The Danger of Drift
Healthcare. The quality of specialized care at U.S. hospitals remains the envy of the world, but the overall system is in deep trouble, perhaps meltdown. With medical inflation more than three times as high as general inflation, health costs have risen to 16 percent of gross domestic product and are heading toward an unsustainable 20 percent.
Not only are the ranks of the uninsured swelling--up to 45 million, an increase of 6 million since 2000--but corporations are under increasing financial pressure. General Motors spends more on healthcare than on steel. The Government Accountability Office estimates that without a major overhaul of healthcare, GDP will cumulatively grow 72 percent by 2030, but Medicaid will increase 166 percent and Medicare an astonishing 331 percent. Solving the healthcare puzzle has become the single most important step to solving budget problems, too.
Financial imbalances. It is well understood that the federal government has squandered the budget surpluses of just five years ago. Less well understood are the extra commitments Washington has quietly made to future spending. David Walker, a Republican voice of truth at the GAO, reports that five years ago, the federal government's long-term liabilities and unfunded commitments for things like Social Security and Medicare stood at $20 trillion. Today, the tab is $46 trillion. The new Medicare prescription program alone will account for $8 trillion of this mammoth debt.
As America continues to import far more than we export--so that we borrow some $2 billion a day from nations like China--we have built new twin towers: budget debt and trade debt. Economists keep warning us they are unsustainable, and our political leaders keep whistling past the graveyard.
Energy and the environment. From Richard Nixon on, presidents have called for energy independence. Congress has passed one bill after another, but the nation's dependence on foreign oil has actually grown since 30 years ago--from around 30 percent to over 60 percent! And with the price of oil around $70 a barrel, as columnist Tom Friedman points out, not only are consumers paying more at the pump, but we're financing authoritarian regimes in Russia, Iran, and Venezuela.
Then there's climate change. The question is no longer whether mankind is heating up the atmosphere but whether and when there might come a tipping point when warming is no longer reversible. Some scientists think we have already passed it; others disagree. But no one disagrees that the United States is a primary culprit, accounting for 24 percent of carbon dioxide emissions with less than 5 percent of the world's population. The time has clearly come for a "grand bargain" in American politics in which the right agrees to major conservation steps, the left agrees to more production and to nuclear power, and both agree on a dramatic investment in renewable energy. But Washington today is so caught up with gaining a tiny partisan advantage that no one even talks boldly.
Staying ahead. Last fall, the National Academies, experts on science, engineering, and medicine, issued a report aptly titled, "Rising Above the Gathering Storm." It warned that unless the United States moves fast, China, India, and others will rapidly catch up with us competitively. America maintains commanding leads in many fields, but signs of slippage are abundant. In the sale of high technology, we've gone from a $54 billion surplus in 1990 to a $50 billion deficit today. Last year, American investors put more money in foreign stock funds than in domestic.
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