/PRNewswire/ -- The Following is the fourth of a six-part statement by J. Moromisato.
4. A Zero National Debt Within a Decade Can Be Achieved with Freed Money Technology and the Denver Plan
With a growing national debt, now about 100% of our GDP, saddling our country with near $400 billion in interest payments every year, shouldn't we worry about reaching a breaking point?
There is the Denver Plan solution, which the mainstream media continues to ignore. It may be up to you to spread my message until the powers-that-be pay attention and do something about our dysfunctional financial system.
The Denver Plan explains how all the money government overspends, namely the annual fiscal deficit, goes one way or another into the pockets of the super-rich, which they in turn lend to the government in exchange for tradable securities that increases their wealth.
The Denver Plan proposes the establishment of Freed Money, which would decouple, or disconnect, the savings of the rich to the all-important flow of credit; this would enable the government to gradually raise taxes on the super-rich to the levels prevailing in the 1950s and 1960s -- when our country enjoyed the longest period of sustained economic growth.
Freed money would allow the Fed to replace all the privately held debt with bank-debt to the Fed, and the interest paid by the banks would thus constitute a new revenue stream for the government. How big would this be? The total outstanding debt in the U.S. is about $50 trillion, of which about $35 trillion are owed by private entities; at some point, perhaps a decade or so in the future, all that debt would become assets to the Fed; at a 4% interest rate, the interest to be earned by government would be $1.4 Trillion, that is larger than the total income tax -- from individuals and from corporations -- collected last year.
The combination of new interest and higher taxes revenues would enable the government to gradually pay the national debt -- now around $15 trillion. Furthermore, since the Fed would own that debt, and would return the interest it accrues to the Treasury, the government would save that $400 billion from its budget every year.
Showing posts with label deficit. Show all posts
Showing posts with label deficit. Show all posts
Friday, October 22, 2010
Friday, December 4, 2009
Congress Has Allowed Most Previous Medicare Cuts to Take Effect, New Study Shows
/PRNewswire/ -- Despite claims that the pending health reform bills aren't really paid for because Congress never lets Medicare savings take effect, Congress has allowed the vast majority of Medicare cuts that it enacted in the past two decades to take effect and produce significant savings, a new study from the Center on Budget and Policy Priorities shows.
The analysis, by James Horney and Paul Van de Water, former senior CBO officials now at the Center, examines the history of every significant Medicare cut that Congress has enacted in the past 20 years - specifically, cuts included in deficit reduction legislation enacted in 1990, 1993, 1997, and 2005.
The authors found that virtually 100 percent of the 1990 savings survived; virtually 100 percent of the 1993 savings survived; virtually 100 percent of the 2005 savings survived; and nearly 80 percent of the 1997 savings survived.
"Today's conventional wisdom is wrong," said Horney. "Medicare savings have been a big part of all major deficit-reduction packages that Congress has enacted since 1990, and lawmakers have allowed the vast majority of those cuts to take effect. Given that history, there is every reason to believe that Congress will allow the Medicare savings in the pending bills to take effect as well."
Main "Example" of Failure to Implement Cuts Rests on Misunderstanding
In arguing that large Medicare cuts never "stick," many critics focus on Congress' repeated refusal to let the reductions in doctor reimbursement rates under Medicare's "Sustainable Growth Rate" (SGR) mechanism to take full effect.
But, as the report explains, Congress didn't intend the SGR to produce large savings. In fact, the SGR represented only 3 percent of the total ten-year Medicare savings in the 1997 deficit-reduction bill - only $12 billion of the $394 billion in total Medicare savings over ten years, as CBO estimated at the time.
Because it was badly designed, however, the SGR would actually have cut payments to physicians much more than had been anticipated and well below the level needed to keep pace with doctors' costs. Congress' decision to forestall these unintended cuts was therefore justified on policy grounds.
But, Congress did not simply cancel the SGR and let physician reimbursement rates grow willy-nilly. In fact, although Congress has since 2002 prevented the full SGR cuts from going into effect, it has cut physician reimbursement rates substantially below what was needed simply to keep pace with inflation. Even if Congress blocks the next scheduled SGR cut and freezes the rate at current levels, the rate next year will be 17 percent below the rate in effect in 2001, adjusted for medical inflation.
The Medicare savings provisions in the House and Senate health bills are very different from the poorly designed SGR cut. Instead, they are similar in both size and design to the past Medicare cuts that Congress has allowed to take effect.
Bills Contain Wide Range of Cost-Containment Measures
Claims that the House and Senate health reform bills lack serious cost-containment provisions also do not withstand close scrutiny, the report explains.
"These bills contain just about every reform that health policy experts have proposed to slow health care costs over time," notes Van de Water. "While we will ultimately have to do much more, the bills take most of the steps that we know enough about to pursue now in the areas that experts view as promising."
In Medicare, the bills would scale back overpayments to private insurers, reduce annual payment updates for hospitals and other providers, and, in the House bill, lower prescription drug costs. To reduce costs across the entire health care system, the bills would promote competition among insurers by creating an insurance exchange, cut insurers' administrative costs, invest in preventive care, penalize hospitals with high readmission rates, and establish pilot projects in various areas to help determine the best approaches to controlling health care costs (while giving federal health officials some new authority to implement some changes in Medicare based on the knowledge gained without having to enact new legislation). In addition, the Senate bill would impose an excise tax on high-cost insurance plans to discourage overuse of health care and would create an independent board with the power to implement cost savings in Medicare.
"Lawmakers can strengthen the final bill by combining the strongest cost-control elements of the House and Senate bills," Van de Water said.
Bills Are Fully Paid For and Would Begin to Rein in Long-Term Health Costs
A third major claim by critics -- that, in the near term, the House and Senate bills would raise the nation's total health care expenditures -- is correct but not a meaningful argument against health reform, the report explains. Covering tens of millions of uninsured Americans will necessarily raise total health care spending in the short term.
"There are two fundamental tests for any health reform bill: does it expand coverage without increasing the deficit, and does it begin to slow health cost growth so total health spending will be lower over the long term than it otherwise would be? The House and Senate bills meet the first test and hold real promise for the second," Horney said.
The Congressional Budget Office estimates that both bills would reduce deficits over the first ten years (the House bill by $138 billion, the Senate bill by $130 billion) and for at least a decade after that. Moreover, under the Senate bill, the total federal cost for all health care spending and tax subsidies in the decade after 2019 would be no higher than if we continued current law, according to CBO. This is a major accomplishment for a bill that extends coverage to more than 30 million of the uninsured, the report notes.
Finally, some critics complain that the CBO cost estimates showing that the bills would reduce the deficit are misleading and rest upon a gimmick -- specifically, that neither the House nor the Senate bill includes a measure to permanently eliminate the SGR mechanism. Since Congress likely will continue to prevent the SGR from taking effect, critics say, Congress and CBO should consider the cost of such action as part of the cost of the health reform bills. Once that cost is added, they argue, the contention that the bills do not increase the deficit is false.
Indeed, Congress likely will never let the full SGR cuts take effect, and it probably won't offset the cost of scrapping them. But that cost is neither part of, nor in any way a result of, health care reform -- the federal government will incur this cost regardless of health care reform, not because of it. This fact is undeniable: if health reform legislation were to die tomorrow, the full SGR cost would remain. To be sure, it would be better if Congress offset the cost of cancelling the SGR cuts. But that issue is separate from the question of whether the health care reform bills themselves add to the deficit or not.
The full report is available at http://www.cbpp.org/cms/index.cfm?fa=view&id=3021.
The Center on Budget and Policy Priorities is a nonprofit, nonpartisan research organization and policy institute that conducts research and analysis on a range of government policies and programs. It is supported primarily by foundation grants.
-----
www.politicalpotluck.com
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The analysis, by James Horney and Paul Van de Water, former senior CBO officials now at the Center, examines the history of every significant Medicare cut that Congress has enacted in the past 20 years - specifically, cuts included in deficit reduction legislation enacted in 1990, 1993, 1997, and 2005.
The authors found that virtually 100 percent of the 1990 savings survived; virtually 100 percent of the 1993 savings survived; virtually 100 percent of the 2005 savings survived; and nearly 80 percent of the 1997 savings survived.
"Today's conventional wisdom is wrong," said Horney. "Medicare savings have been a big part of all major deficit-reduction packages that Congress has enacted since 1990, and lawmakers have allowed the vast majority of those cuts to take effect. Given that history, there is every reason to believe that Congress will allow the Medicare savings in the pending bills to take effect as well."
Main "Example" of Failure to Implement Cuts Rests on Misunderstanding
In arguing that large Medicare cuts never "stick," many critics focus on Congress' repeated refusal to let the reductions in doctor reimbursement rates under Medicare's "Sustainable Growth Rate" (SGR) mechanism to take full effect.
But, as the report explains, Congress didn't intend the SGR to produce large savings. In fact, the SGR represented only 3 percent of the total ten-year Medicare savings in the 1997 deficit-reduction bill - only $12 billion of the $394 billion in total Medicare savings over ten years, as CBO estimated at the time.
Because it was badly designed, however, the SGR would actually have cut payments to physicians much more than had been anticipated and well below the level needed to keep pace with doctors' costs. Congress' decision to forestall these unintended cuts was therefore justified on policy grounds.
But, Congress did not simply cancel the SGR and let physician reimbursement rates grow willy-nilly. In fact, although Congress has since 2002 prevented the full SGR cuts from going into effect, it has cut physician reimbursement rates substantially below what was needed simply to keep pace with inflation. Even if Congress blocks the next scheduled SGR cut and freezes the rate at current levels, the rate next year will be 17 percent below the rate in effect in 2001, adjusted for medical inflation.
The Medicare savings provisions in the House and Senate health bills are very different from the poorly designed SGR cut. Instead, they are similar in both size and design to the past Medicare cuts that Congress has allowed to take effect.
Bills Contain Wide Range of Cost-Containment Measures
Claims that the House and Senate health reform bills lack serious cost-containment provisions also do not withstand close scrutiny, the report explains.
"These bills contain just about every reform that health policy experts have proposed to slow health care costs over time," notes Van de Water. "While we will ultimately have to do much more, the bills take most of the steps that we know enough about to pursue now in the areas that experts view as promising."
In Medicare, the bills would scale back overpayments to private insurers, reduce annual payment updates for hospitals and other providers, and, in the House bill, lower prescription drug costs. To reduce costs across the entire health care system, the bills would promote competition among insurers by creating an insurance exchange, cut insurers' administrative costs, invest in preventive care, penalize hospitals with high readmission rates, and establish pilot projects in various areas to help determine the best approaches to controlling health care costs (while giving federal health officials some new authority to implement some changes in Medicare based on the knowledge gained without having to enact new legislation). In addition, the Senate bill would impose an excise tax on high-cost insurance plans to discourage overuse of health care and would create an independent board with the power to implement cost savings in Medicare.
"Lawmakers can strengthen the final bill by combining the strongest cost-control elements of the House and Senate bills," Van de Water said.
Bills Are Fully Paid For and Would Begin to Rein in Long-Term Health Costs
A third major claim by critics -- that, in the near term, the House and Senate bills would raise the nation's total health care expenditures -- is correct but not a meaningful argument against health reform, the report explains. Covering tens of millions of uninsured Americans will necessarily raise total health care spending in the short term.
"There are two fundamental tests for any health reform bill: does it expand coverage without increasing the deficit, and does it begin to slow health cost growth so total health spending will be lower over the long term than it otherwise would be? The House and Senate bills meet the first test and hold real promise for the second," Horney said.
The Congressional Budget Office estimates that both bills would reduce deficits over the first ten years (the House bill by $138 billion, the Senate bill by $130 billion) and for at least a decade after that. Moreover, under the Senate bill, the total federal cost for all health care spending and tax subsidies in the decade after 2019 would be no higher than if we continued current law, according to CBO. This is a major accomplishment for a bill that extends coverage to more than 30 million of the uninsured, the report notes.
Finally, some critics complain that the CBO cost estimates showing that the bills would reduce the deficit are misleading and rest upon a gimmick -- specifically, that neither the House nor the Senate bill includes a measure to permanently eliminate the SGR mechanism. Since Congress likely will continue to prevent the SGR from taking effect, critics say, Congress and CBO should consider the cost of such action as part of the cost of the health reform bills. Once that cost is added, they argue, the contention that the bills do not increase the deficit is false.
Indeed, Congress likely will never let the full SGR cuts take effect, and it probably won't offset the cost of scrapping them. But that cost is neither part of, nor in any way a result of, health care reform -- the federal government will incur this cost regardless of health care reform, not because of it. This fact is undeniable: if health reform legislation were to die tomorrow, the full SGR cost would remain. To be sure, it would be better if Congress offset the cost of cancelling the SGR cuts. But that issue is separate from the question of whether the health care reform bills themselves add to the deficit or not.
The full report is available at http://www.cbpp.org/cms/index.cfm?fa=view&id=3021.
The Center on Budget and Policy Priorities is a nonprofit, nonpartisan research organization and policy institute that conducts research and analysis on a range of government policies and programs. It is supported primarily by foundation grants.
-----
www.politicalpotluck.com
Political News You Can Use
Wednesday, June 10, 2009
Statement of Robert Greenstein, Executive Director of the Center on Budget and Policy Priorities, on the President's 'Pay As You Go' Budget Proposal
/PRNewswire / -- The following is being released by the Center on Budget and Policy Priorities:
President Obama's proposal to require policymakers to fully pay for all new entitlement increases and tax cuts, rather than deficit-finance them, is an important first step to restore fiscal responsibility. Critics charge that the pay-as-you-go, or PAYGO, proposal is riddled with loopholes, would be ineffective, or is a gimmick. But they are fundamentally mistaken. In light of obvious political realities, the so-called loopholes actually increase the likelihood that the pay-as-you-go rule would be effective in preventing enactment of new policies that would increase the deficit. Those who support fiscal responsibility should embrace the President's proposal, rather than undercut it by calling for a "pure" pay-as-you-go rule that would be doomed to failure.
The last administration ignored pay-as-you-go discipline. It successfully pushed deficit financing of nearly all of its major initiatives, including the 2001 and 2003 tax cuts and 2004 prescription drug legislation. In sharp contrast, the Obama Administration proposes to bar deficit financing for its own top initiatives, like health care reform, even though this will make those initiatives harder to push through Congress. Proponents of fiscal responsibility should applaud the commitment to ensuring that policymakers fully offset the costs of universal health coverage, strengthened college financial aid, efforts to address global warming, and other initiatives.
Some critics complain that the proposal would exempt the costs of extending the 2001 and 2003 tax cuts, alternative minimum tax relief, the current estate tax rules, and current policies that prevent deep cuts in the fees that Medicare pays to doctors from taking effect as scheduled. But, the inclusion of these exemptions strengthens, rather than weakens, prospects that the proposal will start to restore fiscal responsibility.
To be sure, we would much prefer that the President and Congress offset the cost of extending these current policies. But, it has become painfully clear over the past few years that there is no chance that Congress will pay for such extensions and no chance it will allow these policies to expire.
Suppose new statutory PAYGO requirements were applied to these current policies. Congress would unquestionably issue a series of waivers of the PAYGO rules, undermining their credibility within months of enactment and making it much harder to prevent waivers for other legislation to institute new entitlement expansions and tax cuts. Rather than make a transparently phony fiscal responsibility promise that would evaporate whenever 60 Senators support an entitlement or tax cut but don't want to pay for it, we need a PAYGO rule that Congress will adhere to. The Administration's proposal would erect a pay-as-you-go rule that acknowledges the additional costs that everyone knows will be incurred in extending current policies (and everyone knows will not be offset), and makes a commitment to draw the line at new policies that would increase the deficit.
Consider the estate tax, for example. If the Administration proposed a PAYGO rule without exemptions for current policies and Congress needed to waive the rule just to maintain today's estate tax rules in coming years, then Congress surely would enact such a waiver. That would leave no additional statutory barrier to going well beyond today's rules and eviscerating much of the estate tax that remains, and thereby digging the deficit hole even deeper. The sky would be the limit here. In contrast, if a new PAYGO rule draws the line at today's estate rule tax parameters --- so that extending them does not violate the rule but any effort to remove more of the tax does violate it -- then policymakers will have a better chance of holding the line and avoiding still more deficit financing here. As this example illustrates, the Administration's proposal will likely be more effective at maintaining fiscal discipline than an all-encompassing PAYGO rule that applied to extending current popular policies -- and that Congress waived willy-nilly.
An analogy may help here. If a boulder has begun to slide down a hill, standing at the top of the hill and exhorting the boulder to roll back up -- or building a barrier at the top of the hill -- won't do much good. But marching part way down the hill to where the boulder currently sits and erecting a barrier to prevent the boulder from sliding further can be effective.
To be sure, PAYGO rules will not close the daunting budget gaps we face. Policymakers must take other steps to begin addressing them. But erecting an effective barrier to forestall new policies that would make the problem worse is an important first step. The nation's fiscal situation would be far healthier had policymakers adhered to such policies over the past decade. The Obama Administration and the "Blue Dog" coalition of lawmakers (a group of conservative-to-moderate House Democrats), as well as others who support the President's efforts, should be commended, rather than chastised, for pursuing this action.
-----
www.politicalpotluck.com
Political News You Can Use
President Obama's proposal to require policymakers to fully pay for all new entitlement increases and tax cuts, rather than deficit-finance them, is an important first step to restore fiscal responsibility. Critics charge that the pay-as-you-go, or PAYGO, proposal is riddled with loopholes, would be ineffective, or is a gimmick. But they are fundamentally mistaken. In light of obvious political realities, the so-called loopholes actually increase the likelihood that the pay-as-you-go rule would be effective in preventing enactment of new policies that would increase the deficit. Those who support fiscal responsibility should embrace the President's proposal, rather than undercut it by calling for a "pure" pay-as-you-go rule that would be doomed to failure.
The last administration ignored pay-as-you-go discipline. It successfully pushed deficit financing of nearly all of its major initiatives, including the 2001 and 2003 tax cuts and 2004 prescription drug legislation. In sharp contrast, the Obama Administration proposes to bar deficit financing for its own top initiatives, like health care reform, even though this will make those initiatives harder to push through Congress. Proponents of fiscal responsibility should applaud the commitment to ensuring that policymakers fully offset the costs of universal health coverage, strengthened college financial aid, efforts to address global warming, and other initiatives.
Some critics complain that the proposal would exempt the costs of extending the 2001 and 2003 tax cuts, alternative minimum tax relief, the current estate tax rules, and current policies that prevent deep cuts in the fees that Medicare pays to doctors from taking effect as scheduled. But, the inclusion of these exemptions strengthens, rather than weakens, prospects that the proposal will start to restore fiscal responsibility.
To be sure, we would much prefer that the President and Congress offset the cost of extending these current policies. But, it has become painfully clear over the past few years that there is no chance that Congress will pay for such extensions and no chance it will allow these policies to expire.
Suppose new statutory PAYGO requirements were applied to these current policies. Congress would unquestionably issue a series of waivers of the PAYGO rules, undermining their credibility within months of enactment and making it much harder to prevent waivers for other legislation to institute new entitlement expansions and tax cuts. Rather than make a transparently phony fiscal responsibility promise that would evaporate whenever 60 Senators support an entitlement or tax cut but don't want to pay for it, we need a PAYGO rule that Congress will adhere to. The Administration's proposal would erect a pay-as-you-go rule that acknowledges the additional costs that everyone knows will be incurred in extending current policies (and everyone knows will not be offset), and makes a commitment to draw the line at new policies that would increase the deficit.
Consider the estate tax, for example. If the Administration proposed a PAYGO rule without exemptions for current policies and Congress needed to waive the rule just to maintain today's estate tax rules in coming years, then Congress surely would enact such a waiver. That would leave no additional statutory barrier to going well beyond today's rules and eviscerating much of the estate tax that remains, and thereby digging the deficit hole even deeper. The sky would be the limit here. In contrast, if a new PAYGO rule draws the line at today's estate rule tax parameters --- so that extending them does not violate the rule but any effort to remove more of the tax does violate it -- then policymakers will have a better chance of holding the line and avoiding still more deficit financing here. As this example illustrates, the Administration's proposal will likely be more effective at maintaining fiscal discipline than an all-encompassing PAYGO rule that applied to extending current popular policies -- and that Congress waived willy-nilly.
An analogy may help here. If a boulder has begun to slide down a hill, standing at the top of the hill and exhorting the boulder to roll back up -- or building a barrier at the top of the hill -- won't do much good. But marching part way down the hill to where the boulder currently sits and erecting a barrier to prevent the boulder from sliding further can be effective.
To be sure, PAYGO rules will not close the daunting budget gaps we face. Policymakers must take other steps to begin addressing them. But erecting an effective barrier to forestall new policies that would make the problem worse is an important first step. The nation's fiscal situation would be far healthier had policymakers adhered to such policies over the past decade. The Obama Administration and the "Blue Dog" coalition of lawmakers (a group of conservative-to-moderate House Democrats), as well as others who support the President's efforts, should be commended, rather than chastised, for pursuing this action.
-----
www.politicalpotluck.com
Political News You Can Use
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