start by not sending out ONE MORE PENNY in foreign aid!!!
Posted on 01/06/2013 10:34:02 AM PST by SatinDoll
As you folks all know I've been pounding the table for years about the fact that if we're serious about addressing what's wrong with our budget we must break the medical monopolies.
Indeed, there's an entire sub-category of Tickers dedicated to Health Reform, which I started writing on when the entire Obama mess began and the discussion took off in earnest.
But lately I've been asked to look once again at exactly what sort of realistic budget cuts we could make, especially now that the "fiscal cliff" game has been "punted."
Let's remember something here folks -- last calendar year's deficit was $1,210 billion. That's from 12/30/2011 to 12/31/2012, the last "working day" of each year, measured by the outstanding debt.
So here's the problem in a nutshell. Anyone can find $20 or $30 billion to cut in the budget. That's so trivial that it's not funny. $100 million here and $100 million there and you get there. It's not hard at all.
But it's inconsequential, because if you cut $30 billion that's only about 2.5% of the deficit.
Indeed, even $120 billion, or 10% of the deficit, is not enough to matter. That would "count" as $1.2 trillion to the wonks in DC, but that's a lie, for two reasons -- there's a new budget each year and you cannot bind the next Congress no matter what you pass, so only that which you do right now counts.
$120 billion is not enough to matter fiscally. But this much is assured -- if you try to cut $120 billion in real spending 5,000 lobbyists are going to descend on your office and make your life a living hell, no matter which party you are in.
And that, my friends, is for a symbolic change in spending that will do exactly nothing to solve the problem.
If we're going to make a real difference we have to get to zero. In fact we have to further and into surplus, but let's just for a moment go with the IMF's numbers (or the ECB's and Eurozone's in general), which are that a "roughly 3%" deficit is "sustainable." That is, let's allow the government (for right now) to steal the productivity improvements that you, I and everyone else make.
That, by the way, is why the IMF and Eurozone believe 3% is a "sustainable" deficit although they will never tell you that.
3% of $16 trillion (the size of our economy, roughly) is $480 billion. To get there we must cut, this year, $720 billion from the budget.
You know those 5,000 angry lobbyists? They're at your door.
So let's ignore them for a minute and ask the question -- can we get there?
The answer is "Yes." But there is only one way to do it.
We must break the medical monopolies.
The Oklahoma Surgical Center shows us what happens when you break the cost shifting and monopoly game.
Costs come down by 80%, roughly.
Yes, 80%.
Last year we spent about $850 billion at the federal level on medical care.
What if we spent 80% less because we broke the monopolies?
We would spend $680 billion less.
Now can you find another $40 billion in the budget to cut between everything else?
You bet you can.
So let's ask the question:
If you're going to take heat from the lobbyists and everyone else, why not actually solve the problem?
I'm not going to tell you this is some sort of panacea. We're talking about taking an actual $700 billion, more or less, out of the economy in the first year. Right here, right now. And when we do that there will be real economic consequences. A real recession. Real, but temporary, job loss. A real realignment in the medical industry, and there will be lots of oxen gored.
But seniors will be mostly protected. Those who are younger will be mostly protected. Everyone's costs will come way down, which means that (1) money will get spent elsewhere in the economy and in those other sectors jobs will be gained and (2) seniors and others will mostly be able to pay cash for their needed care.
America will become much more internally and internationally competitive as well, as labor costs will dramatically decline.
There is no free lunch folks. There is only the choice to either play "dog and pony" show once again, which will lead to downgrades and ultimately collapse of our economy, markets and possibly even our government, or we stop with the BS and do the right thing.
This is where the problem has come from. It is irrefutable in the arithmetic -- $53 billion for all medical spending combined by the Federal Government in 1980 to $850 billion this last year.
That's where the problem is, and unwinding this mess is the only way to fix it.
I stand ready to help with doing the right thing. I can help take a sharp pencil to this problem, as can many others, and I stand willing and able to do so. But you, dear Congressperson, must be willing to take the slings and arrows, and those who are serious about this need to both press for it and be willing to sell it.
If you believe Karl Deninger is wrong, be sure and tell him. I'm certain he'll explain why you're wrong and will even provide the math to prove WHY you are wrong!
Well, he’s right in saying that fiddling with a million here and a billion there will do nothing to solve the problem.
But he’s wrong to say that cutting the “medical monopoly” is the ONLY way to fix it.
Sure, we should eliminate Obamacare, and also some of the stuff that Clinton and Bush put through as well.
But, there are plenty of ways to fix it. We don’t just need to balance the budget, we need to SLASH it. We need to eliminate endless departments and bureaucratic cess pits. Eliminate the Department of Education completely. Eliminate the EPA completely and let the states deal with it.
Cut even useful departments by 20 or 25%. Outlaw public unions. End supplements to green energy companies and all sorts of other boondoggles. Cut back agricultural subsidies and interference. End the ethanol program. Eliminate the supplements to public broadcasting.
And those are just starters. Healthcare is going to break the camel’s back, sure, but there are a ton of other things that need HUGE cuts and eliminations.
“...We don’t just need to balance the budget, we need to SLASH it. We need to eliminate endless departments and bureaucratic cess pits. Eliminate the Department of Education...”
You write like a soulmate; the above is exactly what I’ve been saying here on FR for quite some time.
And how about just following the Constitution for a sure change in the economy?
I’m unclear on who these “medical monopolies” are?
And yes, Cicero, start gutting subisidies...ALL of them. And foreign aid? Get rid of that too.
The care and maintenance of one’s state of health is not, and never should have been, the responsibility of other than the individual.
That what constitutes “the government” (at local, state, federal or world) should have taken an interest in maintaining a “state of health” for the population as a whole, is nothing less than a move to take control of personal behavior with the force of police power.
Basic rules of hygiene, and preventive measures taken at the onset of illness or infirmity, are still much better managed by the individual directly, than relying on the “informed” authorities to take over and dictate what should and should not be done. But once this basic responsibility is surrendered, then also are any basic rights as well. And in surrendering this responsibility, a blank check is simply handed to the authorities to collect sufficient funds by whatever means necessary to cover the costs of administering this “care”.
Breaking the “medical monopoly” may not be the sole means of dealing with debts and deficits, but it sure makes up a large portion of it.
He also mentions the Oklahoma Surgery Center with no details. Here's a Reason article I found about the Center.
IMHO, Mr. Deninger's article would have been much more interesting with more info.
I read his stuff everyday, though a lot of the “market” stuff is a little fuzzy to me, he is Right.
start by not sending out ONE MORE PENNY in foreign aid!!!
Why the heck are we giving fighter jets and tanks to Egypt ? Who are they supposed to be fighting with them ? Napoleon ?
First off is you Ban Lobbyist in DC Then you do base line budgeting. Start with the 2008 budget and cut 10-15%. Eliminate the Federal Employees that Zero hired. Close the border pass law that no one can get Federal Aid unless they are a United States Citizen. That is a good start!
Karl D. has written extensively on medical monopolies on his blog, market-ticker.org. Those writings include all the arithmetic Mr.Deninger used to present his thesis, which is surely better than anything I can do.
You might try going to his blog and reading his arguments.
Please note: I am not now, nor have I ever been, Mr.Karl Deninger. /S
Yes, as you say, a good start.
Unfortunately, I suspect that such cuts would only be accomplished by a dictator, as the American people have become way too comfortable with government freebies. As we both know, dictators are notoriously hard to get rid of once in place, so the means to the good solution will provide a worse condition.
Payroll taxes should be deducted from all taxpayer funded benefits like welfare, food stamps, and unemployment. They will eventually benefit from SS and Medicare/Medicaid programs. Let them pay in. Just consider it a 6.2 percent across the board pay cut for free loaders.
As you folks all know I've been pounding the table for years about the fact that if we're serious about addressing what's wrong with our budget we must break the medical monopolies.Breaking the medical monopolies is *exactly* what Obamacare is designed to do!!! And that's why this is a Partisan Media Shills ping.
Unfortunately, I suspect that such cuts would only be accomplished by a dictator, as the American people have become way too comfortable with government freebies. As we both know, dictators are notoriously hard to get rid of once in place, so the means to the good solution will provide a worse condition.
Your probably right but it will come crashing down shortly!
I'm not being impatient, mind you, but I have been waiting over 4-years for the “house-of-cards” to come tumbling down.
I go to zerohedge.com and some posters there speculate on how much juggling is going on behind the scenes at banks to keep everything in the air, so to speak.
When the crash does come, it'll probably be spectacular!
Karl usually does seem to make sense. A lot of sense.
But I just can’t get over that
he
voted
for
Ubama, the African communist.
He really killed himself with that inexcusable lapse in judgment.
When did he do THAT!
Denninger supported Ubama in 2008
I doubt Denninger supported Ubanga in 2012. That would be beyond the pale.
Temporary insanity is one thing; malicious stupidity is another.
Zero will just keep printing more money to cover the debt....
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