In a recent Wall Street Journal Op-Ed piece, Lawrence Kadish presented a sobering assessment on the nation’s exploding debt and the dangers posed by the growing cost of servicing that debt:
It is the interest on the national debt that makes our future unstable. The exploding size of that burden suggests that, short of devaluing the dollar and taking a large bite out of the middle class through inflation and taxation, there is no way to ever pay down that bill.
As of Sept. 30, 2009, the national debt was almost $12 trillion and interest on that debt was $383 billion for the year, according to the Treasury Department’s Bureau of the Public Debt. The Congressional Budget Office on Oct. 7 estimated the 2009 budget deficit to be almost $1.4 trillion (about 10% of GDP). In August, the White House Office of Management and Budget (OMB) estimated total government revenues at about $2 trillion. The revenue estimate included $904 billion from individual income taxes. This means the cost of interest on the debt represented more than 40 cents of every dollar that came in from individual income taxes. …
During Jimmy Carter’s years in the White House, Treasury yields reached 15%. The 2009 average interest rate on the debt was only 3.2%. With our mounting national debt and budget deficits, it is reasonable to assume that in the near future interest rates on new and refinanced debt could double or triple.
In stark but simple terms, unless Americans are made aware of this financial crisis and demand accountability, the very fabric of our society will be destroyed. Interest rates and interest costs will soar and government revenues will be devoured by interest on the national debt. Eventually, most of what we spend on Social Security, Medicare, education, national defense and much more may have to come from new borrowing, if such funding can be obtained. Left unchecked, this destructive deficit-debt cycle will leave the White House and Congress with either having to default on the national debt or instruct the Treasury to run the printing presses into a policy of hyperinflation.
It is against this background that Washington is now debating whether to create social programs it can’t afford.
The Health Care Reform bill America cannot afford
With all five congressional health care bills finally out of committee and with a summer of tempestuous town hall meetings behind them, the White House and top Democrats must merge the different bills into versions that can win a majority in the House and get the 60 votes needed to pass in the Senate — even as the Congressional Budget Office admits it can’t confirm whether the legislation will save Americans a dime.
Senate leaders will meet Wednesday, October 15, 2009, to start merging the Finance Committee bill that was approved Tuesday with the Senate Health, Education, Labor and Pensions Committee bill that was passed earlier this year. Others expected to attend Wednesday’s meeting are Sen. Christopher Dodd, D-Conn, who shepherded the Health Committee bill, and Sen. Max Baucus, D-Mont., who oversaw the Finance Committee bill.
Merging the two bills will not be easy
Both bills were written by Democrats, but that’s not going to make it easier for Senate Majority Leader Harry Reid, who has said he wants to complete the wedding quickly and get historic health care overhaul legislation onto the Senate floor by the week of Oct 26. The bills share a common goal of providing all Americans with access to affordable health insurance, but they differ on how to accomplish it.
The Senate Finance Committee approved its version of health care reform by a 14-9 vote Tuesday, clearing the way for it to be merged with the Health Committee’s bill. Once merged, the bill will be up for vote by the full Senate.
The Finance Committee bill has no government-sponsored insurance plan and no requirement on employers that they must offer coverage. It relies instead on a requirement that all Americans obtain insurance. The legislation won its first Republican support when Sen. Olympia Snowe of Maine broke ranks with her party, saying she was answering the call of history. “My vote today is my vote today,” Snowe said. “It doesn’t forecast what my vote will be tomorrow.”
The Health Committee bill, passed earlier by a panel in which liberals predominate, calls for both a government plan to compete with private insurers and a mandate that employers help cover their workers. Those are only two of dozens of differences.
In general, the bills moving toward floor votes in both houses would require most Americans to purchase insurance, provide federal subsidies to help those of lower incomes afford coverage and give small businesses help in defraying the cost of coverage for their workers.
The measures would bar insurance companies from denying coverage on the basis of pre-existing medical conditions and for the first time limit their ability to charge higher premiums on the basis of age or family size. Expanded coverage would be paid for by cutting hundreds of billions of dollars from future Medicare payments to health care providers. Each chamber also envisions higher taxes — an income tax surcharge on million-dollar wage-earners in the case of the House, and a new excise levy on insurance companies selling high-cost policies in the Senate Finance Committee bill.
Apart from Snowe, Finance Committee Republicans cited higher taxes, a greater federal role in the insurance industry and other concerns as they lined up to oppose the bill.
From $829 Billion to $2 Trillion
Until recently, the legislation was projected to cost $829 billion during 10 years. That number has changed dramatically.
On October 16, 2009, Senate Majority Leader Harry Reid talked about the calculated savings of Medical Malpractice (Tort) reform and in the process let the true cost of the health care bill slip out. He compares the $54 Billion in predicted savings against the 2 trillion dollar cost of National Health Care.
Reid said, “He (the President) talked about CBO saying that there would be $54 billion saved each year if we put caps on medical malpractice and put some restrictions — tort reform — $54 billion. Sounds like a lot of money, doesnt it, Mr. President? The answer is yes. But remember, we’re talking about $2 trillion, $54 billion compared to $2 trillion. You can do the math. we can all do the math. It’s a very small percent.”