Bill Bonner

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 Bonner
for The Daily Reckoning

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success in numerous industries. His unique writing style, philanthropic undertakings and preservationist activities have been recognized by some of America's most respected authorities. With his friend and colleague Addison Wiggin, he co-founded The Daily Reckoning in 1999, and together they co-wrote the New York Times best-selling books Financial Reckoning Day and Empire of Debt. His other works include Mobs, Messiahs and Markets (with Lila Rajiva), Dice Have No Memory, and most recently, Hormegeddon: How Too Much of a Good Thing Leads to Disaster. His most recent project is The Bill Bonner Letter.

  • richard lamb

    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?

  • doug

    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.

  • reflecting

    Richard, maybe you meant when will the IMplosion come?

    ObamaCare will only be $20 billion? I thought it was 2 Trillion.. or more.

  • Bruce Walker

    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.

  • Bennet Cecil

    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.

  • http://conspirosphere.tk tom

    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”.

  • dave

    Uh, isn’t Europe broke?

  • Whatchamacallit

    Yeah, let’s turn healthcare over to the Postal Service.
    They’re a legal monopoly (and public good) and are going broke.

  • David

    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!

  • not_harry

    “Only a country that flirts with Sarah Palin could be as blind to reality as the USA.”

    …Or one that elected Obama.

  • Model T

    tom

    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.

  • Will Rubin

    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.

  • Pingback: Trackback

Recent Articles

What the Reboot of the US Budget Means for Your Money

Byron King

Big government doesn't come cheap. And right now the U.S. government is one of the biggest in history. So far the budget writers have been able to move money around to keep the machine moving. But as Byron King points out, that will soon become much more difficult. Read on for the full story...


Invest Like a Shark in the “New” Stock Market

Wayne Mulligan

In the late '90s, financial TV personalities like Jim Cramer became mega stars - often drawing more ratings the ESPN. But that was over 15 years ago... That couldn't happen again, could it? Today, Wayne Mulligan details the new flock of personalities that are set to cash-in on a different kind of investment boom. Read on...


One Thing to Consider Before You Become a Whistleblower

Chris Campbell

Being a "whistleblower" is no easy task. Regardless of whom you're blowing the whistle on, there's bound to be a fair amount of risk involved... and that's especially true if you're going after the "powers that be." But there's more to it than that... And as Chris Campbell explains, none of it matters if you can't protect yourself. Read on...


How to Spot a Market Top

Greg Guenthner

Last week was a rough one for most of the world's markets. Investors saw red almost everywhere they looked. And that's got a few media outlets ready to declare a top in stocks. Greg Guenthner explains why this line of thinking could be dangerous... and why, if you follow it, you could be doing your portfolio a disservice. Read on...


The Number One Threat to the US Above Terrorism

Peter Coyne

As conflict with ISIS looms, the Pentagon appears to be in a pickle... They've got all kinds of things on their "wish list", and they're not likely to get all of them. But they may have found a loophole, and that could mean big bucks for a handful of investors who know where to look. Peter Coyne explains...