Wednesday, June 29, 2011

A main reason for exploding debt and deficits

Funding wars with income tax cuts is rarely a good idea. The cost of the wars in Afghanistan and Iraq stands at $3.7 trillion...and growing.

Let's also recall this chart from the Center on Budget and Policy Priorities (see Figure 1 inside the link). The chart shows where most of the future debt and deficit is coming through the end of the Twenty-Teens. The debt and deficits mostly come from three sources: the burst housing bubble and resulting economic downturn, the wars and the Bush Jr. income tax cuts.

The only other driver I can see is Medicare reimbursement costs because Medicare is prohibited by law (yes, by law) from negotiating better prices from Big Pharma, and the US Government, under Medicare, continues to provide the primary insurance for the most expensive part of the population--the elderly. If we put everyone in the same pool, Medicare for All, and gave Medicare the chance to negotiate pricing, we would have a much more effective system of health insurance.

And for those who think Obama is just swell, and simply hampered by Republicans, the failure of the Democrats, when they had the House and a major majority in the Senate, to raise the Big Pharma giveaway to a fever pitch to get that law repealed. Most Americans don't even know that prohibition exists.

ADDENDUM: But even the idea that Medicare is going broke is one that is far less likely than corporate media likes to make us all assume. Stimulating demand in our economy will boost GDP and that will help maintain Social Security and Medicare. When we focus on Social Security and Medicare as "problems" to be solved, we are looking through the wrong end of the telescope. Would someone please tell that to our Hoover-like President?

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