- Sep 30, 2003
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Edit: This primarily an attempt to put everything into context. This problem is much too large to solve with ideology.
Back in Reagan's day, Republicans were said to conceive a plan of 'starving the beast' in order to achieve the ideal of 'smaller government'. I think Obama's (unintentional) plan may turn out far more effective: Engorge the Beast until there's nothing left to feed on and it will wither and shrink.
We frequently hear from those on the Left that Bush's tax cuts and the wars in Iraq and Afghanistan caused our huge debt. Well, they may have contributed but they certainly didn't cause it all. Reversing them will not come close to stopping continuing annual deficits, thus our debt will continue to grow; assuming someone will still lend us money.
And what's Obama to do about his tax pledge? Is this the second of coming of "Read My Lips"?
Those on the right don't want increased taxes but instead want to cut spending. The trillion $ question here is 'cut what'? Maybe they agree to raise taxes on the wealthiest, typically defined as those making $250K or more, but it's a drop in the bucket.
Now, from recent reports the credit agencies demand our national debt get on track to be reduced to $10 trillion. I'm guessing they'll give us 10 years to get it done. If our debt service costs (interest expense) goes up, the hole just gets deeper faster. We'll be running on a treadmill. I.e., getting nowhere fast even if do cut, the higher interest cost will just eat up money and further increase our debt.
Anyhoo, on to the depressing numbers:
A. Hard Facts (as best as I can find them)
1. First a look at our recent annual deficits:
FY 2011 (projected) $1.4 trillion
FY 2010 $1.65 trillion
FY 2009 $1.9 trillion
FY 2008 $1 trillion
http://home.adelphi.edu/sbloch/deficits.html
2. Costs of Bush Tax Cuts, both 2001 and 2003.
A CBO Report from June 2007 estimate the extension of those cuts cost a little under $1.8 trillion over 10 years, or about $180 billion per year. Yesterday I saw another CBO report that put it at only $100 billion per year. (Edit: See here for $100B amount http://forums.anandtech.com/showthread.php?p=32078472&posted=1#post32078472 ) If I wasn't mistaken, it's likely a downward revision because of the recession beginning shortly after the June 2007 report was completed. Obviously, falling incomes means the tax cuts 'cost' less. (Using the Left's term there for tax cuts). While I won't link it here, I'm seeing repeal of the Bush tax cuts for the wealthy only brings in between $40-70 billion per year. Not much.
Here's a link to the CBO's June 2007 report. See page 6, Table 1-3:
http://www.cbo.gov/ftpdocs/78xx/doc7878/03-21-PresidentsBudget.pdf
3. Costs of Iraq and Afghanistan Wars.
FY 2011 $132 billion (I'm using the higher number for for 2012 since I couldn't find anything better for 2011. One report listed below says $50 billion, but I strongly suspect that's far too low.)
FY 2010 $165 billion
FY 2009 $144 billion
These war number comes from the two sources below. I have used the highest amounts to be conservative. Please note that other sources list much higher overall war costs. They include interest on debt due to the war and such things as medical costs for injured soldier out to year 2050. Whether accurate or not, it's irrelevant because we can only cut what we can cut. I.e., how much costs could we cut by pulling back all the troops.
http://www.fas.org/sgp/crs/natsec/RL33110.pdf
http://www.nytimes.com/2009/03/01/weekinreview/01glanz.html
B. Simple Math
Let's assume that the 2011 projected deficit of $1.4 trillion is the best estimate, at least near term. Prior years' had Stimulus packages so were higher. And in 2008 the recession hadn't fully been realized so was lower. Of course, if our economy comes raging back, which no one is expecting, a lower deficit would be more appropriate.
So:
$1.4 trillion Expected deficit
Less $132 billion in expected war costs
Less $180 billion in reversal of Bush tax cuts (I'm being very generous here I think)
= $1.088 trillion of remaining annual deficit (or annual additions to national debt)
C. Tough Choices
Now the million $ question - where are we going to cut over a $ trillion per year to just get to a balanced budget (much less pay down debt to $10 trillion as the credit agencies are demanding) without shrinking the federal government?
Don't say Social Security because it has nothing to do with it. It's a separate fund and generally runs a surplus. SS money cannot be used for other expenses.
Other than general government services (E.g., Dept of Education etc) we have:
Medicaid at $204 billion in 2008. (Plus Obamacare greatly expanded Medicaid coverage starting in 2014. Must that be reversed?)
http://en.wikipedia.org/wiki/Medicaid#Budget
The Defense Dept at $524 billion (2010 was at $689 billion but I assume that include war costs which I've already deducted out above, so lets say that leaves $524 billion.)
http://en.wikipedia.org/wiki/United_States_federal_budget
Federal Welfare Programs. Total 2011 spending by the federal government is expected to be $471 billion. How much of that are the Democrats willing to cut?
http://www.usgovernmentspending.com/welfare_budget_2011_4.html
(I'm not going to mention debt service, we can't cut that now and it's only going up.)
Those are some pretty tough choices, and the further we go into debt (which we surely are), the tougher and deeper those cuts will need to be. Either that, or we just go till we hit 'the wall' - the government itself goes out with a bang overnight instead of a long drawn out whimper.
Who the heck would really want to be President, or a member of Congress, facing this?
Fern
Back in Reagan's day, Republicans were said to conceive a plan of 'starving the beast' in order to achieve the ideal of 'smaller government'. I think Obama's (unintentional) plan may turn out far more effective: Engorge the Beast until there's nothing left to feed on and it will wither and shrink.
We frequently hear from those on the Left that Bush's tax cuts and the wars in Iraq and Afghanistan caused our huge debt. Well, they may have contributed but they certainly didn't cause it all. Reversing them will not come close to stopping continuing annual deficits, thus our debt will continue to grow; assuming someone will still lend us money.
And what's Obama to do about his tax pledge? Is this the second of coming of "Read My Lips"?
Those on the right don't want increased taxes but instead want to cut spending. The trillion $ question here is 'cut what'? Maybe they agree to raise taxes on the wealthiest, typically defined as those making $250K or more, but it's a drop in the bucket.
Now, from recent reports the credit agencies demand our national debt get on track to be reduced to $10 trillion. I'm guessing they'll give us 10 years to get it done. If our debt service costs (interest expense) goes up, the hole just gets deeper faster. We'll be running on a treadmill. I.e., getting nowhere fast even if do cut, the higher interest cost will just eat up money and further increase our debt.
Anyhoo, on to the depressing numbers:
A. Hard Facts (as best as I can find them)
1. First a look at our recent annual deficits:
FY 2011 (projected) $1.4 trillion
FY 2010 $1.65 trillion
FY 2009 $1.9 trillion
FY 2008 $1 trillion
http://home.adelphi.edu/sbloch/deficits.html
2. Costs of Bush Tax Cuts, both 2001 and 2003.
A CBO Report from June 2007 estimate the extension of those cuts cost a little under $1.8 trillion over 10 years, or about $180 billion per year. Yesterday I saw another CBO report that put it at only $100 billion per year. (Edit: See here for $100B amount http://forums.anandtech.com/showthread.php?p=32078472&posted=1#post32078472 ) If I wasn't mistaken, it's likely a downward revision because of the recession beginning shortly after the June 2007 report was completed. Obviously, falling incomes means the tax cuts 'cost' less. (Using the Left's term there for tax cuts). While I won't link it here, I'm seeing repeal of the Bush tax cuts for the wealthy only brings in between $40-70 billion per year. Not much.
Here's a link to the CBO's June 2007 report. See page 6, Table 1-3:
http://www.cbo.gov/ftpdocs/78xx/doc7878/03-21-PresidentsBudget.pdf
3. Costs of Iraq and Afghanistan Wars.
FY 2011 $132 billion (I'm using the higher number for for 2012 since I couldn't find anything better for 2011. One report listed below says $50 billion, but I strongly suspect that's far too low.)
FY 2010 $165 billion
FY 2009 $144 billion
These war number comes from the two sources below. I have used the highest amounts to be conservative. Please note that other sources list much higher overall war costs. They include interest on debt due to the war and such things as medical costs for injured soldier out to year 2050. Whether accurate or not, it's irrelevant because we can only cut what we can cut. I.e., how much costs could we cut by pulling back all the troops.
http://www.fas.org/sgp/crs/natsec/RL33110.pdf
http://www.nytimes.com/2009/03/01/weekinreview/01glanz.html
B. Simple Math
Let's assume that the 2011 projected deficit of $1.4 trillion is the best estimate, at least near term. Prior years' had Stimulus packages so were higher. And in 2008 the recession hadn't fully been realized so was lower. Of course, if our economy comes raging back, which no one is expecting, a lower deficit would be more appropriate.
So:
$1.4 trillion Expected deficit
Less $132 billion in expected war costs
Less $180 billion in reversal of Bush tax cuts (I'm being very generous here I think)
= $1.088 trillion of remaining annual deficit (or annual additions to national debt)
C. Tough Choices
Now the million $ question - where are we going to cut over a $ trillion per year to just get to a balanced budget (much less pay down debt to $10 trillion as the credit agencies are demanding) without shrinking the federal government?
Don't say Social Security because it has nothing to do with it. It's a separate fund and generally runs a surplus. SS money cannot be used for other expenses.
Other than general government services (E.g., Dept of Education etc) we have:
Medicaid at $204 billion in 2008. (Plus Obamacare greatly expanded Medicaid coverage starting in 2014. Must that be reversed?)
http://en.wikipedia.org/wiki/Medicaid#Budget
The Defense Dept at $524 billion (2010 was at $689 billion but I assume that include war costs which I've already deducted out above, so lets say that leaves $524 billion.)
http://en.wikipedia.org/wiki/United_States_federal_budget
Federal Welfare Programs. Total 2011 spending by the federal government is expected to be $471 billion. How much of that are the Democrats willing to cut?
http://www.usgovernmentspending.com/welfare_budget_2011_4.html
(I'm not going to mention debt service, we can't cut that now and it's only going up.)
Those are some pretty tough choices, and the further we go into debt (which we surely are), the tougher and deeper those cuts will need to be. Either that, or we just go till we hit 'the wall' - the government itself goes out with a bang overnight instead of a long drawn out whimper.
Who the heck would really want to be President, or a member of Congress, facing this?
Fern
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