Tuesday, November 30, 2010

U.S. Facing Lingering Deficits, Crushing Debt, Difficult Choices

The U.S. is not only the world's biggest economy, it also the world's biggest debtor nation.

Just 10 years ago the national debt was $6 trillion. Today, it has more than doubled, to $14 trillion.

And it was just 10 years ago that the Clinton administration handed off a large surplus to the new president, George W. Bush.

Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget, says those surpluses were projected to continue. But they didn't.

"We were running deficits in the past decade when we shouldn't have been," she says. "They came from tax cuts that weren't paid for. They came from fighting two wars without paying for them, when normally in our past, we have. They came from the addition of things like the prescription drug program — not paid for — and high growth in government spending in general."

A reflexively anti-tax ideology resulted in a 'borrow and spend' mentality.

As a result of that uncontrolled deficit spending, says MacGuineas, the government was taking on more debt when it should have been saving to prepare for the big Medicare and Social Security payouts it has promised to current and future retirees.

But then the government's fiscal position got even worse when the financial crisis hit. Unemployment skyrocketed when millions of people lost their jobs. That shrunk the tax base and cut government revenues. At the same time, all those millions of people started collecting unemployment benefits. Add in the bailout bills and President Obama's giant stimulus package, and the deficit soared even higher.

"All of these factors came together and just piled on the trillions of dollars of debt," MacGuineas says. "And our debt climbed to levels that are well above the historical averages, and the problem is it's on a trajectory to grow even more."

As big as our deficits and debt are today, they will only get bigger as a result of entitlement spending. Due to our aging population, Medicare will become a budget buster. Add in Social Security obligations to a larger group of retirees than there are workers, and it spells trouble.

Social Security's shortfall can be solved by modestly raising payroll taxes, cutting benefits, raising the retirement age or some combination. But Medicare is a different story, MacGuineas says.

"When it comes to Medicare and health care in general, we just don't know how to fix it," she says.

If rising healthcare costs remain unchecked, Medicare and Medicaid, the health program for the poor, could consume nearly a third of the total budget just 10 years from now.

The first wave of the 76 million strong Baby Boomer generation — a group that represents 25% of the U.S. population — will begin retiring on January 1, 2011, little more than a month from now.

Think of it as a coming tsunami.

To address the continuing deficit problems and begin chipping away at the underlying debt, taxes will have to be raised, deductions and write-offs eliminated, and significant and widespread budget cuts enacted.

Even then, the gap opened by the tax cuts and new entitlements enacted during the George W. Bush administration will be difficult to overcome.

President Obama's deficit commission has delivered its plan, and the Bipartisan Policy Center has issued its own. There will be many choices, many debates, and many tough decisions to make in coming months and years. They will all be difficult, uncomfortable and unpopular.

That's why Washington hasn't done anything about the debt problem for the past decade.

Monday, November 29, 2010

Irish Austerity Measures Offer Preview For U.S.

Ireland has managed to negotiate a €85 billion ($115 billion) EU/IMF bailout to save itself from bankruptcy. In addition, the Irish government plans to slash €15 billion from its deficits over the next four years, with the harshest cuts and tax hikes slated for the next budget, which will be published December 7.

The pain of such cuts — or so-called 'austerity measures'— will be widespread and they will lower the standards of living of almost the entire Irish population, some 4.5 million people.

There will be cuts to welfare, pensions, and other public programs. The government has no choice; it's 2010 deficit is 32 percent of GDP, the highest in Europe since World War II.

Prime Minister Brian Cowen is proposing €4.5 billion in spending cuts and raising an extra €1.5 billion in taxes. That will put a tremendous burden on Irish citizens.

What's more, the bailout only raises the possibility of a future default since the banking sector’s losses will be transferred to the state. That means the Irish people are now fully responsible.

Like all European governments, the Irish austerity measures will only undermine growth, thereby lowering tax revenues. That in turn will just lead to further deficits. Think of it as a cycle of indebtedness.

Receiving an €85 billion ($115 billion) bailout will significantly increase Ireland’s debt-to-GDP ratio. Irish debt will equal 50% of its GDP.

Irish media report that the EU-IMF fund could charge interest rates of up to 6.7 percent, higher than the 5.2 percent that applied to Greece's €110 billion bailout in May.

This bailout is not a solution. It is a path to perpetual indebtedness. This plan only pushes Irish debt further off into the future, while making it even larger due to added interest payments. Such a bailout is not a plan for retiring Irish debt. It is merely a plan for delaying and enlarging it, making the current situation even worse.

If you're wondering why this matters to you, it's because these sorts of austerity measures will soon be coming to America.

Though projected to be lower than anticipated, the fiscal 2011 budget deficit will once again exceed $1 trillion, largely due to shrinking revenues. With fewer people working and millions earning less than in previous years, there is less tax money being collected by the government.

When you add the costs of two unfunded wars, absolutely massive additional defense expenditures, and expanding entitlements, you have a recipe for disaster. Current deficits and the mounting debt are simply unsustainable.

The National Commission on Fiscal Responsibility and Reform, better known as the debt or deficit commission, has proposed making nearly $4 trillion in cuts over the next decade.

The plan has already infuriated nearly everyone cross the political spectrum. That's because the proposed cuts will be quite painful and are sure to offend or outrage just about everyone.

All of the sacred cows have been put on the chopping block, including defense, Social Security, Medicare, and assorted tax breaks and deductions.

Entitlement cuts won't just piss off grandma and grandpa either; they'll outrage anyone over 50, or anyone who's been paying into the system for 20 years or more. And those folks vote.

So as we witness protests, marches, strikes and even violence across the European continent, it will be interesting to see how Americans react when they eventually realize that their taxes are going to be raised and their services reduced.

The politicians have so far avoided these eventualities, and they fear enacting them for political reasons. Tax hikes and budget cuts aren't exactly vote getters. But the longer Congress puts them off, the worse the problems — and their eventual outcomes — become.

As it stands, the debt commission projects that the interest on the debt could reach $1 trillion by 2020 if Congress doesn't act immediately.

But in America, political expediency has always trumped the bitter reality of sound, yet painful, decision-making. How soon will Congress have the courage and conviction to do what Ireland and the rest of Europe are already doing?

Tax hikes and budget cuts will amount to some very bitter medicine because they will constrict the economy and further shrink GDP.

There are no good choices; just ugly ones.

Sunday, November 28, 2010

The Cost of Obesity

The Cost Of Obesity Can Be Measured Not Just In Dollars, But Also In Our Nation's Priorities And Well-Being

A new study finds that obesity costs the US about $168 billion annually, or about 17 percent of all healthcare costs.

The new research suggests that the nation's weight problem may be having close to twice the impact on medical spending as previously estimated.

So, aside from the human toll — poorer health, more disease, diminished physical ability — we now have a dollar value for America's obesity crisis.

And it is indeed a crisis. More than two-thirds (68%) of American adults are overweight or obese, and more than a third (34%) are obese.

Obesity goes hand-in-hand with a variety of diseases including: Type II diabetes, coronary heart disease, high LDL (bad) cholesterol, stroke, hypertension, fatty liver disease, gallbladder disease and more.

In fact, the prevalence of diabetes and hypertension have now reached crisis or epidemic levels, and obesity is the primary contributing factor.

According to a report from the Organization for Economic Cooperation and Development (OECD), "soaring obesity rates make the US the fattest country in the OECD."

The OECD is comprised by 33 industrial, or developed, nations. These are the nations with the highest standards of living and the greatest abundance of food. Simply put, this means that the US is the fattest nation in the world!

Most alarmingly, the problem of obesity in the US is not limited to adults: America also has the highest rate of child obesity among developed nations.

Obesity rates among children have tripled in the last three decades, and one in three children are now obese. Perhaps most alarmingly, one-third of all children born after 2000 will suffer from diabetes.

The reason for all of this seems fairly simple; American kids have unhealthy diets consisting largely of high-calorie, high-fat, high-sodium, high-sugar foods, and they are also plagued by inactivity. Children are less active today than at any other time in American history, spending 7.5 hours a day watching TV, playing video games or simply involved in efforts that don't require movement.

The problem is so bad that it's gotten the attention of our military leadership. Recruiters are finding it increasingly difficult to find recruits who are healthy enough and fit enough to qualify for military service.

A study released in April by 'Mission: Readiness', a nonprofit group of more than 150 retired generals and admirals, concluded that 27 percent of 18- to 24-year-olds are too fat to join the military.

The study blames the poor diets of young Americans and their sedentary lifestyles.

"Today, otherwise excellent recruiting prospects, some of them with generations of sterling military service in their family history, are being turned away because they are just too overweight," read the study. "Our standards are high because we clearly cannot have people in our command who are not up to the job. Too many lives depend on it."

In testimony before Congress, the former head of the California Army National Guard, retired U.S. Army Major Gen. Paul Monroe, said that "80 percent of children who were overweight between the ages of 10 to 15 were obese by age 25."

Monroe went on to tell Congress, "In the past, retired admirals and generals have stood up to make it clear that America is only as healthy as our nation's children. Childhood obesity is now undermining our national security and we need to start turning it around today."

He and other military leaders want Congress to enact a massive child nutrition bill to remove all junk food and high-calorie beverages from schools, improve nutrition standards in schools, upgrade school menus and, the group said, "Help develop new school-based strategies, based on research, that help parents and children adopt healthier lifelong eating and exercise habits."

Ultimately, fat kids grow into fatter adults. Our nation's poor diet and sedentary behavior are both detrimental and destructive. It leads to diminished quality of life, shorter life spans and massive medical costs that the nation simply cannot afford.

Instead of directing our money toward treating unpreventable diseases, we spend far too much of it treating preventable and obesity-related diseases. This is wasteful. It is not money well-spent.

A nation that disregards its health and well-being to such an extent is not a well nation in any sense.

Our nation's obesity rate and all of its burdensome costs are signs of a very unhealthy, over-indulged nation — a nation in decline.

Wednesday, November 24, 2010

Q3 GDP Revision: Good News That Won't Make A Difference

The Commerce Department has revised third-quarter GDP up to 2.5 percent, from the previous 2 percent. The revision was due to increased consumer spending and stronger US exports.

While good news, it's not quite good enough. GDP growth must be above 3 percent to create enough jobs to lower the unemployment rate, which remains stuck at 9.6 percent.

Economists estimate the economy would need to grow by 5 percent for a full year to push down the unemployment rate by a full percentage point.

This means that if the US managed to maintain the third-quarter GDP growth rate for the entire year, it would still put us only half-way to lowering unemployment to 8.6 percent.

That's as unlikely as it is unexciting.

While the economy continues to grow, it's growing at a slower pace than in past economic recoveries. Since 1965, U.S. economic growth has averaged 3.2 percent.

Consumer spending accounts for more than two-thirds of US economic activity. The problem is that consumers are heavily in debt and have been curtailing spending from the levels seen in the go-go years of the past two decades.

You could say everyone is now finally sobering up from the spending and debt binges.

The US will remain hampered by the facts that exports account for just 12 percent of GDP and manufacturing just 11 percent of GDP.

We buy far too much from overseas, and we manufacture and sell far too little in exchange. Those issues will not be rectified any time soon. And given the cost of labor in the US compared to the developing world, they may never change.

The reality is that, as a mature, developed economy, we may have now entered a long term period of lower growth and higher unemployment.

As of September, the US trade deficit stood at $379.1 billion, up 40% from the same period in 2009. Much of that was due to our reliance on foreign oil, and that is a massive drag on our economy.

According to the Energy Information Administration, the US imported 4.3 billion barrels of oil in 2009 and 3.6 billion through the first 10 months of 2010.

So, we are on track to match, and likely exceed, last year's level. With oil at roughly $80 per barrel, this means that nearly $1 billion a day is being sent out of the US.

As oil prices continue to rise due to increasing global demand, that will put even further pressure on the US economy, slowing growth and hampering the employment picture even further.

From now on, we'll have to get used to good news being when things aren't as bad as expected.

Diabetes Projected To Become Most Costly Disease

A new study released Tuesday by the insurance company UnitedHealth projects that diabetes will cost $500 billion by 2020 — meaning it would become the nation's most expensive disease.

That massive sum would amount to a tenth of all health care spending, or $3.4 trillion in total costs over the next 10 years.

About a sixth of that money would actually go toward treating diabetes and another third would go to diabetes-related diseases and complications, like heart disease.

However, much of the the disease's burden is not due to medical expenses, but rather to associated costs like lost productivity and extra time and money spent by families for care.

Alzheimer's is another disease with overwhelming costs and many additional complicating factors, such as extra personal care, nursing homes, and unpaid time spent by spouses and children.

Joel Hay, an economist at the University of Southern California, says the costs of the two diseases could cripple the US economy.

"Alzheimer's and diabetes, if nothing changes, will bankrupt our society," says Hay.

That's a powerful and frightening projection, one that should give us all pause.

Trying to fathom the notion of billions and trillions of dollars is both mind-numbing and overwhelming. It's hard to wrap your head around numbers that large.

Despite all the warnings about diabetes and the need for a healthy diet and regular exercise, Americans seem to have ignored every bit of it. Doctors now classify diabetes as an American epidemic. That was not the case just 20 years ago, or at any time prior to that.

According to the American Diabetes Association, urgent action is needed because nearly 24 million American children and adults now have diabetes, and another 57 million Americans are at high risk of developing the disease.

If current trends continue, one-third of all children born in the United States (and half of all minority children) will face a future with diabetes.

The harsh reality is that people die from diabetes, most often from its associated diseases, like heart disease, heart failure, and organ failure. In fact, two out of every three people with diabetes will die from heart disease or stroke.

Since 1987, the death rate from diabetes has increased by 45% while the death rates from cancer, heart disease, and stroke have declined.

While 90% of diabetes cases are Type II and almost entirely preventable, Americans refuse to change their behaviors. The costs to individual families, the healthcare system, and the nation as a whole are enormous. Those expenses draw much needed money away from the treatment other diseases.

Aside from all the direct and indirect human suffering, the costs associated with diabetes could overwhelm our healthcare system and our economy by the end of this decade, draining much needed money away from other vital national needs.

Diabetes primarily affects developed nations with abundant food resources and an excess of processed foods. It is the hallmark of an overly indulged, gluttonous and indolent society.

It is the mark of a society in decline.

Sunday, November 14, 2010

The American Decline: Infrastructure

By Sean M. Kennedy

The following is Part III in a three-part series documenting 'The American Decline'. You can read Part I here and Part II here.

Last year, the American Society of Civil Engineers (ASCE) gave our nation's infrastructure a cumulative grade of "D".

"Bridges collapsing, highways cracking, levees breeching, state power grids failing ... our roads, ports, dams, water systems, highways, power plants, airports, etc., are all in desperate need of new investment," the ASCE report said. "Our infrastructure has been badly neglected and has been allowed to deteriorate for far too long."

The findings were nothing new. In fact, they just highlighted a continuing pattern of disrepair and neglect.

The ASCE had previously given US infrastructure a "D" grade in 2005 as well. Getting the same grade again in 2009 just indicated a total lack of national commitment to improving these problems.

Infrastructure refers to the basic facilities and capital equipment that a society, country, state or community needs to function. These are things like power stations, utilities, roads, airports, railways, and sewers.

How important is infrastructure? Well, a report from Credit Suisse called infrastructure "the backbone of the world economy."

However, the US has an aging, crumbling infrastructure that is not prepared for the 21st Century. It is yet another economic albatross around our nation's neck. The decay is costing us heavily right now, and it will cost us even more in the future.

According to the ASCE, America's crumbling infrastructure is sapping our economy and our way of life.

The ASCE estimates that government and the private sector need to invest $2.2 trillion from 2009 through 2013 - roughly three times the size of the $787 billion stimulus package passed by Congress in February of 2009.

It should be noted that tax cuts amounted to $288 billion of the so-called "Recovery Act", and that $233 billion went toward food stamps and unemployment for those hit most hard by the Great Recession.

The remaining $275 billion went to economic stimulus, and that spending wasn't nearly enough to addresses all of the assorted problems with our nation's infrastructure. In fact, it barely scratched the surface.

The current state of our nation's infrastructure is simply unacceptable for a 21st Century, first-world, industrialized nation and it's a sign of decline.

Failing infrastructure is not the mark of a world leader; it's the mark of a country in decay. It not only lessens our competitiveness with other developed nations, but even developing ones. This cannot be ignored and it cannot be overlooked.

Without question, our nation's failing infrastructure needs to be addressed and rebuilt. The 2005 levee failures in New Orleans following Hurricane Katrina and the 2007 Minneapolis bridge collapse are symptoms of our broken and decaying infrastructure.

After that tragic bridge collapse (which killed 13 people and injured 145), more than 73,000 US bridges were rated structurally deficient by the Federal Highway Administration and another 80,000 were rated functionally obsolete.

The problem is that the US is already running massive annual budget deficits and is burdened by a cumbersome national debt exceeding $13 trillion. Our politicians have squandered our national wealth and the opportunities to address these problems for many years. This decay didn't just happen overnight.

It's worth remembering that Hurricane Katrina swept away New Orleans and much of the Gulf Coast region five years ago, and the federal government still hasn't rebuilt the region or replaced New Orleans' failed levees.

If the US doesn't have the money (or the will) to rebuild the Gulf region, what happens when the "Big One" strikes LA or San Francisco?

Additional spending on the necessary repairs and improvements to our national infrastructure will certainly incur additional debt. However, it is an investment in our country and an investment in our future. It is tangible, and all Americans would benefit from it each and every day.

These investments are long overdue, and if they are not made immediately our economic problems are guaranteed to worsen.

Yet, these investments won't be made because maintaining tax cuts and slashing spending are politically in vogue at the moment.

However, repairing, rebuilding and modernizing our national infrastructure would also create jobs, increase demand, and circulate money back into the US economy and tax base.

Whatever the cost, the price of not investing is even higher.

If we're not motivated or inspired by the long term economic impact of failing to make the necessary investments needed to correct these shortcomings, and prepare for the century we're already living in, then maybe the human cost will spur us.

When it comes to infrastructure, real, actual human lives are on the line. Just ask the citizens of Minneapolis and New Orleans.

Here's a look at the American Society of Civil Engineer's 2009 report card on America's infrastructure; it's simply awful.

Roads; D-
One-third of the nation's major roads are in poor or mediocre condition.

Drinking water: D-
Leaking pipes waste 7 billion gallons of clean drinking water every day, and many aging facilities are near the end of their useful life.

Waste Water: D-
Billions of gallons of untreated waste water are discharged into the nation's waterways each year.

Levees: D-
More than 85% are locally owned and the reliability of many is unknown, though increased development near levees has increased the number of lives at risk.

Inland waterways: D-
Of the 275 locks in use, 30 were built in the 1800s, another 92 are more than 60 years old.

Aviation: D

Dams: D

Hazardous waste: D

Schools: D

Mass Transit: D

Energy infrastructure: D+
This was the only sector to show improvements since the last ASCE report card in 2005.

Solid waste: C+
The highest grade on the list, due to recycling efforts.

What all of this clearly indicates is that our nation has fallen behind in the world and continues to decline.

The lack of infrastructure maintenance and modernization was seen most recently in San Bruno, CA, where an entire neighborhood was wiped out after a half-century-old gas line ruptured and exploded. The blast destroyed 38 homes and killed seven people.

State and local governments around the US are expected to spend roughly $150 billion a year on infrastructure during the coming decade. Meanwhile, Congress has yet to approve nearly $500 billion in proposed infrastructure spending over the next six years. That amounts to just over $83 billion per year, a paltry sum by modern US standards.

Even the Chinese suggested this amount should be doubled in preference to quantitative easing since it would provide more jobs.

While the US is underfunding its crumbling infrastructure, other nations are not.

According to The Journal of Commerce, infrastructure spending in Asia (not including Japan) could total roughly $1.4 trillion in the next two years, with China committing $585 billion or more. India is also projected to spend more than $500 billion by 2015.

That kind of government investment will only spur even greater private investment, as those nations are continually seen as the rising economic giants of the 21st Century.

The 20th Century was called the 'American Century'. Absent adequate, effective and dedicated infrastructure spending that keeps up with the times, the same will not be said of the US in the 21st Century.

Wednesday, November 10, 2010

The American Decline: Health & Healthcare

By Sean M. Kennedy

The following is Part II in a three-part series documenting 'The American Decline'. You can read Part I here and Part III here.

As Teddy Roosevelt so famously noted, "No country can be strong if its people are sick and poor."

Americans are indeed a sick and unhealthy bunch. Poor? Well, that's another story for another time.

At present, one-third of American adults are obese. And another third are overweight. Yet, researchers at Harvard University are predicting that the worst is yet to come. If current trends continue, they say, the obesity rate in the US could reach at least 42 percent by mid-century.

As it stands, obesity has already reached epidemic proportions in the US, and it is taking a staggering toll on the nation's health and its healthcare system. It is also driving a variety of other diseases.

According to the American Diabetes Association (ADA), nearly 24 million American children and adults now have diabetes, and another 57 million Americans are at high risk of developing the disease. Doctors across the nation call the scourge a modern American epidemic.

Diabetes is a particularly nasty disease. Two out of every three people with diabetes will die from heart disease or stroke, both largely preventable diseases. And 90 percent of diabetes cases are Type II, which is also largely preventable with lifestyle changes.

Since 1987, the death rate from diabetes has increased by 45%. And the total annual diabetes-related costs may exceed $218 billion, according to the ADA.

Americans are afflicting themselves with a variety of preventable lifestyle diseases, and the average American's life span is shorter than it ought to be. However, according to a new report, a lack of access to proper healthcare seems to be the reason.

Researchers at Columbia University report that the US is now 49th in life expectancy, putting it lower than a dozen other developed nations.

While some might assume that things like smoking, obesity, traffic accidents and a high murder rate are the reason, they are not to blame. Instead, the Columbia researchers say the culprit seems to be poor healthcare.

The researchers compared the United States to Australia, Austria, Belgium, Britain, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden and Switzerland, all of which provide universal health insurance. On the other hand, the US, where 15 percent of the population lacks health insurance, just passed healthcare reform in March.

The Columbia team noted that the US has been dropping in life expectancy tables for decades.

“In 1950, the United States was fifth among the leading industrialized nations with respect to female life expectancy at birth, surpassed only by Sweden, Norway, Australia, and the Netherlands,” they wrote. At last count, the United States was 46th in female life expectancy; 49th for both sexes.

As recently as 1999, the US was ranked 24th in life expectancy by the World Health Organization. So we are moving in the wrong direction very quickly.

Apparently, this is not a problem that money can solve. In fact, the US is plowing trillions into healthcare and getting very little in return.

The US commits a staggering $2.5 Trillion annually to healthcare spending. Yet, we have worse outcomes than many third-world nations. We spend more than any other nation in total dollars, per capita, and as a percentage of GDP. And yet we still have terrible results. That's neither wise nor efficient. In fact, it can only be described as an utter failure.

Despite that absolutely massive amount of spending, health outcomes in the US are simply awful.

Whoever says, “You get what you pay for,” clearly hasn’t seen America's deplorable healthcare statistics.

The findings are not unique, and they are not new either.

In 2000, the World Health Organization ranked the US 37th of 191 countries for "overall health system performance," 72nd for "level of health," and first for "health expenditures per capita."

Sadly, American adults aren't the only ones with a shortened life expectancy. Even American babies have shorter life spans than babies in other nations.

In 2009, the National Center for Health Statistics ranked the US 30th in global infant mortality rates, behind most European countries, Canada, Australia, New Zealand, Hong Kong, Singapore, Japan, and Israel.

And out of 20 “rich countries” measured by UNICEF, the US ranks 19th in “child well-being”.

How many more statistics do we need, from different groups and agencies, to conclude that the American healthcare system is a mess? If it were a patient, it would be listed in critical condition and on life support.

Once again, this isn’t due to a lack of money.

In June, the Commonwealth Fund, which researches and advocates for healthcare reform, reported that Americans spend twice as much on healthcare as residents of other developed countries — $7,290 per person — but get lower quality and less efficiency.

Despite all of these facts, last year, many people were screaming that our healthcare was just fine and should just be left alone. In the end, we ended up with a 2,000 page monstrosity for a healthcare bill, written by the pharmaceutical and insurance industries.

It was just further proof that corporations own and run America, serving their own narrow interests. They have bought and paid for our elected officials. Unlike the rest of America, corporations are certainly getting what they paid for.

Yet, we don't even do the simple things right in the US.

Despite its advanced technologies, the US suffers from alarming rates of medical errors and poor results, even though it spends absolutely massive sums on healthcare.

The US has an ass-backwards system that relies on drugs and surgery instead of wellness and prevention. The US now ranks last out of 19 countries in deaths that could have been prevented with timely and effective medical care.

Americans simply lack access and preventative care. And when they do get care, the results are often disastrous.

According to new findings from the Inspector General’s office of the Department of Health and Human Services, medical mistakes kill 15,000 Medicare patients a month, which equates to 180,000 Medicare deaths per year.

Equally disturbing, two million Americans enter the hospital for what should be routine surgery each year, only to be afflicted by hospital-acquired infections. And those hospital infections are the 4th leading cause of death in the United States. In fact, hospital acquired infections kill as many people in the US annually as AIDS, breast cancer, and auto accidents combined.

Are you feeling outraged and ripped off yet?

Prescription painkillers have now surpassed heroin and cocaine as the leading cause of fatal overdoses.

According to the American Journal of Preventive Medicine, accidental — or unintentional — poisoning from prescription opioids, sedatives and tranquilizers is now the second leading cause of unintentional injury death in the US.

Among people 35 to 54 years old, unintentional poisoning has surpassed motor vehicle crashes as the leading cause of unintentional injury death.

And according to Johns Hopkins Medical School, medical errors and prescription drugs together may actually be the leading cause of death.

In other words, our primary forms of healthcare appear to be the biggest killers of Americans. Imagine that.

We don't spend our money wisely to prevent disease in the first place. We spend most of it after people are already in crisis and at the end-stage of their lives.

In 2008, Medicare paid $50 billion just for doctor and hospital bills during the last two months of patients’ lives — that’s more than the budget of the Department of Homeland Security or the Department of Education.

While care goes down, costs just keep going up.

Last year, in the midst of a historic recession, the nation’s five largest health insurers increased their profits by 56%, to over $12 billion. Of greatest concern is that insurance premiums are growing at four times the rate of wages.

This litany of problems only provides further evidence that our nation is in rapid decline. It’s both sad and disturbing. We are spiraling downward at a breakneck pace. This is backed by facts, by evidence and by research.

There is a pervasive lie passed around that the US has the greatest healthcare system in the world. That is clearly untrue. It could be more accurately described as an inefficient mess, a disaster, and a complete failure to our citizenry. But many people love to delude themselves behind the mantra that the US is No. 1.

Sadly, the US' healthcare rankings are shameful, embarrassing and perhaps irrevocable. There are many forces aligned who like this messy disaster of a system just the way it is.

The larger aspects of our mammoth healthcare bill will kick in by 2014. Along the way, we should find out about many of the hidden clauses and language that were inserted by the pharmaceutical and insurance industries, which were designed to benefit only them.

Meanwhile, the Republicans will seek to repeal the bill and return us to the failing system we already had. In the end, the people can't win.

The road to hell is paved with good intentions, bad intentions, special interests and politicians.

Enjoy the ride, America.

Saturday, November 06, 2010

Bank Failures Reach Highest Level Since 1992

With two additional bank closures Friday, a total of 143 US banks have now failed this year, exceeding the 140 banks that failed in 2009. There will be more to come since there are still two months to go in this calendar year.

Since the creation of the FDIC in 1933, there have been only 12 years in which 100 banks have failed in a single year. And it has now happened in back-to-back years.

It's a good bet that that there are still many more failures to come; by the end of the second quarter, the number of lenders on the FDIC's "problem" banks list had climbed to 829, the highest since 1992. It was also nearly double the number that were on the list a year earlier.

What this means is that more than 10 percent of US banks are now on the problem list. Bank failures over the past two years have pushed the number of FDIC institutions to below 8,000 for the first time in the agency's 76-year history.

Two decades ago, the FDIC insured more than 16,000 institutions nationwide. As a result of the massive number of failures since that time, banks have not only become fewer, but also bigger as a result of consolidation.

The 143 bank failures this year amount to the highest total since 1992, at the height of the savings and loan crisis.

For comparison's sake, twenty-five banks failed in 2008 and only three succumbed in 2007.

The growing number of bank failures have sapped billions of dollars out of the FDIC's deposit insurance fund. It fell into the red last year, and its deficit stood at $15.2 billion as of June 30.

The deposit insurance fund has lost about $21 billion so far this year, compared with $36 billion in 2009.

Due to the pace of home foreclosures and commercial property losses, bank troubles will continue into the foreseeable future.

The vacancy rate at malls and in office buildings has spiked across the country. The number of delinquencies and defaults are straining the capacity of many community and regional lenders to survive.

According to CoreLogic, more than 11 million homeowners across the country are underwater. It's estimated that number could double in the next year, which means nearly half of all American mortgage holders will owe more on their homes than those homes are currently worth.

That would spell disaster for the banking system. And the FDIC would be quite challenged to cover all the losses.

Many US banks are severely under-capitalized, hence the reason they are failing.

The government changed accounting rules for banks during the financial crisis so that they no longer have to mark foreclosed properties to market values. Banks have been allowed to "extend and pretend," as they await for the housing market to recover. That could take many years.

If the banks had to mark these "assets" — which at this point could be more accurately described as liabilities — to current market values, even more institutions would be revealed as bankrupt.

As the commercial real estate market continues to falter and more loans go bad, the losses at banks will become overwhelming.

And, as always, US taxpayers will end up footing the bill for all these failures.

Wednesday, November 03, 2010

Midterm Election Post-script

It's quite clear that President Obama totally understated and downplayed the dire condition of the US economy since coming into office. It's the nature of a president to be optimistic and to encourage a despondent nation.

However, Obama never should have predicted that unemployment wouldn't rise above 8%. That was quite foolish, and he's now paying for it.

Obama should have seen the economic writing on the wall and gotten rid of all those econo-clowns that were feeding him such bad information — before most of them decided to leave on their own.

Hell, a savvy politician — even one who knows nothing about economics — would have given the public the worst-case scenarios in order to diminish unrealistic expectations. But raising hopes — even false hopes — has been the hallmark of Obama the candidate and Obama the President.

Obama might have gotten away with an unemployment rate near 10% had he been telling the people to expect something considerably higher from the beginning. The U-6 unemployment reading for October (which includes both the unemployed and part-time workers seeking full-time employment) was 17.1%.

Obama should have been honest and forthright with the public, telling the nation to expect the worst because things aren't going to change for the better any time soon.

Exit polls found that nearly nine in ten voters believe the economy is in bad shape. The same percentage said they feel pessimistic about America's economic future. That's practically unanimous.

Regardless of where — or how — this mess started, the public clearly holds Obama accountable for not fixing it. That's simple and unrealistic, but the public always gives the president too much credit and too much blame.

Americans were not going to be mollified by health care reform that doesn't kick in until 2014 and financial reform that isn't slowing down foreclosures or making borrowing money easier for small businesses.

So, the GOP now controls the House, and yet nothing will change. Americans will only grow more depressed, distressed, angry and cynical.

Don't believe in any politician, and you'll never be let down.

Meet the new bosses; same as the old bosses.

Monday, November 01, 2010

The American Decline: Education

By Sean M. Kennedy

The following is Part 1 in a three-part series documenting 'The American Decline'. You can read Part II here and Part III here.

If you're not aware of how bad the high school dropout problem is, there is good reason. For many years, states, school districts and administrators tried to hide the depth of the dropout problem, which might be better classified as a crisis.

According to the Bill & Melinda Gates Foundation, nationally about 1 in 3 high school students quits school. Among black and Hispanic students, the rate is closer to 50%.

Yes, it's that bad.

School officials in most states obscured the problem for decades with lax accounting. Some states wouldn't even submit graduation data. In fact, many couldn't even agree on what exactly constituted a dropout. If a kid merely promised to get his or her GED, they weren't counted as dropouts.

But the majority of analysts and lawmakers now admit that the dropout rate has remained steady at approximately 30%, despite two decades of intense educational reform.

In 2001, Jay Greene, a senior fellow at the Manhattan Institute, published a study which found that the national graduation rate is anywhere from 64% to 71%. Most researchers say this rate has remained fairly steady since the 1970s, despite increased attention and a vigorous educational-reform movement.

According to the National Center for Education Statistics, kids from the lowest income quarter are more than six times as likely to drop out of high school as kids from the highest.

In essence, the dropout problem is creating a permanent underclass.

Some blame the dropout problem on a lack of funding. However, according to the Manhattan Institute, spending per pupil has doubled since the '70s, and the problem still hasn't improved.

Incredibly, nearly half the states allow kids to drop out at the age of 16 without parental consent. That makes it pretty easy for a troubled, unmotivated, or bored kid to just walk away.

Interestingly, the Gates Foundation funded a report which found that 88% of dropouts said they had passing grades in high school. Asked to name the reasons they had left school, more respondents named boredom than struggles with course work.

Whatever the reasons are, the dropout problem is an issue for more than just the dropouts themselves; it creates huge social problems and leaves America less competitive in a global economy.

Kids who drop out of school are typically relegated to a lifetime of unskilled, low-paying jobs. As a result, they are more likely to be poor. And a 2002 Northeastern University study found that nearly half of all dropouts ages 16 to 24 were unemployed.

Dropouts are also more likely to be incarcerated; an estimated 67% of prison inmates nationwide are high school dropouts.

And dropouts are more likely to raise future dropouts, creating a generational problem of failure and often hopelessness.

The US is the only industrialized nation in the world where children are now less likely to receive a high school diploma than their parents were, according to a 2008 report by the Education Trust.

At the same time, two-thirds of new jobs in the U.S. require at minimum a college degree.

This education gap affects the US economy in that many companies feel compelled to move overseas, or simply outsource additional jobs to foreign nations.

The problem isn't just that dropouts are more likely to be unemployed; they are often unemployable, typically lacking even the most basic skills.

No matter how you slice it, US students are falling behind globally, and that does not bode well for our nation's future prospects.

Money alone will not solve the crisis. In fact, the US ranked 5th in cumulative K-12 education spending per student in 2006. Only Luxembourg, Switzerland, Norway, and Iceland outspend the US.

From 1971 to 2006, there was a 123% increase in per-pupil spending in the US. Yet, there was a 0% change in the academic performance of 17-year-olds in a national test for reading.

It seems fair to say that a lack of money isn't the issue.

Despite all that spending, the US still trails most other rich nations in science and math scores.

Consider the following:

• US students ranked 21st in science literacy out of 30 developed countries in 2006

• US students ranked 25th in math literacy out of 30 developed countries in 2006

• In 2009, 69% of eighth-graders scored below proficient in reading

• In 2009, 68% of eighth-graders scored below proficient in math

Some point to larger class sizes as part of the problem. However, we currently have the smallest elementary class sizes in 45 years. In 2007, the US student-to-teacher ratio was 16:1, compared with 22:1 in 1970.

And yet our kids — even the more affluent, suburban ones — perform worse than kids in comparable nations.

The failures in education and graduation affect the nation as a whole. It ultimately leads to higher unemployment, higher incarceration levels, higher poverty rates, and less global competitiveness.

Far too many young Americans are unprepared for the modern American workforce, in which the best jobs — sometimes the only jobs — are high skill jobs.

Taken as a whole, all of this is just further evidence of the American decline.