US Politics: Beyond the Budget Dispute, A Crisis in Health Care

The starting point for the health care debate is that the US spent nearly $2.2 trillion, or $7,400 per person, on health care in 2007. To put that in context, $2.2 trillion is double the total of discretionary spending, which includes defense, in 2010, and itrepresents 16% of America's annual GDP.

Those numbers and percentages have been been rapidly rising in real terms over the last 40 years. The US spent $714 billion on health care in 1990 and $253 billion in 1980; as a share of GDP, health care has increased from 7.2% in 1970 to a projected 20.3% in 2018.

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US Politics: A Beginner's Guide to Tax Rate Reform

To tackle the deficit, the government must sharply curtail the $1.1 trillion it currently "spends" annually on exemptions and deductions in the tax code. To give that number some perspective: it roughly equals what America spends each year on discretionary programs --- including defense --- and is about 2/3 of the yearly deficit. If these “backdoor spending grants” for special interests are eliminated, the commission contends, marginal tax rates can be lowered to broaden and simplify the tax base while increasing government revenue. Controversially, much of this increased revenue would not be used to finance government spending, but would be dedicated solely to paying off America's debt.

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EA's US Politics and Economy Special: A Half-Time Reality Check on the Federal Budget

It may be that those who are arguing the debt is unsustainable are just doommongers, panicked needlessly by deficits caused by this relatively short-term blip in the economy. Undoubtedly the present deficit numbers have been made worse by more people receiving benefits from the entitlement programs, and less people paying taxes. But, even recognising that possibility, the numbers being presented in various reports on America's fiscal future are sobering reading.

The issue is only going to grow in importance over the next few months, and the partisan extremes in both parties are readying themselves for the mammoth struggle ahead. What we have seen recently are petty squabbles compared to the brouhaha that will erupt when the Americans from The New York Times poll finally realise what is actually at stake in the forthcoming discussions on the debt crisis.

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US Politics: A Beginner's Guide to Reducing the Federal Government's Debt

This report issues a stark warning, supported by every member of the Deficit Reduction Commission, "The era of debt denial is over, and there can be no turning back. We sign our names to this plan because we love our children, our grandchildren, and our country too much not to act while we still have the chance to secure a better future for our fellow citizens." And the Preamble emphasises the Commission's belief that the American public are ready to discuss long-term fiscal solutions, as long as they feel that everyone is sharing in the pain. The report notes that; “In the weeks and months to come, countless advocacy groups and special interests will try mightily through expensive, dramatic, and heart-wrenching media assaults to exempt themselves from shared sacrifice and common purpose,” but stresses that. “The national interest, not special interests, must prevail."

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US Politics Special: A New EA Series on the Debates Over the Economy

Two political stories will dominate US news coverage this year: the campaign for the Republican nomination to face President Obama in the 2012 election, and the efforts by both parties, bi-partisan commissions, and independent think tanks to find a solution for the state of the American economy. Included in the latter debate will be terms that turn us all bleary-eyed; debt ceilings, discretionary and non-discretionary spending, entitlement reform, tax reform, and a myriad of health,care acronyms like MSAs (Medical Saving Accounts). The grim reality beyond the terms is that the United States is facing a fiscal crisis, and this year will see the beginnings of policies that will have long-standing consequences for the future of America.

Over the next few weeks EA USA will post a series of articles looking in-depth at the various recommendations for changes.

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Obama's Message En Route to Asia: Time to Make Money

President Barack Obama's Asia tour, with stops in India, Indonesia, South Korea and Japan, has started. 

As a good-bye wave before his trip, Obama's "Exporting Our Way to Stability" was published in The New York Times. The President set Washington's goal for the next five years: a doubling of exports. He added: "To do that, we need to find new customers in new markets for American-made goods. And some of the fastest-growing markets in the world are in Asia, where I’m traveling this week."

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