Why America’s Going Broke:The US Deficit Debt Problem:A Longer Term Perspective

The American Interest ^ | January 23, 2013 | The American Interest

[lbryce]

A new paper The US Deficit Debt Problem:A Longer Term Perspective by Daniel Thornton, an economist at the Federal Reserve Bank of St. Louis, contains some useful graphs on the causes of our debt crisis. The first graph below illustrates the rise of spending relative to government revenue; the second shows that the lion’s share of increased spending has been on social services, Medicare and Medicaid in particular:

Source: Thornton (2012)

Source: Thornton (2012)

The graphs demonstrate, the words of James Hamilton that “Americans want an increasing government contribution to health care, but don’t want to pay for it.” It might be tempting to conclude from this that we either need to raise taxes to a level that corresponds to the government contribution we want, or we need to cut government spending, or both.

But that’s not the whole answer. Raising taxes might make citizens more sensitive to the real cost of healthcare, but it would kill small businesses already struggling under tax burdens, particularly as they take on the costs imposed by Obamacare. Reducing government spending might close the budget gap this year, but it would still leave our healthcare system struggling with inefficiencies struggling with inefficiencies and ever rising costs.

America needs to find ways of transforming the healthcare industry, not just ways to temporarily narrow the budget gap.We don’t have a deficit problem; we have a healthcare policy problem.

[lbryce]

Liberals, communists, motley crew sycophants worshiping at the altar of the Gifted One, the ObamaGod, want their cake, want it free, want it whenever, however, and still have the cake.

[lbryce]

I don’t know what happened. The html worked fine while in Preview but once posted, the colors changed, the links stopped working from the Free Republic links, but work well from the original post. Sorry about this.

[Cowboy Bob]

Right now, the US is $16 trillion in debt, and rising. A large portion of what the government spends each year is borrowed money. As on not, the currency and financial system hasn’t collapsed. Has anyone done an analysis of what the breaking point is?

Is the tipping point $20 trillion in debt? $25, or $30 trillion? Or, is it when the country has to borrow to cover more that 50% of its obligations?

Does anyone have a guess as to when TSHTF?

[SMARTY]

Health care ‘cost’ (or any kind of ‘cost’ for that matter), is a moot point to people who have never and will never work for what they get.

Political squabbles over ‘cost’ and the tax burden are less than meaningless to this element.

They have never worked and it was always free for them! So it's laughable that the issue of 'cost' would ever enter their heads?

[DustyMoment]

WOWSERS!! This is a “stop the presses!” moment if ever I saw one.

Who knew that spending more than you receive in income would lead to a debt crisis!?? And (let me catch my breath), how could ANYONE determine that reduced revenue, overspending and borrowing against future earnings was an economically unsound system!!???

I may have to get an oxygen treatment. I’m hyperventilating with all this new information. After I get my oxygen treatment, I’ll have to try to figure out what it all means.

[Opinionated Blowhard]

The article starts off well and ends with government as the solution.

The author states: Reducing government spending might close the budget gap this year, but it would still leave our healthcare system struggling with inefficiencies.

So what? If you are conservative, you believe the market will deal with the "inefficiencies" much better than any government policy yet article concludes that we need a new government healthcare policy. Any time the government gets its grubby hands on any part of the private sector, it creates a disaster. Just think of housing as another example. Housing would have been better off with NO government policy. Healthcare would be in better shape than its in today with no government policy.

[Lumper20]

Frankly, we are damn close to the TSHTF. We have already had several down grades of US currency, and; we shall have another soon. Use your head and hedge your paper money.