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March 09, 2006

The Budget

Midtopia has a look at the Republican Study Committee's Contract with America: Renewed.

Posted by Rick Heller at March 9, 2006 09:17 PM
Comments

I agree and disagree with what they propose.

Agree: Mars mission cuts, some of the transportion cuts, agriculture subsidy cuts, legislative reforms and elimination of bad programs and how to cut them.

Disagree: sidestepping any cuts in defense; defense spending also hides in Dept. of Energy spending and other "non-defense" spending. Nobody's talking about weakening the country. But I do get angry that such a huge department (both officially and not) never gets questioned about ANYTHING. Don't tell me that a department that officially gets over 400 bil (and rising FAST) plus hundreds of billions more indirectly thru other expenses doesn't deserve any of the hard-nose scrutiny that gets put on everything else. Something so big should not be ignored. It should be the first thing to be fairly examined.

Also disagree: Health cust (not medicare), alternative energy research cuts, education cuts, aid to the poor cuts, foreign aid cuts.

Neutral: what to do about Medicare and SS. They need a solution and I'm not sure how. But I'm far more concerned about Medicare.

Posted by: John at March 9, 2006 11:14 PM

It's been pointed out before that balancing the budget is impossible if we ignore defense, Medicare and Social Security -- and the RSC ignores two of the three. The result is deep cuts in discretionary programs that still leave us in the red.

If this post sparks a discussion, it'll be interesting to see if a consensus emerges on what to cut and what to keep, as well as the legislative reforms.

Posted by: Sean Aqui at March 9, 2006 11:53 PM

Yeah, it's true. Defense spending (in all its forms) MUST be included in any serious discussion of fiscal responsibility.

Besides the pass that the vagueries of defense spending get because of some taboo in our culture that is easy to demogogue against(like Dubai), locally, defense spending is very intertwined in the economies of so many districts. This makes it dangerous for congresmen and senators to vote for any downsizing (even if Defense experts say it's a smart cut with no consequence to security). This doesn't just pertain to bases but also to military contractors building equipment funded by the military.

My cynical side (everybody has one) makes me wonder if this funding is protected more for economic reasons than security reasons...meaning local jobs and sales of weaponry and technology overseas since we "make" less and less of anything else tangible. Ya gotta wonder.

Eisenhower famously warned against a growing influence of the "military-industrial complex" (a phrase he coined) in his farewell speech.

I have few answers for SS. Th proposals are out there. As for Medicare and Medicaid, I think a serious restructuring of the entire health care system to somehow bring down costs (a lot) and widen cost-effective accessibility to everyone is the only answer to these unsustinable programs.

Posted by: John at March 10, 2006 09:22 AM

It's been pointed out before that balancing the budget is impossible if we ignore defense, Medicare and Social Security -- and the RSC ignores two of the three.

Without arguing over program details of what's good or bad, that indeed is the crux of the matter. Discretionary spending, including defense, in less than 40 % of the overall federal budget. Non-defense discretionary spending is under 19% of the overall federal budget. And non-dicretionary spending (entitlements) is growing faster than the economy.

You simply cannot meaningfully restrain federal spending without addressing entitlements. Period. You can NOT ignore the 800 pound gorilla.

Posted by: Tully at March 10, 2006 09:25 AM

I think we should adopt a single-payer system for healthcare that allows for multiple providers and for consumers to choose from a variety of ways to be covered. This would cut out some middle men (which would save money)and get rid of the obvious inequities of various people paying different rates simply due to whatever "group" they happened to belong to for insurance purposes. You could choose to pay more for cadillac care if you were rich but everyone would belong, and everyone that could afford to pay would pay something.

It should be de-coupled from employment. While this transition occured, employers could pay premiums based on the employee chpose of program, and make adjusted based on some "total compensation figure." Any employee that wanted to could zero out the employer health contribution and take it all as salary, but then they'd pay for their own healthcare. The goal of proscribing the transtion would be to make sure that none of anyone's total compensation gets "disappeared."

I also think that some of the budget-balancing suggestions that the advisory panel came up with last fall should be explored.

And I think that both a balanced budget amendment and a line item veto would help.

Social security needs to be made solvent. We have to match what we're promising to what we can afford. Changes may need to include lower benefits paid, later retirment ages, and rises in money collected (which could not be used to fund deficit spending in the sort-term).

I don't have any objection to integrating private investment or to moving away from a pay-go system, provided that we can find a relatively undisruptive way to finance the burden such a transition would entail.

Thew main SS schism an near as I can tell is that one group, mostly composed of those who are doing pretty well, wants to have current SS contributions simply become private funds set aside for retirement. The money is your property.

The other main group wants an annuity-type guarantee where you are taxed a certain amount, and in return you get back post-retirement whatever you need monthly to sustain your minimal needs, regardless of whether you live 5 years or 25 years. I support that style. It's safer for everyone. No one will have to worry whether living too long will become a financial problem, or whether unforeseen circumstances will outpace what they have planned for.

I think more than 50% of Americans prefers this style as well. What I don't think they support is lower benefits paid, later retirment ages, or rises in taxes collected to finance the program. And IMO that's a shame. I just want a promise of minimal support that I can count on. If we don't know what we are really going to get or when we can start getting it, how can we plan? I just want the promises to be realistic.

Posted by: bk at March 10, 2006 12:28 PM

I think SS needs a phasing from public to private. Benefits will have to be cut. I would suggest a pushing of retirement age to 75 for those 45 and younger. Push to 70 for those 45-50.

Now that I have the fantasy out of the way. A short term fix for Social Security is to raise the cap. Not exactly fair; but would it be fairer to start slashing benefits. Medicare is a diaster. I think medicare reform has to start with reform of both the healthcare industry and legal reform. The healthcare professionals do not do enough to police themselves and our society is too quick to sue a misdiagnosis. Therefore, we test everything to absurd ends, increasing costs to an insane degree. We also force what should be simple in-office issues to be taken care of in out patient surgical centers now.

Case in point on the latter. I had a cyst twelve years ago on my neck. Doctor cut it opened, drained it and cleaned it out there in the office. Extra cost, $40. Said he thinks it got it all; but could not be sure. Sent sample off to lab, nothing found. Ten years later, the cyst returns. OK, he may not have gotten it all; but he said that. No big deal, go to Doctor and do it again. Nope, not this time. Now I have to see a specialist. Takes two extra appointments, schedule at an off site surgical center, four poeple working on me. Plus, given a bunch of painkillers that I never use. Same result. Total billing cost - $8765. Now in ten years, this system has taken a simple $40 procedure and turned it into $8765. The result is no different. However, my productive time lost is tripled and the cost to the insurance company is insane. That cost gets passed along. Things did not change that much because of changes in technology or procedures. The doctor at the clinic and the doctor at the out-patient surgery did exactly the same thing. Cut it opened, drained it and cut out the offending mass ad sent it for tests. What changed was the legal climate. Fear of being sued.

This is not to say that medicine has not improved. I think it has in a lot of areas. The practice of medicine has had common sense removed, though. Medicare reform can not be accomplished without legal reform, IMHO. That is where they need to start.

Getting back to defense. It needs to be cleaned up. Many of the weapon systems need to be readdressed to see if they are really useful in todays enviroment. We can bomb the hell out of anyone. We seem ill prepared to handle urban fighting enviroments. Maybe cut back on high tech bomber development and redirect a focus to improving the equipment for our troops on the ground. What good is a $1B bomber if it can't be used but in a few rare occasions?

I agree with cutting agricultural subisides. I think that alternative energy does need more support. Our biggest subsidy right now is to oil. Indirect in the form of our US military in the Middle East. It would be niave to think that we would be there if there was no oil. We certainly aren't in Africa. Now we have countires like Iran using oil as a weapon. It is better to subsidize research in alternatives now and get a head start and have them ready if needed then to wait for high oil prices to tear our economy up, be it by embargo, increased demand from India and China, Peak Oil or all three combined.

I think the economy is taxed cutted out. With personal savings doing so poorly, I doubt tax cuts will filter into the economy at useful rate. If they want to use a tax cut with any economic stimulus, it must be focused to the poor and middle class. I do not think cuts for the upper class will do much to improve the economy these days.

Balance budget amendment, bad idea. While I like the idea of a balanced budget, there are times when government may have to spend more then what is taken in. If you want to see a generational war in fifteen to twenty years, just put that amendment in and watch the blood letting when the Social Security drain of the Baby Boomers, who created the fiscal mess, starts to bang up against a balanced budget amendment.

One thing we need to be doing is improving our educational financial aid system for college students. Not turning it into a revenue increasing tax. That is exactly what Congress did last term by raising the rates on loans and reducing grants. Shortsighted and selfish.

Posted by: Jim M at March 11, 2006 12:35 PM
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