What Shall We Cut?
Alright, America: You bought it hook, line and sinker. You voted for Obama and the Democrats in 2008, and now you have the Democrat’s Health Care Takeover legislation passed into law in March, 2010. President Obama says he’ll sign it tomorrow.
So now what are you giving up in exchange?
It’s a very simple economic concept here: Opportunity Cost. An opportunity cost is the next most important thing you give up so that you can have something else that you want. Think of it this way: You have $750. You want a new High Definition 42″ 1080i television. You also want to go to have a three night Memorial Day getaway with your spouse at Chateau Elan. Both are $750 so you can only afford one. If you choose the TV, Memorial Day Weekend at Chateau Elan is your opportunity cost. If you choose the getaway weekend, then your opportunity cost is the TV.
Simple, right? Yet so many Americans who voted for the Democrats and their wild government fantasies just don’t get it.
So, now that we understand that in order to have this new health care system, we have to give something up, what will it be? Europe and Canada already their choice: They spend roughly half what the United States does on their military (as a percentage of GDP) sans the Balkans, and Europe relies on us to defend them from attack. Japan isn’t allowed to spend much money on its military. Even China spends just 1.7% of their GDP (the US spends roughly 4%). Similarly, Cuba spends on its military but allows its infrastructure to crumble.
So what shall we cut? Obviously, the Democrats chose to cut portions of Welfare and thieve from our future economic prosperity by raising taxes, but that will not be enough. There is still the trillion dollar-plus hole in the budget to fill before this program goes into effect. The increased taxes and lowering of our national credit rating that are an inevitable result of all this spending will require even greater sacrifices.
So once again, what shall we cut? Obviously there is the Defense budget. At $719 billion for FY2011, it is one huge chunk of money our government spends. There’s the $132 billion we plan to spend on the Department of Agriculture. There’s $117 billion for the Department of Labor and $75 billion for Transportation. Oh, and the $2,165 billion in “mandatory” spending for Social Security, Medicare, Medicaid and a few other programs.
And of course, we can also cut our economic growth by taxing the Hell out of hard-working American businessmen and entrepreneurs.
So for the last time, what shall we cut?
We are faced with the ultimate opportunity cost. We can’t continue to spend more money that our economy simply cannot afford. Total government expenditures (Federal, State and Local) in the United States already exceeded 1/3 of GDP before the TARP and and the Stimulus. This new program is estimated to cost, according to the CBO, $1.2 trillion in the first 10 years, or $120 billion per year on average. But since most of the program doesn’t go into effect immediately, the actual cost is about $150 billion per year (actual costs may vary). That’s approximately 5% increase in spending for just one government program. The CATO Institute estimates there’s $150 billion in personal spending mandated for individuals who now have to buy health insurance.
Not to be cliche, but something’s gotta give. What do you want to give up?