Laffey is running for the Republican nomination with fundamental policies to fix Social Security, healthcare, taxes, and more -- all designed to restore the American Dream for your children.
Hi John, I realized that the right discount to discount real flow is the historic real return on U.S. national wealth and not the long-term real yield on U.S. inflation-link Treasuries. The latter discount rate is lower and is the one used by SSI. That's why their numbers are larger. The fiscal gap is the shortfall in the government's intertemporal budget. This budget plus household intertemporal budgets, when added together equal the economy's intertemporal budget. Along any path of the economy, the present value of the economy's realized consumption (household plus gov) must equal the realized present value of its human wealth plus its national net wealth. The discounting of realized paths is at the realized path of the real return to national net wealth. Hence, using the average national wealth return for discounting the average path of future real variables is an approximation to the theoretically correct measure. The government real bond yield can go down because, for example, the public becomes more risk averse. So it's not telling us about whether the economy, appears, on the average, to be trying to spend more in present value than it will, on the average, have in resources. This said, using a higher or lower discount rate for all the analysis doesn't change the fiscal adjustments need to close the fiscal gap. best, Larry
Send me any links to these behaviors. I don't doubt they are occurring, but I want to get my Bettercare Plan co-authors to focus on how we can modify the plan to keep this from happening. This may require having an independent federal claims adjudicator.
good luck to Mr. Laffey, but he sounds far-too-reasonable about Important Stuff to win the Republican nomination. (unless, of course, he pivots to wanting to discuss Hunter Biden's laptop and purple M&M's ... then he might have a shot)
Larry, I hope you are well in 2023! Question: when last we talked [I was working for Ben Carson], your analysis of the fiscal gap had it at @ $211 Trillion or so. Now, you say it is much lower [$41.3 Trillion] due to using a higher discount rate [6.5%] more appropriate to long term wealth creation/accumulation in the USA. What was the old discount rate, and what prompted the change? I also thought the 41.3 Trillion was the TOTAL envelope of federal spending, but you link to the SSI page showing long term insolvency of $20 Trillion to 2096 and $61 Trillion out to the infinite horizon. Wouldn't we want to add $61 to the $43, plus other federal spending streams [i.e., health care] ...?? Thanks for any insights!
Anytime a republican uses the words "social security" & "radical surgery" in the same sentence, BEWARE! There is no mystery here; REMOVE or substantially raise the cap on earnings subject to SS withholding.
Liffey has some interesting ideas but lost me at “The Bettercare Plan”. Investigations of Medicare Advantage Plans have found they routinely deny claims that would have been paid under a fee-for-service plan. I’m no a fan of fee-for-service but maybe he should also consider a well-funded Single-Payor Plan.
Well, congratulations to your friend for stepping up, but the prediction about his name being a household name? Well, that rather sounds like your predictions about Liz Cheney.
I agree with your readers who prefer you to stick to economics and social security. I added your Substack to my reading pile bc your work on SS was impressive. It is MUCH better than your work as a political pundit. There is wisdom to staying in one’s lane.
Hi John, I realized that the right discount to discount real flow is the historic real return on U.S. national wealth and not the long-term real yield on U.S. inflation-link Treasuries. The latter discount rate is lower and is the one used by SSI. That's why their numbers are larger. The fiscal gap is the shortfall in the government's intertemporal budget. This budget plus household intertemporal budgets, when added together equal the economy's intertemporal budget. Along any path of the economy, the present value of the economy's realized consumption (household plus gov) must equal the realized present value of its human wealth plus its national net wealth. The discounting of realized paths is at the realized path of the real return to national net wealth. Hence, using the average national wealth return for discounting the average path of future real variables is an approximation to the theoretically correct measure. The government real bond yield can go down because, for example, the public becomes more risk averse. So it's not telling us about whether the economy, appears, on the average, to be trying to spend more in present value than it will, on the average, have in resources. This said, using a higher or lower discount rate for all the analysis doesn't change the fiscal adjustments need to close the fiscal gap. best, Larry
Hi Cheryl,
Send me any links to these behaviors. I don't doubt they are occurring, but I want to get my Bettercare Plan co-authors to focus on how we can modify the plan to keep this from happening. This may require having an independent federal claims adjudicator.
best, Larry
good luck to Mr. Laffey, but he sounds far-too-reasonable about Important Stuff to win the Republican nomination. (unless, of course, he pivots to wanting to discuss Hunter Biden's laptop and purple M&M's ... then he might have a shot)
Larry, I hope you are well in 2023! Question: when last we talked [I was working for Ben Carson], your analysis of the fiscal gap had it at @ $211 Trillion or so. Now, you say it is much lower [$41.3 Trillion] due to using a higher discount rate [6.5%] more appropriate to long term wealth creation/accumulation in the USA. What was the old discount rate, and what prompted the change? I also thought the 41.3 Trillion was the TOTAL envelope of federal spending, but you link to the SSI page showing long term insolvency of $20 Trillion to 2096 and $61 Trillion out to the infinite horizon. Wouldn't we want to add $61 to the $43, plus other federal spending streams [i.e., health care] ...?? Thanks for any insights!
JOHN L. CHAPMAN
Anytime a republican uses the words "social security" & "radical surgery" in the same sentence, BEWARE! There is no mystery here; REMOVE or substantially raise the cap on earnings subject to SS withholding.
Liffey has some interesting ideas but lost me at “The Bettercare Plan”. Investigations of Medicare Advantage Plans have found they routinely deny claims that would have been paid under a fee-for-service plan. I’m no a fan of fee-for-service but maybe he should also consider a well-funded Single-Payor Plan.
Well, congratulations to your friend for stepping up, but the prediction about his name being a household name? Well, that rather sounds like your predictions about Liz Cheney.
I agree with your readers who prefer you to stick to economics and social security. I added your Substack to my reading pile bc your work on SS was impressive. It is MUCH better than your work as a political pundit. There is wisdom to staying in one’s lane.