Budget Cuts Conundrum

So I'm hearing two opposing themes about the proposed federal budget cuts:

1) It's horrible because we are cutting into the bone and this is going to really hurt a lot of important government programs.

2) It's great because we have been spending money that we don't really have, and we need to finally reign it in. 

Let's face it, we'll never get such drastic cuts across the civilian government unless this country goes into severe crisis mode--which never happens until it's too late and something terrible has happened. 

If we even got half the cuts being proposed--which most people don't seem to believe will even happen--that would be significant and painful itself. 

The truth of the matter is that we are facing enormous danger on both the national security and financial fronts!

- Militarily--Russia, China, Iran, North Korea pose huge threats including those involving weapons of mass destruction. 

- Financially--We have a serious national debt to the tune of $20 trillion, an annual trade deficit of half a trillion dollars, and social security and medicare trust funds that are going bankrupt. 

If we let these threats run their course, we will eventually have a crisis that will be truly nationally catastrophic. 

So what's it gonna be--guns or butter--or national bankruptcy. ;-)

(Source Photo: Andy Blumenthal)

Budget Cuts Conundrum

The Unsustainable U.S. Economy

The U.S. National Debt often touted at an enormous $18 trillion is really more than 3 times that amount and closer to a whopping $65 trillion!

That's when you actually count all the unfunded liabilities for civilian and military pensions, retiree healthcare, social security, and medicare.

For each of the 318.9 million people of that United States, it mean $203,826 of debt or for a family of four that's a debt of $815,303.

Put another way, the entire net worth of Americans is $84.9 trillion, but after subtracting the debt of $65 trillion, it drops to just about $20 trillion--coincidentally around the amount of our new debt ceiling.

Moreover, with the richest 1% owning more than 50% of the wealth by 2016 that leave only $10 trillion or $31,675 for each of us--not so hoity toity for 239 years of independence and founding as a nation or all the blood, sweat, and tears we put in every day of our lives.

In terms of our escalating debt, just this last year alone, social security spending went up to $944,143,000,000 or the equivalent of $6,345 for every American with a job. and this is projected to dramatically rise with the retirements of the baby boomers.

Projections are for social security to exhaust its funds by 2035, which could result in across the board 20% or more cuts in benefits of the already meager program where many seniors end up eating cat food.

Additionally, the retirement age already set to go to 67 by 2027 could be forced to go even higher, and social security would likely be curtailed or eliminated entirely above certain income levels.

Is this the financial security and brighter future we are leaving our children and grandchildren?

We can kick the can down the road, but the unsustainability of it all will eventually come back to haunt us. ;-)

(Source Photo: here with attribution to Pictures of Money)

The Unsustainable U.S. Economy

A Feel Good But Deeply Ailing U.S. Economy

Get comfortable with your salary, because it isn't going anywhere positive--payrolls are stagnant!

The Wall Street Journal reports that wages since the recession "have grown slowly, advancing at a pace of about 2% annually" for a total of 12% since 2009.

In contrast, in the 20 years prior to the recession, wages "grew on average better than 3% annually"--that's 50% more increase per year!

Sure some of the increase is now coming in the form of benefits growth, such as time off, subsidized commuting costs, and health insurance premiums, but workers still need to be able to pay their bills. 

For the federal workforce, things have even been worse with pay raises of "just 2% [total] over the last five years" and a proposed 1.3% (with locality pay) for 2016.

Is it surprising then the innovation--one of our greatest strengths--is also drastically slowing in the United States. We are not rewarding risk with reward like we used to--and that changes the whole innovation equation!

Also no surprise then that mergers and acquisition are booming as the key to corporate growth as well as cost-savings through economies of scale are seen as one of the only ways to wring out profit growth in companies bottom lines.

All in all:

- The average household income in the U.S. of $53,657 (as of 2014 census) is actually negative $2,401 or -4.3% since 2005.

- While inflation is up an average of 2.13 over the same 10-year period.

- This leaves the average household more than 6% worse off then they were a decade ago...that's a lot of time to be working and getting negative returns on your investment of time and effort.

Combine this with:

- A stagnant U.S. economy despite near zero interest rates since December 2008.

- Manufacturing down to only 9% of jobs in the U.S. economy

- The country's ongoing spending binge--a national debt that has doubled over 8 years from around $10 trillion to almost $20 trillion by 2017 and interest payments about to take off with rising interest rates.

- Throw in a arms-race with China and Russia and the aging Baby Boomers setting up the economy for dramatic increases in Social Security and Medicare

And the "fun" NOT is only just beginning. ;-)

A Feel Good But Deeply Ailing U.S. Economy

Self-Perpetuating Immigration For All The Wrong Reasons

So this is the prevailing misguided logic by some for more immigration. 

We need immigrants to "reduce the ratio of retirees to workers."

Why? 

Because the birth rate has fallen to below replenishment rates (roughly 2.1 births per women). 

And since our "trust funds" for social security, medicare, pensions, and the like have NOT been been kept in trust, BUT INSTEAD have been squandered on other things...

Therefore, according to this warped thinking we now need a wave of immigrants to come save us--have lots of babies and grow our economy--to pay for what we should be able to, but can't--because of gross mismanagement and corruption with the money that was taken out our payroll all our lives supposedly to care for us in our elder years. 

The wrong reasons for immigration are expressed by Charles Kenny in Bloomberg Businessweek.

- According to Kenny, "More immigration is both the cheapest and most effective response to the challenge of a shrinking, aging population," which he frets is "ominous for pension and health-care costs."

- Kenny's approach to immigrants is that they are not vital and talented human beings, but rather basically baby machines with higher birth rates for population replenishment, as he states, "Although immigrants rapidly adopt the fertility patterns of their new countries, they still tend to produce more children to begin with."

- And he says, because most come over as adults, we have the benefits of the workers "without the expense and delay of rearing...[them as] children."

- Oh, and by the way, Kenny says, "Some newly arrived workers help provide cheap child-care options."

Wow, how biased, cold, and condescending is that!

Not once does Kenny mention or advocate for immigration for any of these truly worthy reasons:

- Shelter from persecution 

- Political asylum

- Promote diversity

- Bring in needed skills, investment, and innovation 

- Rejoin families

And what is the result of bringing in immigrants to pay our way?

Well, we'll need to bring in yet another and another, wave after wave of immigration, because we can't balance of budget and spend rationally, responsibly, and with an eye toward the future--it's self-perpetuating immigration for the sake of deadbeatism. 

Sweet land of liberty is being thrown out for a bunch of economic opportunists who feel we need "immigrants to [come to] the rescue" rather than join together with us in being great in terms of compassion, humanitarianism, and mutual respect. 

(Source Photo: Andy Blumenthal)

Self-Perpetuating Immigration For All The Wrong Reasons

Have It When You Need it

At an event that I attended recently, I heard a young woman explain her philosophy on life. 

She said, her grandmother taught her: "Better to have it and not need it, than need it and not have it."

Thinking about it at the time, it seemed pretty wise--because you never want to be without something you really need. 

And good planning and survival skills say to always be prepared--you never know what happens. 

But then with the fiscal cliff and all the talk about social entitlements, I started to think about this some more. 

In a sense, as a society, we have come to think of social entitlements as something that we better have in case we need it--Unemployment Insurance, Medicare, Social Security, Medicaid and more. 

You never know when it's your turn to get laid off, sick, old, or needy. 

And isn't that what's it for--it's a safety net--these are like personal insurance and you never want to need the coverage and not have it. 

But as we should know by now, having it--doesn't come for free. 

So the question is how much social entitlements or insurance do you need--and part of the answer is how much can you afford. 

So is it really better to have it and not need it, than need it and not have it--if you can't afford what you're buying?  

In this case, our grandparents and parents having it and not really needing all of it--may mean that we and our children will not be able to have it when we do need it. 

To have social entitlements, we need to be able to pay into the system for it or borrow to finance it. 

Unfortunately, as a nation we have been doing more borrowing, because we have spent beyond our national means--we have even raided our very own social entitlement programs that we hold so dear, to pay for other things--maybe that's why they call it a trust fund, because you really do have to trust, almost blindly, that there will be something there, when it's your time to need it. 

It's great to have it, but if we are gluttons and don't responsibly plan for genuine needs--then as a nation, we really will be left needing and not having it when the time comes.

In short, spend all your money to soon, and tragically, there won't be any candy later. ;-)

(Source Photo: Andy Blumenthal)

Have It When You Need it

Electronic Health Records, Slow But Steady

The best article I have seen on the subject of Electronic Health Records (EHR) was in Bloomberg BusinessWeek (21 June 2012) called "This machine saves lives so why don't more hospitals use it."

What I liked about this article was how straightforward it explained the marketplace, the benefits, the resistance, and the trends.  

Some basic statistics on the subject of EHR:

The healthcare industry is $2.7 trillion annually or ~18% of GDP.

Yet we continue to be quite inefficient with only about half of hospitals and doctors projected to be using EHR by end of 2012.

Annual spending on EHR is expected to reach $3.8 billion by 2015.

Basically, EHR is the digitization of our medical records and automation of medical services so that we can:
 
- Schedule medical appointments online
- Check medical records including lab and test results
- Communicate with our doctors by secure messaging/email
- Send prescriptions into the pharmacy electronically
- Automatically keep track of dosage and refills
- Get alerts as to side effects or interactions of medication
- Analyze symptoms and suggest diagnosis
- Receive prompts as to the latest medical treatments
- Recognize trends like flu outbreaks or epidemics
- File and speed claim processing

So why do many doctor's seem to resist moving to EHR?
 
- Cost of conversion in terms of both money and time
- Concern that it can be used against them in medical malpractice suits
- Potential lose of patient privacy
- Lack of interoperability between existing systems (currently, "there are 551 certified medical information software companies in the U.S. selling 1,137 software programs"--the largest of which are from GE and Epic.)

The government is incentivizing the health care industry to make the conversion:

- Hitech Act (2009) "provides $27 billion in financial incentives" including $44K from Medicare and $63K from Medicaid over 5 years for outpatient physicians that can demonstrate "that they are using the technology to improve care."
- Patient Protection and Affordable Care Act (2010)--a.k.a. Obamacare--calls for "accountable care organizations" to receive extra money from Medicare and Medicaid for keeping patients healthy, rather than by procedure--"they are expected to do so using computers."

The big loophole in EHR right now seems to be:

- The lack of standards for EHR systems from different vendors to be compatible, so they can "talk" to each other.
- Without interoperability, we risk having silos of physicians, hospitals, labs, and so on that cannot share patient and disease information.

So, we need to get standards or regulations in place in order to ensure that EHR is effective on a national, and then even a global level. 

A number of months ago, I went to a specialist for something and saw him a few times; what he didn't tell me when I started seeing him what that he was retiring within only a few months.
Aside from being annoyed at having to find another doctor and change over, I felt that the doctor was not too ethical in not disclosing his near-term intentions to close up shop and giving me the choice of whether I wanted to still see him. 

But what made matters worse is that I got a letter in mail with the notification--not even in person--along with a form to fill out to request a copy of my medical records at a cost per page, so that I could transfer them--hardcopy--elsewhere. 

Of course, this was also the doctor who hand wrote prescriptions still and wasn't able to get test results online. 

To me, seeing someone with a great amount of experience was really important, but the flip side was that in terms of organization, he was still in the "dark ages" when it came to technology. 

I look forward to the day when we can have both--senior medical professionals who also have the latest technology tools at their disposal for serving the patients. 

In the meantime, the medical profession still seems to have some serious catching up to do with the times technologically. 

Let's hope we get there soon so that we not only have the conveniences of modern technology, but also the diagnostic benefits and safeguards. 

(Source Photo: Andy Blumenthal)

Electronic Health Records, Slow But Steady