We've now seen the President's FY2012 proposed budget and heard the Republican's misguided response. It's thoroughly depressing. Why? Because the political blather from the Republicans and Democrats who will be making fiscal decisions on next year's budget (and this year's, since the Congress ineptly hasn't even passed a budget for this fiscal year that began Oct 1st, 2010) have vacuously promised to "reduce the deficit" without continuing to deal with the simple fact there's 9% unemployment or taking any consequential action on the main causes of the long-term (structural) deficit – the relentless growth of entitlements like Social Security, Medicare, Medicaid and of defense spending.
How can they get away with it? Because US citizens are too unknowing (a polite way of saying too dim) about what really ails us fiscally speaking. We may say we want the government to cut expenditures and to get "more efficient," but we really don't know what benefit this will produce or why it matters at all – except facetiously expecting our taxes to be reduced. We seem to think that cutting foreign aid or community development grants (which together account for about a tenth of 1% of total spending) will somehow make a momentous difference for our Federal deficit. It won't.
Realistically, the US public doesn't want the Federal deficit reduced. We want to continue enjoying the personal advantages of receiving our Social Security, our Medicare and other deficit-financed benefits without worrying about the tomorrows, especially if those tomorrows involve making any sort of financial sacrifice personally or collectively. In this sense, we're too selfish to care about the future. We want our government's largesse to continue, but don't want to pay for much of it. We talk about the future meaning something, but we don't act that way at all. We want our government to continue living beyond its means, and instead let our kids pay for our deficits.
As usual, and with the public's encouragement, politicians are aiming their fiscal guns at the wrong targets. The only way to meaningfully reduce our long-term deficit is to significantly cut mandated entitlements spending and security-defense spending that the military-industrial complex has all too successfully made most of us believe is "required" spending (which together account for an astonishing 80% of Federal government expenditures; and over 100% of government revenues). Security-defense spending has roughly doubled in real terms since 2001, to over $870 billion in FY2011. Has any politician walked the political plank and said we need to meaningfully reduce mandated spending? No; because they see no benefit in making such truthful statements; they want to stay in office. They only feel safe talking about cutting really minor amounts of discretionary spending that will have no effect in remedying our long-term structural deficit or focusing on ancillary issues like public pensions (a state or local issue, not a federal one).
As a consequence we, the allegedly strongest nation on Earth, will continue to pass our fiscal tin cup around the world's capital markets in search of investors to finance our ever-increasing deficits. The Chinese and others have been obliging in the recent past. Will they in the future? Hard to say, but just like Greece and Ireland, sooner or later such investors will demand more return (higher interest rates on US bonds) from a nation that does not have its longer-term fiscal house in order. When they do, overdue painful changes will be required.
Excellent points which leads to an obvious solution. We need a Kaiser type HMO to provide Medicare coverage. Heck, actually give the job to Kaiser. We could even phase it in over 10 years but simply put, when you retire and if you want the government to take over your healthcare, you must join Kaiser. Even Medicare, as a single payer system is rife with abuse and fraud and costs us too much. For example, many doctors legally “milk the system” by charging for an office visit just to have a nurse practitioner administer a flu vaccine injection. For a patient in retirement, Medicare would pay a reduced rate for the office visit but they would pay none-the less. On the other hand, if that patient where a Kaiser patient, the injection would be free and administered for free since it would prevent a far most costly medical event should the patient come down with the flu.
ReplyDeleteAnd from today’s news: the Feds just rounded up more than 100 doctors, nurses and physical therapist for fraudulently milking the system – an occurrence that could not happen if those professional where instead employees of Kaiser. Those 100 Medicare abusers are just the tip of the iceberg. Medicare fraud is estimated to cost you and me between $60 and $90 billion each year! The above bust required 700 law enforcement agents across the country and I am sure the pending court and incarceration costs for these criminals will be astronomical as well. All of this can be avoided.
Here are the main pieces of President's budget request for 2010 ($3.55 trillion)
ReplyDeleteBillion $
695.00 Social Security
663.00 Department of Defense (including Overseas Contingency Operations)
571.00 Other mandatory programs
453.00 Medicare
290.00 Medicaid
164.00 Interest on National Debt
78.70 Department of Health and Human Services
72.50 Department of Transportation
52.50 Department of Veterans Affairs
51.70 Department of State and Other International Programs
47.50 Department of Housing and Urban Development
46.70 Department of Education
42.70 Department of Homeland Security
26.30 Department of Energy
26.00 Department of Agriculture
23.90 Department of Justice
If you combine Medicare and Medicaid, it jumps to the largest expenditure we have: $743 Billion!