OT: No worries folks, federal debt is now under control

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Submitted by harvey on January 24, 2011 - 3:42pm

Interview with House majority leader Eric Cantor:

http://www.msnbc.msn.com/id/41195135/ns/...

REP. CANTOR: No, no, that's not true. First of all, David, we're going to have a vote on the floor on Tuesday of this week directing our appropriations committees to go about deliberating on where those cuts are. Now, we know that there are hundreds of programs that are going to need to be cut. When you're talking about cutting $100 billion, you're going to have hundreds of programs in the thousands pages of spending plan that the federal government has. This week we will vote on an issue having to do with the Presidential Election Fund. We're going, we're going to vote to cut that. That's a $500 and some million expenditure. We're going to see hundreds of programs experience analysis and cuts just like that.

The Republican goal is to cut $100 billion in spending, back to '08 levels (because there was no deficit on '08, right?)

Here's a summary of the plan to reach the goal

1) Cut the Presidential Election fund.
2) Figure out the other 95% later.

So we can all breathe a sigh of relief. Problem solved.

Submitted by desmond on January 24, 2011 - 3:49pm.

I watched the interview and Cantor was really weak, but I think the Republicans know what they want to cut and and have a plan on when to announce it. They over spent the last time they were in control and will get voted out if they don't stop spending this time, or at least I hope so.

Submitted by harvey on January 24, 2011 - 4:13pm.

They don't have any plan - they can't have a plan.

Any plan that is mathematically possible requires big cuts to some combination of defense, social security, and medicare.

And they won't touch any of those.

They're just hoping they can make enough noise before 2012 so that they can win the White House.

They will continue to try and distract the fiscally ignorant public by talking about cuts to NPR, NEA, "earmarks," and other mathematically insignificant programs.

Even if they managed to cut 100% of their favorite scapegoats, such as the Departments of Education, Energy, Labor, etc. the federal government would still run a deficit.

Submitted by faterikcartman on January 24, 2011 - 4:34pm.

I think those idiot Republicans are almost as keen on violating the Constitution as the Democrats. The Republican argument often strikes me as "we'll sure we're going to support programs not authorized by Constitution and spend money like crazy, but we're going to spend it more smartly and on better programs than those darn Democrats."

It's almost as if they want to lose in the next election. If Obama winning showed us anything is that a lot of people won't bother to vote if the choice is between a Democrat and a Democrat-lite. And why bother to vote for the lite-beer version when you can get the real thing?

I really feel like there is no classically liberal -- or so-called conservative -- party. We are trending towards a hard-line communist/socialist Democrat party and a Euro-style socialist Republican party. I couldn't stand George Bush because he was rather far to the left of Bill Clinton. That is, if you look beyond the rhetoric to the policies.

I wish members of the Republican establishment would simply ask themselves if they are willing to dedicate their service to restoring a small government constitutional republic. And if they are not, they should promptly join the Democrat party and make way for an originalist, or at least Reagan conservative, movement to take over the Republican party.

I'm sick and tired of Republicans talking a good game when running for office, yet always going along with the creeping incrementalism that keeps the lefty agenda always moving forward.

Doesn't anyone ever notice that, as a loose example to highlight my point, that it is always the left wanting to double the size of the Department of Education, and the "compromise" everyone in the media cajoles the right into accepting is to only increase it by 50%. We never hear about a movement to eliminate the Department of Education by Republicans who swore to uphold the Constitution and the media pressuring the left to compromise by only eliminating half of it.

That is they dynamic that has been at work for years and, I believe, is a prime motivator behind the tea party phenomena even though it has not yet been clearly articulated.

Submitted by Rich Toscano on January 24, 2011 - 4:39pm.

pri_dk wrote:

Any plan that is mathematically possible requires big cuts to some combination of defense, social security, and medicare.

And they won't touch any of those.

Nailed it.

Submitted by surveyor on January 24, 2011 - 4:55pm.

step by step

It's a start. Rome wasn't built in a day.

Submitted by GH on January 24, 2011 - 4:57pm.

If we have learned nothing from the last 5 years, Consumer debt becomes national debt when the consumer defaults. Banks lend, consumers borrow and then default. Debt is then nationalized to prevent the banks from going under.

I put it out there that while the national debt is quite large, there are much bigger problems of job loss and poor quality consumer, business and municipal debt which need to be addressed to prevent these debts from quadrupling the size of the national debt and killing our economy.

Submitted by no_such_reality on January 24, 2011 - 5:17pm.

Rich Toscano wrote:
pri_dk wrote:

Any plan that is mathematically possible requires big cuts to some combination of defense, social security, and medicare.

And they won't touch any of those.

Nailed it.

2011 Budget:

Revenues (ie Taxes): $2.57Trillion [aka $2,570,000,000,000]
Expenditures: $3.83Trillion [aka $3,830,000,000,000]
Deficit: $1.267 Trillion [aka $1,267,000,000,000]

So, basically, the deficit is 1/3rd. Cut's need to be 1/3rd of every single expenditure. Or taxes need to be raised.

Remove the sacred cows Social Security and Medicaid and the unavoidable (debt interest), and everything else needs to be cut 50%.

Ending the war is a start, but a pittance. It's only a little over $100B, but that said, Defense has been on a tear all of the 2000s running 9% annual increase. Snip, neuter, next...

Submitted by desmond on January 24, 2011 - 5:17pm.

Rich Toscano wrote:
pri_dk wrote:

Any plan that is mathematically possible requires big cuts to some combination of defense, social security, and medicare.

And they won't touch any of those.

Nailed it.

Maybe you should have watched the interview, when questioned about cuts in S.S. Cantor did say that anyone 54 and younger there will be changes in benefits. I would give them at least a month to announce cuts before any "nailing" is done.

Submitted by harvey on January 24, 2011 - 5:19pm.

Romans, eh?

What ever happened to those guys, anyway?

Submitted by harvey on January 24, 2011 - 5:28pm.

desmond wrote:
I would give them at least a month to announce cuts

They've been raising the alarm about the debt since around January 2009 (for some reason they didn't care about it before then...)

More than two years to come up with a plan, and they have nothing.

Reminds me of college student who has all semester to complete a project, and then asks the professor for an extension two days before it's due.

Submitted by Arraya on January 24, 2011 - 5:41pm.

Debt reduction? The geniuses at Davos said we need 10 trillion more per year just to stay even. With a growing lists of countries on the brink of default, you can only laugh.

http://www.telegraph.co.uk/finance/finan...

Submitted by Eugene on January 24, 2011 - 5:41pm.

pri_dk wrote:

Any plan that is mathematically possible requires big cuts to some combination of defense, social security, and medicare.

You have to remove social security from the list, it still has positive cash flow, I think. And add back medicaid. When 'they' say that 'they' won't touch medicare, they are probably only referring to the part that pays for 70 year olds.

Submitted by SK in CV on January 24, 2011 - 5:50pm.

pri_dk wrote:

Any plan that is mathematically possible requires big cuts to some combination of defense, social security, and medicare.

That's kind of a misnomer. In 2010, SS by itself will have it's first deficit in almost 30 years. Estimated at 41 billion, it is almost entirely do to the recession and high unemployment. According to the Trustees Report, SS is expected to run a surplus from 2012 through 2014. Social Security is not causing the deficit. It has never contributed significantly to the deficit.

It is the other spending, primarily defense, that has to be cut. The two wars we're fighting have already consumed almost 10% of the national debt, over $1 trillion. Current defense budget is close to $700 billion. That's where the cuts will have to come from if the budget is ever to be balanced.

Submitted by harvey on January 24, 2011 - 6:04pm.

Quote:
Social Security is not causing the deficit. It has never contributed significantly to the deficit.

Thanks SK (and Eugene), I actually understand that SS and Medicare are different, as they are both sources of revenue and expenses. I was trying to keep it simple.

You correctly point out that it's a little more complicated than what I presented. This more correct description of the problem actually means that the only possible solution involves massive cuts in defense, which is the last thing the Republicans will do.

If we only focus on "Non-Security Discretionary Spending" we have to eliminate everything the federal government does, outside the military. And that still would probably not be enough.

No more worries about security checkpoints on the freeways. There won't be any freeways.

Submitted by Eugene on January 24, 2011 - 6:12pm.

pri_dk wrote:

You correctly point out that it's a little more complicated than what I presented. This more correct description of the problem actually means that the only possible solution involves massive cuts in defense, which is the last thing the Republicans will do.

Once again: Medicaid.

Republicans hate Medicaid with a passion, and its part in the federal budget is almost as big as the entire non-security discretionary spending.

It will be cut.

Submitted by bearishgurl on January 24, 2011 - 6:32pm.

SK in CV wrote:
pri_dk wrote:

Any plan that is mathematically possible requires big cuts to some combination of defense, social security, and medicare.

That's kind of a misnomer. In 2010, SS by itself will have it's first deficit in almost 30 years. Estimated at 41 billion, it is almost entirely do to the recession and high unemployment. According to the Trustees Report, SS is expected to run a surplus from 2012 through 2014. Social Security is not causing the deficit. It has never contributed significantly to the deficit...

Cuts need to be made to the SSD an SSI programs. I believe these programs are in whole or part funded from FICA taxes which also funds the OASDI program (all are Social Security Admin programs).

I know a couple of handfuls of able-bodied American adults of working age that have collected $1800-$3000 mo SSD for many years. My OASDI benefit (if its still there when I'm old enough to claim it, lol) won't be anywhere near that. If mine and my employers' original contribution on my behalf will not even be available for me, I think it is only fair to pay me the lump sum now.

And I don't think recent immigrants should be eligible for SSI benefits. They didn't feed anything into the system, entered the US at an advanced age and their sponsors swore to the INS on affidavits to support them for life as a condition of their legal residence in this country.

IMO, Social Security reform needs to be undertaken ASAP. It's a ponzi scheme in which benefits will likely not be available in the future except to maybe the first five years of baby boomers . . . for a limited time.

Submitted by faterikcartman on January 24, 2011 - 6:32pm.

It's pretty clear the Constitution is out the window when we're discussing cutting things that are in the Constitution in favour of things which are not. And nary a concern that there is no longer a valid and observed compact setting forth the terms by which the people agree to be governed -- or what that means.

Submitted by SK in CV on January 24, 2011 - 6:58pm.

bearishgurl wrote:
Cuts need to be made to the SSD an SSI programs. I believe these programs are in whole or part funded from FICA taxes which also funds the OASDI program (all are Social Security Admin programs).

I know a couple of handfuls of able-bodied American adults of working age that have collected $1800-$3000 mo SSD for many years. My OASDI benefit (if its still there when I'm old enough to claim it, lol) won't be anywhere near that. If mine and my employers' original contribution on my behalf will not even be available for me, I think it is only fair to pay me the lump sum now.

And I don't think recent immigrants should be eligible for SSI benefits. They didn't feed anything into the system, entered the US at an advanced age and their sponsors swore to the INS on affidavits to support them for life as a condition of their legal residence in this country.

IMO, Social Security reform needs to be undertaken ASAP. It's a ponzi scheme in which benefits will likely not be available in the future except to maybe the first five years of baby boomers . . . for a limited time.

SSI is entirely funded through the general fund. SSD through the SS fund.

And I agree with you entirely that SSD needs to be tightened up. It is way too easy to qualify.

But I reject the whole ponzi scheme. It is a defined benefit plan, that is projected to be fully funded, without any changes, until 2039. THe just ended recession and continued unemployement has knocked about 4 years off that estimate. (It was 2043 until a couple years ago.) That will take the oldest baby boomers thru about age 95, the youngest to about 75. A 1% increase in FICA taxes would extend it indefinitely, as would uncapping the FICA taxes.

Submitted by SK in CV on January 24, 2011 - 7:02pm.

faterikcartman wrote:
It's pretty clear the Constitution is out the window when we're discussing cutting things that are in the Constitution in favour of things which are not. And nary a concern that there is no longer a valid and observed compact setting forth the terms by which the people agree to be governed -- or what that means.

Precisely which things do you think should be cut because they are not in the Constitution and which should not be cut because they are in the constitution? (And I'll give you a head start. The constitution does not specify any spending levels. For anything.)

Submitted by no_such_reality on January 24, 2011 - 7:25pm.

SK in CV wrote:

It is the other spending, primarily defense, that has to be cut. The two wars we're fighting have already consumed almost 10% of the national debt, over $1 trillion. Current defense budget is close to $700 billion. That's where the cuts will have to come from if the budget is ever to be balanced.

Just to nitpick in case you're a product of LAUSD, you could cut 100% of the defense budget and you still have another 1/2 trillion to go to balance the budget.

Balancing the budget is nothing to do with actually getting rid of the debt.

Submitted by SK in CV on January 24, 2011 - 7:42pm.

no_such_reality wrote:
SK in CV wrote:

It is the other spending, primarily defense, that has to be cut. The two wars we're fighting have already consumed almost 10% of the national debt, over $1 trillion. Current defense budget is close to $700 billion. That's where the cuts will have to come from if the budget is ever to be balanced.

Just to nitpick in case you're a product of LAUSD, you could cut 100% of the defense budget and you still have another 1/2 trillion to go to balance the budget.

Balancing the budget is nothing to do with actually getting rid of the debt.

Umm...yes, it has everything to do with getting rid of the debt. The only way to get rid of the debt is to have a budget surplus. You can't have a surplus until the budget deficit is removed.

And yes, you're right there's still another 1/2 a trillion to go if defense spending goes to zero. (A suggestion that no one has made.) Put America back to work and more than 80% of that half a trillion goes away. The recession, due to decreased revenues, has added around $400 billion to the deficit each of the last 2 years.

Submitted by Eugene on January 24, 2011 - 7:59pm.

SK in CV wrote:
The recession, due to decreased revenues, has added around $400 billion to the deficit each of the last 2 years.

It also added a comparable amount to the spending side, because of higher safety net spending.

Submitted by no_such_reality on January 24, 2011 - 8:03pm.

Sorry, you're right, balancing the budget and eventually generating a surplus is the path to reducing the debt.

Reducing the deficit has nothing to do with reducing the debt. It just slows the rate at which we pile up.

It's why I find the Republican plan to reduce $100 Billion to be hypocrisy, it's lip service and does nothing.

Submitted by SD Realtor on January 24, 2011 - 8:11pm.

I am not thrilled with the front the republicans are putting up and I have no faith in them.... I agree that the sacred cows will have to be slaughtered to get things under control.

SK I agree with you about putting america to work but I fail to see who wave the magic wand to make that happen. Put america to work doing what? Adding federal jobs? I am perplexed to see how the private sector will do that but I hope it does happen.

Right now I would be happy to see some simple progress on low hanging fruit.

Do we have to foot the legal bills for Fannie and Freddie executives who are under investigation? (175M tab)

Other tidbits found on the internet...

112M paid out by the irs in undeserved tax refunds to prisoners who filed fraudulent returns.

NASC paid a Stanford prof 250k to study how Americans use the internet to find love...Really? Will someone pay me 250k to say porn and match.com?

The VA paid out 175M each year to maintain buildings it does not use.

Vegas received 5.2M in federal grant to build the Neon Boneyard Par and Museum including 1.8M in 2010.

Anyways there are a ton of sites that have these lists. Whether they are true or not, I am not sure but even if half of them are true it is still a hell of alot of money.

I think regardless of whether you are liberal or conservative, it seems like there is some trimming that can be done.

Submitted by faterikcartman on January 24, 2011 - 8:50pm.

SK in CV wrote:
faterikcartman wrote:
It's pretty clear the Constitution is out the window when we're discussing cutting things that are in the Constitution in favour of things which are not. And nary a concern that there is no longer a valid and observed compact setting forth the terms by which the people agree to be governed -- or what that means.

Precisely which things do you think should be cut because they are not in the Constitution and which should not be cut because they are in the constitution? (And I'll give you a head start. The constitution does not specify any spending levels. For anything.)

Is this what happens when you stop teaching what the Constitution says and instead teach what judges, politicians, and media personalities say it says? And I never mentioned anything about specific spending levels. Perhaps you were trying some sort of Jedi mind trick right out of Star Wars ("these aren't the droids you're looking for")?

Now I'll give YOU a head start: taxing for and spending on the defence of the United States is actually in the Constitution. Anything related to the Department of Education, for example, is not. There are others. Read the document yourself and discover the richness of your national heritage.

We've now reached a point where the left's position -- as made clear through court decisions and acts of government -- is that the General Welfare and Commerce Clauses are so broad as to allow virtually unlimited government activity. If that were true, however, the rest of the Constitution would have been pointless.

As far as the economic issues, politicians would do well to read what I wrote in the thread about gold. So-called "experts" have gotten so wrapped up in economic models and theory that they've lost sight of the basics of how and why it all works. People provide goods and services that other people want. People trade their excess goods and services for others which they desire. Currency makes these transactions more convenient and reliable. Generally, not only does government provide the goods and services people want more efficiently, it produces goods and services that most people don't want, for a price that is not market driven and often too high, and forces wide swaths of the population -- at the point of a gun -- to give up large percentages of their income to pay for things they don't want, and often for other people. Free people to spend their money on things they want and the economy will thrive for those who produce goods and services that others desire.

I've studied economic theory in upper division econ courses at the University of California (at San Diego -- professor Bear anyone?) that seemingly involved little more than crunching differential equations, but the misleadingly simplistic explanation above is what most are missing today.

Submitted by paramount on January 24, 2011 - 8:34pm.

Come on guys, seriously who really cares. Money is printed at will, the world still craves dollars.

Spend, spend, spend...it doesn't matter anyway.

Submitted by SK in CV on January 24, 2011 - 8:52pm.

SD Realtor wrote:
I am not thrilled with the front the republicans are putting up and I have no faith in them.... I agree that the sacred cows will have to be slaughtered to get things under control.

SK I agree with you about putting america to work but I fail to see who wave the magic wand to make that happen. Put america to work doing what? Adding federal jobs? I am perplexed to see how the private sector will do that but I hope it does happen.

Right now I would be happy to see some simple progress on low hanging fruit.

Do we have to foot the legal bills for Fannie and Freddie executives who are under investigation? (175M tab)

Other tidbits found on the internet...

112M paid out by the irs in undeserved tax refunds to prisoners who filed fraudulent returns.

NASC paid a Stanford prof 250k to study how Americans use the internet to find love...Really? Will someone pay me 250k to say porn and match.com?

The VA paid out 175M each year to maintain buildings it does not use.

Vegas received 5.2M in federal grant to build the Neon Boneyard Par and Museum including 1.8M in 2010.

Anyways there are a ton of sites that have these lists. Whether they are true or not, I am not sure but even if half of them are true it is still a hell of alot of money.

I think regardless of whether you are liberal or conservative, it seems like there is some trimming that can be done.

Just to clarify, my comment about putting America to work was not a policy recommendation. That ship has sailed. (The stimulus was too small to have the desired effect, and another one won't happen, so it's a moot point.) It was more general, if unemployement falls to pre-recession numbers, the deficit will go down.

The private sector will do it, but it will take time. The next 12 months new hiring will add 3 million new jobs, and if things progress as I suspect they will, another 5 million the following year. (keep in mind that somewhere around 1 million new jobs barely covers the net of new workers entering the workforce and older workers retiring.) I don't know what we're going to do with the roughly 5 million workers who used to build homes. It's unlikely more than 1/2 that many will be needed any time in the next decade.

As to the low hanging fruit, I agree entirely. I suspect they're only a tiny dent, except within the military budget. But they should be addressed nonetheless.

Like you, I have no way of knowing if those you listed are for real. My neighbor, a cell biologist with a lab at scripps, once had one of his projects at his previous lab identified as another rediculous government contract. The claim was something like millions of dollars being spent comparing chunky and creamy peanut butter. Apparently it did have something to do with some compound found in peanuts, but nothing to do with peanut butter. I have little doubt there is government waste. But I'd hesitate to argue about any particular program just because i read about it on the internets.

Submitted by SK in CV on January 24, 2011 - 8:57pm.

faterikcartman wrote:
SK in CV wrote:
faterikcartman wrote:
It's pretty clear the Constitution is out the window when we're discussing cutting things that are in the Constitution in favour of things which are not. And nary a concern that there is no longer a valid and observed compact setting forth the terms by which the people agree to be governed -- or what that means.

Precisely which things do you think should be cut because they are not in the Constitution and which should not be cut because they are in the constitution? (And I'll give you a head start. The constitution does not specify any spending levels. For anything.)

Is this what happens when you stop teaching what the Constitution says and instead teach what judges, politicians, and media personalities say it says? And I never mentioned anything about specific spending levels. Perhaps you were trying some sort of Jedi mind trick right out of Star Wars ("these aren't the droids you're looking for")?

Now I'll give YOU a head start: taxing for and spending on the defence of the United States is actually in the Constitution. Anything related to the Department of Education, for example, is not. There are others. Read the document yourself and discover the richness of your national heritage.

We've now reached a point where the left's position -- as made clear through court decisions and acts of government -- is that the General Welfare and Commerce Clauses are so broad as to allow virtually unlimited government activity. If that were true, however, the rest of the Constitution would have been pointless.

As far as the economic issues, politicians would do well to read what I wrote in the thread about gold. So-called "experts" have gotten so wrapped up in economic models and theory that they've lost sight of the basics of how and why it all works. People provide goods and services that other people want. People trade their excess goods and services for others which they desire. Currency makes these transactions more convenient and reliable. Generally, not only does government provide the goods and services people want more efficiently, it produces goods and services that most people don't want, for a price that is not market driven and often too high, and forces wide swaths of the population -- at the point of a gun -- to give up large percentages of their income to pay for things they don't want, and often for other people. Free people to spend their money on things they want and the economy will thrive for those who produce goods and services that others desire.

I've studied economic theory in upper division econ courses at the University of California (at San Diego -- professor Bear anyone?) that seemingly involved little more than crunching differential equations, but the misleadingly simplistic explanation above is what most are missing today.

Thanks for that. I don't really see any argument there supporting your your orignal comment, unless you're claiming that spending on education is prohibited under the constitution and that 3/4 of a trillion dollars of defense spending is mandatory. Good luck with that one.

Submitted by Eugene on January 24, 2011 - 9:21pm.

Quote:
I've studied economic theory in upper division econ courses at the University of California (at San Diego -- professor Bear anyone?) that seemingly involved little more than crunching differential equations, but the misleadingly simplistic explanation above is what most are missing today.

Did they teach you about public goods and market failures in those courses?

Quote:
Now I'll give YOU a head start: taxing for and spending on the defence of the United States is actually in the Constitution.

Strictly speaking, the Constitution does not authorize any spending on the air force (the only kinds of military allowed are army and navy). And it does not authorize spending on wars in Iraq and Afghanistan (since we never formally declared war on either). And even in the case of the army, we're not supposed to have a professional army, we're only allowed to raise and finance one for the period not exceeding two years, after which point we have to send soldiers home. (And if we're invaded, the correct strict Constitutionalist response would be to raise a militia.)

Submitted by harvey on January 25, 2011 - 8:12am.

Eugene wrote:
Once again: Medicaid.

Republicans hate Medicaid with a passion, and its part in the federal budget is almost as big as the entire non-security discretionary spending.

It will be cut.

Good points. Medicaid is big, and I personally don't have a problem with cutting it.

So if the Republicans plan includes cuts to Medicaid, why don't they just say so?

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