"Right now, it doesn’t look like anybody up there can add, whether they’ve got an R or a D."
I am seriously concerned about America's debt. There are all kinds of worst case scenarios that are maybe's but THIS IS HAPPENING. I know we are past the point of a painless fix. At some point we will get to a place where there isn't a fix.
You can read a draft of the proposed report here. I appreciate that it is a slide show type presetation versus a dry and wordy mess. It doesn't take too long to look through. There were all kinds of ideas; some of which were pretty blah and others were more interesting. Huffington Post highlighted some of them.
•Roll discretionary spending back to FY2010 levels for FY2012, requires 1% cut in discretionary budget authority every year from FY2013 though 2015;
•Fully offset the cost of the "Doc Fix" by asking doctors and other health providers, lawyers, and individuals to take responsibility for slowing health care cost growth;
•Reduce farm subsidies by3 billion per year by reducing direct payments and other subsidies;
•Achieve 100 billion in Illustrative Defense Cuts;
•Index retirement age for Social security to increases in longevity. "This option is projected to increase the age by one month every two years after it reaches 67 under current law, meaning the normal retirement age would reach 68 in about 2050 and 69 in about 2075." There will be a "hardship exemption" for those unable to work beyond 62;
•Give retirees the choice of collecting half their benefits early and the other half at a later age to minimize impact of actuarial reduction and support phased retirement options;
•Reduce corporate tax rate to 26% and permanently extend the research credit;
•Gradually increase gas tax to fund transportation spending.
There were definitely some good parts to this whole thing. First and probably most significantly we are actually talking about our deficit problem in a broad and public venue. Next I really enjoyed that this effort was at least fairly bipartisan. Both sides of Congress and the parties they represent and really ever national level elected official except Ron Paul is to blame. You could even argue that Ron Paul shares some blame for not doing a good enough job of convincing his co workers to get on board with sound monetary/ economic policies. More significantly the suggestions which stemmed from this Commission seem to me pretty bipartisan. It suggests cuts in just about everything and is sure to have an idea or two which makes just about everybody annoyed.
Americans have a serious issue of wanting services and social type support networks but not wanting to pay for them. We want first class infrastructure and the benefits of a psuedo welfare state but want to pay the taxes of a your on your own Carribean tax haven. Americans as a group need to come to terms with the simple fact that we are going to get the government, services and benefits that we pay for.
The real issue isn't so much coming up with ideas but making those ideas palitable to enough people and actually getting them implimented. Politicians hate the idea of losing the earmarks which let them bring bacon to their home districts and keep the businesses which fund their campaigns happy. Just about every group of citizens has some pet tax credit or another which to them is untouchable such as "earned" income credit, mortgage interest deduction, capital gains, etc.
I am not an economist or an accountant or a financial genius. However like most other people I have had to balance budgets and deal with bills and all that. Like anyone else I have had times when I didn't pay attention or made mistakes and lived beyond my means. I think the first and most significant step is realizing you have a problem, if just a temporary one. Next you look at what kind of income you have coming in. You put your expenses and obligations onto a list in terms of priority. WHAT DO YOU REALLY NEED? A place to live, utilties, fuel and food are quite important. After that you pay whatever bills you have. Additional money can be used to try and pay off debt and have a little bit of fun.
What does this have to do with anything? The same train of thought could be made in terms of our national budget. We need to cut out fancy stuff like foreign aid, farm subsidies and meddling in health care and focus on basic services, reasonable defense and just plain getting our house in order. The situation is that we need to get our own house in order and that might mean we can't do all kinds of things we like doing.
Personally I have some thoughts on how to deal with our debt. In no particular order:
- It is absolutely imperative that we get entitlements under control. I say again, it is absolutely imperative that we get entitlements under control. While a few hundred million for this project or a billion for a bailout catch headlines but Social Security, Medicare and Medicade are going to bankrupt us. At the same time we need to honor our promise to individuals already recieving these benefits and those who will start to collect them soon. However those under a certain age (somewhere around 52-55) have time to adjust their plans. Then some smart people could sit down with an actuary table and figure out how to fund benefits for those who were close to collecting. We have to bend the bell curve or it is going to destroy us.
- We need to have a serious discussion about if we can afford to continue our overseas adventures; particularly Iraq and Afghanistan. Without even talking about if these wars are good or meaningful we need to talk about how to pay for them. The idea that we can fight wars and not actually pay for them just doesn't mesh with reality. Our overseas footprint in general should also be up for serious articulate discussion. Having some strategic bases as well as prepositioned logistics makes sense. I would be willing to would wager that we could dramatically decrease our overseas presence at little or no cost to our real military capabilities. Europe and Asia can afford to pay for their own defense and if they should choose not to well that might play out badly for them. I am stationed in Germany and I hate to tell you but the Russians aren't storming through the Fulda Gap any time soon. North Korea doesn't have the fuel and rations to invade anybody and why should we care if they invade South Korea anyway?
- We need to motivate businesses, particularly the kind of manufacturing that provides decent paying jobs in medium to large numbers to stay in or move to America and make things which people want to buy. This will go a long way toward fixing our import/export problem. This whole idea of an information or finance or service economy isn't working well. Of course all those things occur in any economy but we have just got to start making stuff that people in other nations want to buy. At least if we ever want to fix our trade situation.
- We need to admit that we cannot afford to continue foreign aid on anywhere near the current scale. Buying a few million pounds of rice so hundreds of thousands of people in some crappy African country do not starve to death is to me acceptable and in the big scheme of things isn't a drop in the bucket. However we do not need to be giving money to nations like Russia, India, Egypt and Indonesia. We just can't afford it.
- Farm subsidies in the USA are just rediculous. If I were in charge I would cancel them all immediately. At a minimum we need to stop paying massive agri businesses a whole bunch of money that was meant for small family farms. Also the idea of paying people essentially not to produce food on a given piece of land is rediculous. I mean heaven forbid we piss off Iowa because they have the first primaries and all but this is just completely and totally stupid.