A Serious Warning: The Facts Behind America's Coming Collapse

By Porter Stansberry Monday, June 6, 2011

On May 11, the U.S. Treasury updated the public on our federal government's finances. So far this fiscal year (which began October 1, 2010), the feds have borrowed nearly $1 trillion. April marked the 31st consecutive month of deficit spending at the federal level. It did not matter that tax receipts have rebounded substantially – growth in spending on social programs has far outpaced the increase in revenues. In total, President Obama's economic mandarins now forecast the fiscal year 2011 deficit will come in at $1.6 trillion. To put this figure in perspective for you, when Ronald Reagan took office, the entire national debt totaled less than $1 trillion. Even as late as 2002, the national debt was only $6 trillion. Obama's administration will almost surely borrow more than $6 trillion in only his first term. In four years, Obama will double our entire national debt from its pre-financial crisis levels. This has never happened in peacetime.  Keep in mind, this is the same president who, after taking office in 2009, held a widely publicized Fiscal Responsibility Summit and pledged to "halve the deficit we inherited" by 2013. The budget deficit in Bush's last year in office (the 2008-09 calendar year) was $1.2 trillion – due largely to the Wall Street bailout and Iraq war. Today, both of these major sources of spending have largely disappeared. The government is selling assets acquired during the financial crisis. That generates revenue. Yet rather than decrease the deficit, Obama has allowed it to grow by 33% annually. This same man, while a U.S. senator, called 2006 efforts to raise the debt ceiling "a sign of leadership failure." He voted against raising the debt ceiling to $9 trillion, proclaiming, "Americans deserve better." Obama noted, accurately in our view, these mounting federal debts were "shifting the burden of bad choices onto the backs of our children and grandchildren." We hope history will hold Obama accountable for his actions. But we're not holding our breath. Federal, state, and local government spending now makes up about 45% of the U.S. economy. Hardly any major business in America doesn't count on the government for a significant amount of its earnings. While we used to call this kind of system "socialism," today the popular term is "crony capitalism." Whatever you call it, it leads to collapse. Another worrisome sign? A record number of people (almost 70 million) now depend on the U.S. government for their daily housing, food, and – most of all – health care… Today, 45% of American households receive some form of direct government payments. And 132.5 million people pay no federal taxes whatsoever – a record number of people who neither paid federal income taxes in 2010 nor were claimed as a dependent by another taxpayer. Tallying up all these numbers, you discover something amazing. A tiny number of Americans pay for the well-being of nearly a majority. While half of the population may pay something in taxes, only the top 10% – people earning more than $113,000 – pay a substantive amount. These few citizens pay 70% of all the income taxes collected. Benefits funded this way are unsustainable. According to a recent study published in the Wall Street Journal, the average couple that retires at age 66 on Social Security and Medicare will receive $1 million in benefits. On average, they and their employers paid $500,000 into the system. The federal government is taking an excessive amount of money from its few high earners – a wealthy minority – and redistributing inefficiently to pay for services the country can't realistically afford… Individuals, of course, are not the only beneficiaries. Entire industries gush cash thanks to the generosity of the federal Treasury – mortgage REITs, defense companies, and most of the health care complex. The system is so broken, not even the already lopsided payment scheme is enough. Not even close. Every week we hear more demands for the "rich" to pay their "fair share." The political reasons for spending are so powerful, until the government can take more from the rich, they will continue to borrow it from somewhere else. Any American with the ability to balance a checkbook can discern the serious nature of this financial situation and the politics that explain its origins. Yet in the battle between political expediency and financial probity, the lust for power will always win. So what can we do to protect ourselves as the borrowing and spending continues to accelerate? Tomorrow, I'll show you the first step to take. Good investing, Porter Stansberry

The BIG health care problem that could be costing you hundreds of dollars a year

From Dr. David Eifrig in Retirement Millionaire:
Medicine is big business. The hope that Obama or any group can change it magically and turn it into a quiet garden where perfect vegetables and fruits are grown and freely shared in the town square is wishful thinking.
An article in Smart Money magazine shows how costs are going up dramatically as local hospitals increase their market share of delivering health care. The story described the "acquisition spree that's in full swing," and how hospitals buying up independent physician practices around the country are leading to higher costs and headaches.
For example, a stress test done by an independent cardiologist in Milwaukee is $170 - but $240 at the local hospital, Aurora Health Care. Or a sleep study performed in Orlando, Florida: $780 versus $1,140. The list goes on.
The other problem with big business taking over is that no one is measuring the outcomes of the care delivered. And they won't because of the clear conflict of interest. For-profit hospitals are in business to make money, not worry about good care. And that's leading to exploding prices for things... and worsening care.
For example, in Springfield, Illinois, an exam for strep throat might cost $400. Yet an independent pediatrician in Chapel Hill charges only $12 for the rapid strep test - the deciding factor whether to treat or not treat with antibiotics.
This sort of pricing doesn't make sense. How much is the doctor's technique of swabbing the throat worth to society? And the power to prescribe medicine? Let's be generous and say the exam takes 10 minutes (really, it's more like two minutes).
If a doctor's practice is going to make $200,000 a year, it needs to charge $100 an hour - about $16 for the 10-minute exam. Even if we double it ($32) for 50% overhead, and add the cost of the test, the practice could justify a $50 charge. But $400?
We're letting large hospitals and corporate arms of insurers share in the fees for imaging exams, diagnostic analyses, and other pools of money that doctors once owned. Letting big government shift the money from local doctors to big corporations is a tactic that won't improve your health care. Please don't trust new government programming to make your health care any better. It won't, it's impossible when the goals are this misaligned.
Crux Note: Each issue of Dr. David Eifrig's Retirement Millionaire is loaded with ideas to help you save money, invest wisely, and live better... and it just might save your life. In his latest issue, Doc tells readers why its time to fire their doctors, and what to do instead. To learn more about Retirement Millionaire, click here.
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