The President said that he understands the relevance of the budget crisis, however, keeps their policy directly to the iceberg.
President Barack Obama entered the office, promising to start with the principal and solve big problems. He showed great political will in trying to reform the national health system. But the biggest economic problem facing the nation - not health, and the budget deficit. Recently, the White House made it clear that he would seriously consider reducing the budget deficit next year after the massive health benefits. This is a recipe for disaster, because it provides a basis for increased spending and the emergence of another powerful interest group opposed to measures to reduce the deficit.
Our financial situation has deteriorated dramatically in just the last few years. The federal government has a budget deficit of $ 1.4 trillion. That is the highest figure since the Second World War, as the expenditure amounted to almost 25% of GDP, while revenue fell nearly 15% of GDP. Such indicators, we see the first time in 50 years.
Going forward, we understand that in the short term improvements will not be, because the costs far outstripped income and each year the federal budget planned so as to be scarce. Our national debt is $ 17.1 trillion. 10 years, or $ 50,000 for every American. By 2019, according to the analysis of the Congressional Budget Office, the budget deficit will be approximately $ 1trln. Even if the economy improves and incomes will be higher than historical norms.
The planned budget will have devastating consequences for economic growth and for its adequate assessment. These actions will make our children and grandchildren to pay for the current over-consumption. Federal deficit replace our internal investments in physical capital, human capital and technology that can increase the potential GDP and living standards. Funding shortfall could displace exports and hurt our international competitiveness, which is already happening, when we take big loans from countries such as China.
Many financial analysts ask questions as to when rating agencies lowered their rating of the U.S.? When lenders will provide an additional risk in the price of borrowing the federal government, which will lead to a surge in interest rates? And what the result will be the impact of higher interest rates, dollar depreciation and higher inflation in the manifestation of the economic crisis? Given the recent friendly, but fruitless, the president's visit to China, the answers to these questions will appear faster than any of us would like.
Obama and his advisers say that share similar concerns, but his administration's policies is equivalent to the rate of the iceberg. Perhaps the most striking example of incorrect sends global stock markets could be called health reform, which was adopted by the White House earlier this month, and another that is pending in the Senate. Whatever the intentions, the program has too many shortcomings to be justified.
First of all, the curve of health spending does not go down. U.S. Congressional Budget Office found that passed the House bill is not in a position to reduce the rate of growth of health spending. Checking the bill mainly actuary service centers free medical care and health services by Richard Foster (Richard Foster) showed that the rate of growth of national health expenditures will increase by 2.1% over 10 years, or the cash equivalent of up to $ 750 billion bill the majority leader, Harry Reid is growing as fast as the version the House of Representatives. Thus, the bill modifies the basic principles of health reform: providing quality service at lower cost.
Secondly, every bill defines a new program of social protection, which is growing at 8% annually, and invisible to the naked eye, it is growing faster than the economy, faster than tax revenues and as fast as we have already rolled the program of medical care and free medicaid. They form the next federal program of social protection for long-term insurance.
Finally, the financial bills are not clean, because they use budget tricks and stunts in their reporting: hide "inconvenient" expenses to mask the true extent of their conceal income from taxes, inflation can affect the taxation, promises to reduce costs for doctors and hospitals which are not attached to material nature of their work.
If you do have savings, which are intended for medical insurance, then these savings should be directed at eliminating the budget deficit and maintaining this program, but not to finance new insurance programs. Take control of such long-term programs are very difficult to date. Work will be basically impossible when several insurance programs.
In general, any innovation that pass through Congress, are economically dangerous and cause a sharp acceleration of the debt crisis. And worst of all, that the Federal Government is unable to cope with the financial situation.
What to do? The best choice for president would be financial suicide to stop the Congress and to refocus on slowing the dangerous growth of social security and health insurance. He must appeal to Congress to request a comprehensive reform of our revenue and taxation system, which will create sufficient income to meet their own needs and stimulate economic growth.
The narrowing of insurance payments and closing tax loopholes to create a fair tax system, with balanced benefit politically difficult to implement. But we will prevent the potentially devastating credit crisis, increase national savings, productivity and wages, increasing our international competitiveness.
Worry about the deficit should not next year, but now. We can not waste time.
President Barack Obama entered the office, promising to start with the principal and solve big problems. He showed great political will in trying to reform the national health system. But the biggest economic problem facing the nation - not health, and the budget deficit. Recently, the White House made it clear that he would seriously consider reducing the budget deficit next year after the massive health benefits. This is a recipe for disaster, because it provides a basis for increased spending and the emergence of another powerful interest group opposed to measures to reduce the deficit.
Our financial situation has deteriorated dramatically in just the last few years. The federal government has a budget deficit of $ 1.4 trillion. That is the highest figure since the Second World War, as the expenditure amounted to almost 25% of GDP, while revenue fell nearly 15% of GDP. Such indicators, we see the first time in 50 years.
Going forward, we understand that in the short term improvements will not be, because the costs far outstripped income and each year the federal budget planned so as to be scarce. Our national debt is $ 17.1 trillion. 10 years, or $ 50,000 for every American. By 2019, according to the analysis of the Congressional Budget Office, the budget deficit will be approximately $ 1trln. Even if the economy improves and incomes will be higher than historical norms.
The planned budget will have devastating consequences for economic growth and for its adequate assessment. These actions will make our children and grandchildren to pay for the current over-consumption. Federal deficit replace our internal investments in physical capital, human capital and technology that can increase the potential GDP and living standards. Funding shortfall could displace exports and hurt our international competitiveness, which is already happening, when we take big loans from countries such as China.
Many financial analysts ask questions as to when rating agencies lowered their rating of the U.S.? When lenders will provide an additional risk in the price of borrowing the federal government, which will lead to a surge in interest rates? And what the result will be the impact of higher interest rates, dollar depreciation and higher inflation in the manifestation of the economic crisis? Given the recent friendly, but fruitless, the president's visit to China, the answers to these questions will appear faster than any of us would like.
Obama and his advisers say that share similar concerns, but his administration's policies is equivalent to the rate of the iceberg. Perhaps the most striking example of incorrect sends global stock markets could be called health reform, which was adopted by the White House earlier this month, and another that is pending in the Senate. Whatever the intentions, the program has too many shortcomings to be justified.
First of all, the curve of health spending does not go down. U.S. Congressional Budget Office found that passed the House bill is not in a position to reduce the rate of growth of health spending. Checking the bill mainly actuary service centers free medical care and health services by Richard Foster (Richard Foster) showed that the rate of growth of national health expenditures will increase by 2.1% over 10 years, or the cash equivalent of up to $ 750 billion bill the majority leader, Harry Reid is growing as fast as the version the House of Representatives. Thus, the bill modifies the basic principles of health reform: providing quality service at lower cost.
Secondly, every bill defines a new program of social protection, which is growing at 8% annually, and invisible to the naked eye, it is growing faster than the economy, faster than tax revenues and as fast as we have already rolled the program of medical care and free medicaid. They form the next federal program of social protection for long-term insurance.
Finally, the financial bills are not clean, because they use budget tricks and stunts in their reporting: hide "inconvenient" expenses to mask the true extent of their conceal income from taxes, inflation can affect the taxation, promises to reduce costs for doctors and hospitals which are not attached to material nature of their work.
If you do have savings, which are intended for medical insurance, then these savings should be directed at eliminating the budget deficit and maintaining this program, but not to finance new insurance programs. Take control of such long-term programs are very difficult to date. Work will be basically impossible when several insurance programs.
In general, any innovation that pass through Congress, are economically dangerous and cause a sharp acceleration of the debt crisis. And worst of all, that the Federal Government is unable to cope with the financial situation.
What to do? The best choice for president would be financial suicide to stop the Congress and to refocus on slowing the dangerous growth of social security and health insurance. He must appeal to Congress to request a comprehensive reform of our revenue and taxation system, which will create sufficient income to meet their own needs and stimulate economic growth.
The narrowing of insurance payments and closing tax loopholes to create a fair tax system, with balanced benefit politically difficult to implement. But we will prevent the potentially devastating credit crisis, increase national savings, productivity and wages, increasing our international competitiveness.
Worry about the deficit should not next year, but now. We can not waste time.
The Wall Street Journal
November 20
November 20
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