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The Almighty Buck Government Politics

US Candidates Ignore Looming Debt Crisis 266

Posted by Hemos
from the chicken-little-or-right-on? dept.
code_rage writes "Carolyn Lockhead of The San Francisco Chronicle has written an article about one of the most important, but overlooked, political issues we are facing. Baby-boomers will soon begin retiring, which will result in a huge fiscal imbalance (deficits and debts). The article says that the present value of the anticipated debt is estimated to be between $40 trillion and $72 trillion, depending on the source. To put that in perspective, the current national debt is $7.3 trillion.""


Former Treasury Secretary Paul O'Neill commissioned a study (free PDF) that was written by Jagadeesh Gokhale and Kent Smetters. To give a sense of how serious the fiscal imbalance is, consider some of the painful measures that the study said would be necessary to balance the books:
- More than double the payroll tax, from 15.3% to 32% of wages
- Raise income taxes by two thirds
- Cut Social Security and Medicare benefits by 45%
- Eliminate all "discretionary" spending (including such constitutionally mandated government functions as the military and the judiciary)

Peter G. Peterson has written a book about the issue: "Running On Empty: How the Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do about It." He recently gave an interview at the Council on Foreign Relations. He prefers to express the issue in terms of cash flow, because Social Security and Medicare are "pay as you go" systems (there is essentially no trust fund). The cash flow impacts will be an estimated $783 billion in 2020, increasing to trillions later.

Peterson offers some concrete proposals in the interview, and offers some political cover to the candidates in saying "I have never thought that a political campaign is an optimum environment for serious discussion or practical proposals.
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US Candidates Ignore Looming Debt Crisis

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  • by salesgeek (263995) on Monday September 13, 2004 @08:10AM (#10234115) Homepage
    O'Neil's report is nothing new at all. Social Security is and always has been a grand pyramid scheme that worked because America's population grew fast enough that enought people came in at the next level lowerer on the scheme and enough people died off of the top. People live longer and don't reproduce as much - so the pyramid begins to collapse.

    The best solution may end up being Bush's "ownership society" where we transition from a cashflow scam to personal investment programs. The problem with this, and it is a very big problem is that there is little risk to a healthy chashflow scam and investments are by definition risky. The other problem is that the money would not be 100% under government control and congress could not use the money when other sources of revenues dry up as it uses Social Security today.

    At the end of the day, this issue is of critical importance as I really don't look forward to watching my parents generation financially crush my daughter's generation under the weight of some social contract. Taxes suck. So do governments, but ours is much better than the alternative.
    • by ConceptJunkie (24823) on Monday September 13, 2004 @08:31AM (#10234226) Homepage Journal
      The problem with this, and it is a very big problem is that there is little risk to a healthy chashflow scam and investments are by definition risky. The other problem is that the money would not be 100% under government control and congress could not use the money when other sources of revenues dry up as it uses Social Security today.

      You're right. But at this point, I'd rather take the investment risk than the certainty of a cashflow system that will fail. The second reason you describe obviates the first... one of the reasons, besides basic mathemetics, is that the so-called Social Security Fund is really just more government debt.

      From what I've heard, in the best of time Social Security ended up rendering about 2% interest in terms of average payouts. There is no 40-year period in the last 100 years where investments in the stock market wouldn't have beat that by a huge margin. The key is the length of time: 40 years. Certain the period from 1928 to 193x was awful, as were other times like 1987, 1990-1991, and the beginning of this decade, but over 40 years, these drops were more than offset by the subsequent economic growth.

      If the government could unleash the economy with true tax reform (a la Dennis Hastert, Jerry Brown and many others), combined with a program of retirement investment becoming personal rather than just another Congressional feedbag and Ponzi scheme, I think the problem can be solved. However, these are drastic measures, and it seems like it would take someone as crazy as Ross Perot to be bold enough to actually propose them (rather than just hint around). That's one thing I really respected about him, by the way. I was really hoping President Bush would drop a huge tax reform bomb at the RNC convention, and I think it could have clinched his run for re-election. Like a friend of mine used to say: The flat tax (or whatever scheme you are talking about, like VAT, etc) won't work perfectly either, but it makes a whole lot of sense to start from there and fix that rather than add to the 20,000 pages of tax code that alreadyt exist. An additional plus is that there's a whole industry of people who could get jobs that actually produce something rather than just waste productivity dealing with an incomprehensible tax code.

      True tax reform and Social Security are just like the weather, everyone talks about them but no one does anything.

      • by utopiabound (199550) on Monday September 13, 2004 @09:37AM (#10234790) Homepage

        Social Security is not a personal retirement account.

        It is a social safety net; It is a social pact, a new socal covenant; It is the promise of the Government that when you get old, you will not be homeless and die of hunger. It is not about rich people having more disposable income when they retire. The Rich are not supposed to get the lions share. If you think of Social Security as a safety net then, who gets paid, becomes clear. The people who paid the least get the most, and the people who paid the most get the least. This is the heart of the "New Deal" the new pact between the Government and the People.

        This is a program that, at its heart, is truly Christian (not to say that it doesn't fall well into any other religion, Christian is just what I was raised). This is loving your neighbor. This is helping the poor.

        • by ConceptJunkie (24823) on Monday September 13, 2004 @12:29PM (#10236613) Homepage Journal
          Social Security is not a personal retirement account.

          But that's what it's been sold as, at least these days. Otherwise it's just another tax and more income redistribution. If they call it that, then I think people will look at it a lot differently, especially since there will be no difference between the hard-working person who couldn't save enough to retire despite good planning and best efforts and the stupid person who didn't plan for the future and squandered his money, from the system's point of view. And we all know proving a negative ("I can't be successful.") is infinitely harder than proving a positive ("I have been successful."), where success here means being able to take care of yourself.

          I'm not disagreeing with your categorization of what it should be. The problem with all these "Christian charity" type Government programs is a.) they are coerced, and b.) that far too many people will do everything they can to unfairly take advantage of them.

          I'm not saying there shouldn't be a safety net, there absolutely should be. But I am extremely leary when the government implements one, because every time it has done it in the past, it has failed. Not in the fact that it didn't provide the safety net, although that happens, but the fact that such programs attract abuse and result in dependency, whether real or perceived.

          It is truly Christian to administer "tough love" (although obviously not to the point of people starving to death). The problem is that there are people who cannot help themselves, temporarily or permanently, and people who will not help themselves, because of lack of education, motivation or need (i.e., the system lets them float along just fine). I think the former, while very real and in genuine need of our help as citizens and as a society, are greatly outnumbered by the latter. The problem is that "The Government provides a safety net." is perceived by many as "The Government owes me a living."

          The pact of the New Deal is that if you do your part, the government will cover your butt if something really bad happens, and that's good. The problem is with the "you do part" part of it. Just like with Communism, the "give what you have and take what you need" won't work when people fail to acknowledge the proper definitions of "have" and "need".

        • by Bluesman (104513) on Monday September 13, 2004 @01:24PM (#10237262) Homepage
          If this were true, we'd have means testing of social security recipients.

          As it is now, even the richest old people get their social security check each month.

          What you're describing is welfare.

        • by GOD_ALMIGHTY (17678) <curt@johnson.gmail@com> on Monday September 13, 2004 @01:33PM (#10237374) Homepage
          The basis of authority for Social Security is not morality. It's a recognition that we are not willing to let old people simply starve and die in the streets. If we believe that a person has the right to emergency health care, regardless of ability to pay, then it makes sense to pursue policy that decreases the amount of emergency care required by those who cannot pay. Leaving old folks to fend for themselves creates an environment

          Your right about the safety net functions, but this is a recognition of a more advanced and complex society and the rights that must be recognized in order to achieve growth in this modern world. I believe that is a more accurate description of the heart of the New Deal. No law in the US, no matter how "good" or "moral", can use morality as it's basis for authority and remain valid. Laws who's only basis of authority is moral violate the principle of equal protection under the law.

          The GOP economic policy of so-called ownership is about taking ownership of risk, not providing opportunity. If you look at all of their proposals and replace the word opportunity with risk they start to match with reality instead of looking like some ideologue's fantasy. Check out this column [washingtonpost.com] by Harold Meyerson, which lays out this concept very clearly.
        • by Silmaril (19015) on Monday September 13, 2004 @09:32PM (#10242389)
          [Social Security,] at its heart, is truly Christian [...] This is loving your neighbor. This is helping the poor.

          Walter Williams said it best [gmu.edu]:

          [R]eaching into one's own pocket to assist his fellow man is noble and worthy of praise. Reaching into another person's pocket to assist one's fellow man is despicable and worthy of condemnation.

          For the Christians among us, socialism and the welfare state must be seen as sinful. When God gave Moses the commandment "Thou shalt not steal", I'm sure He didn't mean thou shalt not steal unless there's a majority vote. And, I'm sure that if you asked God if it's okay just being a recipient of stolen property, He would deem that a sin as well.

          • [R]eaching into one's own pocket to assist his fellow man is noble and worthy of praise. Reaching into another person's pocket to assist one's fellow man is despicable and worthy of condemnation.

            What an idiotic statement this guy's making. He's neglecting the fundamental facet of "government" - governments exist to provide order. We gain order by sacrificing some of our freedoms. Democracy guarantees that the freedoms we give up are the freedoms that the majority want to give up, and the order that we gai
            • What an idiotic statement this guy's making. He's neglecting the fundamental facet of "government" - governments exist to provide order.

              Governments exist for many reasons. Order is one of many reasons. Some of these reasons conflict with one another.

              We gain order by sacrificing some of our freedoms. Democracy guarantees that the freedoms we give up are the freedoms that the majority want to give up,

              We live in a republic, not a democracy. Our government has a constitution and judicial system that pro
        • This is a program that, at its heart, is truly Christian

          So of course, we must cancel Social Security to enforce separation of church and state! The government cannot be allowed to do good works or help people! They must be evil like...oh wait, Satanism's a religion, too? curses. ;-)
      • "From what I've heard, in the best of time Social Security ended up rendering about 2% interest in terms of average payouts."

        There is a very important difference between Social Security and investment accounts. SS is continually being raided (every dollar coming in is sent out to granny immediately -- actually there's a little more coming in than going out, but very minor). The analogy that would fit would be if you took out a loan on your 401k for your kid's Ivy League education (removing the entire princ
        • Perhaps, but what you receive in benefits does not depend on how the government manages the fund, at least until it runs out.

          All I know is that the people who are contributing to the system are the ones getting screwed. Not only do they not get what they could because of investments, but neither does anyone else. It's a significant chunk of our economy being sucked away to feed more government rather than grow the economy. It's taking economic growth which is not a zero-sum game, and making it into a ze
          • "Perhaps, but what you receive in benefits does not depend on how the government manages the fund, at least until it runs out."

            There is essentially no trust fund [wikipedia.org].

            "Not only do they not get what they could because of investments, but neither does anyone else. "

            True, and Peterson agrees that there should be mandatory savings accounts, invested in global index funds (see interview). He does not whole-heartedly endorse Bush's personal savings accounts under Social Security. Bush has not said how to make up th
            • and far more is needed to prevent a crisis.

              It's another big piece of the national debt that doesn't get counted in that $7 trillion total. The frustrating part is that if we poor schmucks engaged in this kind of accounting, we'd end up bankrupt or in jail.

    • by leftie (667677) on Monday September 13, 2004 @10:21AM (#10235292)
      Corporations go bankrupt, and their investors lose everything they have invested when they do.

      All these privatization of Social Security plans are scams devised by the filthy rich to have the stock markets flooded with capital so that THEIR investments will be massively increased in value. The investor class has their investment spike while the average worker is forced to pay a premium.

      None of these privatization schemes offers any suggestions about what to do when the next Enron happens and people lose their retirement savings. Are we supposed to shake our heads at old people and tell them to starve in the streets because the senior management of the corporation looted all the value out of the company?

      There has to be a safety net for the elderly and disabled in our society. Ensuring they have minimum standard of living is far more important than the investor class getting a huge increase in their account values from a massive sump of capital into the stock markets.
      • by Cereal Box (4286) on Monday September 13, 2004 @10:54AM (#10235647)
        None of these privatization schemes offers any suggestions about what to do when the next Enron happens and people lose their retirement savings.

        Likewise, you aren't offering any suggestions about what to do when Social Security collapses under its own weight in the near future...
  • Debt clock (Score:5, Interesting)

    by tod_miller (792541) on Monday September 13, 2004 @08:17AM (#10234152) Journal
    debt clock [brillig.com]

    The problem is, if they do not get it under balance, the dollar will plummet, and then loose value as people loose faith in it.

    This is a real fear in 4-7 years. (I won't go into i18n economy bonds, and how they will weaken until the global economy becomes more bouyant)
  • Debt isn't sexy (Score:5, Interesting)

    by ghostlibrary (450718) on Monday September 13, 2004 @08:19AM (#10234162) Homepage Journal
    Problem is, real issues like Debt or Fiscal Policy aren't sexy enough to campaign. You can't stake out turf, or slander the others.

    "My opponent is sending us into debt. I pledge, if elected, to send us _less_ into debt than he. This is leadership."

    Electionining at all levels is always about tangibles. 'Tough on crime', 'tough on terror', 'taking a stand on gay marriage'. Debt isn't cool in that context. No one likes debt, but no one wants to talk about it.

    Oddly enough, having researched the issues, I support the candidate I do because he has a record of slashing the budget in a way I agree with, as opposed to the other guy, who slashes stuff I think he could keep.

    (Well, I had to mention slash, this is slash-dot!)

    They should run elections just by listing all issues candidates mention, but don't list the candidates. You just vote 'yes/no/don't care' for each _issue_ and whichever matches most with a given candidates platform-on-record, they get your vote.

    So 'ban on gay marriage' would have yes/no/don't care'. You vote 'yes', that may tally for either candidate-- or both, if they both support it, or neither, if they both don't care or are both against it. And your vote is the tally of all issues, whomever you support most gets your 1 vote.

    So, yeah, maybe you'd only find out who you voted for _after_ voting, but it'd be on the real issues, not the spin or marketing of the candidate!
    • Issues or candidates (Score:2, Interesting)

      by Mawbid (3993)
      They should run elections just by listing all issues candidates mention, but don't list the candidates.

      Good idea, but why not go all the way and just allow voting on the issues directly?

      The thing I really hate about current democratic systems is that you're always voting for a person (or worse, a group of people). You have to pick the person whose stand is closest to yours on a range of issues. Unless you're using one of the candidates as the source of your opinions, you're unlikely to find a candidate

      • by ghostlibrary (450718) on Monday September 13, 2004 @11:49AM (#10236219) Homepage Journal
        Hi,

        > Good idea, but why not go all the way and just allow voting on the issues directly?

        That, alas, goes entirely against the idea of a Republic, and also leads to 'tyranny of the masses'.

        The idea behind the US gov't is that gov't is too complicated for each us to constantly stay informed of and be able to fully judge each issue.

        So, instead of requiring every citizen to be fully and accurately informed every day on 200+page bills, we instead use representatives. "I don't know gov't, but I trust that Joe's views are close to mine, and that he'll represent me accurately."

        Contrast this to a pure democracy-- say, at the neighborhood level. If the issue is raised to 'evict Mawbid due to fashion sense' and 51% agree, you're screwed. That's tyranny of the masses (corrolary: a good society is one where it is safe to be unpopular.)

        In a representative system, though, 51% might vote for Fred, who runs on a Pro-Eviction platform, but Fred will (hopefully) look and say, hey, we don't really have a mandate here, and Mawbid's fashion errors aren't enough to do this.

        In short, the republic adds friction and a buffer between the populace and laws. Both are good-- we don't want gov't making instant laws or automatically going with slight majorities.

        So voting directly on issues, nope. Voting more accurately for candidates and removing the marketing/advertising of career politicians, that I'm for!
        • by Mawbid (3993)
          OK, shut up about my fashion sense! :-)

          I realise it's not a good idea to expect everybody to read all the bills. We don't even expect congresspeople to read all the bills.

          "Either we pick people to decide all the issues, or we decide all the issues diretcly" is a false dichotomy. It's possible to imagine a solution in between.

          For instance, it could be a rule that the signatures of some percentage of voters forces a referendum on any issue. Once decided, the issue is out of the hands of politicians. I'm

    • by abb3w (696381)
      Problem is, real issues like Debt or Fiscal Policy aren't sexy enough to campaign.

      I'm afraid the problem is more basic than that.

      Anyone who spends any time doing enough study on this to grasp the scope of the problem will end scared out of their wits. If the candidates explain the issue to their constituents so that the voters start to understand, they will start to scare the voters out of their wits. The sheep in this country will be traumatized by this, and associate the trauma with the candidate expl

  • Generational Warfare (Score:4, Interesting)

    by macinrack (314691) on Monday September 13, 2004 @08:31AM (#10234230)
    We are headed for general warfare. The Republicans seem to think that we can spend spend spend and give away all our piggy bank and the sun will somehow still shine. Democrats are convinced that letting in waves of immigrants from the South will fund the Social Security system. What a mess. The fact is that the younger generation will not have enough to give, and the Me Generation (they call themselves 'boomers') will not be willing to give up anything they have been promised. It will come to a head when the younger generation finally is in power, like the Me Generation is now, and hard decisions are made about whom gets what. Generational Warfare.
    • I was thinking along the same lines.

      It's not going to be pretty, but I doubt it will be as bad as some people say.

    • The investor class declared war on the middle class and poor long, long ago. 90% of the wealth in the US is held by the top 10% and 50% of the wealth is held by the top 1%. I'm so tired of trying to point out that fact and hearing "CLASS WARFARE!" in response from right wingers.

      NO... "class warfare" is all the policies since Reagan was sworn in that got almost all the wealth in this society in the hands of the investor class.
  • by jamie (78724) <jamie@slashdot.org> on Monday September 13, 2004 @08:53AM (#10234407) Journal
    This is why I wish Child's Pay [bushin30seconds.org] had been allowed to air during the Super Bowl. I think most Americans, Republican and Democrat, are honest and honorable enough that we don't want to stick our children with the bill for what we are enjoying today.

    But most Americans don't have a clue what is going on. I saw a billboard last night that said, "Remember, it's your money" -- and it was an ad for Bush-Cheney! The administration that insisted tax cuts were the prescription for times of plenty, for times of recession, for times of peace and times of war, has now seen the unwanted side-effects: a languid recovery, and a trillion dollars added to the debt. A budget surplus, the first in modern times, converted instantly to massive deficit.

    Sometimes I wonder if there isn't a way to start talking about the debt as the balance on our nation's credit card. Maybe if we put overspending into terms that the average consumer could understand, and stuck to those terms, people could finally start to get it. This country produces $11 trillion [cia.gov] of wealth every year, and, through our government, we are $7.4 trillion [brillig.com] in debt. Maybe if we start comparing the government to a family that's making $110,000 a year, but is $74,000 in debt, we could have a real national debate about government spending. The question is not whether "it's your money," but whether, being $74,000 in debt, it's a good idea for you to get a brand-new credit card and go rack up another $4,000 on it every year -- as Bush and the Republican Congress are now doing.

    Especially when massive, unavoidable costs are just over the horizon.

    Grover Norquist has declared his goal of drowning the government in a bathtub, and his way of doing it is to spend it into oblivion. The Republican Party has sold out the country by signing on with this brand of destruction. What it's going to yield is not prosperity and limited government, but anarchy and -- very possibly, in the decades to come -- the end of America as an economically powerful beacon of freedom. When our children are serfs for the wealthy who have bought up the country, when the old are baking to death because we can't afford to buy them air conditioners, when the poor and the sick die alone because we can't provide them with basic health care, when the unregulated food makes us sick and the unregulated drugs are a crapshoot, when half the country will never be able to retire and will be forced to work at McDonald's and Wal-Mart until their bodies fail, I hope people remember the name of Grover Norquist, and who it was [thenation.com] that put his theories into practice. One percent of this country will always enjoy all the best things in life, but everyone else will be wondering what it was like before our government was drowned, and if those folks back in the '90s and '00s knew how good they had it.

    • A budget surplus, the first in modern times, converted instantly to massive deficit.

      Yeah, that's Bush's fault. It's not because the dot.com bubble burst. It's also not because we massively increased spending when we had that surplus. Of course, can you really call it a surplus if we proceeded to spend it all when we found out about it?
      • by jamie (78724) <jamie@slashdot.org> on Monday September 13, 2004 @11:54AM (#10236269) Journal
        It is indeed Bush's fault. About half of the deficits are the result of Bush's tax cuts [pkarchive.org]:

        The prime cause of giant budget deficits is a plunge in the federal government's tax take, which fell from 20.9 percent of G.D.P. in fiscal 2000 to a projected 15.7 percent this year, the lowest share since 1950. About 45 percent of this plunge can be attributed to the Bush tax cuts. The rest reflects the end of the stock market bubble, the still-depressed economy and -- probably -- growing tax sheltering and evasion.

        (Note: much of the reason the economy is taking so long to recover is, obviously, the war in Iraq, and the fact that Bush's tax cuts were back-loaded, having most of their effect in the years to come, not in the three years we just lived through.)

        And you simply have no idea what you're talking about re "massively increased spending." Go look up what the annual increases in discretionary spending [factcheck.org] were under Clinton and under Bush. Even Cato calls it "The Republican Spending Explosion."

      • by llefler (184847) on Monday September 13, 2004 @02:20PM (#10237988)
        Yeah, that's Bush's fault.

        I have been concerned about Social Security for quite a while. As well as all the talk about budget deficits while completely ignoring the debt. But I didn't have a real fear of our fiscal future until I saw ultra conservative Pat Buchanan railing against the Republican party over their stance on outsourcing and government spending. His predictions for the next 10 years are every bit as dire as any posted here.

        We're going to have to start protecting our higher paying jobs, get control on government spending (lets clean up the two wars we have, instead of trying to start new ones in Korea and Iran), and get rid of our budget deficit. Balancing the budget is no longer enough, we need a surplus to pay for current and future debt responsibilities. I like tax cuts as much as the next guy, but they are irresponsible when we don't have a surplus. It's like saying "I'm not going to pay the gas bill this month, I need more discretionary money to 'invest' in a new SUV."

        And as far as privatizing Social Security; unless you are willing to tell someone to sleep on the street and starve when they lose their money, it will do nothing but make things worse.

        So yes, as long as Bush is president and he continues to ignore the train wreck, all the while finding ways to spend more and more money, then it is his fault. We've gone from a budget surplus to a record breaking deficit in 4 years. And while it's nice to blame it on the dot bomb bust, I'm sure 130,000 troops in Iraq aren't exactly helping the bottom line.
    • Maybe if we start comparing the government to a family that's making $110,000 a year, but is $74,000 in debt, we could have a real national debate about government spending.

      While I do think that the defecit it somehting that needs to be taken care of, I don't think this method will work. A family with that kind of income usually will have a mortgage and at least a car or school loan to pay off.. hundreds of thousands of dollars.

      US Consumer debt rose to $1.98 trillion in October 2003 - this number includ
      • The trouble is that it's hard to compare national production to a family's wages. I agree that the $110,000/year comparison is off-base, but I'm not sure how to fix it.

        One basis for comparison is that of the U.S.'s $11 trillion economy, only about $2 trillion is reasonably available for a budget, since it is politically impossible (and of course unwise) to tax, say, 50% of the nation's production. So the analogy might be a family with $110,000 income that has to spend $90,000 of that on nondiscretionary e


  • - More than double the payroll tax, from 15.3% to 32% of wages
    - Raise income taxes by two thirds
    - Cut Social Security and Medicare benefits by 45%
    - Eliminate all "discretionary" spending (including such constitutionally mandated government functions as the military and the judiciary)

    I say all of them
    • Yes brillant idea. Lets reconstruct. The US has such a high standard of living for 2 reasons, high Gross National Product (meaning a lot of stuff is made per person, efficiency is high) and people feel secure (we don't have to worry much about invading armies and such).

      Ok now lets cover the points.

      - More than double the payroll tax, from 15.3% to 32% of wages.
      This will cause massive inflation as people will need to be paid more to continue making the same living.
      Thus money will be worth less, so the incre
    • by pb (1020) on Monday September 13, 2004 @10:36AM (#10235446)
      It's possible to start responsibly paying down the debt without any huge shifts in economic policy, Clinton proved that. The amount we pay on interest on the national debt every year is often less than the deficit itself, which implies that if we didn't have the debt now, we wouldn't get into more debt! So all we have to do is start paying it down, and eventually our interest payments will shrink as well.

      As a percentage of the budget, it isn't that big a chunk, so we wouldn't have to cut back too much. As for Social Security, I suggest we raise payroll taxes and income taxes slightly, and/or possibly institute a small national sales tax on luxury items. Simultaneously, we can start saving the Social Security surplus for Social Security, instead of spending it on the rest of the budget--because we know we'll need that money!

      So there; no drastic changes. It isn't all bread and circuses, but it's at least somewhat responsible and forward-thinking.
      • This is not the same problem as year-to-year account deficits. Peterson estimates that the year-to-year deficits would be $783B in 2020, increasing to trillions later. Even Robert Rubin and the other economic experts on Clinton's team cannot pull off those kinds of savings and revenue increases without radical reforms of the entitlements.

        Peterson does propose some relatively minor tweaks which will add up to big effects -- indexing COLAs to inflation instead of wages, legally mandatory savings accounts, an
      • It's possible to start responsibly paying down the debt without any huge shifts in economic policy, Clinton proved that.

        Umm, no. The National Debt increased every year Clinton was in office. Even when we had that "surplus", the National Debt was increasing. Go figure.

        possibly institute a small national sales tax on luxury items

        Raise your hands if you don't believe that such a sales tax wouldn't be expanded to include pretty much everything within twenty years!

        Note, by the way, that the original In

  • by dpilot (134227) on Monday September 13, 2004 @09:04AM (#10234494) Homepage Journal
    Do we really know who is ignoring the issues? I know that the only time I've heard more than two sentences from Kerry was his acceptance speech at the DNC, and only on CSPAN. On network news his speech was overlayed and overshadowed by Talking Heads. Beyond that time, I don't hear anything else about Kerry's proposals. The news covers polls, Swifties, fonts, and superscripts. They don't cover election issues, as far as I can tell.

    I honestly can't comment on Bush's ability to get his words out. In a way, it just doesn't matter, because Bush has had nearly 4 years with a friendly Congress, so we don't need to hear what he says. We can see what he has done. We can expect more of the same, changing only the degree of aggression in pursuit, based on Congressional makeup.

    I have 4 possiblities:
    1: The news services are incompetent, and have forgotten how to cover hard news in favor of covering fluff.
    2: The news services are interested primarily in revenue, and know that pushing emotional hot buttons is the best way to Sell More.
    3: (mild tin-foil hat) The broadcasters that own the news services want to keep consolidating, and know Kerry is less likely to go along. Therefore they want Bush to win. Open coverage of issues like the National Debt hurt Bush, so they don't get covered.
    4: (strong tin-foil hat) The news services are in it with the Space Aliens and the Republican Comittee, and all want Bush to win. The rest is like (3).

    For any choice above, IMHO the new services are failing in their responsibility to cover the news and enlighten the population.
  • Not ignored (Score:3, Insightful)

    by Kohath (38547) on Monday September 13, 2004 @09:07AM (#10234528)
    Bush talked about Social Security reforms at the convention.

    The rest of the Federal debt is constantly overhyped. I remember in the 80s it was going to kill us all, and in 2000 we were going to pay it off on 10 years. Now it's going to kill us all again.

    The solution is very simple: cut spending, grow the economy, reform Social Security into private accounts. Bush is saying he'll do all those.

    The Social Security "obligations" can be retired by selling government land. The Federal government owns most of the land west of the Mississippi.
    • by Scarblac (122480)

      The solution is very simple: cut spending, grow the economy, reform Social Security into private accounts. Bush is saying he'll do all those.

      But what he actually did the last four years is almost exactly the oppositie - cut taxes and increase spending.

      • He also more-or-less kept his campaign promises from last time. He did most of what he said he'd do.
        • Yup, and you can say what you want about me because of it. I believe that had 9/11 not happened, we would not be deficit spending. Well, more likely it wouldn't be the biggest deficit ever. The upswing in the economy hasn't come about as fast as anybody would have liked, and that would have put a dent in the budget. Granted that doesn't do much for Social Security.
      • Re:Not ignored (Score:3, Interesting)

        But what he actually did the last four years is almost exactly the oppositie - cut taxes and increase spending.

        50% accurate, he did not promise to raise taxes.

        Also, seven months into his term he was forced to seriously adjust national priorities and focus on unanticipated problems and issues.
    • by lorcha (464930)
      The solution is very simple: cut spending, grow the economy, reform Social Security into private accounts. Bush is saying he'll do all those.
      In term 1, he ballooned spending, shrank the economy, and expanded Social Security welfare.

      The biggest problem with Bush is he is not a conservative! Why the hell do Republicans like him so?

    • I was curious about your claim about US Gov't land ownership so I did a little looking and found this site [nwi.org] that tallies government land ownership, took that data and ran it through a spreadsheet. Not including Alaska and Hawaii, state and federal government ownership accounts for 34% of the land in states west of the Mississippi (including those states stradling the river). Including AK and HI the total goes up to 47%.

      The next question though is how much of this land is actually worth anything, since the
  • This is issue has been the centerpiece of MSNBC's Scarborough Country for about a week. Mainly because he's promoting his new book. Link to transcripts here [msn.com].

    The world is changeing and now we have a way of making issues come to the forfront. Bloggers unite!
  • Reality Check (Score:4, Insightful)

    by rueger (210566) * on Monday September 13, 2004 @09:12AM (#10234560) Homepage
    The perception is that politicians get re-elected by spending money in their constituencies. The aim of course is to spend tax dollars in whatever way will register with the largest group of voters.

    As evidenced by the Bush administration, politicians really don't give a fig about debt - they care about getting re-elected. If a few billion dollars of deficit spending will bring in the votes, that's what they'll do.

    Of course, voters aren't much different. I have yet to hear a fiscal conservative make a list of the things that they are prepared to forego in the name of debt reduction, only the things that everyone else should give up.
    • I'm a fiscal conservative. I'll give up everything except for national defense and highway construction, which the federal government is, and always has been, constitutionally mandated to provide for.

      Now you've heard it.

  • in Medicare and Social Security could greatly increase the chances that the US can weather the retirement "storm."

    1. Increase retirement age, perhaps by 3 months a year. Doing so over a period of 16 years would help to stretch out retirement time -- more months of tax payments, fewer months of social security payments.

    2. Increase the ceiling. Right now, the income ceiling is $87,000. After that, you're not taxed teh 6.2%. While the ceiling rises every year (IIRC), it could rise a whole lot faster.
    • by Cade144 (553696) on Monday September 13, 2004 @11:08AM (#10235780) Homepage

      4. Work hard to reduce medical expenses. This is a huge problem and incredibly complex. I suspect that improving public health (reducing smoking, alcohol abuse, fat-assedness, etc.) would help tremendously. Working on decreasing the price of perscription drugs is a help, but it's drops in the very big bucket.

      5. Put a Medicare tax on stuff that makes people sick. Cigarettes, booze, and restaurants would be a great start. Why should some Americans get to enjoy a butt, a beer, and a double burger -- and then enjoy health care paid for by those who treat their bodies better. Drinking, smoking, and eating crap food is part of the American way... but those doing the enjoying should be paying their fair share for their future added costs.

      Just to be a bit dismal, I think you miss one of the key problems with both Medicare and Socical Security: Longevity.

      When both Social Security and Medicare were conceived (heck most pension plans for that matter) life expectancy wasn't much pas age 65 or so. If you managed to live long enough, you could benefit from your company's penson plan, or the government backup (Social Security) and get government medical benefits so that getting sick once didn't wipe you out financially (Medicare).

      However, medical technology, good dentistry, and the "health craze" movement have all added years on to people's lives. Now people live longer, and expect to partake in the government largesse. People who live longer need expensive medications and surgeries to help them live longer. The longer they live, the more Social Security and Medicare money they soak up.

      Just look at President Clinton or VP Dick Cheney. Both men would be dead (or unable to do much more than lay in bed) without nifty cardiac surgeries. Those surgeries cost thousands and thousands of dollars. (I am not saying that the price of these procedures is too much, just that they cost lots of money.) Now that their lives have been prolonged, they can expect to continue taking medicines to keep their cholesterol down, blood pressure down, and so on for the rest of their lives. This costs more money. When they finally make it to the age where cancer starts to take them down, they can expect to use more money on cancer treatment.

      The longer you live, the more it costs to keep you alive. Multiply that by all the people eligible for Medicare, and you can see how the policy of providing medical treatment to people is a positive feedback loop that rapidly chews up all your spare money.

      How do we solve this problem? Heck if I know. I don't want to turn us into some parody of Logan's Run where people are forcibly retired from living at age n. But I do want those who run for political office and who claim "leadership" as one of their defining adjectives, to discuss this seriously.

  • by sofakingon (610999) * on Monday September 13, 2004 @09:22AM (#10234651)
    There is a candidate who will veto ALL deficit spending if elected:

    Taken from badnarik.org [badnarik.org]

    Every working American is acquainted with the principle of balancing his or her checkbook. You have income. You have expenses. If your expenses are larger than your income, you either cut expenses or you start getting nasty letters from your bank and your creditors about bounced checks. Maybe you end up in court. Maybe you go to jail.

    Unfortunately, we--the people--are the federal government's "bank" ... and right now, we don't have any way to bounce the rubber checks that Congress writes and the president signs.

    Deficit spending is no different in principle for the government than it is for you or me. It happens when government spends more money than it takes in.

    When that happens, the people must inevitably take it on the chin sooner or later. Either the government raises taxes, or it inflates the currency--reducing the spending power of the money we've earned--to pay off the debt it has amassed.

    One obvious solution, of course, is to forbid Congress to spend more than it takes in. While a "balanced budget amendment" to the Constitution has been proposed--and while I support such an amendment--there's no substitute for a chief executive whose veto pen stands ready to shut down any congressional appropriations in excess of revenues.

    As your president, I'll veto deficit spending. Period. I expect this to be an easy thing to do, since I'll be slashing the size of the federal government at the same time--so much so that taxes will be slashed as well.

    A second solution is to put the American economy back on real money, backed by gold and silver, and to take away the ability of the Federal Reserve to create "money" out of thin air, debasing the value of the "money" in your wallet.

    The Constitution delegates the power to coin money to Congress. As your president, I'll insist that they discharge that responsibility instead of fobbing the job off on an external entity like the Fed. And I'll veto legislation for any such operation that doesn't meet the true test of money: It is either made of gold or silver, or can be redeemed for a fixed amount of gold or silver.

    A nation's money is its economic lifeblood. Passing on our debt to future generations, or defrauding the people and the government's creditors with inflation, are not options. Those paths lead inevitably to economic collapse; mine leads to long-term prosperity.

    I'm Michael Badnarik, Libertarian for President. I ask the tough questions--to give you answers that really work!

    • by joss (1346) on Monday September 13, 2004 @11:33AM (#10236065) Homepage
      Why gold and silver, why not butterflies.

      What is inherently more real about using gold and silver as a basis for currency than some other arbitrary good ?

      If someone creates something, eg writes a computer program, there is more stuff in the world, and either more money needs to be created, prices need to go down, or we end up with a situation where there is plenty of stuff around, but not enough money for people to buy it. Stuff gets created all the time, so the amount of money available has to go up continually. Since we have fractional reserve banking system money is continually created [in form of debt]. In fact, so much is created that we end up with inflation rather than deflation.

      I agree that the current debt based monetary system is responsible for a huge number of problems, but it works better than the gold standard did. It's not just that it works better, economies which relied on stagnant money supplies got wiped out in an almost darwinian fashion. Debt based money fosters growth [and inflation, boom/bust economics, banking supremacy, war and other stuff, but it's certainly less stagnant].

      I recommend "The grip of death" for a better understanding of this stuff.
  • > - More than double the payroll tax, from 15.3% to 32% of wages

    And by doing so close half the businesses in the country? What president is dumb enough to do that?

    > - Raise income taxes by two thirds

    This may be a good time to remember why we declared independence from England. As I recall, the high tax rate was one of the reasons. "High" was something like 5% back then...

    > - Cut Social Security and Medicare benefits by 45%

    Do you realize how old most people who vote are? Doing this would automa
    • > - Cut Social Security and Medicare benefits by 45%

      Do you realize how old most people who vote are? Doing this would automatically prevent reelection of everyone who votes for it.

      See what term limits could do? Imagine a Senate and House were 60% are out from term limits anyway, with a lame duck president (which we'll have if/when Bush gets reelected): then it could be done. Of course, people would run saying they were going to reverse it.

      I personally thing that Social Security is a last resort - an

      • I oppose term limits because I believe the result would be that the power of staffers, consultants, and lobbyists would be increased. A neophyte congressman would be (IMO) more susceptible to manipulation and pressure from these anonymous power brokers.

        That is not to say that I like the status quo. One big problem is congressional district gerrymandering, by which a huge percentage of Congressional Reps are in politically "safe" districts (strongly Dem or Rep). They would basically have to commit murder to
  • by torpor (458) <jayv.synth@net> on Monday September 13, 2004 @10:12AM (#10235187) Homepage Journal
    .. because the People ignore it, too.

    Ignorance of the issues concerning the National Debt lead to Big Profit on the part of Banks (and other Lenders) to whom the Debt is owed... so you can be damned sure that popular culture has no clue just deep in the red the nation is ...

    In other words, its not enough to blame the politicians. Blame the people, and the Banks, too ...

  • It just requires a candidate in the debates who is willing to tackle them. Hearken back to 1992, when the major party candidates were busy nattering on as they do. Along comes Ross Perot, a quixotic little Texan with a penchant for flip charts and one burning issue: the deficit.

    Perot did not win the election, but the man who did ended up moving us from a deficit to a surplus. He didn't want to do it, but being publicly shamed by a Texan with big ears will get someone to change their mind mighty fast.

    It
  • by clambake (37702) on Monday September 13, 2004 @10:20AM (#10235274) Homepage
    How the Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do about It.

    Quite simple realy... We'll wait until they are all old and feeble and then stop paying for them. It's cruel, but they brought it on themselves.
  • There are many parts to this problem, but birth rates are a large part of it. When the baby boom starts to retire the ratio of workers to people getting social security will shift. Even if we change the social security rules it won't matter much. There will be fewer people running the economy as a percentage of the population. This will be even worse in Europe were pretty soon there will be more people collecting benifits than paying taxes.

    The USA needs to raise its birth rate in a major way. If each woman
  • Cf the privatization scheme Bush came up with; the idea is to turn SS into a real investment scheme, instead of a Ponzi scam -- but means that some of the "pay as you go" revenue is lost. The Democrats have their own schemes, which depend on increasing the most regressive Federal tax.

    Mathematically, there's no scheme that will work without one or the other approach, and either approach is untenable in the face of a populace assured for years that they can have whatever they want if they'll only vote for i
  • -End the "War on Drugs"
    -Pull out of Iraq. Now.
    -End military aid to ALL foreign coutries
    -Stop development of Star Wars defense system and new nuclear devices.
  • The government does not have the stomach to stop it's ponzi scheme. When the proverbial shit hits the fan people will still receive their "entitlement." It just won't be worth anything. The sitting President will have to go to war (wag the dog) as long as the countries who design our weapons systems let him :).
  • by CashCarSTAR (548853) on Monday September 13, 2004 @11:50AM (#10236228)
    You just need to be willing to think outside the box. To look at the big picture.

    Problem:The debt is every growing, unless drastic measures, which are politically implausible are taken. Why?

    Not enough tax money is being taken in to cover the costs. Simple. So you can either cut costs, or you can figure out ways to expand the tax base. Can you expand the tax base without raising taxes? Sure can!

    Steps that can be taken:
    #1. Raising the minimum wage by a substantial amount. This would increase the tax base by quite a wide margain. As well, it would relieve strain on various governmental services by quite a wide bit. Sure, it would cut down on corporate profits...boo fucking hoo.

    #2. For the cost of the medicare system, we can publicize the whole thing and bring out Universal Health Care. Again overal this would create more a more efficent system, which basic economics says creates more jobs, meaning a higher tax base. As well, it would have a nice side-effect of fighting overseas job loss, as rising health care costs are a big motivator to move the jobs in the first place. Cut the parasites out.

    #3. Make it official government policy to have as many people to work as possible. Current government policy is to maintain a certain unemployment rate to fight inflation. Get the people you need to do whatever jobs needed to be done. Sure it costs tax dollars. But with all the spinoff money of those jobs, the amount of taxes taken in will much more than account for the additional costs.

    Three steps that can be taken to enlargen the tax base without costing you a dime. (Unless you pay somebody minimum wage, which in that case FUCK YOU parasite). Yeah the corporations will bitch and scream. But it's pure survival folks. It's them or us.

    Take your pick.
    • by jpryan98 (813095) on Monday September 13, 2004 @12:37PM (#10236716)
      So we raise the min wage to $50/hr. What will this do. I currently make$35/hr so I need a raise to $75/hr because I do not have a basic job. The people that have more responsibilities than me get a raise to $100/hr. So now that means that everything that we produce must cost more to cover our wages as I work in a small business and there is no big corporate money. Our product that was selling for $150 must now sell for $225. Are you as a consumer willing to pay that increase or is my company going out of business?
    • Steps that can be taken: #1. Raising the minimum wage by a substantial amount. This would increase the tax base by quite a wide margain. As well, it would relieve strain on various governmental services by quite a wide bit. Sure, it would cut down on corporate profits...boo fucking hoo.

      Hmm, so we can increase the tax base by raising the minimum wage. Alright, let's raise it to $100 per hour! That should help the economy LOTS, right?

      No? What do you mean, it would cause inflation if we raised the minimum

      • Responses: (Score:3, Insightful)

        by CashCarSTAR (548853)
        Overall, the big problem I see with the economy, what entitles "success", and the expectation there-of. Basically, increasing profits as far as the eye can see, which frankly, has its limits.

        #1. I would suggest using a region based minimum wage based on some sort of scientific formula. Basically, add together all basic costs and add 10% or so for discretionary spending/saving and tie that in to a 140 hr/month work.

        Do that for individual areas, and it would make sure that people see the value of hard work
  • Financial deficit, loss of liberty and what not... Watch this 40 min video clip and then
    http://www.prisonplanet.tv/articles/august20 04/082 804dictatorspreview.htm

    do a thorough search on the two terms "Skull Bones" and "Bohemian Grove" on the web, read some books...

  • Such as this: http://www.ssa.gov/retirement/retirechartred.htm [ssa.gov]

    How many of you know that currently your full retirement age is 67? What do you want to bet it will soon be higher?

    Maybe if they didn't make exceptions for the 1943-1954 group Social Security might last a bit longer.
  • by Anamanaman (97418) <jc@@@comicjunkie...com> on Monday September 13, 2004 @06:47PM (#10240967)
    Think about the debt in the same way you think about a mortgage.

    Say you buy $1,000,000 house with a loan. Your salary is $50,000. You are in trouble.

    Say you buy a $1,000,000 house with a loan. Your salary is $200,000. This is perfectly acceptable.

    The point is, just looking at the debt amount is meaningless. You also have to see what the income is to see if you are in debt trouble.

    Let's put this in the perspective of the national debt. The debt seems pretty large. However you need to look at the income. What is income? It's national GDP (gross domestic product). As our GDP goes up, so does our ability to sustain a larger debt.

    This is the one thing the deficit demagogues never mention. Our GDP has gone up dramatically over the last 20 years. So when looking at a national debt, first you need to adjust for inflation. Then you need to take the proportion of the debt compared to the gdp. Do this with our current national debt, you will realize that our debt is very manageable and much less than it was during Reagan and FDR.

    Here's a good graph of Debt vs GDP:
    http://zfacts.com/p/318.html

    So yeah, the debt is too high right now. No one disputes that. But its not the end of the world. The economy isnt going to collapse, even if our debt was double what it is now.
  • by popo (107611) on Monday September 13, 2004 @06:49PM (#10240991) Homepage
    Its not just social security either: Many economists now believe that the effect of baby boomers retiring will send shockwaves through every industry.

    Healthcare will not escape unscathed, as demand for limited and expensive drugs goes through the roof. The pressure to legislate away the basic economic problems of supply/demand will be near overwhelming -- and either big-pharm will become increasingly socialized, or radical restructuring of medical financing will be required.

    Housing and Real-Estate *will* crash as sure as night follows day when retiring baby-boomers, needing extra cash downsize into retirement communities. (Remember that almost 90% of high-end real estate is owned by boomers). The notion that real estate always goes up (while true in the long term) will be challenged by a 20 year downtrend as baby boomers' real estate assets inundate the market in an unprecedented deluge.

    And the list of impacts goes on and on... inheritance law, banking, education... everything is going to be affected by this -- the largest of population trends in the next 20 years.

    What's really scary are the downstream effects -- like what happens to Freddie and Fannie when the great boomer real-estate liquidation happens... but that's O.T.

  • by rlp (11898) on Monday September 13, 2004 @07:12PM (#10241241)
    A fellow boomer gave me pertinent advice that I feel obliged to share. Given the state of Social Security, corporate retirement plans, and post-dotcom bust 401K's, he recommends the following strategy: "Once a week eat a can of cat food. That way, by the time you retire, you'll be used to the taste".

You can not get anything worthwhile done without raising a sweat. -- The First Law Of Thermodynamics

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