Who Hasn't Donald Trump Insulted?

The latest institution to be denigrated by the White House is the Congressional Budget Office. Sean Spicer, the President's ditzy Press Secretary, said that the CBO's financial analysis of the Republican's proposed 'American Health Care Act,' should not be trusted. This preemptive strike against the CBO is due to widespread reports that the analysis will show the AHCA to be vastly inferior to the Affordable Care Act, covering far few people at far higher premiums.

Trump has now dismissed, denigrated, or demeaned the Intelligence Community, the military officer corps -- "rubble" -- Senator John McCain, because he was captured during the Vietnam War, the U.S. Judiciary, former president, Barack Obama, the U.S. Electoral System, and the Media, Muslims, Mexicans, to say nothing of past Republican presidential nominees, and of course, "Crooked Hillary," and women generally, for whom he demonstrates appalling disrespect.

The only entity for whom the American President, Donald J. Trump, exhibits respect, and indeed admiration, is Russian President, Vladimir Putin. I wonder why that is.

My Republican Friend Worries About the Federal Debt

My friend wrote:

"I heard on the radio that the Congressional Budget Office has issued a dire warning about the USA's debt problem.  Check it out (I don't have the web address). Of course, NO democrats ever mention our fiscal situation."

Dear Republican Friend;

"Dire" is in the eye of the beholder, e.g., I think climate change is a dire situation. You don't. Nor do your Republican Presidential candidates, who feel so strongly about it NOT being "dire" that they've criticized the Pope for addressing climate change in his encyclical. Yet unchecked, global warming will kill us. What the CBO report says, on the other hand, is that ALL THING BEING EQUAL, a growing debt will make us very uncomfortable. Here's the bottom line of the CBO summary:

If current law remained generally unchanged in the future, federal debt held by the public would decline slightly relative to GDP over the next few years, CBO projects. After that, however, growing budget deficits—caused mainly by the aging of the population and rising health care costs—would push debt back to, and then above, its current high level. The deficit would grow from less than 3 percent of GDP this year to more than 6 percent in 2040. At that point, 25 years from now, federal debt held by the public would exceed 100 percent of GDP.

The consequences of this growth in debt are addressed by the CBO as follows:

How long the nation could sustain such growth in federal debt is impossible to predict with any confidence. At some point, investors would begin to doubt the government’s willingness or ability to meet its debt obligations, requiring it to pay much higher interest costs in order to continue borrowing money. Such a fiscal crisis would present policymakers with extremely difficult choices and would probably have a substantial negative impact on the country. Unfortunately, there is no way to predict confidently whether or when such a fiscal crisis might occur in the United States. In particular, as the debt-to-GDP ratio rises, there is no identifiable point indicating that a crisis is likely or imminent. But all else being equal, the larger a government’s debt, the greater the risk of a fiscal crisis.

Now the reason Democrats don't pay more attention to the debt problem is that the problem is easily fixed. Let's start by eliminating the estate tax and reducing corporate taxes, two of the Republicans favorite "fixes." Did you know that the House just voted (along party lines) to repeal the estate tax? Congress’s Joint Committee on Taxation estimated that repealing the estate tax would cost the Treasury $14.6 billion in the 2016 fiscal year and $269 billion over 10 years. John Boehner said $269 billion “is nothing more than a drop in the bucket to the federal government.”

Of course the only reason you'd be interested in the facts about estate taxes is to avoid them, but if you are interested in the larger picture and why the Republican crusade to repeal estate taxes is such a farce, you could read this economic intelligence report, which would tell you that you have nothing to worry about, because the federal tax currently applies to estates worth more than $5.43 million for an individual or $10.86 million for a couple. Only Republican donors of the Sheldon Adelson variety worry about this, and even they aren't too worried, because they can afford good tax lawyers.

But I digress. You will note that at the beginning of this email I capitalized "ALL THINGS BEING EQUAL." There are quite straight-forward things our "leaders" in Congress could do to remedy the fiscal situation (e.g., raise the amount well-off people like you and I have to pay into Medicare). Then again, Congress could simply implement the Simpson-Bowles plan. That would result in the savings shown below. But as you've pointed out, every item has a "constituency." That makes it hard for politicians to tackle, especially those with no integrity.

So that leaves us with the prospect of waiting until the POTENTIAL crisis that CBO forecasts occurs in 2040 and then watching as our "leaders" take stop gap measures to stem the tide. And speaking of stemming the tide, do you know what sea level rise is predicted to be by 2040?

The Debt Does Not Exist

VIEWPOINT: The Debt Everyone Is Freaking Out About Does Not Exist
JEFF SPROSS, FEBRUARY 24, 2013

Excerpts:

The debt that’s got everyone worried is the part we haven’t yet incurred. And that debt, by definition, does not exist. It’s not a certainty, it’s merely a projection by the Congressional Budget Office. And trying to model how the federal budget, not to mention the entire American economy, will behave years or even decades in the future is a devilishly treacherous business.

By fixating on a problem that may or may not exist, Washington has trapped policymaking in a weird, postmodern dilemma. We’ve declared there’s a crisis because we’ve produced a hypothetical number, tethered to reality only by a host of assumptions and guesswork about what will happen in the next several decades. Then we insist this “crisis” isn’t “solved” until we’ve made policy changes that shift the math designed to spit out said hypothetical number. Policymaking becomes less about solving concrete problems and more about made-up numbers on an Excel spreadsheet.

In a depression, spending cuts suck demand out of the economy, leading to slower growth. Europe has so far pursued austerity with markedly more enthusiasm than the United States, and its economic performance predictably tanked as a result. Spain and France are anticipated to miss their latest debt-cutting targets, and the Continent as a whole will probably not see renewed economic growth for another year.

The vast majority of the deficits we’ve seen since President Obama took office were due to the 2008 collapse. Under depression conditions, deficits are a feature, not a bug.

We’ve already cut non-defense discretionary spending to 40-year lows, endangering all sorts of investments in America’s infrastructure, health, safety, communities, and future productivity. This massive failure to invest or aid saps the economy’s skills, education, networks, and future prospects.

What's Driving Health Care Costs?

In 1973 in France, French tax inspectors barged into the offices of the 155 year-old Cruse et Fils Freres wine shippers and discovered that the shippers were passing off inferior wines from humble growing regions as superior wines from regions like the noble Bordeaux. One vat of exceptionally bad wine was labeled, "Salable to Americans as Beaujolais."

In testimony before the Senate Committee on the Budget in January 2008, the Congressional Budget Office stated that "future health care spending is the single most important factor determining the nation’s long-term fiscal condition." Given its importance, Americans would do well to understand what's driving burgeoning health care costs and what can reasonably be done about it -- we don't want to spend a lot of money buying bad wine.

The chart above shows where the health care dollar goes, but not necessarily where we can get the most bang for buck in slowing the rise in health care spending.

Some people argue that the rise in America's health care spending is due to an aging population. But it turns out that the bulk of the projected increase in spending on Medicare is not due to demographic changes (e.g., increases in the number of beneficiaries) but rather to on-going increases in costs per beneficiary. In other words, we're spending more on our seniors that we did in the past. Why?

The reason for this is the same reason we're spending more generally on health care -- we have more high technology and better medicine and we dispense it more readily. According to the CBO, “The most important factor driving the long-term growth of health care costs has been the emergence, adoption, and widespread diffusion of new medical technologies and services by the U.S. health care system.”

The problem is exacerbated (if you want to look at it that way) by the fact that Americans are better informed about available medical technology (god bless the Internet and TV) and more aggressive in requesting it from their doctor. If they aren't already asking for the latest drug to reduce their anxieties, they're told to do so by pharmaceutical company advertising, "Ask you doctor about Zofloat, today." Prescription drugs cost, on average, 30% to 50% more in the United States than in Europe. Under most of the health care bills under consideration in the House and Senate, the secretary of health and human services would be required to negotiate drug prices on behalf of Medicare beneficiaries, a proposal that is anathema to pharmaceutical companies.

Another major factor in rising health care costs -- perhaps the most significant -- is the nexus between how doctors are paid and the cost of high tech medical procedures, such as the myocardial perfusion nuclear stress test, a procedure I had recently. I don't have my bill yet, but tests like this can easily run over $1000.

In the United States, nearly all doctors are paid piecemeal, for each test or procedure they perform, rather than a flat salary. As a result, physicians have financial incentives to perform procedures that further drive up overall health care spending. Doctors in the United States earn two to three times as much as they do in other industrialized countries. Furthermore, doctors have become much more business savvy, and like other businesses are realizing the financial benefits of vertical integration. Why “outsource” lab work when you can open your own lab and supply it a ready source of customers – your patients?

Americans generally don't begrudge doctors their high financial returns. It takes intelligence and hard work to become a doctor, to say nothing of the cost of medical school and setting up business (in fact, most new doctors start their profession in considerable debt). I don't have an opinion on whether doctors make too much money or not, but I do believe that a system that is designed to provide financial incentives to doctors to perform procedures rather than care for patients' well-being is a poorly conceived system.

It should also be noted that doctors make more from doing expensive, complex procedures. These procedures require specialists. Thus, an unintended consequence of our health care system is the over abundance of medical specialists and the growing shortage of primary care physicians.

Finally, the spectre of multimillion-dollar malpractice suits is a further incentive for doctors to practice "defensive medicine" and order expensive and often unnecessary tests.

Is it time to convert doctor's pay to a salary system? Many people think so. Most doctors don't.