February 16, 2009

Panic stations!

The American public needs to have this put in perspective - the national debt obligations of the United States government EXCEED the GDP of the ENTIRE WORLD! This is not all Obama's fault of course, he can largely only be blamed for pushing the latest $0.8 trillion. That's T for Trillion and as in TROUBLE. His blame in the build-up would be more substantial if he actually voted while in the Senate more often, but he was complicit nonetheless.

The real blame lies with successive Congresses, Senates and Presidents since the FDR era who have either willingly followed or not stomached the fight with Keynsian economics that has brought America to the precipice. Now, panic is not a good idea, and I remain positive on the outlook for America. This liability has yet to be realized. Truth be told there's still some time to turn around before driving America off the cliff. But that time for applying the brakes is quickly running out. Instead Obama & the Democrats (who I truly wish were instead a 60's Motown act instead) have chosen not to brake put rather put the pedal to the metal.

This is why 2010 and 2012 are CRITICAL to us as conservatives, libertarians, Republicans, social conservatives, fiscal conservatives and anyone else interested in still having a country in 2040. We've got to put aside any grievances we have with anyone who shares that concern and is willing to listen to the implications of failing to act. This is why the Turncoat 3 need to be banished. It has very little to do with ideological control of the Republican party and everything to do with saving the economy and the country from an unsurvivable cliff dive.
"As bad as 2008 was, the $455 billion budget deficit on a cash basis and the $5.1 trillion federal budget deficit on a GAAP accounting basis does not reflect any significant money [from] the financial bailout or Troubled Asset Relief Program, or TARP, which was approved after the close of the fiscal year," economist John Williams, who publishes the Internet website Shadow Government Statistics, told WND.

"The Congressional Budget Office estimated the fiscal year 2009 budget deficit as being $1.2 trillion on a cash basis and that was before taking into consideration the full costs of the war in Iraq and Afghanistan, before the cost of the Obama nearly $800 billion economic stimulus plan, or the cost of the second $350 billion in TARP funds, as well as all current bailouts being contemplated by the U.S. Treasury and Federal Reserve," he said.

For a more visual interpretation of the real problem, watch this 60 Minutes piece from 2007:

Yes, where were 60 Minutes during the run-up to the 2008 election when Obama was saying ha hatchet wasn't needed, just a scalpel. It was chic to point out the problem under Bush, but where are they now with the stinkulus bill? All I hear from CBS is crickets chirping. Maybe I'm wrong. If you know of any concerns they've raised since October 2008, please let me know.

Here's the truth. Medicare, Medicaid have to go. They are a federal version of the problems General Motors - punting problems down the road by promising more to unions when the impact would be felt decades later, In the case of the US government the 'unions' are the voters. These programs are the equivalent of an anvil around the neck of a drowing man.

Want proof? I hope you do. This is from the Government Accountability Office - it was published last June (2008):

GAO was asked to provide its views on the long-term fiscal outlook. This statement addresses four key points: (1) the federal government's long-term fiscal outlook is a matter of utmost concern; (2) this challenge is driven primarily by health care cost growth; (3) reform of health care is essential but other areas also need attention which requires a multipronged solution; and (4) the federal government faces increasing pressures yet a shrinking window of opportunity for phasing in needed adjustments. GAO's simulations of the federal government's long-term fiscal outlook were updated with the Trustees 2008 intermediate projections and continue to indicate that the long-term outlook is unsustainable. This update combined with GAO's analysis of the fiscal outlook of state and local governments demonstrates that the fiscal challenges facing all levels of government are linked and should be considered in a strategic and integrated manner. Since 1992, GAO has published long-term fiscal simulations of what might happen to federal deficits and debt levels under varying policy assumptions. GAO developed its long-term model in response to a bipartisan request from Members of Congress who were concerned about the longterm effects of fiscal policy. Information about GAO's model and assumptions can be found at http://www.gao.gov/special.pubs/longterm/.

Long-term fiscal simulations by GAO, the Congressional Budget Office (CBO), and others all show that despite a decline in the federal government's unified budget deficit between fiscal years 2003 and 2007, it still faces large and growing structural deficits driven primarily by rising health care costs and known demographic trends. Simply put, the federal government is on an unsustainable long-term fiscal path. Although Social Security is important because of its size, over the long term health care spending is the principal driver--Medicare and Medicaid are both large and projected to continue growing rapidly in the future. Rapidly rising health care costs are not simply a federal budget problem. Growth in health-related spending is the primary driver of the fiscal challenges facing state and local governments as well. Unsustainable growth in health care spending also threatens to erode the ability of employers to provide coverage to their workers and undercuts their ability to compete in a global marketplace. Public and private health care spending continues to rise because of several key factors: (1) increased utilization of new and existing medical technology; (2) lack of reliable comparative information on medical outcomes, quality of care, and cost; and (3) increased prevalence of risk factors such as obesity that can lead to expensive chronic conditions. Addressing health care costs and demographics--and their interaction--will be a major societal challenge. The longer action on reforming heath care and Social Security is delayed, the more painful and difficult the choices will become. The federal government faces increasing pressures yet a shrinking window of opportunity for phasing in adjustments. In fact, the oldest members of the baby-boom generation are now eligible for Social Security retirement benefits and will be eligible for Medicare benefits in less than 3 years. Additionally, in addressing this fiscal challenge it will be important to review other programs and activities on both the spending and revenue sides of the budget.

In 2 brief (and visually unreadable) paragraphs on their website, the GAO hammers the current situation as unsustainable.

Don't trust the GAO? What about this from the Congressional Budget Office in December 2008?

The rising costs of health care and health insurance pose a serious threat to the future fiscal condition of the United States. Under current policies, CBO projects that federal spending on Medicare and Medicaid will rise from about 4 percent of gross domestic product (GDP) in 2009 to nearly 6 percent in 2019 and 12 percent by 2050. Most of that increase will result from rising per capita costs, rather than from the aging of the population.

Unfortunately the CBO's focus is on increasing payroll taxes to close the gap - it doesn't really think outside the box on smarter ways to privatize the insurance and keep it affordable.

And here's Ben Bernanke, Chairman of the Federal Reserve Board, in 2007;

Federal Reserve Chairman Ben S. Bernanke warned today of a "fiscal crisis" in coming years if the government does not act soon to curb federal retirement and health care entitlement programs, picking up a theme that his predecessor, Alan Greenspan, had pursued without success at the end of his term as head of the central bank.

In prepared remarks delivered this morning to the Senate Budget Committee, Bernanke said that a dip this year in the annual federal budget deficit to $248 billion was "the calm before the storm," with ballooning entitlement payments looming over the next 20 years as the Baby Boomers retire and medical costs skyrocket. By 2030, he said, spending under current law on Social Security, Medicare and Medicaid could consume as much as 15 percent of the nation's economic output, double the current rate. Underwriting that could lead to a "vicious cycle," he said, as the nation borrows more to meet its obligations and spends increasing amounts to service that debt, leaving less for investors and consumers and slowing economic growth.

This black hole of government cost has to be addressed, and soon. The GOP has to come up with a comprehensive solution to this before 2012, and continually hammer the public on the need to fix this. It's not important for Republicans, it's important for America. The Democrats aren't going to do anything about this, so the GOP has the opportunity to own this issue and create a fix - it just has to sell itself as the solution.

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