While I’m on the subject of deficits, do you get the impression that the members of Congress don’t know the difference between billions and trillions? It certainly looks that way to me. They’re acting as though $850 billion over ten years (the amount deficit reduction estimated by the CBO) or even $1.2 trillion (the amount that Speaker Boehner was claiming) was a big deal. According to at at least one estimate it will take $650 billion of deficit reduction (some combination of increased revenue and reduced spending) per year just to stabilize the situation. That’s $6.5 trillion over ten years, an enormous amount over the sums that are being discussed.
We are going to be spending more on Social Security and Medicare for the foreseeable future. That is no surprise. We’ve known that for the last 40 years we just haven’t known quite how much more we’d be spending. Regardless of any discussion of trust funds, Treasury will need more cash to pay those expenses and that means more borrowing, higher taxes, or both. If we elect more borrowing, which is the pattern right now, it means that our cash requirements in future years will be that much higher.
Growth isn’t going to save us. The IPAB won’t save us. It’s already emasculated and if it shows any sign of actually achieving the objective of spending reduction it will be cut off at the knees.
If deficit reduction were easy and painless, we’d have already done it. We are just about on the floor, debt service-wise. It will only get more expensive from here. That may be in ten years or it may be next year. Next stop: primary default.
That’s $6.5 trillion over ten years, an enormous amount over the sums that are being discussed.
Well, enormous compared to the two proposals being considered now. It’s not THAT enormous compared to a) the $4 trillion deal that was reportedly under discussion between Obama and Boehner or b) the $5.2 trillion Simpson-Bowles proposal. Either of those would be a good start.
But you’re right that it’s time for both parties to drop their yammering and pass a limit increase, even a temporary one. Or just eliminate the debt ceiling entirely.
My mood is becoming increasingly black on this issue. That was my grandmother’s nursing home that the Chicago/St.Louis/Illinois newspapers reported over the weekend as closing due to failure of the state to pay it’s bills. On Wednesday, management told the employees they only had enough money to pay wages for a week. The newspaper accounts have a governor flack explaining how the law requires 90-day notice of a closing. We suspected the staff might not show up today despite some artifice of paper constructed somewhere. I think she’ll be fine, but her health does not respond well to movement.
This really appears to me to be the beginning of a death spiral. I know too many companies that are planning their exit strategy from government-contracted services, which the government cannot provide on it’s own. I know too many government programs that exist only as fictious entities in some rule or regulation (90 day notice?), and too many existing agencies that cannot perform their functions in a way that is conductive to the public good.
And the state raised taxes, substantially.
But you’re right that it’s time for both parties to drop their yammering and pass a limit increase, even a temporary one. Or just eliminate the debt ceiling entirely.
Yes, let’s eliminate the damned debt ceiling already. I doubt anyone in Congress is proposing that, though.
“If deficit reduction were easy and painless, we’d have already done it.”
Only if you are in the business of spending for constituents, and building beaurocracies for votes. That is, only politically. I’m dead serious here. Does any commenter believe as an organizational/running a business/efficiency matter we couldn’t reduce government spending by 15%, at least? The politics, which I recognize but am unsympathetic, I understand are difficult. But just as running an organization in proper fashion? Really?
So let’s understand the real debate here. Grandma doesn’t need to get thrown out in the snow. Children don’t need to breathe or eat poisoned air and food. Its about politicians and their power. We have a false debate going on here.
Its about politicians and their power. We have a false debate going on here.
It would be a false debate if we weren’t dealing with politicians and their power. Since we are, and since THEY are in charge, we are not having a false debate.
And even if you could cut spending by 15% in just the form you cite, we would still need about another 25% to get back to even. All of THAT isn’t coming from an “efficency matter.” And once you get to THAT, then you run smack into the stuff that gives the politicians their real power. Not only is it not going to be easy, it is going to be nigh impossible.
Growth isn’t going to save us.
2011 Q2 GDP (ADV): 1.3%
SPLAT!
Or perhaps that should be:
SPLAT!
And all this before the debt ceiling crisis.
Oh crap! I missed the revision to Q1! Call it a
MEGA-SPLAT!
Wow, even Tyler Durden at Zero Hedge has been knocked a little flat like this. About 20 minutes after the announcement and he’s still only got a “More shortly” up. He’s usually much quicker with the insta-doom.
Also, the revisions are interesting. And think about how bad these numbers are minus-stimulus. The real economy has not recovered.
And I read somewhere that with the Q1 revision that the GDP is now officially still below the previous peak. Not sure if that’s true, but given popluation growth and wealth redistribution (all upward), things are starting to officially look like what I have been saying – those not at the top are somewhere between “getting screwed” to “royally cluster-fucked.” Add in some inflation for extra-doom.
Okay,major revisions going back a ways in the report. It turns out the recession was substantially worse than reported.
SNAFUBAR.
You said it, Brother.