Not necessarily true. Britain is the only ‘traditional’ European state with a particularly healthy economy at the moment, and this can as easily be credited to its relatively restrained welfare state and Atlanticist economic policies. This <a href=http://news.bbc.co.uk/2/hi/business/4365861.stm>article</a> shows that the stability pact that you refer to with the 3% claim is not anything like a watertight guarantee. European states are suffering in much the same way as the US currently, and so are doing more deficit spending. They don’t have to shoulder the costs of the war in Iraq, which is a big savings.
Many people would also argue that it’s an unfair comparison, given that thanks to NATO, America has effectively been subsidising the defence budgets of all of Western Europe.
Before one claims that Europe is particularly better off, have a look at the archives of any European news organization and search for ‘pensions’. With ageing populations and much more generous retirement benefits, everybody between Shannon and Checkpoint Charlie’s got problems.
Metacom: *There’s no way in hell our political system (including BOTH major parties) are going to tackle an issue that won’t impact us for 35 years. *
I don’t think it’s argued that the problems of current fiscal policies won’t impact us till 2040. Simply that they won’t reduce us to absolute bankruptcy and disastrous economic implosion before that time.
After all, the projections suggest that “[t]he only thing the United States is able to do a little after 2040 is pay interest on massive and growing federal debt”. Imagine having such a huge personal debt load that it took every cent of your income just to pay the interest to your credit card company. Nothing left over for rent or mortgage, food, transportation, clothing, SDMB membership, nada, zip. You’d be in pretty bad financial shape.
Does that mean that as long as the interest of your debt isn’t actually consuming your entire income, you’re in good financial shape? Of course not. Even much lower debt levels would have a serious negative impact on your financial situation and be difficult to handle.
Similarly, the mere fact that our national budget deficits aren’t projected actually to consume all of our national income until 2040 doesn’t mean that we don’t need to start worrying until 2039. Large and rapidly growing debts get you in serious trouble well before they eat you up entirely.
Seems like the discussion is focussing on the “raise taxes” half of the solution.
What spending cuts can we agree on?
Keeping in mind that they are all going to have to come from popular programs like Medicare, Social Security, Medicaid, defense and suchlike. How much should we cut Medicare, and how do we deal with the screaming if we do?
Right, but they didn’t exactly predict the previous boom either. Anyway, that’s beside the point because I’m all for Doing Something Now. We can’t sustain having more gazoutas than gazindas.
That’s all very nice, and I’m not gonna argue any of their specifics, but it seems overly simplified to me. They’re compiling all these numbers every year and dropping them in a column headed “Democrat President,” or the column “Republican President.” There’s no allowance for the many years when we had a Democratic majority in Congress and a Republican president. As we’re all aware, Congress is the branch of the government entrusted with the purse strings. Might be interesting to see the same spending dollars tallied up that way. It would provide a nice contrast, at least.
If you’re looking for single, specific things to eliminate entirely so that the rest may live unscathed, you’re probably right. But I don’t see a huge problem with getting acceptance of across-the-board cuts that affect pretty much everyone - we can be responsible but we do insist on fairness.
Which is nonsense. Raising taxes without cutting spending is not necessary, because it is not a solution.
If you are running an unsustainable deficit, and you raise taxes by a billion dollars, politicians will increase spending by at least a billion dollars - probably more. Thus you have all the disadvantages of increased taxation without any benefit.
Both the think tanks of the OP agree that we have to raise taxes and cut spending. Democrats seem to be saying, “Yes, let’s raise taxes”. And it often seems to be linked to a whole shit load of new programs that require increased spending.
The only way to balance the budget is to [ul][li]raise taxes and cut spending []cut taxes and freeze spending and hope to grow your way out of the deficit []freeze taxes and cut spending.[/ul]Republican strategy seems to be to cut taxes and raise spending. Democratic strategy seems to be to raise taxes and raise spending. Neither strategy has a snowball’s chance in hell of eliminating the deficit. [/li]
Face it - any steps that will be effective in eliminating the deficit are going to be extremely unpopular. And no, there isn’t any way around that.
Any party that is going to balance the budget is going to be required to say “No” to programs that nobody wants to cut.
But that does not prove that raising taxes without cutting spending is not a solution, because that would not be raising taxes without cutting spending. If you want to debate the idea, please debate it on its own merits, without simply assuming it is ipso facto a political impossibility.
That’s the best way because you won’t have to raise taxes quite so much.
The spending increases were going to happen anyway. The Democrats simply say, well, um, maybe we should actually pay for this.
Well, technically, if you raised taxes by a much greater amount than you raised spending, then you could eliminate it. The problem seems to be that there is a common denominator in both approaches, that of increased spending. And that’s really because there’s no “approach” from either side.
Agreed, that’s why they’ll never get cut. Nobody wants to raise taxes or cut spending. The reason I called for the automatic tax increase kicker is because it will force them to balance the budget, otherwise the taxes will automatically increase - making them look bad. The public doesn’t pay attention to the budget in general because nobody’s hurting, taxes get decreased, programs aren’t cut. Suddenly, people start watching the budget because of the congress critters can’t get it right, their pocket books will be hurt.
The whole thing, I think, will force Congress and the public in general to look a lot more closely at what we’re actually spending money on and whether people actually want to be paying for these programs or not.
You’re relying on obsolete stereotypes. How do you know what Democratic strategy even is? When, since the GOP takeover, have they even had a say? The Republican practice has been to refuse to allow the elected representatives of nearly half the people even to see the budget before voting on it.
Shodan:Both the think tanks of the OP agree that we have to raise taxes and cut spending. Democrats seem to be saying, “Yes, let’s raise taxes”.
Shodan, what are you basing that assertion on? The article linked in the OP doesn’t claim that this is what Democrats are saying. And the Democratic posters here don’t seem to be supporting the position that the preferred solution is tax increases without any spending cuts.
So where are you getting the idea that this is what Democrats are advocating?
That’s a good point, but then the obvious question becomes: When will it start impacting us enough that most citizens begin to feel it? Because until that happens, I have a hard time seeing it becoming a major political issue.
No, no, no! That’s “More tax cuts for the rich.” Stick to the script!
In other words, IOKIARDI.
Well, I’m no economist, but it seems to me that the current Republican-controlled Congress puts that matter to rest. After all, Bill Clinton had a Republican Congress to deal with, and he got things under control; one would imagine G. W. Bush should have an easier time keeping the books balanced, instead of giving us the mess we’ve got now.
In other words, our unsustainable fiscal policies are making our currency less attractive to international investors, which will further weaken our currency relative to others, which will make it even less attractive as an investment, and so on.
South Korea and Russia have already decided to reduce their dependence on the dollar in stabilizing their own currencies.
Does this portend an immediate financial crisis and a severe tanking of the US economy? I’m not an economist, but I doubt it. Does this portend immediate economic changes that are going to pinch people in the US? I’m still not an economist, but ISTM that it does, for example in rising interest rates.
I wouldn’t disagree with any of that too strenuously, rjung. But that analysis is still too simplistic to have much meaning. It really takes complicity between two of the three federal branches to significantly affect government revenues and spending; but the Constitution quite explicitly lays overall responsibility on doorstep of the Capitol Building.
In 1980, total U.S. government revenue was 517 billion dollars
The projected revenue for the government for 2006 is 2.2 trillion dollars.
Inflation over that period of time would make that 517 billion worth roughly 1.3 trillion today.
In 1980 the population of the U.S. was 227 million, for an inflation-adjusted revenue of about $5726 per person.
In 2005, the population of the U.S. is about 295 million people, for a per-capita revenue of about $7457 per person.
So per-capita revenue has gone up by almost 50% in the past 25 years, despite the end of the cold war and the general increase in wealth of the population (and their resulting lower need for government services)
The problem is not a lack of revenue. The problem is that spending is out of control. Trying to solve this problem by increasing revenue is like trying to stop a cocaine addict from going broke by giving him more money. All it does is give him the ability to buy more coke.
I’d make it a simple rule: Surpluses get returned (divide the amount by the number of citizens and mail everybody a check for the result), and that’s the government’s main anti-poverty program (it’s highly progressive, as a flat number of dollars is much more helpful to a poor person than a rich one).
Under that system, running up more spending produces highly visible pain to everybody, and makes the spender a selfish uncompassionate bastard who is taking bread out of the mouths of the needy.