Mar 31, 2023
Mar 31, 2023
The US debt is over 14 trillion dollars with a GDP of nearly 15 trillion dollars. Unfunded future liabilities for Medicare, Medicaid, Social Security, Federal Pensions and Veterans benefits are over 65 trillion dollars.
Previous Congresses and Presidents have misappropriated and spent the 2.7 trillion dollars of social security surpluses, which the Greenspan reforms under Reagan had, to be sequestered separately and left IOUs in the piggy bank. Even if those surpluses had been saved and sequestered, the benefits would have to be cut by nearly 25% to continue paying the retirement benefits roughly 20 years from now or the rate of OASDI taxes would have to go up by an extra 2.6 to 3%.
|The painful reality is that the US will need to borrow inordinately large sums of money forever, unless it puts its budget and trade deficits in order.
Prolonged unemployment takes a toll on the psyche of an individual and makes one lose self-confidence. The resultant insecurity destroys self worth and inflicts stress and conflict in families, leading to divorce and delinquency in children.
Medicare part A cannot be funded from general tax revenues and will probably run out by 2024 or sooner as the reduction authorized by Obama of payroll taxes to increase jobs, will deplete it sooner, together with the persistent high unemployment which reduces the total receipts. The wars have cost or will cost the US over four trillion dollars.
The prolonged unemployment benefits and the subsidies to state budget deficits are increasing the federal budget deficits. We have been running over one trillion dollar budget deficits for the last two fiscal years and roughly 500 billion dollar deficits under the idiot president “W” since he started unnecessary wars in Iraq and Afghanistan which Obama has extended to Yemen, Libya and Pakistan.
The ephemeral budget surpluses under Clinton were due to the windfall tax receipts from a manipulated, soaring stock market which allowed shameless CEOs to cash in their stock options and were certain not to persist. The tax cuts by Bush to the high income wealthy were unjustified and fiscally irresponsible, but enacted with the full conniving conspiratorial collaboration of the crooked Democrats. Both parties do this Kabuki dance and refuse to pass fiscally sane budgets and laws while seeking refuge in smoke and mirrors like the current California legislature and the nation’s house and senate.
The Republicans have followed their game plan of starving the beast (Grover Norquist strategy of strangling the social safety net by tax cuts causing mounting deficits, till it is small enough to drown in a bathtub) and used filibustering and varied chicanery to thwart the Democrats when the Republicans were in a minority but had more than forty votes in the Senate. When they have been in the majority they have ridden roughshod over the spineless incompetent Democrats, who are equally beholden to nearly the same vested interests and plead impotence, since they are too scared to admit or promote the use of Viagra.
The media (Press & TV) divert public attention with the tamashas of Palin, celebrities, gay marriage, hurray, we are the greatest and such subterfuges and the people are too stupid to understand that the media are the Trojan horses of the same vested interests and often in their pay or colluding.
In India, judging by the analysis of so called experts about Afghanistan and Pakistan, the modus operandi is to be blind to the reality and foolish hopes of the US rescuing India from its follies in dealing with Afghanistan, Pakistan and China.
The painful reality is that the US will need to borrow inordinately large sums of money forever, unless it puts its budget and trade deficits in order.
It foolishly made up to China to avoid capitulation in the Vietnam war and exported jobs to China, created huge trade deficits and now tries to force China to revalue upwards the Yuan, to correct US idiocy. Almost 90% of the last year’s deficit was covered by the Federal Reserve buying US government bonds. China and other foreigners and US citizens bought only 10% of the bonds. That means the Federal Reserve printed money to buy the bonds. Such increase in the money supply and the speculators and emerging nations buying oil, metals, grains, sugar etc., led to the steep rise in commodity prices with increasing inflation in India and China and bogus lying statistics by the US regarding domestic inflation. The double whammy comes from falling US citizens’ income due to high unemployment and loss of bargaining power of workers and falling house prices putting home owners into negative equity, because of having overpaid for their homes or having extracted equity from their homes for either plain living or living it up. Now, dropping or stagnant incomes makes them unable to service their high debt load.
This is exactly what is happening now in Greece and variations on the same theme have occurred in Eastern Europe, Baltic Republics, Ireland, Portugal, Iceland and with Spain, Italy and most important US of A, poised on the brink of a precipice.
As though all these problems are not enough, many jobless persons are constrained by the negative equity in their homes, which makes it impossible for them to move to another state where jobs maybe available. They cannot afford to continue paying the mortgage on their old home and even rent an apartment at the town where a job is available.
Prolonged unemployment takes a toll on the psyche of an individual and makes one lose self-confidence, as studies have shown. The resultant insecurity destroys self worth and inflicts stress and conflict in families, leading to divorce and delinquency in children. The older unemployed individuals are difficult to retrain for new and different jobs because of poor ability to learn new skills and the financial constraints of supporting themselves while retraining.
The pervasive and often covert racial prejudices make it more difficult for minorities to get a job with 25% unemployment in black and Hispanic youths. They, more than the whites often have inadequate education, making them unemployable, but in all fairness even college graduates of the majority and dominant white group often have abysmal reading, writing, mathematical and scientific skills due to a society and culture which values sports and street savvy above real and meaningful education leading to useful and employable skills.
A significant if not a majority of the population then falls back on macho pride, jingoistic hubris and devastating military power, to wage endless wars in the hope of capturing or assuring energy and raw material supplies, while exporting jobs to enrich corporations and CEOs who can cash in on their cheap or crooked options by moving jobs, services and manufacturing to nations with the lowest wages and the least onerous environmental restrictions. All this leads to xenophobia, scape-goating of immigrants, while sweeping under the rug, huge unfair subsidies to corporations involved in energy, ethanol, farming and jet planes, to name a few. The subsidy to farmers and corn devastates farmers in Mexico and Central America, who come to the US as illegal migrants to avoid starvation at the risk of death, or become illicit narcotrafficantes.
Let us look at wars. The foolish attack on Iraq led to hundreds of thousands of civilian deaths and the strengthening of the Shias, who are closely allied to Iran, our enemy whom we are trying to weaken. It raised the oil price and increased our trade deficit, while taxing and depressing the world economy. It was done in the hope of capturing and controlling Iraq’s oil and gas, which the Chinese are exploiting now. We are still hoping for a permanent troop presence, but both Muqtada Sadr and Maliki are unwilling to extend the Status of Forces Agreement. In Afghanistan, blatant lies are put out by the president and Pentagon, about turning the corner while the Taliban carry out mini-Tet offensives in the heart of the capital, Kabul. We have withdrawn from Kunar and Nuristan provinces and even our puppet , the president Karzai, publicly chastises us and cuddles up to our enemy Iran and publicizes that we are negotiating with our opponents, the Taliban.
Did we negotiate with the Nazis or the Japanese to end WW2. Only the losing side is desperate to negotiate, as we did in Korea, Vietnam and Nixon with China. So next time you hear or read a pundit stating that Obama’s troop withdrawal from Afghanistan is a temporary election ploy or a strategic victory move, don’t be a gullible fool and swallow it hook, line and sinker.
Foolish India and puppet Manmohan Singh will have wasted money and efforts if the Taliban returns. India should try to bifurcate Afghanistan into a Northern Alliance (Tajik, Hazara, Uzbek, Turkoman) upper half and a southern (Pashtun) half which will eventually absorb Pakistan’s FATA and Khyber-Pakhtoonwa.
The Republicans wish to destroy the social safety net. If they really wanted to cut the budget deficit, they would withdraw US troops from Europe, Korea, Afghanistan, Iraq, close our 800+foreign bases and reduce the size of our armed forces first, eliminate the subsidies to corporations, hedge funds and other fat cats, apply the OASDI tax to all earned income not just the first 150,000, tax capital gains, dividends and all unearned income at the same or higher rate as earned income, reduce the mortgage interest deduction to the median or average price of a home, repeal the Bush tax cuts, and then only talk about increasing the age of eligibility for social security and Medicare and cutting the benefits. The Alan Simpsons and Erskine Bowles are just paid hacks and talking dummies of their ventriloquist special interests, as are the Congress and the presidents, current and past.
That brings us to healthcare. Bush enacted part D Medicare as a Ponzi scheme to fool the elderly and win re-election. The Democrats went along and abandoned fiscal prudence and responsibility. Obama should have stood firm on a single payer government scheme, either as a sole plan or as a competing plan with private insurance. Instead, he like Bush, kowtowed to vested interests and passed a chimeric monster plan catering to private insurance with draconian cuts in Medicare, thus irritating the seniors and mid-wifing the Tea Party. His employer mandates led to hesitancy to hire people for new jobs by small business, worsening the slump. His keeping Geithner, Summers and other partisans of those responsible for the economic debacle shows that Obama is an incompetent fraud, who has sold out to vested interests.
The reality is that the advantages of the US, in the beginning were because the Europeans gained access to a vast land mass with abundant natural resources by genocide of the natives and used military might to enrich themselves by slave labor. The country served as a magnet for immigration from all over Europe and later Asia, which allowed the talent of some immigrants to come up with new inventions which made it the world leader. It used its military might to exact resources from the rest of the world but the infinite greed of its ruling class made it fatten itself by cannibalizing its own weaker, stupid and ignorant population and now the day of reckoning has come.
As the saying goes,”You can fool some of the people, all of the time and all of the people, some of the time, but you cannot fool all of the people all of the time”. The tragedy is that the US misused its hegemony and goodwill so profligately, uselessly and wastefully, that it is on the verge of bankruptcy in just a hundred years, as opposed to two hundred for the British and five hundred or more for the hero, it is obsessed with, Rome. With sound policies and wise leaders it would have been number one for a millennium, but it chose the route of the Third Reich.
More by : Gaurang Bhatt, MD
|The picture is even bleaker because on a debt of 15 trillion dollars which is mostly financed on a short term basis (bonds maturing in ten years or less), the interest rate is on the average less than 3%. This means that we are currently paying approx. 450 billion as annual interest payments and not paying down the principal. Inflation in the US is running at above 5%, but the government CPI lies because it excludes food and energy cost increases. This results in savers like older retired persons being penalized and their income and spending reduced. This makes them even more dependent on Social Security which the Republicans want to gut. Public pensions are already being reduced as in Wisconsin, New Jersey, Illinois, California. Layoffs are occurring in all states and Minnesota govt. has closed down. The interest rates are bound to rise as the Federal Reserve has finished its QE2 and as the world realizes that the US is in the same position as Greece. If the interest rates rise to their normal level which is about 2% above nominal inflation, the ten year treasuries should have a 7% coupon. This means that the interest payment on our debt would be 1.05 trillion every year. The total US treasury receipts (taxes, duties and user fees) are about 2+ trillion dollars. We spend 700 billion dollars on medicare and medicaid, 700 billion dollars on social security and one trillion dollars on defense, every year. After paying the interest of one trillion dollars every year out of total treasury receipts of two trillion dollars, how can we pay for defense, medical care and social security. Mind you we would have to abolish the departments of commerce, education, environment, state, commerce and justice etc.|
To make it worse state pension funds are short by nearly two to three trillion dollars and falling state tax and local real estate tax revenues are forcing states and municipalities to lay off teachers, police and firemen. The city of Vallejo in California and counties in Alabama and Georgia are technically bankrupt as are many states.
I would differ from you on your view of people without insurance abusing emergency room services. In most civilized countries health care is a right and not a privilege. Even in India which is poor, there are free government hospitals which provide care, though often poor, suboptimal and not always adequate. Those who cannot afford insurance cannot get a doctor willing to see them. Those with medicaid and medicare are turned down by some doctors. Congress intends to slash doctor payments by 29% from Jan. 2012, while CEO salaries rise by 20% a year as do Congressional perks. What is a poor sick person to do?
To really put the US finances in sustainable solvency would require cutting federal spending by one trillion dollars a year. This can be done by cutting defense spending by 500 billion dollars a year. Eliminating tax breaks for oil companies, corporate jets, ethanol, farm supports, restricting mortgage interest deductions to only one home and the median national price, social security tax on everyone's entire income by eliminating the current ceiling of approx 125,000 and taxing unearned income (interest and capital gains) at the same rate as earned income will get another 100 to 200 billion dollars. There is no reason and gross injustice in taxing speculative income of hedge funds and interest and capital gains income at a lesser rate than what some poor worker has to pay for what she earns from the honest sweat of toil.
But the whole system is corrupt and loaded towards the rich and powerful and the people in the US are stupid, ill informed and misled by the media, which like the regulators are the hired hacks of the power elite. Why else is the corrupt Congress and the deceitful fraudulent president refusing to appoint Elizabeth Warren to head the consumer protection agency for months while appointing their obedient slaves like Panetta to defense, Petraeus to CIA, Geithner, Summers and other foxes at the treasury to guard the national henhouse.
If nothing meaningful is done the US will be bankrupt like Greece and as I wrote in my piece about US Foreign Policy and Freddie Widgeon, only when the US loses its pants, it will drive off towards the sunset. Criticism is not be confused with denigration. As they say in Gujarati, only the caring mother forcibly gives the sick child its needed bitter medicine. ---gaurang bhatt
|Pretty bleak picture? Obama missed the golden opportunity, at least in health care. His dictum should have been "medicare for everybody, and you pay the taxes on the supplement you buy". People without the insurance abuse the emergency room services, which on the average cose 50 times as much, and provide the unnecessary services, only leading to poor outcome. |
Shame the CEOs who rake in shameful amount of the monies, while starving their employees in the name of free enterprise. Capitalism without spirituality is nothing but slavery.