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Published by: Colorado Christian University on Oct 02, 2012
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OUR TICKING DEBT BOMB: THE GRAVEST THREATFACING AMERICA 
By Senator Tom Coburn
 America today faces one of thegreatest threats to its existence sinceour founding. The threat does notcome from any foreign army orterrorist network, but from our owngovernment and its unsustainablespending. If we don’t change coursein the near future—most likely thenext two years—America as we’ve known it could soon bea shell of its former self. We could face a sudden economic collapse worse than the Great Depression, or wecould enter an era of managed decline
and waning inuence.
 What is certain is that maintaining our present course is amathematical impossibility. If we ignore this problem, we will condemn future generations to a lower standard of living with less freedom and less opportunity. Sooner orlater, our “debt bomb” will go off.
‘Red Ink Rising’ Isn’t Fiction
 Admiral Mike Mullen, former chairman of the Joint Chiefsof Staff, is not exaggerating when he calls our debt ourgreatest national security threat. What makes his statementso remarkable is that for most of America’s history,threats to our national security have been described inmilitary terms: the size of opposing armies, the number of ICBMs, and—in a post-9/11 world—the determination of terrorists to kill civilians.Our military leaders, of all people, have no reason todownplay such threats, so Admiral Mullen’s decision toidentify America’s greatest vulnerability in economic ratherthan military terms should be a wake-up call for every  American. If Tom Clancy could capture our moment, he
Editor, John AndrewsPrincipled Ideas from the Centennial Institute
Volume 4, Number 10 • October 2012
Publisher, William L. Armstrong
Eric Novack
(M.D., University of California) practices as an orthopedic surgeonin Phoenix and is chairman of the U.S. Healthcare Freedom Coalition. This essayis adapted from his speech at the Western Conservative Summit in Denver on
 June 29, 2012.
Centennial Institute
sponsors research, events, and publications to enhancepublic understanding of the most important issues facing our state and nation.By proclaiming Truth, we aim to foster faith, family, and freedom, teach citizen-ship, and renew the spirit of 1776.
Condition critical,change course now.
HEALTH CARE EXCHANGES: THE WORST IDEA YOUNEVER HEARD OF
By Eric Novack 
Danger ahead: with the passageof President Obama’s health carelaw by Congress in 2010 and the
afrmation of its constitutionality 
by the Supreme Court in 2012, ourcountry is on track for a health caresystem that combines the spending indiscipline of the Pentagon withthe utter unaccountability of our public schools.Such will be the legacy of the sadly misnamed PatientProtection and Affordable Care Act(PPACA), barring a political U-turn in thefuture. Fortunately, that can occur. We stillhave an opportunity to get it right—butthis will require Americans to see past the smokescreen putup by subsidy-seeking special interests and look carefully atactual policies and their impact.
Obama Promised but Didn’t Deliver
Remember the landscape before PPACA was enacted? Formillions of our fellow citizens, access to quality health carehad long been a problem. The cost of health care was ahuge issue for everyone. And politicians’ promises aboutthe future of Medicare and Medicaid were becoming ever more empty. So when Barack Obama pledged tomake reforms that would address these exact issues, anoverwhelming majority cheered. What the president delivered, however, is a series of policiesthat will demonstrably make access worse, especially forthe needy; that will make costs skyrocket for families while
Senator Tom Coburn
(M.D., University of Oklahoma) is in his second term as aRepublican Senator from Oklahoma. This essay is adapted from his new book,
The Debt Bomb: A Bold Plan to Stop Washington from Bankrupting America 
, and
his speech at the Western Conservative Summit in Denver on June 30, 2012.
Continued on Page 2 Continued on Page 3
 
Centennial Review, October 2012 ▪ 2
Ignoring the problemamounts to betrayal.
Carmen Reinhart and Kenneth Rogoff call “nancial
repression.” Financial repression happens when, to solvea debt crisis, the government uses tools that rob working 
families. One of the time-honored tools of nancialrepression is the debasement of currency by ination.Ination will make government debt seem smaller by 
shrinking the value of the dollar. Yet for individual
 Americans, ination will be an insidious hidden tax increase
that will make everything you buy more expensive andeverything you own worth less. If our government tries to
inate its way out of a debt crisis, much
of your life savings will be wiped out.Meanwhile, other nations will see this astheir chance to make what could be adecisive move against the dollar, and the value of the dollar would fall even further.Finally, the bottom would fall out of the middle class.Unemployment would soar while the cost of living wouldincrease. Real wage growth has been stagnant for years. It will be the middle class and lower-income families that pay the price for Washington’s refusal to act.
Statesmen Needed
If Admiral Mullen is correct that our debt is our greatestnational security threat, doing nothing is a recipe formutually assured destruction. The reality is that doing nothing to solve the problem equates to both a tax increase
and a benet cut for seniors and the poor.
Doing nothing violates the core principles of both parties, while solving the problem is consistent with those values.Doing nothing is the real betrayal and the heresy. The big question facing America now, and in the foreseeablefuture, is not who is going to win the next election but whether we are going to defuse a debt bomb that has putour very survival at risk.From my vantage point, having spent hundreds of hours with people who have a sacred responsibility to solve thisproblem—from the president to congressional leaders—Ibelieve a consensus for a solution already exists in thecountry and in Washington.
But a real solution will never t into an election-year
strategy. In Washington, the moment to do what is right is
Scan this code with your smartphone to read this and previous issues online.
CENTENNIAL REVIEW
is published monthly by the Centennial Institute at Colorado Christian University. The authors’ views are not necessarilythose of CCU. Manager, Jeannie Edwards. Designer, Danielle Hull. Illustrator, Benjamin Hummel. Subscriptions free upon request. Write to:
Centennial Institute, 8787 W. Alameda Ave., Lakewood, CO 80226. Call 800.44.FAITH. Or visit us online at www.CentennialCCU.org.
Please join the Centennial Institute today.
As a Centennial donor, you can help us restore America’s moral core and prepare
tomorrow’s leaders. Your gift is tax-deductible. Please use the envelope provided. Thank you for your support.
- John Andrews, Director
might call it “Red Ink Rising.” In a very real sense, thethreat from borrowing from countries like China is greaterthan the threat of war with China. Sooner rather than later,a major fund or government will just decide one day thatbuying U.S. debt is a bad bet. And with one gust of wind,the house of cards will come crashing down. We need to face the facts. America is already bankrupt. We may not believe it or feel it yet. But we are effectively bankrupt. Our debt now exceeds the size of our entireeconomy. Our payments on our obligations—ourunfunded liabilities—exceed our incomeas far as the eye can see. No amount of obtainable growth or tax revenue will beenough.
Reimagine What Government Can Do
 There simply is no possible way we can nance our
long-term liabilities without fundamentally reimagining  what government can do in the 21st century. If currentpatterns hold, we’ll hear increasingly dire warnings andmore earnest promises to do something, but no one willact decisively until we experience more economic pain. Adebt crisis would likely move through four stages.
Stage 1: Congress tries to maintain the statusquo on spending and entitlements.
Stage 2: The United States faces additional creditdowngrades.
Stage 3: Interest rates markedly increase, harming consumers and sending interest paymentson the national debt soaring.
Stage 4: Ination soars, and the value of the
dollar declines.
In this nal stage, borrowing enough money to fund our
military and other programs will become much moreexpensive. Because we will be spending more on interestpayments, it will be virtually impossible to balance ourbudget with spending cuts and revenue increases. The hole will be too deep and the sides too steep to climb out.
 Working Families, Watch Out
Meanwhile, the so-called solutions that government wouldturn to at this point would make the problem much worse.Politicians would essentially try to save themselves by destroying the middle class with a tactic leading economists
Senator Tom Coburn
Our Ticking Debt Bomb
Continued 
 
Centennial Review, October 2012 ▪ 3
Dollars translateinto political power.
enriching special interests from insurance companies tohospitals; that will imperil Medicare’s and Medicaid’s very existence; and that will place health care decisions thatrightly belong to patients and families in the hands of politicians and their pals. Thanks for nothing. The hated individual-mandate provision is the best knownof PPACA’s many bad features. But perhaps the mostinsidious of the law’s provisions is the creation of healthinsurance exchanges as a state-by-state “marketplace” forpurchasing insurance. It will place control
over massive ows of federal, state, and
personal dollars in the hands of a few corporations with minimal oversight andaccountability. This is why the insurance industry, hospital associations,state and regional chambers of commerce, and other “pro-business” groups avidly support the exchanges—and havecommitted hundreds of millions of dollars to convincing state legislators and governors that somehow this is a free-market solution for health care. It’s nothing of the kind.
Faux Markets, not Free Markets
In the coming decade, insurance companies, along withhospital corporations functioning as insurance companies,stand to get $800 billion in taxpayer subsidies to sell policiesthrough exchanges. That’s according to the Congressional
Budget Ofce. But a more accurate ten-year price tag,
since the program is not slated to begin until 2014 andtakes several years to ramp up, may approach $2 trillion.
In some states the amount of money owing through
the exchanges each year will rapidly become larger thanthe entire state budget. As this happens, since dollarstranslate directly into political power, the companies whose representatives legally hold majority (or evensuper-majority) control over the oversight boards of theexchanges will, for practical purposes,
rule the state 
.never today. It is always a mirage just beyond the horizonof the next election. It comes down to a question of political will and courage. Will we be career politicians, or will we be statesmen? The good news is there is a growing cadre of members of Congress in Washington who are ready to go into battleand to lay down their political lives for their country. Witha little leadership and courage, we can get there soonerthan you think.
 Eric Novack 
Health Care Exchanges
Continued 
Once entrenched, these exchanges with their vast controlover rulemaking—including access to care, creation of 
new health care facilities, and the stiing of competition— 
 will be nearly impossible to displace. The subsidies areattached to patients and families, who will be treated(as they increasingly are already) as commodities worthgovernment funds rather than, well,patients.But it gets worse because, stunningly,the enormous sums being thrown atinsurance and hospital companies will not even be close toenough. Economist Austin Frakt, writing on Ezra Klein’sliberal
Washington Pos
blog, noted that the subsidies may bemuch lower than expected in terms of total insurance costs,and that many children may not be eligible for subsidies.
Paying More for Less
Under PPACA, after 2018, the subsidies allowed will be
below 
 the projected rate of rising health care costs. When thisintentional shortfall is added to Obamacare’s 18 differenttax increases (not including the individual mandate, now 
judicially certied as a tax in itself), the result will be that
 American families will be paying even more, for less.States that are moving forward to establish the exchangesas called for are already spending billions of federal dollarsjust to help begin implementing the complex bureaucracy and even more complex technology platform that will berequired. Not only must policymakers integrate what is,in many states, a completely outdated Medicaid computersystem with the exchanges, but the technology platformmust also have the ability to collect and analyze eligibility data and then transmit that data to the federal government.
Senator Tom Coburn
Our Ticking Debt Bomb
Continued 

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