President Barack Obama took office promising to lead from the center and solve big problems. He has exerted enormous political energy attempting to reform the nation's health-care system. But the biggest economic problem facing the nation is not health care. It's the deficit. Recently, the White House signaled that it will get serious about reducing the deficit next year—after it locks into place massive new health-care entitlements. This is a recipe for disaster, as it will create a new appetite for increased spending and yet another powerful interest group to oppose deficit-reduction measures.
Our fiscal situation has deteriorated rapidly in just the past few years. The federal government ran a 2009 deficit of $1.4 trillion—the highest since World War II—as spending reached nearly 25% of GDP and total revenues fell below 15% of GDP. Shortfalls like these have not been seen in more than 50 years.
Health care inflation has been growing at 16% or more per year for the past 15 years. Our peers in the OECD have been able to restrict the rate of growth to less than 10%. Reform is a pro-growth alternative. (Mr Eakins is dishonest about both SS and Medicare. SS revenues will grow along with the core economy. Medicare is fixed if we fix health care as a whole.)
According to the nonpartisan Congressional Budget Office, the first bill's spending provisions cost $100 billion annually and its tax and budget-cutting provisions recoup $111 billion annually, thus reducing total federal expenditures by $11 billion each year. The second bill proposes $636 billion in annual spending and recoups nothing. Over 10 years, the first bill would spend $1 trillion and recover $1.11 trillion -- a fantastic return on taxpayer investment. Meanwhile, the second bill puts us on a path to spend $6.3 trillion in the same time. Save $110 billion, or spend $6.3 trillion? If you're explicitly claiming the mantle of fiscal prudence, this should be a no-brainer: You support the first bill and oppose the second one.
Yet, in recent months, the opposite happened.
When the House considered a healthcare expansion proposal that the CBO says will reduce the deficit by $11 billion a year, tea party protesters and Congress' self-described "fiscal conservatives" opposed it on cost grounds. At the same time, almost none of them objected when Congress passed a White House-backed bill to spend $636 billion on defense in 2010.
At the time (in 1990) all over the nation, Republican officials decried the fiscal irresponsibility of Washington and swore that if they were in charge -- controlling the House, Senate and White House at the same time -- things would be different. That time has come, and projected deficits are higher than they've ever been before in the history of the known universe. Frist, who in 1995 called deficits "inhumane," is now shepherding the president's tax-cut package through the Senate this week, knowing that it will add at least $44 billion this year alone to the ever increasing national debt.
In February (2003), after years of budget surpluses, the Bush administration projected a $304 billion deficit for this year, though that figure does not include the current tax-cut proposal or the costs of the war in Iraq. Before those were factored in, the Bush administration anticipated that deficits would continue at least through 2008, adding up to $1.1 trillion. The economy slowed down toward the end of the Clinton administration, as well as after the disaster of 9/11, but many estimates place the 2001 tax cut as the single largest contributor to the budget deficit.
This perhaps wouldn't be so bad if outlays -- i.e., "spending" -- were reined in. But despite years of complaints about Democrats who throw around cash like Bill Bennett at the Bellagio, the Republican-controlled House, Senate and White House are now calmly writing check after check in red ink.
"In the near term, given the recession and the war, deficits are a perfectly understandable phenomenon," says Carol Wait, the president of the Committee for a Responsible Federal Budget. But planning economic strategies that will ensure deficits for five to 10 years, "when we stand to experience strains that we've never felt before with the retirement of the baby boom generation, that poses a very real concern."
Ahh ... the marvelous diversity of US politics ... one can move (with a straight face) from deficit hawk to free spender and back again ... depending on whose pockets are getting lined.
We need to STOP pointing fingers and blaming! We need to see that this spending stops, however we can do it. I don't care if your an Independent, Republican, Democrat or Libertarian. The whole point is, WE CANNOT SUSTAIN THIS SPENDING. I am not supporting any of the government beaurucrats past or present. Regardless, cuts have to be done, to the bone, and they will (or would be) really really be painful. But I can't seem to convince anyone I call or write in the government to listen. Does anyone else not see how obvious this is?
It is a frightful message. Peterson describes a "$53 trillion hole" in America's fiscal condition--but the claim assumes numerous artful fallacies. His most blatant distortion is lumping Social Security, which is self-funded and sound, with other entitlements like Medicare and Medicaid. Those programs do face financial crisis--not because the elderly and poor are greedily gaming the system but because the medical-industrial complex has the profit incentive to drive healthcare costs higher and higher. Healthcare reform can solve the financing problem only if it imposes cost controls on private players like the insurance and pharmaceutical industries.
there are alternative ways to solve the financial problems facing the government. A true progressive income tax is a start. Spending smarter based on the stimulative effect to the economy is another.
The Coming Deficit Disaster
Search Tags
World News & Politics