Reducing The National Debt: Mtg Follow-Up

Nice meeting, with 12 of us.  The discussion seemed a little one-sided at times, but, with one political party holding the country hostage, it is hard to remain neutral.  Still, I hope I was clear in my point that liberals have a long-term problem.  Because commitments already made to seniors and others will cost more money in coming decades than the taxes that will be collected under current law, something has to give.  Either (1) taxes must rise, or (2) those commitments must be trimmed.

The two parties want opposite approaches. of course.  On everything.  Take health care, the main driver of future deficits.  Democrats want to increase regulations on the HC industry to drive down costs, in part by letting individuals band together in purchasing pools to increase their negotiating leverage.  Republicans just want the government to pay less of people’s health care.

The public wants neither more taxes nor fewer services and doesn’t want to be told they have to choose.  That — not just GOP recklessness — is a big problem.

Here is some links to more info on some of the things we talked about:

The “Do Nothing” Option

  • How doing nothing cuts the deficit by 75% in five years.
  • A more technical but more accurate explanation.
  • But let’s be honest: “Doing nothing” is a bit misleading because it means doing nothing to stop tax increases and Medicare cuts already mandated by current law to go into effect in a few years.  Yes, phasing out the Bush tax cuts for everybody is one, and look how popular that’s been!  It also means raising taxes on the upper middle class via the Alternative Minimum Tax, and cutting Medicare physician reimbursements by a lot.
  • So, “doing nothing” involves raising taxes on the rich and the upper-middle class, and smacking the elderly’s Medicare.   Good luck with that.

Cutting Defense Spending,

  • See here.
  • Notice the table in this article.  It shows that most DOD spending is on personnel (soldiers) and operations and maintenance, NOT weapons procurement.  It’s not just tanks and planes and the clout of big defense contractors.

GOP Descent:

  • A rocked-rib conservative (who has been purged from the GOP) calls them out but blames Obama for assuming the other side was ever acting in good faith.
  • The conservative NYT columnist David Brooks has had enough, calls the modern GOP insane. (h/t Dean)

Long-Term Solution:

  • Create Jobs, Lower The Deficit.  It works.
  • As we discussed, of course there would come a point at which too much employment could overheat the economy and cause inflation.  But, we are as far away from that point as we’ve probably been since the 1930s.  Unemployment is over 9%, Ten-year bond yields (a measure of markets’ expectations of future inflation) are down to 3%, a 30 year low.  Etc.
  • So, although I’m not sure I agree with some of you that the government should mandate full employment at pretty much any cost, it’s not a problem we have to worry about trying to reduce 9% U to 6% or so.

What Drives GOP Behavior?


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