(10-09-2019 07:49 AM)Marc Mensa Wrote: There is no flip-flopping but there are two separate issues.
1. The spike in the current deficit which is double the projected deficit from 2016.
I blame the doubling of the current deficit on the Trump tax cuts, and quite frankly, I don’t see how you could look at the data and not come to that same conclusion. In a healthy economy we should be seeing the deficit shrink, however, we’re seeing the exact opposite.
2. The significant rise in the deficit coming in 2023 and onward.
For this, you point the finger at President Obama, I suppose since the 10 year 2017 CBO projections illustrated what has been known for years. Al Gore was ridiculed for his lock box of protection for Medicare and SS surplus’... protecting them being given back in the form of tax cuts. Those benefits were projected to run dry in 2025... projections made prior to tge Bush cuts.; Bush won, however, and cut taxes. It was the Bush tax cuts beginning in 2002 that have consistently reduced revenues below 18% GDP and ensured the insolvency of SS and Medicare. President Obama renewed those cuts in 2012 because of the fragile state of the economy, but we have yet to see revenues rise back to those mid-90’s pre-tax cut levels. I do not blame Trump for that oncoming crisis, but I do believe his tax cuts only exacerbated the problem.
OK, and my point is that your point 2 is actually not just about what is happening from 2023 onward but what is already happening. I agree that from 2023 onward it gets completely out of control. But from 2017 to 2023 it was projected to double without Trump. And while I agree that the "Trump tax cuts" have reduced tax revenues, I'm not sure about the $300 billion number (the projections up front were for an impact of about $100 billion a year) and whatever the number, they simply add to a trend that was already there.
The point about the $100 billion is that the democrats were calling it a "trillion dollar tax cut" because they were using the projected ten-year impact. I think that's kind of the mis-perception they are trying to perpetrate here. We get told how Obama "reduced the deficit" when 1) he blew up the deficit before he reduced it, 2) he didn't reduce it until republicans took the house (where spending bills originate) and started to impose some fiscal discipline, and 3) he left behind a bunch of policies that were going to ensure that the deficit began to grow rapidly again as soon as it became somebody else's fault. I think democrats are just waiting for the deficit to hit $1 trillion again, so they can talk about how Trump's "trillion dollar tax cut" caused a trillion dolar deficit that was "shrinking under Obama." Honesty is neither the democrats' nor Obama's strong suit.
I don't think we are ever going to be able to talk about the same subject, so I'm not sure there's any point in continuing the conversation.
I will say this, I disapprove of the deficit at either the Obama legacy level or the Trump level. Unlike most, who just want to complain about it and blame others, I've actually tried to figure out a way to solve it.
Number one, we need more tax revenues. We can't do that with income taxes without pricing ourselves off the world market. We would become a raw materials, consumption, and services economy, with few value-added activities that can afford middle-class wages. Ask Argentina how well that works. The only way to solve it is by doing what every other developed country does, and impose a national consumption tax. That move would also have mild trade protection impacts superior to anything Trump's tariffs can produce. We can't really "level the field" in trade with anyone else until we do that. A 15% consumption tax would generate sufficient revenues to balance the budget and allow income taxes to be reduced to world-competitive levels, particularly if we also broadened the tax base by reducing or eliminating deductions and exclusions. This is essentially the conceptual approach recommended by Domenici-Rivlin, and to a lesser extent (no consumption tax) by Bowles-Simpson.
Number two, we need to make social security solvent on its own. It's actually not difficult, if we act now. Raise the combined tax rate to 15%, eliminate the cap on wages and salaries (the most regressive tax we have, other than perhaps the corporate income tax), and slowly increase that full benefit retirement age from 66 to 70 (say, add one month per year for 48 years) while retaining the early retirement at 62 with actuarially reduced benefits. Additionally, we could do like Sweden and include a privatized component. This would additionally reduce the inequality in wealth dispersion over time, by giving every working citizen a "super 401k."
Number three, we need to stem the rise of health and welfare and other "entitlement" costs. We can do that by adopting different models that deliver more benefits to recipients with reduced administrative costs. Most of our current welfare systems spend more on gate-keepers and other administrative personnel than they pay out in actual benefits. So go to a universal basic income welfare model, and go to a Bismarck health care model. Those could both be basically administered by the current IRS. That transition is going to suck for sociologists and the like, because their gravy train is going to dry up. But IMO that's not a bug, it's a feature. There's a reason why the top 3 counties in the US for average household income, and 7 of the top 12, are in the DC metro area. It's not because they are producing some valuable product. It's because there are too many fat cat bureaucrats (and contractors) getting overpaid for driving a desk.
Until we do those three things, there is not enough money in the military and other discretionary programs to make a significant difference, but we need to squeeze more efficiency out of those programs. Once again, excessive administrative overhead is the big problem. Per a McKinsey study a few years ago, the average OECD country spends 14% of its military budget on combat, 23% on combat support, and 63% on administrative overhead. That's bad enough, but the US is much worse. We spend 9% on combat, 14% on combat support, and 77% on administrative overhead. If we just hacked our way down to OECD average levels of efficiency, we would save $100 billion or more. Never fighting a war that we didn't intend to win would save us whatever we are spending in the Middle East today, probably another $100 billion. Doing like Israel and Sweden and Switzerland and converting a number of positions from active duty to reserves would enable us to increase end strength and still save $20-50 billion. And reforming procurement to save us from boondoggles like the Ford aircraft carrier, the Zumwalt destroyers, the Littoral Combat Ships that can't do combat, and the F-35, would save a few billion more.
Finally, address any remaining shortfalls with increased Pigovian taxes. Increase the taxes on alcohol and tobacco. Legalize marijuana and tax it. Consider taxes on CO2 production, including increased gasoline/Diesel taxes. And tax pollution.
You got any plans, or do you just want to piss and moan and blame?