4 ms·

> Agreed, anyone who just glanced at federal budget would know, it's Social Security/Medicare/Medicaid/Defense. It's almost a trope/meme to label the US govern

> Agreed, anyone who just glanced at federal budget would know, it's Social Security/Medicare/Medicaid/Defense. It's almost a trope/meme to label the US government as "an insurance company with an army": > Think of the federal government as a gigantic insurance company (with a sideline business in national defense and homeland security), which does its accounting on a cash basis, only counting premiums and payouts as they go in and out the door. An insurance company with cash accounting . . . is an accident waiting to happen. * Peter Fisher, 2003, Bust Treasury official; https://nsjonline.com/article/2017/08/hill-the-insurance-company-with-an-army/ https://nsjonline.com/article/2017/08/hill-the-insurance-com...

robocat 11mo ago
I struggle to understand the metaphor. From link: The U.S. federal budget is now 50 percent consumed by spending for Social Security, a social insurance program; Medicare and Medicaid, two of the largest health insurance programs in the country; and various other social safety net programs which act as insurance plans as well. Except for one thing. None of these federal insurance programs operate as licensed sanctioned insurance plans as we see in the private sector where money is collected from the individual and invested or managed in a fiduciary manner to build assets to pay for claims in the future. Voters think they've saved: "I paid my taxes all my life". But what would it mean for a government to save money over decades? How else can a government run except on a cash basis? Aside: I belong to a non-profit health insurance co-op and a non-profit car insurance - they run by matching payouts to premiums and limiting what they cover (e.g. Southern Cross Healthcare is extra healthcare on top of what the NZ government provides). Edit: ooops, I've just noticed my car insurer AMI Insurance which was a mutual insurance company before the Canterbury earthquakes went bust and the government sold it (now part of IAG).
- throw0101a 11mo ago
  > But what would it mean for a government to save money over decades? * https://en.wikipedia.org/wiki/Social_Security_Trust_Fund https://en.wikipedia.org/wiki/Social_Security_Trust_Fund The SSA had actually been collecting 'extra' money (from Baby Boomers) for awhile now and putting off to the side, but that extra income stopped a while ago, and the trust fund where it was stored was being tapped to keep benefits up. The "shortage" in Social Security that is sometimes in the US news is the estimated time when the 'extra' funds run out, and benefits will only be covered in cashflows. And this is not sudden thing: many government pension systems in the world are facing similar situations. The politicians in the US have not done anything about (for decades), whereas Canada did decide to change their system: * https://en.wikipedia.org/wiki/Canada_Pension_Plan#1998_reforms https://en.wikipedia.org/wiki/Canada_Pension_Plan#1998_refor... Other countries are facing debates (France, Denmark, etc).
  - robocat 11mo ago
    > when the 'extra' funds run out, and benefits will only be covered in cashflows The issue is that the necessary delivered services is a kinda fixed amount that the economy should deliver. The economy can't really "save" money. A government can choose to change taxes, change benefits, sell assets (to who?), or burden the next generation with debts (e.g. via mortgages). Talking about money between generations is often just fictional accounting.
  - cogman10 11mo ago
    The US has done something about it, they raised the retirement age to 67. But that was more of a band aid. The real solution is to raise the maximum SSA payment or eliminate it all together. That said, even if the government does nothing, it's not as if SSA goes away. Instead, the payments are reduced (Last I saw, it was around 75% of current payments). That'd suck, for sure, but it's not the all or nothing framing.
- triceratops 11mo ago
  > But what would it mean for a government to save money over decades? Sovereign wealth fund.

robocat 11mo ago

I struggle to understand the metaphor. From link: The U.S. federal budget is now 50 percent consumed by spending for Social Security, a social insurance program; Medicare and Medicaid, two of the largest health insurance programs in the country; and various other social safety net programs which act as insurance plans as well. Except for one thing. None of these federal insurance programs operate as licensed sanctioned insurance plans as we see in the private sector where money is collected from the individual and invested or managed in a fiduciary manner to build assets to pay for claims in the future. Voters think they've saved: "I paid my taxes all my life". But what would it mean for a government to save money over decades? How else can a government run except on a cash basis? Aside: I belong to a non-profit health insurance co-op and a non-profit car insurance - they run by matching payouts to premiums and limiting what they cover (e.g. Southern Cross Healthcare is extra healthcare on top of what the NZ government provides). Edit: ooops, I've just noticed my car insurer AMI Insurance which was a mutual insurance company before the Canterbury earthquakes went bust and the government sold it (now part of IAG).

throw0101a 11mo ago
> But what would it mean for a government to save money over decades? * https://en.wikipedia.org/wiki/Social_Security_Trust_Fund https://en.wikipedia.org/wiki/Social_Security_Trust_Fund The SSA had actually been collecting 'extra' money (from Baby Boomers) for awhile now and putting off to the side, but that extra income stopped a while ago, and the trust fund where it was stored was being tapped to keep benefits up. The "shortage" in Social Security that is sometimes in the US news is the estimated time when the 'extra' funds run out, and benefits will only be covered in cashflows. And this is not sudden thing: many government pension systems in the world are facing similar situations. The politicians in the US have not done anything about (for decades), whereas Canada did decide to change their system: * https://en.wikipedia.org/wiki/Canada_Pension_Plan#1998_reforms https://en.wikipedia.org/wiki/Canada_Pension_Plan#1998_refor... Other countries are facing debates (France, Denmark, etc).
- robocat 11mo ago
  > when the 'extra' funds run out, and benefits will only be covered in cashflows The issue is that the necessary delivered services is a kinda fixed amount that the economy should deliver. The economy can't really "save" money. A government can choose to change taxes, change benefits, sell assets (to who?), or burden the next generation with debts (e.g. via mortgages). Talking about money between generations is often just fictional accounting.
- cogman10 11mo ago
  The US has done something about it, they raised the retirement age to 67. But that was more of a band aid. The real solution is to raise the maximum SSA payment or eliminate it all together. That said, even if the government does nothing, it's not as if SSA goes away. Instead, the payments are reduced (Last I saw, it was around 75% of current payments). That'd suck, for sure, but it's not the all or nothing framing.
triceratops 11mo ago
> But what would it mean for a government to save money over decades? Sovereign wealth fund.