Health Care

[Cleo's Mom 257]

You always talk to me about ignoring what the economist's say, and you are doing the same thing.

Originally Posted by pattygreen

By MICHAEL J. BOSKIN

President Barack Obama's 2011 budget lays out a stunningly expensive big-government spending agenda, mostly to be paid for years down the road. He proposes to increase capital gains, dividend, payroll, income and energy taxes. But the enormous deficits and endless accumulation of debt will eventually force growth-inhibiting income tax hikes, a national value-added tax similar to those in Europe, or severe inflation.

On average, in the first three years of the 10-year budget plan, federal spending rises by 4.4% of GDP. That's more than during President Lyndon Johnson's Great Society and Vietnam War buildup and President Ronald Reagan's defense buildup combined. In those same three years, spending on average hits the highest level in American history (25.1% of GDP), save the peak of World War II. The average deficit of $1.4 trillion (9.6% of GDP) is over three times the previous 2008 record.

Remarkably, President Obama will add more red ink in his first two years than President George W. Bush—berated by conservatives for his failure to control domestic spending and by liberals for the explosion of military spending in Iraq and Afghanistan—did in eight. In his first 15 months, Mr. Obama will raise the debt burden—the ratio of the national debt to GDP—by more than Reagan did in eight years.

Some specific proposals are laudable: permanently indexing the Alternative Minimum Tax for inflation, part of the increased R&D funding, reform of agriculture subsidies, a future freeze on one-sixth of the budget (only after it balloons for two years). But these are swamped by the huge expansion and centralization of government.

True, as he often reminds us, President Obama inherited a recession and fiscal mess. Much of the deficit is the natural and desirable result of the deep recession.

As tax revenues fall much more rapidly than income, these so-called automatic stabilizers cushioned the decline in after-tax income and helped natural business-cycle dynamics and monetary policy stabilize the economy. But Mr. Obama and Congress added hundreds of billions of dollars a year of ineffective "stimulus" spending—more accurately characterized as social engineering and pork—when far more effective, less expensive options were available.

The Obama 10-year budget—unprecedented in its spending, taxes, deficits and accumulation of debt—is by a large margin the most risky fiscal strategy in American history. In his Feb. 1 budget message, Mr. Obama said, "We cannot continue to borrow against our children's future." But that is exactly what he proposes to do.

He projects a cumulative deficit of $11.5 trillion by 2020. That brings the publicly held debt (excluding debt held inside the government, e.g., Social Security) to 77% of GDP, and the gross debt to over 100%. Presidents Reagan and George W. Bush each ended their terms at about 40%.

The deficits are so large relative to GDP that the debt/GDP ratio keeps growing and then explodes as entitlement costs accelerate in subsequent decades. So worrisome is this debt outlook that Moody's warns of a downgrade on U.S. Treasury bonds, and major global finance powers talk of ending the dollar's reign as the global reserve currency.

Ken Rogoff of Harvard and Carmen Reinhart of Maryland have studied the impact of high levels of national debt on economic growth in the U.S. and around the world in the last two centuries. In a study presented last month at the annual meeting of the American Economic Association in Atlanta, they conclude that, so long as the gross debt-GDP ratio is relatively modest, 30%-90% of GDP, the negative growth impact of higher debt is likely to be modest as well.

But as it gets to 90% of GDP, there is a dramatic slowing of economic growth by at least one percentage point a year. The likely causes are expectations of much higher taxes, uncertainty over resolution of the unsustainable deficits, and higher interest rates curtailing capital investment.

The Obama budget takes the publicly held debt to 73% and the gross debt to 103% of GDP by 2015, over this precipice. The president's economists peg long-run growth potential at 2.5% per year, implying per capita growth of 1.7%. A decline of one percentage point would cut this annual growth rate by over half. That's eventually the difference between a strong economy that can project global power and a stagnant, ossified society.

Such vast debt implies immense future tax increases. Balancing the 2015 budget would require a 43% increase in everyone's income taxes that year. It's hard to imagine a worse detriment to economic growth.

Presidents and political parties used to propose paths to a balanced budget. After almost doubling it, Mr. Obama proposes to substitute stabilizing the debt/GDP ratio, a much weaker goal.

That goal requires balancing the budget excluding interest payments, the so-called primary budget. But he never achieves this, even after five and a half years of economic growth, withdrawal from Iraq and Afghanistan, and repaid financial bailouts. The 2015 budget still calls for a primary deficit of $181 billion.

For perspective, returning 2015 spending to population growth plus inflation produces a primary surplus of $645 billion (3.3% of GDP). Mr. Obama's spending turns a short-run crisis into a medium-term debacle.

Two factors greatly compound the risk from Mr. Obama's budget plan. He is running up this debt and current and future taxes just as the baby boomers are retiring and the entitlement cost problems are growing, which will necessitate major reform. (Mr. Obama didn't get any help from his predecessors: George W. Bush's growing Medicare prescription drug benefit was not funded, and Mr. Clinton's Social Security reform was a casualty of the Monica Lewinsky scandal.) And Mr. Obama's programs increase the fraction of people getting more money back from the government than the taxes they pay almost to 50%, just as the demographics on an aging population will drive it up further. That's an unhealthy political dynamic.

Former Senate Majority Leader Howard Baker famously called Reaganomics—with its defense buildup, tax cuts and budget deficits—a "riverboat gamble." (Which, by the way, worked out well.) Mr. Obama's fiscal strategy is more akin to the voyage of the Titanic. Let's hope he changes course soon enough to prevent disaster.

Mr. Boskin is a professor of economics at Stanford University and a senior fellow at the Hoover Institution.

When you post an economist's writing it's fact, when I do, it's a 'conservative's spin'.:thumbdown:

But you keep missing the point that we tried it bush's way (the conservative, give tax cuts to the rich, way) and are living with the disasterous results.

That's why the republicans and neocon economists have no credibility when it comes to the economy.

[pattygreen 5]

And you ignored this, except to say that "he had to spend all that money to get us out of Bush's mess".

Bush Deficit vs. Obama Deficit in Pictures

President Barack Obama has repeatedly claimed that his budget would cut the deficit by half by the end of his term. But as Heritage analyst Brian Riedl has pointed out, given that Obama has already helped quadruple the deficit with his stimulus package, pledging to halve it by 2013 is hardly ambitious. The Washington Post has a great graphic which helps put President Obama’s budget deficits in context of President Bush’s.

What’s driving Obama’s unprecedented massive deficits? Spending. Riedl details:

• President Bush expanded the federal budget by a historic $700 billion through 2008. President Obama would add another $1 trillion.
  
• President Bush began a string of expensive finan­cial bailouts. President Obama is accelerating that course.
  
• President Bush created a Medicare drug entitle­ment that will cost an estimated $800 billion in its first decade. President Obama has proposed a $634 billion down payment on a new govern­ment health care fund.
  
• President Bush increased federal education spending 58 percent faster than inflation. Presi­dent Obama would double it.
  
• President Bush became the first President to spend 3 percent of GDP on federal antipoverty programs. President Obama has already in­creased this spending by 20 percent.
  
• President Bush tilted the income tax burden more toward upper-income taxpayers. President Obama would continue that trend.
  
• President Bush presided over a $2.5 trillion increase in the public debt through 2008. Setting aside 2009 (for which Presidents Bush and Obama share responsibility for an additional $2.6 trillion in public debt), President Obama’s budget would add $4.9 trillion in public debt from the beginning of 2010 through 2016.
  

UPDATE: Many Obama defenders in the comments are claiming that the numbers above do not include spending on Iraq and Afghanistan during the Bush years. They most certainly do. While Bush did fund the wars through emergency supplementals (not the regular budget process), that spending did not simply vanish. It is included in the numbers above. Also, some Obama defenders are claiming the graphic above represents biased Heritage Foundation numbers. While we stand behind the numbers we put out 100%, the numbers, and the graphic itself, above are from the Washington Post. We originally left out the link to WaPo. It has now been added.

CLARIFICATION: Of course, this Washington Post graphic does not perfectly delineate budget surpluses and deficits by administration. President Bush took office in January 2001, and therefore played a lead role in crafting the FY 2002-2008 budgets. Presidents Bush and Obama share responsibility for the FY 2009 budget deficit that overlaps their administrations, before President Obama assumes full budgetary responsibility beginning in FY 2010. Overall, President Obama’s budget would add twice as much debt as President Bush over the same number of years. ___

[Cleo's Mom 257]

Pattygreen: And you ignored this, except to say that "he had to spend all that money to get us out of Bush's mess".

Because that's true. I have offered a number of charts, graphs, etc.. and facts that show that the stimulus was needed and it worked. It added to the deficit, but it was still the right thing to do. And most economists agree with me, not you.

[pattygreen 5]

What about the graph I posted above? Bush deficits vs. Obama's deficits. That graph clearly shows that Obama is wreckless with his spending. Oh, I know you say he "had" to spend all that, but come on!, ALL that? Really, that is very, very irresponsible. His spending sprees are breaking us!

[loserbob 11]

Dont know where this is from. Clinton left office with no deficit, now we are at around 12-14 trill., Obama makes 1.75trill. which some has been paid back already. Bushs treasurey sec. was on fox yesterday(SAT), he said we needed this stimulus, the results would have been catastrophic. He said if we allowed AIG etc. to collapse we would not have recovered. Yes Bushs treasurey secretary said this.

[loserbob 11]

My apologies, I confused budget deficit with national debt.But I just looked it up. When Clinton left office there was a $350bill. dollar surplus, a known conservative sight said it was somewhere around $230bill.Bush left with 1.85trill. Budget deficit. The question is how much did Bush contribute to national debt? When Clinton left it was between 4.5-5.6trill. Part of Obamas contribution is going to the 2 wars Bush started, he has no choice now!

[Cleo's Mom 257]

What about the graph I posted above? Bush deficits vs. Obama's deficits. That graph clearly shows that Obama is wreckless with his spending. Oh, I know you say he "had" to spend all that, but come on!, ALL that? Really, that is very, very irresponsible. His spending sprees are breaking us!

Here's the policy and attitude under the bush administration that got us into the mess we are in today - the mess that Pres. Obama has to get us out of:

Cheney to Treasury: "Deficits don't matter"

Former Treasury Secretary Paul O'Neill was told "deficits

O'Neill, fired in a shakeup of Bush's economic team in December 2002, raised objections to a new round of tax cuts and said the president balked at his more aggressive plan to combat corporate crime after a string of accounting scandals because of opposition from "the corporate crowd," a key constituency. O'Neill said he tried to warn Vice President Dick Cheney that growing budget deficits-expected to top $500 billion this fiscal year alone-posed a threat to the economy. Cheney cut him off. "You know, Paul, Reagan proved deficits don't matter," he said, according to excerpts. Cheney continued: "We won the midterms (congressional elections). This is our due." A month later, Cheney told the Treasury secretary he was fired.

That's right - the republican policies are to allow corporate greed and scandal (which we taxpayers pay for) and to ignore deficits (NOW THIS IS THE IMPORTANT PART) when they happen under republican presidents, and to fire whoever tells them the truth.

[BJean 16]

I'm not impressed that the author went to Stamford. Oh wait, he didn't claim that, someone else did in her follow up post. Uh, the Hoover Institution? Doesn't that just suck?

[BJean 16]

cleo's: "...when they happen under republican presidents, and to fire whoever tells them the truth."

It's called "scape goating" and I'm pretty sure that if you look that term up in your encyclopedia, there will be a photo of Dick Cheney beside it.

[Cleo's Mom 257]

Fox: The Wellpoint Rate Increase Was Bad Because it Re-energized HCR

by mcjoan from dailykos

Tue Feb 16, 2010 at 07:06:03 AM PST

How dare Anthem Blue Cross strengthen the case for reform?

Earlier today on Fox Business, WellPoint VP Brad Fluegel appeared to discuss the hikes.

Fox hosts Charles Payne and and Stu Varney lashed out at WellPoint for increasing rates just when "it was safe to get out of the healthcare debate." The hosts were

uninterested with how the increasing rates would affect customers and

struggling families in California

. Instead, the pair attacked Fluegel for re-energizing advocates for health reform. Payne groaned, asking Fluegel why he didn’t

"take Wall Street’s lead" and "wait for this to blow over and maybe a year from now try to hike rates":

PAYNE: But Brad this is like Jaws 2, just when you thought it was safe to get out of the healthcare debate, you brought everybody back into it. [...] Didn’t someone though, wasn’t there a committee that said listen, let’s take Wall Street’s lead, do the minimum we can, wait for this to blow over and maybe a year from now try to hike rates?

VARNEY: You handed the politicians red meat at a time when healthcare is being discussed. You gave it to them! [...] You couldn’t see this coming? I mean really, you couldn’t see this coming? [...]

VARNEY: You actually did make a net in that quarter in twleve weeks, you made what, $500 million net profit didn’t you? You tell that to a politician and they’re going to say, ‘you made a half billion dollars in twelve weeks and now you put the price up 25%.’

....At the end of the interview, the Fox hosts chuckled with the WellPoint VP. They apologized for being so harsh and warmly reminded Fluegel that their criticism of insurer profits was only meant to be "warm up" for Rep. Henry Waxman’s (D-CA) investigation. "You did very good," cooed one of the cohosts.

Fox doesn't care that the premium increase might shut out a lot of people who would then have to go without healthcare.

No, they only care because now it brings the focus back on to healthcare (and the greed of the health insurance industry).

Edited February 16, 2010 by Cleo's Mom

[pattygreen 5]

Poverty: It ain't what it used to be

As America's economic malaise grinds on, we increasingly read and hear about how this budget reduction or that program cut would hurt "the poor." The hand-wringing has become so widespread that a Hartford Courant blogger complained the other day about the effects of snow days and school holidays on child nutrition: "In Connecticut, most students in Hartford, Bridgeport, New Haven, and New London get free lunches because the districts' residents are so poor." The message? No school, no food, as if inner-city children would starve without government handouts.

But let's define poor. If these were Appalachian families in the 1950s, that'd be one thing. But this is 21st century America, where The Heritage Foundation's Robert Rector, renowned as America's leading authority on poverty, cites government data that paints a very different picture of "poor households."

Forty-six percent own their own homes, and two-thirds live in housing with at least two rooms per person. Eighty percent have air conditioning; three quarters own a car and 31 percent own two or more; 97 percent have a color TV, and more than half own at least two; 78 percent have a VCR or DVD player, and almost two thirds have cable or satellite TV service; 89 percent own microwaves; more than half have a stereo; more than a third have an automatic dishwasher; a third have cell and land-line phones. These households may be "low income," but they have a good amount of material wealth, a goodly amount purchased with or made more affordable by government largess intended to help them make ends meet. But this is what happens when the government doesn't means test its programs or monitor how taxpayers' money is abused.

But what of the nutritional concerns? "Most poor children today are, in fact, super-nourished and grow up to be, on average, one inch taller and ten pounds heavier than the GIs who stormed the beaches of Normandy in World War II," Mr. Rector wrote in 2007 in a column for the National Review. "While the poor are generally well-nourished, some poor families do experience temporary food shortages. But even this condition is relatively rare; 89 percent of the poor report their families have 'enough' food to eat, while only 2 percent say they 'often' do not have enough to eat."

And if poor children are so malnourished, why did President Obama form a task force to battle childhood obesity with special focus on inner-city children from low-income families?

(no name article in today's editorials)

[pattygreen 5]

We are soooo worried about the poor in this country. Liberals say they 'need' all these government handouts. I say the government has made them dependant. The poor today have no idea what it means to be poor. Poor, to most, is not having cable TV.

[Cleo's Mom 257]

We are soooo worried about the poor in this country. Liberals say they 'need' all these government handouts. I say the government has made them dependant. The poor today have no idea what it means to be poor. Poor, to most, is not having cable TV.

But those slackers need cable tv for their big screen tv's - don't you know? :sad:

[Humming Bird 275]

I do not work on Fridays and watched a little bit of Obama's town meeting in Nevada on CNN today.

I do not agree with some of the things he has done and agree with some too.

I know it is not just him alone and many others play a large role. I just hope they get healthcare , jobs and the state of our country figured out soon. I think it is going to take much too long for the little guy/gal to start feeling the relief.

[loserbob 11]

See Patty, I told you there are probably things you and I would agree on. Once in a while I work in "projects",(low income houses). People cry to me and tell me all about their hardships,low on money, health problems. But theyre driving brand new cars, most of the time 2, Big screen tvs. People are more concerned about buying video games than they are about sewage all over their basement floors. It drives me crazy that people want and some even expect this kind of living when they cant afford it. Theyre happy to be living in HUD housing and collecting welfare. Alot of them are younger than me and appear to be capable of working. Thats where the problem would be as far as universal healthcare. People who could work but choose not to would get it but wouldnt have to pay for it. Alot of these people know how to work the system. Im not talking about all people on welfare or HUD, because there are people who probably need it. I just dont see how people choose to live this way. I believe in always trying to better yourself. Thats why I started my business. I didnt want someone telling me how much i was going to earn or how and when i was going to work, just to make someone else money. I know I complain about healthcare costs(we do need some kind of reform)but Im only 4 1/2 years into my bus. and someday Ill get to where I want to be financially because I work hard(Ive always gotten compliments about my work ethic from employers) and I see improvements every day. I guess my point is, I agree with you to a certain extent about "free handout programs". Your life is what you make of it. Youll get out of life what you put into it. But there are issues we have no control over. Healthcare, they make record profits and still raise costs. Our choice is, we either pay them or have no healthcare. Switching to another provider isnt the answer because theyre doing the same thing. Thats why " I agree with you to a certain extent." Its late, have a good night.