Interesting article in the San Diego Tribune

[Taxman]

Today I read something interesting in the San Diego Tribune about how GOP leaders are pressing Bush to reign in his spending. I found this relevant for many reasons given the various debates going on here and in the NVG forum. Also because this article was published in an (obviously) conservative paper and is about other conservatives criticizing Bush, I just had to mention it, in case this is news to anyone. It appears even the leaders of the GOP have recognized to danger inherent in the massive rise of the deficit as a result of irresponsible spending.

[sam h]

We are a country accustomed to livng beyond its means, and its going to come back and bite us in the ass in one way or another unless we do something about it. The question is what.

Note that this is not just an economic problem but potentially an international relations one as well, as a lot of our debt is held by Chinese and Japanese banks.

[andyfox]

http://www.theatlantic.com/issues/2004/01/littlefield.htm

[Zeno]

No-limit poker is a very dangerous game.

-Zeno

[adios]

This article is ok. Here's IMO the most important point from the article:

To put into perspective just how large a share of government expenditures entitlement programs are expected to consume over the coming decades, consider a third option: Couldn't we manage to keep tax levels constant and retain Medicare and Social Security if we were willing to eliminate, permanently and completely, all other government spending on everything including the military? Nope; wouldn't work. The gap between tax revenues and entitlement expenditures is so large that not even reducing the federal government to a shell would close the long-term deficit.

As I've posted about previously you won't get anywhere in rectifying budget deficits without reforming entitlements namely medicare/medicaid and social security. I'm still reading about the recent medicare/medicaid legislation but there have been some steps taken that will help.


Something from the article that the authors state should be done:

Thus, as an important first step the federal government should officially adopt a more comprehensive accounting measure, along the lines of the one produced by the economists Gokhale and Smetters.

Not sure what they mean but what I think they mean is that budget forecasts should be realistic and laws should be passed accordingly. For instance we've discussed this before, there is never any planning for economic slowdowns as all budget forecasts that I've ever seen assume continouous economic growth.

BTW the Euro zone has budget deficit problems as well.

[adios]

"Note that this is not just an economic problem but potentially an international relations one as well, as a lot of our debt is held by Chinese and Japanese banks. "

Well the respective coutries you mention central banks are buying the US peso to keep the value of their currencies from appreciating against the US peso. They're acting in their own self interest by doing so. What else are they going to do with all the US pesos purchased but buy US Treasuries. Rumors are that the ECB may start doing the same thing to keep the Euro from appreciating more against the US greenback. Rest assured they'll buy US Treasuries as well. I wrote about the irony of this last week where they could actually be helping in funding the US deficit which includes money spent on the war in Iraq.

[sam h]

Yes, there is a certain irony there. Although the Chinese I believe do not completely float their currency.

But any way you look at it, we have a situation where lots of T-bills are owned by these two countries, which isn't necessarily cause for alarm, but could spell trouble if a) they decide to mess with us (probably not in their interests) or b) they have a banking sector crisis.

[sam h]

[ QUOTE ]
As I've posted about previously you won't get anywhere in rectifying budget deficits without reforming entitlements namely medicare/medicaid and social security.

[/ QUOTE ]

Yes, and the first step should be to stop giving these benefits to people who don't need them, like my grandmother worth over $1.5M who has the government pay for all her pills.

But old people vote a lot, and both parties know it.

[andyfox]

"budget forecasts should be realistic and laws should be passed accordingly. For instance we've discussed this before, there is never any planning for economic slowdowns as all budget forecasts that I've ever seen assume continouous economic growth."

One thing our movie star governor has done here in California is to do exactly this: his budget projections are realistic in that they allow for a rainy day and don't assume the most optimistic revenue projections in order to make himself look good at the expense of future governors. Perhaps this is an advantage of having a governor who is not a career politician and cannot run for President.

[andyfox]

I loved the look of that post title, all those zeroes.

A trillion here, a trillion there, pretty soon you're talking serious money.

And you're right, it really is the biggest no-limit game in the world.

[Roy Munson]

I bite in the ass can sometimes be a good thing depending on the identity of the biter and their technique.