Spending is Not the Problem

- by Mo Johnson

Here are some facts that I suspect will surprise some of you (some of you will simply dismiss them, but that's not my fault).

We actually don't have a serious spending problem at the moment. It's a bit, just a bit, higher than it generally has been. In the US, federal spending has averaged about 25% GDP for the past 40 years or so -- yes, even when Reagan was pres.

What has changed dramatically has been tax receipts. Traditionally we received about 18% of the GDP in tax receipts; that has dropped to about 14%. Most of that is due to lower taxes paid by corporations and wealthy individuals.

We are actually one of the lowest spending and lowest taxing countries of all the industrialized countries in the world.

All of the difference between the traditional 18% receipts and 25% spending (the deficit) can be accounted for by the dramatic rise in health care costs. We have by far the most wasteful health care system the world has ever known. We spend about twice as much of our GDP on health care as anyone else. It is a disgrace and the primary cause of all our fiscal problems.

And, it also is the black - er cloud on the horizon as the population ages.

So, while our current deficits are manageable, they will not be in a few years unless we dramatically change the way we deliver health care.

There are two ways to change it -- one that will lead to social calamity -- another that will work. We know what will work -- cause everyone else already does it.

But, stupid ideology prevents us.

Comments for Spending is Not the Problem:

Health Care "Cuts" - by Anonymous

Universal health care would result in "cuts" of 1 to 2 trillion. The difference between the GOP and DEMS, Ryan and Obama -- is Dems want to cut by making the system more efficient and force providers to lower costs to a level more competitive with the rest of the industrialized world. The GOP wants to take the money out of the hide of the beneficiaries -- simply cut their benefits and force them to pay more or go without.

This is the central debate about health care (and deficits) and I hope more and more Americans come to understand it.