About that "insignificant" deficit

[Aragorn]

From today's NY Times:

"Using what economists say is the most reliable measurement, the $455 billion represents 4.2 percent of the total economy, somewhat less than the 1983 deficit in the administration of President Ronald Reagan, which was 6 percent.

"But in only six years since 1946 has the deficit been larger than 4.2 percent of the gross domestic product. Not counting the current surplus in the Social Security fund, the deficit would be 5.7 percent of the total economy, the largest since World War II except for 1983, when there was no Social Security surplus.

The second largest deficit since before I was born and no end in sight to the deficits. That is not insignificant. Also,

"The deficit picture has worsened by $789 billion, from a surplus of $334 billion to a deficit of $455 billion, in just two years."

[adios]

I certainly didn't say the deficit was insignificant, just that it's hyped. Did you read the Wall Street Journal editorial today about the budget deficit? Basically it stated that same things that I wrote in my post only revenues are going to be worse than expected. In the editorial they attributed 53% of the current deficit to revenue declines (I didn't check the math myself). Also they pointed out, correctly, that defense spending as % of GDP has increased quite a bit from the Clinton administration lows. The editorial pointed out that even Howard Dean has acknowledged that defense spending had to increase after 9/11. It's certainly worthy of debate as to what percentage of the budget should go to Defense spending. On the other topics forum I pointed out that Medicare and Medicaid spending is out of control. Here are the three reasons why the Clinton administration was able to have a surplus when considering the total federal budget:

1. Record revenues due to many factors including record low levels of unemployment, high corporate profits, and high capital gains from a big stock market rally.

2. A significant decrease in defense spending as a percentage of GDP. The Wall Street Journal editorial I referred to pointed out that this level of defense spending had not been seen since before 1940.

3. A constant growth rate in Medicare and Medicaid spending. During the Clinton administration Medicare and Medicaid growth was held more or less constant due IMO to the Clinton administration's get tough policy on Medicare and Medicaid fraud as well as pressure on providers to keep their charges inline.

Medicare and Medicaid spending has resumed it's accelerated growth rate under the Bush administration. Again referring to the Wall Street Journal editorial, it stated that increasing taxes will not balance the budget but I think that's open to debate although I agree with what was stated in the editorial. The facts are these:

1. Government revenues have declined significantly since 2000.

2. Government outlays have increased every year for the last 40.

3. You can't balance the budget when revenues are declining and outlays are increasing.

What programs do you want to cut and by how much? IMO you can't get government spending under control without some sort of Medicare and Medicaid reform as a start.

[Wildbill]

I don't think to place blame for the deficit at this time and further I don't think a deficit is the worst thing. What I oppose and I think most do is the sense that many Republicans give us that a deficit doesn't ever matter and that if they are allowed to they will insure there is one until the end of time. This arrogant attitude of "yeah we agreed to a $350 billion ceiling on tax cuts, but mark our words this thing will become permanent damn the deficit" doesn't exactly go over well. When Republicans learn and convince us that they will be responsible over time, that they will indeed only do these things to be temporary fixes instead of endless cycles of further giveaways, then maybe much of the country will come around and see them as being rational leaders. Until then I think a lot of people find their rhetoric and endless battle for yet another tax cut to be quite troubling.

[adios]

"When Republicans learn and convince us that they will be responsible over time, that they will indeed only do these things to be temporary fixes instead of endless cycles of further giveaways, then maybe much of the country will come around and see them as being rational leaders."

Oh you mean they might get a majority in the Senate and House as well as win the White House someday? I've been reading that Bush is getting a lot of advice to push hard for a bill to add outlays for prescription drugs for medicare. The reason is to pander to the over 65 constituency which will make him a lock for 2004. Of course it will add megabucks to medicare outlays. If the strategy is right, then austerity probably isn't a great message or vote getter. To be fair I'm not reading or hearing about many concrete Democratic proposals to recitify what is arguably out of control spending on Medicare and Medicaid. Scream about dead beats on Welfare and get tough on em but don't mess with the sacred cows. IMO rightly or wrongly the Democrats have the label of being tax and spend while the Republicans have the label of being fiscally responsible advocating a strong defense.

[Aragorn]

>>What programs do you want to cut and by how much?

For a start I wouldn't have gone into a war which will cost us at least $100 billion this year. Also, I wouldn't have done the large tax cuts.

I could list plenty of programs to cut, but it won't happen.

[Aragorn]

They are not the poor people, although there are people who abuse the system. It is the elderly. Our entire system of taxation and benefits is a massive transfer of money from the young and working to the old and retired.

The other massive transfer of wealth is to the Middle East. We send massive amounts of money over there for a product we burn. Then we send more money over there and burn some more.

Here's my politically impossible solution. We put large additional taxes on gasoline and we refund every penny of it based on average driving in a region. If you drive an energy efficient car, you come out ahead. If you drive a gas guzzler, you pay through the nose for the priviledge. If you drive an average car, you about break even.

I know it will never work that way. The public would scream. Congress couldn't keep their hands off the revenue. But it would be a great way to provide incentives for enery efficiency and helping our trade balance.

[Ashe]

Hey! I like my Jeep.

I agree that the tax cuts were a little much, but in theory, the war will pay for itself in the future, from Iraqi oil.

Anyway, back to the tax cuts. They don't really mean too much. Living in a highly taxed area, New Jersey, I see my state and local taxes already rising to completely eliminate any benefit I will receive from the federal cut. I hear most state governments are doing this.

Goodbye tax cut. [img]/forums/images/icons/frown.gif[/img]

[Wildbill]

Highly taxed? Buddy just go across one of the rivers into New York or Pennsylvania and see what highly taxed really means! I am not about to say Jersey is a low tax state, but on most surveys it comes up in the middle or better. Want a real joke, go work in Philly or NYC and pay an exorbitant local income tax on top of a state income tax on top of a federal income tax and you will quickly run back to Jersey and say good riddance to that. Living in Nevada I recognize we do have it good as far as taxes go, but I am well aware of what taxes are in most places and actually you don't have it so bad, especially on things such as gas and other excise taxes.

[Wildbill]

Tom they used to be the fiscally responsible party but it only takes a few bad years and look now, I bet they aren't seen that way but too many people. Fiscally sane? They are gaining a reputation for being tax cutters for the rich. I don't say it that way, but a lot of the public sure does. In any event these types of titles just don't go too far really, people vote for candidates more so than parties and with so many liberal Republicans and conservative Democrats these titles don't do much good.

Bush definitely tries to do too much to get elected, he has the special interest constituency of the month club, the seniors turn has come up. This medicare "mess" just drives me crazy. What mess is there? I say it again people want the best coverage and care and the lowest price (none) and act like the only thing keeping them from getting it is an unhelpful Congress. If only life were so easy. Sometimes this democracy we have makes me cringe, its not about merit or good, its about promises and then lies. You know what would be a great idea, but probably never happen. Have a "mid-term approval". The representative has to be approved midway through their term, if they are voted out they can't run again for a couple cycles. If they are voted back in we don't waste time and lies on a campaign. Then it would be simple, the candidate makes a list of things to accomplish and if the people think s/he isn't getting it done s/he is tossed and we move onto someone that lives up to their word. Fair enough?

[Aragorn]

>>In theory, the war will pay for itself in the future, from Iraqi oil.

How exactly is that going to work? The proceeds from any oil sales are supposed to go to rebuilding Iraq.

Or are you talking about all the sweetheart contracts going to Halliburton?

In reality, I could think of only one rational reason to war with Iraq. To bring the Iraqit oil back on the market and keep world oil prices from getting too high. It may be that the right thing was to trade blood for oil. But all this stuff about making the world safer and doing something about terrorism is a bunch of nonesense.

And the government will find Iraq a money pit, even if some American companies do VERY well over there.