But can we afford it?

Among the things Thomas Jefferson said about our future was – “I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them. “

The simplest, no cost, no nonsense answers to healthcare reform lies in capping malpractice settlements which would lower malpractice insurance costs, giving tax incentives for health savings accounts and employee owned policies and creating competition among health insurance vendors.  The real issue is can we afford any other solution?

For every trillion in national debt, we pay approximately 50 billion in interest.  Presently, the accumulated national debt amounts to 11 trillion; it has ballooned 1.8 trillion so far this year.  Stuart Varney, financial contributor to Fox Business News reports we borrow 75 billion every week and we will add 2 trillion to the national debt, before yearend.  To fund this debt, the federal government must borrow $1 trillion or go to the Federal Reserve and have them print it. The Fed has already added $970 billion to the nation’s money supply this past year and Treasury Secretary Geithner is asking to again raise the federal debt limit. Reason being, China and other foreign debt buyers have retreated from buying our debt until we start paying it down.  A couple of weeks back, Secretary Geithner hinted a tax increase was preferable over cutting federal spending. He knows Congress is not going to balance the budget nor curtail their appetite.

While optimism precedes recovery, so does reality. The recent financial recovery news should be considered cautiously because the leading indicators do not project recovery. Unemployment rose 166,000 jobs in July and did not account for the 100,000 who’s time expired on the unemployment rolls. Foreclosures rose 7% from June and 32% from one year ago and home prices fell 15.6% during April through June 30.

 Overall government tax take is on track to drop 18% this year, the biggest single-year decline since the Great Depression.  Individual income tax revenues are down 22% from last year and corporate income taxes are down 57%. Social Security tax payments could drop for only the second time since 1940 and if the present trend continues, Medicare collections will decline for only the third time ever. According to the Fed, US industrial output fell to its lowest output ever in May utilizing only 68.3% of industrial capacity.

 In short, the government is cooking the books again. In April the Financial Accounting Standards Board was forced by bank executives and ranking congressional members to impose “emergency measures” and relax the mark-to-market rule leaving “fantasy” balances by which to measure our recovery.  The total number of banks failing this year is now at 69, costing the FDIC $912 million.  FDIC Chairman Sheila Bair just told the Senate Banking Committee it is possible bank failures could increase 10 fold before the crisis is over.  That’s at least another 500 banks.  Reserves at the FDIC are nearly tapped out, leaving it up to the Fed again to print money for the second (or is it the third?) round of bailouts.

According to Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program this could leave the American taxpayer on the hook for as much as 23.7 trillion.

 I would like for the news to be better, but it is not.  America cannot afford health care reform as Congress presents it.  There are good solutions to correct inequities in the present system and our representatives need to be encouraged to move in this direction.

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