The showdown over the nation's debt ceiling could force the government to consider drastic steps to manage its limited cash, including delaying trillions of dollars of payments to employees, Social Security recipients, contractors and others.
The Obama administration has said it has no backup plan to pay the government's bills if Congress refuses to raise the $16.4 trillion federal borrowing limit. The White House said Saturday in a statement that "there are only two options to deal with the debt limit: Congress can pay its bills or it can fail to act and put the nation into default."
Congress and Obama share equal blame here. Government is spending about 40% more than it takes in via taxes, and this is utterly irresponsible and unsustainable. Alleged "GDP" must be adjusted to subtract back out deficit spending, and when you do that you find that we've been in a strong recession or economic depression for the last four years -- and still are!
The fact of the matter is that this is all coming from one place -- medical spending -- when one looks at the facts and trends. And this is not a new phenomena either; I was noting and writing on 10+% annual increases in medical costs in the private sector in the 1990s, and here we are a decade later while Congress has diddled itself and so have two successive administrations.
We simply must put a stop to this -- right now. Congress and The White House have only one option that can actually work:
Break the medical monopolies. All of them. Remove all special protections and make medical services and commodities subject to Robinson-Patman, along with the rest of anti-trust law. Put a stop to cost-shifting in all of its forms and end the ability of these firms to abuse the law to enforce pricing disparities of 1000% across national boundaries. This will ultimately drop the cost of care by as much as 80%, and while there will be therapies, drugs and devices that will disappear as their cost of provision will exceed what people can pay, virtually everyone will be able to pay cash for the services and goods they actually need (as opposed to want.)
No other move will work because nothing else addresses the problem at its root. But neither Congress or the White House will even tell the truth on this matter, say much less do anything about the problem. Instead we get BS and "unicorn games" from both the left and right, and as a consequence you need this:
And a strong stomach for what is to come.
Everyone seems to think that the GOP will cave when push comes to shove. This time I'm not so sure. There is, however, plenty of reason to believe that a cave-in is the most-likely outcome, especially with the spineless and puerile idiots in the House such as Cathy McMorris-Rogers who knows damn well what's driving this and refuses to stand up and speak the truth, along with others like Paul Ryan (ditto) who has put forward multiple knowing lies in the form of alleged "budget proposals" that have no chance of actually leading to balance in federal spending.
May you live in interesting times.
Where We Are, Where We're Heading (2013) - The annual 2013 Ticker
The content on this site is provided without any warranty, express or implied. All opinions expressed on this site are those of the author and may contain errors or omissions.
NO MATERIAL HERE CONSTITUTES "INVESTMENT ADVICE" NOR IS IT A RECOMMENDATION TO BUY OR SELL ANY FINANCIAL INSTRUMENT, INCLUDING BUT NOT LIMITED TO STOCKS, OPTIONS, BONDS OR FUTURES.
The author may have a position in any company or security mentioned herein. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.
Looking for "The Best of Market Ticker"? Check out Ticker Classics.
Market charts, when present, used with permission of TD Ameritrade/ThinkOrSwim Inc. Neither TD Ameritrade or ThinkOrSwim have reviewed, approved or disapproved any content herein.
The Market Ticker content may be reproduced or excerpted online for non-commercial purposes provided full attribution is given and the original article source is linked to. Please contact Karl Denninger for reprint permission in other media or for commercial use.
Submissions or tips on matters of economic or political interest may be sent "over the transom" to The Editor at any time. To be considered for publication your submission must include full and correct contact information and be related to an economic or political matter of the day. All submissions become the property of The Market Ticker.