The closer we get to the final passage of health care reform legislation, the worse it seems to get and the higher the costs rise. Today, The Heritage Foundation is out with a new assessment of the costs that puts it all in perspective. The full text is below:
In theory, the federal government has $2.5 trillion stashed away in a nondescript office building in the sleepy little town of Parkersburg, West Virginia. That is where the Treasury Department keeps stacks of nonnegotiable Treasury bonds payable to the Social Security Administration. But as the Associated Press reported yesterday, for the first time since the 1980s, the federal government will not be adding to that stack. Thanks to an aging population and slow economy, Social Security will pay out $29 billion more this year than it takes in. And the Congressional Budget Office reports that after small surpluses in 2014 and 2015, the program is projected to be in the red from 2016 until forever.
But what about Al Gore’s Social Security “Lock Box?” Can’t we just spend that $2.5 trillion in the Social Security Trust Fund? As Heritage experts David John and Brian Reidl explain, since 1939 federal law has required Social Security to “invest” its extra money in Treasury bonds. Those bonds are really just IOUs from the government to the government. The feds already spent that $2.5 trillion long ago on programs such as education, foreign aid and defense. Add the $2.5 trillion Social Security obligation onto our other obligations and our current national debt stands at $12.5 trillion, or nearly $42,000 for every man, woman, and child in the country. And it will only get worse under President Barack Obama’s Budget. It would: 1) borrow 42 cents for each dollar spent in 2010; 2) leave permanent annual deficits that top $1 trillion as late as 2020; and 3) dump an additional $74,000 per household of debt into the laps of our children and grandchildren.
Responding to such unsustainable borrowing, Moody’s rating agency announced Monday that the United States needs to make deep spending cuts or risk losing its AAA credit rating. From the report: “growth alone will not resolve an increasingly complicated debt equation. Preserving debt affordability at levels consistent with AAA ratings will invariably require fiscal adjustments of a magnitude that, in some cases, will test social cohesion.”
Losing our AAA rating would send interest rates higher, increase our borrowing costs, and send the percentage of GDP we spend servicing our debt sky rocketing. Bloomberg adds: “the U.S. will spend more on debt service as a percentage of revenue this year than any other top-rated country except the U.K., and will be the biggest spender from 2011 to 2013.” The message from Moody’s was clear: the U.S. federal government must change direction on spending or face economic disaster.
The leftist majorities in Congress and the White House are not listening. Instead of reining in federal spending and tackling our existing Entitlement crisis, they are locked in an all out push to create a brand new $2.5 trillion health care entitlement. The President may say his plan is deficit neutral, but the American people do not believe him. And they are wise not to. The President tries to pay for his plan with over half a trillion dollars in Medicare cuts over the next decade. The president’s own Centers for Medicare and Medicaid Services reports that these cuts would cause one-fifth of all health care providers to go bankrupt. Congress would never allow those hospitals to go out of business. Congress will never actually make those Medicare cuts. So already Obamacare is half a trillion dollars in the red, and we haven’t even tacked on the hundreds of billion of dollars the doc fix adds on.
Reducing our entitlement obligations is the only way to prevent our nation from becoming another Greece. We need to: 1) to show these programs’ long-term obligations in the budget; target these programs to only who that need them; and strengthen personal responsibility by making it easier for people to build personal retirement savings and use health care savings accounts. But first we must avoid the fiscal insanity that is Obamacare.
For a related Associated Press report, click here.