I loved a tweet that Jon Henke sent out last night during the Obama health care press conference. It had me laughing – “Shorter Obama: you’re either with us or against us”.
In reality the press conference was the retelling of the same old nonsense. We’re going to expand the insurance system, require everyone be taken, no pre-existing conditions, no dropping you or denial of service. We’ll pay for it by finding some savings in waste, fraud and abuse, do health care delivery better than anyone else has ever done it, tax the rich and do it all – every bit of it – cheaper than it’s being done now, because we’re the government and we’re the experts in efficiency.
Tell me that wasn’t the crux of the presser? Anyone left wondering why the majority of Americans are skeptical?
And of course we had the usual canards out there. The claim that preventive medicine is cheaper than medicine as it is being practiced now. Take a moment to read this post by a doctor who lays out the con in minute detail. Here’s another view. Here’s a fact no one seems willing to deal with – the vast majority of all health care costs come in the last 6 months of life. No one has beaten death yet. Ergo that fact isn’t going to change unless the entity with the money refuses to pay up. So while preventive care may extend life, the cost of preventive care is more expensive and the end result remains the same.
As for paying for it, the whole appeal, of course, was to give the allusion to the middle class that he and the Dems were all for soaking the rich to cover the cost, even talking about how taxing millionaires met his “principle” on that.
But as Mickey Kaus points out, you have to listen carefully:
I don’t want that final one-third of the cost of health care to be completely shouldered on the backs of middle-class families who are already struggling in a difficult economy. And so if I see a proposal that is primarily funded through taxing middle-class families, I’m going to be opposed to that …
Kaus points out that those two words, in “Wash-speak” mean he’s open to a middle-class tax to pay for the “new” and “improved” health care (49% isn’t “primarily”, right?).
And then there’s the dawning understanding around much of the country that this isn’t about reforming health insurance at all (something that might be appealing to most). It is about a fundamental change in how health care is delivered. As the Republicans have begun saying, it is “experimenting” with your health care.
Can I guarantee that there are going to be no changes in the health-care delivery system? No. The whole point of this is to try to encourage changes that work for the American people and make them healthier. And the government already is making some of these decisions. More importantly, insurance companies right now are making those decisions. And part of what we want to do is to make sure that those decisions are being made by doctors and medical experts based on evidence, based on what works. Because that’s not how it’s working right now. That’s not–that’s not how it’s working right now.
Yes the government is already making some of those decisions. And the unfunded liabilities of the government system threaten to bankrupt us.
But the point remains that peppered all through the statement and answers was the phrase “health care delivery”. That is one of the things driving down the approval ratings on the legislation. Its one thing to say, “hey we’re going to eliminate pre-existing conditions, portability issues and denial of service while making sure everyone has insurance”. It is an entirely different thing to say “we’re going to tinker with and change the way your health care is delivered”.
Now suddenly the government is in territory few want it in. And that’s the overreach that Obama and the Democrats have committed that is driving the health care legislation approval numbers down. Which gets us into the politics of this.
Obama said “this isn’t about me”. But in fact it is all about him and maintaining his credibility. But his problem, as usual, is he’s outsourced his signature agenda item to Congress. Peter Wehner discusses the result:
On virtually every important issue — from the stimulus package, to cap-and-trade, to health care, to taxes, and more — Obama is ceding the agenda to the barons on Capitol Hill. And they will lead him over a cliff.
Why this is taking place is hard to know. It may be that Obama and Company are over-learning the lessons of the Clinton and Carter years, when relations with Democrats on the Hill were strained. It may be that Obama doesn’t like to immerse himself in the nitty-gritty of policy and is more comfortable deferring to those who do. It may be that the liberals on the Hill actually reflect what Obama himself — whose record as a legislator was, after all, markedly liberal — favors. It may be that Obama’s lack of experience is now showing through. Or it might be a combination of all four.
Regardless of the cause, the result will be damaging, and maybe even debilitating, to the Obama administration. All the campaign’s promises — about practicing a new brand of politics, finding middle ground, embodying hope and change — seem so old, so dated, and so cynical. Obama is turning out to be Salesman-in-Chief. But what he’s trying to peddle — an unusually liberal agenda and legislation that ranges from ineffective to downright harmful and reflects the desires of leading Congressional Democrats rather than the needs of the country — ain’t selling.
No, it’s not, thus the reason for the presser. As I pointed out yesterday, it is obvious at points he has no idea what is or isn’t in the bill. But what he does have a firm grasp on are his talking points, even if, as the days and weeks go by, they’re shot away or, at best, left hanging tattered and limp.
Speaking of politics, I love the attempt to take on the Republicans as the bad guys (one of the main Democratic talking points for days has been that the Republicans have brought no alternative to the table) and then this:
So, for example, in the HELP committee in the Senate, 160 Republican amendments were adopted into that bill, because they’ve got good ideas to contribute.
I’m not noting this with particular approval, I’m simply noting how this gives lie to the talking point.
To conclude, for anyone who has looked into the issue and followed the debate, such that is has been, Obama’s performance was anything but impressive. It was a mix of tired talking points and a con job – careful rhetoric that implied one thing while really saying something else (the middle-class tax increase being a perfect example).
But that doesn’t mean that some form of health care legislation won’t pass. I think, unfortunately, it will. And that is all about him and politics and he knows it. So do the Democrats. Clinton, Reagan, and GW Bush all passed their signature legislation before the first August recess in their first term. That isn’t going to happen in Barack Obama’s case. But he and the Democrats know that something they can call health care reform must pass or, as Obama is reported to have said, it will destroy his presidency.
To our eternal sorrow the fact that he’s right means the Democrats will do whatever is necessary to pass something to maintain his viability.
Does it bother you that a president who is out pushing like hell to pass a bill that will fundamentally change the way we receive health care, and apparently most now believe that change will be negative, apparently isn’t familiar with what he’s pushing?
With the public’s trust in his handling of health care tanking (50%-44% of Americans disapprove), the White House has launched a new phase of its strategy designed to pass Obamacare: all Obama, all the time. As part of that effort, Obama hosted a conference call with leftist bloggers urging them to pressure Congress to pass his health plan as soon as possible.
During the call, a blogger from Maine said he kept running into an Investors Business Daily article that claimed Section 102 of the House health legislation would outlaw private insurance. He asked: “Is this true? Will people be able to keep their insurance and will insurers be able to write new policies even though H.R. 3200 is passed?” President Obama replied: “You know, I have to say that I am not familiar with the provision you are talking about.”
It’s only a question that’s been in the news for a week after it was raised in an Investors Business Daily editorial. That’s the entire reason the blogger brought it up. Salesmanship 101 – know your product. He’s been so busy flapping his jaws about how we have to pass this now that he hasn’t even taken the time to understand what “this” is.
IBD said the provision would, in effect, outlaw private insurance.
The Heritage Foundation did a little digging into this provision to figure out the real impact it will have. Here’s what they have to say:
[T]he House bill does not outright outlaw private individual health insurance, but it does effectively regulate it out of existence. The House bill does allow private insurance to be sold, but only “Exchange-participating health benefits plans.” In order to qualify as an “Exchange-participating health benefits plan,” all health insurance plans must conform to a slew of new regulations, including community rating and guaranteed issue. These will all send the cost of private individual health insurance skyrocketing. Furthermore, all these new regulations would not apply just to individual insurance plans, but to all insurance plans. So the House bill will also drive up the cost of your existing employer coverage as well. Until, of course, it becomes so expensive that your company makes the perfectly economical decision to dump you into the government plan.
President Obama may not care to study how many people will lose their current health insurance if his plan becomes law, but like most Americans, we do. That is why we partnered with the Lewin Group to study how many Americans would be forced into the government “option” under the House health plan. Here is what we found:
* Approximately 103 million people would be covered under the new public plan and, as a consequence, about 83.4 million people would lose their private insurance. This would represent a 48.4 percent reduction in the number of people with private coverage.
* About 88.1 million workers would see their current private, employer-sponsored health plan go away and would be shifted to the public plan.
* Yearly premiums for the typical American with private coverage could go up by as much as $460 per privately-insured person, as a result of increased cost-shifting stemming from a public plan modeled on Medicare.
So it ends up not killing the private insurance business outright with a bullet through the brain, but instead, by slow strangulation. Same effect, but it will just take much longer. Legislate rules and requirements which will up the cost of private insurance to the point that the economic incentive is to dump it in favor of the cheaper public option.
Like your plan? Like your doctor?
But the man who promised you could keep both couldn’t be bothered to become “familiar” with this particular “provision”.
Joseph C Phillips writes an excellent post at Big Hollywood addressing the health care issue (it’s a comparison between Canada’s system and ours which goes beyond just the obvious differences). In it, he gets to the moral essence of what those who want the type of reform Democrats are promising are really asking for. It is, as you’ll see, a damning review:
I must remember to share this article with my friend Bryan. Bryan is a cancer survivor. I have had friends that have lost their battles with cancer so his continued presence on this earth is a great joy to me and a fact of which I am sure he is also no doubt ecstatic. Bryan is particularly interested in the current state of health care costs because his insurance paid for what he terms a “measly portion” of his treatment- he is currently burdened with the cost of what his insurance did not cover. He simply can’t afford the astronomical cost. His complaint is echoed by many clamoring for nationalized healthcare. What remains unclear is under what moral principle one man can demand that others pay for his healthcare and whether any policy not firmly grounded in a moral truth can be just.
Bryan’s story perfectly illustrates the truth that the rising cost of healthcare has coincided with the rising quality of healthcare. It is true that not too long ago he would have paid considerably less for his cancer treatment. The bad news is that he would not have been around long enough to spend his savings. New drugs and new technologies lengthened his life as it they have for hundreds of thousands of others. Progress comes with a price tag.
Bryan was not denied care. In fact no one in America is denied healthcare. He had insurance and he has an income with which to pay what the insurance didn’t cover. The fact is– he would much rather spend his money on something else other than hospital bills reaching into the thousands of dollars. What better solution than a system where cancer treatment is paid for by someone else? He may be interested to learn that the U.S. ranks first in the world in cancer survivor rates and that breast cancer survivors in Canada have filed a class action suit against several hospitals that forced them to wait 12 weeks for radiation therapy. Obviously neither Bryan nor other national healthcare advocates want to wait in lines or have others decide if they are to live or die. What they want is someone else to foot the bill even if children receiving a public education must suffer.
Those three emphasized lines are the crux of the battle. On one side, you have people who want the care but want someone else to pay for it. They’d like to call that “fairness” because they can’t afford (or don’t want to pay) the cost of the care necessary to save their lives. On the other hand, we have costly treatments being developed that save the lives of people who previously wouldn’t survive the disease. Those who develop and administer those treatments want to be paid what they’re worth. That is the incentive that drives further research and development of advanced treatments.
How, morally, do you demand others pay for your health care problems? We’d all scream and holler if we were required to help pay for our neighbor’s roof if it was damaged in a storm. Through no real fault of his own, his roof was damaged. And insurance only paid a portion of it. Would we accept the idea the government has a moral right to take our money to pay for his roof?
Of course not. We might help him voluntarily or we might not, figuring it was his responsibility to plan and save for such an eventuality. But we’d certainly never accept the premise that government had any moral right to demand we pay for our neighbor’s roof. Yet with health care, that premise remains front and center.
Phillips hits the nail right on the head when he notes his friend Bryan would “much rather spend his money on something else other than hospital bills reaching into the thousands of dollars.” Of course he would. So would we all. But that still begs the question of what moral right we have to obligate others to that duty? Notice I didn’t ask how we do it “legally”. As Nazi Germany and the Soviet Union should have taught us, the immoral can be made legal at the stroke of a pen.
The Democrat’s solution, of course, is to declare what Bryan wants to be a “right”. What it would really be is a legal privilege granted and enforced by the coercive power of the state. Morally, it would be no different than declaring that every citizen has a “right” to a sound roof and legally making it the obligation of every other citizen to pay to ensure that “right” is fulfilled.
We wouldn’t stand for that. Yet we’re watching that exact immoral premise being approvingly considered by a portion of the population which has no problem with the coercive obligation of their fellow citizens to their selfish wants in the name of “fairness”.
If health care is so darn terrible here, how does we manage rankings like this?
[T]he World Health Organization ranked the United States No. 1 out of 191 countries for being responsive to patients’ needs, including providing timely treatments and a choice of doctors.
Isn’t that the essence of good care?
Oh, but it is expensive and not everyone has insurance.
Well they have a plan to take care of the latter problem. Get it or government will fine you and assign you:
When you file your taxes, if you can’t prove to the IRS that you are in a qualified plan, you’ll be fined thousands of dollars — as much as the average cost of a health plan for your family size — and then automatically enrolled in a randomly selected plan (House bill, p. 167-168).
And of course the way to make it less expensive is to use less of it, right?
It’s one thing to require that people getting government assistance tolerate managed care, but the legislation limits you to a managed-care plan even if you and your employer are footing the bill (Senate bill, p. 57-58). The goal is to reduce everyone’s consumption of health care and to ensure that people have the same health-care experience, regardless of ability to pay.
Paying for all of this will be a breeze:
The price tag for this legislation is a whopping $1.04 trillion to $1.6 trillion (Congressional Budget Office estimates). Half of the tab comes from tax increases on individuals earning $280,000 or more, and these new taxes will double in 2012 unless savings exceed predicted costs (House bill, p. 199). The rest of the cost is paid for by cutting seniors’ health benefits under Medicare.
There’s plenty of waste in Medicare, but the Congressional Budget Office estimates only 1 percent of the savings under the legislation will be from curbing waste, fraud and abuse. That means the rest will likely come from reducing what patients get.
You did get that line in there where it says “the rest of the cost is paid for by cutting senior’s health care benefits?” And, as Dale pointed out, they have a wonderful idea of how to manage that:
One troubling provision of the House bill compels seniors to submit to a counseling session every five years (and more often if they become sick or go into a nursing home) about alternatives for end-of-life care (House bill, p. 425-430). The sessions cover highly sensitive matters such as whether to receive antibiotics and “the use of artificially administered nutrition and hydration.”
This mandate invites abuse, and seniors could easily be pushed to refuse care.
Because they’re usually in such robust physical and mental health at the time such “counseling” would take place that they’re sure to stick up for themselves and further treatment.
No matter how tight the cost though, you can count on layer upon layer of bureaucracy finding the money necessary to exist and flourish:
Shockingly, only a portion of the money accumulated from slashing senior benefits and raising taxes goes to pay for covering the uninsured. The Senate bill allocates huge sums to “community transformation grants,” home visits for expectant families, services for migrant workers — and the creation of dozens of new government councils, programs and advisory boards slipped into the last 500 pages.
Is it any wonder Obama wants all this passed quickly? It’s the jobs portion of his “stimulus” plan. Oh, wait, that can’t be right because none of this begins to take effect until 2013 (except the taxes, which begin in 2011), one year safely on the other side of the next presidential election. In fact it won’t be fully in effect until 2018.
So what’s the rush again?
This is a legislative turkey that needs badly to be led to the chopping block. We don’t have the problem we’re being told we have, nor is there such wide-spread dissatisfaction with what we have that the government must step in.
The most recent ABC News/Washington Post poll (June 21) finds that 83 percent of Americans are very satisfied or somewhat satisfied with the quality of their health care, and 81 percent are similarly satisfied with their health insurance.
There is absolutely no rush for any of this except politically. It comes under the heading of “using political capital while you have it” and right now Obama has it. The problem, and the reason for the rush, is there a hole in the political capital bag and the assets are draining out much more quickly than they thought they would.
I’m all for having them hold the bag and watch it empty without giving them the opportunity to wreck a system that for the vast majority of us seems to be working pretty well. If they want to do anything, they can remove the insurance mandates, pass the legislation to allow a real free insurance exchange to establish itself and get the hell out of the way.
At least not the Medicaid portion. The reason, of course, is states are on the hook to pay about 43% of Medicaid costs. Under the pending legislation, and depending on which plan you look at (House or Senate), Medicaid would expand 11% to 20%.
As you might imagine, that would impose a huge new mandate on the states already struggling with huge budget deficits and revenue shortfalls.
State governors, in Biloxi MS for the National Governors Association meeting, expressed bi-partisan disapproval of the plans.
“I think the governors would all agree that what we don’t want from the federal government is unfunded mandates,” said Gov. Jim Douglas of Vermont, a Republican, the group’s incoming chairman. “We can’t have the Congress impose requirements that we are forced to absorb beyond our capacity to do so.”
The House plan would pay for all of the costs of new enrollments and expand Medicaid the least (11%). The Senate version, however, would expand it the most (up to 20%) and would only pay full costs for 5 years. And the Senate’s answer to the states about how to fund the mandate?
Go into debt, of course:
One of the proposals being considered by the Finance Committee would encourage states to issue bonds to cover the costs of expanding Medicaid. Governors in both parties revolted, trumpeting their opposition in a conference call last week with Senator Max Baucus, the Montana Democrat who leads the committee.
The point is that not all costs are being surfaced when the total cost of this bill at the federal level is all that is cited. The House bill, for instance, would cost an estimated $438 billion over 10 years. I want to emphasize the word “estimated” and remind readers that there has never been an estimated cost I’m aware of that has come in on or under the projection.
Of course the Senate version, with expanded coverage, would cost more and shift the cost to states in 5 years. So you’ll not only be paying for this monstrosity at a federal level, but you can count on being tapped at a state level as well.
Except when locked in a battle in which it is trying to fool the public into accepting a 1 trillion plus spending program as a “money saver”. Then, apparently, it is quite all right to delay the scheduled release of its revised budget numbers (based on known economic indicators):
The White House is being forced to acknowledge the wide gap between its once-upbeat predictions about the economy and today’s bleak landscape.
The administration’s annual midsummer budget update is sure to show higher deficits and unemployment and slower growth than projected in President Barack Obama’s budget in February and update in May, and that could complicate his efforts to get his signature health care and global-warming proposals through Congress.
The release of the update – usually scheduled for mid-July – has been put off until the middle of next month, giving rise to speculation the White House is delaying the bad news at least until Congress leaves town on its August 7 summer recess.
And, of course, what it hopes to have in its pocket at that time is a health care reform bill passed by Congress. So why delay the budget update? Well, it isn’t going to be kind to the administration’s rosy speculation concerning deficit and growth, that’s why:
“Instead of a dream, this routine report could be a nightmare,” Tony Fratto, a former Treasury Department official and White House spokesman under President George W. Bush, said of the delayed budget update. “There are some things that can’t be escaped.”
The administration earlier this year predicted that unemployment would peak at about 9 percent without a big stimulus package and 8 percent with one. Congress did pass a $787 billion two-year stimulus measure, yet unemployment soared to 9.5 percent in June and appears headed for double digits.
Obama’s current forecast anticipates 3.2 percent growth next year, then 4 percent or higher growth from 2011 to 2013. Private forecasts are less optimistic, especially for next year.
Any downward revision in growth or revenue projections would mean that budget deficits would be far higher than the administration is now suggesting.
And then there’s the debt problem, which is headed to new and dizzying heights:
The nation’s debt – the total of accumulated annual budget deficits – now stands at $11.6 trillion. In the scheme of things, that’s more important than talking about the “deficit,” which only looks at a one-year slice of bookkeeping and totally ignores previous indebtedness that is still outstanding.
Even so, the administration has projected that the annual deficit for the current budget year will hit $1.84 trillion, four times the size of last year’s deficit of $455 billion. Private forecasters suggest that shortfall may actually top $2 trillion.
The administration has projected that the annual deficit for the current budget year will hit $1.84 trillion, four times the size of last year’s deficit of $455 billion. Private forecasters suggest that shortfall may top $2 trillion.
If a higher deficit and lower growth numbers are not part of the administration’s budget update, that will lead to charges that the White House is manipulating its figures to offer too rosy an outlook – the same criticism leveled at previous administrations.
Of course, if it does include the higher deficit and lower growth numbers, as it should, it would also most likely kill the costly push toward health care “reform”. And that is why it is being delayed.
How do I say that with such assurance? Because this is a routine and easily produced report despite what the administration is trying to claim.
White House officials say it is now expected in mid-August. They blame the delay on the fact that this is a transition year between presidencies and note that Obama didn’t release his full budget until early May – instead of the first week in February, when he put out just an outline.
Still, the update mainly involves plugging in changes in economic indicators, not revising program-by-program details. And indicators such as unemployment and gross domestic product changes have been public knowledge for some time.
Consider this: if those budget numbers looked good, would the White House postpone revealing them? Obama could use all the good news he can get at the moment, especially with two big-spending bills stalling in Congress.
Ironically, the White House budget director was making the rounds claiming those trying to delay the vote on health care were trying to kill it, all the while the administration is delaying the budget report with the purpose of depriving law makers the information they need in their consideration of the cost of such legislation.
Meanwhile, we are apparently on course to eat our way into prosperity as the Recovery Act spends your hard earned dollars on … cheese.
We now have the White House Budget Director weighing in on health care reform legislation:
ORSZAG: We have to remember: there are some who are advocating delay simply because they don’t have anything to put on the table. The typical Washington bureaucratic game of — ‘if you don’t have a better alternative, just delay in the hope that that kills something’ is partly what’s playing out here.
Of course what Peter Orszag seems not to understand is that most of those trying to delay (and eventually kill) the legislative monstrosity called “health care reform” are quite happy with putting nothing on the table as they don’t buy into the manufactured crisis being whipped up by the administration.
Nothing of earth shaking consequence is going to happen in the health care world if this bill isn’t passed before August. In fact, most likely that statement is true of next August and the following one as well.
What you really hear Orszag subtly acknowledging is the longer this goes on, the more people are going to become aware of what is in the bill and object to the cost and intrusion. This isn’t about “better alternatives” or their lack thereof. This is about the administration’s fear that delay means defeat because of what’s in the bill. Hence the attempt to rush something through before it can be read and understood and certainly before members of Congress have to go home and face their angry and concerned constituents.
Almost all adults figure out early in life how to deal with pushy salesmen. But there’s a small supply of gullible fools that keep alive the classic sales scam: “You must act now to get this deal!”
Any reasonably savvy adult knows how to deal with such a tactic. You pull back and don’t allow the salesman to bully you into doing something prematurely. The urgency he’s injecting into the situation is purely artificial, and it’s to his benefit for it to be there, not yours.
Obama’s continues to show contempt for the American people by using this tactic. It was slightly plausible for passing the bloated, pork-laden stimulus bill, though many of us saw through it. It’s been a common theme for the cap-and-trade legislation, with presumed incipient global warming as the urgency creator. Again, the excuse is slightly plausible but is far from established if you look at the other side of the debate.
But now he’s ready to drop even the facade of plausibility. Witness his attempted sale of the healthcare bill:
“This is what the debate in Congress is all about: whether we’ll keep talking and tinkering and letting this problem fester as more families and businesses go under and more Americans lose their coverage,” Obama said Saturday in his weekly radio and Internet address. “Or whether we’ll seize this opportunity — one we might not have again for generations [emphasis mine] — and finally pass health insurance reform this year, in 2009.”
Translation: Act now! You may never be offered this deal again! You’ll be sorry if you don’t act right away!
This is nonsense on toast. If his health insurance reform is such a good idea, why won’t it continue to be a good idea after more discussion on it? Why can’t it pass next year after Congress has actually had a chance to read the thousand page bill? Why the rush?
Because this salesman senses that he’s just about to lose his potential customers. His approval figures are dropping, Congressional members are being barraged with email and being visited by protesters, and the decrepitude, insolvency, and dysfunctionality of the healthcare systems already put in place by the government become more obvious every month.
Obama is probably right. If his more-or-less socialist healthcare reform doesn’t pass this year, it will probably be shelved for at least ten years. But that’s not because it’s a once-in-a-lifetime special deal. It’s because it’s a bad idea. And the very fact that he tries to sell it the way he does should tip off all but the most gullible to realize it.
It goes to Steve Chapman in his discussion of the government’s health care reform proposals and what they promise:
But efficiency is to government programs what barbecue sauce is to an ice-cream sundae: not a typical component.
Chapman also discusses the illusion of “competition” the reformers are pushing while outlining what real competition in the insurance field might actually look like (and, unsurprisingly it requires less, not more, government).
Make sure you RTWT.
I‘m not sure how often everyone has to be told, but here’s the warning again, just as Democrats attempt to pile another trillion plus dollars in federal health care spending (and debt). From the CBO Director’s blog:
Under current law, the federal budget is on an unsustainable path, because federal debt will continue to grow much faster than the economy over the long run. Although great uncertainty surrounds long-term fiscal projections, rising costs for health care and the aging of the population will cause federal spending to increase rapidly under any plausible scenario for current law. Unless revenues increase just as rapidly, the rise in spending will produce growing budget deficits. Large budget deficits would reduce national saving, leading to more borrowing from abroad and less domestic investment, which in turn would depress economic growth in the United States. Over time, accumulating debt would cause substantial harm to the economy.
I’m not sure how it can be said any more clearly and more succinctly.
The choices, as laid out in the paragraph above are fairly simple – cut federal spending dramatically or raise taxes (revenues) dramatically to meet the spending or your going to do “substantial harm to the economy”. Of course we also know that raising taxes dramatically would have the same effect. That leaves one option and, as is clear with the health care reform proposals, that’s nowhere near the table, is it?
Yet that’s the formula:
Keeping deficits and debt from reaching these levels would require increasing revenues significantly as a share of GDP, decreasing projected spending sharply, or some combination of the two.
CBO offers the following graph to illustrate the point of letting the status quo remain in place. Note that the second line coming off the actual/projected line – that’s the “extended baseline scenario” where absolutely nothing is changed and the budget, as projected, is executed. Disregard the first line for the moment.
What is important is to understand this:
The current recession and policy responses have little effect on long-term projections of noninterest spending and revenues. But CBO estimates that in fiscal years 2009 and 2010, the federal government will record its largest budget deficits as a share of GDP since shortly after World War II. As a result of those deficits, federal debt held by the public will soar from 41 percent of GDP at the end of fiscal year 2008 to 60 percent at the end of fiscal year 2010. This higher debt results in permanently higher spending to pay interest on that debt. Federal interest payments already amount to more than 1 percent of GDP; unless current law changes, that share would rise to 2.5 percent by 2020.
Now you’ve heard that, in various forms for years. But what does that mean to you personally – how does one put that in terms that mean anything to a taxpayer?
Well Jim Glass at scrivner.net has done that for us:
The national debt incurs interest that is paid with taxes. The interest rate on US debt is projected be about 6% annually in the long run, according to the Social Security Administration’s actuaries and other such governmental budget projectors. Six percent of one trillion dollars is $60 billion.
There are 80 million payers of income tax in the US. (If that seems low for a population of 300 million remember that 47% of all “tax units”, 70 million potential taxpayers, pay no income tax or receive refundable tax credits from the government.)
Now $60 billion divided by 80 million taxpayers equals $750 per taxpayer — so each trillion dollars of the national debt costs the average taxpayer $750 per year, every year that the debt is carried, forever.
So for every trillion in debt the federal government puts us, we owe $750 per tax payer in interest alone.
Jim extends his example to what the chart above depicts:
As of the end of last year the government’s outstanding explicit and implicit debt was $64 trillion. Add another year’s interest on that, plus this year’s $1.8 trillion deficit, and we will be well over $66 trillion at the end of this year. Which creates an explicit and implict annual interest liability to just carry the debt of more than $49,000 per taxpayer.
Yet we have Joe Biden claiming we have to spend money to avoid bankruptcy – and there are people out there who believe him. As Jim points out:
As of today most of that is implicit (for unfunded Medicare liabilities, etc.) but every year from now on (as more seniors retire and start collecting Medicare, etc) more of the debt will shift from being implicit to explicit, requiring cash tax collections to pay for it.
And the same entity which has put the country in this shape running a health care system, now wants the rest of it with the stated goal of cutting costs.
If you’re gullible enough, given the facts above, to fall for that, I have to question your critical thinking abilities. In fact, you might want to consider the chart above again and pay attention to the top line coming off the actual/projected line – that’s likely what our debt will look like if you hand over health care to the federal government.
It is very close to fish or cut bait time for the people of the US – we have got to realize, very quickly, that in fact, we are on the verge of bankruptcy and what that buffoon Biden says is just abject, unthinking nonsense.
Either cut government spending – drastically – or go under. Those are your choices.