Thursday, June 28, 2012

America is Now Even Closer to Fiscal Doom

Today is just an awful day. If Bush-appointed Justice Roberts had only voted with the rest of the conservatives, we would have been rid of all of Obamacare, not just the mandate, as their dissenting opinion implies. Once again, decisions that George W. Bush are turning out to be disastrous for those of us who believe in individual liberty and limited government.  Let's just do a quick run down shall we?
  1. Appointed Ben Bernanke to be Fed Chair.  How he could appoint the guy who actually hired Paul Krugman at Princeton to run our money supply is beyond me.  Bernanke has done almost nothing but debase our currency and fund Obama's deficit spending through his debt monetization (QE) programs.  Also, let's not forget what role that QE had on commodity inflation worldwide, causing riots in much of the developing world and probably leading to the US friendly Egyptian government to be overthrown.
  2.  Enacted Medicare Part D.  By actually expanding an entitlement while President, W made many Republican voters say "what exactly is the point of voting Republican if they act like Democrats"  and stay home.  The routs that were the 2006 and 2008 elections enabled  the passage of Obamacare by razor thin margins in both Houses of Congress
  3. He chose Justice Roberts, who has singlehandedly allowed a monstrous piece of legislation that does nothing but increase government largesse and hurt our long term fiscal health, to be enacted.
I guess I've found something to agree with Obama on, it is Bush's fault!

Now let's get back to Obamacare.  You would think that an economy that continues to grow feebly, with unemployment rising again would not need the additional taxes and regulations that is Obamacare.  Let's just take a look at the taxes that Obamacare increases:
  • Broaden Medicare tax base for high-income taxpayers: $210.2 billion
  • Annual fee on health insurance providers: $60 billion
  • 40% excise tax on health coverage in excess of $10,200/$27,500: $32 billion
  • Impose annual fee on manufacturers and importers of branded drugs: $27 billion
  • Impose 2.3% excise tax on manufacturers and importers of certain medical devices: $20 billion
  • Raise 7.5% Adjusted Gross Income floor on medical expenses deduction to 10%: $15.2 billion
  • Limit contributions to flexible spending arrangements in cafeteria plans to $2,500: $13 billion
  • All other revenue sources: $14.9 billion
And then there is the biggest tax increase of all, the individual mandate, which is also a regressive tax.  I remember when I was first out of college, there is no way I could have afforded to pay for my own health insurance, nor would I have been able to qualify for medicaid.  The need to rend an apartment and lease a car sucked much of the money out of my pocket.  Where would I have found the money to get health insurance on top of that?  I never got sick at that age, so why would I have wanted to piss away thousands of dollars on something I wouldn't use (I didn't even go to the doctor for the first 3 years after college)?  Jay Cost has a great description of what the individual mandate actually does:

The individual mandate represents an enormous transfer of wealth, completely independent of income or social status. It transfers resources from the healthy to the sick, from the young to the old, without regard to who has more money to begin with. Democrats typically rail against supposedly regressive GOP tax proposals, but nothing the Republicans have ever cooked up compares to the individual mandate.
For all the talk about taxing the rich and giving the poor the break, the mandate actually seems to do the exact opposite as:
The mandate itself is the method by which the Democrats have delivered literally billions of dollars worth of patronage to the key interests groups that lined up with them during the health care debate. The party sought to apply new layers of regulations upon doctors, nurses, hospitals, retirement care facilities, etc., and they rightfully feared a rebuke from these key “stakeholders,” as the Obama White House called them. What better way to buy their silence than to require 30 million Americans become their customers, whether they want to or not! All it took was a flip-flop on the part of the president – who conveniently disavowed his campaign opposition to a mandate – and suddenly all those opponents turned in to lusty supporters, eager to get their hands on all that new revenue.
As soon as the mandate comes into force, suddenly there will be millions of Americans with reduced disposable incomes, forcing them either to go deeper into debt or cut spending on things they would rather spend their hard earned money on (like food other than Ramen noodles and macaroni & cheese).  There is no way this is good for the economy.

And the last thing we need is for the economy to get any weaker, especially with our annual deficit at about 8.5% of GDP, our debt to GDP at about 100% and 35 cents of every dollar of federal spending having to be borrowed from countries that aren't exactly friendly to American interests like China.

Let's also not forget that even without Obamacare, our fiscal health is severely compromised.  Here is a nifty graph from Mary Meeker's USA,Inc. presentation on how just our entitlement and interest expenditures will soon be well over 20% of GDP alone.  And that is before paying for things like the military or the patent office or just about every government agency outside of the SSA and CMS:

As this chart indicates, even before Obamacare, entitlement spending has grown at a rate that is 5 times faster than REAL GDP!

As you can see, it's not defense spending or other discretionary programs that are bankrupting us, it's entitlements, and now we have another major one, which will undoubtedly blow the bank.  I know the liberals keep saying that the CBO score showed it was deficit neutral, but as we know that is just unrealistic.  Medicare ended up being 10x greater than estimated by the government.  That is definitely NOT reassuring.

So what now?  Are we doomed?  I'd say "probably but not necessarily".  As long as we have people like Obama in the White House and Bernanke in the Fed, we are doomed.  As long as we keep spending like we are and adding more and more entitlements, we are doomed.  If you think these countries will perpetually be buying more and more US debt at anywhere near today's interest rates, you have another thing coming.  Eventually we will have a treasury debt crisis and the game will be over.

The first step is to kick both out of their current positions (and as far away from this country as possible would also be nice).  Also, something to at least consider would be to refuse to increase the debt ceiling.  I know the mainstream media thinks this means the US would default, it actually wouldn't.  We would still make interest and principal payments on debt without an increased debt ceiling, we would just be FORCED to balance the budget.  That is probably the fastest 1way to limit the size of the government, though given the way the world's financial system is going right now, a shock to the system like that might be too much (though it might be necessary regardless).

Anyway, I have some other things that I would favor right now, but I am still a bit pissed by this decision so should probably stop typing before I say something I shouldn't.


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