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June 27, 2005

Discouraging Savings as Govt Policy

Why don't Americans save?

Because we punish people for having assets.

Take long term care for the elderly. Many families exhaust their savings paying for it, making all the hard work of saving during their lifetime a waste as Medicaid takes over those costs. Some elderly get around this problem by giving away their assets to children so that the savings do not all disappear.

But given expanding Medicaid costs, the government is likely to make that harder.

But the core problem is obvious. We don't extend long term care to all citizens regardless of income. By only extending long term care to the penniless, we de facto create a disincentive to save.

The irony is that an edministration that promotes eliminating the estate tax for the very wealthy is supporting policies that will strip working class families of their remaining assets as their families sicken in their old age.

But then what else is new? Conservatives talk a good game, but whether it's their failure to eliminate the marriage penalty for the working poor (via the EITC) or this attack on the assets of working families via "Medicaid reform", the lesson is simple. It's all about helping the wealthy. Nothing more.

Posted by Nathan at June 27, 2005 06:13 AM