US Candidates Ignore Looming Debt Crisis 266
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.
Debt clock (Score:5, Interesting)
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)
"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!
Generational Warfare (Score:4, Interesting)
Candidates, or News Organizations ignoring debt? (Score:5, Interesting)
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.
There is another choice (Score:4, Interesting)
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!
Bush mentions SS on his web site, Kerry doesn't... (Score:4, Interesting)
Re:Social Security, etc... (Score:1, Interesting)
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.
Perhaps, but how do you expect to pay for the $1-2 trillion over 7 years to pay for the transition between the current pay-as-you-go system to the personal investment system? Also, who is going to determine where this gigantic glut of cash is going to go? Will you limit choice to try and ensure low risk? Will you allow lots of choice and say tough luck when thousands of people lose their safety net? What will the increase in overhead be to fight fraud by unscrupulous investment firms?
The social security system (including medicare) in my opinion is harmful to our economy. We would be better served by creating a welfare system which utilizes tax funds collected from higher income people to create an economic safety net for the poor. This would leave FICA tax in the hands of the people most likely to spend it, which increases the standard of living of the lower classes, while increasing profits at companies to up the pay of the people who have to pay higher taxes.
Re:Not exactly being ignored (Score:3, Interesting)
There's a difference between raising the retirement age and privatizing Social Security and medicare or a flat tax. If people are living longer, it makes sense to raise the retirement age.
But, privatizing services, or going to a flat tax would be disastrous, I agree. There's a real chance that our country will move in the next few years from being a democracy, to a plutocracy. The rich will rule and get richer. The rest of us will have to bend a knee to our royal dynasties. Their power will continue generation after generation with no estate tax, and in the end we'll be no better than the regime that we fought a revolution against.
Issues or candidates (Score:2, Interesting)
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 that wants the all the same things as you do.
So let's say you're anti-X and anti-Y, and all the candidates are pro-X, anti-Y or anti-X, pro-Y. You're forced to either support something you don't believe in, or not vote. And even after you vote for the pro-X candidate (because you don't want to suffer these assholes who think you've no right to complain if you don't vote), you have no guarantee they'll actually deliver on what they promised.
The system we have today for discovering and enforcing the will of the people is ...suboptimal.
Are there any better methods available? I know we won't get a perfect solution to a problem this complex, but surely we can do better.
Re:Not ignored (Score:3, Interesting)
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.
The situation is not totally helpless however.. (Score:4, Interesting)
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.
We are SO screwed.... (Score:3, Interesting)
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 explaining this. They will then usually change the channel to make the bad man go away. Whether they do or not, come the voting booth, Pavlovian conditioning ("aiigh! scary man!") will make them vote against the honest man.
As Walter Mondale so memorably demonstrated, voters don't vote for people who tell them the bad news; they shoot the messenger. This, lamentably, may well set up a memorable demonstration of "evolution in action" as applied to societies.
The problem may get scarier. I am not an Economist (and I'd be delighted if one can explain why I'm wrong), but according to my old ECON201 textbook, stagflation (inflation combined with slowing economy and job loss) is caused by economic shocks to the national aggregate supply curve-- IE, something suddenly causes making things to be more expensive. Government deficit spending can somewhat reduce the effects.
Stagflation was first triggered in the 1970's by the rise in oil prices, coincident with OPEC tightening supply-- and, perhaps more importantly, the peak of the US oil production Hubbert Curve. The Reagan era's deficit spending (continuing to the present) helped make this problem disappear-- but not necessarily go away.
Estimates for the peak of the global oil Hubbert curve are at 2010, plus or minus 10 years. (Yes, that means some people worry it has already peaked.) So, we'll be facing a global economic slowdown that reduces the US tax base, we'll have exhausted our ability to hide this via deficit spending, and we'll be facing this financial shortfall from needing to pay for the Boom going out to pasture.
Oh... and the diminished likelihood in such an economy for those at lower income levels to earn enough for the necessities of life will result in increased numbers resorting to illegal means to do so... just to add widespread small scale mayhem to probable riots in the streets. With luck, though, we should be able to avoid a civil war fought with nuclear weapons. =|
Now, where did I put that electronic thumb I borrowed from Ford Prefect....
Re:Bush and the deficit (Score:4, Interesting)
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.
Re:Issues or candidates (Score:2, Interesting)
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 not necessarily recommending precisely that, but you get the idea.
We choose candidates largely based on where they stand on issues, so we're already making up our minds about some of the big issues: Do you want us all to pay for healthcare for everyone? Do you support capital punishment? Do the people have the right to ban areas of scientific research? Should art be publicly funded through grants? I imagine you already know the answer to these questions.
The tyranny of the masses is really orthogonal to this. Representative democracy produced the sodomy laws that make criminals of homosexuals.
How do we make sure our political system does good? That's begging the question.
Current political systems are flawed. So is any alternative, but they might still be better, so it's worth dreaming them up and evaluating them.
Re:Social Security, etc... (Score:3, Interesting)
1) Living longer, doesn't mean being able to work longer. What percentage of people living to 80 instead of 70 spend those extra 10 years of life demented in a nursing home?
2) A higher retirement age means less jobs available for the youngest generation. Comic book man now lives in parent's basement until 45 yrs old, instead of 35... there just aren't extra jobs (sure as hell aren't creating jobs otherwise).
3) Political realities (or rather the fantasies that pass for reality in DC) dictate that not only do we have to keep the current flawed system as is, but create a secondary one in its place even more flawed. Pointing out how insane it is does nothing, the lunatics run this asylum.
Pay your bill now, die early.... (Score:2, Interesting)
b) I encourage as many baby boomers as possible to do their part for mother Earth and my paycheck by early euthanization. I'll miss some of you, but frankly, most of you are just dead weight to me. You boomers are responsible for this massive federal debt, our crushing bureaucracy and nanny state, and by the time I live long enough to enjoy any of it, it won't exist anymore, so F you very much.
c) Did I mention that raising tax rates has never increased tax revinues?
d) back to (b)