Obama cuts $17 billion from 2010 budget

[bascule]

http://money.cnn.com/2009/05/07/news/economy/obama_budget_details/index.htm?postversion=2009050710&eref=rss_topstories

 

What do you think, is this a drop in the bucket, or does every dollar saved count?

 

I think this is great, but that the general reaction from the teabagging community will be that it isn't enough.

[Pangloss]

Well it isn't enough. The budget is ridiculously bloated, and we can't afford it. That's not stimulus, either -- that was a separate package, so this spending is all spending we can't give up because of our bad habits. And WAY too much of the President's plan for eventual return to fiscal responsibility is based on a predicted growth rate that has existed in only a handful of years out of the last few decades, and not enough on actual spending cuts.

 

But it may be what's possible. The problem isn't the President, it's Congress. They're institutionally incapable of cutting spending, because of the very accurate perception that spending is directly tied to re-election. As such, the President has put up a budget that can actually be passed. What else can he do?

 

Give the man the Bush-revamped, potentially SCOTUS-approvable Line Item Veto and it will be a whole different ballgame. Rapid return to fiscal responsibility might actually be possible then. You'd still have a million press stories about single mothers losing this benefit or that, but the moment the recession's over we'd stop spending more than we earn.

 

Also I think it should be recognized that the increases in discretionary spending are primarily in Defense (something Rush Limbaugh certainly doesn't want his listeners to know), and that one of the biggest reasons for the increase is the inclusion of Iran/Afghanistan spending inside of the budget instead of outside of it. The last fact alone added almost $150 billion.

 

But at some point we have to somehow, some way, learn how to stop spending more than we earn. We just have to.

[bascule]

But at some point we have to somehow, some way, learn how to stop spending more than we earn. We just have to.

 

There's two solutions to that:

 

1) Spend less

2) Earn more

 

I've heard this quote bandied about quite a bit by the teabaggers (specifically Glenn Beck):

 

We don't have a trillion-dollar debt because we haven't taxed enough; we have a trillion-dollar debt because we spend too much.

 

(yes, this coming from one of the presidents under which the debt ballooned enormously. oh, and he cut taxes)

 

I still think one of the best ways we can fix the deficit right now is to get the economy in better shape so we have higher tax revenue, even at existing rates.

[Pangloss]

Yes, earning more can balance the books. But it's not realistic to expect that our tax earnings will grow by 200% over the next decade. That's how much we're spending over what we're bringing in.

 

I've read that the budget plan predicts 4% growth annually. I don't have a source for this, so I can't vouch for its accuracy, but it's a reasonable supposition based on the massive growth that the budget seems to suggest is going to be needed. It may not even be enough.

 

If it's accurate, it is a whopper of a figure, and it is what led the Congressional Budget Office to contradict the White House and release its own, much direr, deficit prediction.

 

This is an interactive chart at the Department of Commerce that lets you input date ranges and show GDP:

 

http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=1&FirstYear=2008&LastYear=2009&Freq=Qtr

 

I punched in 1994 to 2000 (highlighting the Clinton/Gingrich years, which everyone seems to agree is the recent peak in 'good times'), and it shows >4% for 1994, 1997, 1998 and 1999. That's four out of seven. I also punched in the Reagan/O'Neill years ('80-'9) and got back a result showing 1984 having a whopping 7.2% growth, and three more examples of years with 4% or more.

 

So out of 21 years I checked, we only had 8 years with 4% growth or more. That's not a statistical analysis, of course, but I think this does suggest that actually expecting and planning for more than 4% growth is maybe not such a good idea.

 

We need to learn how to cut programs we can't afford.

[bascule]

We need to learn how to cut programs we can't afford.

 

Social Security is foremost in my mind. We all know it's doomed, the question is when someone will put their foot down and say when, defaulting on at least a portion of the payments and completely suspending the potential future payments for individuals who are younger than a certain age.

 

I pay into Social Security now and know when it comes time to retire I won't see a dime from it. Of course, I also have a roth IRA, which is where I actually expect to get retirement money from.

 

I'd be happy if they stopped having me pay into "Social Security" as if I was ever going to get money from it, and just raised my payroll or income tax to cover payments to existing recipients of Social Security. At least then it wouldn't be a big lie.

 

Of course, it's the figurative "third rail of American politics"... nobody's afraid to touch it, even though it's horribly broken.

[Pangloss]

Sure, but we're talking about discretionary spending at the moment. That's the stuff Congress is supposed to be able to cut when necessary. And when has it ever been more necessary than right now, or at least as soon as this economy recovers?

 

Let me be blunt with my opinion on this: If President Obama cannot restore fiscal responsibility to this government, then I will not be voting for him in 2012. That's assuming I have an alternative who's mature enough to understand that seeing Russia from her back yard does not constitute foreign policy experience, but that is where my inclinations will lie going into that election.

 

And the moderates -- the ones who put Obama where he is today -- are with me on this. Be afraid of this, you spendthrift Congressional Dems!

 

<shakes fist in a northerly direction and then meekly wanders off to work>

[bascule]

Medicare is another one I'm surprised has been unaddressed. The Medicare Prescription Drug, Improvement, and Modernization Act passed by Republicans in 2003 is expected to cost the American taxpayer $1.2 trillion by 2013 (or approximately $120 billion per year)

 

This bill included provisions which were effectively a handout to pharmaceutical companies. It prevented Medicare from negotiating volume discounts by having Medicare reimburse pharmacies for drugs instead of purchasing the drugs in bulk then disseminating them to pharmacies to give to Medicare patients at a discount.

 

This is also the reason why drugs are so much cheaper in Canada... Health Canada gets a volume discount, Medicare doesn't.

 

Not really sure why the Democrats aren't tackling that one yet, but I think a safe assumption for the time being is they're too busy.

[Mokele]

Give the man the Bush-revamped, potentially SCOTUS-approvable Line Item Veto and it will be a whole different ballgame.

 

That got shot down? I remember it from when I was younger and Clinton used it, but then it sort of dropped off the radar.

[bascule]

That got shot down? I remember it from when I was younger and Clinton used it, but then it sort of dropped off the radar.

 

SCOTUS shot it down as unconstitutional (saying a constitutional amendment would be required to enable it)

[Pangloss]

SCOTUS shot down the Clinton-era LIV. It was resurrected during the Bush administration in a manner considered by some legal experts to be more likely to survive SCOTUS scrutiny (see link below), based on the specifics of the decisions that were handed down in that case. The bill was approved by the House Budget Committee in 2006, but was unsuccessful in the Senate.

 

http://en.wikipedia.org/wiki/Line_item_veto

[bascule]

Well, here's a way to save $26 billion... end oil and gas industry tax breaks:

 

http://news.yahoo.com/s/ap/20090507/ap_on_go_pr_wh/us_budget_energy/print;_ylt=AlyH0WcrXtrYM43v4QQG4IMGw_IE;_ylu=X3oDMTB1MjgxN2UzBHBvcwMxNARzZWMDdG9vbHMtdG9wBHNsawNwcmludA--

[SH3RL0CK]

Just to provide an update:

 

http://news.yahoo.com/s/ap/us_social_security

 

This portion of the article says it all "The financial health of Social Security and Medicare, the government's two biggest benefit programs, have worsened because of the severe recession, and Medicare is now paying out more than it receives."

 

I completely agree with Pangloss. We must stop spending. But it may already be too late; hard decisions may be necessary. So do we simply screw the elderly and stop paying social security and medicare or do we screw the younger and very significantly raise taxes? My guess is that eventually we will actually do both.

[bascule]

This portion of the article says it all "The financial health of Social Security and Medicare, the government's two biggest benefit programs, have worsened because of the severe recession, and Medicare is now paying out more than it receives."

 

I just got a letter from the Social Security Administration explaining the same thing: you've paid this much into Social Security, but Social Security is in trouble!!!

 

I completely agree with Pangloss. We must stop spending. But it may already be too late; hard decisions may be necessary. So do we simply screw the elderly and stop paying social security and medicare or do we screw the younger and very significantly raise taxes? My guess is that eventually we will actually do both.

 

I would be perfectly fine with the goverment saying "everyone over the age of 35 doesn't get social security", and raise taxes in lieu of me paying into "social security" with a goal of sunsetting the program.

[SH3RL0CK]

I would be perfectly fine with the goverment saying "everyone over the age of 35 doesn't get social security", and raise taxes in lieu of me paying into "social security" with a goal of sunsetting the program.

 

 

Did you mean "Under the age of 35"? Also, why do you care what the government calls the social security tax; after all it is still 15% out of your paycheck? And are you sure you are so willing to let the government break its promises and commitments so easily?

 

I happen to be over 35 and have paid quite a bit into social security (and doubtless I will pay quite a bit more). I personally would not be happy at all to have paid all this and then recieve nothing in return (since I am only 40, this seems quite likely)...I would call it fraud (though the government does have the right to do this). Maybe if Congress had not been spending the social security surplus on all their pet projects for the past 60 years, the system would be solvent. Alternatively the total tax burden during the past 60 years could have been less.

 

But I am glad you are willing to pay up, hopefully you will be able to support my retirement (I intend to golf and fish all day) ... in return I promise you the promised benefits (but not the amount taken from your paycheck) will be ended before you get to use it. Don't worry people are living longer all the time; you can just keep working until you are 85 to make up for this (after all what else would you do if you were retired, its not like you would enjoy just golfing and fishing all day)

[Sisyphus]

Actually, it seems entirely reasonable to me (if unfortunate) that the age of entitlement would be raised along with rising lifespans. Surely it makes sense that a system where I'm productive for 35 years of my life and leaning on the support of others for 65 years (including childhood, higher education, and retirement) is not terribly sustainable. If you human age-curing people ever get that worked out, there's no longer going to be any such thing as "retirement."

[Pangloss]

"I will work harder," said Boxer.

[SH3RL0CK]

Sisyphus, I don't disagree with you, the intent of social security and medicare was never to provide a retirement or universal health coverage. These were meant to provide a safety net to protect the elderly. Unfortunately, Congress has extended these well beyond the original intent (and increased the amount taken from our paychecks as well) but spent the money elsewhere.

 

As such, the USA will break its promises and commitments once these programs go bankrupt. I don't feel this is right, especially since 15% of my take-home pay for my entire working life has therefore been confiscated. The government needs to meets its obligations or it cannot be trusted for anything. Or let me have this 15% and compound it over my 47 years of working and I can pretty much guarantee that I wouldn't need Social Security or Medicare when I retire. But I am very certain I will be paying for the rest of my working life and have nothing to show for it in return.

 

Also, I'm not sure it is right to force someone to continue working based on the expectation they will live longer than people did in the past. If one has the financial resources to no longer work, why should they if they do not want to? You never know when you could get run over by a bus. I would predict that given lifespans of several hundreds of years, people would have multiple careers. The first career to afford a house, a family, pay off school, etc. Then once the house and college loans are paid off and the kids are grown, people could do anything they wanted to (which might be their current job, though perhaps on a part time basis). If I didn't have a house payment, I could easily afford to work part-time and enjoy life.

 

Also, some jobs require hard, physical labor. Even if someone at 65 could expect to live another 20, 30, or even 200 years doesn't mean they will be physically capable of doing the job 40 hours a week, 50 weeks a year.

[The Bear's Key]

I personally would not be happy at all to have paid all this and then recieve nothing in return (since I am only 40, this seems quite likely)...I would call it fraud (though the government does have the right to do this).

Government does not have such a right.

 

Maybe if Congress had not been spending the social security surplus on all their pet projects for the past 60 years, the system would be solvent.

Exactly. It's not Social Security that failed, it's the politicians' highway looting of its funds that crippled the system. Hopefully not on purpose (as tactical sabotage).

[bascule]

Did you mean "Under the age of 35"?

 

Yes, whoops

 

Also, why do you care what the government calls the social security tax; after all it is still 15% out of your paycheck?

 

I'm just saying I'd like them to officially recognize that I won't be getting money from social security. Rather than having a separate line item for social security, taxes would just go up and the fund would receive a dedicated chunk from the treasury.

 

And are you sure you are so willing to let the government break its promises and commitments so easily?

 

Who's letting who do what? The program is doomed. I'm just saying it's time to face reality.

 

 

I happen to be over 35 and have paid quite a bit into social security (and doubtless I will pay quite a bit more). I personally would not be happy at all to have paid all this and then recieve nothing in return (since I am only 40, this seems quite likely)...I would call it fraud (though the government does have the right to do this).

 

Well, that's why I'm saying set an age threshhold where people haven't paid into it as long so maybe they won't be as pissed off.

 

Even with something like that, it's quite likely the older people won't ever see all their benefits. They'll wind up getting some fraction of what they should've recevied.

 

Personally I have an IRA for this very reason.

 

But I am glad you are willing to pay up, hopefully you will be able to support my retirement (I intend to golf and fish all day) ... in return I promise you the promised benefits (but not the amount taken from your paycheck) will be ended before you get to use it.

 

Yep, that's the reality... I'll be paying in but will never see a dime, so I'd like for them to just recognize that officially.