. . . and after some consideration, I’ve decided that’s a good thing.
After the initial release of the first draft won so much applause, I was inclined to support it. Then I began to look at the details, and the more I saw of it, the less I liked it.
In fact, its early response showed nothing else but how inured we have become to the cowardice and ignorance that has infected the nation’s capital. It’s the only way this could ever be considered “brave” or “groundbreaking.”
There are five reasons why I could not support the Co-Chairmen’s proposal.
The spending “cuts” are mythical: As Veronique de Rugy noted in her post on NRO‘s Corner, under the Commission’s plan, spending actually rises by nearly 50% – or $1.6 trillion in ten years. Health spending practically doubles during that time (so much for Democare “bending the cost curve”). Instead of cutting spending, the Co-Chairmen simply slow down spending growth. Furthermore, there are no mechanisms in place to lock in the slower growth long term. Have we forgotten the early 1990s, when two different “deficit-reduction plans” under two different presidents of different parties relied on tax-hikes now and spending cuts later? In both cases, he tax increases slowed the economy (and made hash of the revenue projections) while the spending cuts were forgotten and ignored.
Democare isn’t touched: Despite an election in which the party calling for its repeal won nearly 60% of the House and over 67% of Senate races on the ballot one month ago, the “bipartisan” co-chairs swallow the budget-busting health-care deform whole.
Entitlements are largely unchanged: Hardly anything is done to Medicare and Medicaid, while Social Security’s retirement age doesn’t get changed beyond “current law” until 2027 (by which point, according to Jim Bacon, the game will already be up). I am repeatedly stunned by how so many in Washington refuse to notice that Americans under 40 have no expectations of Social Security, and therefore some more forceful changes here would be welcomed. I’m beginning to think that any reform effort that still has yours truly receiving a Social Security check in my lifetime is a sham. Perhaps that’s just me; then again, I also know that the program was started to keep seniors from dying in 1935, and the rest is a de facto Ponzi scheme that, had it been started in the private sector, would have landed its founder in prison.
The tax increases will devastate the economy: Now, just to be clear, I’m not talking about removing the tax credits and tax deductions that have repeatedly triggered the Christmas tree metaphor to describe the tax code. However, those phase-outs should be entirely matched by rate reductions, not partially matched by them. Net tax increases are not beneficial to the economy, and for that reason never get the revenue they’re projected to gain anyway. This is especially true in this case because the Co-Chairman included a massive capital-gains tax hike that will cripple investment, thus bending the growth curve downward and costing revenue in the process.
Finally, but most importantly, the steady-state (2035 and beyond) is NOT a balanced budget, but $900 billion deficits as far as the eye can see. The report “caps” spending and revenue at 21% of gross domestic product (GDP). There’s only one problem with that: revenue has historically averaged 19% of GDP, not 21%. Using the Co-Chairmen’s own GDP and inflation projections (themselves borrowed from the CBO), a 2% difference in GDP translates to $904 billion.
So, in summation: the proposal that failed in the Commission vote today would raise taxes, hurt the economy, increase spending, have no mechanism to ensure spending inccreases would slow down, accepts Democare, make no more than cosmetic adjustments to entitlements, and make a $900 billion mistake about the future of the country.
The real outrage, frankly, was that it got 11 votes in the first place.
[...] Cross-posted to RWL [...]
There are TWO PLANs guy and they BOTH do what we have not done – they BALANCE THE BUDGET and you and your team offer NOTHING instead.
You’re playing for the team of excuses and do nothing.
Both of them do MORE than “touch” the entitlements. There will be haircuts for all involved but they don’t perform the ideological hari cari that you guys want.
Ya’ll do’t like SS/Medicare even if they function without deficits – which they can.
You guys – the Republican are the reason we are here right now.
You talk fiscal conservatism but you blow up the balanced budgets.
I you don’t like the deficit commission proposal then whats wrong with the domenici/rivlin plan?
at the least, couldn’t you guys get off your flabby ideological butts and put together a balanced budget proposal when you’re not banging on the ones you don’t like?
or are you opposed to scruples also?
Perhaps you stopped reading the post about halfway through, Larry. I specifically noted that this plan does *not* balance the budget.
Not sure about Domenici/Rivlin, but Ryan/Rivlin looks somewhat promising . . .
D.J. I read your post. Who am I to believe here on the balance – you ?
Can you name others with appropriate credentials support what you say?
I’m going to go back and re-read you comment but when I first read it – I saw nothing to substantiate – just an assertion.
We could argue about that but then you and your team .. despite your claims of saying we need to make cuts – offer none.
why?
If the deficit commission and the Bipartisan Policy folks have had time to suggest cuts – why has your team not put out a competing plan?
wait a minute. We reach a balanced budget that stays that way until 2035 and you oppose it?
ha ha ha…
Jesus H. Keeerist fellow… getting to a balanced budget right now is way, way more than your team has accomplished – in recent history.
the bottom line here is that your team does not offer a balanced budget and instea critique other efforts without producing one yourself.
youse guys should be ashamed to call yourselves conservatives.
Cutting taxes without balancing the budget guy is a disaster and you seem to be fine with it.
No Larry, the Co-Chairmen’s plan doesn’t balance any budget prior to 2035, it merely sets the deficit on a supposed glide path to extinction.
Again, though, that’s with the faulty 21% of GDP assumption, a mistake that creates a $900B hole in their plan.
I would remind you, Larry, that the last balanced budgets came with Republican-controlled Congresses, which had as much to do with them as President Clinton. Meanwhile, there are more than a few plans out there to balance the budget without tax increases (ATR, Cato, and Congressman Paul Ryan, although his introduction of a VAT concerns me).
Then again, you’re only interested in slagging the GOP as often as you can – and it’s getting old. We don’t march in lockstep; we don’t share the same brain. I would have thought your friendship with Vince would have shown you that.
Oh, and I should note Ryan has two plans, one by himself and the other being the Ryan-Rivlin plan I mentioned in an earlier comment. Ryan-Rivlin in particular actually focuses on reforming entitlements, without which this is all academic.
re: ” Ryan-Rivlin”. Is that a balanced budget proposal or a health care proposal?
Reforming Medicare will not reduce the CURRENT 1.4 trillion deficit because SS and Medicare are funded by FICA – not the income tax and it is the income tax /discretionary budget that is in deficit.
Medicare an SS – WILL HAVE – in the future – major problems without changes but in BOTH Deficit Commissions proposals they show how to keep SS/Medicare SOLVENT without destroying those programs.
The problem with Ryans approach is the same problem we have right now with health care in that if people cannot pay for health care – we provide a free alternative to them which costs the rest of us about 4 times what it should cost to pay for their care.
We call this EMTALA and Ronald Reagan signed it into law and basically what it says is that if you are irresponsible as an individual and have not saved for health care – that “we” – the rest of us will provide it for free and pay about 4 times more for it than it should cost.
That’s not a responsible answer to health care but that’s essentially what Ryan is proposing. He does not say what happens to people who run out of their voucher money but unless he is willing to advocate repealing EMTALA – that’s where people will go for care when they are out of money.
Ryan’s scheme is totally bogus because he does not say that the rest of us will pay for the health care of those that run out of money.
That’s not fiscal conservatism. That’s DUMB but it’s what the Republican Party delivers these days for policy.
this is the plan that was just released:
Bipartisan Policy Center – Debt Reduction Task Force; domenici/rivlin.
http://bipartisanpolicy.org/sites/default/files/Debt%20Rollout%20Charts.pdf
Now the fact that you are not familiar with this at the same time you say there are “a lot of balanced budget plans out there” tells me that you really are not THAT familiar with the plans and that you seem more interested in ideology than actual practical plans to balance the budget and reduce the debt.
Where is the Republican Plan? Where is YOUR PLAN? How would you alter the DRAFT Plan to do what you say it does not do?
And that’s why I am “slagging” on you and your party and I bet that Vince would agree with me because you guys are all talk and no do – have been for a decade – and as we speak – continue to not specify which cuts need to be made to balance the budget.
You run on cutting debt and balancing the deficit but you are more interested in killing programs you don’t like even if we never balance the budget.
You won’t even list the cuts that you think are necessary to balance the budget. Why?
The Republican Party has become a fraud because you simply refuse to balance the budget or present a plan to do it and you discredit other plans by pointing out alleged flaws without saying – “if we did this, instead, it would balance”.
Both of these recent plans may or may not achieve technical “balance” but they go a long, long way pushing the deficit down AND bringing the debt down and you guys offer NOTHING as a PARTY.
You say that you have a lot of different ideas.
Ideas don’t work guy. “ideas” is why we have a 13 trillion debt with no action to reduce it.
You’ve had “ideas” since George Bush took over and all you and your party managed to do was run the country into an economic ditch at the same time we’ve had the lowest tax rates in 50 years.
We got no job growth. We have no seen increased tax revenues. What we did get – during the Republican rule was an annual structural deficit of over a trillion and we went from 5 trillion in debt to 10 trillion in debt.
All the while you guys are running on a fiscal conservative claim that you will make the necessary cuts to put us on a responsible fiscal path.
which is total BULL….
The problem is that Republicans did not perform and even now – they refuse to specify the hard choices necessary to balance the budget.
At least give the Deficit Commission credit – they made the hard choices and what you did was dismiss them out of hand.
And the reason you don’t perform is that you and your party have morphed into ideology and ignored the actual work of reducing the deficit and debt.
You’re anti-tax but you’re also irresponsible and that’s not the core ethic of fiscal conservatism.
So the party of fiscal conservatism that I respected – and I bet Vince also – has morphed into a bunch of right-wing zealots who are oppose to CONCEPTS like social security and Medicare and the party and their leaders by their actions has no interest in making the actual cuts that you claim we need to make to put us on a fiscally responsible path.
At least give the DRAFT Commission an the Bi-Partisan Group CREDIT for making a good-faith effort at making the necessary cuts – and laying down a baseline that can be tweaked if it does not totally suit you.
but – no – you dismiss it out of hand – even as you have no plan of your own.
that’s totally bogus – non-responsive – irresponsible and really just downright fraudulent for any party or any person who claims to be a fiscal conservative.
you guys give fiscal conservatism a BAD NAME no days.
and that’s why I’m “slagging” on you and the Party.
and I will continue until the Republican party that I respected and admired returns.
and you know what – there are a LOT of us who feel this way. I’m not about to join up with a bunch of right wing zealots until they get pushed back to where they belong – a fringe that has no real influence over the main party.
The Republican Party has abandoned it’s core principles of common-sense fiscal conservatism and morphed into a bunch of right-wing zealots who care more about ideology purity than governance. Unfit to govern.
I’ll tell you what. If Vince disagrees with what I say here – I’ll listen to his point and reconsider my “slagging”
Deal?
here’s the basic problem.
You guys think entitlements need to be totally reformed – changed , not just “fixed” to be solvent.
But we don’t need to do that to keep them solvent and we certainly don’t need to do it right now AND even if we did do it right now – it would not touch the CURRENT 1.4 trillion deficit and 14 trillion debt – that have nothing to do with FICA and everything to do with spending more on non-entitlement govt than we are taking in – in income (and other) taxes
so you’re focusing on a real problem that we have time to fix and ignoring the problem that directly threatens us right now.
Social Security and Medicare can be fixed the same way any insurance program – public or private can be fixed by adjusting it actuarially the very same way that private sector insurance programs have to adjust to maintain pay-outs balanced with premiums.
You need to increase the premiums and/or cut the benefits but you can do that without killing the program. Private insurance companies do this all the time.
Instead, you guys are opposed to the CONCEPT of Govt-sponsored Social Security and Medicare Insurance and you want to kill these programs and replace them with defined contribution funds.
They are not funds. They are insurance programs funded by premiums – FICA taxes.
But beyond that – you have no answer to what happens to people who end up old and have no more fund.
We will end up with people in their 70′s an 80′s who are totally destitute and have no income at all.
And you have no answer for that.
Who will pay for these people?
We will.
so you basically support an ideology without a practical way to implement it as a real solution.
The American people have not caught on to this yet in part because of the volume of misinformation being propagated – for instance – the false idea that our CURRENT BUDGET DEFICIT and OUR DEBT right now is due to entitlements when the fact is that we are actually spending more on non-entitlement government that we are paying for with taxes.
But the bigger question is why would someone pursue such a grossly dishonest narrative in the first place?
It’s basically a big lie.
and sooner or later – even clueless Americans will figure it out and then realize that the Republican Party is not being honest about their real ideas about Social Security and Medicare.
They’re going to figure out pretty quick that the rest of us are going to end up paying for those that use up their vouchers and are destitute.
The Republican Party apparently thinks that “insurance” is a socialist concept because that exactly how Social Security and Medicare currently work – NOT as pension funds or health savings accounts.
And the reason why is readily apparent. Some of us will end up with unanticipated, even catastrophic expenses – the very same way some o us end up in those same circumstances with a home fire or a flood or an auto accident.
So we buy insurance – an if we don’t buy insurance then we lose our house or car.
But as a nation – we will not let a 75 year old die in the streets destitute and our solution is the same solution that every other G20 country in the world uses and that is that we have a mandatory tax for insurance – FICA.
and FICA provides that safety net that will be needed for those who either fail to properly plan for their old age or who did plan but face catastrophic circumstances.
The Paul Ryan approach to this is to destroy the insurance program and replace it with an optional defined contribution program and he has no answers as to what happens to those who end up in destitute circumstances – he assumes that the govt and taxpayers will not cough up the money to rescue these folks.
so my question is – do you really think the American people will willingly an knowingly sign on to this concept?
I do not think so.
I think if you argued honestly and up front on the merits -the American people will totally reject your approach.
And you know it too because the narrative that you use to promote this idea is dishonest and misrepresents what is actually being proposed.
My view is this.
If this is what the American people honestly want, then we live in a one-man-one-vote Democracy and even though I would not agree, I will abide by the wishes of the majority.
But what we are having right now is not an honest discussion on the merits.
It’s totally dishonest in two fundamental ways.
1. – First it represents that entitlements are the current issue and fixing entitlements will cure the current deficit and debt.
2. – Second – it’s a proposal to destroy the way that SS and Medicare work – not because they don’t work – they will – just like any actuarially-adjusted insurance works but because you fundamentally disagree with the CONCEPT of government-sponsored insurance.
but you won’t tell the public the truth about this.
and that destroys you as legitimate political voice in my view.
and it’s NOT the Republican Party that used to exist….
and THAT’s why I’m “slagging” on you.
that’s why I am confronting you – as an individual who once believed in the Republican Party but now am not happy with you – and want you to return to your honest common-sense, fiscally-conservative principles that once was respected and admired.
so you ask Vince to read the last two and weigh in with his views and we can go from there.
So . . . we want Social Security and Medicare to go away and 75-years-old to die?
Really?
BTW, take a look at this: http://www.nationalreview.com/exchequer/230937/three-programs-take-literally-all-money before telling me entitlements aren’t the problem.
There is no question that entitlements, if not adjusted will be a huge problem that will wipe us out.
Agreed.
But it’s a fixable problem and it’s not the problem that’s more urgent right now.
And fixing the entitlement problem won’t fix the problem we have right now.
We need – right now about 1.4 trillion dollars worth of CUTS to the non-entitlement budget.
and not a single Republican has bothered to say what needs to be cut while every last one of them has said that we must cut and cannot increase taxes to make up the deficit.
All I’m expecting is a simple, honest list of cuts like the Deficit commission and domenici/rivlin provided – from the Republicans who I once expected to be the grown-ups when it came to budgets and who now can’t seem to just do a simple honest thing – name the cuts.
When you guys get your principles back – you’ll get folks like me back ….
And D.J. – here’s what your link says:
” Three programs — Social Security, Medicare, and Medicaid — consume 100 percent of federal revenue, and everything else is paid for with borrowed money. ”
and that is a bald-faced LIE because those three programs are funded from FICA not Income taxes.
Why do you and your folks purposely keep misrepresenting the simple facts about this?
FICA pretty much covers these programs for now but we’ll need to expand it to include currently capped salaries OR a combination of several things outlined in BOTH of the budget deficit reports plus others we know about.
Fixing FICA is not going to fix the structural 1.4 trillion dollar debt that directly results from spending 1.4 trillion more on non-entitlements than we take in in income taxes.
That’s the simple truth and for some reason you guys can’t abide it.
Anybody who doesn’t acknowledge that entitlements (and military spending, for that matter) are not the jet engines of US deficits can be safely ignored.
entitlements are FULLY ACKNOWLEDGED as needing changes but the entitlements are funded from FICA and the military is funded from the income tax.
they are SEPARATE.
FICA and the entitlements are not the cause of the 1.4 trillion deficit.
We SPEND 1.4 trillion more on general govt and military than we take in -in taxes and that is independent of FICA/SS/Medicare.
How can we FIX the problem when we refuse to recognize the simple realities with regard to income tax and FICA?
Of ALL the political critters who one would think – would have their fiscal act together on how the budget works – you’d think it would be the folks who traditionally have claimed fiscal conservative credentials – the Republicans.
But they are either abjectly ignorant on the basics or they are lying out their butts – and either path is just plain unconscionable for a party that claims to be “responsible”.
One more time – FICA has nothing to do with the military budget – ZERO!
the military budget is funded from Income Tax – not FICA.
we are spending more on the military than we are taking in – in income taxes …. (and other general govt).
cutting SS/Medicare/FICA won’t do one thing for the income tax-funded side of the budget.
You’re a smart guy DJ. I KNOW you must know this.
The average American is apparently not this smart even though right smack on their pay stubs it has 4 boxes. Federal Tax. State Tax. FICA SS and FICA Medicare.
FICA is for many folks a 1/3 or more of what they pay in Federal Income Tax – and that money goes DIRECTLY to the Social Security Administration – not to Congress.
How about you fess up to this? Have you talked to Vince yet?
[...] somewhere in the 2030′s; the Simpson-Bowles budget claims to be balanced by 2035 (expect that it’s not, as I’ve explained earlier); the Democrats – including President Obama – have punted on this [...]
[...] somewhere in the 2030′s; the Simpson-Bowles budget claims to be balanced by 2035 (expect that it’s not, as I’ve explained earlier); the Democrats – including President Obama – have punted on this [...]