The CERTAIN Destruction Of Our Nation*

Go back and read this Ticker, and the link in it on the actual budget deficit we ran last year (no, it's not the nice number you see at the top of the MTS.)

The budget deficit was in fact $1.4 trillion -- not the claimed $587 billion (which is bad enough, incidentally.)

Last year the Federal Government spent $1,417 billion dollars out of $3,854 billion, or 37% of every dollar it spent, on Medicare and Medicaid. This was a 9.3% increase over last year's expenditure of $1,296,731 (million), all-in.

But inside this figure are even-more damning numbers.

Payments to the health care trust funds were up 13.4% (!)

Spending on CHIP, the plan for poor kids, rose last year by an astounding 56%. While the total spent was only $14.3 billion that rate of rise is utterly astronomical by anyone's measure.

Don't believe for a second that administrative expenses are under control, which is a claim often made for Medicare and Medicaid: They were up 32% last year for the primary hospital insurance trust fund. No, that's not a misprint.

Hospital benefit payments for Medicare? Up 8.4% -- the bright spot, believe it or not.

Medicare Part "D" (drugs)? Sit down: Up 26.2% to a total of $95.2 billion.

Folks, at this rate of change within the next four years Medicare and Medicaid will consume just over $2,000 billion a year, or $2 trillion -- an increase of $600 billion a year in spending.

Let me remind you that last year taxes (receipts) rose by a paltry 0.55%, and at this rate of increase over the next four years government revenue will absorb only $72.9 billion of that $600 billion in additional spending -- and this assumes that absolutely nothing else in the budget increases in cost at the same time, an utterly fanciful notion.

In other words there will be at least another $500 billion of additional annual deficit, and likely far more than the $600 billion denoted here, bringing the total to more than $2 trillion in actual deficit being run per year.

If this pattern were to continue for 10 years then Medicare and Medicaid would rise to $3,448 billion, or for all intents and purposes all of the $3,854 billion the government spends now! Worse, increased tax revenue would absorb only $184 billion of that additional cost -- for all intents and purposes ZERO.

For those politicians and others who claim Social Security is going to blow at roughly the same time, no it won't. Social Security payments (for retirees and disability) rose 3.2% last year while for both retiree and disability tax receipts rose at a 5.2% rate. Yes, on a cash basis Social Security ran a deficit last year but the rate of increased tax revenue was higher than the rate of spending growth and Social Security has a $2.8 trillion dollar Treasury security cache it can redeem to cover the shortfall. At present rates Social Security may have issues in the future, but for right now it is stable.

MEDICARE AND MEDICAID ARE NOT AND THEY ARE WHERE THE ENTIRE PROBLEM RESIDES.

We will not manage to get through the next 10 years at this rate and in fact will not get through the next President's term. If we do not put a stop to this right now the stock market will collapse and lose up to 90% of its value, all pensions will collapse and at best be able to pay 50% of what was promised (are you a teacher, firefighter or police officer? Bend over because law or no law you are screwed.) The bond market will collapse as the spiral of debt will be clear to everyone and nobody will be willing to buy a bond from anyone at any reasonable interest rate, which will instantly destroy the value of all outstanding long-term Treasury debt by as much as 50-70%, government entitlements will collapse (to put that in plain language they will go to zero or effectively so) and real estate values will collapse as demanded interest rates on mortgages will make the 1980s look like a Girl Scout Party.

And by the way it is not possible to tax our way out of this and certainly we cannot do so by "taxing the rich", as is often claimed. If you confiscated all of the money made by those who make more than $500,000 a year you would not even close the deficit gap for one year. Of course if you did that the amount of money those who make over $500,000 a year would choose to make next year, and thus be subject to said tax, would be no more than $499,999, and thus you'd get zero in tax from them via this approach in year #2. Anyone running a "pay your fair share" claim is lying and they know it; again, that's the math.

We must -- and can -- stop this crap with existing law. Specifically, by applying 15 USC Chapter 1 to all parts of the health care industry. This will collapse the cost of care for both the government and private parties by as much as 80% and permanently end and reverse the budget problems it is causing -- for the federal government, for state and local pensions, and for private firms and individuals.

I have been writing and speaking on this since I ran MCSNet in the 1990s. It has been a focus of this column since it was formed in 2007, including in this column written in 2012. We have willfully and intentionally, as a nation, ignored this issue for the last decade and we are now facing the destruction of our economy, our markets, our government, our society and our way of life if we do not put a stop to the pillaging of our economy and people NOW.