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Budget Accord Puts Camel's Nose In The Tent
An old Arab proverb concludes that allowing the camel's nose in the tent soon will lead to the whole animal inside. That apparently is what is happening with the budget agreement finally concluded in Washington.
Almost everyone agrees that not enough "rich" exist to provide increased taxes to resolve the budget deficit, currently a $300 billion problem. Yet, that is precisely what the agreement is trying to maintain.
Any cheers from the preliminary agreement that the government is owning up to the growing insolvency in its health insurance programs and also is trying to shift taxes toward consumption and away from production were dashed by congressional meddling. The insolvency issue was postponed by pushing the burden of Medicare to higher income people through an increased wage tax and to the providers of medical services, who will then push the burden on to their paying clients. Perhaps the higher wage people should shoulder a greater burden of taxation, but the concept that a relationship exists between contribution and benefit has been dashed in the Medicare program. How much longer can the illusion of a contributory benefit now be maintained for the social security system?
Also, while the $32 billion of further restraint in paying hospital and doctor bills will reduce the federal deficit, it will add to health insurance charges as fees are added to full paying customers. Of course, some hospitals will not be successful in shifting these burdens. Therefore, further failures in the medical service sector are likely. In the meantime, continue to budget medical cost increases in the large teens as government shifts payment responsibilities to third parties.
Another blatant shift in responsibility occurred as the Congress lowered gasoline taxes from those proposed by the summit and added to the burden of high income people, who normally save more. The $5 billion more per year raised by the emasculated gasoline tax does not even pay America's share of "Operation Desert Shield." If we are unwilling to ask the users of oil products to pay for the increased military burden used to ensure orderly markets for those products, will we ever seek a realistic energy policy? Yes, the people wanted a lower gasoline tax increase,...