How Bad Could It Get? (UPDATED)
A new CBO report explains how the United States could be headed for a debt trap that would make Greece’s fiscal meltdown look like a minor rhinovirus by comparison. The analysis uses far more negative assumptions than the rosy-picture analysis that the White House uses (and which still show unsustainable spending), but even discounting some of those, the outlook is pretty grim.
Meanwhile, America’s political parties vary in their response on a scale limited to weak to zero. Republican response has been weak, with only Rep. Paul Ryan willing to put forward a concrete plan, for which he was politically crucified by Democrats and their allies in the media. By contrast, those same Democrats and media analysts who vilified Ryan have proposed no alternative vision at all. An interesting example is Nobel Prize-winning former economist and now partisan attack dog Paul Krugman, who has railed endlessly and vitriolically against the intelligence and personal character of Republicans, conservatives, moderates and, well, pretty much everyone in the world except Paul Krugman, but has steadfastly refused to defend any specific proposals of his own, in spite of his seeming obvious claim to non-partisan expertise.
Even assuming they come to a deal, the budget talks currently being “led” by Vice-President Biden don’t even put a significant dent in the problem. As long as the Democratic Party remains willing to play politics by castigating literally anyone who even tries to talk about spending cuts and as long as the Republican Party remains locked into a purist tax-cutting religion, there is no where near enough wiggle room to even begin to conceive of the kind of large-scale spending cuts and tax changes necessary to really tackle the problem. Both parties (and their sycophants) prefer instead to simply change the subject by pointing fingers at the other side while remaining suspiciously silent about any actual alternatives of their own.
Just like in Greece, the “give me my stuff and to hell with the rest of the world” attitude is running the country towards an abyss.
UPDATE: The Washington Post‘s Greg Sargent outlines the political consequences of Democrats’ refusal to actually engage in the argument over the deficit. While they may have succeeded in reinforcing the contempt and even hatred that the progressive base feels towards “the right” by focusing on demonization instead of governing, Democrats now face the stark reality that the Republican plan is the only plan on the table. As a result, the Republicans now benefit from the issue and the Democrats don’t win anything except the anti-conservative zealots they already had.
34 Responses to “How Bad Could It Get? (UPDATED)”
Debt trap, no surprise. Note also that Social Security began running deficits earlier, and CBO already has informed us that it will continue running deficits until 2016, when it already was predicted to begin running deficits. Already, deficits are happening (made worse by the cut in FICA taxes), which means the real problems have begun. (They are just smaller now than they will be later; they will grow year after year after 2016.) The real problems include redeeming special Treasury securities (debt obligations) in the “trust funds” as well as any other deficit reduction, in order to pay benefits in full. This will require money to be found from elsewhere: it must be shifted to Social Security from elsewhere in the federal budget, or taxes must be increased (or new taxes levied), or borrowing must be increased.
People have been warned for ages about this, but have ignored it.
Medicare is in even worse present and future condition.
I suspect that the ignorant will insist on remaining so, and the politicians will avoid entitlement reform, which will be painful at least to associated special-interest parties and which if avoided is better for re-election, until the problems cannot be denied any longer. At that point reform will be forced and it will begin in earnest. (Also at that time, I believe many politicians will retire.)
Lets call for the Rapture now. Seems 25 years from now is happening in Japan.
http://en.wikipedia.org/wiki/List_of_sovereign_states_by_public_debt
The Ryan model will lead us into Japanese economic model. While the Socialist in Scandinavia seem to be churning along.
The right should have thought about all this before:
“the “give me my stuff and to hell with the rest of the world” attitude is running the country towards an abyss” – Logan
I agree with the sentiment, but would be surprised if we agree on who sports that “attitude” the worst. I’d start with Wall St., the corporate/government and go from there. Sure, the citizenry may not be any too swift, but they control little of the wealth, hardly any influence and are pretty much along for the ride – all the way to that aforementioned abyss. Even if they wise up, what can they really do?
The answers are simple and well known. Look at the reasons we are running a deficit and reverse them.
Let the Bush tax cuts expire as originally planned. They were enacted to boost the economy and reduce unemployment. According to the study in 2003 from the crack conservative research group the Heritage Foundation, using the same dynamic scoring principles still being used to justify the Ryan budget, the Bush tax cuts would guarantee the nation a balanced budget and 2.8% unemployment today. They were wrong.
End the wars. Or find away to pay for them.
Get some control over the run away greed on Wall Street. They are cycling economic bubbles every five to seven years. The current one in commodities is driving up consumer inflation in a period of reduced demand. The last of these bubbles that popped, in home mortgages, caused the worse economic setback since the Great Depression. The resulting loss in revenue is a major contributor to the current deficit.
Reduce the government spending that has grown the fastest and the most over the past years, Defense and Homeland Security. Cut the fat, eliminate redundancies. Quit running them as pork projects and corporate welfare.
The biggest single threat to the long term fiscal health of the nation is the run away costs of health care. It is time to admit that the experiment to control costs by relying on profit making and the market economy in health care that started in the 1990′s has not only not solved the problem, it has made it worse. The profits and added administrative costs of the free market system where added on to the top of the health care costs with little to none of the promised savings from competition. As an example, Medicare Advantage was promoted as a way to reduce the costs of Medicare. In fact it still to this day increasing them. Incredibility, the same idea of using the private markets to control costs is the very basis of the Ryan Medicare plan. Double down on failure.
The thought that this nation, the wealthiest in the world, has to go back on promises made to provide for our elderly so that a few corporations can make a few more dollars is repugnant.
Reduce unemployment. The Republicans gained control of the House promising to reduce unemployment. It has been six months and they still have no bill before Congress to increase jobs. This after blocking nearly every other plan and idea to increase jobs.
We are living through the disasters caused by thirty years of misguided conservative governance and economic policies. It is time to reverse the causes of the deficits, not to continue to do the same things over and over again that actually caused them.
See, it is not so hard.
Democrats have been in control of Congress since 2006 and in control of the White House since 2008. Yet it is the REPUBLICANS that bear EXCLUSIVE blame in the minds of the progressive commenters here.
Laughably obvious double standard.
Logan,
New Year. New Congress. New Senate Rules?
The Republican Party has decided that if it can’t rule, it will make it impossible for any one else to govern…
Thanks DQ.
Jason is intentionally omitting facts that he is fully aware of because if he including them his entire argument goes up in smoke.
Here’s another article on the specifics of how Republicans have abused the filibuster while claiming “the Democrats have been in control.
Laughably intentional ignorance.
DQ, during the period of Republican control of the Senate, I was informed by a whole huge raft of progressives that the filibuster was essential to democracy and that Republican proposals to abolish it were an attack on democracy. Now that you Democrats are in charge, all that is completely reversed. Bottom line, you guys have zero credibility complaining about the filibuster.
It is also completely off-topic since Democrats have not even proposed anything in the first place. There is no filibuster blocking some nice, complete Democratic proposal in the Senate.
But don’t worry. I get it. Democrats are supposed to be exempt from all criticism or accountability and literally EVERYTHING that EVER goes wrong is ALWAYS the Republicans’ fault EXCLUSIVELY. Right?
You partisan purist types are SO predictable.
“Democrats have been in control of Congress since 2006 and in control of the White House since 2008. Yet it is the REPUBLICANS that bear EXCLUSIVE blame in the minds of the progressive commenters here.”
Logan, today’s democrats are (with rare exceptions) NOT progressives. They are in essence moderate republicans. Even so they are reflexively obstructed by actual republicans who (with rare exceptions) continue to believe their own failed mantras. There is no mystery here – and precious little accountability.
LOL. No matter how far left they go, its never far enough for the purists.
That goes for the intolerant far righties too, but they are not really around here in anywhere near the quantity as the intolerant far lefties.
The calls for accountability for Republicans ring hollow since all of you progressives respond to EVERY post critical of Democrats by simply changing the subject back to Republicans.
A veritable fountain of mirth you are my friend.
Merkin, excellent post. Excellent points.
If by “excellent points” you meant a blind regurgitation of overused partisan myths and non-sequiturs, that’s right.
And this folks is how
JasonLogan gets twenty plus replies… And when the fire gets too hot he changes screen names and deletes all past threads. Too funny!When did the Democrats propose a plan to seriously address our long-term fiscal problems that was obstructed by Republicans?
What I see here is that Logan made some good points, explaining how both Democrats and Republicans are in denial about what is really required to fix our fiscal situation, which is as close to indisputable as you can get in an opinion piece, and then the conservation quickly turned to a partisan blame game. As Logan wrote:
“Both parties (and their sycophants) prefer instead to simply change the subject by pointing fingers at the other side while remaining suspiciously silent about any actual alternatives of their own.”
So, what substantive point that Logan makes in this post is in dispute or warrants such partisan defensiveness? At least merkin offers something of a proposal, although projected Medicare costs dwarf all of the other factors and the assertion that just getting rid of the profit factor (apparently a new experiment introduced in the 90s?) is going to fix that is… well, I can’t think of a word that wouldn’t just inflame this thread even more.
I just caught the tail end of a ways and means committee hearing on Medicare costs. Bottom line: Medicare is on an unsustainable path, as we all hopefully know. ACA isn’t going to fix it. Letting the Bush tax cuts expire, which I think we should do, isn’t going to fix it. It’s time we got serious about how to address this problem that both parties have created.
It never fails to amaze me the lengths that people with young children go to to defend a political ideology that puts their children’s future in jeopardy.
SteveK,
Thanks for the parenting advice and for your excellent contribution to the discussion. At this point I can’t say anything else that doesn’t violate TMV’s commenting policy.
To all good republicans, conservatives & libertarians here, let us assume that the Republicans get 61 seats in the Senate, the majority in the House & the Presidency in 2012, what policies should/would they pursue for the next four years?
Please layout goals & strategy:
For example:
A) Balance Federal Budget by
1) Raising taxes
2) Voucherising medicare
3) Turning medicaid into a block grant to the States
4) etc…
Please fell free to give as many details as possible, I could use a good laugh…
Good luck getting a coherent reply on that Don. While we’re holding our collective breath here’s a little mirror for our “conservative” friends – although I doubt they will be inclined to take a look:
http://www.time.com/time/nation/article/0,8599,2077943,00.html
Btw, SteveK’s comment about children goes to the right question: What kind of world are we leaving for our children and their children? If we are afraid to ask and answer this question honestly and forthrightly then we are already lost.
It is a good question, DQ, as is the same question directed at Democrats. Although, in the interest of not contributing to the partisan bickering, I won’t dwell on the fact the question directed at Democrats is not as much of a hypothetical.
That’s exactly Logan’s point. Both parties are willfully ignorant of reality here. Who here is defending Republicans except against claims that they are exclusively to blame?
JSpencer, the question of what kind of world we are leaving our kids is a good one. I don’t object to it. What I object to is responding to a comment urging that we put aside partisan bickering and talk about solutions by claiming that I am failing at my responsibility to look out for my children by doing so.
Adelines Dad, I have no doubt you are a fine, loving, and responsible parent. As an aging boomer I have to be concerned about what kind of world is being passed on to the next generations. The prognosis is not good. I see the democrats being negligent and the republicans being destructive. I see little or no progress in much of the rest of the world – with a few exceptions. If we don’t get our collective act together then we will have failed on a monumental scale. We HAVE to be thinking longterm. How can we even start to do that when something as critical as science has actually become politicized??? Nobody is going to bail us out. It’s up to us.
Allow me to quote extensively from the CBO report. What is required to hold our debt-to-GDP ratio relatively stable? (numbers added for my convenience)
Which political party has advocated doing ALL of these things? Democrats have advocated for a small part of #1 (expiration for the rich only), and they have professed support for #3 although it remains to be seen whether they have the stomach for it once the provisions get closer to taking effect (if history is a judge, they don’t). Republicans have only professed support for #4 to some degree.
But, even if both parties agree to implement all of that, we’re still not even close to being on sound footing:
Not to mention what happens after 2035.
The only rational conclusion, of course, is that the assumption of the CBO report–that mandatory health spending remains on its current trajectory–is unsustainable and must be dealt with. Back to Logan’s post, the only proposal that does that is Ryan’s proposal. If you don’t like that option, they were need to move to another option, but something needs to be done besides and in addition to the typical partisan talking points about taxing the rich on one side or cutting waste on the other.
JS,
I agree whole-heartedly with your last comment.
Edited: Sorry, I confused you with SteveK.
So Jason, are you saying that the recent Republican obstructionism is a figment of our imagination?
EDIT TO ADD: The final number of Cloture votes at the end of the 110th Congress was 112
How to balance the budget:
1. Let the 2001 tax cuts expire.
2. Remove the earnings cap on Social Security taxes.
3. Phase out the mortgage tax deduction.
4. Cut military spending by 30%, focused disproportionately on the Air Force and the Navy. Especially cut next-generation fighter programs. Eliminate at least 2 carrier battle groups.
5. Increase the Social Security retirement age and the eligibility age for Medicare to 72, beginning in 2020.
6. Eliminate all Medicare benefits for discretionary procedures and medications like Viagra.
This would at least be a start.
By the way, I have proposed this several times, DQ. You guys always ignore it. I guess that means if doesn’t fit into your Manichean partisan narratives.
Oh, I forgot to add an important component:
7. Implement means-testing for all Social Security and Medicare benefits so that benefits are phased out for those with high income and/or assets. This means converting Social Security and Medicare from entitlement programs to much more sustainable programs targeted at the needy.
Logan,
There is no way in hell that the Republicans will ever vote for 1 (Hell, they just blackmailed Obama to extend the Bush tax a few months ago), 2, 3 or 4…
Republicans may vote for 6, but it’s not a gimme, the AMA & Pharma will be against it…
5 & 7 are the only two things I can see Republicans supporting in that the people being screwed are the middle class, the working class and the poor…
DQ- I rather thought that was Logan’s point- that there’s not the political will to do what needs to be done. Keeping in mind that while I agree with most of your assessment (though I can’t understand how item #7 on Logan’s list- means testing for SS and Medicare- could be construed as hurting the poor- it’s completely the opposite in fact), there’s also that the Dems wouldn’t support most of the list either (only #2 and #4 – and half of #1-would find support on the Dem side I think.)
DQ, your problem is that you base your entire analysis of this and every other issue on the absolute presumption that all Republicans are absolutely bad people with absolutely bad motives and, as a result, that Democrats deserve a pass in order to be able to fight them effectively.
When you are thus proceeding from a initial position grounded in emotional hatred and prejudice, it is impossible to have any kind of actual discussion about POLICY with you. Analysis drowns in the flood of your emotions.
Means Testing for Social Security & medicare is the first step in the long process of killing both programs…
Once the programs are not universal, you can them call them welfare and claim that only the undeserving get it…
Because you don’t have the exact opposite problem…
DQ- how is it then that Medicaid, which has always been a means tested only program, has grown through the years instead of being ‘killed’?
CStanley,
Accounting for Medicaid Spending Growth
For all practical purposes Medicaid is a universal program…
Now if someone were to move the long-term care benefits into Medicare, Medicaid would get gutted overnight…