April 29, 2005

Quick Budget Thoughts/Predictions

The Budget that both houses of Congress agreed upon last night features prominently two things in particular.

1. $106 billion in tax cuts.
2. The aim "to trim the growth of Medicaid by $10 billion over five years.

To my mind, this is irresponsible government. The Feds have dramatically reduced tax rates for the wealthiest Americans while cutting services for people who need them.

So, a couple predictions: The deficit will not be cut in half over the next five years, unfortunately. Health care costs will continue to rise by 12-14%, if not more, over the next several years.

Now, outside the beltway, politicians know that people want health care reform and need help keeping the costs down. The states, already in financial trouble, will need to do what the Feds won't and find a real way to hold costs down for their citizens, while providing access to quality care. Generally speaking, this means that there will be an increasingly noticeable shift towards state governments bearing the financial burden, meaning greater weight on state sales and property tax revenues--as opposed to federal income tax revenues.

In this light, the budget cuts should be seen more as a shirking of responsibility than as fiscal austerity.


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