Showing posts with label US government. Show all posts
Showing posts with label US government. Show all posts

Wednesday, March 27, 2013

Can He Read The Writing on The Wall?

While The US National debt Currently stands at a Staggering $14.235 trillion, The Federal budget deficit is Estimated at Over 10% of GDP for FY2011. B&E Catches up with The US Department of The Treasury, Moody’s Analytics and Others to find a way out of The Situation for The US Government.

Just as the US economy seemed ready to hit its stride, new threats have appeared to trip it up. Well, the writing on the wall this time is: Federal borrowing is likely to hit the statutory limit very soon. In fact, as of March 14, 2011, the total public US debt stood at a whopping $14.235 trillion (about 103% of US GDP, and more than $1,00,000 per US tax payer), or just $59 billion below its present statutory limit of $14.294 trillion. Confirms Mary Miller, Assistant Secretary for Financial Markets at the US Department of the Treasury through a communiqué to B&E, “The Treasury Department now estimates that the US will reach the debt limit between April 15, 2011 and May 31, 2011.”

Though one would argue that the situation is not new for the US policymakers who have increased the statutory limit 17 times since 1990 (the debt limit then was $3.195 trillion) to its current level, there lies a catch! Although Congress plans to increase the ceiling once again, several Republicans have vowed to oppose the increase this time unless the Obama administration commits to deeper spending cuts. And if the Republicans go by their word, the government would be in a position where it could no longer borrow to fund its day-to-day operations, which perhaps might result in a partial shutdown or a default on debt payments by the US. This could even force credit rating agencies to downgrade the country’s credit rating (US at present has AAA credit rating), which not only would affect the much-hyped American pride, but will also more importantly result in bond investors demanding higher interest rates, thereby adding to uncle Sam’s overall debt burden.

Moreover, the issue pops up at a time when large annual budget deficits (for FY2011 the federal budget deficit is estimated at $1.645 trillion, over 10% of GDP from just 1% in 2007) are projected to continue indefinitely under current laws. In fact, if current policies remain in place, the US Congressional Budget Office (CBO) projects that while the national debt, subject to the statutory limit, will exceed $25 trillion in 2021, deficits will total $7 trillion over the next 10 years.

Unfortunately, while the nation’s budget deficit and debt load are out of control (the highest since World War II), President Obama’s recently released 10-year budget plan doesn’t generate the much-needed confidence that the economy’s fiscal problems will be resolved anytime soon. Agrees Mark Zandi, the US based Chief Economist of Moody’s Analytics as he tells B&E, “Obama has put forth a budget that isn’t sustainable even on paper. Even with a freeze on discretionary government spending – the President’s principal response to the fiscal outlook – projected deficits are too large to stem an unmanageable rise in the nation’s debt.”


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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Sunday, October 28, 2012

US & CANADA: HEALTHCARE DISSIMILARITIES

Barack just needs to look to his neighbours to understand health policies

In the year 2007, 70% of healthcare spending in Canada was through public sources (which, though, has decreased from 74.5% in 1990), while in the US, the same was 45% (the lowest among all OECD countries). Unbelievably, this happens despite the fact that the Canadian government spends a lesser amount (16.7% of its revenue) on its citizens’ health than the US government (which spent 18.5% of its revenues last year). Surprisingly, in spite of such gigantic healthcare spending in the US, a whopping 40% of the US citizens lack adequate accessibility to the country’s healthcare system (24% of the US population remained under-insured, according to the Consumer Reports Study, 2007), while with relatively lower investments, only 5% of Canadians are outside the system.

It is also astounding to observe that simply having more doctors, physicians and nurses doesn’t ensure a high quality of health service. Canada has fewer physicians per capita than in most other OECD countries (In 2007, it had just 2.2 practicing physicians per 1,000 people, lesser than the 2.8 physicians per 1,000 population in the US). Canada has 9 nurses per 1,000 people, while the US has 10.6 nurses per 1,000. Canada also ranks as worse as the US in the number of acute care beds per 1000 people (2.7). Look at where that has brought Canada. Canadians have an average life expectancy of 80.4 years according to the Canadian Institute of Health Information (US: 77.8). Infant mortality rate also has come down drastically to 5 deaths per 1,000 live births (US: 6.9). Adult smokers consuming tobacco products has gone down from 34% in 1980 to 18% in 2007 through an effective public awareness campaign, advertising ban and taxation moves. In Canada, 15% of its population is obese, far below the US, which has 34.3% of its population afflicted by obesity (OECD health data). Experts comment that patented drug prices are 35% to 45% lower in Canada than in the US. Some US citizens now even purchase prescription drugs from Canada (many using online transactions) than from their home country – this cross-border purchasing has been estimated at $1 billion.


Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.
 
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