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  Obamacare Targets Entitlements
Meeting with the Washington Post's editorial staff on January 16, President-elect Obama pledged to reform entitlements saying the process would begin straightaway by convening a "fiscal responsibility summit" before delivering his first budget to Congress.
"What we have done is kicked this can down the road. We are now at the end of the road and are not in a position to kick it any further," he said. "We have to signal seriousness in this by making sure some of the hard decisions are made under my watch, not someone else's." Key, he said, is reigning in entitlement costs by making "very difficult choices and....sacrifice(s)....Social Security, we can solve. The big problem is Medicare (and, of course, Medicaid covering 60 million in 2005), which (are) unsustainable." In a major April 14 Georgetown University speech, he again highlighted the problem saying cutting health care costs and "restoring fiscal discipline" are two of the top "pillars" of his agenda. "Let's not kid ourselves and suggest that we can solve this problem by trimming a few earmarks," he said. The "biggest cost drivers in our budget are entitlement programs like Medicare, Medicaid, and Social Security, all of which get more and more expensive every year, (so) if we want to get serious about fiscal discipline - and I do - we will have to get serious about entitlement reform," implying a clear long-term goal of: -- shifting the burden from Washington, handing it to the states, and ultimately to taxpayers directly with no government aid or indirectly through taxes. -- $13.9 trillion for Social Security;
-- $18.4 trillion for prescription drugs; and
-- $73.3 trillion for Medicare/Medicaid for a total of nearly $105.7 trillion. The Congressional Budget Office (CBO) and Other Recent Reports Highlight the Problem The CBO's June 2009 "Long-Term Budget Outlook" projects future budget deficit and national debt estimates. Both suggest future economic decline, eventual hyperinflation, and deep erosion of personal savings. Already the national debt is more than during the Great Depression, and it's fast heading for surpassing WW II. According to the report, this burden will: -- "reduce national saving;"
-- create the need for "more borrowing from abroad;"
-- reduce "domestic investment;
-- depress income growth in the United States;" and
-- "seriously harm the economy." Admitting its estimates may be grossly understated, the CBO said its projected budget shortfalls are unprecedented in US history, signaling a growing urgency to address them. Further, the analysis omits how financial markets will react, but it anticipates "much more (disorder) as investors' confidence in the nation's fiscal solvency beg(ins) to erode....causing (dollar valuations to) plunge, interest rates to climb, and consumer prices to shoot up." The Federal Reserve's second quarter "Flow of Funds Accounts" report highlights the problem by showing federal spending crowding out businesses and consumer households. In Q 1 2009, the Treasury borrowed $1.443 trillion, and in Q 2 $1.896 trillion with projected continued high levels ahead. In contrast, bank credit has dried up. Q 1 2009 outstanding loans were liquidated at an $857.2 billion annual rate and $931.3 billion in Q 2. In addition, net new mortgages aren't being created. Instead, annualized liquidations hit $39.3 billion in Q 1 and $239.5 billion in Q 2. Cash availability through credit cards eroded by $95.3 billion in Q 1 and $166 billion in Q 2. According to Professor Tim Congdon of International Monetary Research, "There has been nothing like this in the USA since the 1930s. The rapid destruction of money balances is madness," suggesting serious trouble ahead. The September 2009 US Treasury Bulletin adds more by showing America owes foreign investors nearly $7.9 trillion, and suggesting that these sources may begin drying up and eventually contract because dollar investments no longer are safe. Some, in fact, say the time for alternatives is now. Medicare Reform Through MedPAC - The Medicare Payment Advisory Commission Established in 1997 as an independent congressional agency, it advises Congress about Medicare. Each year, it submits a "Report to the Congress: Medicare Payment Policy," the latest on March 17, 2009 for FY 2008 with recommendations to the nation's lawmakers: "to help constrain costs both in the short and long run. (These) recommended actions are one part of a broader array of recommendations aimed at more fundamentally reforming Medicare's delivery system," including achieving greater overall "efficiency" to control the unsustainable out-year costs. "to amend title XVIII of the (1935) Social Security Act, making the Commission an executive branch agency, and providing the Commission new resources and authority to implement Medicare payment policy." In other words, both bills will let White House appointed bureaucrats dictate future policies, including payment rates and benefits, trial programs, and various other initiatives outside of congressional control for the first time ever. Thus far, they remain in committees, so it's uncertain if Congress will relinquish its long held power. If it does, for Medicare and Medicaid combined, it will be step one toward eventually ending what over 100 million Americans rely on - a steadily rising total as the population ages and growing numbers of poor and lower income people have no other source of care.
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