Quote of the Week

This week's Quote comes courtesy of Karl Denninger, who has inspired more than a couple of my rants here in the past. It stems from the Congressional Budget Office's projections released yesterday, which are absolutely chock full of ugly numbers and statistics (ignore them at your own peril). Let's get right to it:

This week's QUOTE OF THE WEEK

"Government spending for Medicare, Medicaid and other healthcare programs will more than double over the next decade to $1.8 trillion, or 7.3 percent of the country's total economic output, congressional researchers said on Tuesday.


In its annual budget and economic outlook, the non-partisan Congressional Budget Office said that even under its most conservative projections, healthcare spending would rise by 8 percent a year from 2012 to 2022, mainly as a result of an aging U.S. population and rising treatment costs. It will continue to be a key driver of the U.S. budget deficit."
                                           - David Morgan, Reuters

Look at that first paragraph: that's 7.3 percent OF THE COUNTRY'S TOTAL ECONOMIC OUTPUT! Not of tax revenues, not of total government spending, of the ENTIRE ECONOMIC OUTPUT. In case you were wondering, total federal tax receipts in 2011 were approximately $2.3 trillion, on total economic output (GDP) of $14.6 trillion--about 15.8% of total economic output. That means that our expected expenditure on health care programs would be a full HALF of everything that we currently bring in from tax revenues.

That is, in a word, untenable. There's absolutely no way to make these programs solvent, and we need to stop pretending that there is. We can't grow our way out of this problem, we can't inflate our way out of this problem (hi, Ben), and we certainly can't default our way out of it (although that's where we're heading).

Oh yeah, and just repealing Obamacare doesn't do anything to help matters either, in case any of you Republican-lovers were wondering.

This country is bumping up against fundamental problems with respect to how it cares for its elderly, and it's clear that we've made promises that we mathematically cannot keep. A millionaire tax or a wealth tax or an inflation tax or whatever other tax can't compensate for the fact that there's just simply not enough money to go around. We need to admit that we've made promises that we can't keep, and begin the ugly and unpleasant process of reneging on those promises. The longer we wait, the worse the problem will get--procrastination is an expensive vice that we simply cannot afford.

[Reuters]
(h/t Karl Denninger)

My head just exploded

Alright, we all know that I spend a lot of time here talking about deficits and debt and government spending gone wild (in fact, I've got another post coming later today on that last issue--stay tuned), and that I also think (read: know) that trying to balance our budgets by shaving pennies off of small piles isn't going to get us anywhere. So when I read this article in the Wall Street Journal this morning, you can imagine that it all sort of came together for me, and, well... my head exploded.

Karen Dombi was thrilled when her three oldest children were picked for student government this year—not because she envisioned careers in politics, but because it was one of the few programs at their public high school that didn't charge kids to participate.

Budget shortfalls have prompted Medina (Ohio) Senior High to impose fees on students who enroll in many academic classes and extracurricular activities. The Dombis had to pay to register their children for basic courses such as Spanish I and Earth Sciences, to get them into graded electives such as band, and to allow them to run cross-country and track. The family's total tab for a year of public education: $4,446.50.

"I'm wondering, am I going to be paying for my parking spot at the school? Because you're making me pay for just about everything else," says Ms. Dombi, a parent in this middle-class community in northern Ohio.

Public schools across the country, struggling with cuts in state funding, rising personnel costs and lower tax revenues, are shifting costs to students and their parents by imposing or boosting fees for everything from enrolling in honors English to riding the bus.

At high schools in several states, it can cost more than $200 just to walk in the door, thanks to registration fees, technology fees and unspecified "instructional fees."

Weak, dude. Look, I fully appreciate the gravity of budget shortfalls--more than most people in this country, it seems. But pinching pennies at our public schools really isn't going to solve the overall problem of unrealistic entitlement spending at both the state and federal level (and the deficits it creates). Ballooning Medicare/Medicaid costs (Medicaid takes up an average of 22% of a state's total budget outlay), underfunded pension funds (be they teachers' funds or just basic Social Security), and plummeting tax revenue (due both to economic recession and some ill-advised tax cuts) are the real culprit, and balancing any budget must start there, with the big-ticket items--NOT with pinching pennies in relatively small pots like we're reading about here.

And that's... wait a minute. These people are charging a fee to learn Spanish... and to run cross-country and track!??!? THOSE SPORTS DON'T COST ANYTHING!!!! Seriously, running cross-country consists of throwing a bunch of kids out into the middle of the woods, and having them run around for a while until you tell them to stop. Really, that's it. You don't even need a track. You barely need a coach. How in the hell are we justifying charging parents a fee to have their kids run cross-country? That's just silly. I... I mean... I need to sit down.

No, you're right though, Medina school district--charging fees is the way to go. Really, it's the only way. And if you cut far enough, to the point that our students are paying more in fees to go to public school than they would to go to private school, you just might be able to pay for a half a percent of Ohio's ballooning Medicaid expenditures. And then, and only then, we can rejoice.

[Wall Street Journal]