On Tuesday, February 2, President Obama released his budget forecasting a deficit for 2010 of $1.6 trillion for the year and $9.1 trillion from 2010 through 2020. The next day the Moody’s credit rating agency announced Obama’s budget policies were so profligate and irresponsible as to risk the credit rating of the federal government. The United State has long been recognized as the best credit risk in the world, with a rating of Aaa on Moody’s scale. Obama’s fiscal policies may “test the Aaa boundaries” according to Moody’s, as it shaded the U.S. government ratings now below those of Canada, Germany, and even France.
The source of massive budgetary shortfall is not a shortage of revenues. Obama projects federal receipts will once again be above their modern average of about 18.4 percent by 2013, rising to almost 20 percent by 2020. Near- and medium-term deficits arise because Obama saw Washington’s excess spending in recent years and decided to double down. Under his budget, federal spending rises by $1.7 trillion over 10 years.
Worse, these medium-run deficits but segue to America’s long-standing, long-run fiscal disaster known as Social Security, Medicare, and Medicaid. With promised benefits exceeding the programs’ dedicated revenues by many tens of trillions of dollars the President has boldly called for the creation of yet another toothless, partisan budget commission. As Senator Dorgan (D-ND), Chairman of the Budget Committee so aptly expressed at a committee hearing on the Budget, when it comes to controlling long-term costs, “I don’t see the focus. I don’t see the pivot”. Dorgan announced his retirement from the Senate the same day Moody’s issue its warning.
The consequences of Obama’s profligacy will be felt some time in the future. For now, markets understand the United States has plenty of time to change course, and apparently assume it will do so. Hopefully, they are right. If and when markets come to believe the U.S. intends to continue to spend irresponsibly now and indefinitely, the reaction will be swift and painful in terms of much higher interest rates on U.S. government debt and throughout the economy. Debt is always a pay now or pay later proposition. If Obama impairs the U.S. government’s credit rating as his budget proposal threatens, paying later will get a lot more expensive.
The Vancouver Sun reports:
Vancouver patients needing neurosurgery, treatment for vascular diseases and other medically necessary procedures can expect to wait longer for care, NDP health critic Adrian Dix said Monday.
Dix said a Vancouver Coastal Health Authority document shows it is considering chopping more than 6,000 surgeries in an effort to make up for a dramatic budgetary shortfall that could reach $200 million.
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Dr. Brian Brodie, president of the BC Medical Association, called the proposed surgical cuts “a nightmare.”“Why would you begin your cost-cutting measures on medically necessary surgery? I just can’t think of a worse place,” Brodie said.
According to the leaked document, Vancouver Coastal — which oversees the budget for Vancouver General and St. Paul’s hospitals, among other health-care facilities — is looking to close nearly a quarter of its operating rooms starting in September and to cut 6,250 surgeries, including 24 per cent of cases scheduled from September to March and 10 per cent of all medically necessary elective procedures this fiscal year.
President Barack Obama says his health care plan will not lead to government rationing of health care, but government run health care systems around the world have had to control costs by doing just that. Conservatives in the House tried to pass amendments that would prevent the federal government from rationing health care under Obamacare, but they were all defeated. For example in the House Ways and Means Committee:
Rep. Kevin Brady (R-TX) offered an amendment that would eliminate the public plan if its enrollees experienced longer wait times than the average wait times for enrollees in private health plans. These people would then be able to enroll in private health plans offered on the Health Insurance Exchange. The Brady amendment failed on a straight party-line vote.