Why America is Going Broke

 

I am a candidate in the May 15 Nebraska Republican Primary for the U.S. Senate because the incumbent, Deb Fischer, is ignoring our enormous and out-of-control national debt. In fact she recently voted twice to make it worse.
The new tax law, in spite of its good individual features, increases our debt by $1 trillion over the next ten years, even after new growth is taken into account.  The new budget agreement increases spending by hundreds of billions of dollars.  Fischer voted for both of these measures.

The Hoover Institution analyst, John Cogan, summarizes our dire fiscal situation in the above chart which compares three major categories of federal spending since 1950: defense, entitlements and all other.  Entitlement spending is steadily increasing.  The other two categories have stabilized at about 3.5% of GDP each.
The Manhattan Institute scholar, Brian Riedl, explains why this situation is so serious that it is already an emergency:

  • Between 2008 and 2030, 74 million baby boomers, will retire into Social Security and Medicare, at the rate of 10,000 per day.
  • Today’s typical couple has paid $140,000 into Medicare and will receive $420,000 in benefits, largely because physician and drug benefits are not prefunded with payroll taxes (only hospitalization is). Social Security recipients also come out way ahead.
  • The demographic challenge is much worsened by rising healthcare costs.
  • The imbalance is so large that something has to give. Doubling the top tax rates of 35% and 37% to 70% and 74% (I.e. taxing the rich) would only cover 1/5 of the long term shortfall in revenue. An increase in inflation (purposeful or not) will not dilute away our debt. Social Security and Medicare benefits are also tied to inflation. Faster inflation would also increase interest rates and therefore interest payments on our rapidly growing debt.
  • Restructuring cannot wait. Every year of delay sees 4 million more baby boomers retire and get locked into benefits which will be difficult to alter. “Reality will soon fall like an anvil on Generation X and Millennials as they find themselves on the wrong side of the largest generational wealth transfer in world history.”

Conclusion. A severe form of fiscal cancer is gradually creeping over the body politic. We ignore it at our grave peril.

The Republican Party is Jeopardizing its Moral Credibility

 

I have been a Republican for most of my adult life because I have usually considered the Republicans to be the party of fiscal responsibility. But is this still true? Consider:

  • Our national debt now stands at 77% of GDP (for the public part on which we pay interest) and was already predicted to reach 98% of GDP in 2027, just ten years from now. Now, with the new tax law and the new budget deal, deficits are likely to reach 109% of GDP by 2027.

  • In numerical terms, our current $20.5 trillion debt was already set to increase by $11 trillion over the next ten years. The new tax law will add $1 trillion to the debt (after taking new growth into account). The new budget deal adds another $1.7 trillion.  In other words new debt, on top of our existing debt, will be close to $14 trillion over the next decade.

  • The Republican Party now controls the Presidency and both houses of Congress and therefore has absolutely no excuse for such fiscal extravagance.

I am a candidate in the Nebraska Republican Primary for U.S. Senate against the incumbent, Deb Fischer, because she is offering no resistance to this flagrantly rotten charade. Last fall, it would have taken only three Senators to stop the trillion dollar giveaway in the new tax law and not one single Republican Senator voted against it.

Conclusion. The Republican Party is now endangering its critical role in making sure that the federal government acts in a fiscally responsible manner. I shudder to think what will happen to our country without a major party offering fiscal restraint.

Nebraska Senator Deb Fischer is Fiscally Irresponsible!

 

I am a candidate in the May 15 Nebraska Republican Primary for the U.S. Senate against the incumbent Deb Fischer because she is ignoring our enormous and out-of-control national debt.  In fact, she is doing much worse than just ignoring it; she is actively making it much worse.  For example:

  • Fischer voted for the new tax law which increases our debt by $1 trillion over ten years even after new growth is taken into account.  The main features of the new law are excellent but need offsets to avoid losing tax revenue.

  • The budget just approved by Congress and signed by President Trump, for this year and next, will increase the debt by $300 billion. It means that the deficit for FY 2018 will be $800 billion followed by $1.2 trillion for FY 2019 (see first chart).  In FY 2027, just ten years away, the annual deficit is projected to increase to $2.1 trillion (see second chart).

  • On Senator Fischer’s watch, for the six Fiscal Years 2014 – 2019, the new debt is likely going to be $4.5 trillion (just add up the totals for these years in the chart above). This means that by the end of her six year term in office, 20% of our entire debt of $22.5 trillion, will have been accumulated while she was in office!

Conclusion. The national debt now $20.5 trillion and growing rapidly, is by far our biggest long term problem. We badly need representatives in Congress who will stop ignoring this awful problem and start doing something about it.  That is why I am a candidate for the U.S. Senate.

The Key to Solving our Healthcare Cost Problem II. Make the Employer Mandate More Flexible

 

I am a candidate in the May 15 Nebraska Republican Primary for U.S. Senate.  I have entered this contest because the incumbent, Deb Fischer, has done nothing to reduce our enormous and out-of-control national debt and, in fact, voted recently (with the new tax law) to increase our debt by $1 trillion over the next decade.  And this is after new economic growth, stimulated by the tax changes, is taken into account.


One way to get the debt under control is with a more sensible budgeting process, but this is not enough by itself.


We also need a major effort to reduce the cost of healthcare.  One problem here is that employer provided health insurance is very inefficient, especially because it insulates employees from the full price of their healthcare. The way to fix this is to make the employer mandate in the Affordable Care Act more flexible in the following ways:

  • Replace income based tax credits in the ACA with aged-based tax credits (which then apply to everyone). See here for details.
  • Allow individual employees to migrate away from the employer plan to individually underwritten personal insurance. This will often save money for the individual employee (and family), the employer (who has fewer employees to cover) and the government (which has a smaller tax exemption). The employees also gain more flexibility for future employment.
  • Such a system, when fully implemented, will save $400 billion per year in government revenue, both state and federal.

Conclusion. I have outlined one way of moving from the defined benefit healthcare system we have now to a defined contribution system which will save hundreds of billions of taxpayer dollars every year by putting more responsibility on the individual health consumer.

Ignoring the National Debt Endangers Our Country

 

Here is the preliminary version of my campaign announcement, now scheduled for Wednesday, January 24, for the Nebraska Republican Primary for U.S. Senate:

“This may sound overly dramatic but if we ignore the debt much longer, it will endanger the future of our country.

This is exactly what the new tax law does, in spite of its otherwise good features, by increasing the debt by $1 trillion over the next decade.  And 51 Republican Senators voted for this new law, including Nebraska’s Deb Fischer who is running for reelection this year.  I am running for her seat to challenge her about our ballooning debt because she is doing nothing about it and has just voted to make it worse!

First of all, the chart below shows why our debt situation is so serious. It now sits at 77% of GDP (for the public part on which we pay interest), the highest since WWII, and is predicted by the Congressional Budget Office to keep getting steadily worse, hitting almost 100% of GDP by 2027.


Right now interest rates are so low, less than 2%, that our debt is almost “free” money.  But this cannot and will not last much longer.  Inflation has already started to increase and the Federal Reserve has started to raise interest rates.

Rising interest rates mean much higher interest payments on our debt. This will put an enormous strain on the federal budget, choking off spending for many of the things such as education, scientific and medical research, infrastructure and social programs which so enhance our quality of life.

And furthermore, these much higher interest payments on the debt will continue, and even grow worse, indefinitely into the future, placing a huge burden on future generations, our children and grandchildren.

The solution is to shrink our annual deficits ($668 billion in FY2017 and likely over $700 billion for 2018) down to a much more manageable level so that our debt will also shrink as a percentage of GDP.

I emphasize that this can be done in a sensible, non-disruptive way by simply curtailing spending increases in most government programs without actual budget cuts, and thereby reducing our huge annual deficits over a period of several years.

The Affordable Care Act expands access to healthcare (which is good!) but does nothing to control cost (which is bad!).  American healthcare needs major changes.  One way to do this is to abolish the employer mandate and migrate from employer provided health insurance to personal insurance with age-based, instead of income based, tax credits.  Medicaid can move to the same age-based (refundable) tax credit system. Also fix Medicare by making Medical Savings Accounts readily available for Medicare Advantage plans and then encouraging migration from regular Medicare to Medicare Advantage.

Such major changes as I have proposed above likely will be considered controversial.  However, which is better, to implement major changes in a rational, careful manner while there is time or rather to wait for a new fiscal crisis, much worse than the Financial Crisis of 2008, which will inevitably occur down the road if we continue to ignore the debt?

Summary. The U.S. has a horrendous debt problem which is getting worse all the time.  We badly need representatives in Congress who will stop ignoring our debt and make reducing it a very top priority.  This is why I am challenging Deb Fischer as she runs for reelection. “

Follow me on Twitter 
Follow me on Facebook 

Why We Cannot Wait to Fix the Debt

 

A Letter from Birmingham Jail   Why we cannot wait  Martin Luther King, Jr., April 16, 1963

Yesterday was Martin Luther King Day and every year at this time we are reminded of his eloquent letter from the Birmingham Jail, “Why we cannot wait,” written to some of his hesitant supporters in the Spring of 1963.
African-Americans were tired of waiting so long for equal rights in their own country.  On my own personal scale, I am so frustrated by the inability of our political system to address our massive debt problem, that I am getting organized to enter the 2018 Nebraska Republican Senate Primary against the incumbent Deb Fischer who has just voted (with the new tax law) to increase our debt by $1 trillion over the next decade.
Basically I am saying that our debt is so large and growing so fast that it will soon be out of control if we don’t take action to start reducing it very soon.


Consider:

  • The public debt (on which we pay interest) is now 77% of GDP, the highest since WWII, and projected by the Congressional Budget Office to keep getting steadily worse. It will grow by $11.5 trillion in just 10 years to almost 100% of GDP and will reach 150% of GDP, double the current level, by 2047, without major changes in current policy.
  • A fiscal crisis, much worse than the Financial Crisis of 2008, will occur long before 2047 if nothing is done to greatly shrink our annual deficits which are again rapidly approaching the trillion dollar per year level.
  • The new tax law increases deficits by an average of $100 billion per year, and therefore makes it that much harder to shrink them down substantially. It is imperative for the two parties, Democrats and Republicans, to work together to figure out how to do this.

Conclusion. Our national debt is so large and growing so fast that it is virtually out of control. We need prompt and fairly strong action to turn the situation around.  I have often discussed one major way to do this.

Follow me on Twitter 
Follow me on Facebook 

Why Am I So Fixated on Our Debt Problem?

 

In a few days I expect to announce my candidacy for the Republican nomination for the U.S. Senate seat now held by Deb Fischer. She is running for reelection and apparently is quite popular in Nebraska.  But she has one huge liability as far as I’m concerned.  First of all, she is a big spender.  But now as well she has just voted for the new tax law which will increase our debt by $1 trillion over the next decade. In other words she is flagrantly guilty of ignoring our very serious debt problem even as it continues to get worse.


People sometimes ask me why I am so fixated on the debt.  After all, there are plenty of other important issues that we should be concerned about. The answer is that uncontrolled debt affects almost everything else government does because as interest rates increase, eventually interest payments on the debt will skyrocket.

  • Defense spending, so critical to our role as the world’s major superpower, which maintains peace and stability in the world, will be threatened.
  • Run-away inflation is likely to result from the buildup of the debt bubble and this will erode the economic security which is so important to our way of life.
  • The international standing of the dollar, so critical to our leadership role in the financial world, will be weakened.
  • Spending for programs such as education, research and infrastructure, so important to our quality of life, will be threatened.
  • By focusing so strongly on the debt issue, hopefully I will be able to persuade large numbers of people that I am really serious about taking strong action to address it effectively.

Conclusion. There are lots of issues which will come up on the campaign trail in a Senate race. But my campaign will be focused on our gigantic debt problem.  If we can’t get our debt under control, then our entire way of life is threatened.  It is that simple.

Follow me on Twitter 
Follow me on Facebook