Submitted for your approval... I was alerted to a site here, which refers to "USA Inc.". From their blurb:
"USA Inc.is a non-partisan report that looks at the U.S. federal government (and its financials) as if it were a business. Mary Meeker, partner at KPCB and former financial analyst at Morgan Stanley, created and compiled the report with the goal of informing the discussion about our financial situation and outlook. USA Inc. examines the country’s income statement and balance sheet, aiming to interpret the underlying data and facts, and illustrate patterns and trends in easy-to-understand ways. The report also analyzes the drivers of federal revenue and the history of expense growth, and discusses basic scenarios for how revenue and expense growth might change to help America move toward positive cash flow."
I'm just starting to review this: no comments, yet. It has the appearance of being interesting. We'll see...
- Steve
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I'm trying to approach this tract with an open mind. I read through the first 30 or 40 pages of it but found it hard to supress a steadily building sense of fury and frustration.
ReplyDeleteFirst thoughts: From the very outset, the paper is dimissive of defense spending as a core driver of the increase in government debt. We learn (from the paper) that defense spending is "only" 20% of overall spending and as such not particularly important in any effective strategy to reduce the debt.
Holy Moses Steve, 20% is a whopping share of the deficit! And even this figure is not accurate. Overall defense spending actually comprises 25% of federal spending - not 20%. Apparently the authors have whittled the actual figure down to 20% by failing to include off budget appropriations for ongoing wars - not to mention defense related foreign aid, or defense research (think "Star Wars").
If you take out interest, which cannot be reduced by any strategy other than reducing principle, defense spending comes to almost 28% of discretionairy spending! Doggonit Steve, that's almost a third of the entire problem!
Furthermore, unlike social security, medicare or unemployment compensation, defense spending is NOT SUPPORTED by a separate tax. Defense spending is not limited to or measured against any separate fund created to pay for it. When we speak of medicare costs "exceeding" the tax intended to pay for it, it is a criticism of a different order altogether. After all, citizens pay directly and currently, right from their paychecks, for medicare.
Think, Steve, how loudly would these fiscal conservatives be howling if defense spending, like medicare, was tied to a specific and well defined percentage of the income tax?
Furthermore, we all know social security is fully funded now and for the next 15 years or so. The real problem, which the weasels in congress refuse to admit, is that the money designated on your paycheck as social security in reality just goes to the bottomless pit of federal spending. There isn't any such thing as a social security trust fund - what a joke! If there was, social security would be solvent well past 2025.
And as for Medicare - THAT program was ramped up and made a budget buster by George Bush and congressional Republicans when the passed the Prescription Drug Act as a SELL OUT to big pharma. Do your research dude.
Finally, I intensely, and I mean INTENSELY object to the perjoritive term "entitlements". Technically it is correct - by paying into a fund like social security you are entitled to some kind of return. But we all know the public has come to view "entitlement" as an unearned subsidy.
Thus, the whole paper begins with an intentional ignorance of the most important component of the deficit and then proceeds to mischaracterize the nature of social security, which is a secondary problem at best.
Somebody call Dr. House - I'm still fibulating.
I still haven't had a chance to get deep into the paper. I will.
ReplyDeleteI admit I'm curious about your statement that "we all know social security is fully funded..." Really? This year, SocSec is paying out more than it takes in and there's no account (e.g., 'trust fund', 'lockbox', et.al.) to make up the difference. You did correctly point out the SocSec taxes have been (improperly) tossed into the general fund, and we all know WHY it was done. But, like Defense spending, SocSec is only a PART of the problem...
BTW - I'm all in favor of tossing out the Prescription Drug program. It was and remains a Bad Idea. Just because a Republican championed it doesn't make it a good idea. It was a payoff to Big Pharma, AARP, and others among the favored few, and it had significant bi-partisan support.
Chris, this economic time-bomb we're tossing back and forth is not a purely partisan issue. I'm sick-and-tired of watching everyone focus on creating a Blamestorm, as though that solves anything.
- Obama & the Democrats are a big part of the problem.
- G. W. Bush & the Republicans are a big part of the problem.
- Clinton, G.H.W. Bush, ... how far do you want to go back? Nixon? LBJ? Eisnehower? Roosevelt? Does it really matter? Does burning them in effigy SOLVE anything?
FACT: Policies and legislation originating from both Democrats and Republicans over the last 100 years is how we got into this mess. HOW we got here (and under WHOSE leadership) is only relevant within the context of making sure we don't continue to Make It Worse by maintaining those proven-to-fail policies and kneeling before sacred cows. At this point, identifying WHAT doesn't work and WHY is more important than WHO had the idea in the first place.
So - Let's agree to set aside the ideological in-fighting, side-stepping and finger-pointing and try to deal with the Problem, OK?
Anyway...
Eliminating *all* discretionary spending will not balance the budget; cutting defense spending to zero will not balance the budget either... There's no way we're going to get things in order without putting EVERYTHING on the table. That means: discretionary spending, earmarks, defense, entitlements (call them 'direct payments to individuals' if that is more apt), *and* taxation (i.e., the revenue stream).
We need a COMPLETE overhaul, top to bottom... no exceptions. Yeah, I admit we've got to address how to generate appropriate amounts of revenue (taxes) *WITHOUT* destroying the economic engine. We've got to get the regulatory bureaucracy under control (e.g., sure doing X might be a good thing, but is it worth the cost?)...
But - above all else - if we can't get a handle on the Spending side of the equation, there is NO SOLUTION.
- Steve
I'll admit, social security is currently paying out more than it is taking in. Throw in the exploding Medicare costs and it gets even worse. I guess the point I was trying to make was that social security didn't get us into this mess. If there was a social security trust fund - a fiction which the government maintains - it would have a positive balance now and at least until 2025.
ReplyDeleteOf course I agree we need to set aside our differences. That's the course the public itself is going to have to take out there beyond the comfortable, air-conditioned offices of LRA&H.
But what bothered me most is that this report, however well meaning, refuses to acknowledge the effect of a bloated defense budget - and I considered that a particularly cowardly approach to take for a report which proposes to answer tough questions and deliver hard, disagreeable, but do-able answers.
Steve, since we abhor violence here at the Acworth Regional Offices of LRA&H, I'm going to restrict myself to wishing upon you only a mild toe fungus (easily treatable with over-the-counter ointments) for forcing me to read and eventually opine on "USA, Inc.".
ReplyDeleteSo far, I've found the piece to be relatively objective in the narrow corridor of the problems and solutions Ms Meeker elects to confine herself. In this regard, I'm finding in equal parts a genuine ambition to find honest answers and a troubling tendency to tailor the overall issue in such a way as to funnel the argument towards some answers she seems to have predetermined.
In other words, the tract is half an open minded search for solutions and half a closed minded search for ideological validation. That's not necessarily a problem for me. As a matter of fact, its refreshing to see a few conservative talking points subjected to actual, factual analysis. I'm still looking the thing over, and preparing a review. Expect it, but probably not soon.
-Chris