James Hamilton has an excellent analysis of the long term trends in federal spending and revenue which I commend to your attention. Lots of charts and graphs.
Here’s the bottom line:
To return to long-run fiscal solvency, the U.S. will need both tax increases, defense cuts and significant entitlement reform.
The fact that I don’t hear more people delivering the same clear message suggests to me that we don’t have enough objective observers.
I think it’s actually even simpler than that. We’ve got to tax a little bit more and we’ve got to reduce healthcare spending.
I would include defense. I cannot think of a valid reason for keeping defense spending at a set percentage.
Steve
So would I, as I have said any number of times. I wanted to make it as simple as possible and I honestly don’t believe we can control spending without reducing healthcare spending.
We will never solve our spending problem until we rate our expenditures. If you take a government unit and rate its spending line by line from 1 to 10 with 1 being in the top 10% of necessary and effective expenditures and 10 being in the bottom 10%, you can create an entirely new frame by which to judge spending and an easy way for the voters to judge. In a country which borrows to pay for its bottom 40% of its spending, no Congressman should be voting for any expenditures on their bottom 10% list. Heck, they shouldn’t be voting for anything on their bottom 20%. Comparing the 537 (US congress plus President plus VP) lists, we should be able to identify consensus stinkers and put together a series of cut bills cutting the bottom 5%, then the next 5%, and so on. At a certain point, the cut bills will stop passing but we’re going to be a lot closer to fiscal solvency after the process. We might even make it all the way to balance or a surplus.
Right now nobody approaches cutting this way. The approaches used are much more open to demagoguing and much harder to follow through to passage.
We need to move to a system where lobbyists advocating new spending have to justify borrowing the money for the extra expenditure or finding offsetting cuts for it.