Bumping up against the debt ceiling

You don’t have to be a news junkie to know that the debt ceiling is the political and financial hot topic du jour. Debate over the debt ceiling–should we raise it, how can we address long-term structural deficits–has been dominating print, TV and online media for weeks; if not months. While there is some debate over the impact of a default, there is general agreement that, if some kind of an agreement to raise the debt ceiling is not reached, the resulting default will have a pretty significant adverse impact on the marketplace. Given the potential pitfalls, if this political stalemate persists, it does seem likely that some kind of agreement will be reached – and, like almost all compromises, neither side will be totally thrilled with the outcome. But all the back and forth between both ends of the political spectrum (Republicans want to cut spending and avoid higher taxes, Democrats want to close tax loopholes and increase revenue) is really missing the big point: there is an elephant in the room…and he’s wearing a stethoscope. Entitlements are an enormous financial obligation for this country, and by far the biggest debt on the balance sheet going forward is health care: Medicare and Medicaid. At the end of the day, the question we have to ask ourselves is how much health care do we want and how are we going to pay for it. Polls show that people overwhelmingly (and understandably) don’t want to give up their government subsidized health care, but at some point we are going to have to make some very hard decisions with regard to health care spending.