the alternate universe problem

[Azazello1313]

by arnold kling

 

At the moment, I am very pessimistic about the prospects for the United States solving its fiscal problems without a crisis. Given that we have divided government, a reasonable long-term budget will require a compromise. But the two sides seem to live in alternate universes.

 

The Republicans' alternate universe is based on the belief that government spending ought not to exceed its historical average of about 20 percent of GDP. You can't get future spending down to that level, however, without really major cuts in future spending on Social Security and Medicare. Much as I would like to see those programs phased out completely, neither I or nor anybody else can claim to have won an election on that platform.

 

The Democrats' alternate universe is based on (a) the belief that the rich are not paying their share of taxes and ( with Obamacare passed, the rise in health care spending as a share of GDP is as good as arrested. So they see no need to change the status quo on entitlements.

 

I think that a sensible compromise would be Simpson-Bowles. This would make some needed changes to entitlements, which drives the Democrats beserk. It contemplates leaving spending at somewhere between 21 and 22 percent of GDP, which drives Republicans beserk.

 

I go back and forth as to which side is being more self-defeating. Republicans, who won't agree to a 21.6 percent of GDP, with the result being that we stay on a path that takes spending much higher. Or Democrats, who won't agree to reductions in future entitlements, with the result being that we will be forced to cut entitlements in the future, during the inevitable fiscal crisis.

 

sums it up pretty well, I think. I'd love to see taxes and spending below 20% of GDP, but it's not realistic given present realities of health care costs and demographics. republicans need to give on that score, in return for a tax code that raises more revenue but does so in a way that gives the government a less prominent role in choosing economic winners and losers. simpson-bowles does that, by broadening the tax base dramatically. same thing as the ryan plan, just at slightly higher rates that aim to garner more revenue rather than aiming to be revenue neutral.

[Ursa Majoris]

republicans need to give on that score, in return for a tax code that raises more revenue

I read recently that a large part of the Republican contingent in Congress will not accept any tax reshuffling that increases revenue. Period.

[SEC=UGA]

I read recently that a large part of the Republican contingent in Congress will not accept any tax reshuffling that increases revenue. Period.

 

It is a shame. I really think we need to go one of two ways... A flat tax and remove the deductions or a consumption tax that gives credits to the needy. The current system has to be torn asunder, not just reworked.

 

We need to cut defense, medicare/caid, and SS budgets dramatically and then deal with the other small discretionary items. After that, we need real budget controls that don't automatically increase department budgets annually just for the hell of it.

[Ursa Majoris]

It is a shame. I really think we need to go one of two ways... A flat tax and remove the deductions or a consumption tax that gives credits to the needy. The current system has to be torn asunder, not just reworked.

 

We need to cut defense, medicare/caid, and SS budgets dramatically and then deal with the other small discretionary items. After that, we need real budget controls that don't automatically increase department budgets annually just for the hell of it.

Yeah, I partially agree. While I'm not at all convinced about a flat tax, it is clear that the current system of exceptions and deductions is more than broken.

 

I thought it was really strange that this core of people who would otherwise support a simplification of taxes were reportedly against it if it increased revenue as they consider that a tax hike.

[Deathpig]

Here's the CBO's 6/10 Long Term Budget Outlook:

 

http://www.cbo.gov/ftpdocs/115xx/doc11579/06-30-LTBO.pdf

 

 

The PPACA version of our long-term budget situation revolves around two main concepts. The first, is that Congress won't increases Medicare/Medicaid costs ever again in the future. This *might* happen; doesn't seem likely but it *could* occur. The second, is that revenue to the government is going to climb to over 20% of GDP (in perspective, 1.5ish% above the 60 year average) inside of 3 years and constantly grow to keep pace with entitlement spending, hitting and sustaining levels (23+%) that haven't been seen in this country outside of a tiny window after WWII. I feel comfortable saying this *won't* happen.

 

If you actually believe both things will occur, you have no reason to come to the table and talk about fixing or restructuring or cutting back any entitlement.

[SEC=UGA]

Yeah, I partially agree. While I'm not at all convinced about a flat tax, it is clear that the current system of exceptions and deductions is more than broken.

 

I thought it was really strange that this core of people who would otherwise support a simplification of taxes were reportedly against it if it increased revenue as they consider that a tax hike.

 

They're against it because they're idiots. We have to increase revenue while decreasing budgets. Get this thing healthy and build back our nation and the dollar.

[untateve]

They're against it because they're idiots. We have to increase revenue while decreasing budgets. Get this thing healthy and build back our nation and the dollar.

 

:politician: But I want to get re-elected :/politician:

[BeeR]

It is a shame. I really think we need to go one of two ways... A flat tax and remove the deductions or a consumption tax that gives credits to the needy. The current system has to be torn asunder, not just reworked.

 

We need to cut defense, medicare/caid, and SS budgets dramatically and then deal with the other small discretionary items. After that, we need real budget controls that don't automatically increase department budgets annually just for the hell of it.

I'm military but agree on defense cuts ie we DON'T need more billion dollar bombers/etc and do need a serious draw-down to the Middle East SNAFU (good luck w/that now that people are intoxicated from Osama killing) which is costing obscene amounts of money along with oh btw lives.

 

The SS/etc I don't see how you cut that right when a bulge of people who have paid into it all their lives are now cashing in. As stated that is like screaming "don't elect me." The real pisser is that jam exists because of such gross mismanagement of it from decades past.