Tag: debt

The Friday before Inauguration Day, the Congressional Budget Office (CBO) illustrated the fiscal challenge facing President Trump and the new Republican Congress. In a short version of its annual Budget and Economic Outlook, CBO quantified the whopping $21.8 trillion in budget deficits the federal government faces in the coming decade.

While the updated numbers only marginally constitute news — CBO has warned for years about our dire financial future, only for lawmakers to keep spending — one particular nugget illustrates the problem. The budget gnomes significantly increased their spending projections for Medicaid, as but one example of how entitlement programs continue to cannibalize the federal budget.

Double-Digit Growth in Medicaid

Appendix A, which contains all the changes — legislative, economic, and technical — to the fiscal baseline since CBO’s last update last June, contains a sizable change in the last category. Among the technical “tweaks,” the budget office increased projected federal spending on Medicaid over the coming decade by $817 billion, or 12 percent. Most of this projected increase has to do in one way or another with administrative actions by the Biden administration.

Chief among the factors driving the spending explosion were continued increases in Medicaid enrollment, even after states were finally permitted to remove beneficiaries from the rolls following the pandemic (something they could not do during the Covid “emergency”). CBO increased projected enrollment for calendar year 2025 from 79 million last June to 84 million. It also noted that the enrollees remaining on Medicaid have generally worse health than those who were removed from the rolls, resulting in “significantly higher than expected” costs per enrollee last year — which CBO believes will force state Medicaid programs to raise their rates to the managed care plans that provide coverage.

Other factors also drove the growth in the Medicaid spending estimates, including projected increases in enrollment among individuals with disabilities — a result of Biden’s rules expanding eligibility for the Supplemental Security Income program — and rising drug costs, attributable in part to Biden’s recent proposal to require Medicaid programs to cover GLP-1 drugs to control obesity. CBO assumed a “modest increase in expected coverage expansions” under Obamacare, meaning more red states will decide to cover able-bodied adults (which they should not do).

Finally, the budget office assumed that another Biden regulation will raise Medicaid spending. Specifically, a rule on state-directed payments will encourage states to raise reimbursement levels to draw additional federal matching funds. In a recent paper for the Paragon Health Institute, I suggested that Congress or the new administration should repeal many of these requirements, which provide examples of the executive branch spending money without congressional approval.

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Last week President Trump tweeted, “I requested that Mitch M & Paul R tie the Debt Ceiling legislation into the popular V.A. Bill for easy approval. They didn’t…Could have been so easy-now a mess!”

Trump seemed awfully cavalier about raising the debt limit, didn’t he? Isn’t raising the debt limit a really big deal? Isn’t it capitulation by all conservative-minded Americans? Isn’t raising the debt limit tacit approval for the US Government to even further exceed its Constitutional boundaries? Well, maybe. But more importantly, the ‘raising the debt limit’ debate is just another scam on the American people, perpetrated by those we elected to represent us in DC, another reason they all must be replaced. 

The periodic raising of the so-called “debt limit” is simply the natural order of things anytime a national government chooses to carry out its financial responsibilities under a private banking system rather than a truly sovereign, national monetary system. The banking system in our case is that of the Federal Reserve.
Although it could if it chose, the US Government does not create and issue dollars…AKA, money. Instead private Fed member banks do, the largest of which are on Wall Street. Importantly, however, those banks only issue dollars when someone promises to pay them back, with interest. And because the banks do not issue the dollars to pay the interest, the only way for a society as a whole to pay back what has already been borrowed is to keep borrowing more and more, and pay off older loans with new, larger loans. The entire American economy ($68 trillion in debt), including the US Government ($20 trillion in debt) is testimony to that fact. There is no mathematical solution for this system. It cannot be paid off from within. And while the system runs, the bankers get richer and richer, the population gets poorer and poorer, and the Government goes more and more in debt. It is a covert, wealth transfer mechanism-the biggest scam in the history of mankind. And as long as the Federal Reserve System stays in operation, it will remain mathematically impossible for America to become a nation other than one that is increasingly encumbered in debt.

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