Is There an Easy Fix for America's Budget Problem?

[Bruce Gourley]

Fareed Zakaria says yes, Washington can easily conquer the national debt in the coming years ... but than in being responsible stewards of our nation's resources.

[KeithE]

[KeithE]

And Bruce having a new forum is good for those who do not want to be bothered by politics. But politics is often a moral issue.

[Dave Roberts]

Another help for the federal budget would be to extend Social Security taxes to all income, not just to the first $108K. Why should the guy making $1-million a year get exception on $900K of that amount? That should be taken to court as discrimination against those who make less to have to pay on all their earnings.

[Jonathan]

[Jonathan]

Rep. Paul Ryan (R-Wi) has a very compelling plan to address the budget problem:

[KeithE]

[KeithE]

[Dave Roberts]

[ET]

No, there is no easy fix. Might be better to find an economist instead of a foreign affairs guy when talking budget issues, however. He leaves out the fact that there were never any "surpluses" during Clinton's years, just as there were no "cuts" when Republicans took control of Congress, only reductions in the size of budget growths. Those mythological "surpluses" were nothing more than surplus social security funds raided and added to the general budget in order to mask the true size of the deficit, sort of like borrowing from your 401(k) account to pad your overdrawn checking account then proclaiming that you have "surplus" funds available to pay down the credit card.

I think it's also time to raise the retirement age to 65 or 70, maybe 75. When SSI was first formed, only a small percentage of folks lived long enough to draw from it for any length of time (this still holds true for a large segment of the black population). With life spans today, a large number of people (particularly women) can burden the system for almost as many years as they put into it. Both my grandmothers along with my great aunt got social security for more than 20 years, although I will note I believe they worked until close to 70, being school teachers. My parents are probably close to 10 years on SS, and from statistical information they may end up spending close to 1/4 of their lives drawing from funds provided based on the labor of my wife, myself and even two of their grandchildren at the moment.

The problem with this issue is our addiction to government programs and solutions -- our "addiction to foreign oil" pales in comparison. It's not nearly as sexy or "compassionate" to balance the budget or pay down debt as it is to get elected to office by telling your constituents that you're going to hand out goodies to them, usually with the implication that some who are not paying enough will be paying for those goodies.

But from scanning Ryan's proposal, he's got some good ideas, although there are major hurdles to clear for it to ever be implemented. With trial lawyers being significant contributors to one of the parties (notice there are no parts in any health care legislation dealing with them), the attempt to reign them in would be monumental. I would venture to bet it would be a huge fight to abolish the mortgage interest deduction even if a panel of economists testified before Congress that its abolition would lessen home prices and might even lower interest rates or just simply would result in the majority of people paying less in taxes.

We should also abolish public-sector unions. The compensation and benefit plans are in many places ridiculous. For example, in Vallejo, California, the average firefighter salary was $171,000. One could store up unused vacation and leave time and get a check. One did so to the tune of $370,000. After five years, police and firefighters are guaranteed lifetime health benefits, which might mean that somebody that worked for only 25 years or so burdens the taxpayers with 25 years or health insurance coverage when that employee moves on and is no longer providing those police or firefighter services to the community. Vallejo, CA voted for bankruptcy back in May '08 because of such outrageous compensation packages and liabilities for pensions that they could not meet. In San Diego, fireman can (or could) retire at 50 with 90 percent of their salary. That's the insidious thing about the arrangement. The ones that make these agreements don't have to worry about when the bill comes due, especially when it's a lot further down the road than the next election or maybe even the next generation.

Personally, I doubt the moral fiber of most Americans to deny themselves the benefits of things for which they want in order to take a longer view of a more stable economy for their children and grandchildren.

[Sandy]

[Jonathan]

[Sandy]

[Jonathan]

[Bruce Gourley]

One must remember that access to America's public infrastructure in reality is uneven, with the moneyed having greater access, and the poorer lesser access. And this, of course, contributes to the (ever-growing) redistribution of wealth to the rich that has now demoted America to Third World status in terms of our nation's wealth gap.

[Jonathan]

[Bruce Gourley]

[Jonathan]

[Howard V]

IMO, this would be a good time to actually freeze federal spending, not just slow the rate of increase. After that why not actually decrease federal spending? But to be realistic, a snowball has a better chance in the hot place than either of these ever being done.

Howard

[Cathy]

[KeithE]

[Dave Roberts]

Another two places that the federal budget has to be addressed are earmarks and efficiency, particularly in the military.

Earmarks are basically the pork barrel spending that we continue to provide for the pet projects of legislators. Often, a lot of good is done, but the more influential your representative or senator is, the more likely you are to be receiving pork. The fact that there is no system and no sense of broader national priorities to these continues to provide a struggle with mounting national expenditures.

The second is military efficiency. I believe in supporting the military and providing every battlefield soldier with the needed items that are important for the work of soldiering. However, I lived near one of the largest army bases during the Reagan buildup of the 1980's and saw how money was often spent. During that era, the National Guard had to be brought in on weekends to empty ammunition bunkers and fire that ammunition in order to make space for trucks to be unloaded. Also, all on-post theaters were rebuilt to provide movies for the troops despite the fact that there was a large multi-screen cinema off post where far more of the troops were likely to go. We created competition for the private sector. Then over $1-million was spent to purchase a towing system for water skiers on a post lake, and the system had to be imported from Germany. Additionally, all barracks were replaced by single-room dormitory-style accomodations for the troops. Getting the real bang for the buck is needful.

[Bruce Gourley]

[Jonathan]