Monday, February 23, 2009

Comments on the US Budget

CSPAN just showed the opening remarks at the start of President Obama's budget summit. For those of you who don't know, the US has a budget crisis. Right now, national debt is about 16% of GDP. By mid century, it could be as much as 300% if nothing is done now.

Two of three speakers mentioned that the number one problem for the US budget is increases in healthcare spending. The majority of those increases come from growth in per-capital medical expenditures. In other words, people are using more and/or more expensive technology and procedures. It would be nice if this caused all Americans to live healthily to 100 and die in their beds of old age, but in fact the US has poorer health outcomes than most Western nations. The time for reform is right now.

In addition, President Obama remarked that the Bush administration budgeted zero dollars for the Iraq war. All appropriations for the war were conducted in a supplementary bill. This was massively dishonest, because it masked war spending from the regular budgeting process. If the war had been in the regular budget, policymakers would have to directly balance those costs against, say, the costs of tax cuts for the rich, or health and other entitlement spending. They did not. The Bush administration also relied on a number of short-term fixes that hid the true cost of certain provisions (e.g. the Alternative Minimum Tax).

It's change or die time for the US.

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