Can Cutting Military Spending and Subsidies Solve the US Deficit Crisis?

[WhoWee]

The reason that Medicare and Medicaid costs are rising is because we have a broken health-insurance system. It costs more than many people can afford, and uninsured people fall back on ER visits, etc, when timely preventative care could have averted those visits. That drives up medical costs for all.

The lack of affordable universal coverage in the US is very costly to all the insured people because their costs are driven up by the uninsured. European countries and Canada do a lot better at covering their citizens with a lot less money than the US spends.

How many millions of people have been added (and will be added) to Medicaid - because they are unemployed or under-employed? Let's also not forget the expansion of the SS disability program (50+ new eligible conditions - bi-polar as an example). I've posted links to both of these extensively in other threads - just label IMO.

 

[Al68]

"Why do some people describe the "special issue" securities held by the trust funds as worthless IOUs? What is SSA's reaction to this criticism?

As stated above, money flowing into the trust funds is invested in U. S. Government securities. Because the government spends this borrowed cash, some people see the trust fund assets as an accumulation of securities that the government will be unable to make good on in the future. Without legislation to restore long-range solvency of the trust funds, redemption of long-term securities prior to maturity would be necessary.
Far from being "worthless IOUs," the investments held by the trust funds are backed by the full faith and credit of the U. S. Government. The government has always repaid Social Security, with interest. The special-issue securities are, therefore, just as safe as U.S. Savings Bonds or other financial instruments of the Federal government.

While that's true, the "safety" of all U.S. debt notes assumes that our grandchildren will choose to pay debts they didn't incur. Could happen, but I wouldn't count on it.

 

[WhoWee]

While that's true, the "safety" of all U.S. debt notes assumes that our grandchildren will choose to pay a debt they didn't incur. Could happen, but I wouldn't count on it.

When the Chinese raise our borrowing rate - we'll see how secure the trust fund investments are - won't we?

 

[ChanceEdwards]

Try Smart Shopping
By Ed Rendell

Pennsylvania now spends $2 billion less to run state government than it did eight years ago. This didn't happen by accident; it's a direct result of the smart management measures we put into place.

Pennsylvania had more than 2,000 contracts for buying office supplies when I took office in January 2003. Some agencies paid full retail price. We immediately began applying good business practices to every aspect of state purchasing. We saved $14 million a year by putting office supplies out to bid and selecting the lowest-priced single supplier. Applying that same model to computer purchases saved taxpayers another $19 million a year. We allow local governments and school districts to piggyback on these contracts. These are just two examples of the procurement redesign that is saving taxpayers nearly $30 million a year.

Today, the skyrocketing cost of providing health care is squeezing taxpayers. Here, we've applied more cutting-edge strategies. To give our state workers greater responsibility for their own care, I imposed the first-ever employee contribution toward premiums. We also require employees to fully engage in a wellness program or face 50% higher monthly premiums.

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Our wellness plan specifically focuses on reducing the costs of treating chronic illness, and it actively pushes employees to stay healthy. This approach enables us to keep the state's cost increases to less than 7% a year, well below that of most other states in the recent past. This is a true "win-win" for our employees and our taxpayers.

To save even more money without cutting services to taxpayers, we've asked the state legislature to place all 500 of our school districts into one combined health-insurance plan. Districts would enjoy new leverage in the insurance marketplace, leading to improved benefits and cost reductions of up to 30%.

Each of our cost-saving measures has faced some opposition from legislative leaders of both parties. Fortunately, taxpayers stood with us—they understand that common sense, innovation and political will are what it takes to make government work for them.

Mr. Rendell, a Democrat, is the governor of Pennsylvania.

Pension Reform Is Key
By Arnold Schwarzenegger

For years now, I have been trying to get lawmakers to reform public employee pensions in order to benefit private-sector job growth. The problem is stark: Over the last decade in California, spending on state employees' compensation rose nearly three times faster than state revenues. This has squeezed resources for programs, such as higher education and job training, that benefit private-sector workers.

This year, for the first time ever, our state was forced to spend more on retirement costs ($6.5 billion) than on higher education. This prevented us from, among other things, investing in more transportation and other infrastructure projects that are needed to accommodate the world's fastest-growing and most innovative companies.

Last week we finally got some good news: The state legislature agreed to pass my pension reforms as part of a hard-fought budget deal. These reforms cut spending in significant ways:

• Current employees will now be required to contribute more toward their pensions, saving nearly $800 million this year alone.

• For new employees, we will create a two-tier system that rolls pension levels back to pre-1999 levels. This will reduce pension costs by $100 billion over time.

• We ended the ugly practice of pension "spiking," where employees manipulated their compensation in their final year at work in order to boost their lifetime retirement benefits.

• We brought transparency to the system by exposing the deceptive pension fund accounting practices that were hiding hundreds of billions in pension debt from the taxpayers.

These reforms are creating a pension system that is fair to both state workers and to the private-sector workers who pay their salaries and benefits. It will free up more money for investing in critical programs like higher education and infrastructure, and help reduce tax burdens on the private sector.

It saddens me to see Democrats and some Republicans who seem intent on raising business taxes and reducing infrastructure investment in order to protect spending on public-employee compensation and retirement benefits. We believe that, on the contrary, private-sector job growth will be enhanced if public-sector retirement benefits are brought under control. All it takes is some lawmakers who are willing to stand up to the special interests and do what's right.

Mr. Schwarzenegger, a Republican, is the governor of California.

Invest During Bad Times
By Deval Patrick

Even before we began to feel the effects of the global economic collapse, we chose investments and reforms that we believed would build a stronger, better Commonwealth for a generation. We stuck with that strategy through the recession—and it's working.

Massachusetts increased its investment in education—because education is our calling card around the world—and sustained it because second graders don't get to sit out the second grade until the recession is over. We invested in innovation industries (like biotech, IT, clean and alternative energy, and related manufacturing) because our highly educated work force is uniquely suited to such enterprises. And we invested in health care, because we see health as a public good, and because we believe that people should have health security, especially in tough times.

We paid for these investments with government reforms and deep cuts in other spending. We cut $4.3 billion from a variety of programs and agencies, reduced employee head count by 3,000, negotiated wage and benefit concessions from state employee unions, and increased state employee health-care contributions. We also capped pensions and ended loopholes that some employees used to boost their retirement benefits, such as by claiming an entire year of service for working one day in a calendar year.

At the same time, we consolidated more than 20 transportation, business development and other state agencies. Civilian flaggers instead of police details were assigned to construction projects. We cut the business tax rate to 8.75% from 9.5%. We closed tax loopholes that favored multinationals over small businesses, which make up 85% of the businesses in our state. We increased our sales tax to 6.25% from 5%, but food and most clothing remain untaxed. A large rainy day fund and federal stimulus funds have also helped. Through this blended approach, we delivered four responsible, balanced budgets—on time—leading all the independent rating agencies to reaffirm our strong bond rating.

We're getting results. Massachusetts's rate of job growth is the highest in the nation, having added nearly 65,000 jobs so far since December. The state economy is growing at 6.4%, twice the annual rate. CNBC rates us the fifth best place in the U.S. for business.

Mr. Patrick, a Democrat, is the governor of Massachusetts.

Ever-Higher Budgets Can't Be the Norm
By Bob McDonnell

When I took office in January, we faced two massive budget shortfalls. The first was $1.8 billion in the fiscal year 2010 budget. To get this under control we cut spending and provided a financial reward for state workers to generate savings and not spend their entire agency budgets by the end of the fiscal year. Six months later we announced a $403 million surplus.

The second shortfall was $4.2 billion in the current biennial budget. Again, we cut a wide variety of programs (including in education and health), reducing state spending to 2006 levels. As a result we closed that shortfall without a tax increase—indeed we threatened a veto if the legislature passed the previous governor's proposed $2 billion tax increase. The legislature rejected the tax unanimously.

Virginia's state budget grew by 73.4% from 2000 to 2009, much faster than the rate of growth in population plus inflation. This is unsustainable and unacceptable, and the budget cannot be seriously restrained without addressing its two primary drivers: personnel and programs.

As a result, we supported a significant overhaul of Virginia's pension system. All state employees hired after July 1 of this year will now, for the first time in a generation, contribute to their own pensions. With pension-system reform, we will save an estimated $3 billion over the next 10 years. Actuaries estimate that in the long run, our reforms will reduce the total cost of Virginia's pension system by 10%.

Our second major reform was an immediate, statewide hiring freeze. We obtained enhanced authority from the legislature for the governor to order a freeze that covers all noncritical areas of state government, not just a select few agencies. This strict freeze, together with reductions in full-time positions, will save over $20 million a year.

Looking forward, we've also created a commission on government reform that is evaluating over a thousand ideas to save tax dollars, by doing everything from cutting and consolidating boards and agencies to creating a one-stop shop where businesses can access every license, permit and registration they need to operate. For too long, state governments have operated on the assumption that ever-higher budgets are the norm. We intend to redo the way government operates.

Mr. McDonnell, a Republican, is the governor of Virginia.

 

[Al68]

When the Chinese raise our borrowing rate - we'll see how secure the trust fund investments are - won't we?

Yep. Many people seem to think that a government can continue to exist indefinitely while overspending like ours currently does. And that a constantly devaluing fiat currency can last indefinitely. We know from history that neither is true.

 

[WhoWee]

Yep. Many people seem to think that a government can continue to exist indefinitely while overspending like ours currently does. And that a constantly devaluing fiat currency can last indefinitely. We know from history that neither is true.

I received four (4) emails today from lenders urging me to borrow money before July 1 - when their rates will increase.

 

[mege]

The reason that Medicare and Medicaid costs are rising is because we have a broken health-insurance system. It costs more than many people can afford, and uninsured people fall back on ER visits, etc, when timely preventative care could have averted those visits. That drives up medical costs for all.

The lack of affordable universal coverage in the US is very costly to all the insured people because their costs are driven up by the uninsured. European countries and Canada do a lot better at covering their citizens with a lot less money than the US spends.

Maybe medicare/medicaid is the problem with the health care system in the US. Instead of being safety nets for the unfortunate and the elderly - they've become ways of life for many. I forget whom said it - but medicare wasn't supposed to get this big, ever. It was supposed to be stop-gap coverage, and temporary at best for necessary services.

The dictitorial nature of medicare/aid skew the otherwise market system that is in place and force medical facilities to potentially charge more for a service to 'non standardized' patients. This increase can be from a) the dictated price being higher than necessary (so why charge less to someone) or b) the dictated price being lower than expected (causing the facility to recoup costs from non-medicare/aid patients). Either way, unless the medicare/aid price for service is perfectly aligned with the market expectation it will force the non-entlitled individuals costs up. With the expansion of federal medical subsidies like medicare/aid in the 90s (it's not really insurance...) there were several reports which went into more detail on these points. If I have time tonite I'll dig them up.

Even discounting the scenario above, if medicare/aid is well managed enough - how does that explain the secondary market for medicare coverage? There's companies out there making money on buying medicare coverage from someone and still providing them 'even more' services. That indicates a fundamental flaw in the system to me.

 

[WhoWee]

Maybe medicare/medicaid is the problem with the health care system in the US. Instead of being safety nets for the unfortunate and the elderly - they've become ways of life for many. I forget whom said it - but medicare wasn't supposed to get this big, ever. It was supposed to be stop-gap coverage, and temporary at best for necessary services.

The dictitorial nature of medicare/aid skew the otherwise market system that is in place and force medical facilities to potentially charge more for a service to 'non standardized' patients. This increase can be from a) the dictated price being higher than necessary (so why charge less to someone) or b) the dictated price being lower than expected (causing the facility to recoup costs from non-medicare/aid patients). Either way, unless the medicare/aid price for service is perfectly aligned with the market expectation it will force the non-entlitled individuals costs up. With the expansion of federal medical subsidies like medicare/aid in the 90s (it's not really insurance...) there were several reports which went into more detail on these points. If I have time tonite I'll dig them up.

Even discounting the scenario above, if medicare/aid is well managed enough - how does that explain the secondary market for medicare coverage? There's companies out there making money on buying medicare coverage from someone and still providing them 'even more' services. That indicates a fundamental flaw in the system to me.

The Government has controlled healthcare and health insurance for many years - through regulation and price control.
http://www.google.com/search?source...gc.r_pw.&fp=bd71108a3b251f45&biw=1186&bih=847

To expand a bit - Medicaid has become a de-facto universal health care plan - due to expand again - isn't it?
http://old.news.yahoo.com/s/dailyca...opelosiunclearonobamacaresmedicaidglitchcosts

"As details about the new-found Obamacare glitch, that allows for more than 3 million middle-class Americans to qualify Medicaid surface, the Obama administration and key members of Congress are mum on several points.
Was it intentional? According to the Associated Press, it was a negative result of a “well-meaning effort.” Obama administration officials and senior congressional Democrats, including House Minority Leader Nancy Pelosi haven’t answered this question, and Pelosi’s office hasn’t responded to requests from The Daily Caller seeking comment.
“What I want to know is: did the CBO know about this? Did they include this spending in their original score of the law?” said Michael Cannon, health policy expert at the Cato Institute, in an email. “Or would this spending add even more to the cost of the law?”"

 

[edpell]

I would keep social security off-budget where all pols used to promise it was. I would pay the social security trust fund its 2500 billion dollars using printed money and allow them to invest it in something real like the world stock markets.

That leaves everything else at 45% borrowed. I would cut everything 45% except I would cut 100% of ag subsidies, 100% of oil subsidies, 100% of foreign aid. I would consider repudiating the debt.

 

[SixNein]

The reason that Medicare and Medicaid costs are rising is because we have a broken health-insurance system. It costs more than many people can afford, and uninsured people fall back on ER visits, etc, when timely preventative care could have averted those visits. That drives up medical costs for all.

The lack of affordable universal coverage in the US is very costly to all the insured people because their costs are driven up by the uninsured. European countries and Canada do a lot better at covering their citizens with a lot less money than the US spends.

While I agree that uninsured people are a problem, the necessary reforms are not politically possible.