White House projects record deficit for 2009

[bascule]

http://www.cnn.com/2008/POLITICS/07/28/2009.deficit/index.html

 

...which will quite likely be enough to push the national debt over the $10 trillion mark. It appears the neocon "spend more, tax less" approach to fiscal policy has failed miserably. The present national debt represents almost $32,000 for every man, woman, and child in the US.

 

I really hope a new administration will focus on massively reducing budget deficits, hopefully employing a "tax more, spend less" approach to fiscal policy. It'd be good to see the Bush tax cuts rolled back, and hopefully we'll elect a president who can get us out of Iraq and stop the country from profusely bleeding money.

[Pangloss]

Yah I touched on this in this thread. I.E., a 14-digit debt. Pretty outrageous.

http://www.scienceforums.net/forum/showthread.php?t=34330

 

But I question whether anyone will be chastising the promised "Obama tax cuts" the way they deride the "Bush tax cuts". The unfortunate perception today is that tax cuts that come from Republicans are evil, corporate greed that harm the budget. Tax cuts that come from Democrats are for the common good and don't really hurt the budget very much.

 

And to some extent that's understandable, given that it's a spending problem, not a collections problem. It would be interesting if the people had a more direct say in how much money the government was given to spend, and a balanced budget was constitutionally mandated.

 

(You know... that kind of amendment might actually pass if it included a clause that allowed for deficit spending in times of war, especially if it were phrased such that the declaration of war in question had to be congressional as well as executive.)

[iNow]

Now, no matter who gets elected this fall, they'll be so bogged down trying to fix the red placed on the balance sheet by Bush that they won't be able to touch or do squat with their own economics policies for at least a year and a half.

 

 

 

http://www.nytimes.com/2008/07/29/washington/29budget.html?ref=business

 

The White House predicted on Monday that the Bush administration would bequeath a record deficit of $482 billion to the next president — a sobering turnabout in the nation’s fiscal condition from 2001 when President Bush took office and inherited three consecutive years of budget surpluses.

 

By most accounts, the worst seems yet to come. The deficit announced by Jim Nussle, the White House budget director, does not reflect the full cost of military operations in Iraq and Afghanistan, the potential $50 billion cost of another economic stimulus package or the prospect of steeper losses in tax revenue or further declines in the housing market.

 

Mr. Nussle also predicted Monday that the deficit would more than double in the current 2008 fiscal year — to $389 billion, from $162 billion in 2007.

 

[ecoli]

Now, no matter who gets elected this fall, they'll be so bogged down trying to fix the red placed on the balance sheet by Bush that they won't be able to touch or do squat with their own economics policies for at least a year and a half.

 

It's easy to blame Bush, but don't forget that it was the congress who just passed a bill that raised the debt ceiling another $800b. We need to get rid of all these clowns, not just Bush.

[Pangloss]

Now, no matter who gets elected this fall, they'll be so bogged down trying to fix the red placed on the balance sheet by Bush that they won't be able to touch or do squat with their own economics policies for at least a year and a half.

 

True, but like ecoli, that answer just feels "too easy" to me. It also feels partisan, like whatever Obama does will have a built-in excuse for failure (though I'm sure it wasn't meant that way). Democrats/liberals are complaining about deficit spending under Bush, and that's great, but they're doing so out of the left side of their mouth while the right side talks about increased entitlement spending, so we fix everything from global warming to the homeless.

 

The projected budget is $3.1 trillion. Out of that, $1.9 trillion is mandatory entitlement spending on stuff Bush has little or no say on. Social Security, Medicare, Medicaid, Unemployment/Welfare, and a quarter-tril (!) on servicing the debt. (Source)

 

And liberals want to increase that $1.9 trillion in mandatory entitlement spending. Dramatically. So any Democrat who REALLY wants to "balance the books" is going to have to do so at the direct expense of popularity with his very base of support.

 

Wanna bet?

[bascule]

Pangloss, I think it's incredibly dishonest to call the $260 billion we're paying as interest on the National Debt "entitlement spending". When you put that aside, the remaining mandatory spending adds up to ~$1,636,000,000,000.

 

The single biggest expense on the US budget is the Department of Defense, which weighs in at a whopping $660,600,000,000 when you include the cost of the wars in Iraq and Afghanistan, beating out Social Security which weighs in at a hefty $644,000,000,000. That said, the $515,400,000,000 the DoD receives sans the wars is more than the defense spending of all other nations on earth combined. That's ludicrous. Why are we spending that much on defense?

 

If we cut our defense spending to, say, just twice China's $59 billion defense budget, spending a total of $118,000,000,000 on defense, that alone would bring the budget defecit from $482,000,000,000 to $84,600,000,000, and that doesn't even include any changes to the spending in Iraq and Afghanistan. If we could further cut our spending on the "War on Terror" in half, say by ending the war in Iraq, that would bring the budget deficit down to $12,600,000,000. And if taxes on millionaires returned to Clinton era levels, we'd bring in an additional $90 billion per year, resulting in a $77,400,000,000 SURPLUS.

 

I couldn't care less about Social Security, but that's clearly an unpopular opinion among those who've paid into it for decades.

Edited July 29, 2008 by bascule

[Pangloss]

Pardon me, that's what I get for late-editing. Quite right, servicing the debt is not entitlement spending, though it's certainly mandatory. Different subject, of course.

 

So a little more than half the budget is on entitlement spending. And while I happen to agree with you about the DoD's budget, and you ignore the fact that China's spending is growing and they're rapidly approaching our military capabilities, you're still only talking about a quarter of the budget. Entitlement dwarfs defense. Dwarfs.

 

So you're arguing about the barn door while the horse is running around tearing up the yard. Wanna keep arguing about that? Fine. There are roughly 1.5 million active members of the US military. At a roughly-national-average salary of $40,000 that's $60 billion on salaries alone. You wanna tell them they can only make what a Chinese soldier makes? To do so you'll have to abandon that other liberal favorite, the "living wage".

 

The point being you're comparing apples and oranges. When China starts fielding stealth fighters and nuclear subs, and still has millions on the payroll demanding higher salaries, then we'll see what their budget is. Don't worry, at the rate they're spying on us, you shouldn't have to wait too long.

 

Now, please explode some more two-wrongs reasoning at me about why we need to balance the budget AND increase entitlement spending. I'm all ears.

[Mr Skeptic]

The difference between social spending and military spending is that social spending is essentially free. Take money from this person, give it to another, or take your money now, and return it later. Much of the money spent on the military, however, is gone. (Unless you use your military to "acquire" more resources, anyhow)

[ecoli]

The difference between social spending and military spending is that social spending is essentially free. Take money from this person, give it to another, or take your money now, and return it later.

we get a return on entitlement spending? That's news to me.

[Pangloss]

Yah I'm afraid I don't understand that reasoning at all. I guess tanks grow on really expensive trees.

[Sisyphus]

I'm guessing Mr. Skeptic means that with something like social security, you "get your money back" when you collect. So in a way, the real "cost" of social security is not the sum of social security taxes, but sum taxes minus sum payments. It's still not "free," and you won't necessarily individually get "a return on your investment," but it's still far less expensive than a first glance would indicate. This, I guess, would contrast with military spending, since they're never going to give me a tank when they're done with it.

[bascule]

So you're arguing about the barn door while the horse is running around tearing up the yard. Wanna keep arguing about that? Fine. There are roughly 1.5 million active members of the US military. At a roughly-national-average salary of $40,000 that's $60 billion on salaries alone. You wanna tell them they can only make what a Chinese soldier makes? To do so you'll have to abandon that other liberal favorite, the "living wage".

 

The point being you're comparing apples and oranges. When China starts fielding stealth fighters and nuclear subs, and still has millions on the payroll demanding higher salaries, then we'll see what their budget is.

 

I used China as an example because they're the #2 military spender in the world. Russia is #3 with $50 billion.

 

Is there any reason we're spending an order of magnitude more on our military than the #2 highest military spender in the world after us? Or, for that matter, more than the rest of the world combined?

 

Now, please explode some more two-wrongs reasoning at me about why we need to balance the budget AND increase entitlement spending.

 

I never said we should increase entitlement spending. I'm perfectly happy getting rid of the $644 billion we spend on social security, but yeah, that third rail thing...

[Pangloss]

I'm guessing Mr. Skeptic means that with something like social security, you "get your money back" when you collect. So in a way, the real "cost" of social security is not the sum of social security taxes, but sum taxes minus sum payments. It's still not "free," and you won't necessarily individually get "a return on your investment," but it's still far less expensive than a first glance would indicate. This, I guess, would contrast with military spending, since they're never going to give me a tank when they're done with it.

 

Perhaps that's what he meant. If so it's a great example of the narrow-mindedness of entitlement thinking, because it completely ignores the fact that military spending goes right into the economy at every level, from salaries to investors, and that money is far more efficient at padding retirement accounts than anything you'll ever get out of Social Security.

 

 

Is there any reason we're spending an order of magnitude more on our military than the #2 highest military spender in the world after us? Or, for that matter, more than the rest of the world combined?

 

No, I agree with you on that.

[ecoli]

I'm guessing Mr. Skeptic means that with something like social security, you "get your money back" when you collect. So in a way, the real "cost" of social security is not the sum of social security taxes, but sum taxes minus sum payments. It's still not "free," and you won't necessarily individually get "a return on your investment," but it's still far less expensive than a first glance would indicate. This, I guess, would contrast with military spending, since they're never going to give me a tank when they're done with it.

well, you could argue that if that tank keeps you from getting blown up by a terrorist, you get an excellent return on your investment.

 

I do know what you're saying though, but my biggest problem isn't necessarily social security specifically, but wasteful way we pump money into entitlement programs without any clear proof that its better than private alternatives.

[Mr Skeptic]

Perhaps that's what he meant. If so it's a great example of the narrow-mindedness of entitlement thinking, because it completely ignores the fact that military spending goes right into the economy at every level, from salaries to investors, and that money is far more efficient at padding retirement accounts than anything you'll ever get out of Social Security.

 

Well, there is the opportunity cost of where the money would go if it were to be spent in a different way. Much of the money spent on the military does indeed go back into our economy (we wouldn't be able to afford it otherwise), but it goes into things that aren't generally of much economic benefit. So we have a tank, a factory to build tanks, and people trained to build tanks. The equipment and people needed to build the tank factory and train the tank building people will probably have other economic uses, but unless we are selling tanks, the tanks and things to build them are an economic loss. The same goes for the training of soldiers; it has little use other than fighting. The money spent on these might have been used for something else; I will leave it up to you to speculate if there might be a better use for it, perhaps one with social, economic, or scientific benefits.

 

Now compare giving the money back to the people (even if it is different people or different money). For one thing, people find this more acceptable -- if the government were to take that money and not give it back, people might find the tax rate unbearable, as the effective tax rate would be higher. It is doubtful that the government could even get that much money if it weren't for them giving it back. This is the sense I meant that it is essentially free, as they would not even have it if they did not give it back.

 

Anyhow, there is some money wasted in collecting the taxes and handing them back out. Perhaps a larger effect would be on changing people's spending behavior. If the rich were more likely to buy imported items, for example, transferring money from the rich to the poor would act to decrease imports. Of course, imports are us giving other nations money in exchange for their stuff, and is in general a bad thing for the economy. So in this example, giving money from the rich to the poor would actually benefit the national economy from a trade deficit point of view.

 

Not that I support the government messing with our money, I'm just pointing out that it is a different thing to take money from one person and give it to another, compared to taking someone's money and spending it.

[bascule]

That's not to mention that the Pentagon can't account for trillions of dollars because its accounting processes are so antequated and error-prone:

 

http://www.portfolio.com/news-markets/national-news/portfolio/2008/04/14/Pentagons-Accounting-Mess

 

This some 18 years after Congress required major federal agencies to be audited... the Pentagon still can't be.

[Pangloss]

Are we having fun arguing about the paint on the barn while the horse roams free? THIS is why nothing ever changes, you know.

 

Not that I support the government messing with our money, I'm just pointing out that it is a different thing to take money from one person and give it to another, compared to taking someone's money and spending it.

 

I agree with this reasoning; thanks for being more specific.

 

---

linr[/hr]

John McCain is taking a stance on taxes this week, pledging not to raise them, and he's taking a hard hit from Democrats in light of the new deficit story. He's right and they're wrong. The problem isn't one we can solve by collecting more money. It's one we MUST solve by eliminating both nanny-state thinking and (I agree) overspending on defense. The budget makes this quite clear.

 

Here's an LA Times story on McCain's tax position:

http://www.latimes.com/news/nationworld/nation/la-na-campaign30-2008jul30,0,5820215.story

Edited July 30, 2008 by Pangloss
multiple post merged

[iNow]

The problem isn't one we can solve by collecting more money.

I dare you to prove that. At the very least, I request that you put some parameters around the dismissal (like, it could only be solved if we collected X amount more money, which is not likely due to A, B, and C).

[Pangloss]

I dare you to prove that. At the very least, I request that you put some parameters around the dismissal (like, it could only be solved if we collected X amount more money, which is not likely due to A, B, and C).

 

I realize we could collect more money and balance the budget at a higher expenditure level, if that's what you mean. In my opinion that's not an acceptable answer to the problem.

 

That reaction would appear to say something about your own opinion, iNow, just as bascule's seemed to, earlier in this thread. I don't think either one of you are "entitlement guys", but it was an interesting (and surprising) reaction.

 

Maybe we should explore the subject further. Take a closer look at what could be saved, what spending we might all agree should be increased, that sort of thing.

[iNow]

I That reaction would appear to say something about your own opinion, iNow, just as bascule's seemed to, earlier in this thread. I don't think either one of you are "entitlement guys", but it was an interesting (and surprising) reaction.

I'd caution you to read nothing more into my statement other than I expect generalizations to be avoided and dismissals to be parameterized.

 

My opinion on this subject did not even begin to enter into my response to you. I was simply challenging bad logic, asserted as fact, with no parameters.

 

We probably agree on this more than you think, so hopefully you will realize that and not continue to cast me into some "entitlement" label. I was only reacting to your absolutist comment, as it wasn't accurate.

 

 

Cheers.