Everyone in Washington knows the record Federal deficits and debt are out of control and can’t continue. President Obama knows it. The ultraliberal Democrat Congressional leadership knows it. Rank and file Congressional Republicans and Democrats know it. Fed Chairman Ben Bernanke has been openly saying so.
Obama’s economic policies, adopted by the Democrat-controlled Congress, call for total Federal borrowing of $3.5 trillion this year alone! The Federal debt is projected to soar over the next 10 years to a peacetime record of 84% of GDP, and to keep on growing past the all-time record of 113% of GDP during World War II. Rep. Paul Ryan, ranking Republican on the House Budget Committee, projects it will climb to 200% of GDP, twice the size of our entire economy. That would be 5 times the level of national debt that prevailed for decades before Obama.
This is the result of adding Obama’s extreme, liberal left, Keynesian economic plan, with its trillion dollar stimulus package of wasteful spending that will do nothing to stimulate the economy, on top of the exploding costs of our current entitlement programs.
Obama’s New Amerika
But not to worry, because the Congressional Democrat leadership and President Obama have a plan. First they are going to pass national health care, adding the biggest entitlement of all to the fiscal catastrophe we already have, giving new definition to the term fiscal insanity. Then, after that, they are going to come back to us and say, gee, we have no choice now but to raise your taxes, really, really, really raise your taxes, to record-shattering levels, to levels so high that it will change the fundamental nature of our economy and our nation.
After that, America will no longer be a land of prosperity and booming economic growth, as it has been for hundreds of years, since early colonial days. It will no longer enjoy the highest standard of living in the world. It will instead be America the Welfare State, with a government so big and overwhelming that everyone will be scrambling to get their personal gravy in government handouts, rather than producing for the marketplace and consumers.
Example Number 1 of this will be the new Obama health care system, where the doctors and hospitals will all be working for the government, who will be paying their bills, not you the patient, who will just be along for the ride. When the government tells them not to provide medicine for macular degeneration, or cancer treatment for senior citizens because it is not “cost effective,” or referrals to specialists until it is too late, the doctors and hospitals will all hop to and salute, because they will be desperate for their slice of federal funding.
In this new system, everyone — patients, doctors, hospitals, etc. — will all be sacrificed for the “greater good,” as defined by the liberal left. Doctors and surgeons now refusing Medicaid and Medicare patients because the government won’t pay them enough will find the same government is refusing them adequate payment for everyone. Cost pressures will lead the government to clamp down more and more over time on payments to doctors, hospitals, drug companies, and other health providers. They will be vilified in the media just like the bank executives are now in regard to their traditional bonuses. As a result, investment will collapse in new hospital capacity and medical facilities, and development and adoption of new, cutting edge, health technologies and advanced, high tech, miracle drugs, sacrificing the interests of sick patients. This is how Canada got to the point where a hospital room could not be found in British Columbia for a mother experiencing accelerating birth contractions, and she had to be flown over the Rockies to the next state, Alberta, while giving birth, to find maternity care. Human capital will flee the health system as well, as older doctors retire early and new ones choose other professions instead, further constricting care for sick patients.
The Current Entitlement Catastrophe
Adding this new, massive, health care entitlement on top of the enormous entitlement mess we already have could not be more ridiculous and wildly irresponsible. The latest Trustees’ Reports show that the current unfunded liability for Medicare alone is $89 trillion. Social Security adds another $15.1 in unfunded liabilities, for a total of $104 trillion. And that doesn’t even count Medicaid. The entire American economy right now only produces about $14 trillion a year.
Since World War II, going back 60 years, federal spending as a percent of GDP has been stable, hovering around 20%. But the cost of the three big entitlement programs alone, Social Security, Medicare, and Medicaid, is now projected to balloon eventually to 20.5% of GDP. Counting burgeoning interest on the national debt, on our current course federal spending will rocket towards 40% of GDP. Counting state and local spending, total government in America will consume over 50% of GDP. GDP will collapse in the face of all that spending and the resulting taxation and debt, increasing the percentage of government spending further. America will no longer be a free country, at least in terms of the freedom of people to enjoy the fruits of their own labor and decide how to use what they earn for the pursuit of happiness.
This doubling of federal spending as a percent of GDP implies a doubling of federal tax rates. The Heritage Foundation reports that trying to pay all of the promised benefits of Social Security, Medicare, and Medicaid by raising income taxes would require raising the top 35% tax bracket to 77% and the 25% tax bracket paid by middle income earners to 55%. All income tax brackets, in fact, would have to be doubled.
By 2018, less than 10 years from now, Medicare Part A will be running a deficit of close to $100 billion. General revenue contributions for Medicare Parts B and D that year are now projected to be $364 billion. Consequently, the deficit for Medicare alone that year will be close to $500 billion (and that assumes a scheduled reduction in doctor and hospital reimbursements of over 20% starting in 2010). Yet, Obama and the Left are preparing to fight for an “option” for everyone to join Medicare or its equivalent as the answer to our health care problems. This is their “public option,” which they say will keep insurance companies honest. But who is going to keep the government honest? These people just cannot be numerically literate.
How the Plot Will Work: A Tax Increase for 95% of Americans
After Obama’s socialized medicine plan is passed, the hue and cry will start coming out of Washington, and will be echoed throughout the Democrat Party controlled media, that something has to be done about this fiscal catastrophe. The answer will be to appoint a new federal spending and tax reform commission, which will report back just after next year’s election. America will then be permanently mangled by the enactment of extremist, bone-crushing taxes early in 2011.