When I remarked on the Social Security Trustees’ report, I didn’t mention what they had to say about the Medicare Trust Fund which if anything is in worse shape than that of the Social Security Trust Fund as the editors of the Wall Street Journal do not hesitate to report:

Don’t shoot the messenger, but the Trustees project that the Medicare hospital trust fund will run dry in 2026.

Five years is not a lot of time but, fortunately, it’s not in a presidential election year which suggests the Congress will wait until the wolf is actually at the door before doing anything about it. The editors also don’t hesitate to point out the irony of the Congressional Democrats striving to broaden Medicare even as it faces insolvency:

Democrats won’t mention any of this as they try to add vision, dental and hearing benefits to Medicare and lower the qualifying age to 60 from 65.

I think I disagree with this observation:

The Medicare Trustees note that their forecast doesn’t take “into account the potential effects of sustained slower payment increases on provider participation, beneficiary access to care, quality of services, and other factors.” Translation: Many doctors won’t take Medicare patients because stingy government payment rates don’t cover their costs. The feds may soon have to pay providers more to ensure Medicare patients can get care.

As of today more than 90% of physicians take Medicare and most of those who don’t are either shrinks or plastic surgeons. I don’t believe the numbers add up to support their claim. Medicare, Medicaid, and a variety of other government programs account for something between 40% and 60% of all healthcare revenue, depending on how you calculate and whom you ask. I find the notion that physicians will cut off their noses to spite their faces unlikely. What I think is more likely is that physicians will mobilize to persuade the Congress to rescue Medicare.

Sean Trende summarizes his analysis in RealClearPolitics of the effects of a declining presidential approval rating in his concluding paragraph:

Regardless, the decline in Biden’s job approval is consequential. Right now, he is probably sitting just below the “Mendoza line” that would represent a “normal” midterm, with perhaps no Senate losses and low double-digit House losses. If the president rebounds, Democrats will have a successful 2022, even if they narrowly lose the House. If he declines much further, however, it could turn into an ugly rout.

There are lots of facts, figures, and charts to back up his observations.

15 months is an eternity in politics and a lot can happen between now and November 2022. The only districts in which good intentions or trying very, very hard are likely to help them very much are those they’re going to carry regardless. If inflation continues to transit over the next 15 months the unewelcomely slow economic growth projected by the Atlanta Federal Reserve, as pointed out by a frequent commenter, will probably affect President Biden’s popularity his handling of the withdrawal of troops from Afghanistan or any foreign policy news.

Historically, as Mr. Trended documents, the parties of sitting presidents have tended to lose a dozen or more seats in the election after the start of his first term. With such a narrow House margin that could be significant.

In Thomas B. Edsall’s column in the New York Times he asks the question “How Strong Is America’s Multiracial Democracy?”. I’ve now read the column twice and for the life of me I have no idea what the answer is. I have no idea what his answer is.

When black intellectuals are saying things like:

The only remedy to past discrimination is present discrimination. The only remedy to present discrimination is future discrimination.

I can only conclude that it is weakening. I agree with Mr. Edsall that conditions for blacks in the U. S. have improved enormously over the last 50 years but I’m concerned that an increasing number of people, both black and white, don’t recognize that. Said another way, facts have nothing to do with the present mood.

Pop quiz. According to the 2020 U. S. census has the percentage of blacks in the country increased, decreased, or remained the same? Answer: it has decreased very slightly. Unless you’ve read the published reports very closely, I don’t think you’d come to that conclusion.

The Social Security Trustees have released their annual report, only five months later than they are required by statute to provide it (a record), reports Kate Davidson at the Wall Street Journal. The report contains good news and bad news. The bad news first:

• The fund disbursed more than it took in last year.
• The trust fund will be depleted by 2034, one year earlier than forecast just one year ago.

Now the good news:

Senior administration officials also said they expect higher inflation this year will significantly boost benefits next year, estimating Social Security beneficiaries could see close to a 6% cost-of-living increase. That would be the highest annual benefit increase since 2008, when rising gas prices pushed up the cost-of-living adjustment to 5.8%, officials said.

By comparison, beneficiaries saw a 1.3% cost-of-living adjustment in 2021, and a 1.6% adjustment in 2020.

There’s a worm hidden in that apple. The higher the disbursements, the faster the fund will be depleted.

Now the big question: will Congress take action to prevent the fund from cutting benefits in 2034 as they will be required to do? I honestly don’t think it’s a done deal. Social Security recipients are not just older than other Americans—they tend to be richer and whiter, too. Social Security has been called “the third rail of American politics” but that was then and this is now.

At Project Syndicate Nouriel Roubini warns that stagflation shouldn’t be discounted:

NEW YORK – I have been warning for several months that the current mix of persistently loose monetary, credit, and fiscal policies will excessively stimulate aggregate demand and lead to inflationary overheating. Compounding the problem, medium-term negative supply shocks will reduce potential growth and increase production costs. Combined, these demand and supply dynamics could lead to 1970s-style stagflation (rising inflation amid a recession) and eventually even to a severe debt crisis.

Until recently, I focused more on medium-term risks. But now one can make a case that “mild” stagflation is already underway. Inflation is rising in the United States and many advanced economies, and growth is slowing sharply, despite massive monetary, credit, and fiscal stimulus.

There is now a consensus that the growth slowdown in the US, China, Europe, and other major economies is the result of supply bottlenecks in labor and goods markets. The optimistic spin from Wall Street analysts and policymakers is that this mild stagflation will be temporary, lasting only as long as the supply bottlenecks do.

True to form Dr. Roubini is less optimistic:

But what if this optimistic view is incorrect, and the stagflationary pressure persists beyond this year? It is worth noting that various measures of inflation are not just well above target but also increasingly persistent. For example, in the US, core inflation, which strips out volatile food and energy prices, is likely still to be near 4% by year’s end. Macro policies, too, are likely to remain loose, judging by the Biden administration’s stimulus plans and the likelihood that weak eurozone economies will run large fiscal deficits even in 2022. And the European Central Bank and many other advanced-economy central banks remain fully committed to continuing unconventional policies for much longer.

He concludes by pointing to the likelihood of “persistent negative supply shocks”. I would add that the best evidence we have is that public debt overhang is a drag on economic growth. We already have a lot of public debt overhang and the likelihood is we will have more.

Update

Also at Project Syndicate Kenneth RogofF waxes nostalgic about the similarities between the present and the 1970s: the messy and unsuccessful conclusion of a disastrous war, a Republican president challenging institutional norms, slowing economic innovation, flagging growth in productivity, and big increases in government spending unmatched by tax increases. Ah, those were the days.

I found the editors’ of the Wall Street Journal’s take on the various spending plans that the Congressional Democrats have teed up amusing:

If Mr. Sanders were to confiscate every asset of every American billionaire— Jeff Bezos’s rockets; Elon Musk’s bitcoin; Larry Ellison’s boats; Oprah Winfrey’s houses; Ted Turner’s ranches; Jay-Z’s car collection; even the starched shirt off the back of poor Larry Fink, who tied for last place on the Forbes list, at $1 billion—it still wouldn’t cover the cost of Democrats’ next two legislative plans.

That’s to say nothing of funding the government’s regular operations, a baseline budget that’s expected to be roughly $4 trillion a year. And we haven’t allocated a dime yet to Mr. Sanders’s larger ambitions, including Medicare for All. The point is that he talks abstractly about the “billionaire class,” but at the scale of the U.S. government, Jeff Bezos is a minnow.

Bernie’s shtick is always “us versus them.” The reality is that there aren’t enough of “them,” which is why the tax man will be coming back sooner rather than later for the rest of “us.”

It will also be amusing to see Gallup’s update to their annual poll on American trust in the federal government. Last year trust in the legislative branch was at an all-time low.

There is a little truism I wish more people understood: today’s savings is tomorrow’s consumption. There’s a corollary: today’s borrowing borrows against tomorrow’s consumption. Federal borrowing makes the most sense when it will contribute fairly directly to increases in future GDP.

You may or may not be aware of it but columnist John Kass is no longer with the Chicago Tribune. Not to put too fine a point on it but the Trib made him an offer he could not refuse and he “retired”. Ever since he’s been posting at his own site. Today he’s featured a “guest column” from long-time Trib editor John P. McCormick on the status and fate of Michigan Avenue I thought I would share with you. Here’s a sample:

For those of us who walked this street as children, Michigan Avenue spoke of possibility, of opportunity. South of the Chicago River, this had been the original lake shore drive — before landfills of debris from the Great Fire of 1871 moved the lakefront a quarter-mile east. North of the river this had been drab Pine Street, until completion of the bascule DuSable Bridge in 1920 created today’s Michigan Avenue.

My family came here each summer from a county seat town in Iowa. Between ballgames and evening strolls, my father found gentle ways to say that I could be more than a big-eyed visitor in this capital of the Midwest. Lucky for me, he was right. The last time he and I walked these sidewalks together, I was halfway through four decades of working on and near Michigan Avenue.

Back then thieves and muggers made cameo appearances on Michigan Avenue. But this wasn’t yet a playpen for robbery crews or daylight gunmen or looters stuffing merchandise into stolen getaway cars. Raise your hand if, in the past year or so, you haven’t heard a dozen discussions about the perils on Michigan Avenue. And more broadly, about fearless outlaws who’ve changed the perception, and the reality, of downtown Chicago.

Read the whole thing. In addition to the insightful text it includes pictures which tell a story all their own.

Between sites like John Kass’s and the refugees on Substack I strongly suspect this reflects the future of long form journalism. Although maybe with attention spans shrinking as they have over the last 30 years there is no future for long form journalism.

As I read this piece by Jim Murawski at RealClearInvestigations:

The national movement to eradicate what activists call systemic racism and white privilege from medicine and health care has few public critics in the medical profession. A possible reason: Skeptics who have questioned these efforts have been subject to harsh Twitter campaigns, professional demotions and other blowback.

I could only think what would “equity” in healthcare be? If they mean outcomes, I can only suggest that advocates of equity might want to be careful about what they wish for. IMO different outcomes among different racial groups are multi-factorial with factors including genetics, behavior, cookbook medicine, and, I am sorry to say, racism. I cannot assign relative importances to those factors but I am skeptical that racism as such is the most important factor. I have long thought there were too few black physicians but changing that would require a revolution in medical education.

Some of the earliest posts I wrote here were about medical education. I won’t dredge them up but suffice it to say that “better fewer doctors” has been the mantra of medical education for more than a century and most of that is accomplished by limiting admissions. One of the effects of that has been to limit the number of black physicians. I don’t have facts and figures to back this opinion of mine up but I think that physicians should be prepared to serve the community they plan to serve and there are both advantages and disadvantages to being black and serving black patients.

Ultimately, I’ll leave it to my readers: what would “equity” in healthcare be?

While I’m glad that Abrahm Lustgarten is highlighting the issues regarding the depletion of the Colorado River in his post at Pro Publica:

Earlier this month, the Bureau of Reclamation released lesser-noticed projections for water levels, and they are sobering. The figures include an estimate for what the bureau calls “minimum probable in flow” — or the low end of expectations. Water levels in Lake Mead could drop by another 40 vertical feet by the middle 2023, ultimately reaching just 1,026 feet above sea level — an elevation that further threatens Lake Mead’s hydroelectric power generation for about 1.3 million people in Arizona, California and Nevada. At 895 feet, the reservoir would become what’s called a “dead pool”; water would no longer be able to flow downstream.

The bureau’s projections mean we are close to uncharted territory. The current shortage agreement, negotiated between the states in 2007, only addresses shortages down to a lake elevation of 1,025 feet. After that, the rules become murky, and there is greater potential for fraught legal conflicts. Northern states in the region, for example, are likely to ask why the vast evaporation losses from Lake Mead, which stores water for the southern states, have never been counted as a part of the water those southern states use. Fantastical and expensive solutions that have previously been dismissed by the federal government — like the desalinization of seawater, towing icebergs from the Arctic or pumping water from the Mississippi River through a pipeline — are likely to be seriously considered. None of this, however, will be enough to solve the problem unless it’s accompanied by serious efforts to lower carbon dioxide emissions, which are ultimately responsible for driving changes to the climate.

Meanwhile, population growth in Arizona and elsewhere in the basin is likely to continue, at least for now, because short-term fixes so far have obscured the seriousness of the risks to the region. Water is still cheap, thanks to the federal subsidies for all those dams and canals that make it seem plentiful. The myth persists that technology can always outrun nature, that the American West holds endless possibility. It may be the region’s undoing. As the author Wallace Stegner once wrote: “One cannot be pessimistic about the West. This is the native home of hope.”

I’m sorry that the post is as superficial as it is. It does have some interesting tidbits of information. For example:

Like the record-breaking heat waves and the ceaseless mega-fires, the decline of the Colorado River has been faster than expected. This year, even though rainfall and snowpack high up in the Rocky Mountains were at near-normal levels, the parched soils and plants stricken by intense heat absorbed much of the water, and inflows to Lake Powell were around one-fourth of their usual amount. The Colorado’s flow has already declined by nearly 20%, on average, from its flow throughout the 1900s, and if the current rate of warming continues, the loss could well be 50% by the end of this century.

and this:

Since about 70% of water delivered from the Colorado River goes to growing crops, not to people in cities, the next step will likely be to demand large-scale reductions for farmers and ranchers across millions of acres of land, forcing wrenching choices about which crops to grow and for whom — an omen that many of America’s food-generating regions might ultimately have to shift someplace else as the climate warms.

and this:

A breathtaking amount of the water from the Colorado — about 10% of the river’s recent total flow — simply evaporates off the sprawling surfaces of large reservoirs as they bake in the sun. Last year, evaporative losses from Lake Mead and Lake Powell alone added up to almost a million acre feet of water — or nearly twice what Arizona will be forced to give up now as a result of this month’s shortage declaration.

How superficial? For one thing as far as I can tell the 40 million people they cite as being dependent on the Colorado only includes people in the U. S. Since many people in Mexico also depend on the Colorado for water, it suggests that the 40 million is a grave understatement.

Additionally, California, Arizona, Nevada, Utah, and Colorado are all more dependent on real estate sales as a percentage of GDP than the other states in the U. S. Said another way an increasing population is “baked into” the economic projections for those states. Paradoxically, California is also more dependent on agriculture for its economy than most other states. If you see a conflict there, you’re not mistaken.

Also conspicuously missing is the conflict between increasing dependence on hydroelectric power in California in particular and the decreasing ability of the Colorado to support hydroelectric power generation.

Finally, there are three ways to address the problem being called out by the article: fewer people, more efficient resource utilization, and increasing the amount of water carried by the river. Of those the last two are those emphasized. There is little attention paid to the relative costs of each strategy. A little cost-benefit analysis would be informative.