July 13, 2017
Senator Toomey is apparently too young to remember the financial crisis that resulted from the collapse of the housing bubble. He told the Washington Post that he thinks Medicare cost increases will lead to a financial crisis:
“‘It’s a guaranteed financial crisis if we don’t do something about our entitlement programs,’ said Sen. Patrick J. Toomey (R-Pa.), who has pushed for indexing Medicaid to a lower inflation rate. ‘It’s not a question of whether that happens, it’s just a question of when, and how devastating, that is.'”
While it is possible to see how higher Medicare costs would lead to larger budget deficits, if Toomey and his Republican colleagues decide never to raise taxes or cut other spending, there is no obvious way that this leads to a financial crisis. The last crisis came about because a housing bubble was fueled by loans. When housing prices collapsed, trillions of dollars in loans went bad. While this is a fairly straightforward story, it is very difficult to see how rising Medicare costs are more likely to lead to a financial crisis than a Superbowl victory by the Cleveland Browns.
It might have been helpful to point out to readers that the Senator doesn’t appear to know what he is talking about.
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