Now that the “supercommittee” of Congress has failed to reach a compromise to restore some fiscal sanity to our national debt, let us consider for a moment what a monumental failure of leadership this waste of time turned out to be.
For starters, their task was to reduce the federal deficit by $1.2 trillion over 10 years, which according to my simplistic math works out to be about $120 billion per year. Once again the media contributed to Washington spin by allowing the talking heads to play loose with the denominator (over 10 years vs. per year). This $1.2 trillion figure is chump change compared to our current annual deficit of $1.4 trillion EACH YEAR. The bozos couldn’t even work out a deal to reduce the current deficit by 10%.
In the background of this nonsense is the stark reality that the baby boomers are just entering the Medicare and Social Security pools. Just the hospital portion of Medicare (Part A) is expected to grow from 3.6% of the GDP now to 5.2% of the GDP in 2030, according to a report of the Medicare trustees earlier this year. This assumes there is no fundamental change in how the program works.
How do we pay for this? An analysis by the Congressional Budget Office suggested that if Medicare costs increased by just 1% per year over GDP growth, income taxes would have to be raised 70% to cover the increased costs over the next 10 years. This is bad enough, but 1% is probably wishful thinking if no fundamental changes are made to Medicare. For the last 50 years the average healthcare inflation rate has been 2.5% over GPD growth, which would require a 160% increase in income taxes. Or we could keep doing what we’ve always done and just dump our national credit card debt on the backs of our children and grandchildren.
And while all these projections were being calculated and disseminated, Medicare elected to cover the new drug for metastatic prostate cancer, which increased life expectancy in its big study from 22 to 26 months at a cost of $93,000 just for the drug. This will add roughly $7 billion more per year to out national debt. I understand that legally the CMS folks were pretty much forced to approve the drug, but taking the broader view, this decision was insane. We’re going the wrong direction.
Sorry to be a wet blanket. I had hoped I could write an uplifting thankful message this season. But our children’s futures depend not on us sharing delusional uplifting platitudes with each other, but facing reality and making some difficult decisions. I am not thankful that our leaders can’t get the job done. They’re not even close.