US Politics: Compromising on the Federal Government's Debt

A few weeks ago it appeared that Republicans were prepared to use the need for increasing the debt limit to push through some of the controversial measures included in their 2012 Budget Resolution, notably the plan proposed by Rep. Paul Ryan (R-Wisc) to change the Medicare programme for future beneficiaries and/or a Balanced Budget Amendment that would require sharp and immediate reductions in government spending.

These options are not totally off the table, especially with the pressures being exerted within Republican ranks by new members of Congress keen to assuage their Tea Party constituencies, but the overwhelming message that emerged from participants after the Biden talks is the urgent need for compromise before the debt limit vote.

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US Politics Analysis: "The Game's Afoot" --- The Budget Battle and Obama's Historic Speech

This was a speech that will be in the history textbooks in 50 years' time. Their verdict on its importance may be uncertain as yet, but Obama showed on Wednesday the essential role of the Chief Executive in framing the context of debate in the United States. Now the budget battles over the future of the entitlement programs in America can begin in earnest.

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US Politics: Beyond the Budget Dispute, A Crisis in Health Care

The starting point for the health care debate is that the US spent nearly $2.2 trillion, or $7,400 per person, on health care in 2007. To put that in context, $2.2 trillion is double the total of discretionary spending, which includes defense, in 2010, and itrepresents 16% of America's annual GDP.

Those numbers and percentages have been been rapidly rising in real terms over the last 40 years. The US spent $714 billion on health care in 1990 and $253 billion in 1980; as a share of GDP, health care has increased from 7.2% in 1970 to a projected 20.3% in 2018.

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US Politics: A Beginner's Guide to the Plans to Cut Government Spending

On Monday, the Tea Party Caucus held a meeting in Washington to discuss their potential approaches to a forthcoming vote, probably in June, on raising America's debt ceiling. No definite conclusion was reached by the Caucus, but here are the headline numbers, from the President's deficit reduction commission, that illustrate how the the debt burden in in the United States is forcing the political conversation in Washington....

In 2010, Federal Government spending was nearly 24% of the nation's GDP; a level not seen since the days of WWII. To cover this spending, the government raised tax revenues of 15% of GDP. In total, the difference between spending and revenue in 2010 –-- the deficit –-- stood at 9% of the value of all the goods and services produced in the economy, or GDP.

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US Politics: A Beginner's Guide to Reducing the Federal Government's Debt

This report issues a stark warning, supported by every member of the Deficit Reduction Commission, "The era of debt denial is over, and there can be no turning back. We sign our names to this plan because we love our children, our grandchildren, and our country too much not to act while we still have the chance to secure a better future for our fellow citizens." And the Preamble emphasises the Commission's belief that the American public are ready to discuss long-term fiscal solutions, as long as they feel that everyone is sharing in the pain. The report notes that; “In the weeks and months to come, countless advocacy groups and special interests will try mightily through expensive, dramatic, and heart-wrenching media assaults to exempt themselves from shared sacrifice and common purpose,” but stresses that. “The national interest, not special interests, must prevail."

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US Politics Special: The Conservative Way Forward on Social Security

Last week's quiet in Congress was broken when the House of Representatives debated the spending levels to keep the government in operation through 30 September, the end of the current Fiscal Year.On Tuesday, Wednesday and Thursday the House did not adjourn until past midnight. Members can presumably catch up on sleep this week when Congress is in recess for President's Day.

Meanwhile, President Obama released his budget for Fiscal Year 2012, which starts on 1 October.Some sympathetic commentators, i.e., those who didn't castigate the President for cowardice or a lack of statesmanship, argued that this was a credible political strategy. Ignore the subject of this year's budget and let the Republicans raise it; with the consequence they become labelled as the party that wants to tear apart America's welfare system. That is not a badge you want to wear as you enter a 2012 election campaign that, as always, will be decided by moderate Independents.

Entitlement reform will be the political battleground for the foreseeable future. The current struggles over cutting government spending are only the initial skirmishes in a long campaign ahead. Momentum is growing for the budget summit called for two week ago by Sen. Kent Conrad (D-North Dakota), Chairman of the Senate Budget Committee, and Republicans are intimating their leadership will only attend if entitlement reform is on the agenda for discussion.

That brings up to a final look at the Conservative Roadmap put forward by Rep. Paul Ryan's (R-Wisconson), with its recommendations for Social Security and Tax Reform.

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US Politics Special: The Conservative Way Forward on Medicaid and Medicare

The conservative Roadmap's guiding philosophy is the vaunted economic efficiency of the free market,with hundreds of millions of individual choices in the health insurance market driving down the overall cost of health care provision.

Both Medicare and Medicaid began in 1965 as part of President Lyndon Johnson's "Great Society". Medicare is funded solely by federal dollars, partly through an employee payroll tax, and provides health care coverage for participants who are over 65. Medicaid is a joint state-federal enterprise, with states generally receiving a dollar of federal money for each dollar they spend, allowing low-income families to receive medical treatment.

The highlight of Rep. Ryan's recommendations for Medicaid is the issuing of a debit card to low-income families, loaded with a set amount of funds that can be paid to approved health care insurers.

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US Politics Special: A New EA Series on the Debates Over the Economy

Two political stories will dominate US news coverage this year: the campaign for the Republican nomination to face President Obama in the 2012 election, and the efforts by both parties, bi-partisan commissions, and independent think tanks to find a solution for the state of the American economy. Included in the latter debate will be terms that turn us all bleary-eyed; debt ceilings, discretionary and non-discretionary spending, entitlement reform, tax reform, and a myriad of health,care acronyms like MSAs (Medical Saving Accounts). The grim reality beyond the terms is that the United States is facing a fiscal crisis, and this year will see the beginnings of policies that will have long-standing consequences for the future of America.

Over the next few weeks EA USA will post a series of articles looking in-depth at the various recommendations for changes.

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US Politics: Previewing Obama's "State of the Union" (and How the Republicans Will Try to Pre-Empt It)

It promises to be an interesting Tuesday with potential filibuster reform and an outside chance of Republicans forcing a repeal vote on the health care plan. But in the end it will be the power of the Presidency that draws the world's attention to Washington on Tuesday. With one of his most important weapons, President Obama has the chance to remind Americans, and an international audience, of the optimism that surrounded his election in 2008.

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