"America’s most serious budgetary problem is Medicare"

"Its spending has been growing faster than the economy for years, a key reason why total US health spending as a share of gross domestic product is double that of countries such as the UK.

Back in 1997 Republicans and Democrats joined together to implement a programme that would permanently restrain the growth of Medicare spending.

...as soon as it began to bite in 2003, Congress intervened to prevent doctors’ fees from being cut. It has continued to do so every year since. This annual exercise is known in Washington as the “doc-fix”.

But the original law remains in force. If it were simply allowed to take effect without congressional interference, payment to doctors for Medicare services would be cut by 30 per cent on January 1.

...if Congress would just rebase the SGR formula to this year, and allow it to operate from now on, it would save about $300bn over the next 10 years, plus another $50bn in debt service.

...a tax provision called “the alternative minimum tax” ...has also been subject to an annual congressional fix to keep it from affecting too many taxpayers.

...The so-called Bush tax cuts are now scheduled to expire at the end of next year. The Congressional Budget Office estimates that allowing them to expire on schedule, as well as foregoing another minimum tax fix, will raise revenues by almost $4,000bn through to 2021, plus saving almost $700bn in debt service.

...the joint select committee on deficit reduction announced that it could not agree on a viable alternative, thus leaving in place a $1,200bn spending cut beginning in 2013.

Thus we see that laws already in force would reduce projected deficits by approximately $5,500bn over the next 10 years, plus another $1,000bn in debt service savings.

...neither Congress nor the White House has shown any inclination to allow the laws on the books to take effect.

...no new laws are needed to get the US on a stable fiscal course."

Bruce Bartlett
Treasury department and White House official
Ronald Reagan and George H.W. Bush administrations

"Obama, Democrats, Republicans AND Bernanke All in a Bind – What they will do and when" Bruce Krasting: Would this be a hidden tax hike by both Dems and Pubs?

"We have two distinct groups in D.C. that are stuck between a very big rock and a hard place.

The first is the Federal Reserve.

The second is the Democrats and Republicans and the battle being waged over the debt limit.

...The Fed is in a bind.

The economy is clearly slowing down again.

Unemployment will soon follow.

According to the Fed’s Dual Mandate they should be doing something about that.

...They can’t do more Large Scale Asset Purchases (“LSAP”).

What has become referred to as “QE”, has not worked.

It was also very unpopular (both in and out of the country).

...Now consider where the politicians are on the inflation story.

Republicans have drawn a line in the sand on the debt limit with their position
of “No New Taxes”.

If we cannot raise taxation and we are spending more than we make,

and we cannot borrow more,

where will the money come from to pay for Social Security, Medicare

and Medicaid?

The Democrats have said pretty much the opposite with, “No spending cuts”.

...to go to August 2 without a resolution is just a dumb move.

...the next presidential election is riding on the outcome.

...The “side” that gets the blame will lose the election. And both sides understand this.

So where’s the compromise?

...The government has got to get out of its inflation indexed obligations.

If everything gets more expensive and fixed payments stay the same,

who takes the hit, and who benefits from others having less to spend?

You don’t have to raise tax brackets to raise revenues or cut expenses.

You can mess with inflation adjustments to achieve these ends.

Lying by omission

One lies by omission by omitting an important fact,

deliberately leaving another person with a misconception.

Lying by omission includes failures to correct pre-existing misconceptions.

…Propaganda is an example of lying by omission.

Wikipedia

Both sides can appear to win if this is accomplished.

Consider the words last week of Brian Graff of ASPPA (Lobby for pensions and actuaries)
(The conference was sponsored by the IRS!!)

"Eliminating indexing is one of the proposals receiving serious consideration
as Congress enters “uncharted territory” with legislation to raise the debt ceiling.

If Congress were to stop indexing for a period of time, which would affect tax brackets,
individual retirement account contributions, and contribution limits under tax code Section 415,
“you could raise a lot of money, and those are the kinds of things they are talking about.”

On the expense side of the equation a great deal of fat can be cut
by eliminating/cutting COLA increases in a variety of programs.

The most important of which would be Social Security.

Depending on how the cuts in COLA are defined and how they are applied
a huge amount of money would be saved over an extended period.

If all social obligations had their COLA increases cut in half
it would (on paper) put the US on a much more solid long-term footing.

If some financial estimates and hypothetical illustrations

assume perpetual levels of varying data,

can governmental inflation valuation measures be manipulated

to increase taxes without most understanding what is occuring?

It is a very appealing “kick the can down the road” approach.

No cuts in programs (just smaller increases) and no new taxes
(but higher revenue as the inflation adjustments for AMT and other tax issues kick in).

Why not do the same with federal state and corporate pension funds?

...this is the way it could play out:

We DO go to the 11th hour on the debt limit. But a compromised is reached.

Central to the deal is a broad restructuring
of the way inflation impacts both revenue and expenses at the federal level.

Both sides claim victory."

Bruce Krasting

The Ministry of Peace concerns itself with war,

the Ministry of Truth with lies, the Ministry of Love with torture,

and the Ministry of Plenty with starvation.

These contradictions are not accidental, nor do they result from ordinary hypocrisy.

They are deliberate exercises in doublethink.

George Orwell

Do the few who control dissemination of most financial and political information,
enjoy relatively disproportionate levels of influence than the many who don’t?

“You shall not bear false witness against your neighbor.”

Exodus 20:13

All warfare is based on deception.

…when able to attack we must seem unable,
when using our forces we must seem inactive,
when we are near, we must make the enemy believe we are far…,
when far away, we must make him believe we are near.

Sun Tzu

900,000 Jobs

…states — which continue to face huge budget shortfalls that they must close — are taking steps now to plan their budgets for state fiscal year 2011, which starts on July 1, 2010 in most states.

…Presuming they will get no more fiscal relief, states will have to take steps to eliminate deficits…

…That, in turn, could cost the economy 900,000 jobs next year.

…States are continuing to grapple with record steep declines in tax receipts.

…Deficits for the current state fiscal year, not all of which states have closed, total more than 25 percent of state general fund budgets, making these the largest shortfalls on record.

Center on Budget and Policy Priorities

Los Angeles Budget Cuts

Council Committee Recommends Cuts To Police, Fire Departments

…the Los Angeles City Council's Budget and Finance Committee on Monday recommended that cuts be made to the police and fire department…

The city is operating $208.5 million in the red and must make drastic cuts to make its fiscal budget by July. City Administrative Officer Miguel Santana is recommending 1,500 city-worker layoffs as well as the elimination of the Human Relations Commission, Commission on the Status of Women, the Children, Youth and Families Commission, the departments of Disability and Environmental Affairs, the Fire Department's next recruit class, and the Department of Cultural Affairs grants program.

Dennis Romero
LA Weekly

Remember Greensboro’s $500,000,000 incinerator idea?

Pennsylvania State Capital Mulls Bankruptcy as a Budget Option

Harrisburg, the capital of Pennsylvania, will consider Chapter 9 bankruptcy protection along with tax increases and asset sales as options to address $68 million in debt service payments due this year…

…The $68 million in debt service payments that Harrisburg faces in connection with the construction of a waste incinerator this year is four times what the city of 47,000 expects to raise through property taxes, and $4 million more than the city’s entire proposed operating budget.

...City Controller Dan Miller, who was vice president of the council until January, has advocated bankruptcy as an alternative to selling assets.

Harrisburg’s credit rating was lowered two levels below investment grade to Ba2 by Moody’s Investors Service in October. The city faces a $164 million deficit over the next five years, mostly because of debt created by the incinerator…

Dunstan McNichol
Bloomberg

On High Point’s $8 million budget deficit: If High Point says about $2.5 million of shared revenue with Guilford County is at risk and may have to fund more road maintenance…?

High Point tries to close widening budget gap

The city is facing an estimated $8 million budget deficit through the next two years, as the recession has brought about lower-than-expected revenues.

…A $3 million shortfall is projected for the current $320.4 million budget, and officials forecast a $5 million shortfall through 2010-11. In addition to sales tax, other funding sources —such as beer/wine and franchise revenues, along with current or planned private construction activity — have dried up. At the same time, the city faces increases in employer retirement contribution rates and health insurance costs that should total about $2.2 million.

About $2.5 million in shared revenues with Guilford County and the state could be at risk, and the city could be forced to take over state road maintenance responsibility at a cost of about $1 million per year.

…Although not recommended, transferring money from the electric or water and sewer funds to the general fund is another option.

…city officials are early in the process of evaluating possible changes in existing service levels, including reducing hours in the library and recreation centers, cutting back on grass mowing and going to every-other-week recycling pickups.

High Point Enterprise