Slate's Do-Nothing Balanced-Budget Plan
Annie Lowery's provocative piece about budget policy is making the rounds this morning. There is a lot to enjoy and a lot of familiar ground to disagree with, but the essential point is worth repeating:
So how does doing nothing actually return the budget to health? The answer is that doing nothing allows all kinds of fiscal changes that politicians generally abhor to take effect automatically. First, doing nothing means the Bush tax cuts would expire, as scheduled, at the end of next year. That would cause a moderately progressive tax hike, and one that hits most families, including the middle class. The top marginal rate would rise from 35 percent to 39.6 percent, and some tax benefits for investment income would disappear. Additionally, a patch to keep the alternative minimum tax from hitting 20 million or so families would end. Second, the Patient Protection and Affordable Care Act, Obama's health care law, would proceed without getting repealed or defunded. The CBO believes that the plan would bend health care's cost curve downward, wrestling the rate of health care inflation back toward the general rate of inflation. Third, doing nothing would mean that Medicare starts paying doctors low, low rates. Congress would not pass anymore of the regular "doc fixes" that keep reimbursements high. Nothing else happens. Almost magically, everything evens out.
What I like about her argument is her point that it is not the baseline that has the deficits, it is all of the interventions that Congress and the President enact. If you are worried about the defcit, stop intervening to extend the Bush-era tax cuts, stop extending AMT relief, and stop suspending the "doc fix" in Medicare. And, I would add, if you are worried about the deficit, pick the low-hanging fruit first. Recognize that a $700 billion defense budget is a lot for any country to bear and that 62 is an early age for the government to be facilitating the retirement of healthy people who could continue to work and pay taxes.
Mental gymnastics
It's intellectual fun of the highest order to go 'round and 'round with the endless ways to cut deficit spending. Some of those ways even align closely with the expressed desires of the American people.
However, congress, as it is currently controlled by moneyed interests, can't trim the deficit. The current congress, elected as it is and responsive to lobbying by non-human entities, cannot reign in the deficit, period. It is simply not possible. The reason is because politically powerful entities - defense, private companies, unions - determine what gets spend and what gets done. And those entities are perfectly happy to borrow from the future to pad their present day wallets. And elected reps from both parties are happy to oblige.
Until those interests can be skewered with joy and terminal prejudice by our elected representatives, any conversation about the deficit is an intellectual exercise. Until defense can be halved without a single lobbyist making a peep; until oil company tax brakes can be axes without a single lobbyist making a peep; without single payer health insurance coming into being without a single lobbyist making a peep; there is no hope of reigning in the deficit. The deficit is caused by how moneyed interests wish to see the government run. They don't explicitly want deficits; but what they want from the collective causes deficits.
"...62 is an early age for
"...62 is an early age for the government to be facilitating the retirement of healthy people who could continue to work and pay taxes."
If Andrew really thinks that most of the non-working 62 year olds in this economy are VOLUNTARILY not working, I worry about his sanity.
Don't worry about the sanity
All I saw was a link to Slate... and I immediately quit reading.
Does Mr. Samwick provide any of his own material on this blog? Commenters on CG&G seem to like beating up on Mr. Collender, but at least the guy provides consistent/frequent content that doesn't just repost blog spam.
When doing nothing ain't nothing
" ... a patch to keep the alternative minimum tax from hitting 20 million or so families would end ..."
I'm not sure that 20 million upper-middle class to middle-middle class families (the latter in blue states with high state and local taxes) -- with a good deaml more than 20 million potential voters among them -- would consider many billions of new taxes landing on them, the amount rising ever year, as "nothing". More likely they'd consider that "something".
"... doing nothing would mean that Medicare starts paying doctors low, low rates ..."
Which would mean doctors ceasing en masse to provide services through Medicare, which probably would be considered by all the voting seniors of the AARP block who lose their medical services to be "something".
"62 is an early age for the government to be facilitating the retirement of healthy people who could continue to work and pay taxes."
Very true. But that gets us back to doing the something-somethings -- nobody will pretend that's doing nothing.
Closing even a mega-trillion budget gap on paper is simple. The *politics* of cutting even mere $38 billion from a $1.6 trillion deficit is brutal. *Every* action that cuts the deficit -- both legislatively doing nothing and something -- is politically *something*. That's the inescapable problem.
"If you are worried about the
"If you are worried about the defcit"
It has been established beyond any shadow of a doubt that the Beltway political class does not care one iota about the deficit.
Don't Just Stand There, Do Nothing!
It's a sad state of affairs when doing nothing beats all the long term budget "plans" floating around Washington hands down. Obama just needs to grow some gonads and whip out his veto pen and everything will be fine.
retirement at 62
It seems to me that while the notion of making folks work to 66 works out fine as an academic and intellectual exercise, it is not necessarily a good idea in real life.
As you look at lower income workers, you will find that their life span is shorter, often having worked at jobs that physically abuse their bodies. That means that their period of receiving social security and medicare is shorter.
While this is undoubtedly good for the system from the financial point of view, it seems to me that there is a question of essential fairness involved. I am unsure how this should be accounted for, but apart from liberal blogs I never see the issue even considered.... and it should be.
Don
PS. I am a clergyman who will retire next year at age 66.