Saturday, April 16, 2011

Who is Really Hurting Seniors?

As soon as Paul Ryan's budget plan was rolled out, Democrats immediately got busy explaining how this will lead to seniors sleeping in bus stops and eating out of trash cans.
This line of reasoning is not just misleading and insincere, but it is supremely hypocritical.



To claim the moral high ground with respect to caring for seniors is completely incongruous with the Democrat's track record. Most of the Democrats demagoguing the Ryan plan are the same ones that favor more quantitative easing. Nothing will do more to hurt seniors living off of savings and fixed income than further rounds of quantitative easing (QE). QE erases the value of savings and payments from bonds, annuities and social security, the very things that seniors rely on to support themselves. Recent increases in commodity prices, which have hit seniors particularly hard, are at least partly caused by QE.



Inflation transfers wealth from savers and wage earners to borrowers like the Federal government and companies with heavy debt loads and big payrolls (think union shops). Although the CPI remains fairly low, for seniors living off of fixed income and paying a large portion of their income on food and energy, this is cold comfort.



Populist claims that the Ryan plan will not increase Medicare payouts fast enough are also misleading because it is likely that medical costs will decrease under the Ryan plan. Consumers will finally be given a stake in the cost of health care under the Ryan plan. Natural pricing mechanisms will be allowed to function in the health care market for the first time in two generations. The lack of such mechanisms is partly what has caused our health care costs to escalate to two times that of other OECD countries. Putting competitive forces to work will cause states to innovate more efficient and affordable health care plans through federal block grants. States that innovate successful plans will have their plans copied. States whose plans fail will copy the plans that work, or their citizens will relocate to states with better plans. This is how a republic is meant to function.

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