Originally published at Washington Times.
As Halloween approaches, it’s not just haunted houses and ghosts that should send chills down your spine. The real nightmare is America’s fiscal crisis — a terrifying collision of unsustainable spending and an exploding national debt. At the heart of the fright are the country’s spiraling mandatory Medicare and Social Security programs, which account for about half the federal budget. As Medicare creeps toward insolvency by 2036, proposals for even more spending, such as “Medicare for All,” and amnesty for millions of illegal immigrants threaten to send the country faster over a fiscal cliff. The Biden-Harris administration’s policies have led to a surge in illegal immigration, with an estimated 12.5 million immigrants living in the U.S. illegally. Proposals to grant them legal status may sound appealing. Still, they further strain social services such as Medicare. Because Medicare is a pay-as-you-go system that relies on payroll taxes from current workers to fund retirees’ health care, adding millions of new recipients — many of whom are older — would only accelerate the program’s ensuing collapse. The estimated 90% of illegal immigrants here younger than 55 could be eligible with 10 years of work history before turning 65. The aggregate cost to taxpayers of recipients retiring later could be at least $1.8 trillion over time. Vice President Kamala Harris’ Medicare for All plan, coupled with amnesty, could cost $2 trillion more over the next decade to cover newly legalized immigrants, as a new study states. Combined with the full cost of Medicare for All for current Americans, the net cost could be $44 trillion, demanding unprecedented tax increases or massive cuts to essential services. And while Ms. Harris argues that these programs promote fairness and access, the fiscal reality is terrifying. The government’s spending would spiral out of control, with no clear way to rein in the costs. Former President Donald Trump has emphasized stricter immigration laws and border security. While Mr. Trump’s approach may help reduce the immediate costs of adding more people to programs such as Medicare, it does little to address the deeper issues of an aging population and soaring health care costs. Unless something is done to reform Medicare, the program will remain a ticking time bomb. The fiscal implications of immigration are complex. On the one hand, younger, higher-skilled immigrants contribute to the economy by filling labor shortages and paying taxes, which help support programs such as Medicare. On the other hand, older and lower-skilled immigrants tend to impose a net drain on public resources. Research shows that immigrants arriving in the U.S. after age 55 can impose a fiscal burden of up to $400,000 over their lifetime, while younger, educated immigrants contribute more than $1 million to the federal budget. Blanket amnesty would fail to account for these differences, much like a one-size-fits-all costume that doesn’t fit anyone quite right. The real horror story, however, is Medicare itself. The Inflation Reduction Act of 2022 was meant to curb rising health care costs, but it has only added to the chaos. With price controls on prescription drugs, Medicare premiums are rising faster than ever, up 21% in 2024 alone, and the number of available drug plans has dropped by nearly 100. Rather than containing costs, the law’s price controls have stifled innovation and driven up prices, meaning older Americans have fewer and more expensive options. This could become a nightmare when access and quality of care are sacrificed. So, what’s the way out of this fiscal haunted house? First, the U.S. needs a sustainable budget with a strict federal spending cap tied to population growth and inflation. We can avoid the terrifying prospect of runaway deficits by cutting spending now and limiting how fast the government can spend after that. Expanding work requirements for government assistance programs such as Medicaid would help reduce dependency on taxpayer-funded benefits and encourage self-sufficiency. A market-based reform system is crucial for immigration. A solution is a visa auction system where employers bid on visas for immigrants based on their skills and economic value. By pricing visas based on demand, the U.S. could ensure that immigrants contribute meaningfully to the economy while filling labor gaps without burdening social services. Such a system would be a much-needed reform to correct decades of failed immigration policies and prevent the horrors of government failures. If America wants to avoid fiscal disaster, policymakers must confront these issues head-on. Granting amnesty and expanding Medicare without reform is like opening the door to a haunted house — you may not know what horrors await, but you know they’re lurking. By balancing immigration with sustainable economic policies and reforming programs like Medicare, the U.S. can ensure a more prosperous, fiscally sound future. The time to act is now before this fiscal nightmare becomes a reality. Venezuela's Socialism, U.S. Immigration, & the Fight for Freedom w/ Daniel Di Martino | LPP Ep. 11810/17/2024
Join me for Episode 118 of the Let People Prosper Show with Daniel Di Martino, a PhD candidate in Economics at Columbia University and a graduate fellow at the Manhattan Institute, who shares his experiences living under socialism in Venezuela and its impact on his family. DiMartino discusses the current political landscape in Venezuela, the challenges faced by the opposition, and the implications of socialism on daily life. He also delves into immigration in the U.S., presenting research on immigrants' economic and fiscal impacts and the ongoing debate surrounding immigration policy. The conversation concludes with thoughts on the future of immigration reform in the U.S. and the importance of understanding these issues as the election season approaches. Please share and rate the Let People Prosper Show wherever you get your podcasts, visit vanceginn.com for more insights, and subscribe to my newsletter for show notes at vanceginn.substack.com. As election day approaches, critical issues like school choice, the federal deficit, Medicare, illegal immigration, inflation, and financial data privacy dominate discussions. From the growing debate on school choice to alarming projections about our national debt, these policies will impact the economic well-being of Americans. Here’s a brief look at where things stand and what’s at stake.
Watch the episode on YouTube below, listen to it on Apple Podcast or Spotify, visit my website www.vanceginn.com for more information, and get show notes at www.vanceginn.substack.com. Originally published at Tholos Foundation. Your browser does not support viewing this document. Click here to download the document. Originally published at Kansas Policy Institute.
Recent Internal Revenue Service (IRS) data underscore a significant trend: people and income continue moving from high-tax to low-tax states. The pandemic lockdowns accelerated this movement, and even as life returns to a semblance of normalcy, the exodus continues unabated as policies matter. The IRS reports migration data between states reveal that in 2022, California topped the list of net losers in adjusted gross income (AGI), shedding $23.8 billion. Other high-tax, blue states, New York, Illinois, New Jersey, and Massachusetts, were the biggest losers, collectively losing billions in AGI. Conversely, low-tax, red states like Florida, Texas, South Carolina, Tennessee, and North Carolina emerged as the biggest net gainers, with Florida alone attracting $36 billion in AGI. According to the Wall Street Journal, the flight from blue, high-tax states far surpasses pre-pandemic levels. California’s income loss in 2022 was nearly three times that of 2019. New Jersey saw a record net income loss, largely due to fewer New Yorkers relocating across the Hudson River. Although lower than during the pandemic, New York’s AGI loss was still about 50% higher in 2022 compared to 2019. This migration pattern illustrates a clear preference for states with lower taxes, less regulation, and more business-friendly environments. The top income-gaining states share common pro-growth policies that promote economic growth, highlighting the significant impact of state policies on migration decisions as people move with their feet. Kansas: A State of Concern For Kansas, the story is one of consistent outmigration. The net loss from domestic migration in 2022 marked the 28th out of the last 30 years, with a staggering loss of over $600 million and more than $2 billion over the last five years. This represents the second-highest loss in three decades, second only to 2017 when the state imposed its highest tax increase. The average state outmigration loss in Kansas, about $76,000 per return, indicates a broad spectrum of incomes are leaving. Moreover, Kansas’ biggest gains came from higher-tax states, and its losses went to lower-tax states. Johnson County, often hailed as Kansas’s economic engine, accounted for over half of the state’s AGI loss at $357 million in 2022. This marks the fifth out of the last six years that Johnson County has experienced a net loss. Despite having about 20% of the state’s population, it has borne a disproportionate share of the AGI loss, which coincides with efforts to shift the county politically left and impose significant property tax hikes that reduce affordability. Considering data from the Kansas Policy Institute’s Green Book and the Tax Foundation, it becomes clear that Kansas is not alone in facing these challenges. However, the extent of the problem in Kansas is particularly alarming compared to other states. The IRS data indicate that while many states have rebounded or stabilized post-pandemic, Kansas continues to struggle with significant outmigration. Economic and Policy Implications for Kansas The significant outmigration from Kansas has several implications:
Kansas’s Path to Prosperity In response to these challenges, Kansas must adopt a comprehensive approach that includes responsible budgeting, tax relief, and the removal of barriers to work and education. Here are some key policy recommendations:
Addressing Migration Trends The migration trends underscore the importance of adopting free-market, pro-growth policies prioritizing economic freedom and personal responsibility. Kansas can learn from states that have successfully attracted residents and income by implementing policies that reduce the size of government, lower taxes, and eliminate burdensome regulations. The continued outmigration from Kansas highlights the urgent need for policy reforms that can reverse this trend. By learning from the successes of states that have managed to attract people and income, Kansas can chart a path toward a more prosperous future. Addressing the underlying issues driving residents away is crucial to ensuring the state’s long-term economic stability and growth. |
Vance Ginn, Ph.D.
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