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Tag Archives: Medicaid

Clark Howard Nails It: The Country is “Sailing Up Denial” About Taxing Our Way Out of Debt

I happened to hear Clark Howard on the radio while driving back to the office from a business event.  For those that don’t know, Clark Howard (like Dave Ramsey) is a consumer guru known for giving out advice and tips to the masses via his radio and TV programs.  During his program today, he mentioned that the country as a whole was “sailing up denial” when it comes to solutions to fix the country’s long-term debt issues.  While I will still be more of a fan of the saying “denial is a river in Egypt,” Howard definitely nailed the thought process that currently occupies the minds of many Americans–that increasing taxes on the top earners, without making cuts to Social Security, Medicare, and Medicaid, is a viable option for debt reduction over the long term.

The fact that a poll was taken on this subject is quite humorous.  There are a couple of ideas that rule the hearts and minds of many Americans.  The first is that they wouldn’t support the reduction of government benefit programs, knowing they would be affected by the reductions.  Seems to be the simple law of self preservation to me.  The second is that people feel if a person is rich (or seems that way) then regardless of whether or not they actually paid into a benefit, they have money and can do without the government entitlements.  These thoughts reflect, as Howard also stated, that in America, we don’t have a notion of shared sacrifice on the issue.  “Don’t change MY stuff, just make the rich fund it.”  Tricky thing is, as Howard explained, you could tax the upper 1%-2% of income earners all the way to destitution, and the debt problem still wouldn’t be solved.  Further–and I thought this was spot on–if the solution used was more taxes with no benefits cuts, eventually there wouldn’t be enough money coming into the government to pay for benefits.  Before long, individuals would find themselves solely responsible for their own welfare and wellbeing, just like in the old days.  One can only imagine the outcry THAT would produce.

Here’s to hoping that Congress gets it right for a change and puts the sacrifice on everyone, not just a few people.

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Neither party is serious about debt, and the joke is on us

As of today, to pay off the entire US debt would require every US citizen to write a check for $45,400.  EVERY citizen.  The total debt is right at $14.1 TRILLION.  And neither party is really serious about doing something about it.

On the right, they are making a lot of noise, but as the saying goes, “full of sound and fury, signifying nothing.”  First, after promising to cut $100 billion in spending from the next budget, they are only able to come up with about $65 billion.  After being called to task by the Tea Party, they are able to dig and find the promised $100 billion.  The problem?  Not only are the cuts based on a budget that President Obama never sent to the House, but they also used the infamous “baseline budgeting” tricks.

Quick refresher:  Baseline budgeting is a technique where by the budget of a particular department or organization is projected years in advance.  Typically, those budgets include an already-applied increase in funding.  So, a department may already have on paper that in 2011, they will be funded at $10 million, but due to a budget increase already factored in, they may know that their budget in 2012 will have $10.3 million due to an expected 3% increase in funding.

What republicans have done is to say “we are going to cut x billions,” not acknowledging that instead of truly cutting funding, they are simply reducing the already scheduled budget increase.  So instead of cutting a department’s funding from $10 million to $9 million, they are simply advocating cutting the 3% increase to 2% or some other number.  The cut isn’t really a cut.

Further, in the “fraud waste and abuse” category, some republicans are on board with funding a 2nd, alternative engine for the F-35 Lightning II project.  The F-35 is slated to replace thousands of fighter jets in the US inventory, and the building effort is being shared across many countries, including the US, Canada, the UK, and Turkey.  The engines for the plane are made by Rolls Royce, but there is an effort in Congress to secure funding for a second engine.  The reasoning given is “in case the first one has problems,” but the real reason is to secure jobs and a contract for an American firm.  Even the Pentagon has said they don’t want it.

Democrats aren’t helping.  Even thought the White House has proposed cutting funding to some programs (like a heating oil assistance program), many Dems refuse to go along with any proposed cuts in “entitlement” spending.   Though everything should be on the table, dems are resisting anything that might touch Social Security, Medicare, and Medicaid.  Obama and the democrats have also been using the baseline budgeting trick, especially with the healthcare reform bill.  Once again, a cut isn’t really a cut.

For there to be real solutions, someone on both sides needs to wake up and wake up their fellow politicians to the real threat they all know about but are afraid to do something about (don’t want to mess up their reelection chances!).  The recommendations of the Debt Committee would be a good place to start.