A plaque remaining from the Big Apple Night Club at West 135th Street and Seventh Avenue in Harlem.

Above, a 1934 plaque from the Big Apple Night Club at West 135th Street and Seventh Avenue in Harlem. Discarded as trash in 2006.

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Entry from July 04, 2018
“The U.S. government is an insurance company with an army”

Is the U.S. government an insurance company? It pays out Medicare, Medicaid, Social Security—and it has an army.

Under Secretary of the U.S. Treasury Peter R. Fisher said at the Columbus Council on World Affairs in Columbus, Ohio, on November 14, 2002:

“Think of the federal government as a gigantic insurance company (with a side line business in national defense and homeland security) which only does its accounting on a cash basis – only counting premiums and payouts as they go in and out the door.  An insurance company with cash accounting is not really an insurance company at all.  It is an accident waiting to happen.”

It helps to think of the government as an insurance company with an army” was posted on the newsgroup rec.sport.football.college on April 19, 2003. American economist and New York (NY) Times columnist Paul Krugman has frequently cited Fisher’s quotation.


Wikiquote: Peter R. Fisher
Peter R. Fisher (born in 1956) is a Senior Lecturer at the Tuck School of Business at Dartmouth, and a Senior Fellow at the Tuck Center for Global Business and Government. He is also a former executive at BlackRock and a former senior official at the U.S. Treasury and the Federal Reserve.

Quotes
Think of the federal government as a gigantic insurance company (with a sideline business in national defense and homeland security), which does its accounting on a cash basis, only counting premiums and payouts as they go in and out the door. An insurance company with cash accounting . . . is an accident waiting to happen.
. While under secretary of the U.S. Treasury in 2002; frequently short-handed as “an insurance company with an army.” Krugman, Paul (March 11, 2003). A Fiscal Train Wreck. The New York Times.

U.S. Department of the Treasury
Remarks of Under Secretary of the Treasury Peter R. Fisher to the Columbus Council on World Affairs Columbus, Ohio Beyond Borrowing: Meeting the Government’s Financial Challenges in the 21st Century
11/14/2002
(...)
Think of the federal government as a gigantic insurance company (with a side line business in national defense and homeland security) which only does its accounting on a cash basis – only counting premiums and payouts as they go in and out the door.  An insurance company with cash accounting is not really an insurance company at all.  It is an accident waiting to happen.

This particular insurance company, it turns out, has made promises to its policy holders that have a current value $20 trillion or so (give or take a few trillion) in excess of the current value of the revenues that it expects to receive.  A real insurance company could try to grow its way out by raising its premiums and its earnings on investments faster than its liabilities.  The federal government, however, would have to raise taxes or borrow faster than it increases outlays. 

In my opinion, neither is likely nor desirable.

21 November 2002, Wall Street Journal (New York, NY), “The Economy—Capital: U.S. Promises Are $20 Trillion in the Hole” by David Wessel, pg. A2:
No one took much notice. Maybe that’s because Peter Fisher, the Treasury’s undersecretary for domestic finance, spoke in Columbus, Ohio, far outside the Beltway.
(...)
“Think of the federal government as a gigantic insurance company with a sideline business in national defense and homeland security,” Mr. Fisher said. It counts premiums and payouts as they come and go and worries little about how to pay claims in the future. “This particular insurance company, it turns out, has made promises to its policyholders that have a current value $20 trillion or so in excess of the revenues that it expects to receive,” he said.

“An insurance company with cash accounting is not really an insurance company at all,” he added. “It’s an accident waiting to happen.”

Google Groups: sci.econ
usa will have over 20 trillion in national debt soon
1984
11/22/02
according to Peter Fisher, the Treasury’s under-secretary for domestic finance. Said Mr. Fisher, “Think of the federal government as a gigantic insurance company with a sidesline business in national defense and homeland security. This particular insurance company, it turns out, has made personal promises to its policyholders that have a current value of $20 trillion or so in excess of the revenues it expects to receive. An insurance company with cash accounting is not really an insurance company at all,” he added, “it’s an accident waiting to happen.”

Google Groups: rec.sport.football.college
Strange quote of the day
Daniel Seriff
4/19/03

On Fri, 18 Apr 2003 23:58:02 -0500, Lone Victor wrote
(in message ):
> “It helps to think of the government as an insurance company with an
> army.”
>
> I have absolutely *no* idea what he’s talking about.

Insofar as they charge you too much for not a whole lot in return, sure.

The New York (NY) Times Magazine
The Tax-Cut Con
By PAUL KRUGMAN SEPT. 14, 2003
(...)
As Peter Fisher, under secretary of the treasury for domestic finance, puts it, the federal government is ‘’a gigantic insurance company with a sideline business in defense and homeland security.’’ And about a decade from now, this insurance company’s policyholders will begin making a lot of claims.

July/August 2004, Health Affairs, “Don’t Give Up On Markets Yet” by Jim Cooper, pp. 278-279:
A former Bush Treasury official, Peter Fisher, put it this way: “Our federal government is a giant insurance company that is $42 trillion in the hole, with side businesses in defense and homeland security.” The vast majority of the $42 trillion unfunded liability is attributable to overpromising by politicians regarding Medicare and Medicaid, giant health insurance programs that are actuarily unsustainable in their current form.

Google Groups: alt.politics.bush
Re: Keep Your FILTHY Republicon Hands Off My Retirement !
Barney Lyon
12/22/04
(...)
PAUL KRUGMAN: Well, then the question is what—is he prepared to be honest and say that “And we’re going to slash Medicare benefits, slash Social Security benefits, not for people 30 years from now but people in the near term”? Because you can’t run deficits this size indefinitely, and you can’t cut these deficits significantly without either raising taxes or making big cuts where the money is, and this—the federal government is basically—as number of people have said, it’s basically a big insurance company with a side business in national defense. Aside from Medicare, Medicaid, Social Security and national defense, there just isn’t much there

Google Groups: rec.sport.football.college
Legit (non-bait) Rand question for Glapski..
StephenJ
2/6/05
(...)
Someone recently described the US government as basically a check dispenser for old folks with a side business in national defense...That’s not necessary, is it..?

Google Groups: rec.sport.football.college
Economics 101
stephenj
3/24/06
(...)
massive wastage. as some wag accurately put it, the US government these days is essentially an insurance/pension fund for old folks, with a side-business in national defense. that’s where the huge debt comes from, and we can thank FDR/LBJ for it, for the most part.

Twitter
Adam Paul
@apumich
Rep. Jim Cooper (D-TN): The US government is “an insurance compnay with a side business in defense.” More info at: at http://www.aei.org/event1923
10:26 AM - 29 Apr 2009

25 May 2009, The Weekly Standard (Washington, DC), “A Scary Story” by Matthew Continetti, pg. 8:
The saying goes that the federal government is nothing more than a giant insurance company with a side business in defense. Most federal expenditures, after all, go to just four things: Social Security, Medicare and Medicaid, interest on the national debt, and the Pentagon. But here’s the bad news: The insurance company the government most closely resembles is AIG.

Economist’s View
Thursday, January 17, 2013
Who First Said the US is ‘An Insurance Company with an Army’?
Underbelly Buce does some digging:

The Holland Principle: Who first said that the US government is “an insurance company with an army.” Paul Krugman often gets the credit, but he says it is not original with him: “this isn’t original” he wrote, invoking the principle on April 27, 2011. Ezra Klein also gets credit; he presented it alongside a lovely pie chart on Feb. 14, 2011, but I find a (second-hand) reference back in 2007 crediting Krugman, so Krugman at least trumps Klein. A polisci textbook (Jan. 1, 2010) credits it to “a Bush administration staff member.”
(...)
Update: Paul Krugman emails:

Someone should have asked me. Peter Fisher, undersecretary of the Treasury, in 2002.

Twitter
Paul Krugman
@paulkrugman
The federal government is an insurance company with an army: “big government” is Social Security, Medicare, and Medicaid, all of which are very popular—and Obamacare is getting there 2/
8:51 AM - 10 Apr 2018

Twitter
John Gramlich
@johngramlich
Where do your federal tax dollars go every year? Ex-Treasury official Peter Fisher put it this way: “Think of the federal government as a gigantic insurance company, with a sideline business in national defense and homeland security.” #TaxDay https://buff.ly/2JS080A
7:57 AM - 17 Apr 2018

American Action Forum
The Daily Dish
July 2, 2018
VALUING YOUR EQUITY STAKE IN THE FEDERAL GOVERNMENT
Douglas Holtz-Eakin
The old joke is that the federal government has become a large financial institution with side businesses in national defense and poverty programs — think of the myriad financial products it offers: health insurance, flood insurance, mortgage insurance, student loans, small business loans, crop insurance, and more. Viewed from that perspective, the taxpayers are the equity investors in this large financial institution.

Posted by Barry Popik
New York CityBanking/Finance/Insurance • Wednesday, July 04, 2018 • Permalink