Fiscal conservatives, what/how would you change the budget

[brickbacon]

@Sam_Stone

Paying off the last administration’s war debt won’t bring you anywhere close to being out of the hole. The CBO says that the entire cost of the war in Iraq was about 675 billion dollars up until 2009.

But why would you stop counting in 2009? Clearly, the war costs will not cease the day he leaves office. Regardless, those estimate do not seem to jibe with what Nobel-prize winning economist Joseph Stiglitz, and others, estimate.

@Sam_Stone

George Bush increased the gross debt by about 5.1 trillion dollars (that includes the Social Security and Medicare liabilities). That’s outrageous and indefensible. However, Obama will surpass that total in his first two and a half years, based on current projections.

But let’s not be dense here. Obama would not have passed a stimulus bill had he taken the reins during a better economy. Regardless, of what you think about his fiscal profligacy, most reasonable people can admit that a large chuck of what he has spent, or proposed, was simply unavoidable. New spending under Obama as part of his personal agenda only accounts for 3 cents of every dollar in deficit spending.

The story of today’s deficits starts in January 2001, as President Bill Clinton was leaving office. The Congressional Budget Office estimated then that the government would run an average annual surplus of more than $800 billion a year from 2009 to 2012. Today, the government is expected to run a $1.2 trillion annual deficit in those years.

You can think of that roughly $2 trillion swing as coming from four broad categories: the business cycle, President George W. Bush’s policies, policies from the Bush years that are scheduled to expire but that Mr. Obama has chosen to extend, and new policies proposed by Mr. Obama.

The first category — the business cycle — accounts for 37 percent of the $2 trillion swing. It’s a reflection of the fact that both the 2001 recession and the current one reduced tax revenue, required more spending on safety-net programs and changed economists’ assumptions about how much in taxes the government would collect in future years.

About 33 percent of the swing stems from new legislation signed by Mr. Bush. That legislation, like his tax cuts and the Medicare prescription drug benefit, not only continue to cost the government but have also increased interest payments on the national debt.

Mr. Obama’s main contribution to the deficit is his extension of several Bush policies, like the Iraq war and tax cuts for households making less than $250,000. Such policies — together with the Wall Street bailout, which was signed by Mr. Bush and supported by Mr. Obama — account for 20 percent of the swing.

About 7 percent comes from the stimulus bill that Mr. Obama signed in February. And only 3 percent comes from Mr. Obama’s agenda on health care, education, energy and other areas.

Now, even if you count the bailout, and his decision to extend Bush tax cuts, a huge chuck of the deficit would remain. I agree that he could be more aggressive in addressing the problem, but I would imagine that he believes the best way to do that is via healthcare reform and a clean energy policy. Reasonable people can disagree, but an alternate reality with president McCain holding up a balanced budget is pure fantasy.

@Sam_Stone

If you want to get an idea of how big a hole the U.S. is digging, consider that the entire taxable income of everyone in the United States is about 5.5 trillion dollars. This year’s deficit is about 30% of the entire taxable income of the whole population.

Or perhaps an even scarier number: The entire income tax collected in 2006 in the U.S. was 1.02 trillion dollars. That means the U.S. is now borrowing more than it collects in income tax.

Clearly our fiscal situation is a problem, but you are misrepresenting the matter entirely. The important number is not what the US collected in individual income taxes, but rather what it collected in TOTAL taxes. In 2006, that number was 2.52 trillion dollars.

[Sam_Stone]

No, I was talking about income taxes, because I was making the point that you cant eliminate the deficit on the backs of the rich. Theyre not rich enough.

And regardless of whose fault it is, the problem won`t go away, and nor will the solution to the problem change. Entitlement spending is the problem. Yes, Obama could be more frugal with discretionary spending - by a trillion dollars or two over ten years, maybe. That still leaves you in a deep hole. Entitlement reform is really the only way out.

[brickbacon]

@Sam_Stone

No, I was talking about income taxes, because I was making the point that you cant eliminate the deficit on the backs of the rich. Theyre not rich enough.

That would be a relevant point if Obama, or anyone for that matter, suggested soaking the rich as the sole means of deficit reduction.

@Sam_Stone

And regardless of whose fault it is, the problem won`t go away, and nor will the solution to the problem change.

As I noted. But, I think your vitriol needs to be directed appropriately. Most of your post was about what Obama will spend, etc., and very little about WHY all this money is being spent.

[foolsguinea]

Sam, income is not net worth. I don’t expect to dig out of the hole in one year. We can raise taxes on the finance sector, which is ~50% of the economy, by ~30% of that sector. Maybe a tax hike of ~15% on everyone else. We can be out in 10-15 years without too much pain.

[Sam_Stone]

You think hiking taxes on everyone by 15%, and taking 30% out of the financial sector’s revenue is an example of ‘not too much pain’? Wow.

[fruitbat]

@runner pat

Since you will get back far more than you put in, you’ll be one of the leeches you so despise and prefer to cut off.

Ok, I have only read this far, but this is just so ridiculous I have to laugh. Statements like this speak to a complete lack of understanding about the system. The idea that an earner who earns over the wage base will get back far more than what they put in is absurd. I would be thrilled if I got a 2% return on my Social Security contributions. After all, not only am I putting in, so is my employer.

If I am getting back so much more then let me opt out and I will gladly invest the money myself in TIPS and buy an annuity at my retirement age.

[bump]

@Wesley_Clark

The vast majority of government spending in the US comes down to 4 areas. Health care, pensions for the elderly/disabled, education and defense. For most of those programs the tax revenue is pretty straightforward. With defense, there are lots of issues outside of just the budget of the DoD.

I think part of the reason that fiscal conservatives and conservatives in general give the defense spending a pass, is because it’s the ONLY one of the items you mention that’s specifically listed as a Federal responsibility in the Constitution.

The rest are things that the Federal government isn’t obligated to do- they just decided to fund those other things.

[Ludovic]

@Sam_Stone

You think hiking taxes on everyone by 15%, and taking 30% out of the financial sector’s revenue is an example of ‘not too much pain’? Wow.

It’s better than the alternative.

[sqweels]

On tax rates, I often wonder if the economy would be any worse if Bush had left tax rates right where they were and set out to spend the Clinton surplus wisely.

But on the subject of the OP, I think we need to pay a little more attention to the elderly elephant in the room.

Can we simply “cut” entitlement programs–or prevent their explosive growth–without addressing our fundamental values on our commitment to keeping old people alive?

Someone at some point is going to have to pay the piper, but conservatives don’t want to say who that someone is. Instead they play third-rail politics with paranoia about euthanasia and death panels.

Doesn’t add up.