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It's Time for a Solution to this Mess
The president’s address to the nation the other night about the ongoing high-stakes game of chicken known as the debt ceiling negotiations mostly provided evasions, finger pointing and half-truths. During the address, President Obama threatened that the American people are in danger of becoming “collateral damage” if Congressional Republicans don’t accede to his demands and accept his preferred solution to the debt ceiling “crisis” he’s manufactured. He spent more time scaremongering and continuing to lay the blame for our current fiscal woes on the previous administration than he did providing any real solutions. America deserves better leadership than this.
The president showed his hand when he threatened to veto the “Cut, Cap and Balance” bill that passed in the House with bipartisan support. Now, he has all but said that he and his party will not agree to House Speaker John Boehner’s most recent plan, which would match a $1 trillion increase in the debt ceiling with more than $1 trillion in spending cuts (though this plan apparently falls short of its intended reduction targets and has gotten a lot of pushback from conservative Republicans), plus create a congressional commission to identify additional spending cuts.
Instead, the president is backing a plan proposed by Senate Majority Leader Harry Reid that raises the debt ceiling by nearly $3 trillion (enough to postpone the next round of debt ceiling negotiations until after the 2012 elections) and offsets this by spending cuts that Boehner and others have labeled “phony accounting and Washington gimmicks.” One example of this is counting the projected reductions in war expenditures as savings. Reid’s plan refuses to touch the real financial drains that will sink the economy: entitlements such as Social Security and Medicare. His motivation seems entirely political.
And back and forth it goes. Meanwhile we are fast approaching the date when our country runs the risk of defaulting on its obligations for the first time in its history. Further compounding this situation, Moody’s and other rating agencies are signaling they will downgrade the U.S.’s credit rating if viable long-term plans for controlling debt and spending are not realized, even if a deal to temporarily raise the debt ceiling is reached before August 2. The feeling shared by many is that some short-term compromise will be worked out and disaster avoided in the near term, but at the long-term expense of enacting tangible, comprehensive and serious spending reform. Unfortunately, it looks like we’ll be revisiting this issue again all too soon.
For physicians, this is reminiscent of the annual drama surrounding Congress’ decision to deal with scheduled Medicare payment cuts by enacting temporary “doc fixes” instead of showing real leadership and forging a permanent solution to the bad economics represented by the current sustainable growth rate formula (SGR). The ongoing legislative failure to deal with the flawed SGR fosters an uncertain business environment and raises the likelihood of calamity farther down the road.
To an even greater extent than the kabuki theater surrounding the SGR “fixes” each year, the tough choices that need to be made to ensure the long-term financial health of our country cannot be put off indefinitely. Serious deficit reduction will require bold and decisive thinking, leadership and solutions that promise a smarter and fairer fiscal approach. But both sides of the budget issue need to be addressed in the form of reduced expenditures and revenue collection. The flat tax, variations of which have been proposed in the past by Steve Forbes, Mike Huckabee and others, is a logical and pragmatic revenue-generation approach.
Coupled with realistic discretionary and entitlement spending cuts, moving to simplify the tax code by replacing thousands of pages of loopholes, exceptions and exemptions, and passing and enacting a lower fixed-percent flat tax would reduce our debt, stimulate the economy and keep more money in the pockets of the people who earned it.
This is a simple, fair and, dare I say, “progressive” approach. It will provide one marginal rate for personal income, corporate income and earnings from capital gains and investments that only kicks in at a certain income level (say $30,000), coupled with limited standard deductions. It is our best hope for finally getting our fiscal house in order and stopping once and for all the ridiculous political theater in Washington over budgets. Granted, some coveted deductions created by lobbyists would be eliminated, but the total impact on individual taxpayers and the country would be positive.
President Obama campaigned on “Hope and Change.” I agree that we need dramatic change in how we address expenditures and revenue generation to have any hope of returning to economic stability.
The president showed his hand when he threatened to veto the “Cut, Cap and Balance” bill that passed in the House with bipartisan support. Now, he has all but said that he and his party will not agree to House Speaker John Boehner’s most recent plan, which would match a $1 trillion increase in the debt ceiling with more than $1 trillion in spending cuts (though this plan apparently falls short of its intended reduction targets and has gotten a lot of pushback from conservative Republicans), plus create a congressional commission to identify additional spending cuts.
Instead, the president is backing a plan proposed by Senate Majority Leader Harry Reid that raises the debt ceiling by nearly $3 trillion (enough to postpone the next round of debt ceiling negotiations until after the 2012 elections) and offsets this by spending cuts that Boehner and others have labeled “phony accounting and Washington gimmicks.” One example of this is counting the projected reductions in war expenditures as savings. Reid’s plan refuses to touch the real financial drains that will sink the economy: entitlements such as Social Security and Medicare. His motivation seems entirely political.
And back and forth it goes. Meanwhile we are fast approaching the date when our country runs the risk of defaulting on its obligations for the first time in its history. Further compounding this situation, Moody’s and other rating agencies are signaling they will downgrade the U.S.’s credit rating if viable long-term plans for controlling debt and spending are not realized, even if a deal to temporarily raise the debt ceiling is reached before August 2. The feeling shared by many is that some short-term compromise will be worked out and disaster avoided in the near term, but at the long-term expense of enacting tangible, comprehensive and serious spending reform. Unfortunately, it looks like we’ll be revisiting this issue again all too soon.
For physicians, this is reminiscent of the annual drama surrounding Congress’ decision to deal with scheduled Medicare payment cuts by enacting temporary “doc fixes” instead of showing real leadership and forging a permanent solution to the bad economics represented by the current sustainable growth rate formula (SGR). The ongoing legislative failure to deal with the flawed SGR fosters an uncertain business environment and raises the likelihood of calamity farther down the road.
To an even greater extent than the kabuki theater surrounding the SGR “fixes” each year, the tough choices that need to be made to ensure the long-term financial health of our country cannot be put off indefinitely. Serious deficit reduction will require bold and decisive thinking, leadership and solutions that promise a smarter and fairer fiscal approach. But both sides of the budget issue need to be addressed in the form of reduced expenditures and revenue collection. The flat tax, variations of which have been proposed in the past by Steve Forbes, Mike Huckabee and others, is a logical and pragmatic revenue-generation approach.
Coupled with realistic discretionary and entitlement spending cuts, moving to simplify the tax code by replacing thousands of pages of loopholes, exceptions and exemptions, and passing and enacting a lower fixed-percent flat tax would reduce our debt, stimulate the economy and keep more money in the pockets of the people who earned it.
This is a simple, fair and, dare I say, “progressive” approach. It will provide one marginal rate for personal income, corporate income and earnings from capital gains and investments that only kicks in at a certain income level (say $30,000), coupled with limited standard deductions. It is our best hope for finally getting our fiscal house in order and stopping once and for all the ridiculous political theater in Washington over budgets. Granted, some coveted deductions created by lobbyists would be eliminated, but the total impact on individual taxpayers and the country would be positive.
President Obama campaigned on “Hope and Change.” I agree that we need dramatic change in how we address expenditures and revenue generation to have any hope of returning to economic stability.
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rsabbatini
The same story, decade after decade. Republican presidents such as Mr "Gung-Ho Cowboy" Bush, enjoy ample freedom and support by the Congress AND the people to wage enormously costly wars with zero return to America, After them, Democratic presidents are burdened with fixing the deficit, mainly by cutting social spending to the poor (not by taxing the wealthy, like so many physicians are...). It was so with Mr. Clinton, it will be with Mr. Obama. Why the Republicans didn't curb Bush's spending, who was free to increase the debt ceiling 16 times during his mandate?
Meanwhile, the world economy is balancing itselft on the edge of ruin and recession, due to this irresponsible and dirty party politics regarding support to overspending to maintain America as the police of the world. C'mon, let's be serious! America's first default in history will do awsome damage to the credibility in the country vis-a-vis the main debtors of the USA, such as China. Confidence is lost only once. Who will muster the courage to buy Treasury bonds again? Would you?
Meanwhile, the world economy is balancing itselft on the edge of ruin and recession, due to this irresponsible and dirty party politics regarding support to overspending to maintain America as the police of the world. C'mon, let's be serious! America's first default in history will do awsome damage to the credibility in the country vis-a-vis the main debtors of the USA, such as China. Confidence is lost only once. Who will muster the courage to buy Treasury bonds again? Would you?
July 29, 2011 - [ 12:50:53 ]
jsullivan
Who is this guy kidding?? This is Obama's fault?
July 29, 2011 - [ 13:20:18 ]
Jpadilla
This editorial is so full of bull, it's not even worth responding to.
July 29, 2011 - [ 13:31:21 ]
gdudley
I hear you! I don't hear you blaming one or the other, just calling for the finger pointing to stop and real progress made. Forget about the emotions of the past and party lines, we need to make our voice heard, "the American people", and solve this fairly for all.
July 29, 2011 - [ 14:29:10 ]
jblackwell
remember bush's run-upf the debt was done with a democrat-controlled senate AND house
July 30, 2011 - [ 10:15:36 ]
vcoble
We are in this mess with Republican presidents at the helm 20 out of the last 31 years. One would think their economic policies would be working by now. Bush II started 2 wars and enacted Medicare Part D, all unfunded. In addition, the economy started tanking under his watch, but somehow, all of this is Obama's fault. Now we have a bunch of newbies in the house that believe we can cut the budget to decrease the deficit without increasing revenue. I do not even want to know which school of economics they attended.
July 30, 2011 - [ 17:40:47 ]
Anonymous
How do I unsubscribe? Nevermind, found the button on the email
August 1, 2011 - [ 13:18:33 ]
Mpeters
This is in physicians money digest why? Just another captive audience to spew half truths and Obama bashing toward. This publication ought to rethink its content before continuing to grandstand for the GOP.
August 1, 2011 - [ 13:37:30 ]
S.V.
I expect widely divergent views on this subject.
Deffecit spending started 90 years ago and it went up 10 fold under
Obama. The intent was good - the results are bad .
We're all guilty . The latest budget battle barely touches the problem.
It postpones the next battle till after the President's one Billion dollar
Re-Election Campaign . I Can't wait .
Deffecit spending started 90 years ago and it went up 10 fold under
Obama. The intent was good - the results are bad .
We're all guilty . The latest budget battle barely touches the problem.
It postpones the next battle till after the President's one Billion dollar
Re-Election Campaign . I Can't wait .
August 4, 2011 - [ 13:11:31 ]
Thubert
This article is a joke. What do your political views have to do with research on how best to manage pharmacy benefits? Spew your comments in the appropriate arena.
August 25, 2011 - [ 11:43:11 ]
Tommy D
gibberish. Absolute gibberish. Get your facts straight before spewing this nonsense. How big are your blinders?
August 25, 2011 - [ 15:21:56 ]
The Riddler
I guess you can read into things however you want. But this is over the stop. I suggest you keep your crazy thoughts to yourself. What does this have to do with pharmacy benefits?
August 25, 2011 - [ 15:32:30 ]
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Mike Hennessy is Chairman and CEO of MJH & Associates, the publisher of many influential journals, including The American Journal of Managed Care, Pharmacy Times, MDNG, Politics, Oncology & Biotechnology News, and Physician's Money Digest. As a businessman, entrepreneur, and a publisher of magazines and websites that focus on the financial and professional needs of physicians, Hennessy is intimately familiar with the challenges physicians face in today's competitive practice environment. Blog Information
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