How Would You Balance the Budget? Preferred ratio of tax increases and spending cuts

[REWahoo]

Every small restaurant in my area has an ATM and won't take a credit card.

You need to move to a better neighborhood...

Location: In a van down by the river

 

[Bestwifeever]

I always thought the restaurant ATM machines were intended to (a) make a little money for the restaurants with a portion of the fees going to them and (b) keep the restaurants' expenses down by them not having to pay the credit card companies' fees. The tax "savings" for the restaurant of being all-cash never even occurred to me.

 

[keegs]

How do we get the private prisons lobby plugged into the "lock up the tax cheats!!" idea?

 

[keegs]

OFF TOPIC but wanted to share...I'm watching a squirrel about ten feet from me sitting atop a pumpkin on my deck..(ahhh..my front fender) ...gorging himself....he's been at it for about 10 days now....got it down almost to a nub...seems to like the skin the best..wonder if he's had problems with flatulance...

 

[rescueme]

Question--If you believe action is needed to balance the federal budget, what mix of tax increases and spending cuts would you prescribe as being "about right"?

I would take Nancy out and show her a good time. That would include "making her happy" on her personal vineyard "product".

Maybe she would encourage those to vote on fiscal sanity, ...

 

[ERD50]

Gee ERD...I underlined it for you.

Oh, I can read posts just fine. But I can't read minds. Care to explain?

What about we start throwing some people in jail for unpaid taxes?

Sounds good to me. The most visible, high-profile example we could make to get people's attention and let them know we mean business would be Timothy Geithner. That would send the message that even with connections, you better pay your taxes, or else!

And let's have them pay their own upkeep - else, it could cost more to hold them than the taxes they owe. Though there would be a multiplier effect, so maybe that's OK.

-ERD50

 

[Gone4Good]

Sam, I think your graph would be much more meaningful if it were spending and taxes as a percent of GDP.

I posted one in another thread.

 

[samclem]

I posted one in another thread.

Thanks, yep, I saw it and it is interesting. It's easier to think in "% of GDP" rather than "$X trillions." But, one value if showing things in constant dollars is that it shows how much govt (spending and revenue) has grown ona an absolute basis (without reference to GDP). After all, our defense needs don't necessarily climb with a higher GDP, likewise our social services costs, etc.

One small gripe about the charts is the portrayal of the SS taxes as revenue without also showing the increased future liabilities (as a business would log accruals).


Here's where the US Treasury believes we are headed (page xi, Chart 9):. (Sorry--I can't post the image)

 

[Gone4Good]

Here's where the US Treasury believes we are headed (page xi, Chart 9):. (Sorry--I can't post the image)

I can help with that.

What you'll notice is that nearly the entire long-run budget problem is due to growth in Medicare (and associated interest on future borrowings.) Which is why it's such a bad thing that the deficit commission punted on health care costs, and why the much maligned Health Reform legislation is such an important first step in fixing our structural budget imbalances.

 

[samclem]

I can help with that.

What you'll notice is that nearly the entire long-run budget problem is due to growth in Medicare (and associated interest on future borrowings.)

Thanks for adding the chart.
Some takeaways from the chart:
- The huge light yellow area: That's the monster that's going to kill us if we don't balance the budget very soon.
- The defense budget: Folks think that's where the answers are. Nope. You could zero it out now and by 2020 we'd still be running a deficit.
- Large govt subsidies for the new health care law--where are they? This report was written before that legislation was passed. Be need to add a large chunk of additional spending for that. The picture just got worse, not better.
- Social Security: Reform now can allow us to cut costs decades later, when the money will be needed, and will give workers time to adjust their savings (and expectations) for new, lower, benefits.
- Medicare/Medicaid: A very big problem. We need to reduce the growth of medical spending not only for the sake of these programs, but for the health of the private economy as well. Market based competition is going to work far better than artificially limiting access to care. The government can facilitate this competition.

 

[Gone4Good]

- Large govt subsidies for the new health care law--where are they? This report was written before that legislation was passed. Be need to add a large chunk of additional spending for that. The picture just got worse, not better.

Not according to the CBO who says it will make things better even without giving credit for things like "comparative effectiveness (death panels)".

Market based competition is going to work far better than artificially limiting access to care.

There is no market that will insure the very sick or the very old except at a price that exceeds their cost of care. And because we all become very sick or very old at some point the "market" will fail every single living person sooner or later. You know there isn't a free market solution to health care, why do you pretend otherwise?

 

[samclem]

You know there isn't a free market solution to health care, why do you pretend otherwise?

Where's this coming from?
I know that there can certainly be a competitive market for health insurance, and with the appropriate legal framework, and judicious subsidies, this can offer affordable health insurance for everyone regardless of age or infirmity. And I firmly believe that competition between insurance providers and between providers of medical services is the most effective and most humane way to control medical costs.

 

[Gone4Good]

and with the appropriate legal framework, and judicious subsidies . . .

. . . you end up with something that looks very similar to the reform that passed . . . individual mandates, taxpayer funded subsidies, and heavy-handed regulations to keep private insurers from dropping coverage or jacking prices. All are necessary to make a "market" for health insurance work, but I wouldn't exactly call it a "free" one.

And the forces of competition to control costs essentially break down when the ultimate customer's cost is, by necessity, subsidized or "insured" for all but the most basic care (even with "high deductibles" that are still just a small fraction of the cost of any major treatment).

But again, you know this.

 

[ERD50]

Where's this coming from?
I know that there can certainly be a competitive market for health insurance, and with the appropriate legal framework, and judicious subsidies, this can offer affordable health insurance for everyone regardless of age or infirmity. And I firmly believe that competition between insurance providers and between providers of medical services is the most effective and most humane way to control medical costs.

+1. G4G seems to say that since a segment of the market won't be addressed by the free market, that we have to throw the baby out with the bath water.

We can put some regs in to cover that group, and let the free market fill the demand created by those regs. It isn't a "pure" free market, but nothing is. It's all a matter of degrees.

The Swiss seem to be able to make it work.


-ERD50

 

[Gone4Good]

We can put some regs in to cover that group, and let the free market fill the demand created by those regs. It isn't a "pure" free market, but nothing is. It's all a matter of degrees.

The Swiss seem to be able to make it work.

Yes, and what I'm saying is that when you work through the details of actually making that work, you inevitably end up with something that looks a lot like the reform that was just passed (which doesn't look much like a "free market" at all).

So lets look at the Swiss system . . .
1) Individual mandate - check
2) Basic insurance policy coverage dictated by the government - check
3) Price controls on the basic coverage - check
4) Prohibition against discriminating because of age, or medical condition - check
5) Subsidies if basic insurance premiums are above a certain % of income - check
6) Private supplemental insurance available - check

That sounds almost identical to the legislation that just passed. Surprise, surprise.

 

[ERD50]

Yes, and what I'm saying is that when you work through the details of actually making that work, you end up with something that looks a lot like the reform that was just passed (which doesn't look much like a "free market" at all).

So lets look at the Swiss system . . .
1) Individual mandate - check
2) Basic insurance policy coverage dictated by the government - check
3) Price controls on the basic coverage - check
4) Subsidies if basic insurance premiums are above a certain % of income - check
5) Private supplemental insurance available - check

That sounds almost identical to the legislation that just passed. Surprise, surprise.

The Swiss system didn't have all the rest of the junk that is in that bill, so much stuff that we were told we couldn't even tell what was in it until they passed it (is THAT really how laws are to be produced? What happened to "understand what you sign"?). I'll skip the popular names for the various pay-offs, but you know what I mean.

How it "looks" or "sounds" depends a lot on what kind of glasses (hearing aids?) you are looking through I guess. I think it's safe to say we take a different lens prescription

-ERD50

 

[tjscott0]

http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/CoChair_Draft.pdf


The above link is for the specifics of the commission'sdeficit reduction proposal.

Health care cost reduction starts on page 31.

 

[Gone4Good]

The Swiss system didn't have all the rest of the junk that is in that bill, . . .

How can you be so sure?

But even if that is true, your complaint is then only about peripheral issues (this senator got bribed with 'x' which shouldn't have been in the bill). I agree. That stuff can and should get striped out. What I don't see is an explanation of how we can avoid the big picture elements of the legislation: 1) Individual mandate 2) Mandatory issue insurance with prescribed minimum coverages 3) Prohibition against price discrimination 4) Subsidies . . . all of those elements have to be part of any reform, or the whole thing falls apart.

And if all of those things are part of reform, what we end up with is a system where individuals are forced to buy a Federally prescribed product at a heavily regulated price from a seller who's required to sell it. That may technically be a "market" but I wouldn't call it "free." Thus, my assertion that there isn't a "free market" solution to health care delivery. I'm still waiting for someone to propose a viable alternative (especially from the 'repeal and replace crowd'), but unfortunately, it doesn't exist.

Which leads to the question I asked of Samclem, why are we pretending that there is a free market alternative? And if one exists, why can't anyone describe it in detail?

 

[M Paquette]

How can you be so sure?

Here you go.

http://www.admin.ch/ch/d/sr/8/832.10.de.pdf


It's in Swiss German, though. 59 pages, but... There are an additional set of laws that apply, from the original Swiss laws a century ago that set up federal regulation of the health insurance industry, to various attached bills, and amendments over the past 15 years.

 

[samclem]

Here you go.

http://www.admin.ch/ch/d/sr/8/832.10.de.pdf


It's in Swiss German, though. 59 pages, but... There are an additional set of laws that apply, from the original Swiss laws a century ago that set up federal regulation of the health insurance industry, to various attached bills, and amendments over the past 15 years.

Those Swiss, so efficient. Somehow they crammed our 2000+ page law into 59 pages, plus attachments. But, it's in German, so their 59 pages have 20 times as many words longer than 10 letters than our law does.

Hey, I see how they did it. Their document includes a link back to this post, the accompanying text says "Implement the plan at this link": http://www.early-retirement.org/forums/f52/socialized-medicine-42389-4.html#post789731

The other 58 pages appear to be devoted to a chocolate recipe. . .

 

[DallasGuy]

Whack the ever living cwap out of the defense budget would be a good start.

+1

It's amazing that most politicians seem to think that the defense budget is off limits. Why is that?

 

[keegs]

+1

It's amazing that most politicians seem to think that the defense budget is off limits. Why is that?

.......campaign contributions from the defense industry lobby?
.......the all volunteer armed forces?
........American yahooism?

 

[M Paquette]

The other 58 pages appear to be devoted to a chocolate recipe. . .

Why chocolate protects against heart disease

Finally, a health plan we can all agree on!

 

[tjscott0]

As there is some interest in the Swiss health care system; I though I would give a few links:

http://www.nytimes.com/2009/10/01/health/policy/01swiss.html?_r=1&hp

Best Buy: Privatised Healthcare Systems in Europe | The Brussels Journal

I saw a tv show last last year on the various systems in the world. I recall that the Swiss system is via private insurers. There is a boiler plate set plan that the private insurers provide on a nonprofit basis. Where the private insurers make their profit is the sale of additional boarder coverage.

Oops! One more link:
http://www.civitas.org.uk/pdf/Switzerland.pdf

 

[jimnjana]

+1

It's amazing that most politicians seem to think that the defense budget is off limits. Why is that?

I think because politicians are, well politicians. They don't want to be seen as weak on defense and well, there is a WAR going on. It is mind boggling the amount of waste in the defense budget, much of it put there by the politicians.