CBO: $1.08 trillion deficit, 8.9 percent jobless rate in 2012

Interesting blog I read on Forbes today about healthcare spending relating somewhat to deficit. I think the answer here is to keep printing money.

 

Thanks, Bush Tax Cuts!

 

It's pretty much common knowledge now that the US spends way more per person on healthcare than everyone else with way worse results.

We use far too much healthcare services with little to no accountability for if it actually works.

I submit to this article to continue your perusal on this issue:

Enjoy:

http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande

 

Ironically, news of this will probably push Treasury yields down even further.

Also, the CBO gave me a nice chart to auto-reply when the Schiff hyperinflation kids come roaring again.

 

oh yeah, this one's nice too...

 

Thank you Medicare Part D

http://www.nytimes.com/2011/08/16/us/16drug.html

http://www.forbes.com/2009/11/19/re...-care-opinions-columnists-bruce-bartlett.html

 

Your bolding here is a bit self-serving. On the latter paragraph it's flat out misleading as to both the quote's attribution and the existence of a House of Representatives.

 

15.5 trillion unfunded drug benefit? Wonder how the reps & senators were outpacing market returns on the stock market...

Privatizing the gains, socializing the losses

this last decade has been an absolute disaster

 

Reduce deficits and tank economy or stimulate the economy and run up deficits.

Only way out is to tax the rich back to sane levels.



By the way. Fb is right. We should all agree to stop feeding Basso

 

How about just get rid of medicare like the Republicans always wanted? That should solve the problem right?

 

Tearing into the actual CBO data, it's not the "Bush Tax cuts" that cause the problem in the alternative fiscal scenario. The CBO uses them (oh and BTW, about 66% of the additional revenue from ending the Bush Tax Cuts come from the bottom tax brackets) as a measure to normalize revenues as a percentage of GDP at 18%. That is our historical average. In other words, the CBO assumes that we will be bringing no more and no less than we always have (as a percentage of GDP). The published scenario (which includes ending the Bush Tax cuts) does not take revenue normalization into account. In fact, the long term CBO scoring shows that revenues will eventually 35% of GDP, a completely implausible scenario (and the CBO says so).

On the spending side of the ledger in the alternative scenario, the CBO makes two assumptions:

1) That the spending levels established under the Budget Control Act will not be adhered to
2) That the SGR (Doc fix) will never actually go into effect.

Both of these scenarios are likely. In fact, if you don't pass a Doc fix every year, then you kill Medicare. So that one will absolutely happen. The BCA provisions will likely not go into effect because Republicans don't want to hurt defense and the Democrats don't want to hurt Medicare.

All that said, the real spending problem in America is four items: Medicare Medicaid, Social Security, and Debt Interest. Just those four items will cost around $5 trillion dollars a year by 2020. That's $1.4 trillion dollars more than we spent in total this year. There is no amount of taxation that we can do to bring that cost into balance.

To solve the problem we need to do a few things.

1) True tax reform - Three tax brackets of 10%, 15%, and 20%. All deductions other than charity and mortgage interest are immediately eliminated. Mortgage interest is phased out over 10 years.

2) Find a way freeze MANDATORY spending - Discretionary is not the problem. Yes it needs some cuts, but this year 68% of spending will come from Medicare, Medicaid, Social Security, and Debt Interest. One way help this is to eliminate the SS portion of the payroll tax and make SS a direct appropriation. As far as the other two (which are the much bigger problem) you have to find a way to drive costs down. Tort reform and cross-state insurance sales would help here, but they are only a small part of the problem. Medicare as a whole must be phased out over the next fifty years. It's not going to be there one way or the other, so we need to find a way to end it in a way that benefits both the government coffers and the individual.

3) We need to explode the economy. It's time to come to grips with the facts that our regulatory environment cannot compete with the up and comers of the world. As much as we love our environment, we much ease the burdens that the EPA and DoE place on our energy production, agriculture, and manufacturing industries. We must eliminate corporate taxes (since they just pass them on to consumers anyway) and tie capital gains into income.

 

I agree with the underlying problems you listed, but I'm not sure these solutions really fix things.

Do we know if this raises or drops total tax revenues? Who ends up paying more, and who ends up paying less? How does this help address the budget deficit?

SS can very easily be fixed by changing the retirement age and fixing the inflation measure - I think this particular problem is a bit overrated in terms of the actual health of SS. The bigger problem is that we've essentially accounted badly and spent all the current trust fund, so as it depletes over the coming years with the baby boomer retirement, we're going to have a big drain on yearly finances - but the program itself would totally pay for itself with the proper changes.

Medicare is a much bigger issue - your solution of phasing it out helps fix the government finances, but it doesn't address the real issue at all. Medicare is not a problem because it's government run - it's a problem because health care costs are out of control. Eliminating Medicare does not but put that same impossible burden on seniors, which essentially means that if seniors are not millionaires, we're just giving them a death sentence. The real fight needs to be to get true health care costs under control - if we do that, Medicare is a reasonably healthy and not-gargantuan program.

Other countries manage to provide excellent health care without our costs, so it might be time to start looking at what they do. And, in theory, Medicare can be used to help put downward pressure on these costs since they control so much volume. Ability to negotiate drug prices would be one example here.

The regulatory environment is different than it was a decade ago, but it's not really much worse. The problem right now with the economy is on the demand side, not the supply side. What we really need to do is spur demand, and that involves creating jobs. The best way government can create jobs is to reward job creation. Provide additional tax breaks for companies that hire locally. Provide fewer tax breaks for companies that move operations overseas. We already provide tax breaks for things we consider "important" like alternative energy, oil exploration, etc. If jobs are important, then we should target that. Controlling health care costs in #2 would also make labor in the US cheaper. Etc. I don't think messing with taxes or regulations is going to solve anything - its a very indirect way to deal with the underlying problem, and targets only specific industries when the problem is much broader.

 

Of the many silly tropes you've got going, this is one of the dumber ones - It's not because Chinese gov't officials are willing to take bribes while their kids drink mercury tea that the manufacturing is there, though it certainly helps; it's that they have zillions of people willing to cram themselves into dorms for tiny wages, which has in turn created industrial clusters that basically make it inefficient for the supply chain to be located anywhere else. There was actually a whole big series of reports on this in the NYT last month.

You can gut as many health and safety and enviro regulations as you want, but it doesn't mean an ipad factory is going to open up in Flint Michigan; Instead it means that corporations are going to be even more able to shift the costs of their activities like pollution onto consumers who have no choice in the matter, and everybody's worse off.

 

It has been said that the virtue of the Laffer curve is that
you can explain it to a congressman in half an hour
and he can talk about it for six months.
—Hal Varian, Intermediate Microeconomics

 

you're right, the oil reserves and bodies strewn around could be exported for Soylent Green producers.

Do conservatives really think the true constraint on the economy are...EPA regulations? And not the fact that households and firms are going through the biggest confidence drop in decades, thanks to deleveraging in the face of constrained credit that was caused, I must repeat, entirely by the actions of a few wealthy and jaded elites?

 

Yeah right? If we go back to dumping everything into Lake Erie until it catches fire and cancer rates shoot up to Chinese level - conservatives will still be harping it is not enough.

Fundamental fact is you can't compete with people working for a $1/day by deregulating. You have to compete with them by having jobs that they can't do. That's high-tech.

Manufacturing is dead in this country. We need to keep our edge in the service sector. That's education and stopping the brain drain.