News

GAO report finds that Obama’s massive spending is not sustainable

Leave a comment

The Government Accountability Office is a federal government agency that audits the finances of the federal government. They report to Obama and they are part of his administration. So what do they think about his plans to fix the economy?

Take a look at this article from Breitbart.

Excerpt:

The Government Accountability Office (GAO)—the personal auditor of President Obama and the federal government—released its assessment of the federal government on January 17, 2013. The report’s findings illuminate just how dire America’s spending problem is and, therefore, how little the current cuts debated by Congress do to fix it.

The findings of the paper include these excerpts (emphasis added):

  • “The projections in this Report indicate that current policy is not sustainable… Preventing the debt-to-GDP ratio from rising over the next 75 years is estimated to require some combination of spending reductions and revenue increases that amount to 2.7 percent of GDP over the period.”
  • “It is estimated that running primary surpluses that average 1.0 percent of GDP over the next 75 years would result in the 2087 debt-to-GDP ratio equaling its level in fiscal year 2012, which compares with primary deficits that average 1.7 percent of GDP under current policies.”
  • “It is noteworthy that preventing the debt-to-GDP ratio from rising over the next 75 years requires that primary surpluses be substantially positive on average. This is true because projected GDP growth is on average smaller than the projected government borrowing rate over the next 75 years.”
  • “If the primary surplus was precisely zero in every year, then debt would grow at the rate of interest in every year, which would be faster than GDP growth.”
  • “The differences between the primary surplus boost starting in 2023 and 2033 (3.2 and 4.1 percent of GDP, respectively) and the primary surplus boost starting in 2012 (2.7 percent of GDP) is a measure of the additional burden policy delay would impose on future generations. Future generations are harmed by a policy delay of this sort, because the higher the primary surplus is during their lifetimes the greater the difference is between the taxes they pay and the programmatic spending from which they benefit.”

[…]This is the reality: when President Obama’s personal auditor says the federal government has a spending problem, it indeed has a spending problem—and one that is growing rapidly.

Something to think about during the debate on sequestration. We can’t stay on the course that we’re on. Things will not be OK.

News

How does Obamacare cause medical premiums to rise?

2 Comments

The facts are not in dispute – Obamacare will make health insurance premiums go up.

The Wall Street Journal explains what will happen to medical insurance premiums as more of Obamacare is implemented in 2014.

Excerpt:

Central to ObamaCare are requirements that health insurers (1) accept everyone who applies (guaranteed issue), (2) cannot charge more based on serious medical conditions (modified community rating), and (3) include numerous coverage mandates that force insurance to pay for many often uncovered medical conditions.

[…]We compared the average premiums in states that already have ObamaCare-like provisions in their laws and found that consumers in New Jersey, New York and Vermont already pay well over twice what citizens in many other states pay. Consumers in Maine and Massachusetts aren’t far behind. Those states will likely see a small increase.

By contrast, Arizona, Arkansas, Georgia, Idaho, Iowa, Kentucky, Missouri, Ohio, Oklahoma, Tennessee, Utah, Wyoming and Virginia will likely see the largest increases—somewhere between 65% and 100%. Another 18 states, including Texas and Michigan, could see their rates rise between 35% and 65%.

While ObamaCare won’t take full effect until 2014, health-insurance premiums in the individual market are already rising, and not just because of routine increases in medical costs. Insurers are adjusting premiums now in anticipation of the guaranteed-issue and community-rating mandates starting next year. There are newly imposed mandates, such as the coverage for children up to age 26, and what qualifies as coverage is much more comprehensive and expensive. Consolidation in the hospital system has been accelerated by ObamaCare and its push for Accountable Care Organizations. This means insurers must negotiate in a less competitive hospital market.

Although President Obama repeatedly claimed that health-insurance premiums for a family would be $2,500 lower by the end of his first term, they are actually about $3,000 higher—a spread of about $5,500 per family.

But why? How does it happen?

Investors Business Daily has a look at the chain of causation.

Excerpt:

For years, ObamaCare critics focused on its least popular feature — the mandate that everyone buy insurance — taking their fight all the way to the Supreme Court.

But as ObamaCare’s official launch date approaches, even its backers are beginning to admit that the law could actually create powerful incentives for millions of people and thousands of businesses to drop their coverage, despite the mandate.

There is growing concern, for example, that the law’s market reforms will cause a huge “rate shock,” particularly for those young and healthy.

A February survey of major health insurance companies in five cities across the country found that they expect premiums for this group to climb an average 169%.

The cause of this rate shock is simple: ObamaCare imposes what is called “community rating” on insurance companies, effectively forcing them to charge the young and healthy more so they can charge older and sicker consumers less.

The five-city survey, for example, found that while the law will jack up rates for the young, it will lower them an average 22% for older and sicker customers.

At the same time, ObamaCare also forbids insurance companies from turning anyone down — a reform called “guaranteed issue” — which also will provide an incentive for some to drop coverage, knowing they can get it back any time.

“Even with the tax penalty … some healthy people would avoid purchasing coverage until they are sick,” Howard Shapiro, director of public policy at the Alliance of Community Health Plans, told regulators .

The problem is that if the young and healthy drop coverage, the result would be what the industry calls a “death spiral.” Premiums will climb as the pool of insured gets sicker, causing still more to cancel their policies.

This is just what happened in states that imposed strict community rating and guaranteed issue reforms in the past. In fact, of the eight states that did so, most ended up either dropping the reforms or loosening the rules after they saw enrollment decline and premiums climb.

It’s very important to understand that what Obama did with his health care plan will not cause premiums to go down. On the contrary, they have gone up and they will go up.

News

Did Obama really cut the deficit the deficit by 2.5 trillion?

8 Comments
Democrats control the House and Senate in 2007
Democrats controlled the House and Senate in 2007. The last budget deficit with Republicans in control was $161 billion.

CNS News takes a look at the raw numbers.

Obama’s claim:

President Barack Obama claimed today that since he has been president both parties have worked together to cut the federal deficit by $2.5 trillion—despite the fact that the national debt has increased $5.9 trillion during Obama’s presidency, which is more than it increased under all presidents from George Washington through Bill Clinton combined.

“Over the last few years both parties have worked together to reduce our deficits by more than $2.5 trillion,” Obama said in a speech at the White House in which he called on Congress to avoid modest automatic cuts in anticipated spending that are set to begin on March 1.

The facts:

When Obama was inaugurated on Jan. 20, 2009, the federal government’s debt was $10,626,877,048,913.08. As of the close of business on Feb. 14, 2013, the federal government’s debt was $16,540,800,290,147.46. Thus, since Obama has been president, the federal debt has increased $5,913,923,241,234.38. That is more than all the debt accumulated by all the presidents from George Washington through Bill Clinton.

[…]Federal spending and federal deficits have both increased sharply under President Obama. In fiscal 2008, the last full fiscal year before Obama took office, the federal government spent $2.9716 trillion. In fiscal 2012, the federal government spent $3.538 trillion.

In fiscal 2008, the federal deficit was $454.8 billion. In fiscal 2012, it was $1.2967 trillion. By this measure, President Obama did not reduce federal deficits by $2.5 trillion. He increased the annual deficit by $841.9 billion.

Not sure what Obama is talking about with this $2.5 trillion number, because both deficits and debt are WAY UP under his leadership. Why is he lying? And why do his supporters believe his lies?