The federal government now spends $100 billion more each month than it receives in income tax and other revenue. And no, fixing that horrendous and growing deficit is not a matter of trimming earmarks or other trivial ( in the scheme of things) spending. The real problem is the liabilities created by promises politicians made and failed to fully fund – because they don’t want voters to see the obvious impact on their taxes. Medicare, Social Security, Medicaid and now the Patient Protection Affordable Care Act represent huge costs and incredible liabilities in the future and we are not paying for them.
To give you a perspective of how absurd things have gotten, just to have federal revenue equal spending there would have to be an across the board increase in taxes of about forty-seven percent (47%). Federal spending for 2011 is expected to be $2,567,000,000,000. Considering that between 40% and 47% of all American households pay no income tax and that the top ten percent of earners pay 71% of all income taxes, where is the new revenue going to come from? Oh I know, the growing economy. All this, and Congress just keeps spending.
You may hear rhetoric to the effect that repealing PPACA will increase the deficit because the law actually saves the government money. Do you seriously believe that an open-ended entitlement will save money? The CBO was given a set of assumptions to use in making its cost calculations. Many of those assumptions were bogus (like lowering physician payments under Medicare) and even the CBO said it’s calculations were subject to many variables and uncertainties. Furthermore, the calculations were done for the first ten years, what happens after that? PPACA commits to subsidizing health insurance premiums for families earning under $88,000 per year (2010 dollars). At the same time there are incentives for employers to drop coverage and put more people into this program (it’s cheaper for employers to pay the penalty than to provide health benefits). All the while there is nothing in PPACA to control growing health care costs, quite the opposite in fact. This means that the subsidies will continue to grow both because of ongoing health care inflation and the number of Americans enrolled in the exchanges…sound familiar, it’s called Medicare.
Yesterday I listened to a discussion between a Democratic and Republican representative regarding health care reform repeal. The Democrat rattled off statistic showing that the majority of Americans like the new coverage for children to age 26, the new preventive services fully covered, the elimination of underwriting rules, the elimination of the Medicare Rx donut hole etc. No doubt that is true. And that point of view is also why PPACA will never save money and why politicians are unable to either manage costs or reform health care. Americans like Europeans are addicted to entitlements and politicians know it.
Everyone wants to deal with the deficit only they want to deal with it by affecting spending that does not affect them. It ain’t going to work that way.
QUINNSCOMMENTARY 