$15 Trillion In Debt? Solution – Borrow More At A Higher Interest Rate To Build Investor Confidence

About stevengoddard

Just having fun
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7 Responses to $15 Trillion In Debt? Solution – Borrow More At A Higher Interest Rate To Build Investor Confidence

  1. suyts says:

    Beautiful. I love sarcastic humor twisted with irony. Autonomous collective…… what an improvement……democratic no less.

  2. AndyW says:

    Looks like the debt needs to go up in the short term but then both cuts and tax raises are needed in the long term.

  3. gator69 says:

    It is even better than simply borrowing and buying. Who is buying from whom? And who makes these key decisions?

  4. Dan Zeise says:

    I thought I would provide one example of overspending associated with Medicare.
    Medicare Info on FY09 Report to Congress August 2010.
    Remember that Medicare covers HI (Hospital Insurance) known as Medicare Part A and SMI (Supplemental Medical Insurance) known as Medicare Parts B and D.
    Medicare Part C covers private insurance that includes Medicare Parts A, B and D.
    Based on the report, in 2009 46.3 million people were covered by Medicare with 38.7 million aged 65 and over and 7.6 million disabled.
    At the beginning of FY 2009, the HI Trust Fund had $321.3 billion. Normally this comes from the 1.45% wage tax plus employers 1.45% matching tax for Medicare. Remember that Medicare was initially established to provide hospital insurance to those 65 and over that paid into the system. The $321,3 billion HI trust fund is essentially a fund of US treasuries held on account. In other words, all dollars raised over the years by the employee and employer tax was spent by the US government and the HI trust fund received the US Treasuries that the general fund must pay interest due based on the treasuries held. In 2009, the HI Trust Fund took in $190.9 billion in taxes, $15.3 billion in treasuries interest, $12.4 billion in taxes paid by Social Security Recipients on Social Security payments, plus $2.9 billion in premiums from those beneficiaries of Part A that did not pay any Medicare taxes and another $1.9 billion in general fund and $2.1 billion in others for total income of $225.4 billion.
    The HI Trust Fund paid out $242.5 billion including $239.3 billion in benefits and $3.2 billion in expenses. The total benefits paid out includes, $133.9 billion for hospital, $26.3 billion for skilled nursing facility, $7.3 billion for home health care, $59.4 billion for private health plans (Part C) and $12.5 billion other.
    In the end, the HI Trust Fund lost $17.1 billion in 2009 and at the end of FY 2009 stood at $304.2 billion.
    The SMI Trust Fund actually increased in FY 2009 from $60.3 billion to $76.6 billion. This increase is deceptive though. As stated above the SMI trust fund was to be funded by the premiums to Medicare recipients. Under SMI Part B Medicare recipients paid $56 billion in premiums and total expenditures were $205.7 billion. The balance was covered by $162.8 billion provided by the General Fund (ie: the Federal Budget). The total expenses for Part B of SMI was $30.5 billion for hospital, $11.4 billion for home health care, $62.5 billion for physician services, $53.4 billion for private health plans (Part C), $44.9 billion other and $3.1 billion administrative expenses.
    Bottom line for Part B is that premiums paid by the recipients only covered 25% of the actual cost of Part B SMI services.

    SMI Part D is even worse. The total cost of Part D was $60.8 billion with revenue of $6.3 billion for premiums, $47.1 billion from general revenue (US Federal Budget) and $7.6 billion transferred from states. The break out on expenses was $60.5 billion for prescription drugs. In other words, Medicare Part D recipients paid $6.3 billion in premiums towards the cost of $60.8 billion or about 10.4% of the total benefits received.
    Congress has passed laws to help address the coming shortfall which includes an additional 0.9% Medicare tax on all married couples earning over $250,000 beginning in 2013. The law also requires Medicare recipients to pay higher premiums recalculated each year based on the last years actual cost. Unfortunately, Congress continues to annually pass legislation that holds current recipients harmless and thus prevents the increase in Medicare Parts B, C and D premiums. The average increase in costs for Medicare Parts A and B has been 8.3% while part D has grown 9.4% per year.
    Bottom line is that the Federal Government transferred $211.8 billion from the general fund to support Medicare in 2009 because payroll taxes and Medicare recipient premiums only covered $256.1 billion of the $515.7 billion cost of Medicare.

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