If the United States does not get finances in order, trouble looms. Photo Credit, Dave Granlund
Fast forward to Times Square, January 1, 2013, many will be celebrating the New Year, but the millions of American’s avoiding reality will not realize how troublesome our country’s financial situation is at current moment.
Right now, it appears Washington, DC is in stagnation mode once again and the impact of their inaction will have long-term consequences.
What you need to know
- The fiscal cliff is human made and a result of government mismanagement.
- The debt problem in the United States is problematic because it is growing at a high intensity.
- The biggest contributor to our debt is healthcare spending from costly entitlement programs.
- If we do not come to a reasonable solution there will be long-term consequences for future generations.
The United States has serious fiscal concerns in the short-term. Uncertainty in our economy due to expiring tax policies, automatic spending cuts and other challenges like funding the Federal Government make it hard for people to invest properly or for employers to expand. Expect the markets to react negatively first quarter of 2013 if Congress cannot come to a reasonable solution.
Kicking the can down the road is not the appropriate answer either because it squeezes future generations. Unfortunately for many young Americans, they do not know this.
What is even more troublesome are the long-term costs facing this country if we do not get our fiscal situation in order. As you can see in the chart above, growing entitlement spending, particularly rising health care costs (reflected in red) are putting this nation in serious financial jeopardy. To put it plainly, the United States is broke, our credit cards are maxed out, and we need to take a serious look at the books. Our government is, and has been for awhile, spending far more than it is taking in. Right now, Americans are being asked to make sacrifices and live within their means. Why can’t the government do the same thing?
Our government is more political than ever before, and this high level of polarization is having adverse impacts on public policy. Appearing earlier this year on CNBC’s Squawk Box, three well respected heavyweights gave their analysis of the situation. Warren Buffet, CEO of Berkshire, former US Senator Alan Simpson and former Clinton Chief of Staff, Erskine Bowles all offered their commentary on this topic.
Bowles said we are headed for a “fiscal cliff,” as he cited the fact that the United States spends twice as much on healthcare per person, and our outcomes are sub-par on important statistics such as preventable mortality, infant mortality, hospital re-admissions and others.
Former Wyoming Senator, Alan Simpson, Bowles’ co-chair on the non-partisan Presidential commission on deficit reduction, argued there is nothing to address cost containment in the Affordable Care Act, commonly referred to as Obamacare. Instead he believes costs will be exacerbated due to coverage of pre-existing conditions, and the ever challenging problem of managing chronic diseases such as obesity and diabetes which cost the American economy hundreds of billions each year.
This will be challenging for all of us, and they all agreed, if we do not start having a conversation about how to come together, our country can easily slip back into recession.
Decades of poor government management from both sides have put the United States in precarious financial shape. Sacrifices are going to have to be made, and we are going to have to come together to address this issue. The Joint Chiefs have indicated on multiple occasions, the number one threat to the United States Security is our national debt which is at almost 100% of GDP.
All of this debt has been accumulating while our federal government continues to run nearly a trillion dollar deficit each year. Rising costs of doing business, health care costs, taxes and other fees on businesses are likely, unless we can make some changes now.
This is without question a fiscal nightmare, but we have the opportunity to do something about it. This cannot be said for some of our European friends who we are seeing face huge tax increases and spending cuts.
This website has been a non-partisan resource on the Affordable Care Act with information in common language about an issue impacting all of us. The United States has a healthcare crisis, and leaders from both sides need to step up to address this issue. Action must also come at the community level with local solutions.
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Remember that the most important part of any democracy is an informed electorate.
For more information on the impact of Obamacare implementation, check out a weekly radio program on the topic called “America’s Healthcare Challenge” and follow E.D. Bellis on twitter @AmericasCanary.
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