Last week, whether by accident or design, the Democrat party and the Obama administration revealed an unprecedented level of contempt for the intelligence of the American public with regard to that public’s understanding of economics. Sad to say, if a recent survey is accurate, a substantial portion of that contempt is cynically justifiable.
The three issues that reveal both the contempt and the justification for it are the true costs of ObamaCare, a future “balanced” budget, and what it will really take to get federal government spending under control.
First, ObamaCare. In her first appearance before the House Energy and Commerce Health Subcommittee last Thursday, Kathleen Sebelius, Secretary of the Department of Health and Human Services (HHS), was forced to make an admission she clearly wanted to avoid. Rep. John Shimkus (R-IL) asked the Secretary whether $500 billion in proposed Medicare cuts are being used to sustain the program itself or pay for the new health care law. “There is an issue here on the budget because your own actuary has said you can’t double-count,” said Shimkus. ”What’s the $500 billion in cuts for? Preserving Medicare or funding the health-care law? Which is it?” ”Sir, The Affordable Care Act adds twelve years to the Medicare trust fund according to every actuary, and the $500 billion represents a slowdown in the growth rate of Medicare over ten years, from what was projected at 8% to a growth rate of 6%,” she replied.
Shimkus persisted. ”So are you using it to save Medicare or using it to fund healthcare reform? Which one?” he asked for the second time. ”Both,” answered Sebelius.
Thus, the Obama administration’s ongoing insistence that the health care bill was “revenue neutral” is revealed as fraudulent, and confirms Congressional Budget Office (CBO) Director Douglas Elmendorf’s December 23rd clarification of same. Yet there is more. Many Americans don’t realize that the reason Obamacare’s full implementation has been delayed until 2014 is due to another piece of fraud, which consists collecting ten years of tax increases along with ten-year cuts to Medicare (just revealed as double-counting) to pay for six years of health care costs. Yet we’re still not done: another $200 billion-plus in “savings” referred to reduced physician fees for Medicare that haven’t happened, because Congress refuses to vote on them–just as they have refused for the last seven years. And the Heritage Foundation’s James C. Capretta also points out another case of double-counting with regard to the Community Living Assistance Services and Support (CLASS) Act, in which collecting insurance premiums in advance is counted as “savings,” even though those collections “would be needed later to meet entitlement obligations.”
Only those with utter contempt for the public would consider such gimmicks a legitimate definition of “revenue neutral,” or the more fantastic claim by the president himself that this bill would save money over the long term. Such contempt is apparently shared by the mainstream media: in the course of my research on Sebelius’ testimony, I couldn’t find a single major news source other than Yahoo.com that reported the exchange.
Second, a future “balanced” budget. Despite what the ruling elite in Washington, D.C. think, most Americans understand that a balanced budget means that what one spends must not exceed what one earns. Yet in a mind-boggling display of disregard for such a reality, Office of Management and Budget Director, Jack Lew, told the House Budget Committee that the president’s $3.7 trillion dollar budget, which contains a record-setting $1.6 trillion of deficit spending, is “a plan forward that would get us to primary balance by the middle of the decade.” The weasel words? “Primary balance,” which is defined as a budget where revenues and spending are equal–excluding all the interest on the fourteen trillion dollars of debt, and counting, the federal government has accumulated.
How disingenuous is such a contention? From the Washington Post: “Interest payments on the national debt will quadruple in the next decade and every man, woman and child in the United States will be paying more than $2,500 a year to cover for the nation’s past profligacy…Starting in 2014, net interest payments will surpass the amount spent on education, transportation, energy and all other discretionary programs outside defense. In 2018, they will outstrip Medicare spending. Only the amounts spent on defense and Social Security would remain bigger under the president’s plan.”
The interest payment for the current fiscal year are $267 billion–expected to reach $627 billion by 2017, when, according to the Obama administration, the budget would be “balanced.” Then the Post spelled out the ugliest of ugly realities: ”[T]he nation’s debt is growing faster than the economy.”
For perspective, it is worth remembering that the current impasse in Congress, the one which may lead to a government shutdown, the cuts Democrats are calling “draconian, ” “job-wrecking,” “cruel,” etc., total $61 billion, out of the aforementioned $1.6 trillion in deficit spending. Thus such “cuts” total less than four percent of this year’s deficit, and less than two percent of the $3.7 trillion in spending proposed by the Obama administration.
Which brings us to a substantial part of the reason Democrats think they can get away with such chicanery. A recent survey conducted by The Tarrance Group reveals “widespread misconceptions about the state of the federal budget. A majority of voters incorrectly believes the federal government spends more on defense/foreign aid than it does on Medicare and Social Security (63%). Also, a similar majority (60%) incorrectly believes problems with the federal budget can be fixed by just eliminating waste, fraud and abuse. Voters do not casually agree with these untruths–at least 40% strongly agree (italics original). Further, less than half (44%) believe Medicare and Social Security costs are a major source of problems for the federal budget (49% disagree).”
Best-selling author and financial advisor John Maudlin reveals how erroneous such thinking is. “To avoid a crisis that would devastate this country, putting us into a decade-long recession (or worse), we must bring the deficit back (to at least!) below nominal GDP. That means a trillion dollars plus in spending cuts and/or tax increases….The simple fact is that the federal government is now too large for our current income tax base as it is structured, and we have made promises that cannot be kept without a major change in the tax structure.”
What that means is Americans have stark choices to make. If they want their “entitlement economy,” absent substantial changes in the three largest budget expenditures, aka Medicare, Medicaid and Social Security, then Americans must face a future with substantially higher levels of taxation, likely including a Value Added Tax (VAT) to pay for it. Why? These three entitlements alone make up almost 60% of federal expenditures. And make no mistake: even if every penny of the waste and duplication highlighted in last week’s Government Accountability Office (GAO) report were eliminated, it wouldn’t come close to balancing the federal budget.
How can the public be so naive? Perhaps the other highly-publicized battle taking place in the nation right now might have something to do with it. Public service unions are fighting tooth and nail to maintain their power and influence, the largest part of which concerns public school education. Public school education which has been in decline for the better part of four decades, graduating millions of students deficient in many areas, one of which is math. A study authored by Eric A. Hanushek of Stanford University, Paul E. Peterson of Harvard University and Ludger Woessmann of the University of Munich reveals that U.S. students from the graduating class of 2009 who studied advanced math “rank 31st out of 56 countries, falling behind most industrialized nations…closer to developing countries than to developed countries.”
Sad to say, in the numerous times I have addressed the issue of public education, I have received countless responses from readers convinced that such deficiencies in the quality of public schooling are conspiratorial. Or, to put it succinctly, a bad education equals a good Democrat. I have always dismissed such theories. Yet when I see the deliberate and cynical misrepresentations that form the basis of “revenue-neutral” ObamaCare and the administration’s “balanced” budget, coupled with the public’s deep misunderstanding of where this country is economically, dismissing such theories is getting harder to do.
Anyone who thinks federal deficits and the national debt can be brought under control without substantial changes in Medicare, Medicaid and Social Security–or massive tax increases–is delusional. That so many members of this administration and the Democrat party express their contempt for the public by fostering that delusion, borders on obscene.
Arnold Ahlert is a contributing columnist to the conservative website JewishWorldReview.com.
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