As you know, the White House put together a bi-partisan commission to figure out how to get the deficit down. The group made what sounded like sensible proposals. Cut this…trim that. But even if the proposals were accepted in their entirety – which they won’t be – only about a third of the deficit would be eliminated.
In a nutshell – which is where these things belong – the feds spend about one out of every four GDP dollars in the US. They collect, however, only about one in every five or six dollars worth of GDP. That is a pretty big gap – nearly 10% of total GDP.
If you’re going to cut that kind of a deficit you’re going to need more than a bi-partisan commission. You’re going to need a catastrophe.
Heck, we could cut the budget in half an hour. We’d just get rid of everything that was not part of the original plan – that is, everything that was not necessary for the defense of the country or the maintenance of law and order. We’d have a huge surplus overnight…and lynch mob by daybreak.
Deficits are a big problem. They’re not going away. We’re not going to “grow our way out” of them. Left unchecked, the country will go broke. So you can expect a lot of pantywaist proposals and pussyfooting around on the subject in the years ahead. And then the country will go broke.
The big item is health care. It seems to grow uncontrollably. Americans don’t want to give it up.
We went to the doctor today. We paid $220, in cash. That was the end of it.
“Come back next year,” she said.
Seems controllable enough to us. If we don’t have $220 we won’t go back.
But Americans seem to like going to doctors and hospitals…especially if someone else pays for it.
Bill Bonnerfor The Daily Reckoning
Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill's daily reckonings from more than a decade: 1999-2010.
The World is bankrupt. The EU want’s to buy off Ireland with phoney money. The US is in worse shape. The Fed is pumping money into the ether to keep the economy from collapsing. Come on Bill, tell us when the explosion comes?
health care? What about “defence”? The US government spends roughly a trillion(!) dollars a year through the pentagon. Much of that money is spent creating new enemies for the soldiers to fight.
How much is Medicare? couple of hundred billion? How much will Obamacare add? twenty billion? It’s a joke. Only a country tha flirts with Sarah Palin could be as blind to reality as the USA.
Richard, maybe you meant when will the IMplosion come?
ObamaCare will only be $20 billion? I thought it was 2 Trillion.. or more.
Pity the poor fellow who is estranged from his children when social security fails. Or worse yet, the couple who have no children at all, having squandered their productive years on Volvo station wagons to haul around their beloved dogs. Make no mistake, the biggest losers of all will be the dog people. And the dog’s fate? Think st. Petersburg aka Lenningrad at the zenith of the Soviet collapse in late 1991; –stray dogs everywhere, their owners having abandoned them. If you want to know when the bottom is in, never mind the PE ratios of stocks. The bottom will be in when 25 year-old women can be seen everywhere in the New York subway with 6 inches of black roots, a sort of inverted skunk stripe down the middle of their bleach blonde heads. Social collapse looks quite a lot different than a simple bottom in stock prices.
Medical costs like education is overpriced because of government subsidies. Defund then repeal Obamacare. Take away the deduction for health insurance and prices will come down. The answer for Medicare is means testing or premiums based on income. The answer for Medicaid is restricting it to the poverty line. None of this will happen until interest rates push above 10% again. Nothing like an imminent hanging to focus the mind. For now we stay in fantasyland.
Bill, this reveals your shortcomings: everybody knows that US health is the most expensive and less efficient in the world, while most of european ones are much cheaper and cover 100% of the population. Incredibly, some things are more efficient when managed by some public arrangement. They are called “public goods”.
Uh, isn’t Europe broke?
Yeah, let’s turn healthcare over to the Postal Service.
They’re a legal monopoly (and public good) and are going broke.
The Government spends more money on education than defense. Let people pay their own children’s way through school. I do not yet have children. When I do I will be sending them to private school. So why should I pay thousands each year to the local public school which teaches things with which I don’t agree and which uses my money to build rubberized race tracks and pools fit to host the Olympics?
Why should I pay the bloated salaries of of public school teachers who can take the summers off, can’t get fired and have pensions – PENSIONS!
I do not have a pension but my money is seized to pay for theirs.
The techers unions have destroyed education. Our children are idiots.
Thanks for getting me started, Bill!
“Only a country that flirts with Sarah Palin could be as blind to reality as the USA.”
…Or one that elected Obama.
you know the saying: ‘you get what you pay for?’
Cuba also has cheap, efficient health care. So much so that Spanish doctors were flown in to treat Fidel.
What if you go to the doctor next year, pay your $220, and then find out you’ve got Parkinson’s. Who pays for that? Or do you just drag your family into ruin as you slowly wither away?
Don’t talk about pay as you go unless you can explain how the lower middle class can handle severe problems without going broke. Your scenario is just a fantasy while you’re healthy. Almost everybody will have major medical trouble at some point in their lives.
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