Sunday, July 10, 2011

HITECH the Only Bright Star in $1T Darkness?

Arguably, the only investment from the US federal stimulus money that might have a long term return on investment (ROI) is the money being invested in healthcare computerization which should eventually drive down costs and improve quality.  Unfortunately, that money-- the HITECH (Health Information Technology for Economic and Clinical Health) Program-- is being spent on mediocre but very expensive health information systems products, so the ROI will be minimal and require at least 5 years to least 5 years.

In the US, we continue to elect politicians who make promises to maintain and/or increase federal spending and/or reduce taxes.  We can't have both.  As this chart below clearly indicates, we've been on a steady mismanagement of tax revenue vs. tax spending since the early 1980s-- when the rate of the curve started to take off under the Reagan administration.  In the past three years, the curve has gone straight up under the Obama administration.

Federal spending can only improve the situation described in this graph if that spending is invested to increase business productivity.  Unfortunately, the Obama administration spent--not invested-- $1T in stimulus money on short term job creation--hiring for the sake of hiring-- not long term investment to aid local economies and business productivity (new technology for manufacturing, more efficient transportation; business venues that generate jobs, taxes and local economies; lower cost fuel, less burdensome tax laws, new software engineering techniques, scholarships (not student loans) in critical skill areas, etc.). That $1T in stimulus money is now gone and so are those short term jobs.  In my hometown, the Civilian Conservation Corp, born from the federal stimulus money of the Great Depression, built the county fairgrounds.  That venue hosts innumerable events that continue to contribute to the local economy, 80 years later.

Anyone who campaigns and suggests for one moment that we can change the direction of this curve without cutting Medicare/Medicaid, Defense, and Social Security benefits...AND raising taxes is running for short re-election, not long-term leadership of the United States.

Credit to the US Federal Reserve, St Louis for this graph, Kevin L. Kliesen and Daniel L. Thornton.

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