We are in an era of colossal budget deficits. We are also in an era of more colossal cop-outs. The budget President Obama submitted a couple of weeks ago isn’t serious. It pretends to cut the deficit by $1.1 trillion over 10 years. But the projection is based on economic growth and waste-cutting fantasies inspired by Reagan-Bush-Bush voodoo.
Obama thinks he’ll have the sort of economic growth that will cut the deficit from 11 percent of GDP this year to just over 3 percent in 10 years. He must be dreaming in Chinese. He thinks he can save almost half that trillion by freezing discretionary spending for five years. That means all non-military and non-entitlement spending, including education, road-building, NASA, the National Institutes of Health, food inspections, water safety and untold other services that impact your lives daily, enabling you to stay healthy enough to take government for granted and moan about it at the same time. If he thinks he can get Congress to do that, he might as well move the White House to the Magic Kingdom.
More Columns:
- Two Down. Twenty To Go.
- A Confederacy of Bipartisan Dunces
- Defense of Marriage Act: A Crack in the Crock
- Reality Check: Against Civility
But Obama is in good company. He just finished adding $900 billion to the deficit on the back of a Republican plan that extends the Bush tax cut for the rich for two more years, lowers the payroll tax for everyone else and leaves spending untouched. Supersized self-indulgence has always been an America specialty. It’s now a disease. And like all diseases, it doesn’t respect party affiliation. The Republican obsession to find $100 billion in cuts this year is no less a laughable exercise than Obama’s penny fooleries, but at least Republican duplicity is tradition. You expect it. Republicans don’t pretend to be out to save the world. Obama does. He should at least try to save his corner of the despoiling garden.
If the nation is to avoid the fate of Britain, Spain, France and other empires that collapsed from the weight of their own fat debt, hard choices have to be made now. Picking on the rich won’t do. Everyone must pay. To put it more kindly: everyone must contribute. Talk is cheap. But there are options all over the place.
Want to save a quick trillion? Try this: Raise the Social Security retirement age to 70. That’s $245 billion. Eliminate the mortgage-interest deduction, one of the fattest, most pernicious annual welfare checks written mostly to the upper middle and upper classes. That’s $80 billion. End the wars in Iraq and Afghanistan, both of which were lost pretty much the day they were started. That’s $170 billion, not counting the savings from the number of deaths, maimings, broken families and broken neighborhoods that’ll be prevented. Allow the Bush tax cuts to expire, not just for the rich, but for all. That’s $365 billion. Remember: we must all contribute, and we’d still have some of the lowest tax rates in the western world.
Bring back the estate tax, but exempt the first $1 million, so 95 percent of Americans aren’t affected. That’s another $105 billion. Scale back the F-35 fighter jet program. At $200 million per plane, do we really need 2,400 of these things when no nation on earth can even compete with the F-16s and F-18s we already have flying around? Reduce the redundant nuclear arsenal and end that space-based missile defense folly we’ve been wasting money on for 30 years. There’s another $150 billion. Eliminating tax breaks for employer-provided health insurance, raising capital-gains taxes and enacting reasonable medical malpractice reform would net another $215 billion. Throw in a little means-testing of Medicare benefits and raise the cap on Social Security contributions to $200,000, and we’re talking another $200 billion.
Tally it up: That’s over $1.5 trillion in savings and revenue. There’s more where that came from. But we can stop here for now. The point is that it’s doable. Today. None of it would be popular. None of it would be fun. Some of it would hurt economic growth to some extent, in the short run, but that problem would be vastly erased by a much, much happier bond market and a far more stable fiscal future. The alternative is second-rate status in 10 years, with China poised to laugh over the spoils.
For now, that’s where we’re headed—on our magnificent raft of nickels and dimes.
The figures and calculations in this column are drawn mostly from David Leonhardt’s interactive New York Times invitation to readers last November to fix the budget on their own. A long list of options is presented. Try it out. A somewhat different version of this piece was broadcast on WNZF on FlaglerLive Editor Pierre Tristam’s Reality Check segment on Friday.
dlf says
Great article,not a lot of new suggestions but you had the courage to suggest them, but then you are not running for office like the current crew in Washington. One thing you missed,. since January 1, 2008 ( the start of the recession) until July 2010 ( we are told was the ending date of the recession) the Federal Government added 198,100 jobs;not counting census jobs, state and local government cut or lost 134,000 jobs and the private sector had a loss of 7,8837,000( figures provided by the US Labor Department). That was a result of the brain storm of the current leaders stimulus money. Think of the savings if we reduce the 198,100 Federal Government jobs which prior to January 1, 2008 we got along with out. I guess what I do not understand that all I hear is that the current leaders inherited the deficit but they voted for it and then voted to expand it four fold since January 20, 2008. I agree, we all will need to give ,some more than other; but all will need to do so. Lets hope the current leaders are not afraid to make the cuts you suggest, or will the fear of giving up one of the best jobs prevent then from doing a unpopular thing? My bet is, they will hold on to their cushy job from the top all the way down.
dlf says
Pierre; I noticed you steed away from some of the big ticket items ,foreign aid,ear marks reduce the Federal Government work force by 10% =15 billion dollars,medicare increase age = 104 billion dollars. Must be a reason no one wants to touch these items. As you make reference in your article everyone is going to need to kick in something, I guess that means everyone except a select group., I think you missed some big ticket items. Great link you provide ” try it out”
William says
Some good ideas Pierre, but I must disagree on the Social Security issue.
As I understand it, SS, by law, is a stand-alone system that is completely separate from the federal budget. As it is not part of the budget, it cannot be part of the deficit. Another misconception is that SS is going broke, when the truth is that SS is running a surplus and is fully funded through the year 2037. The idea of raising the cap to $200,000 is one I favor, as it would keep the system solvent long past 2037.
SAW says
Good article, however you made one slight error in chapter 4 when stating that ” talk is cheap”.
Not true, at least when the talking heads, and assorted hangers on in our county, hire a so-called consultant at $1100 dollars an hour . All in a vain attempt to straighten out a mess that many of them are partially responsible for creating. When are these dreamers going to wake up, and understand that the good old days will not be returning any time soon. Just watch the news not the spin, ah but then again at least one guy at that meeting improved his economic position.
kevin says
One cannot argue with the majority of that Pierre, that is if they are sane. Now if only Washington would do the right things for us as a country. You easily outlined a few ideas that most likely would work. Politicians won’t though because in the end, their power is derived from enslaving us with taxes giving rise to their need to create legislation that limits our freedoms and liberty. That and dividing us keeps them fat with power and wealth. .
Pierre Tristam says
William, I’m more with you on that than not, and going into the details, I think the $200,000 cap is actually on the low side. I would also means-test Social Security: if someone is retired on a six-figure pension and raking in dividends from investments, no sense fattening the take. That old saw about someone having contributed an entire life to the pot doesn’t wash, either: we all contribute, true, but we also all benefit in innumerable and intangible ways, and our wealth is never exclusively self-made, as the good old American myth has it: it’s in large part enabled by the collective, and often political and economic, climate.
John Boy says
Over halfof the Federal Debt is what the Feds owe to SS, The Poticians have stolen from the SS Trust fund for years and now want to fool the Public into allowing them to wipe out the debt with stupid claims that we can’t continue down this path. Eliminate the cap on SS earning, raise the Medicare payroll tax and eliminate all programs that draw funds from Medicare & SS for programs that are pprovided to people who did not contribute.
emile says
Pierre, I couldn’t figure out how to post a link as a letter to the editor, so I’ll try it here:
http://www.justfacts.com/news.impactSS.asp
This is a very good summary of how the government and social security work separately and together, and explains the National Debt in terms of what is owed to Federal Entities.
And it was published in 2001!
palmcoaster says
The one most interest paragraph on the link provided by emile, just proves that SS works the problem is that they been getting their hands in the cookie jar and need to stop and refund the probably trillion owed to the fund and contributed by all employed. Social security is not charity as many put it. We all pay up front for it. Is our contributed benefit during our laboral life. ” Social Security in its current form is a tool that politicians can use to drive our country into debt without the public knowing about it. Between 2001 and 2010, the Social Security program is projected to collect 5,502 billion dollars in taxes and spend 4,726 billion dollars on benefits and administrative overhead. This leaves $776 billion in surpluses.[59] If things remain as they are, the law requires that all of this money be loaned to the federal government.[60] Once this money is in the hands of the federal government, it is up for grabs.[61] “
dlf says
If you go to the site ” try it out ” the link at the end of the article and see where your money is going you will be shocked. If you cut the spending on all the programs by 50% and enforce the tax laws you could save $683 billion, that leaves us with a $268 billion surplus for 2015. If you do the same thing for 2030 the number is out of site. By doing this every one would be kicking in the same percentage, the rich, the seniors, the entitlement groups,our friends across the seas, armed forces, ear mark projects and last but nor forgotten the Federal Government and their work force. But none of us want to give up our pet projects are special entitlement programs,let someone else pick up the slack. Tax the rich shoot the seniors but don’t cut my bridge to no where or the President hiring another czar or 25,000 new government employees. Well that is not going to happen and we are all in for a big bubble burst in the next 2-3 years.
palmcoaster says
Even famous Mr. Gross likewise Warren Buffet, advises that wealthy and corporations should pay higher taxes:
http://finance.yahoo.com/tech-ticker/bill-gross-%22of-course%22-the-wealthy-should-pay-higher-taxes-corporations-too-535998.html?tickers=%5EDJI,%5EGSPC,PTTAX,TBT,TLT,HRB,INTU&sec=topStories&pos=7&asset=&ccode=
dlf says
Palmcoaster: I love you guys who want to raise corporat tax, who the hell do you thing they pass that tax on to? The corporat tax is killing new business and the old one s just pass the tax on to you and I. May be you would fit in good with the rest of the dummies in Washington.
Jack says
dlf: Corporate tax rates are largely irrelevant when more than two-thirds of U.S. corporations pay no taxes at all because of special interest deductions, tax exemptions, tax credits and tax subsidies. Two-thirds of US corporations didn’t pay so much as a dime in taxes between 1998 and 2005, exploiting a multitude of loopholes. When corporations own the Congress, they write their own rules.
FYI: Bank of America, the largest bank and 5th largest corporation in America is reported to have paid zero federal income tax in 2009, funneling its income through 115 foreign tax-haven subsidiaries.
Stop drinking from the urinal it’s poisoning your mind!
palmcoaster says
Applause to Jack I could have not said it any better ! Oh Sir, I am so rewarded to find out that some of my countrymen are aware of what is really going on. We, the great majority of Americans sustain our government budgets with our income, payroll and sales taxes in all we buy, while these corporations get only to contribute 1% of our Gross National Product (GDP) revenue.
Meanwhile we get bleed big time by forced subsidizing these corporate giants that always threat us with moving somewhere else if fairly taxed here. Let them move and then tax the heck of anything they want to bring inside the US.
If they think that cutting our social programs and government services that we pay for up front, will solve our deficit, both parties in control are nuts! Don’t they get it that we have probably 40 million jobless that do not contribute 39% of their income in taxes neither in payroll taxes and they have to be paid their well deserved unemployment benefits, among other disgraces?
Tax corporations and the wealthy at least at the same rate we are all taxed 39% and up and also tax imports to bring back our jobs. Our budgets shortfalls will disappear then overnight and will also pay our debt to China overnight too.
dlf says
Jack: would you care to tell us how well Bank of America is doing today compared to 2009. oh that was a Barney Frank problem.
Jim G. says
I think raising the retirement age would likely do more harm than good. Not the end of the world if you have a cushy desk job, but otherwise it might not be practical. Also, if we are in a period of sustained high unemployment I would rather pay older people to retire than for funemployment for people in their 20’s. Like it or not, downsizing, offshoring, etc. tends to target older workers. The odds aren’t great that they will find new jobs. Unemployed at 55=retired at 55, whether the government “allows” it or not. Raising the retirement age will only amp up the pain.
Aside from my dig at funemployment, a worker who is unemployed or underemployed in the early years of their career never really recovers, either financially or in career advancement.
Means testing SS will only turn the oligarchy more against the program. They don’t even like it now. SS would be dead if they couldn’t use it for martini money.
Greenspan’s 1983 Comission on SS Reform recommended increasing payroll tax rates to address the coming baby boom retirements. That money was spent by Congress and given to the rich in tax breaks. The debt is in T bills, if I’m not mistaken, so calling them worthless IOU’s is not correct (not that you did, but others have, to soften us up). Congress needs to figure out how to make good on that debt, not how to screw us out of the money they owe us.