In Debt Talks, Democrats Want Everything On the Table...Except the Entitlements They've Taken Off the Table

Last week, House Minority Whip Steny Hoyer told reporters that when it came to a debt ceiling, Democrats were open to anything. "Democrats have said that everything needs to be on the table and have put everything on the table," he said, according to The Hill. So Democrats are open to anything? Not quite.

Democratic Minority Leader, Nancy Pelosi, the only Democrat who outranks Hoyer in the House, recently made it clear that messing around with entitlements in a way that directly affected benefits wasn't an option. "We must protect Medicare and Social Security," she said. "We will not support cuts." Okay then!

And now Hoyer has, ah, clarified his position in order to line up with his boss. Yesterday, he declared that Democratic leadership in the House has "made it very clear that we have no intention of supporting [a bill] that cuts beneficiaries' benefits." Even when those benefits are unsustainable? Medicare is estimated to be insolvent by 2024, perhaps sooner. It's also the biggest long-term driver of America's debt, which would one might think would make it a big target for reform in any deal designed to make an impact on the country's mounting debt. But House Democrats, while saying everything needs to be on the table, and claiming they have in fact put everything on the table, have simultaneously gone out of their way to highlight their opposition to any substantial scaling back of the biggest single contributor to the long-term growth of the federal debt. 

House Republicans, it should be said, aren't exactly lining up to overhaul entitlements like Medicare either: The supposedly radical cut, cap, and balance plan that passed in the House yesterday specifically exempted Medicare and Social Security from its proposed spending limits.

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  • Old Mexican||

    Democratic Minority Leader, Nancy Pelosi, the only Democrat who outranks Hoyer in the House, recently made it clear that messing around with entitlements in a way that directly affected benefits wasn't an option. "We must protect Medicare and Social Security," she said. "We will not support cuts."


    "Damn the torpedoes! Full spee..."

    BOOOM!!!!!

  • Almanian||

    ELIMUNASHUNISZT RHETORICK!!!!11!!!

  • OO||

    looks like boner & pelosi are on the same page

  • Almanian||

    Then it truly is the End Times

  • Old Mexican||

    And now Hoyer has, ah, clarified his position in order to line up with his boss.


    "I confess I have cavorted with the Devil, for which I repent in front of my Lord, Jesus Christ, and His Holy Inquisition."

  • ||

    Is there any hope that everyone will recognize that these SS and Medicare recipients promised themselves a bunch of money and did not save anything to fund it? Sure, they had money withheld from their paychecks under the labels "OASDI" and "Medi Tax", but then they elected politicians who spent every dime of it on God knows what. One must be ignorant or dishonest to utter the line that these people have paid into the system and earned these benefits. In reality, all they did was enshrine into law the socialization of the practice of people caring for their parents in their old age.

  • ||

    Sure, they had money withheld from their paychecks under the labels "OASDI" and "Medi Tax", but then they elected politicians who spent every dime of it on God knows what.

    This argument would not be sufficient to convince anyone that they weren't owed their money.

    The more powerful, and equally true, argument, is that their contributions never, under any circumstances, were enough to actually pay for their promised benefits, even if all the money were actually saved.

    Yes, everyone contributed to it, but benefits equaling about 125% of the contributions (adjusted for inflation/30 yr. bond rate) were promised. If people only get back what they paid in, that would require a 20% benefit cut, and then we would be fine in the long run.

    A scheme where everyone gets out what they pay in can last forever, despite being pay-as-you-go. One where everyone gets out more than they put in cannot, it is a true Ponzi scheme.

  • robc||

    I dont think that is true. IIRC, the expected SS benefits for someone born around 1969 (to pick a birth year Im vaguely familiar with) works out to about 1.5% annual growth.

    Surely average bond rates in my lifetime (even working lifetime) have exceeded that.

    Now Medicare, that is an entirely different beast.

  • ||

    I dont think that is true. IIRC, the expected SS benefits for someone born around 1969 (to pick a birth year Im vaguely familiar with) works out to about 1.5% annual growth.

    Only the expected SS benefits for someone making the maximum amount. Because of the bend points in the formula (there's effectively a progressive marginal tax rate on one's benefits), this happens. However, for people at the lower end of lifetime earnings, they are promised move proportionately.

    The average person gets much better return than the high end.

  • ||

    Here's an old Cato paper on rates of return for Social Security.

  • robc||

    Interesting, but that seems to cover people born about 1925ish.

    I specifically said 1969ish, ie, those who will start retiring late 2030s. Yes, the RoR is good NOW, but its declining and starts getting crappy for those born in 60s and 70s.

  • robc||

    google search leads to this:

    For many Americans, particularly those born after 1960, Social Security offers a very low rate of return, making it a bad "investment."

    For example, for an average income family of four with a single breadwinner born in 1950 Social Security's rate of return is 3.28%. If the breadwinner was born in 1960 the rate of return is just 2.85% and if the breadwinner was born in 1970, the couple can expect a rate of return of only 2.71%

    Furthermore, if the families in these examples have two earners instead of one, then the rates of return are even lower - 1.88% for the first couple, 1.39% for the second and 1.20% for the third.

  • robc||

    I know for a fact I could have done better than 2.71% with that money.

  • ||

    Haven't seen your random Google search, but that must be real (inflation adjusted) returns.

    The Cato paper I linked specifically has two tables for 25 year olds in 1994, i.e., people born in 1969.

    If the rate of return was *that* crappy in Social Security, we wouldn't have having a problem. It would be in balance regardless of demographics.

  • robc||

    Appears the heritage numbers are REAL rate of return.

    Which doesnt change much. Thats still a crappy rate of return. Slightly less crappy than before, especially for two family earners, or even worse, if you are black (negative in that case).

  • ||

    Real rates of return on long term bonds generally don't exceed 3% either.

    It's true that black people tend to die younger, which really screws with your rate of return, since Social Security is mostly an annuity with survivor's benefits. Heritage's work takes that into account for the demographic, but the overall system still isn't in balance-- other people are getting the money.

    If Social Security's returns really were so far below the risk free rate of return, then it wouldn't be a growing financial problem, and Social Security, considered separately from all other budget programs, would be in actuarial balance long-term. It is not.

  • robc||

    Single Male, 50k (to pick a point in the middle), 3.95%.

    Yeah, I know I could have outinvested 3.95% too.

  • ||

    Interesting, but that seems to cover people born about 1925ish.

    I specifically said 1969ish, ie, those who will start retiring late 2030s.

    You obviously didn't look at the tables in the Cato paper entitled: "Pre-Tax Rate of Return for 25-Year Olds On Social Security Contributions" and "After-Tax Rate of Return for 25-Year Olds On Social Security Contributions."

    The paper was written in 1994, so 25-year olds at the time were born in... 1969.

  • robc||

    Number I posted come from Heritage foundation study, but Cato has some that agree with it too.

    Maybe 1994 is too old.

  • robc||

  • ||

    IIRC, the expected SS benefits for someone born around 1969 (to pick a birth year Im vaguely familiar with) works out to about 1.5% annual growth.

    No, not for the average person. And not even at the high end, unless you're talking about after-tax, after-inflation real returns. See the Cato paper I linked.

  • Achtung Coma Baby||

    But...but...BUT SOCIAL SECURITY HAS A $2 TRILLION SURPLUS!!!!!

  • Mainer||

    The script is playing out as it always has so far, and right on cue, we get the TV commercials with old folks sternly voicing their opposition to cuts in the benefits they've earned. There's one where they cite examples of government waste (like the "treadmill for shrimp") that need to be cut first. Yes, and once we cut the few hundred millions going to basic research, we'll have addressed the multi-trillion dollar SS and Medicare problem by...well, we won't have addressed it all.

  • Almanian||

    Yeah, my TV is in serious jeopardy of having its brief, sweet life cut short if I can ever reach something hefty during one of those Old-People™ commercials.

    So far I've only been able to get hold of napkins and shit like that during my spittle-flecked rages during those commercials. Watch out, TEEVEE, if I snag a paperweight or stapler one of these times...

  • sarcasmic||

    dvrs are cool

  • robc||

    I rarely watch anything "live" anymore. Even if I flip across it, I hit record and wander away for 8 minutes per 1/2 hour.

  • Sudden||

    Agreed. With the exception of sports, mainly football.

  • robc||

    I do it for most sports, especially football. Its easy to time so that you catch up to live about mid 4th quarter.

  • Ted S.||

    Sports, and TCM for me. It's blissful having no commercials during the movies on TCM, and infuriating to see how many commercials there are on Versus' coverage of the Tour de France.

  • ||

    Like how everybody is bitching about that study that tracks the sizes of gay men's penises.

    We can't significantly cut the deficit just by going after the low hanging fruit.

    ...hee hee...

  • ||

    The country is screwed. That is all.

  • ||

    Agreed. Everyone who is in a position to do anything about it is just kicking the can down the road. All they care about is getting re elected.

    The more this drags on the more I really am convinced we will get to the same point as Greece before anything is done.

  • MNG||

    Thanks Suderman! Now I can unleash my army of strawmen!

  • Almanian||

    How 'bout a little fiiiiire, scarecrow?

  • Anonymous||

    14:11 And the smoke of their effigies ascendeth up for ever and ever; and they have no karma points day nor night, who worship the bad arguments, and whoever doth not mock the trolls.

  • Au H20||

    Remember, the 13th ammendment banned slavery. Unless it is in service of old people.

  • robc||

    Fuck off, slavers!

  • GroundTruth||

    If you ever needed proof that none of these clowns are interesting in anything except grandstanding, this is it. This whole 'entitlement' mess could be cleaned up so simply with minimal practical cost to anyone; just roll back the benefit age by 2 months each year. It CAN be done, HAS been done before, and could be done again if these guys would settle down.

  • Sudden||

    Its hard enough to find a job once you're in your 50's, let alone 67 years old. I'd much rather see means-testing implemented as the first measure, and move towards a voucher system for Medicare. Ferchrissakes, we SS is a voucher system, and its more popular than Medicare. Tell old people: "Would you like if it instead of giving you a check every month, the government decided what to spend it on for you? So why do you support that in Medicare?" It gives us some semblence of hope for cost containment in that program, while simulataneously trimming the elite earners from collecting. If after all that, retirement/qualification age is still needed, go for it, but from a practical standpoint, I'd rather see the rich removed from the welfare rolls and cost containment strategies implemented in Medicare first.

  • Au H20||

    But Sean Hannity told me that Cut, Cap, and Balance is how we'll get out of debt. Are you saying Sean Hannity lied? Or is he just an idiot?

  • ||

    "Are you saying Sean Hannity lied? or is he just an idiot?"

    Yes.

  • ||

    Actually, he's more of an ape. And those other things.

  • ||

    But there's a Freedom Festival (or whatever it's called) coming up!

  • CrackertyAssCracker||

    Or is he just an idiot?

    No. He's an asshole too.

  • mb||

    Medicare is insolvent now, the trust fund is nonsense.

  • Achtung Coma Baby||

    Is means testing off the table? If so, why the fuck why?

  • kinnath||

    I'm 54 and an engineer. I expect overall benefits will be shaved, the retirement age will be increased, and means testing will be imposed. So I assume that I will get zilch from the Feds.

  • ||

    You're being overly optimistic. Your scenario would be a good thing. It would mean either they enacted means testing or some other form of fiscal sanity forced them to stop paying.

    More realistically, they'll be running the printing presses 24/7 and we'll all get our entitlements but its purchasing power will dwindle to near nothing and much misery will ensue for all.

  • kinnath||

    you assume that this is an either/or situation. The presses will be running non-stop and benefits will be cut.

  • ||

    Because that would require the Dems to admit that SS is a welfare program.

  • Brett L||

    Wouldn't that also allow them to go after the SS tax salary cap?

  • ||

    You beat me to it, John.

    But yeah, if means testing were implemented the SS account pay-in myth would finally be abolished.

  • Anonymous||

    "Means testing" is wingnut code for "skin color testing".

  • ||

    THIS IS WHAT DIPSHITS ACTUALLY BELIEVE

  • Au H20||

    You mean we won't be giving it to white people?

  • OO||

    no, means testing is code for a demographic bulge nearing retirement.

  • Almanian||

    Is that a demographic bulge in yore pants or are you just happy to be on the government teat?

  • Au H20||

    From the article:

    The first justification for this position is entirely political in nature. In short, I do not believe it is possible to sustain the public consensus necessary to defend a generous welfare state regime, if the benefits of that regime are perceived as being directed to a privileged subset of the population. Setting up benefits in this way inevitably breeds resentment among those segments of the working class who pay taxes and do not receive substantial benefits, who then become open to the argument that the poor are parasitic on their hard work. This tendency is accentuated by the fact that the beneficiaries of means-tested programs will tend to be people who are already subject to social stigma and bigotry, such as women and members of racial minorities. The paradigmatic example of this in the United States is the dismantling of “welfare as we know it” in the 1990′s. In that struggle, the barely-coded racist imagery of “welfare queens” highlighted a perception that the recipients of welfare were undeserving and opportunistic Others rather than people who could have, with a bit of bad luck, been any of us.

    And this is why means testing will never be supported by left-wingers, even though it is immoral to take from a 20 something barely scraping by on minimum wage to give to Warren Buffet. Because as an entitlement for everyone, everyone supports it. It doesn't matter what the financial sense is, or the morality is. It's purely about politics.

    It's also about welfare reform. The left wing of the Democratic Party still HATES that it was implemented, and that, even worse, it was implemented successfully.
  • Tony||

    Betcha deficits stop mattering if the GOP retakes the white house.

  • ||

    They sure didn't matter in the mid 00s. That mattered so little that the public threw the Republicans out of Congress over it.

  • Tony||

    Pretty sure the GOP's unprecedented deficit spending was just one among many, many disasters the people booted them out for.

  • ||

    But now thanks to the Democrats spending three times as much and beign so corrupt the Republicans' sins look rather quaint by comparison.

    How many guns did the Republicans smuggle to the Mexican drug gangs Tony?

  • OO||

    who knows how many guns made it into the black market fm iraq.

  • ||

    Yeah because a nice guy like Saddam would have never sold weapons to bad people. And let me put it to you again, the Obama administration sold guns to Mexican drug gangs for the purpose of creating fodder for gun control propeganda. And these guns were used in the deaths of hundreds of people including two federal agents.

    Nothing Bush or Clinton or any President since Nixon did comes even close to that. How many people died because of Watergate?

  • some guy||

    I'm going to have to ask for a citation on that statement. It's pretty bold... even by this forum's standards.

  • OO||

    that's why i wrote "who noes"

  • OO||

    id say invading the wrong country ranks up there

  • Zuo||

    Deficits stopped mattering to the dumbshit liberals when they took over the federal government. Indeed, they increased them faster and higher than ever before! Tony is projecting. It's a pretty severe case.

  • Wilfred||

    Joy farts, those are the best.

  • Old Mexican||

    Re: Tony,

    Betcha deficits stop mattering if the GOP retakes the white house.


    But we were fighting two wars - TWO!!!! Against dastardly Ayr-abs!

  • ||

    That's been the pattern. But that just further supports the libertarian view that the two parties are essentially the same: whichever party holds the White House insists that "deficits don't matter".

  • Zuo||

    Stop resisisting!

    What's the worst that could happen in the long run?

    Will it all come tumbling down like the British Empire and the Soviet Union? First people need to feel loyalty to their state over DURRR AMURICA FUCK YEAH.

  • Typical Right Winger||

    We could balance the budget if we could just get rid of welfare and foreign aid!

  • Typical Left Winger||

    We could balance the budget, provide free healthcare, housing, food, old-age support, and jobs for everybody in amerikkka if we could just make the rich scrooge mccducks pay their fair share!!!1!

  • Zuo||

    It's not like we don't already spend about $4 Trillion per year.

    *That's around $13,000 per person, including babies.

  • Sudden||

    Total individual income above $250k in U.S. ~ $1.2 trillion.

    We could literally tax every dollar 100% above $250k and still be staring at larger budget deficits than 2007 ($500 bn)

  • Almanian||

    HEY, BOTH OF YOU@

    1 Waste. Fraud. Abuse.
    2 Eliminate #1
    3 ??
    4 Profit!

  • Zuo||

    2a By going through budget line by line.

  • mr simple||

    What budget?

  • H man||

    That's not a table its an award.

  • Almanian||

    It's a MAJOR award. From Italy, I think.

  • T||

    Fra-gi-le.

  • Restoras||

    +1

  • Alan Vanneman||

    Shouldn't the headline "In debt talks, Democrats and Republicans want everything on the table ... except the entitlements they've taken off the table"?

    And, since Republicans also have taken tax increases off the table,* what is there to talk about? Cuts in defense?

    *Yeah, tax increases. Were things so bad in 1999, before the Bush tax cuts? I don't remember it that way.

  • Zuo||

    They can talk about disbanding the multitudes of overlapping and oppresive federal agencies. LOL! I know, right.

    It would win politically, but anything that curtails their own power abuse will never be considered.

  • ||

    Maybe they weren;t so bad, which begs the question why no one is proposing to return to the Clinton rates except for those making >$250k, i.e., the "rich."

  • ||

    By the way, I think the debt situation is so serious that I would support some level of tax increases as a means to fix our national balance sheet. If the democrats proposed serious structural reductions in spending, some new taxes would be justified. Of course, that's not what they are proposing. The "balanced approach" is all about new revenue that will be used to justify making no real changes to our rotten, debt-riddled situation. This is 100% proven by Pelosi's and Hoyer's quotes -- they want taxes and no benefit cuts, period. If that's the deal, the House republicans are right to reject it.

  • some guy||

    I will happily go back to 1999 tax rates if you will happily go back to 1999 Federal spending. Can we shake on it?

  • Sudden||

    If only it were that easy. The sad reality is that we can't say "1999 spending!!!!!1!!!!1!!" with a straight face because so much of the spending now is a direct consequence of SS and MC. Those two programs require serious structural reforms, and absent that, nothing else matters; we're fucked.

  • Old Mexican||

    Re: Alan Vanneman,

    *Yeah, tax increases. Were things so bad in 1999, before the Bush tax cuts? I don't remember it that way.


    You don' rememeber the dot-com crash of 1999?

    Were you born in 1998 or something??

  • Alan Vanneman||

    The dot com crash? Lots of people lost lots of paper profits, including me, but that was about it. Otherwise, the nineties were very prosperous, certainly more so than under Reagan or Bush pere et fils.

  • Old Mexican||

    Re: Alan Vanneman

    The dot com crash? Lots of people lost lots of paper profits, including me, but that was about it. Otherwise, the nineties were very prosperous, certainly more so than under Reagan or Bush pere et fils.


    And you really, honestly, seriously believe it was because of TAX INCREASES?

    Because if that's the case, how would one explain the roaring 20s when tax rates were lowered to 1/4 the 1919 levels, overall? Or the Great Depression, when rates were increased until almost 90 FUCKING percent on top earners! Why didn't THOSE increases spur growth, as you seem to be insinuating?

    The fact is that even though tax RATES were lowered during the Reagan years, the burden itself increased when loopholes and deductions were closed or eliminated, so the tax increases if the 90s did not really matter that much. The prosperity of the 90s was driven mostly by the Fed-induced bubble, not by real wealth creation.

  • Sudden||

    Let all of the Bush tax cuts expire (including those for people earning under 250k, or even under 50k) and you're still facing a trillion dollar deficit each year.

    At least be honest, if you want to budget the federal budget without cutting significant spending, you need a broad based tax increase on all people.

  • ||

    Alan, how much have you sent to the Treasury over and above the taxes owed on your 1040?

  • Alan Vanneman||

    I've paid higher taxes before and I'll pay them again if rates go up. To repeat myself, economic growth was higher under Clinton than Reagan or the Bushes.

  • Au H20||

    Yes, and that would have nothing, whatsoever, to do with the development of a new technology.

    God, if only a new technology had become widely spread in the mid-to-late 90s.... I just can't think of one!

  • Au H20||

    Yes, and that would have nothing, whatsoever, to do with the development of a new technology.

    God, if only a new technology had become widely spread in the mid-to-late 90s.... I just can't think of one!

  • ||

    Of course you pay more if rates go up, because they'll send you to jail if you refuse. Of course, the question remains why you don't pay the Clinton rates now if those rates are the right thing to do.

  • ||

    Anyone who thought congressional Democrats had any intention of touching entitlements is nuts. Their whole campaign is going to be based on telling seniors that the Republicans are going to take away their goodies. I believe it will work to win them about thirty percent of the vote.

  • MNG||

    What percent bought the death panels stuff?

  • PIRS||

    Whatever percent was actually paying attention.

  • ||

    This Tea Partier says let the Berwicking begin.

  • MNG||

    Oh, and here's my first Strawman!!! Eat it, suckas!!!

  • MNG||

    How is that a strawman? Why should the Dems not play the same politics with entitlements that the GOPers played less than a year ago?

  • MNG||

    Nevermind, I answered my own question. I'm such a dumbass.

  • MNG||

    Ah, the spoof. Is there a pussies convention in town?

  • PIRS||

    Do you understand what the arguments about "Death Panels" were actually referring to? Do you know what NICE is in the UK?

    Hint: they are not referring to literal Rowling-esque Death Eaters. They were referring to something that actually has a prescient.

  • MNG||

    Iirc they were talking about end-of-life counseling and/or rationing decisions for end of life care, neither of which warranted the scare techniques we heard so much of.

  • PIRS||

    You don't think rationing decisions - when what is being rationed is health care - are of concern?

    Are you really saying that?

    Do you want a giant bureaucratic agency deciding if you need a new heart or not?

  • MNG||

    Do you want a giant bureaucratic agency deciding if you need a new heart or not?

    Like Aetna?

  • PIRS||

    I am not forced to contract with Aetna, nor am I forced to work for a company that offers Aetna. But with Obama's version of Romneycare I am forced to buy insurance from someone - and there are far more regulations on the kinds of insurance I am permitted to purchase.

    My choices are lessened through this legislation.

    Besides, in a free society the cost of things like this would much less.

  • MNG||

    Any insurance program, public or private, is going to have some place where they draw a line and say "we ain't gonna pay for that."

  • ||

    The line is drawn in a voluntary agreement called an insurance policy, which you can buy or not buy from Aetna, Cigna, etc. And the line moves depending on the premium. With the government panel of experts, there is no negotiation. They might decide the new heart is not "effective" and so no one gets it, period, end of story.

  • mr simple||

    No, though that's what the people in the media trying to control the debate wanted you to believe. They were talking about the panels of people who actually make decisions on what treatments or what have you are going to be paid for and allowed to happen. Like NICE in the UK. If they decide you are too old for some surgery or hat some pills are too expensive, then you don't get it. And, yes, language to create these things was in the bill, though I don't know what was in the final revision.

  • MNG||

    "the people in the media trying to control the debate wanted you to believe"

    Conspiracy-town, here we come!

  • mr simple||

    Yes, it's a conspiracy. No one ever tries to control the tone or message of a debate. That's not what you're doing right there by tying to dismiss anything I said through ad- hominem attacks.

  • MNG||

    I just don't buy that there is some coordinated control of the media, there are too many diffuse outlets with varying motivations and incentives.

  • mr simple||

    I was actually trying to describe a specific subset of people in the media, including guests on talk shows and such, rather than blame the media as an single entity.

  • GroundTruth||

    Linguistic note:

    One's opponent engages in 'rationing', the speaker engages in 'counseling'.

  • MNG||

    1. Would returning to Clinton era taxes be sufficient to close the gap between what we spend and what we take in?
    2. Could cuts in spending without the Medis, defense, SS and veterans programs make up that same gap?

  • PIRS||

    I believe we should cut "defense" spending - deeply. There is no reason to have permanent military installations throughout the world. We should at least close down the ones in Europe and the Middle East - and end the wars. That alone would save a huge chunk of change.

  • MNG||

    Defense is the area that should be the first target. We already spend like a 100 times more than our nearest challenger, and almost none of that is going to actual defense. We still have an entire Cold War apparatus decades after it was over. The recipients are not elderly or needy per se but able bodied.

    It should be first to go, not exempt.

  • PIRS||

    "Defense is the area that should be the first target."

    On that at least, we agree. I don't think government money should be used to build opera houses - but at least there you have something potentially useful at the end. What can you do with a bomb except kill people?

  • Sudden||

    MNG, I agree in theory, but in practice I think defense cuts have to be implemented gradually. I am not a Keynesian, but I do recognize that govt spending (especially at the size it is today) has a significant economic impact, and considering I think you recognize the same, I pose this argument to you (albeit less popular with my fellow hardcore libertarians). Radical defense spending cuts would reverberate throughout the economy as a significant portion of people employed in those industries are put out of work. We already have a shitty enough economy as is without laying off another 500,000 people. Defense spending should be trimmed each year with a target of halving it in a decade, but large scale immediate cuts would have a profound impact on the larger economy.

    So what is the low hanging fruit in terms of cutting spending with minimal broader economic impact? Means testing SS/MC. Warren Buffet isn't spending any differently today than he would without a SS check. And recognizing that is the extreme example, I still think that a person with a lifetime savings net worth in excess of $3-$4 million is not likely to change his spending habits significantly in the absense of an extra $2000/month. These are the areas where we can gain the most $$$wise on cuts and simultaneously not have a deeper economic echo.

  • MNG||

    I see your point, I once read a book by a liberal who praised defense spending as one of our prime "pump priming" programs...

    I agree on the means testing, it's common sense and the moral thing to tod. The Dems resist it for understandable political reasons (similar to why GOPers won't agree to anymore tax raises to address fiscal concerns).

  • tarran||

    Actually, that is the reason why defense should be cut *first*!

    The defense contractors lock up vast amounts of resources, driving up prices and crowding out private investments. Cut defense, and a whole bunch of firms cease to exist. The commodities that go into making bombs are now available at a lower price for firms that want to satisfy consumer demand. Now you have a pool of labor available to work on new ventures. The facilities used by defense contractors are now available to entrepeneurs at fire-sale prices.

    My guess is that if the government were to slash the defense budget by 75%, in 1 year people would be employed on all sorts of interesting ventures, and you'd be seeing all sorts of great products hitting the market.

  • Rob||

    When Minge says that we should start cutting defense first, what he really means is that we should cut defense only and ignore entitlements.

  • Sudden||

    1. Would returning to Clinton era taxes be sufficient to close the gap between what we spend and what we take in?

    No, it would actually be nowhere near sufficient. Under the most optimistic scenarios, we'd gain $500bn a year under Clinton era rates, leaving us staring into a trillion dollar abyss still. And that is assuming ALL rates go up, not just the high earning few. To close the gap without any structural changes, you'd need to significantly raise income taxes on all people well above the Clinton rates (think pre-Reagan rates at least) and even then, the tax revenue/GDP trend does not bode well. You'd likely have to implement an entirely new and harder to avoid tax, i.e. a VAT.

  • MNG||

    Thanks for the answer. If you are correct then liberals who claim that is a solution should not be taken seriously.

  • Sudden||

    I think they believe that it would be sufficient in good faith. I think many of them would propose return to Clinton era rates for everyone, but much higher rates for the +$250k crowd. Even then it would be insufficient. But beyond being insufficient, it would be poorly structured. Its a hard argument to make, and politically untenable, but considering the drivers of the deficit and debt are SS/MC, tax increases should be payroll tax driven. If the idea with those programs is "you're paying into an insurance scheme" (albeit recognizing paygo ipso facto implies otherwise), then it follows that the cost of those programs should at least be mostly met with the taxes collected by those programs.

  • ||

    What evidence is there of such a good faith belief? The numbers have been crunched, and there is NO scenario under which the tax hikes the dmocrats want generate enough revenue to close the current deficit, much less the off-balance sheet liabilities we have under medicare and ss. A belief contradicted by all evidence can't possibly be one held in good faith.

    And if many of them support returning the Clinton rates for everyone, can you name one? I have yet to see it. It lays bare what this is all about: more redistribution. The "rich" pay more and the "poor" take more. That is the democratic platform, they just won't admit it in stark terms.

  • ||

    The whole "raise taxes" v. "cut spending" thing is just kabuki for the real issue:

    Do you think the government we have now is way too big and intrusive, just the right size, or too small and too weak?

    How you answer that question determines whether you think we should raise taxes.

    And, of course, the raise taxes crowd has a problem when it comes to deficits. That problem is history. Periodically, we have had gushers of new revenue come into the Treasury. Said gushers are generally spent, and then some.

    Even if your shiny new taxes really bring in the benjamins, they won't close the deficit unless serious discipline appears miraculously on the spending side.

  • mr simple||

    1. No 2. No

    The problem with the argument for increased revenue throughout increased taxes is that it's not the static equation its proponents would have you believe. Despite the disparity in the tax levels over the years, revenue as a percentage of GDP changes very minutely. I think reason has maybe had an article on this. Generally, though, lower taxation corresponds to higher GDP growth, ceteris paribus.

  • Old Mexican||

    Re: MNG,

    1. Would returning to Clinton era taxes be sufficient to close the gap between what we spend and what we take in?


    What do you mean with "close the gap"? AS in "making it smaller" or as in "making it disappear"? Because tax increases would supposedly "close the gap" if spending levels remained FLAT, but that is assuming people's BEHAVIOR does not change AT ALL in the face of the higher taxes, something only the economics illiterate (or "leftist boobs") would believe.

    2. Could cuts in spending without the Medis, defense, SS and veterans programs make up that same gap?


    No. Never. Nunca jamas.

    Defense is the area that should be the first target.


    Totally agree. Save for the sudden army of clandestine sharpshooters posted on top of buildings trying to get as many Congresspeople as possible, it would be the easiest to cut.

  • Sudden||

    Save for the sudden army of clandestine sharpshooters posted on top of buildings trying to get as many Congresspeople as possible

    I only wish I had such an army at my disposal.

  • ||

    Sharpshooters are retail. We need wholesale.

    I know from experience that you can set off several mini-nukes under the Capitol dome without doing any structural damage.

  • Rob||

    Defense would indeed be the easiest to cut. Which is why we need entitlement reform (or better yet, dismantling)FIRST. These problems are structurally broken and CANNOT be repaired. As far as defense goes, I would like to see it's budget slashed by AT LEAST 50% in the first year and then smaller cuts EVERY year after that.

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