IF only we could get more Paul Ryans...

[Color Me Badd Fan]

A couple of things: 1. There is a difference between simplification and manipulation. From the video clip that I watched that was posted in the beginning of this thread, I believe he is engaging more in the latter, or someone who is behind him is and he is not intelligent enough to know that's what's happening. Either way, doesn't fly in my book.

2. I'm a huge David Walker fan, have been for years. My postings in this thread really haven't been about the budget except to the extent needed to address what I find to be Ryan's dishonesty. If you'd like to have a substantive debate about what should be done with the budget, I'm more than game.

So let me get this straight, you want Ryan to come up with a model of spending that doesn't take into account the spending increases that have occurred since the Obama took office? As much as we'd like to wish it away the stimulus and Obamacare has actually happened and assholes like Paul Krugman think that we need a second stimulus and/or they don't think the stimulus was big enough. There are no shortage of demand siders in the White House. Combine that with the fact that the cost of Obamacare isn't even being incurred right now. Combine that yet again with the massive age demographic shift with the Boomers just now beginning to collect Social Security. Is it really inconceivable that the cost of Obamacare combined with the cost of increased SS outlays attribute to the graph?

On the other hand, Paul Ryan owes you an apology for not covering every contingency and giving a President the benefit of the doubt on spending when that President has pushed through the stimulus (a huge portion of which were simply transfer payments to fiscally irresponsible federal and state government agencies) and Obamacare.

Your mention about the US growing its way out of the WWII debt means to me that you have no handle on the two different situations. The US simply doesn't have manufacturing cost structure to support something like that when its competing on the high end with Japan and Germany and on the low end with China. In addition, the top tax rate after WWII was extraordinarily high for decades. It wasn't merely economic growth but soaking the rich. That was fine when the US didn't have much in the way of foreign competition but it caught up to the US by the 1970s.

[RobinFinderson]

One good thing about Ryan's proposal to destroy Medicare and Medicaid is this -- it will hasten the arrival of socialized medicine by winning the AARP vote.

[BlueHair]

Seems like an expensive prospect for China, since any other country with a depressed currency can also take advantage.

China is screwed. I worked for a large manufacturer a few years back. We shut down a huge plant in California and moved it to Mexico. Within 14 months they moved it China. Manufacturers have gotten very good at moving and setting up shop very quickly.

[Moliere]

Again, I would love to have a substantive debate on the budget, but that wasn't the point I was making in bringing up the post-WWII debt load. So far I've really been addressing the dishonesty and political opportunism I saw in Mr. Ryan's video. Any examples I raised were just illustrations of where he wasn't being honest.

I'm going to assume that you meant billion above, b/c I'm pretty sure the federal government's budget hasn't been in the millions since probably the Jackson presidency. However, you misread my post if you thought I was talking about running deficits or surpluses. I was talking about extant federal debt as a percentage of GDP, its peak and what really made it fall, and it is exactly as I said it was.

Here is what you said:

"Economists say" is a classic appeal to authority that he uses here to support an utter b.s. line that is easily refuted by looking at the data. "Economists say that when a nation's debt rises above 90% of its GDP things start to slow down and that's when things get really bad" or some such nonsense. If he would move his charts back a couple of decades he will note that American debt was well over 100% of the GDP coming out of WWII. I wonder how bad he thinks things must have been in the 50's. If I were to guess, my bet is that he would think of that time period as the zenith of American society. He's gotta be wrong somewhere.

and

As for WWII debt loads, they are obviously sustainable for some amount of time. How long is debatable, but that they are sustainable for as long as we sustained them is indisputable. Also, if you take a peek at the aggregate debt amounts in dollars you will learn a funny thing: the actual dollar amounts of our debt did not decline, rather, our economy grew, reducing our debt amount as a percentage of GDP. This would indicate to me that the real solution is to grow the economy, not shrink the budget. Perhaps you disagree with me on this, but I will say that you could pare down the government to absolute bare bones but if you never grow or develop the economy you will have failed.

I don't disagree that we grew our way out of the large deficit that was ran up during WWII, but you can't ignore the fact that the federal outlays were cut by 40% from 1945 to 1946, which cut was obviously due to the end of the war. Federal receipts also fell during that time period, but they only fell 13%. There was a federal surplus in 1947-49, but you are right, we did grow our way out of that mess (if it was a mess). (Here's a budget link)

The main difference today is that there is no way to outgrow the budget deficit right now. Medical costs are growing at a rate far above normal inflation and growth. I don't have a link to show this, but I have sat in on a couple actuarial meetings (alluded to before in another post) where it is obvious the growth trend of medical care is not sustainable in our economy, thus the fudging of the projections in OPEB actuarial models. With Medicare/Medicaid taking up ~25% of the total budget, there is a lot of damage to be done with the dramatic rise in medical costs. And these costs are vastly different from WWII spending, which was ceased (for the most part) when we won the war. We can't just cut Medicare/Medicaid spending since so many people are depend on it. This is why Obamacare was such a disaster in taht it didn't address the real problem, which IMO is the astronomical medical costs.

I do whole-heardetly agree with you on the fear mongering by the Repubs, but both sides do this. When Medicare cuts are proposed, the left says it will kill old people. Well, Medicare has been killing old people for a long time. It's really just a matter of when they are killed.

I wish your company wasn't blocking CUF. I'd love to have a real discussion of these issues that you could participate in b/c I think your background and knowledge can lend a lot to the discussion and b/c there are only so many people with a wide enough knowledge base and interest in the subject matter that can contribute to a substantive discussion and I think you are one of them. Too bad work has to get in the way.

CUF blocker I'm not an expert in this stuff, but given my accounting /finance background I find it interesting. I need to get a Verizon iPad to pass the time at work

[Uncle Ted]

I don't disagree that we grew our way out of the large deficit that was ran up during WWII, but you can't ignore the fact that the federal outlays were cut by 40% from 1945 to 1946, which cut was obviously due to the end of the war. Federal receipts also fell during that time period, but they only fell 13%. There was a federal surplus in 1947-49, but you are right, we did grow our way out of that mess (if it was a mess). (Here's a budget link)

The argument of the US growing its way out of the WWII deficit reminds me of Paul Krugman talking about Greece and its debt. In that column he said:

So how did the U.S. government manage to pay off its wartime debt? Actually, it didn’t. At the end of 1946, the federal government owed $271 billion; by the end of 1956 that figure had risen slightly, to $274 billion. The ratio of debt to G.D.P. fell not because debt went down, but because G.D.P. went up, roughly doubling in dollar terms over the course of a decade. The rise in G.D.P. in dollar terms was almost equally the result of economic growth and inflation, with both real G.D.P. and the overall level of prices rising about 40 percent from 1946 to 1956.

Of course, what he failed to mention was the massive (and nearly over night) cut on military spending after the war, as you point out. In addition, the country was in a position where it could raise taxes without a lot of political push back. Also, the 10 years or so after WWII was a time of exceptional economic growth. Unless something like cold fusion is invented we can pretty much expect the economy to grow around 2-3% per year on average. Given the current deficit is approaching 200% of the current revenue we can't expect to out grow this.

The main difference today is that there is no way to outgrow the budget deficit right now. Medical costs are growing at a rate far above normal inflation and growth. I don't have a link to show this, but I have sat in on a couple actuarial meetings (alluded to before in another post) where it is obvious the growth trend of medical care is not sustainable in our economy, thus the fudging of the projections in OPEB actuarial models. With Medicare/Medicaid taking up ~25% of the total budget, there is a lot of damage to be done with the dramatic rise in medical costs. And these costs are vastly different from WWII spending, which was ceased (for the most part) when we won the war. We can't just cut Medicare/Medicaid spending since so many people are depend on it. This is why Obamacare was such a disaster in taht it didn't address the real problem, which IMO is the astronomical medical costs.

Here is the graph of entitlement growth in general... I should note that the GI bill most likely was a very good thing since it most likely contributed to the post WWII economic growth in the late 40's and early 50%. I can't say that about a lot of the other programs. One thing that needs to be done, IMHO, is we need to raise the age on social security benefits. I am not going to retire at age 62 or 67. I am hoping to hold out until my 70's.

[Color Me Badd Fan]

The argument of the US growing its way out of the WWII deficit reminds me of Paul Krugman talking about Greece and its debt. In that column he said:



Of course, what he failed to mention was the massive (and nearly over night) cut on military spending after the war, as you point out. In addition, the country was in a position where it could raise taxes without a lot of political push back. Also, the 10 years or so after WWII was a time of exceptional economic growth. Unless something like cold fusion is invented we can pretty much expect the economy to grow around 2-3% per year on average. Given the current deficit is approaching 200% of the current revenue we can't expect to out grow this.



Here is the graph of entitlement growth in general... I should note that the GI bill most likely was a very good thing since it most likely contributed to the post WWII economic growth in the late 40's and early 50%. I can't say that about a lot of the other programs. One thing that needs to be done, IMHO, is we need to raise the age on social security benefits. I am not going to retire at age 62 or 67. I am hoping to hold out until my 70's.

Two excellent posts, Eddie and Ted.

Here's a little column about Bill Gross (manager of the world's biggest bond fund) discussing why he abandoned US Treasuries this year. He thinks the US is only a couple years away from becoming Greece or Portugal unless it changes course.

http://www.bloomberg.com/news/2011-0...uffett-3-.html

So, basically the paltry return on US Treasuries aren't worth the long term risk -- not of default -- but from inflation and devaluation of the dollar. This is a trend that will only continue and the US govt's borrowing cost will increase accordingly (unless they decide to print even more dollars).

[SCcoug]

Obama counters with his own budget proposal.

http://www.nytimes.com/interactive/2...get-plans.html

[Jacob]

Obama counters with his own budget proposal.

http://www.nytimes.com/interactive/2...get-plans.html

The two can't really be compared until Obama comes out with an actual proposal. He has given mostly guidelines. The only details are the big cut in defense spending (Lets start with Lybia, Afganistan, Iraq--I say) and $400B over 10 years in domestic discretionary he allegedly proposed cut in his previous offering. I believe the latter were cuts from the ridiculous spending of last year and not an attempt to bring us anywhere near historic or recent norms.

Almost all of Obama's proposed "spending cuts" are either actual tax increases or the military cuts mentioned above.

He also said that Paul Ryan should be commended for offering a proposal that is neither serious nor courageous. He really did say that.

What do you say we go with the Ryan proposal with the following modifications: Eliminate the Ryan individual tax rate cuts (keep the corporate rate cut but keep it as high as the top individual rates), let the top Bush rates go up the 3% Obama says he's asking Also, give Obama at least half of his proposed defense cuts. Deal?

[Jacob]

Just look at what the Times is reporting Obama's proposal includes for Medicare and Medicaid:

The proposal seeks to reduce the growth in Medicare spending, including lowering prescription drug spending "by leveraging Medicare’s purchasing power."

President Obama has asked governors to recommend ways to make the program more efficient. Medicaid spending would be cut $100 billion over the next decade.

Now those are both serious and courageous!

[Goatnapper'96]

Just look at what the Times is reporting Obama's proposal includes for Medicare and Medicaid:





Now those are both serious and courageous!

Does he mean by "purchasing power" to just pay doctors less for medicare patients under the argument that there are more of them? Similar to a negotiated contract that an insurance provider does with health providers?

Won't that just result in more doctors refusing medicare patients or will they just charge private insurance providers more for the same services?

[Jacob]

Does he mean by "purchasing power" to just pay doctors less for medicare patients under the argument that there are more of them? Similar to a negotiated contract that an insurance provider does with health providers?

Won't that just result in more doctors refusing medicare patients or will they just charge private insurance providers more for the same services?

I'm not sure that bit was referring to more than prescription drugs. But you got the gist of it. The US gov will simply pay drug companies less for the drugs. Which makes the development of drugs a more risky proposition for the drug companies, which likely leads to the development of fewer drugs (including the really important ones).

Plus, I don't think you get near enough cost savings by simply demanding a deeper discount on prescription drugs.

[Goatnapper'96]

I'm not sure that bit was referring to more than prescription drugs. But you got the gist of it. The US gov will simply pay drug companies less for the drugs. Which makes the development of drugs a more risky proposition for the drug companies, which likely leads to the development of fewer drugs (including the really important ones).

Plus, I don't think you get near enough cost savings by simply demanding a deeper discount on prescription drugs.

I really think that the Republicans are unlikely to lose the high ground, by that I mean strategic advantage not moral, in this debate. The batshit progressives came out with some whacked plan they call "The Peoples Budget" which is likely to be ignored by one and all. It appears that the POTUS is the Democrat mouthpiece for their plan. The President is running a reelection bid while simultaneously being the mouthpiece for his Party on the subject. He is out of his league wrt Paul Ryan in ever explaining this issue to any specific degree. The public wants the spending to get under control. I think they will tolerate some tax increase but right now the weight of public opinion is we have a spending problem. I think this is a real losing issue for the Democrats.

[Borderline Divine]

And I think a winner for the Democrats is "They want to take away your MediCare."

Palin taught both parties that your slogans and catch-phrases can't be too short or too misleading.

[BlueHair]

The Republicans will win because the country is getting sick of the death panels.

[il Padrino Ute]

I really think that the Republicans are unlikely to lose the high ground, by that I mean strategic advantage not moral, in this debate. The batshit progressives came out with some whacked plan they call "The Peoples Budget" which is likely to be ignored by one and all. It appears that the POTUS is the Democrat mouthpiece for their plan. The President is running a reelection bid while simultaneously being the mouthpiece for his Party on the subject. He is out of his league wrt Paul Ryan in ever explaining this issue to any specific degree. The public wants the spending to get under control. I think they will tolerate some tax increase but right now the weight of public opinion is we have a spending problem. I think this is a real losing issue for the Democrats.

The Progressive Caucus' People's Budget is without a doubt the most idiotic budget proposal in the history of this country. You can find a link to it here. Click on the link to the PDF of the budget to read it in it's entirety. It can be summed up very easily like this: "Tax the living hell out everyone."