New New Math

If economic growth is slow, as assumed by the Bandit in his Social Security calculations, then money invested in stocks and bonds won't make up the Bandit's calculated Social Security deficit. If growth is high, then there won't be any Social Security deficit, and the same stock and bond investments are likey to do well. The assumed connection (based on historical experience) is that stocks and bonds follow economic performance.

The conflict in Bandit thinking is straightforward. In telling us about Social Security, he assumes poor economic performance. In telling us about private accounts, he assumes average or better economic performance. These assumptions concern exactly the same time period. Clearly, there is a disconnect somewhere.

An even more immediate disconnect has happened in the Medicare program. As reported today in the NY Times, LA TImes and Washington Post, there is a $720 billion price tag associated with BUSHCARE over the next 10 years. That's about the size of Democratic versions of the prescription drug bill which Republicans voted down as "too expensive." Of course, there is a difference: under BUSHCARE much of the money goes to the Bandit's corporate donors and friends, whereas the Democrat's version benefitted poor people.

As reported in the Washington Post,

"The White House released budget figures yesterday indicating that the new Medicare prescription drug benefit will cost more than $1.2 trillion in the coming decade, a much higher price tag than President Bush suggested when he narrowly won passage of the law in late 2003."
...
"As recently as September, Medicare chief Mark B. McClellan said the new drug package would cost $534 billion over 10 years. Last night, he acknowledged that the cumulative cost of the program between 2006 and 2015 will reach $1.2 trillion, but he cited several major savings and offsets that he said will reduce the federal government's bottom-line cost to $720 billion.

"The disclosure prompted new criticism by Democrats about the administration's long-term budget estimates. It also showed that Medicare, the national medical insurance program for seniors, may pose a far more serious budgetary problem in the coming decade than concerns about the solvency of Social Security."
...
"Last March, Richard S. Foster, Medicare's chief actuary for nearly a decade, said administration officials threatened to fire him if he disclosed his belief in 2003 that the drug package would cost $500 billion to $600 billion. Lawmakers in both parties accused the administration of concealing important information that could have derailed passage of the bill."
...
"The new budget projections also show that seniors will face higher bills each year. A 10-year chart prepared by the Medicare actuaries estimates the drug premium will rise from $35 a month next year to $68 in 2015. Annual deductibles will start at $250 in 2006 and rise to about $472 in 2015, and the maximum annual out-of-pocket expense would be $6,800 that year."
...
"Democrats pointed to the discrepancy in Medicare cost projections as further reason to distrust Bush's 2006 budget, which they said uses tricks and omissions to paint a rosier fiscal picture than the facts justify."

Medicare Drug Benefit May Cost $1.2 Trillion, WaPo 2/9/2005, pA01

One of the things not allowed under BUSHCARE (so-called Medicare reform) is any negotiation with the drug companies about drug prices. This not only allows the drug companies to charge the government whatever they want, but it also encourages the same thing for the open market. The result has been an increase of 20% and more in drug prices since BUSHCARE was passed in November, 2003. Thus, drugs have become more expensive for everyone, not just Medicare. Employees may have noticed the effect in increased co-payments.

In addition to non-negotiation about price, BUSHCARE provides direct subsidies to employers and drug companies to make prescription drugs available. Ironically, the way the law is written, it encourages employers to drop drug coverage from their pension plans. Many have already done so, because employers can keep the subsidies even if they drop the coverage. While corporate employers get the money, retirees are shuffled off to Medicare.

An interesting, unexpected consequence of BUSHCARE is that Canadian drugs are still far more affordable than U.S. drugs - even if one uses the Medicare discount cards or gets pricing under the Medicare formulary. The Bandit gang has been trying to hold up shipments from Canada, but so far they have been unsuccessful. The Bandit's FDA mouthpiece has more successfully threatened the Canadian Health Minister with dire consquences, which did result in some Canadian drug price increases. But, even after the price increases, Canadian drugs are still at least 50% less expensive than "discounted" U.S. drugs. (I have checked this extensively with several U.S. pharmacies and discount card plans.)

Of course, as Robert Scheer pointed out in yesterday's LA Times, this is not the only area in which Bandit thought has had "unexpected consequences." It's enough to make one think there's something wrong with brain wiring, somewhere. Is there a Voodoo doctor in the house?