Wednesday, May 21, 2014

The VA Scandal and Its Even Bigger and Broader Financial Ramifications ... What It Teaches Us about Washington and Our Future as a Nation

The VA scandal is bad, and now even the President is addressing it, albeit belatedly and probably ineffectively. See Obama Vows a Forceful Response to Veteran Car Issues. He wants to keep it from becoming a political football.

Fat chance of that happening these days, no matter who's in charge or what the subject matter may be. You see, the money pot is drying up and there's simply not enough to do what needs to be done and has been promised. And sadly, that includes our Veterans. It's a disgrace, but it's true.

The Veterans Scandal Is Only the Start is subtitled 'If the country can't meet basic needs now, wait until the looming deficit disaster finally strikes.'

{NOTE: You see, the bigger and broader disgrace is all about Washington politics, debt, the lack of money and winning elections, and that's exactly why politics sucks in America these days. So now let's take a look at our nation's sick financial condition and why the VA scandal is merely the tip of the iceberg.}

"The recent revelations about the Department of Veterans Affairs point to serious problems. But the root of the scandal is not what self-serving bureaucrats failed to do or tried to cover up; it is a federal budget that prevents us from meeting even the national needs on which our polarized political parties can agree.

Whatever the disagreements about the long wars of the past decades, Democrats and Republicans agree that we must fully honor the debt we have incurred to the tiny fraction of the population that does the fighting for the rest of us. Yes, the budget for the VA has risen sharply since 2002. But the number of returning veterans has risen even faster. Many live with grievous wounds from which they would have succumbed in previous conflicts. Many others struggle with the multiple effects of repeated deployments. Aging Vietnam-era patients require more care, and new responsibilities such as coping with Agent Orange add to the VA's burden.

In 2002, reports the Financial Times, 46.5 million veterans made outpatient visits to VA facilities. In 2012, the number of such visits had risen to 83.6 million. Between late 2010 and the summer of 2013, average waiting times for veterans' claims soared from 100 days to 375 days.

Roughly 42%—$66 billion—of the VA's budget is subject to annual appropriations. That's the nub of the problem. Our inability to agree on a sustainable approach to long-term fiscal policy has led, by default, to a relentless squeeze on discretionary spending that will hobble us at home and abroad....   
                   catThe Congressional Budget Office's latest budget projections showed that between 2013 and 2024, discretionary spending—defense and nondefense—is scheduled to fall from 7.2% of GDP to 5.1%, the lowest share since at least 1962. With only five cents out of each dollar of national income, we are supposed to defend the country, care for veterans, address the needs of children and the poor—and invest in the research, education and infrastructure on which America's future depends. It can't be done. . . .

Ten years from now, the funds available for the military and domestic programs will buy less than they do today. Meanwhile, costs in both categories are likely to rise faster than the rate of inflation. "Doing more with less" is a catchy slogan, but it only diverts attention from the real problem: the contradiction between our needs and the resources we commit to meet them.

The current structure of the federal budget makes this outcome inevitable. By 2015, federal revenues will recover from the Great Recession and stabilize at about 18% of GDP over the next decade. By 2024, however, we are on track to spend fully 17% of GDP on just two items—mandatory programs and interest on the debt—leaving almost nothing for discretionary spending. It only gets worse in the following decade. . . .

We know roughly how many veterans the wars in Iraq and Afghanistan will add to the VA's rolls, and we can estimate what they will cost per capita. Non-magical thinking would budget the amount required to meet their needs. We would have an honest public debate about the size and shape of the armed forces in coming decades, and we would appropriate what is necessary to make that blueprint a reality.

We would ask ourselves how much the government should invest in areas that promote growth, and we would stop pretending that shortfalls won't have consequences. We would also stop pretending that meeting the needs of the poor would be cheaper if we transfer programs to the states, and that cutting waste, fraud and abuse would solve our problems. And then, finally, we would be forced to confront the fiscal and economic consequences of putting revenues and mandatory programs on autopilot."

Summing Up

The VA scandal is real and appalling.

Perhaps even more real and appalling, however, is what our politicians are doing to the future of our great nation and our kids and grandkids.

We simply can't put ten pounds of anything in a five pound sack.

And we simply can't pay for what we promise without economic growth which will generate the funds to pay for those now largely empty promises.

Yes, the VA scandal is a national disgrace. Sadly, however, it's not the only one coming out of Washington. Not by a long shot.

That's my take.

Thanks. Bob. 

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