Originally Posted By Mr X ***in fact I think Clinton was the best president we had in the last 30 years*** That ain't sayin much. Besides two Bushes the only other choice is Saint Reagan brand cool-aid; if you're an abstainer from that particular beverage then Clinton was the best of that sorry lot. President Obama, we'll be able to judge in the fullness of time. So far, I'm mixed but it's only been a year and change.
Originally Posted By Mr X ***Military expenditures pale in comparison with the entitlement liablities. And it's a lot easier to trim the military expenditures than the entitlements*** You sure about that? <a href="http://vis.berkeley.edu/courses/cs294-10-fa07/wiki/images/3/3a/FederalBudgetPieChart.jpg" target="_blank">http://vis.berkeley.edu/course...hart.jpg</a>
Originally Posted By EighthDwarf <<GDP growth does not equal prosperity. How have household incomes compared for the same periods?>> Much better than GDP, as measured by personal expenditure rates (which is what economists look at as it represents the "real" income figure that nominal income figures can't do). Bottom line is people have more money to spend, thus they prosper. Of course, they spent too much over that period and are paying the price now, but people are still much better off than they were 30 years ago.
Originally Posted By Sport Goofy << Much better than GDP, as measured by personal expenditure rates >> Oh, so you are counting all of the debt that people are using to spend money since their incomes aren't going up? Yeah, that's a real measure of prosperity . . .
Originally Posted By EighthDwarf <<Are you talking about Social Security or Medicare?>> Both. And I would add healthcare to that unless cost controls are added. <<Social Security is solvent for several more decades. It would be in better shape if we didn't reduce taxes and use the trust fund money to pay for the non-entitlement parts of government.>> Yes, I would agree with that. <<Medicare is a mess -- but not because of tax policies. It's a mess because we've allowed private industry to create a situation where health care inflation is outpacing that GDP growth that you tout in another posting by a very wide margin. Unfortunately, we don't have the guts to cut the profiteers out of the health care sector, which only leaves higher taxes as a solution to the problem.>> Medicare is a mess because of rising healthcare costs and relatively few payers into the system compared to the beneficiaries. Increasing taxes to pay for it will only address the symptom, not the disease.
Originally Posted By Sport Goofy << Increasing taxes to pay for it will only address the symptom, not the disease. >> Single payer addresses the disease.
Originally Posted By EighthDwarf <<You sure about that?>> Yes I am. Read The Economist, they talk about it almost weekly. And here is an exerpt from Bernanke's testimony to Congress: "As you know, the deficit in the unified federal budget declined for a second year in fiscal year 2006, falling to $248 billion from $319 billion in fiscal 2005. As was the case in the preceding year, the improvement in 2006 was primarily the result of solid growth in tax receipts, especially in collections of personal and corporate income taxes. Federal government outlays in fiscal 2006 were 20.3 percent of nominal gross domestic product (GDP), receipts were 18.4 percent of GDP, and the deficit (equal to the difference of the two) was 1.9 percent of GDP. These percentages are close to their averages since 1960. The on-budget deficit, which differs from the unified budget deficit primarily in excluding receipts and payments of the Social Security system, was $434 billion, or 3.3 percent of GDP, in fiscal 2006.1 As of the end of fiscal 2006, federal government debt held by the public, which includes holdings by the Federal Reserve but excludes those by the Social Security and other trust funds, amounted to about 37 percent of one year's GDP. Official projections suggest that the unified budget deficit may stabilize or moderate further over the next few years. Unfortunately, we are experiencing what seems likely to be the calm before the storm. In particular, spending on entitlement programs will begin to climb quickly during the next decade. In fiscal 2006, federal spending for Social Security, Medicare, and Medicaid together totaled about 40 percent of federal expenditures, or roughly 8-1/2 percent of GDP.2 In the most recent long-term projections prepared by the Congressional Budget Office (CBO), these outlays are projected to increase to 10-1/2 percent of GDP by 2015, an increase of about 2 percentage points of GDP in less than a decade. By 2030, according to the CBO, they will reach about 15 percent of GDP.3 As I will discuss, these rising entitlement obligations will put enormous pressure on the federal budget in coming years. The large projected increases in future entitlement spending have two principal sources. First, like many other industrial countries, the United States has entered what is likely to be a long period of demographic transition, the result both of the reduction in fertility that followed the post-World War II baby boom and of ongoing increases in life expectancy. Longer life expectancies are certainly to be welcomed. But they are likely to lead to longer periods of retirement in the future, even as the growth rate of the workforce declines. As a consequence of the demographic trends, the number of people of retirement age will grow relative both to the population as a whole and to the number of potential workers. Currently, people 65 years and older make up about 12 percent of the U.S. population, and there are about five people between the ages of 20 and 64 for each person 65 and older. According to the intermediate projections of the Social Security Trustees, in 2030 Americans 65 and older will constitute about 19 percent of the U.S. population, and the ratio of those between the ages of 20 and 64 to those 65 and older will have fallen to about 3. Although the retirement of the baby boomers will be an important milestone in the demographic transition--the oldest baby boomers will be eligible for Social Security benefits starting next year--the change in the nation's demographic structure is not just a temporary phenomenon related to the large relative size of the baby-boom generation. Rather, if the U.S. fertility rate remains close to current levels and life expectancies continue to rise, as demographers generally expect, the U.S. population will continue to grow older, even after the baby-boom generation has passed from the scene. If current law is maintained, that aging of the U.S. population will lead to sustained increases in federal entitlement spending on programs that benefit older Americans, such as Social Security and Medicare. The second cause of rising entitlement spending is the expected continued increase in medical costs per beneficiary. Projections of future medical costs are fraught with uncertainty, but history suggests that--without significant changes in policy--these costs are likely to continue to rise more quickly than incomes, at least for the foreseeable future. Together with the aging of the population, ongoing increases in medical costs will lead to a rapid expansion of Medicare and Medicaid expenditures. Long-range projections prepared by the CBO vividly portray the potential effects on the budget of an aging population and rapidly rising health care costs. The CBO has developed projections for a variety of alternative scenarios, based on different assumptions about the evolution of spending and taxes. The scenarios produce a wide range of possible budget outcomes, reflecting the substantial uncertainty that attends long-range budget projections.4 However, the outcomes that appear most likely, in the absence of policy changes, involve rising budget deficits and increases in the amount of federal debt outstanding to unprecedented levels. For example, one plausible scenario is based on the assumptions that (1) federal retirement and health spending will follow the CBO's intermediate projection; (2) defense spending will drift down over time as a percentage of GDP; (3) other non-interest spending will grow roughly in line with GDP; and (4) federal revenues will remain close to their historical share of GDP--that is, about where they are today.5 Under these assumptions, the CBO calculates that, by 2030, the federal budget deficit will approach 9 percent of GDP--more than four times greater as a share of GDP than the deficit in fiscal year 2006. A particularly worrisome aspect of this projection and similar ones is the implied evolution of the national debt and the associated interest payments to government bondholders. Minor details aside, the federal debt held by the public increases each year by the amount of that year's unified deficit. Consequently, scenarios that project large deficits also project rapid growth in the outstanding government debt. The higher levels of debt in turn imply increased expenditures on interest payments to bondholders, which exacerbate the deficit problem still further. Thus, a vicious cycle may develop in which large deficits lead to rapid growth in debt and interest payments, which in turn adds to subsequent deficits. According to the CBO projection that I have been discussing, interest payments on the government's debt will reach 4-1/2 percent of GDP in 2030, nearly three times their current size relative to national output. Under this scenario, the ratio of federal debt held by the public to GDP would climb from 37 percent currently to roughly 100 percent in 2030 and would continue to grow exponentially after that. The only time in U.S. history that the debt-to-GDP ratio has been in the neighborhood of 100 percent was during World War II. People at that time understood the situation to be temporary and expected deficits and the debt-to-GDP ratio to fall rapidly after the war, as in fact they did. In contrast, under the scenario I have been discussing, the debt-to-GDP ratio would rise far into the future at an accelerating rate. Ultimately, this expansion of debt would spark a fiscal crisis, which could be addressed only by very sharp spending cuts or tax increases, or both."
Originally Posted By Dabob2 "Unfortunately, we don't have the guts to cut the profiteers out of the health care sector, which only leaves higher taxes as a solution to the problem." Bingo.
Originally Posted By EighthDwarf <<Single payer addresses the disease.>> According to one ideology. I happen to think there are better solutions.
Originally Posted By EighthDwarf <<"Unfortunately, we don't have the guts to cut the profiteers out of the health care sector, which only leaves higher taxes as a solution to the problem." Bingo. >> Hmmm, so who exactly are the profiteers in healthcare? And how would a single payer system eliminate them?
Originally Posted By Sport Goofy << Hmmm, so who exactly are the profiteers in healthcare? And how would a single payer system eliminate them? >> The whole health insurance industry is a wasteful middleman that increases costs and denies care.
Originally Posted By Sport Goofy << Yes I am. Read The Economist, they talk about it almost weekly. >> I always found it remarkable that a publication called "The Economist" failed to predict the subprime bubble that destroyed the financial system. You would think a magazine devoted to the economy would be better than that.
Originally Posted By pecos bill Our population is so dumbed down they fail to comprehend the very real sacrifices that will have to be made. One problem is that for a politician to stand up and say taxes must be raised and entitlements slashed, they are committing political suicide. So we will just keep tip-toeing around the big, controversial issues until we have no choice in the matter, but by then it may be too late. I think America's standard of living is going to be seriously compromised by the time this all gets ironed out.
Originally Posted By Mr X Your lengthy cut-paste is an interesting read, but doesn't address military spending at all. Much as the article refers to the increased aging of the population as a perpetual concern while noting that the debt-to-GDP ratio of WWII was of less concern as it was a temporary situation, the ever increasing military expenditures due to a never ending series of wars under the guise of "the War on Terror" is itself a perpetual and ever increasing problem that is every bit as big a financial concern if not bigger than entitlements. Moreover, at least entitlements actually directly serve and benefit the population at large, while on the other hand we've got thousands of young dead Americans.
Originally Posted By EighthDwarf <<I always found it remarkable that a publication called "The Economist" failed to predict the subprime bubble that destroyed the financial system. You would think a magazine devoted to the economy would be better than that.>> I would be surprised it they didn't talk about it. They do a pretty good job of identifying current economic and political issues. I'm going to have to go through some old issues to see if I can find some examples. Plus they take a very balanced (European) approach to economics so I enjoy reading it.
Originally Posted By EighthDwarf <<Your lengthy cut-paste is an interesting read, but doesn't address military spending at all>> Read it more closely and try to find this line: "defense spending will drift down over time as a percentage of GDP"
Originally Posted By EighthDwarf <<Moreover, at least entitlements actually directly serve and benefit the population at large, while on the other hand we've got thousands of young dead Americans.>> X, you and I are in agreement about the Iraq War and military spending; the money could be spent much more productively. My point is that military spending is going to be much smaller than entitlement spending this century. If you have information to counter this belief, please share.
Originally Posted By Sport Goofy << My point is that military spending is going to be much smaller than entitlement spending this century. >> Military spending should never be larger than entitlement spending! Why should it ever be larger? You are trying to deflect the point by falsely minimizing the impact of our military spending in the context of overall government spending. It's a very large piece of the pie.
Originally Posted By ecdc I'll vouch for the Economist, a great publication - and one not totally devoted to economics, despite their name. However, I remain wholly unconvinced that the Pentagon budget is a small portion of what we're talking about. And you could make a better case (IMO) for social programs than the military.
Originally Posted By EighthDwarf <<Military spending should never be larger than entitlement spending! Why should it ever be larger? You are trying to deflect the point by falsely minimizing the impact of our military spending in the context of overall government spending.>> No, I am simply arguing against X's point that military spending is a bigger part of the deficit than entitlement spending. He brought it up, not me.
