http://www.boston.com/dailynews/310/...lready_:.shtml

Continuing deficits: Even if nothing changes, we'll add $2.3 trillion to the deficit in the next 10 years.

Privatize Social Security: $1 trillion to $2 trillion in transitional costs over the next 10 years. I don't think that includes the loss of the Social Security surplus, which hides another trillion or so in national debt.

Make tax cuts permanent: Another $1 trillion.

Afghanistan, Iraq: Currently about $100 billion a year not included in budget estimates.

Education and foreign aid initiatives: A few billion a year.

CAN ECONOMIC GROWTH SOLVE THE PROBLEM?

Short answer: No.

The FY 2005 federal budget is $2.4 trillion, including off-budget items such as Iraq. Roughly $400 billion of that is deficit spending.

US GDP is about $11 trillion.

Assuming taxation levels stay relatively constant, that means every $1 trillion in economic growth produces about $180 billion in additional government revenue.

Our current deficit is $7.4 trillion.

Over the next 10 years, everything above will add about $5.8 trillion to that, for a total 10 year hole of $12.9 trillion.

Debt payment on the current debt amounts to about $300 billion a year.

$5.8 trillion divided by 10 years amounts to another $580 billion a year.

So to eliminate the budget deficit and pay for Bush's proposals would require the economy to grow $3.2 trillion, or 29%, THIS YEAR, in order to cover the $580 billion average annual cost. Assuming it doesn't do that, the economy would have to grow by some much larger percentage in the next 10 years so that the averages balance.

That just covers new spending. In order to actually start paying down the $7.4 trillion in existing debt, the economy would have to grow even more. It would have to grow $1.6 trillion THIS YEAR simply to cover the existing debt payments.

We simply can't grow our way out of a hole this big.

WHAT CAN WE DO?

We can cut spending. But lopping even $400 billion out of the annual federal budget (enough merely to erase the current deficit) would essentially erase all discretionary spending.

We also can raise taxes. There were 227 million tax returns of all types filed in 2004. Hitting each of those for $1,762 more a year would erase the budget deficit.

That's an "ouch" kind of number. But it illustrates the magnitude of the problem. The longer we wait, the bigger the deficit gets, and the bigger that cost grows. Economic growth may help, but as I've illustrated, it's not going to solve the problem.

The responsible thing is to do a combination of all three. But cutting spending won't yield enough, nor will any reasonable rate of economic growth. The only way to address the deficit is to raise taxes, in combination with a near-ban on new spending.

That won't do the economy any favors in the short-term, but we've been living beyond our means for years. If we accept our responsibility and take care of the deficit, in the long term the economy — and us — will prosper.

Anyone think Bush will spend his political capital in this fashion?

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Scarred survivor of the April 2008 Mod War.

Yay.....I have an idea......make all the politicians in DC pay for this crap....since they like spending OUR money so much

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www.contraweb.tk
.: Digital Activism for the New Millenium :.

We're part of the problem too, Neonimbo, because we keep telling our politicians that we want tax cuts AND increased services.

You can have one or the other, but not both. And it's gotten to the point where we're talking about substantial tax hikes merely to pay for what we already have.

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Scarred survivor of the April 2008 Mod War.

If I remember correctly, I believe it's something like 47 out of the last 55 years, we've run a deficit. And during that same time period, we've sextupled the GDP. And during that same time period, we've created over 75 million jobs.

Running a deficit is not always as bad as it's painted. Especially during war times where extra expenditures are necessary. Right now, our economy is expanding....slowly, but expanding......interest rates are still very low......inflation is still very low.....home ownership is the greatest it's ever been.......and we've pulled ourselves up out of a recession we were handed despite the greatest terrorist attack on our home soil ever.

Although I do believe we should hold down discretionary spending as much as possible....I don't see this as our primary problem right now.

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"This is a time for a national imperative not to fail in Iraq." Condoleeza Rice, January 11, 2007

Fine, JP5, you don't consider this a problem. I disagree; I think $300 billion a year wasted on interest payments, while we pile on even more deficit spending, is an indefensible bipartisan waste of taxpayer money that lets us live high on the hog while we stick our kids with the bill.

But can we at least for starters stop talking about taxes as if they're inherently evil? Can we instead start talking about our fiscal responsibility as a nation? Can we stop rewarding politicians for pandering to us with our children's money?

Can we stop saying that the way out of deficit trouble is by cutting spending and "government waste"? Those two pots are too small to be meaningful on the scale we're talking about.

Can we string up anyone who demands a "no new taxes" pledge, or a "tax cuts are always good" pledge, or proposes trillions in new spending while ignoring how to pay for it?

"Politics as usual" leads to a lot of bad math.

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Scarred survivor of the April 2008 Mod War.

It is the level of deficits that become an issue. And I do feel we are approaching the level where the deficits are too high, especially in light of social security and an aging nation. Taxes aren't inherently evil, the level of taxation that we experienced until the late 90's is what was inherently evil.

I think eliminating government waste can help, but agree that it's not enough to the level that we need.

The solution would be far easier if the public didn't automatically go for the candidate who will give them the most "things." Unfortunately, people to tend to vote for those who will throw the most money at their demographic or against those who want to take it away. There are plenty in the "not me" crowd. Those who are for cutting spending as long as it doesn't affect them. If you can ever get the public to accept that some pain is needed in regards to spending cuts then you can begin to work. Until then, politicians on both sides will continue to pander to them.

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JMS gets another English lesson:

Quote:

there is no "mostly unique;" thats like saying "sometimes always," its an oxymoron - its either one or the other.

The result:

Quote:

By the mid-19th century unique had developed a wider meaning, “not typical, unusual,” and it is in this wider sense that it is compared. The comparison of so-called absolutes in senses that are not absolute is standard in all varieties of speech and writing.

Social security privatization is not spending. There will be initial "costs" due to the way government spends money, but it is not additional "spending" But that is a good example of the pain that is needed. Once SS is privatized then individuals will always know what they have available to them, government will no longer have a crutch/slush fund to use when it sees a shortfall in revenues, and those who contribute will be guaranteed to see the returns when they retire. Initial pain, yes...but necessary to move forward.

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JMS gets another English lesson:

Quote:

there is no "mostly unique;" thats like saying "sometimes always," its an oxymoron - its either one or the other.

The result:

Quote:

By the mid-19th century unique had developed a wider meaning, “not typical, unusual,” and it is in this wider sense that it is compared. The comparison of so-called absolutes in senses that are not absolute is standard in all varieties of speech and writing.

I don't want tax cuts or increased services. Maybe I'm just different. I don't mind a bit the amount of federal taxes that I pay, and if my pay were to double I wouldn't mind then either. What I do want is less spending. Stop giving corporations money to do things. Stop giving piles of cash to Egypt and other countries. Cut every federal program across the board except for homeland security by 5%. That right there will suck for a lot of people but will save trillions. Stop putting little lines in bills like 'build a 30 million dollar airport here so I can land my jet'.

What I mind paying is my property tax, and my social security tax. Social security tax is the worst because it is estimated that for every 1 dollar you give them today, they hold it for 30-40 years, then give you back 70 cents. That is not fair, ethical, smart, efficient, logical, fiscal, and on and on and on. And don't forget that your employer is also giving them a dollar too and getting zero back in return.

Alan Greenspan has said numerous times that the current system will fail. Privitization is an answer, maybe not the answer, but it will help. A guaranteed 2% gain per year (US treasury bond) is better than a negative 1% gain per year. The government has STOLEN from the system and now it's time to pay it back. Tough cookies. Cut spending and get it done during the transition, and make it so the new system is untouchable, via an amendment to the consitution (it's the only way to force them to never ever touch the money.)

I fully expect that the government will increase social security taxes that your employer has to pay, which will hurt small businesses. But most people won't notice or care since they won't see it effect their check.

Actually, I think it is. I was mistaken earlier, when I thought this was simply a bookkeeping problem. The $1 trillion to $2 trillion is what the government will have to pay current retirees for benefits that are no longer being paid by the contributions of current workers. It's the cost of transitioning from a "current workers support current retirees" plan to a "current workers control their own retirement money" plan.

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Scarred survivor of the April 2008 Mod War.

Isn't it a little early to get all worked up over the private SS acounts? There is no real plan on the table yet. Only a vague idea about where Bush would like to end up.