What they said... (re: federal deficit)

[livendive 8]

A balanced exhortation:

Quote

If even we can agree on big budget plan, so can Congress
By Andy Stern and David Stockman, Special to CNN
updated 8:59 AM EST, Wed November 9, 2011

Editor's note: Andy Stern is the former president of the Service Employees International Union. David Stockman is the former budget director for President Ronald Reagan.

(CNN) -- We don't agree often. In fact, for most of our adult lives, we have worked on opposite ends of the political spectrum. One of us headed the fastest-growing union in North America, the other served as budget director for arguably the most important Republican president in the modern era, Ronald Reagan. But national crises make for strange bedfellows.

That's why we are asking Democrats and Republicans to put aside their partisan interests to secure America's future by passing a deficit reduction plan of at least $4 trillion that includes both spending cuts and new revenues.

Our debt crisis is so severe, so obvious, and the middle ground seemingly so apparent, even Odd Couple characters Oscar Madison and Felix Unger could agree on a solution. So why can't Congress and the president? If we can do it, so can they.

We agree with Republicans who note that we have a serious spending problem. Health care costs are growing out of control and government wastes money on programs that duplicate other programs or are just unnecessary. In 2010, federal spending was nearly 24% of gross domestic product, the value of all goods and services produced in the economy. Only during World War II was federal spending a larger part of the economy.

And we also agree with Democrats that taxes must be part of the plan. Tax revenues stood at 15% of GDP last year, the lowest level since 1950. And even when the economy finally turns around, by 2025 the federal government will have only enough revenue to finance interest payments, Medicare, Medicaid and Social Security.

Our tax system is broken. We simply don't raise enough revenue to pay the bills for the level of government that an overwhelming bipartisan majority has consistently supported.

This country needs a deal. We need to fix our busted budget system, revamp our broken tax code and reform our Social Security and health care programs so that citizens who depend on them can count on them.

We also need to ensure our country is safe and secure, but at a significantly lower cost than today's bloated defense budget. We can only do that by passing a comprehensive fiscal plan, like those put forward by the Fiscal Commission and the Gang of Six, which phases in the changes, contains real cuts that fix our mounting national debt problem and erases the uncertainty that afflicts businesses and other governments who hold our debt.

This last point cannot be emphasized enough. Businesses know that spending cuts and tax increases are coming, but they do not know how, when or even why. Without a concrete fiscal game plan that provides some measure of certainty, confidence will remain weak and economic recovery tepid.

Worse still, if we simply continue to kick the can down the road, we are running the risk of a jarring financial market crisis that will make it even harder to reach consensus and the ultimate tax and spending changes even more draconian.

A deal can happen only if both sides put everything on the table. That means Democrats have to agree to entitlement reform and cuts to domestic programs, and Republicans have to accept more revenue and defense cuts.

Odd couples, strange bedfellows, whatever the terminology, agreeing on budget issues should not be this difficult. The two of us have come together despite our wide philosophical differences because we agree on one fundamental point: The fiscal crisis is so urgent that everything must be on the table. We need to act now. If the president and Congress embrace that principle, we can finally make some progress in getting our fiscal house in order and our national economy back on track.

Blues,
Dave

"I AM A PROFESSIONAL EXTREME ATHLETE!"
(drink Mountain Dew)

[dks13827 3]

Of course those 2 guys agree !!! A union guy and leftist David Stockman ( who repudiated all he did in the 1980's ).

[lawrocket 3]

I agree, Dave. I’ve put out the Fiscal Commission plan in this forum a number of times. I’ve criticized the President for appointing the commission and then ignoring it because, apparently, it gave recommendations that are not politically popular – especially with the voter base.

My biggest concern, though, is this: What will be the macroeconomic impact of federal governmental tax increases and spending cuts? Really – this is something I haven’t seen answered or explained, but I got thinking about it.

The “increase taxes” and “cut spending” will do this. By increasing revenues, it takes money from the private sector that can be used for jobs, capital, investment, etc. This lowers the ability of the private sector to provide goods and services.

But the government also proposes to “cut spending.” Thus, the government will not be providing the same services, jobs or capital. When the government does not provide these, the people turn to private industry. Because of private industry’s lesser access to funds (due to increased taxes) there becomes a hole in the economy that the government won’t fill and the private economy CAN’T fill.

I would think that the result in this is a significant shock to the economy, which will be hamstrung from recovering because of the increased tax load, thus lowering revenues, throwing the budget out of balance, requiring greater cuts and increased taxes, blah…

Again, this is just my own thinking on this. If one is looking to strengthen the economy, why would anybody advocate for doing the two things that, in concert, would seem to have the most detrimental effect?

My wife is hotter than your wife.

[livendive 8]

If the goods and services you're referring to are actually necessary, the people whom the federal government is no longer paying to provide them will have an opportunity to sell them privately. Yes, there' will be fewer dollars to spread around due to higher taxes, and fewer services due to budget cuts, but that's kind of the point. I don't think any reasonable person is expecting the deficit to magically disappear without impacting everyone's lives...the trick is to limit the impacts to those that are tolerable, broad based, and reasonably "fair". Make it hurt for everyone, without unduly punishing anyone, and try to respect some reasonable limits (let the working poor continue to eat and the working wealthy continue to prosper, but both should adjust their expectations somewhat south of where they are currently set).

Blues,
Dave

"I AM A PROFESSIONAL EXTREME ATHLETE!"
(drink Mountain Dew)

[kelpdiver 2]

Quote

Again, this is just my own thinking on this. If one is looking to strengthen the economy, why would anybody advocate for doing the two things that, in concert, would seem to have the most detrimental effect?

Withdraw is quite a shock to a heroin addict, too, but if he doesn't do it at some point, he's likely to die.

[billvon 3,067]

>Withdraw is quite a shock to a heroin addict, too, but if he doesn't do it at some point,
>he's likely to die.

Agreed! But if you kill an addict through withdrawal he's just as dead. If you really want him to survive, good treatment (which often involves gradually decreasing the dosage of the same or a similar drug) is key.

[kelpdiver 2]

Quote

>Withdraw is quite a shock to a heroin addict, too, but if he doesn't do it at some point,
>he's likely to die.

Agreed! But if you kill an addict through withdrawal he's just as dead. If you really want him to survive, good treatment (which often involves gradually decreasing the dosage of the same or a similar drug) is key.

A 4T$ deficit reduction (over 10 years) plan is pretty gradual stuff.

[lawrocket 3]

Quote

A 4T$ deficit reduction (over 10 years) plan is pretty gradual stuff.

This is the part I also like. It's not a "debt" reduction. It's not even a deficit elimination. It's deficit "reduction." What's that mean?

This past summer, the Congressional Budget Office projected that the 10 year deficit will be $13 trillion. The $4 trillion in "deficit reduction" means that the debt would only be expected to increase by $9 trillion over the next ten years, leading us to a federal debt of only $25 trillion by 2021.

It's another of those things that sounds like a lot (which it is - $4 trillion is a HUGE number) but when compared to what else is being done it's very very little.

My wife is hotter than your wife.

[billvon 3,067]

>A 4T$ deficit reduction (over 10 years) plan is pretty gradual stuff.

Also agreed. It's a good balance (IMO) between pulling it all at once and stretching it out over decades, which means it won't happen. Ideally most of the spending cuts happen when the economy recovers, which is the time we can afford it.

[kelpdiver 2]

Quote

>A 4T$ deficit reduction (over 10 years) plan is pretty gradual stuff.

Also agreed. It's a good balance (IMO) between pulling it all at once and stretching it out over decades, which means it won't happen. Ideally most of the spending cuts happen when the economy recovers, which is the time we can afford it.

it's good in the sense that it's less shocking, to lawrocket's concern.

It's bad in that I don't expect the 4T to be fully realized, never mind taking bigger steps.

[Bertt 0]

The key here is "over 10 years". Congress has an attention span from one news story to the next, so anything that requires a concerted, multi-year effort is almost hopeless with these guys.
I still marvel that the effort to put a man on the moon was successful, since it spanned more than one election cycle.

You don't have to outrun the bear.

[kelpdiver 2]

Quote

I still marvel that the effort to put a man on the moon was successful, since it spanned more than one election cycle.

the spectre of the boogeyman (the Russians) helped. Just as "terrorists" have given us an extended Patriot Act.

[marks2065 0]

Quote

A balanced exhortation:

Quote

If even we can agree on big budget plan, so can Congress
By Andy Stern and David Stockman, Special to CNN
updated 8:59 AM EST, Wed November 9, 2011

Editor's note: Andy Stern is the former president of the Service Employees International Union. David Stockman is the former budget director for President Ronald Reagan.

(CNN) -- We don't agree often. In fact, for most of our adult lives, we have worked on opposite ends of the political spectrum. One of us headed the fastest-growing union in North America, the other served as budget director for arguably the most important Republican president in the modern era, Ronald Reagan. But national crises make for strange bedfellows.

That's why we are asking Democrats and Republicans to put aside their partisan interests to secure America's future by passing a deficit reduction plan of at least $4 trillion that includes both spending cuts and new revenues.

Our debt crisis is so severe, so obvious, and the middle ground seemingly so apparent, even Odd Couple characters Oscar Madison and Felix Unger could agree on a solution. So why can't Congress and the president? If we can do it, so can they.

We agree with Republicans who note that we have a serious spending problem. Health care costs are growing out of control and government wastes money on programs that duplicate other programs or are just unnecessary. In 2010, federal spending was nearly 24% of gross domestic product, the value of all goods and services produced in the economy. Only during World War II was federal spending a larger part of the economy.

And we also agree with Democrats that taxes must be part of the plan. Tax revenues stood at 15% of GDP last year, the lowest level since 1950. And even when the economy finally turns around, by 2025 the federal government will have only enough revenue to finance interest payments, Medicare, Medicaid and Social Security.

Our tax system is broken. We simply don't raise enough revenue to pay the bills for the level of government that an overwhelming bipartisan majority has consistently supported.

This country needs a deal. We need to fix our busted budget system, revamp our broken tax code and reform our Social Security and health care programs so that citizens who depend on them can count on them.

We also need to ensure our country is safe and secure, but at a significantly lower cost than today's bloated defense budget. We can only do that by passing a comprehensive fiscal plan, like those put forward by the Fiscal Commission and the Gang of Six, which phases in the changes, contains real cuts that fix our mounting national debt problem and erases the uncertainty that afflicts businesses and other governments who hold our debt.

This last point cannot be emphasized enough. Businesses know that spending cuts and tax increases are coming, but they do not know how, when or even why. Without a concrete fiscal game plan that provides some measure of certainty, confidence will remain weak and economic recovery tepid.

Worse still, if we simply continue to kick the can down the road, we are running the risk of a jarring financial market crisis that will make it even harder to reach consensus and the ultimate tax and spending changes even more draconian.

A deal can happen only if both sides put everything on the table. That means Democrats have to agree to entitlement reform and cuts to domestic programs, and Republicans have to accept more revenue and defense cuts.

Odd couples, strange bedfellows, whatever the terminology, agreeing on budget issues should not be this difficult. The two of us have come together despite our wide philosophical differences because we agree on one fundamental point: The fiscal crisis is so urgent that everything must be on the table. We need to act now. If the president and Congress embrace that principle, we can finally make some progress in getting our fiscal house in order and our national economy back on track.

Blues,
Dave

Well I agree, raise taxes on those not paying taxes, you know the 47% of the free loaders many of who are right now sitting on wall street crying for more free stuff.

[lawrocket 3]

Quote

I still marvel that the effort to put a man on the moon was successful, since it spanned more than one election cycle.

Yep. Part of the reason why the American space program went back to low earth orbit instead of looking toward Mars was Nixon – no way he was going to support funding for something like that because some president down the line would be the one who had it happen under his watch. Nixon knew this all too well.

We see it now. Nobody creating a vision for a glorious future because the future is now. If there’s glory to be had, no POTUS is going to set up glory twenty years down the road so that POTUS can bask in it. Kennedy wanted a man on the moon before the decade was out (i.e., before he left office). He also had a competitor in the USSR and the moon was the only race that he thought the US could win. His death occurred tragically, the pieces were put in place, and the legacy became self-sustaining. A clear goal. A time to complete it.

What about now? A President would have to commit political suicide. A President would have to propose and Congress would have to pass budgets that would be very nearly tearing down the economy and allowing it to rebuild again from scratch.

It may be what’s needed, but the balls to do it just aren’t there.

My wife is hotter than your wife.

[billvon 3,067]

>t's bad in that I don't expect the 4T to be fully realized, never mind taking bigger steps.

Yeah, that's the problem. Do it too quickly and it destroys the economy. Do it too slowly and the next guy in office says "well, that was the last guy, didn't really mean it."

[Austintxflight 0]

a 4T reduction will never happen in our current political system.

putting out 10 year plans makes minimal cuts to look enormous and put a large number on it. Its not even straight cuts, its tiny cuts in years 1-3 and big cuts later with no way to force them

Its like NFL contracts, you pay a little in the front end, huge base salaries in the last year to make the contract look inflated, then they get cut in the last year or forced to renegotiate.

Its the same shell game.