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United States loses AAA credit rating from S&P (reuters.com)
769 points by tshtf on Aug 6, 2011 | hide | past | favorite | 497 comments



(Reference: http://www.federalbudget.com/)

Steps to recovery:

1) End all offensive military actions overseas. Finish winding down Iraq and abandon Afghanistan wholesale. These actions have cost several trillion dollars over the last 10 years. We can't get that money back, but we can stop spending more.

2) Defense spending is in the top 3 highest budget expenditures. Cut it by 1 third across the board. Maintain important overseas installations such as Japan and Taiwan. Given China's rise, its wise long-term to keep a presence in the region. Scale back deployments in Europe unless Russia still is still a threat to western Europe.

3) The most amount of money the U.S. spends is Health and Human Services. The U.S. health system is a fucking mess. Somehow we spend the most on healthcare and get some of the worst societal benefits out of any industrialized country. I don't have an answer here, but it likely involves completely tearing down the existing system to its nuts and bolts and building it back up. I'd love to hear ideas on this point from others that know more about it.

4) Social Security is the other one. My mom relies on it, so does a lot of my family. We're from meager backgrounds and traditionally have come from poorer parts of the nation. That being said, cut it.

When I look at my paycheck and see that upwards of 40% of my income is being sucked out by the government and used more for things I oppose than things I support (e.g. war spending versus scientific investment) it pisses me right off.

Yes, I have heard the naive argument "But taxes are there to run the things you use like roads and government services that you use every day". This is true only in part. Yup, we need an army. Yup, we need local police. Yup, we need roads. Yup, we need a justice system. But it doesn't take trillions of dollars a year to run those things.

The government shouldn't interfere with business like propping up failing business models. It should work to make sure that business plays fair, i.e. anti-monopoly or collusion, etc.

I'm more liberal than conservative, and definitely not one of these people that wants business to have free-reign over everything. But there are bottom lines that we have crossed and need to back off.


You're more liberal than conservative. I'm more conservative than liberal. Bless your heart, I agree with all of your points. At the end of the Cold War, other conservatives were making the same noises that you're making now. For their pains, their careers were destroyed by the people who run the current mainstream conservative movement. Let's take a look at those points of yours.

Points 1 & 2. Cut defense spending and all of the cool people will call you an isolationist. Sure, argue rationally all you want; the name will stick. Also, remember that the United States is bound by treaty to defend more than two dozen nations. That includes keeping bases in some of those nations. Those treaties will have to be renegotiated. Those nations will have to increase their own defense spending. Many of those nations have budget problems of their own. Have fun.

Point 3. Touch social spending and the cool people will call you a heartless bastard who cackles at the sight of starving widows in between gulps of baby orphan blood. Sure, argue rationally all you want; the charge will stick. Of course, this doesn't solve the money problem. Iceberg? What iceberg?

Point 4. Social Security is the third rail of American politics: If you touch it, you will die. Sure, argue rationally all you want. It will help as much as it ever has.

Long story short, the bureaucracy rules us. The administration of administrators who administer the other administers who supervise the people in charge of those who actually get real work done cannot make any concessions to reality. It would be like Gorbachev loosening the grip of Communism; one exit through the Iron Curtain and it's all over.

The Cool People will double down. They will continue to double down until it is physically impossible for them to continue doing so.


Thanks. I have no refutations to any of your comments. I know exactly what you mean.

One interesting thing about your first statement, "At the end of the Cold War, other conservatives were making the same noises that you're making now". A few years ago I had the opportunity to hear Francis Fukuyama speak. He was the author of The End of History and a later follow up book. I never knew it before then, but he was one of the founding members of the Neo-conservative movement. It was originally started by him and a group of like-minded sorts around a cafeteria table in some ivy-league college (Princeton maybe?). He went on to talk about how the ideals of what they founded were adopted and warped beyond recognition by the Evangelical Christian community in the U.S. and by other conservatives. What was remarkable about the talk was that at the end, he essentially repudiated everything he had originally written in The End of History.

I remember stories my grandparents told of growing up during the Great Depression. I also remember stories from my mom's family of 7 kids growing up poor in Rochester, NY in the post-war era. Perhaps I've inherited an attitude of bite-down and deal with reality from their history.


When Fukuyama was talking about the Evangelical Christians, I think that he meant their doctrine of "The Rapture" and how it motivates their support for Israel. It's scary just how much of their politics rotate around that. Seriously, Christopher Hitchens (yes, that Christopher Hitchens, the atheist) can get published in National Review because of his support for Israel and for wars to bring democracy to the Middle East. Meanwhile, the paleoconservatives (the guys who opposed these wars) have been airbrushed out of the conservative movement; vaporized, in the Orwellian sense.

It's downright eerie.

And it's gotten to the point where "extreme" right-wingers like Pat Buchanan are saying that the bankers and corporate executives are ruining America. Paul Craig Roberts, assistant secretary at the Treasury under Reagan for crying out loud, the guy who helped implement supply-side economics, sounds more like Noam Chomsky than George W. Bush, these days.

It's a topsy-turvy world.


The string-pullers behind the conservative "movement" see the Evangelical Christians for what they are -- a bunch of easily fooled suckers. (Especially the non-denominational types) They are insecure, fearful people who respond to the crazy message that's being sold.

One of the big motivations behind the pushing of non-denominational, stupid christianity as you get these large flocks of people attracted to the personality of the leadership of their church, but there's no doctrinal basis. The Catholics or Lutherans have their issues, but they won't allow the psychotics to retain power within their religion.


The problem is, the inmates took over the asylum. It seems that the string pullers have been pushed aside and the suckers are now in charge.


Not necessarily. The traditional conservative nutjob string pullers are people who own natural resources. They are getting very rich right now -- and that's about all they care about.

The traditional patrician Republicans are getting owned.


Don't you think that Fox News could destroy the Tea Party almost as easily as they created it?


Fox News and Christian bashing, it reads like Slashdot on here.


So complaining about extremist theocrats is crass if they call themselves Christian, but civilized if they're Muslim? It doesn't matter what religion it is, it's still a destabilizing influence on what's supposed to be a democracy.

And Fox News had such a clear role in making the Tea Party into a meaningful political force that commenting on the connection isn't necessarily even a political statement - it's a historical statement.



It's almost as if everybody from Jesus Christ to James Madison warned you against mingling religion and government, and you didn't listen.


They are insecure, fearful people who respond to the crazy message that's being sold.

I wonder if the powers that be have been purposefully trying to jam media with lots of spurious messages about, "The Truth Behind The Lies," most of which are structurally similar to actual such messages, but otherwise are just junk.

you get these large flocks of people attracted to the personality of the leadership of their church, but there's no doctrinal basis.

Really, this sort of thing isn't that unusual. In places in the US like Cincinnati, with large populations having immigrated generations ago from Ireland, Germany, and Eastern Europe, you have large numbers of people who call themselves "Cultural Catholics." Do they agree with all of the doctrine of the Catholic Church? Heck, a quite a number of them disagree with most of it. Attendance at mass is really just one way they identify their group.

Given that much of the motivation for religious practice is really group affiliation, it's no wonder there's a lot of it organized around personalities.


> I also remember stories from my mom's family of 7 kids growing up poor in Rochester, NY in the post-war era. Perhaps I've inherited an attitude of bite-down and deal with reality from their history.

I have not much to add to your excellent comments, I just wanted to give you a heads-up. I grew up in a former Eastern-European country, and my childhood and teenage years were very much marked by the economic collapse of the post-communist years.

First, regarding the reducing of military spending by the US, I can still remember reading a very beautiful Soviet propaganda magazine in 1989 (with colored pictures and all) about how happy everyone was that the Soviet Army was getting out of Afghanistan and how about everyone will be happy. Then 1991 happened to them and the Soviets disintegrated under their own weight, in many cases leaving military units stranded in foreign territory because the money had just run out. I don't know what the moral of this story should be, maybe that it is never too early to cut military spending. You (the Americans) should do it now.

Second, I have nothing intelligent to say about your health-care system, but regarding Social Security I hope that you, the American people, will find a bunch of decent politicians willing to sacrifice their political careers over this. The reason being that when the money will run out (and at this rate it will definitely run out) no amount of blaming the other party or of accusing the Chinese or the Martians or whatever will make up for the fact that Government-run agencies will have no money to actual do their jobs (and no, inflation, i.e. indefinite printing of money will not help solve this, it will only make it worst). Again, I saw this happening in my country, ~20 years ago, social services going the way of the shitter and basically the entire Government-run infrastructure crumbling on its own weight. It wasn't funny at all.


Actually health care costs are growing far larger and faster than the cost of social security.


vi opyatj vse pereputalji, moj daragoy paganel.


"Again you are mistaken, my dear Paganel."

Care to elaborate? (Preferably in English.)



Russia failed because communism failed. America doesn't need a weak military it needs a strong, positive leader.


America will fail because kapitalism fails. At least the forms of kapitalism we have knowdays.


Ah, followup. Here's the link to the talk I referenced if anyone cares to take a listen. http://longnow.org/seminars/02007/jun/28/the-end-of-history-...


I'd love to listen to this, but it seems like the mp3 is corrupted. It won'd play in iTunes or Quicktime. Shame.


VLC works fine, but I still can't get it to play under quicktime in Lion. I wonder if Apple changed anything since Snow Leopard?


It seems to work fine for me in QuickTime X under Snow Leopard.


VLC worked for me.


Oh gosh this was great. Thanks for the tip.


Those horrible evangelicals and ... some other conservatives. Fukuyama chose a safe target. (Or not. I didn't listen to the speech.)

"Time magazine's Joe Klein has suggested it is legitimate to look at the religion of neoconservatives. He does not say there was a conspiracy but says there is a case to be made for disproportionate influence of Jewish neoconservative figures in US foreign policy, and that several of them supported the Iraq war because of Israel's interests, though sometimes in an unconscious contradiction to American interests: "I do believe that there is a group of people who got involved and had a disproportionate influence on U.S. foreign policy. There were people out there in the Jewish community who saw this as a way to create a benign domino theory and eliminate all of Israel's enemies....I think it represents a really dangerous anachronistic neocolonial sensibility. And I think it is a very, very dangerous form of extremism. I think it's bad for Israel and it's bad for America. And these guys have been getting a free ride. And now these people are backing the notion of a war with Iran and not all of them, but some of them, are doing it because they believe that Iran is an existential threat to Israel."[75]"

http://en.wikipedia.org/wiki/Neoconservatism


I know I'm invoking Godwin's Law here, but wasn't "The Jews pushed Germany to WW1 and broke the economy" one of Hitler's excuses/propaganda peices? What's the difference between this argument and hitler's?


Why do you - as a conservative - consider it rational to cut social security? The program is popular and self-sustaining. and if you read the trustees' reports you'll see it has been in surplus and perfectly solvent since 1985. In a few years it will stop generating surplus revenue for a few decades as the baby boomers move through the system, but it isn't threatened with insolvency.

There is an ethical problem with using surplus social security revenues to fund tax cuts to non-contributors and then claim there isn't money left to pay back the workers who contributed in good faith. But this isn't a problem with bureaucracy so much as a problem with the Republican Party.


First, both parties have raided Social Security, not just Republicans. In fact, both parties have been complicit in the government's financial misfeasance for a long time.

Second, you mention the money "to pay back the workers who contributed." There was never any money to pay back. Social Security was always a pay-as-you-go system. Current revenue pays for current appropriations. There was never any "trust fund," another fact that smoothed the way for Congresscritters to raid Social Security and replace the surplus with Treasury IOUs.

This system was feasible when there were ten workers being taxed for each retiree receiving benefits. With the graying of the Baby Boomers, that ratio will approach parity. Another commenter on this thread mentioned that the best thing to have done to Social Security would be to build an electric fence around it. A good idea. Too late. Congress has fleeced it.


First, you're right, both parties have diverted Social Security surpluses. But only one party -- the GOP -- is trying to avoid paying it back, using the SS deficit as a tool to dismantle or alter the program.

Second, that doesn't change the social contract we have with people who have spent their entire lives paying out up to $6000 a year in wages to the fund.

Third, yes, while baby boomers retire, it will run a deficit. But if the surpluses over the last SEVENTY YEARS hadn't been diverted to the general fund, they'd have enough in the "lock box" (that Al Gore advocated for in the 2000 election) to pay for 'boomer retirements.

Look at the predictions made by FDR's guys in 193(4?) about social security. They are surprisingly correct. They saw this coming. The only thing they didn't do is force a segregation of funds.


>Second, that doesn't change the social contract we have with people who have spent their entire lives paying out up to $6000 a year in wages to the fund.

A good reason not to trust the government to keep a forced retirement account on your behalf. Someone is going to get the short end of the stick here eventually.

I would prefer that people own up to this and we set up an orderly, phased dismantling of the program, but that doesn't seem very likely. Politicians and head-in-the-sand populace apparently insist on a single disastrous collapse that leaves millions insolvent rather than admitting and accepting that there will be some controlled loss involved in a phaseout.


As opposed to forced retirement accounts you manage yourself? Make no mistake, no sane government would allow for completely voluntary contributions to any sort of pension or superannuation scheme - it'd be setting its country up for a massive economic and social timebomb as the majority of the population put present wants over future needs.

As for investing pensions in the stock market, I'll merely add that in Australia, where we've had superannuation for 20 -odd years, all usually invested in stocks, there were are a large number of people who thought they were going to retire in 2008 (my parents amongst them) who are now still working.


I strongly disagree that retirement accounts should be mandated by the government. If people won't save for retirement, they should understand that the government can't help them. This philosophy that the peon is too stupid and/or undisciplined to manage his own accounts and that the government must protect him from himself is what gets us into huge messes like this in the first place.


I understand this point of view, but at the end of the day, government policy needs to be based on what's going to work out the best for the public. It perhaps goes without saying that there are more than two approaches, but yours is one that I think we can rule out logically.

Psychologically, does it work? In general, if you tell a 22-year-old that in 40-something years he's going to really need some of the money he's making now (even if he feels like he's barely paying his bills), that he absolutely must set aside enough (and invest it wisely, assuming he has the wisdom to do so), will he manage to do it?

From what I understand of human psychology, the answer isn't "yes" nearly enough to make your solution palatable.

It sets up a good learning experience for him when he finally gets to retirement age and finds himself as a greeter in Walmart, but it's way, way too late at that point.

No one wore seatbelts before they were legally required (and still many don't, and many still die because of that dumb decision). People don't, as a rule, have a good grasp of the distant future and/or events that seem unlikely. How many people are still starting smoking, even though it says "cigarettes kill" in big black letters on that first pack they buy?

There are plenty of problems with the US social security system, but removing the safety net entirely to teach a lesson to people who fail to adequately prepare for their old age doesn't feel like a sound approach to me.


And whose idea of "best" do we use? The government is about ensuring a framework of freedom for its citizens to operate within, and if the citizenry refuses to be productive or healthy there's nothing the government can do about it.

Do you support alcohol prohibition? Alcohol leads to much more damage than even smoking from an emotional and psychological perspective.

What if, one day, the government decides that people who buy Japanese cars are a danger to themselves since they are costing the American car companies so much money by refusing to buy home-grown goods? The people just don't have the foresight to understand that buying Honda today means depression throughout Michigan tomorrow. Shouldn't we protect people from that eventuality by ensuring that they only buy domestic vehicles?

How far do we take this? Why do we believe that the politicians have such a heightened sense of foresight and such impeccably unselfish motives? I don't vote for people so they can do my thinking for me, I vote for people who I think will best represent important core principles, like retaining individual free exercise of conscience (like the choice to buy American or foreign cars, even if it will cost Michigan a lot of jobs).

The attitude that we need the government to protect us from our own decisions is in fact extremely dangerous and insidious. Old people survived for thousands of years before the implementation of social security -- if the industrial society doesn't support old people well enough, we have to tweak it so that these things work instead of doing these grotesque hacks of taking > 10% of an average person's salary every year to pay to support your grandpa's RV tour of the US.


We don't use someone's idea of "best" purely based on their opinion. We make changes at a small level, we run studies, we actually find out what works, and stop futzing around with half-baked ideas of what will do what 20 years from now.

This is partly why I hate political discussions as-they-are-played... everyone has such strong opinions based on incredibly tenuous links to actual history, studies, etc.. Just "this is how it is, how it has always been, and if only I were in control I'd have this all tidied up right quick."

Of course I don't support alcohol prohibition. Haven't we tried that? Did it work? Also: we weren't talking about making smoking illegal, just about human psychology, and how people aren't logical. To actually give people better lives requires science, not "more laws" or "fewer laws".

I don't disagree with you on your other examples, generally, but I'll refrain from offering other examples that are obvious in the other direction... it doesn't get us very far.

"I don't vote for people so they can do my thinking for me" -- I half agree with this. I will gladly vote for someone who has thought and researched more deeply on important topics than I have, provided they can explain themselves and advance my own knowledge. In the end we are responsible as citizens for who we elect, so I do agree it's not much use to be snowed by anyone who uses big words or says they have the solutions.

For core principles, though... this is much trickier. Principles, in abstract, are useless. I agree totally with some of my older relatives' politics, when we talk only in terms of principles ("we need better education! critical thinking!"), but when we get into applying the principles we're miles apart.

"Free exercise of conscience", what does that mean in terms of specific issues? We should rely on lynch mobs instead of police? Citizen militias to take out unfair monopolies?

I'm in favor of encouraging responsible citizens who can think critically. I'm not at all convinced that your suggestions (inasmuch as I've seen them) would do that, based on what I know of human psychology.

I also have a suspicion that your idea of what social security payments will cover is a bit overblown. I don't have any living grandparents left, but my father is losing his house and has no medical insurance, in spite of social security.


Somehow, the Federalists have managed to change the conversation from, "should the state provide this service?" to, "should the government provide this service?" I don't quite understand why the state governments should not make their own choices, and people can move to the states that they find have the most acceptable laws to them.


I like the idea of removing power from the federal government in favor of states, but in the case of a service like social security, mobility between states could cause massive issues. State x would not have a safety net, prompting companies and workers to operate there for the tax break. State y, providing a safety net, would be swamped with retirees but not productive workers. Citizens would be hugely incented to game the system. I don't see how it could be sustainable.


If the discrepancies between state policies were large enough, I imagine you'd basically see white flight on a national scale. Essentially, supporting any type of social safety net would be optional for the people with the resources to move out of state. As a result, middle-class and wealthy people would flock to low-tax states without expensive social programs, leaving behind a higher concentration of needy people in the states with the stronger safety nets. What social programs remain would presumably go bankrupt while the nation's wealthiest individuals basked in the glory of their virtually tax-free lifestyles.


That is largely not the case with your neighbors to the north. In Canada only 1/3 of taxes are collected at the federal level, and some of that money is distributed to the provinces to spend (poorer provinces get a larger proportion of payments so they can provide similar services as richer provinces).

While there is some migration to the richest province, that has more to do with jobs related to the oil boom there, and the low taxes there are due to oil revenues.


One possible counterargument to the state-specific approach is that if you have a handful of states that really do well, a majority that do okay, and a few that really screw things up, it's unfair to the residents of the states that chose poorly. They may never be able to move to a better state because the decisions of their current state left them in a financial position too weak to afford life in a different state.


So what do we do with people at the end of their working years, who, through bad luck or bad design, ended up with nothing. Do we stand by and let them suffer and die?


This is not an issue for the government to address. I don't think that people should let them stand by and die, but good governments don't have the powers necessary to give out free money to people they think deserve it. Communities would be expected to handle it in the way most palatable to them. How much more room would Americans have for charity if their paychecks got 50% fatter due to eliminating income and payroll taxation?


There's an interesting argument from Friedrich Hayek (who's usually considered libertarian-leaning) that that approach is actually less pro-individual-liberty than a government safety net is, because it coerces people to stay in collectivist-type communities like ethnic groups, churches, etc., even if they would prefer to leave them, due to the dependence on the safety nets those groups provide. He argues that having a minimal government safety net would give people more freedom to choose their associations within society, since e.g. leaving the Mormon church would no longer mean losing your main safety net.


And do we realize that some may, at that point, turn to crime?


You could devise a means tested welfare for elderly people. There are a lot of perfectly wealthy, perfectly capable people who retire at 60 whatever for no apparent reason other than ss and tax advantaged accounts make it seem like its time. I am a big fan of retirement, and I think safety nets for the disadvantaged are a good idea. I don't think we need a retirement safety net, however, or to make a retirement an entitlement.


The trouble with means testing is that you drain support for the program from the parts of the population with the most political clout. In other words, how long does SS last when rich people get nothing for what they put into it?


I've always viewed Social Security more like catastrophic insurance than a future income stream. What do you get out of insurance? Hopefully, nothing because if you find yourself needing to exercise it, something has not gone according to plan.


I agree with means testing, but think it would have to be something that slowly phased in over a long period, and proportionally to smooth discontinuities so that people could shift their behavior to match expectations.


Actually retirement accounts are demand leakages. For example quantity theory of money gives us MV=PY money * velocity = prices * quantity of goods/services produced. So if money is squirreled away in retirement accounts it is no longer circulating in the economy and in order to maintain the same level of economic activity we have to 'make up' for the lost M. So retirement accounts are a drag on the economy.


Retirement accounts aren't usually held entirely in cash except very near the end. For younger people the bulk would be invested in equity i.e. funding businesses and thus being fed back into the economy.


Its money taken out of circulation that could have otherwise been spend on consumption. Buying IBM stock in my IRA doesn't do much for the economy compared to taking the same funds and buying an IPAD or 100 happy meals.


A legislative body can't force a segmentation of funds on their own! (I always laughed when my state legislators promised to do this.)

Such a decision is overridable by 50%+1 of the legislative body--that same number that is would take to spend the money.

Okay, yes, a constitutional amendment would work, but I suspect most legislators proposing a "wall" like the one in question would be lukewarm to the idea.


How, exactly, do you propose "paying it back"? Social Security is already a TERRIBLE deal for current workers. The only options are to either limit benefits to retirees, who are already getting more than they paid in (payroll taxes are higher now than they were before 1983), or to make Social Security an even worse deal by taxing current workers even more.


Right now FICA taxes are limited to the first 100k (ish) of pay. Increase that, or remove the cap altogether.

Just to be clear -- that would effect me, so I'm not advocating for others to pay the price.


1. Social security reform was a core part of the Democratic platform in 2000. "I will keep Social Security in a lockbox, and that pays down the national debt and the interest savings I would put right back into Social Security." (Al Gore, Oct 4, 2000). Put simply, the Democratic policy aim was to divert the surplus into paying off the debt while preventing lower interest rates from spiking government borrowing/spending by also putting interest savings into the trustee account. You can compare this with the Republican plan at your leisure.

2. Your characterization of the "feasibility" of the social security program is wildly inaccurate. Seriously, instead of turning yourself inside out trying to claim that Republicans didn't setup a system that had workers pay MORE into the system than they were taking out for 30 years, why not just roll back the Bush tax cuts and call it a day?


I think it will take more than rolling back the Bush tax cuts. If no entitlements changes are made, it would take roughly twice the GDP of the entire world:

"Add together the unfunded liabilities from Medicare and Social Security, and it comes to $99.2 trillion over the infinite horizon. Traditional Medicare composes about 69 percent, the new drug benefit roughly 17 percent and Social Security the remaining 14 percent." –Richard W. Fisher, Dallas Federal Reserve President, May 28, 2008 [1]

1. http://www.dallasfed.org/news/speeches/fisher/2008/fs080528....


I agree that Americans pay far more for health care than they should. I agree that Bush's medicare giveaway to industrial pharma was grossly irresponsible and that it has contributed a massive amount to the crater that currently is US fiscal policy. And I do not honestly know how people who consider themselves conservatives could support either that or the tax cuts, especially when the United States was on course to actually pay off its national debt.

Returning to the issue of social security, the statistic Fisher cites comes from Table IV.B6 of the trustees’ report, which is extremely conservative in its assumptions (assuming essentially zero productivity growth over the next 50 years) and thus - even at the worst - would require only a minor tax addition to permanently solve without reducing benefits.

I do not much like your suggestion that since the Republicans instituted tax cuts the surplus is gone and there's nothing we can do about it, but will add only that if Gore's proposal had been adopted (Republicans at the time were championing the terrible idea of dumping social security funds into the stock market while cutting top-end taxes), even the "infinite horizon" figure would be nowhere near where it currently is and it would likely be possible to reduce the payroll tax or increase benefits. And given all this, I don't know how to reconcile your claim that this is not a Republican problem with the fact you claim to be a rational fiscal conservative.


I quite agree with you (and Fisher) that the Social Security system's problems are solvable (you might have confused me with winestock). My point was that SS is a distraction–Medicare dwarfs the other entitlement liabilities–and it will take more than rolling back the Bush tax cuts to bring about budget surpluses.


Apologies for the mix-up. Point well made.


Social Security has very well defined costs that are manageable if you implement some reforms.

Medicare is a another story altogether. Fact is, a 1960-style PPO for every old person just isn't sustainable when health costs rise like 13% per year.


You do realize that most Treasury IOU's are also called bonds, right? There are also two trust funds that comprise social security: the old-age fund and the disability fund. They each buy special issue securities from the government, but have also bought public bonds in the past. The securities have always been paid back with interest. If the Federal gov't ever didn't pay one of these securities, it would be a default by the gov't.

It would be interesting if these funds could invest (limited amounts) in some other type of security, but for now, they are limited to Federal securities. Imagine the sway on the market a $2.7 trillion fund would have.

http://www.ssa.gov/oact/progdata/fundFAQ.html#n7

http://www.ssa.gov/oact/progdata/specialissues.html


The bonds will be paid, but future Congresses can decide at any time to cut benefits to recipients. That's the conflict. Perhaps analogous to lending your boss a large amount of money-- he now has the incentive to cut your wages so that he can more easily pay back the loan.


<i>The program is popular and self-sustaining.</i>

Social Security was <i>never</i> self-sustaining. It's doomed by demographics and has been since the day it was enacted.


You an accomplish italics/quotes using asterisks, like so


Yeah, I know. I get mixed up sometimes going from one blog to another. Is this system really easier that just going straight HTML?


Also, remember that the United States is bound by treaty to defend more than two dozen nations. That includes keeping bases in some of those nations. Those treaties will have to be renegotiated. Those nations will have to increase their own defense spending.

Not having read the North Atlantic Treaty, I don't know that the US has any special obligation above and beyond the rest of the NATO members. Yes, the US is obligated by treaty to defend Latvia, but by the same token Latvia is obligated by treaty to defend the US. American deployments to Europe are likely above and beyond American treaty obligations.


the US is obligated by treaty to defend Latvia, but by the same token Latvia is obligated by treaty to defend the US

And, in fact, the only time that Article 5 of the NATO treaty -- the mutual self-defence article -- has been invoked was after 9/11, when the US used it to drag the rest of NATO into Afghanistan.


Not just into Afghanistan. A good chunk of the post-9/11 air patrols in North America were flown by allied aircraft.


Citation, something, anything to back up such a stupendous claim.


Please see the CNN link posted by smallblacksun.


He said, "A good chunk of the post-9/11 air patrols in North America were flown by allied aircraft."

The article says:

" Five NATO planes have arrived at Tinker Air Force Base in Oklahoma City, Oklahoma"

and:

"Most of the United States' 30 AWACS, based at Tinker, have been flying around-the-clock surveillance of U.S. airspace..."

In my opinion, the phrase, "a good chunk of" is dubious. In a few minutes of Googling, I could find no indication of how many missions (if any) those NATO planes flew.


Allied, yes -- but that was NORAD, not NATO.


[NATO deployed AWACS](http://edition.cnn.com/2001/US/10/12/ret.nato.awacs/index.ht...) in the US after 9/11.


On the contrary, our NATO allies offered to help, but the Bush Administration famously replied, "thanks but no thanks, we'll do this ourselves."


Not true. NATO staff discussed Article 5, decided that it was appropriate, spoke to Colin Powell, who supported it, and by the time the NATO council met to approve the draft statement concerning Article 5 George Bush had also signalled his support for it.

http://www.nato.int/docu/review/2006/issue2/english/art2.htm...


I wasn't denying that NATO passed Article 5 for the first and only time in its history after the 9/11 attacks, and I wasn't denying that the US supported it. I was referring to the arm's length at which the Bush Administration held our NATO allies during the early stages of the Afghan war. The resulting hard feelings made it more difficult for Bush to get cooperation from those same allies during the run up to the Iraq War. This is a fact and was a common talking point at the time among liberals and others critical of Bush's foreign policy.

Fred Kaplan:

"Aside from letting a handful of NATO's AWACS radar planes come help patrol American skies, Bush's response was a shockingly terse: Thanks, but no thanks; we'll handle it by ourselves. Marc Grossman, the undersecretary of state for political affairs, later admitted to the Washington Times that the United States initially 'blew off' the allies. Douglas Feith, the undersecretary of defense for policy, said that the United States, in the Times' words, 'was so busy developing its [Afghanistan] war plans that it did not have time to focus on coordinating Europe's military role.'

"The effect, of course, was to alienate the allies just as they were rediscovering their affections. As London's conservative Financial Times later put it, 'A disdainful refusal even to respond to a genuine offer of support from close allies, at the time of America's most serious crisis in decades, spoke volumes about its attitude to the alliance.'"

http://www.slate.com/id/2088113/pagenum/all/

(The similarity between the "thanks but no thanks" phrase used by Kaplan and the one used by me is a complete coincidence. I found this article this afternoon when googling for something to support a rebuttal.)


I could have sworn we have special obligations to Japan, as part of our demanding them to demilitarize.


Yes. South Korea and Taiwan as well. And possibly--given their status as a former US possession--the Philippines as well.


> The Cool People will double down. They will continue to double down until it is physically impossible for them to continue doing so.

That's why in some ways, watching the government on the brink of default is exciting. For once there's nothing the Cool People can do.


The thing with Social Security is that it's such a huge, tempting cookie jar for Congress to reach into -- remember that this is a program that easily runs a surplus when we just leave it the hell alone. So instead of cutting it, how about we build a big damn electrified fence around it? ;)


You mean like a Al Gore's lockbox? Ahhhh what could have been, what could have been.


There already is one?

Other departments can't touch the SSA's budget-- because it's the SSA's budget.


Except for the gaping hole in the fence, which dictates that the trust funds have to invest in Treasury bonds. Which means the money goes in and straight back out again, and that threats of default carry an implicit threat of "Social Security won't be able to pay out".


Thus far the risk of investing the SS surpluses into any investments other than US treasuries far out-weighed the risk of the US choosing to make SS forgive the debt incurred by said treasuries.

I've often argued that SSA should be allowed to invest some portion of the surplus (perhaps 10-20%) in AAA-rated municipal bonds. Perhaps the downgrade today will prompt more people to consider this.


Isn't reducing the conflict of interest a small price to pay for slightly higher risk? Currently, Congress can "save" money by cutting benefits to Social Security receipients and use that money to pay off the bonds owed to Social Security.


Congress can't actually divert revenue from SS. The way that cutting benefits affects the budget is that the SSA uses more of the payroll tax to buy more bonds, rather than paying the revenue out as benefits. The government still has to use non-SS revenue to pay off prior SSA-held bonds. Thus, once SSA collects less from the payroll tax than they need to pay out (which will happen soon, and may have already happened due to the Making Work Pay tax cut), cutting benefits will not reduce the budget deficit at all, because the SSA will need all of the revenue from the payroll tax and all of the revenue from its maturing bonds to pay out benefits. In order to use any payroll tax revenue (via SS bonds) for non-SS programs, they would have to make unrealistically large cuts in benefits. So, in short, that well will run dry soon enough, and you won't have to worry about it.


It really is depressing realizing that the only changes we can viably make to those three great leeches is to allocate even more money to them.


your choice of words suggests that you're a follower of thoroughly-discredited pseudophilosopher ayn rand, and as a consequence i strongly encourage you to read:

http://aynrandcontrahumannature.blogspot.com/

and not skim and look to argue. read charitably and see if you can still buy into her ideas, after reading some articulate people dissecting them (and seeing rand's defenders try and fail to defend via the comments sections).


Point 3. I don't know who these cool people are that you're talking about, "liberals" I assume. I find it hard to believe they will call you heartless if you socialize your health care to make it cheaper and available for all. http://en.wikipedia.org/wiki/File:Total_health_expenditure_p...


The argument is much that you can't just socialize the health care, you have to tear it to shreds and then paper-mache it back into a more serviceable shape. This is a process that takes time, and would leave people scrambling all over the place. Trying to do it while reducing damage results in monstrosities like Obamacare, and the current situation.


There's a huge gap between isolationism and, you know, not occupying TWO countries on the other side of the planet.

I stopped reading your comment after that sentence with the assumption that all of your other points would be equally dumb.


Sure there's a difference between isolationism and occupying multiple nations across the globe. You know that. I know that. Try telling that to the neocons and watch your reputation get ruined.

The neocons are not nice people. They will call you names for all kinds of silly and/or evil reasons. And they will demand that you think of them as the Righteous Good Guys every step of the way.


You forgot the War on Drugs. Get rid of it, free all the people in prison for non-violent drug-related offenses, and tax the newly legalized drugs.

This should free up a lot of money that's being wasted on ruining people's lives right now, and make more money from taxing legal drugs.

As a bonus, it'll get rid of a lot of organized crime. Witness what happened with the repeal of Prohibition.


The war on drugs is only 0.5% (approx. $18 billion) of the Federal budget (approx. $3,456 billion), so it's inconsequential to our debt crisis.

I whole heartedly agree that drug prohibition should be repealed, and that we need to put an end to the war on (some) drugs.

But, the military, social security, and medicare comprise approx. 70% of the budget, so it's really not going to help us solve the debt.


I think indirect costs are higher than that. Prisons, for example, cost over 60 billion a year. Legalize cannabis, and I guess you can easily cut that by 25% (I know those costs probably are not federal, but do not think that matters. If your kid overspends, your family suffers)

Also, the 'It is only a small fraction' argument is weak. If you really try, you can cut the entire budget into smaller parts.


Legalize cannabis, and you can tax it too.


If you tax it much, there will still be a black market for it, with all the associated crime that brings.

It already happens with cigarettes. http://www.npr.org/templates/story/story.php?storyId=1299345...

And it's a lot harder to differentiate illegal goods from legal ones if the physical item could be either.

I'm not saying whether we should or shouldn't legalize it, but I keep hearing people say "legalize it to remove the criminal element and tax the heck out of it." That doesn't necessarily end the associated crime issues.


If you tax it much, there will still be a black market for it, with all the associated crime that brings.

It already happens with cigarettes. http://www.npr.org/templates/story/story.php?storyId=1299345...


If you really try, you can cut the entire budget into smaller parts

Sure. And just because it's a small fraction doesn't mean it shouldn't ever be addressed. But should a 0.5% line item take precedent over three items which combined total to 70%?

When you need drastic improvement fast, it's just a waste of time to dally on pet agendas that don't represent a significant chunk. Get to them later when you have the time and energy to spare.


But should a 0.5% line item take precedent over three items which combined total to 70%?

Is it any less of a waste of time to talk about those three items, each of which is considered a core concern of one of the two parties in control and will likely never be properly gutted?

If you can't afford the shit that you're unwilling to live without, you need to find a way to make more money. To me, America seems to be in this situation, yet the anti-tax sentiment is so strong here that that stark reality is never addressed honestly. People fairly broadly want these things, so we best find a way to pay for them.

Personally, I'd love to see a situation where the tax rates are mandated to be mere functions of spending, rather than being negotiated as if they're completely disconnected entities. Then Congress has only one knob to fiddle with, how much they want to spend. By letting them decide completely independently how much they want to make we expose ourselves to the obvious outcome, that a lot more goes out than comes in, and that's never going to be properly addressed unless we take it on directly.


You can't just tax to cover whatever you spend. Historically, great revenue comes with greater spending. There must be a limit to taxation in order for the economy to function.

You cannot raise enough taxes to balance the budget. Based on income, you'd have to raise approx. 175%. Based on all taxes you'd have to raise by 50%! Such enormous tax increases would destroy business, investment, and people's paychecks. We want more people paying the same rates through economic growth.

It's not a waste of time if you want to balance the budget to focus on medicare and the military, but addressing the war on drugs is. I already provided numbers proving this. The fact that two parties aren't addressing them is why everyone is pissed off and freaked out. Neither party has introduced a budget that is balanced, or even on a path to being balanced.

Poeople don't want taxes raised, but they don't want medicare cut. So they borrow. And borrow. And borrow... and now borrowing is hurting us because we've done it so much. Eventually we won't be able to borrow anymore. Infinite borrowing is consequentially the same as defaulting.

Fareed Zakaria said in February 2010: "But, in one sense, Washington is delivering to the American people exactly what they seem to want. In poll after poll, we find that the public is generally opposed to any new taxes, but we also discover that the public will immediately punish anyone who proposes spending cuts in any middle class program which are the ones where the money is in the federal budget. Now, there is only one way to square this circle short of magic, and that is to borrow money, and that is what we have done for decades now at the local, state and federal level...So, the next time you accuse Washington of being irresponsible, save some of that blame for yourself and your friends."


I do not think it is a matter of precedence. If you make cuts on larger expenditures, the end result will be a discussion of really tiny posts.

As an example, let's say you decide to cut 30% on defense. You cannot realistically do that by deciding to drop, say, the navy. There are lots of dependencies to consider (does it make sense to have marines, but no navy? Should we perhaps keep a small part of the navy for supporting the marines? What part? Can the air force maintain a global presence without carriers? If not, how many carriers do we really need? Can those carriers do without other ships for protection? Etc) People in charge will delegate filling in the details and suggesting a coherent set of cuts to subordinates.

After a few levels of such delegation, people will be talking about such 0.5% items. For that reason, I do not think you should ignore such smallish items.


Prisons are primarily a state-level expense. You don't get sent to federal prison for possession.


A good part of the federal debt from the stimulus and such is to keep state governments from collapsing due to the fact that they can't run a deficit.


That has to come in parallel with a bunch of lower-skill job programs centered around prisons with the highest non-violent drug-related offense inmates about to be released. The current system makes the unemployment issue seem a bit less, but it also lets the corporations who contract out prisoners for work make a killing. It's a modern form of slavery. Though as others have noted, while this is an important issue, solving it wouldn't give us the greatest bang-for-buck so to speak. If we can solve it concurrently with other problems, all the better, but there are sadly bigger issues...


The only problem with slashing military spending and ending foreign interventions is that it has been just that spending, and those interventions, that have made the US the economic powerhouse it is today. The US has a history, stretching back well over a century, of launching military campaigns to support corporate interests. Be it South America, the Middle East, or Asia, the US has invaded countries and toppled governments time and again in support of its economic goals. Now, I think this is reprehensible, but I also wouldn't be so naive as to say that the path to economic recovery lies in an end to military adventurism. The US is rich for the same reason Rome, England, and Spain were: they won their riches at the the end of a sword.

The American military budget is clearly unsustainable, but that doesn't mean an end to foreign wars is in their economic interest. It's no coincidence that the US has been both the most prosperous nation on Earth, as well as the most aggressive, for nearly 200 years.

Take a look at the history of US military actions on Wikipedia [1], and see how many times the phrase "protected American interests/property" is mentioned.

[1] http://en.wikipedia.org/wiki/Timeline_of_United_States_milit...


Isn't the primary reason the US is rich due to being located far from the battlefields in WW1&2, and after each of these wars an influx of immigration out of Europe into the newly stimulated American industrial economy? We've essentially been riding the demographic wave up the hill since, and yet few in govt/media seem to really take this into account when planning for long-term spending and economic projections. Something has to give eventually, the question is when this long-run day of reckoning will finally come- although to quote Keynes (IMO the only thing he's been proven right about thus far), in the long run, we're all dead.


That's been important, but it's not the only factor. Yes, intactness of American industry after WWI&II was key. It certainly gave the US a big leg up in post-war industry and rebuilding. Imigration was a huge driver of the economy when it came primarily from Europe, and professionals were over-represented. Demographics can't be ignored, but neither can they tell the whole picture.

I'm not trying to insinuate that the US is rich only because it has invaded countries and overthrown governments when doing so suited its economic interests, only that that behaviour has played a large role in its success. As such, the commonly-held libertarian view that an end to military adventurism will be a boon for the US economy strikes me as naive. I still think it's the right thing to do, but I don't argue for it on economic grounds.


As such, the commonly-held libertarian view that an end to military adventurism will be a boon for the US economy strikes me as naive.

Driving economic activity by having the military act as a major consumer is really just running on a treadmill. We need to find an outlet which will lead to increases in economic activity. There is a huge investment hurdle involved, but space exploration and colonization could fit the bill. Once there is a significant human presence in space beyond low earth orbit, there will be tremendous economic growth. The major problem is that hundreds of billions of dollars of investment would be required to jump start it.


>Driving economic activity by having the military act as a major consumer is really just running on a treadmill.

I think you're missing my point. It's not that military spending drives manufacturing, service, and R&D industries (although it does), it's that direct military action has often been, and is often used to promote US economic interests. See the military's actions in Latin America in support of United Fruit, military support of right-wing (pro-US and pro-business) dictators everywhere, or the military-political interventions in the Middle East in support of energy interests.

My contention is not simply that making tanks is an economic activity that many people benefit from, but that those tanks are used to assert and defend economic dominance, which has a massive spillover effect for other industries.


that those tanks are used to assert and defend economic dominance

And the need for the assertion of force to defend economic dominance in turn cements the need for the military machine and perpetuates the military-industrial complex. We are essentially in agreement. I think it would be better for the US to concentrate on economic dominance through sheer commercial and industrial awesomeness combined with forward-thinking research and exploration.


In that, we are in perctect agreement. With leadership and sane economic policy, the US could still be an economic juggernaut without the need for a military that could take out any two nations on earth simultaneously. It can still be by far the most powerful, without needing to cost as much as the next 8 combined.


While I'm an avid supporter of space exploration, it is not the cure for our economic stagnation. Much better are infrastructure improvements: replacing aging bridges, high speed rail, high speed communications, electrical transmission lines. Better to support solar, wind and nuclear energy than to wage wars in the middle east.


A concerted national effort on removing our dependence on foreign energy resources would be a beneficial way to target our resources for the next 30 years or so.

You missed my point. Sure, space exploration won't cure our economic stagnation in the 1 to 30 years time frame. But it will decide if we are a first, second, or third-rate power in the next 100 years.


I think it will take more more then 100 years but I agree generaly agreed.


The US demographic wave hasn't stopped; that's why, from at least a European long-term investor perspective, the US is still a good bet compared to countries that have already peaked: Italy, Japan etc.

There are many paths to wealth. Germany is rich because of - in part - the almost total rebuilding of a ruined nation and the creation of a pretty effective post-war consensus in West Germany. In fact, I'd argue that an important part of the US's success were also an effective post-war consensus (different, but also hugely effective).


"The US is rich for the same reason Rome, England, and Spain were"

Not really, have you been in England, Rome or Spain?

Rome legionaries were used to make roads and bridges and mining 90%of their time. If I show you the extensions of the land they "washed" to get mineral you won't believe it(you can see it using google earth, e.g in the north of spain, look for grooves around mountains).

England made itself rich because of commerce, like Spain(they took the risk to travel the ocean and won the first mover advantage, and when the rest of the world notice, it was late for them). That was what made them rich, not the military.

The US is rich because... IT IS RICH. It is a huge place with huge resources for a small population.

The US became the more powerful country on earth because Japan and Europe totally destroyed itself by the military in the WWII. The US waited for them to auto destroy, and then entered the world and finished it with all their cities untouched, 90% of the world gold reserves and creditor to them all, being able to force the dollar as world currency and english the official language of aviation, and naval commerce. Every body lost their colonies and US got them all(they just wanted the commerce and influence without having to build roads like English or Portuguese did in Africa).

Yes, it was a coincidence(being far away), no, US was not the most prosperous nation on Earth 200 years ago. If you believe in that, please study some real history. US was not the technical leader that is today thanks to all the Europeans that went there thanks to Hitler(militarization and economic totalitarism), the Edisons, the von Brauns and von Newmans.

Thomas Jefferson and other of the US founding fathers thought a permanent military and central banking would ruin the country because military people do nothing while things work at it should they need to create new enemies so they can justify their existence.

I had family members that were in Soviet Russia when something like 95% engineers were used in the war industry, while people needed cars, washing and sewer machines. This was not wealth for Russia, that was a bully inside. Mass media brainwashed them all them about how cool they were being able to destroy anybody else.(This strange pride remains today)

Today 60% of the engineering in US goes to war efforts, 50% of all their money to the military, so they can kill better, while the rest of the world expends significantly less.

They will talk about GPS, but the question is if this money expended in real economy would be able to create as much as the military does?


Thomas Jefferson and other of the US founding fathers thought a permanent military and central banking would ruin the country because military people do nothing while things work at it should they need to create new enemies so they can justify their existence.

The rise of a professional military is often cited in as a major factor in the decline of the Roman Empire. Military Conquest drove economic gain, which provided wealth, which in turn motivated greed and more conquest.

Nowadays, we don't need conquest so much as the economic activity motivated by a military, but the same cycle is there, minus the emphasis on holding territories.

It's curious to think about: The reason a state needs particular access to petroleum, is to support a large mechanized military of the kind first realized on a huge scale in WWII. This petroleum resource now creates a US dependence on other nations, which in turn justifies a large military. While a lot of other things we do need oil, there are alternatives which could offset a lot of those needs. None of those is viable for a mechanized military, however.


Fantastic podcast by history-phile Dan Carlin (also a political journalist, who does a fine job bashing both parties in reference to historical context, "Common Sense, with Dan Carlin" podcast)

http://www.dancarlin.com/disp.php/hh Death Throes of the Republic: The Fall of Rome

You will find so much fantastic similarities to our own downward spiral, re: military, political class of protecting special interests, where near the decline, voting blocks were outright purchased, etc. He brings together several historians, records, etc.

The entire series is wonderful, and you WILL find yourself spending way too much time on them :)


Where do you think the money goes?

Military spending is still government spending. It's going to contractors, vendors and soldiers. They are, respectively: making jobs and selling to everybody (not just the gov't), and buying cars and houses.


When the government spends a million dollars building a bridge, it creates a bunch of jobs because people need to design the bridge, extract the raw materials for the bridge, and build the bridge.

When the government spends a million dollars building a bomb, it also creates a bunch of jobs for the same reason.

The thing is, a bridge gets you a useful public resource that makes lost of people's lives better and encourages economic growth by making trade easier. A bomb blows up, kills some people, and disappears.


Absolutely, no question. It's the same argument that econonmists make against acceptance of a so-called "service based economy" -- if I pay you $200,000 to build me a house, you've got $200,000 and I've got a house worth $200,000.

If I pay you $100 to clean my house, you've got $100, and all I've got is a clean house. Nice, but there's no market value. There's no multiplier effect.

But there is SOME utility to the gov't injecting capital in the form of military spending. As I mentioned in the comment below yours, the most extreme example of that is WWII, which finally and permanently ended the Great Depression, in a way that the WPA/etc building bridges just did not.


Sounds like something straight out of Orwell's 1984? The economy is based on ridiculous spending my the military, which enables companies to write paychecks to facilitate consumer spending at home. So basically, our way of life depends on finding excuses to go off and kill people, which in turn justifies our military-industrial complex.


No, of course not, and that's the most extreme possible way to take my comments.

But remember that what did more than anything to cure this county of the great depression was the massive Keynesian capital injection that we called WWII.


You're making a spurious correlation. If your assertion was correct, the French, British, Danish, Portuguese, and Spanish, et al.--the great colonial powers--should be stronger economies than the United States.

http://qed.princeton.edu/getfile.php?f=European_Colonialism_...

In conclusion, you've made a spurious correlation.


They were stronger. Much stronger. They collapsed for varied reasons, but suffice to say if the British Empire was as big today as it was in its heyday, it would be a larger economy than the US.

Also, no need to say "in conclusion" when the sum total of your argument is a single sentence.


Yeah. Despite Britain's significant fall from grace over the past 100 years, its wealth per capita is still not significantly below that of the US, even now. The US has nothing on how onerous and profiteering the British empire was.


Why would you cut Social Security? It's in no danger.

And frankly, medicare wouldn't be if we killed the payroll tax cap. I never understood why it's ok for payroll taxes to be regressive.


Social Security is supposed to be a pension program, not an income redistribution program. So you are making "contributions", not paying taxes, in the official lingo.

Of course the program is most regressive for younger workers, who pay the most and will get the least in return.

Social Security is in serious trouble, by the way, although it is not the driver of the current budget crisis. In just a couple of years the program goes into the red, and increasingly so as more boomers retire. The unfunded liability is around $8 trillion. That's serious money.


There's no such thing as an unfunded liability for Social Security. By law, SS is funded solely by payroll taxes. If payroll taxes are insufficient, benefit payments are reduced to match.

Social Security can never go bankrupt, and it can never be in debt.


> There's no such thing as an unfunded liability for Social Security.

This is wishful thinking. Social security benefits have been promised to a lot of people, and the money isn't there. It's all well and good to say they will just reduce benefits, but that's just a nice way of saying that they'll default on the liabilities.

In reality this is no different from Medicare or Medicaid, or the military budget, or anything else. Sure, we can in theory just reduce payout. The reality doesn't work out so neatly.


Social Security and Medicare are different from Medicaid and military budget, because they have different funding.

Social Security and Medicare are funded by payroll taxes. Medicaid and military budget funded from Federal income tax.

If you cut military budget 100%, you will save ~900 billions (or whatever the right number is) a year. If, on the other hand, you cut Social Security or Medicare, the savings are 0, because you will have to cut their funding as well. Surely, no one will pay Medicare taxes, if there is no Medicare exist, right?


This is a strange belief. Why in your mind would payroll tax be necessarily cut just because social security expenses drop? You do realize that social security is actually still running in the black, right? They are, right now, bringing in more money than they spend.

Guess what happens to the rest of the money: It gets spent elsewhere. Social security buys US Government debt with any excess, meaning it goes directly into the budget. In theory the SS trust has assets, but in reality the money is gone. It's one account holding a bunch of IOUs from a second account, and both accounts are owned by the federal government.


Why couldn't they just raise taxes?


Because the one thing almost every economist agrees on is raising taxes in a bad economy makes it worse.


The Medicare portion of FICA isn't capped, only social security is.


Why aren't capital gains assessed medicare tax?


People with capital gains don't want to pay for healthier poor people.


"Put another way, the Federal Reserve says that the nation’s net wealth is about $57 trillion. That figure would have to be $18 trillion larger to generate enough additional G.D.P. to pay Social Security benefits without making anyone worse off in the future through higher taxes or lower benefits."

http://economix.blogs.nytimes.com/2011/05/17/the-real-social...


The only reason the healthcare issue seems so complicated is the massive amount of propaganda we're subjected to in the U.S. media about it. You're on the right track to figuring out an answer. Just look at what all the other industrialized countries do. Then do that.

Nice little overview: http://en.wikipedia.org/wiki/Universal_health_care

This is of course beyond the pale of rational discussion in U.S. political discourse. Just whisper "socialism" and it's off the table, instantly.


@geius:

3) Health care: it is screwed up because of the economic model. A single payer system is much more efficient with the government overhead at 5% vs private at 20%. Allow the govt to negotiate drug prices. Currently it's prohibited by law. Streamline the FDA without losing effectiveness.

4) Social Security is in decent shape. Dont cut benefits. If necessary, raise the retirement age. That's a fair trade-off for improved health care.

+ Fix campaign financing to remove the "hidden" corruption that is distorting Congress. Roll back anti-trust a hundred years to the age of the trust-busters. Roll back Republican/Bush deregulation so that banks aren't too big to fail, so that Rupert Murdock doesnt own all news channels. Cone down hard on regulatory capture. (The govt gang that was watching BP should be in jail.)

Edit: Oh yeah taxes. Roll back the Bush tax cuts. My share of the tax cuts was $300 on a 6 figure income. At the time I wished Bush has gone for deficit reduction. The $300 made very little difference to me. Close the loopholes. The oil companies dont need subsidies.


Social security shouldn't be cut, it should be turned into a purely social program (and grandfathered in at that too). Instead of being an entitlement program, it should become like welfare and enabled for the bottom X % of the population. Specifically, the burden for retirement for the middle class should be placed on individuals rather than government.

For too long, babyboomers have relied on social security as a sort of no-interest loan. Why put that extra money in my 401K when I can rely on social security? I'll get a second car, or we'll take a yearly family vacation overseas...

Also, simplify the tax system and close loopholes, but do not directly raises taxes.


You completely underestimate how the average person finds something more important to spend money on now rather than saving for their future. The reason we have social security is because people don't save what they need to. If you don't have this, most of the population will be in poverty when they retire. Social security also has things like survivor's benefits: payments to children and dependents who have lost a wage earner.

I don't think the Social Security program is at all broken; what's broken is that we've used the Social Security surplus over the last 20+ years to help fund a general fund spending deficit.


What you've described is a symptom that can't just be fixed by closing your eyes and throwing money at the government while saying, "Give this back when I need it, OK?"

If the populace doesn't have the discipline to control and organize their extra resources, how can we expect politicians to do so? And why do we even trust them to do it? It's sad that people with the attitude you've described were able to convince the government to enact this as a mandatory thing -- but, the government likes money. We've seen what a faithful steward they have been for us.

People without the self-restraint to save money for a period of time where they expect to live without performing any money-generating work have problems that can't be fixed so simply. Maybe that's the cause of all of this turmoil in the first place.

The idea of "retirement" is also a curious new invention; people didn't save for retirement before the industrial revolution because back then, people would own houses and lands, accumulate real wealth that could be used to sustain life (e.g., agricultural assets) when individuals got too old to perform the work themselves, etc.

The pace of change since the 1860s has been extremely staggering and has introduced many concerns that hadn't existed previously. It is an intriguing matter to be sure. Hopefully we can come out of it all right.


"The reason we have social security is because people don't save what they need to."

Have a law forcing people to put the money into a conservative retirement plan of their choosing.

"I don't think the Social Security program is at all broken; what's broken is that we've used the Social Security surplus over the last 20+ years to help fund a general fund spending deficit."

Absolutely true. But we've also used that surplus to spend much more on current retirees than they ever put in.


If that is true -- people universally don't save what they need to -- than the proposed social security program of taxing everyone to give to the poor will be identical to what we have now.

It isn't entirely true, though. If you look at any net worth by age chart, the values go up with the age categories. People do save, just maybe not enough.


I have an easy solution. Let's make your federal income taxes look less like a bill and more like an order form. So for example some portion of your income taxes are pre-allocated for essential services (say 50%) and everything else is your choice. You get 50 points to spend and a variety of categories to choose from: education, defense, infrastructure, green energy, science research, enhanced Medicare services, NASA, deficit reduction, etc. This data is delivered to congress who must use it as a framework for 50% of the federal budget. After you filed your taxes mid-year you'd receive a detailed receipt that let you know exactly what Americans have decided to spend our money on.


The thought of how this would actually lead to a better allocation of money baffles me. It sounds like the first half of the tragedy of the commons.


That's part of democracy isn't it? We might be better off if we only let highly educated people vote and only after they passed a series of intelligence and psychological tests but we don't do that. As long as essential spending was covered I do think it would lead to a better allocation of federal dollars simply because it would add an additional check & balance to the system.

You could now (effectively) vote for a candidate or party and through your allocation of tax dollars keep them on a leash. It would allow for a more nuanced political system. For example I might vote for a deficit reducing Republican but I don't trust them to keep their hands off the EPA so I give environmental protection 50 points. Maybe I vote for a Democrat but I still think the deficit is really important so I put 50 points on deficit reduction. This would add a whole new dimension to politics and give some power back to the people. It would in my opinion make the commons relevant again. As it stands today I think many Americans are feeling like their vote is no longer all that important. You get two choices, you vote for one or the other, pat them on the back and cross your fingers. That's just not good enough. By controlling a few hundred billion dollars of the budget we might find ourselves on equal footing with PACS, lobbyists, media tycoons, etc.

Of course there are a lot of practical details I didn't address. It may be this could only cover domestic discretionary spending, or perhaps you could only allocate your tax points every 2 or 4 years to provide for more stability and of course for long-term deficit reduction it would have questionable value since the overall level of spending/revenue would still be playing a central role.


That is not an inherent part of democracy, at least not as it's practiced in any sane nation on the scale we're talking here. And we do put people through rigorous testing before they are allowed to vote on laws and budget issues — it's called an election. You might argue the test is flawed (I would agree), but it's not exactly open season. Opposition to direct democracy was one of the founding principles of the United States — at the time, it was generally accepted that the history of direct democracies had shown it to be an utter failure in actually making people free or happy. That's why we have a representative democracy.

Now, if we could vote on Congressional salaries, that might be interesting.


That sounds like a great experiment to try in another country. I like the way our government is currently structured, it was no accident that the founders made the Senate and the Presidency the way they did (hint, not the way it is today). We don't live in a pure democracy, we live in a representative democracy. The fact that the Senate and the President are a bit more immune from public opinion than the House (and they are far less so today than they were in the founders' time) is a feature not a bug.


I'm not sure if the tragedy of the commons would apply in this case. The "mandatory" aspect of elevating discretionary spending into social spending via taxation seems to fundamentally alter the psychology of spending. "Well, if I absolutely must spend this money on other people, then I guess I'll spend it on ___" (education comes to mind as one area people in America might universally agree should get more dollars). The weakness in this system would be the lack of expertise within the "common wisdom" of the people. That might be solved by, say, providing a "template spending ballot" from respected people... a sort of proxy delegation but simplified so you just copy down the numbers they say. If that latter option were made simple enough that 90% of people could understand and do it, the expertise of a few would hold larger sway than the somewhat uninformed choices of the many.

BTW, a friend and I also thought of this idea independently; we called it "mandatory taxes, voluntary distribution" [1]

[1] http://canadaduane.posterous.com/mandatory-taxes-voluntary-d...


In the U.S., we call the template spending ballots "primaries".


We don't have any such thing in the US.

In 2000, voters thought they picked "humble foreign policy", "deregulation" and "lower spending" in the primary. It turns out they voted for the exact opposite.

About 2 years ago, voters thought they picked "not forcing people to buy insurance they can't afford". They also voted for the exact opposite.


Problem is that most things you have described are public goods, for which you really can't allow people to attribute.


Many, many people use tax-deductable donations to do just this. Soo...this is already done. To make it done more, there should be non-profits. Non-profit insurance organizations, non-profit post, mail, private schools. Seriously, just encourage more people to donate, rather than be taxed. Of course, this won't solve the government's problem, because the government is intentionally expansionary.


the actual step 1: admit you have a problem. the US still spends with the attitude that it is a rich country. it needs to start spending with the attitude of a country that is rapidly going broke.

of course, this can't happen because any politician who doesn't parrot the "America is the greatest country in the world" message gets ousted.


Why do they get ousted? Surely you'd vote for them?


Not enough people would though. They would flock to the other candidate that would inevitably reassure them that everything was going to be ok. Heaven forbid that people should vote by thinking about the issues rather than just digestion a handful of sound-bites.


This is really a symptom of control and hypnosis by media sources and a lack of capacity to reason independently than a direct "If you don't flatter me I'll kill you!" response. Though obviously, flattery has a long and successful history.


This has been true since the beginning of humans.


Well why don't you educate other voters on this issue? Knock on doors and canvass, even just print up flyers and push them through letterboxes.


it is human nature to support ideas that make you happy. nobody wants to be told that their country's economic system is failing. people love to be told that everything is peachy and they have nothing to worry about. attempting to educate people about a gloomy topic is just going to make them dislike you as well.


Need an iPhone app linked to local government data with where, when, HOW to vote, appropriate links to the various candidates, etc. Start at a local level, burgeon up. KickStarter or O'Relly Gov20 project. Would love to see this tackled.


One thing to note, I think the strength of our currency is at least partly based on the large amount of military power behind it, and the promise of stability that it brings.

Basically, it went from being backed by gold to being backed by power and promise of restraint in printing more. I guess we've largely given up on the restraint side, though.


Quite a few fallen empires have made that error of judgement. I believe it hails from a time when the military could be used to make occupied peoples pay taxes. Nowadays, a military that is much bigger than what is needed for defense suffers from diminishing returns in terms of backing the currency with a safety net.

The military is not going to force the Fed to stop printing money.


There are lots of things we could do to end the recovery. They won't happen because they are not in the best short term interest of the politicians making the decisions. Natural selection has weeded out the congressmen that make decisions contrary to their ability to raise campaign money.

That is the root cause of the problem. Until that is solved, there's no point in dreaming up efficient solutions, because they won't happen.


Exactly. The problem is corruption. Everything else is a symptom.


The problem is the voters, you get the politicians you deserve.

I don't think the american people are dumb or lazy, I think they are very complacent.

Americans have become so used to their fairly high standard of living that they are ignoring substantive issues and focusing on trivia.

My personal prediction is that the voters will wise up and listen to smart people who understand the issues eventually. At the moment though americans just see high gas prices and demand their government fix "the problem", they aren't interested in the challenging geo political, economic and social complexities.

How far amercia falls on the way to this correction is difficult to tell.

edit: just in case anyone thinks I am america bashing, the above applies to most of western europe as well.


The problem isn't the voters, the problem is the process.

There is no way that basing a representative democracy on geographical cohorts can be optimal. I assume it is based originally on logistical constraints, but today is something we just accept because it is how it has always been done.

Wouldn't it make more sense to divide the political arena based on the scope of the issues allowed to be legislated and not on the origin of the legislator? Or maybe we just need a stronger 10th amendment.

It will never happen. I know. Wishful thinking maybe.


As above, the problem is corruption. We have a structure that is supposed to effectively keep the federal government almost completely incapable of doing anything besides maintaining international borders, treaties, and other boring matters like import taxes. Because the people in power like power, and because the populace is complacent enough to allow it, they ignore any structural inconveniences like the fact that a strict reading of the Constitution forbids almost all federal programs and activities that exist today.


> As above, the problem is corruption. We have a structure that is supposed to effectively keep the federal government almost completely incapable of doing anything besides maintaining international borders, treaties, and other boring matters like import taxes.

This isn't true at all. There was a group of founders led intellectually by Alexander Hamilton who believed in a strong central government and who saw the federal Constitution as giving that government very broad powers.

This is in opposition to the Jeffersonian view of limited government, the primacy of the states, the ideal of the yeoman farmer, etc.

> Because the people in power like power, and because the populace is complacent enough to allow it, they ignore any structural inconveniences like the fact that a strict reading of the Constitution forbids almost all federal programs and activities that exist today.

This also isn't true. Setting aside whether the Constitution forbids, say, the Department of Education or whatever, we have the government we have because that's what people have voted for. FDR was elected president 4 times. The New Deal was popular at the time. He wasn't cramming it down the throats of a credulous population.

It's a good thing that the Constitution is malleable enough to continue to support the wishes of a majority of Americans. If it isn't, we can either amended it so that it does (which we have done when needed), or, in an extreme case, replace it completely.

The Constitution exists to serve the people, not the other way around.


Also, the Senate was once elected by the States, which may have been intended by the founding fathers as an important check on the expansion of Federal power. State-elected senators would serve their state governments, who would probably not want to see the massive appropriation of state power to the federal government.


>The problem is the voters, you get the politicians you deserve.

The politicians and voters are corrupt: I agree.


Agreed but note also that the campaign donations would not work if not for the Baby Boomers.


What constitutes defense spending nowadays?

Is it largely salary payments to current troops? Wouldn't we have to deal with a large unemployment problem in case we laid off a bunch of military employees and told them to go find a job somewhere else?

Or is it payment to defense contractors, such as Valley's own Lockheed Martin? Wouldn't this cause a large number of people to be unemployed, contributing to recession?


Spending money on government employees who provide no value is not sustainable. Those employees go spend their money on goods and services produced in other countries (where the workers are actually providing useful services) and you get a net flow of cash out of the U.S.


"Those employees go spend their money on goods and services produced in other countries"

Is that a rule?


Is it the government's job to keep people employed for the sake of employing them? No!

There are times in history where government spending can help, like during the Great Depression. The government spent a lot of money on public works projects to help put some people back to work. But this didn't do much to actually end the depression. It was the onset of WWII and the subsequent ramp-up to a war economy that really ended the Depression.


WWII and the rampup was still a public works project.

What really turned the economy for good imo was not WWII but the result of WWII -- all of our competitors on the international stage having large parts of their population and infrastructure destroyed. A few year grace period while the rest of the world rebuilt turned into 50 years of global corporate hegemony.


And the USD became the world's reserve currency.


> Is it the government's job to keep people employed for the sake of employing them? No!

The most basic task of government is to maintain a stable social order (see, e.g., the preamble to the U.S. Constitution). With sustained, pervasive unemployment comes social unrest (see any number of examples from the past 100 years). So ....

> The government spent a lot of money on public works projects to help put some people back to work. But this didn't do much to actually end the depression. It was the onset of WWII and the subsequent ramp-up to a war economy that really ended the Depression.

According to most economists (from what I've read), the New Deal was doing OK at getting people back to work until 1937, when the government suddenly cut its spending and raised taxes. That threw the economy back into recession.[1] And yes, the massive deficit spending of WWII did indeed pretty much take care of unemployment, and then some.

[1] http://en.wikipedia.org/wiki/Recession_of_1937


>The most basic task of government is to maintain a stable social order (see, e.g., the preamble to the U.S. Constitution).

I must say I don't see this language appear in the preamble of the Constitution. The Preamble outlines the purpose of the Constitution to "promote the general welfare" -- not to "provide the general welfare". All a reasonable, healthy government can do is provide a few basic structures for its people to build off of, it can't support the whole country (or really anyone) by itself. Unemployment is a governmental problem only insofar as governmental policy impedes useful production; anything else is pandering politicians attempting to dodge the wrath of an uninformed, slothful populace (because the politician likes prominence, money, and power).


I would mention that the US is still getting value out of many projects that were performed during the Great Depression.


Right, I'm not arguing the philosophical aspect of employing people for the sake of employing people.

However, laid off militants are likely to apply for unemployment benefits + whatever other entitlement programs they have. So in terms of pure numbers there might be some win, but when you cut $100 of military salary, you don't magically save a total of $100, you generate some liabilities on the other end.

All those military salaries also generate income taxes for Federal and state coffers, so now you've got lower revenues to deal with, too.


However, laid off militants are likely to apply for unemployment benefits + whatever other entitlement programs they have.

Perhaps initially. The military population in general is disciplined, educated (or even technically inclined), proud, and self-reliant. I've got to think that demographic is more likely to respond to unemployment by going out and doing stuff than any other.


That is an excellent question. I'm too lazy to search for the answer, but, with our luck, I'd say that the Defense budget is about evenly split betwixt personnel and hardware. Therefore, cuts to defense spending will cause unemployment for both defense contractor engineers as well as veteran grunts.


Taking over your laziness I found the 2010 budget. It doesn't really provide an accurate personnel versus hardware comparison but it looks like this:

Maintenance and operations 41.35% Military personnel 22.5% Procurement 20.45% Research, Development, Testing & Evaluation 11.54% Military Construction 3.49% Family Housing 0.145% Total 99.45% (I'm lazy too and rounded too much. Hey it's just 359.6775 millions that are missing...)

http://en.wikipedia.org/wiki/Military_budget_of_the_United_S...


Upvoted for doing my homework for me.

So keeping the lights on and the water running is 42% (there was a link that the Pentagon spends more on air-conditioning in Iraq and Afghanistan per year than NASA's entire annual budget). Much of that cost must be due to maintaining offshore bases.

22.5% pays for the salaries of everyone from grunts to Joint Chiefs. I'll say that getting snazzy new hardware comes under Procurement, R&D, and Test & Eval. So, let's say 32%. That makes 22.5% versus 32% for personnel versus hardware. It's not parity, but it's in the same ballpark.

The biggest bite comes from maintenance & ops, of course. That figure has to include the cost keeping Navy boats afloat. No way to chop that down without also cutting down personnel. After all, if you cut the number of facilities by half, there will a lot less space for the personnel to stay in and fight from. Doing that has to have non-trivial effects on military readiness and the perception of potential enemies.

None of this is easy.


Theoretically, this problem can easily be solved: keep sending them paychecks. At least, they could be working on something productive like finding jobs or starting businesses.


Probably most would not start businesses or seriously seek employment with a steady paycheck unfortunately.


[citation needed]


Well at least if they live in the US the government does not have to feed them all and provide shelter etc... At home they support the economy of the US by buying things whit their salaries here. Soldiers at home are cheaper than soldiers on a battleground. Add to that lower amount of injured soldiers etc... That's also a cost when you factor in the medical costs on the battlefield with the need for quick transport to a hospital etc and future disabilities.


Problem is that, especially during the bush era, there were a lot of no-bid contracts to firms such as Halliburton. And we are obliged to make those payments.


"Given China's rise, its wise long-term to keep a presence in the region."

Why?

China will surpass the United States in soft and hard power eventually. This is demographically and economically inevitable. Even sooner, if not already, China will become an unshakable hegemon over all of Asia. So why fight it in the most expensive and futile ways possible, i.e., by maintaining the fiction that we will be able to exercise any sort of long-term military power in Asia?

It's time we focused on our economic power, and not our military power. The former is a necessary precondition of the latter, and we're acting as though it's not.


"This is demographically and economically inevitable."

Oh, no it's not. First China has to hold together over that time frame. This is feasible... this is not inevitable. There's a lot of tensions over there. Then even if they pass that test, there's other things they're going to have to deal with.

Right now, there isn't a single world power that's looking to be "inevitably powerful" in the next 50 years, it's really "anybody's game".


First China has to hold together over that time frame. This is feasible... this is not inevitable. There's a lot of tensions over there. Then even if they pass that test, there's other things they're going to have to deal with.

Right. It's entirely possible that China can hold together as a sovereign nation, but will develop or hold onto pathologies which will cripple it as a major power. Then again, the same could also be said for other potential powerhouses like Brazil, Russia, and India. The same could even be said for the EU and the US.


"Right now, there isn't a single world power that's looking to be "inevitably powerful" in the next 50 years, it's really "anybody's game"."

The Vatican?


China doesn't need to hold together for that to happen. China has a far stronger ability than most other countries to collapse, reform, and remain "China."


> China will surpass the United States in soft and hard power eventually. This is demographically and economically inevitable.

As far as I can tell, this conclusion can only be reached via naive interpolation of current trends. I can't come up with one plausible scenario in which this actually happens. Most of China, population-wise, lives in a state of abject poverty, about which the government has done very little. The Chinese gov't itself indicates that nearly 10% of the population are migrant workers. The migration of peasants from the countryside to the city is already considered the largest migration in human history, and it's expected to grow drastically over the next decade or so.

No country can smoothly handle the kind of stresses that come with having most of the country living in abject poverty, and seeking migration to already-overpopulated cities. At some point, /something/ will snap - the magic bubble that is China's economy will pop, and we'll all realize that being gigantic is an impairment, not an advantage.

Put another way: at some point, China's ridiculously poor standards of education and health care will catch up to its economy - and the western companies that have been moving (partly) there, helping to fuel the growth, will stop doing so.

Your point about economic vs. military power is, of course, valid, and largely irrefutable. I would add that, as China does seem to be a relatively stable country - with a competent and, most importantly, sane government - they stand little to gain by way of aggressive military action. We may do well to let them police their part of the world (read: keep North Korea in line), trusting their own rational self-interest, and save ourselves the effort.


I don't think it is unreasonable to believe that in 40 years China will have per capita GDP half of the US (The Shanghai and Beijing areas are already close on a PPP basis) - indeed some GS research paper argues this. At that point its economy will be about double the size of the US...


China's defense spending is less than half of the US. This is not an inevitability. Learn the facts before you go spouting off nonsense: http://en.wikipedia.org/wiki/List_of_countries_by_military_e...


What about the single biggest contribution to the deficit, the Bush tax cuts?


This is a plan I could sign on to (for the most part), but as Winestock said, such a plan would never get support.

It is not a coincidence that Presidential elections are as close as they are. Politicians essentially buy votes to get elected, in the form of government programs.

The problem in this country is medical entitlements - not so much Social Security. Social Security in theory funds itself, although Social Security's funds have been raided to fund other programs which now jeopardize its future.

Politicians will not address medical entitlements, because they will lose too many votes in doing so. Ultimately it's these medical entitlements that will bankrupt our country, and in the process, cause the greatest transfer of wealth in the history of the U.S. - not from the rich to the poor, but from the young, to the old.

Most people who support medical entitlements do so for "selfish" reasons, in that they want those entitlements to be available for themselves, their family, and/or their friends. They say things like "health care is a right," although it obviously is not a right. Health care is essentially the result of man's labor, and to say you have a right to health care, is to say you have a right to impose your needs on another man. Which of course is silly and inconsistent with the American constitution.

Still - people will assert their right to medical entitlements, and politicians will oblige, which in the long-run will pull money away from business investment (not all businesses are rich with billions in cash). The added financial burden will either stifle entrepreneurship and innovation, or it will send it oversees.

Of course, anyone who stands up against medical entitlements, like Paul Ryan, will be referred to as a villain who wants to murder old people. To quote the President: "throw grandma off the cliff."

That's my long-term prediction, anyway.

In the short-term we will continue to go through up and down cycles. Each down cycle will bring fear. Each up cycle will bring relief. There will be booms and busts in America's near-future, although the booms will be short-lived, and the busts (like our current bust) will be longer-lived.

To the extent innovators, like many of the people on HackerNews, are able to create great innovations, we can postpone the day of reckoning for our country.


Check out www.downsizedc.org

They are proponents of ending all offensive military action overseas, and cutting government spending and red tape.

They have an excellent system that makes it easier for USA people to contact their government -- you put in your name and address, and they give you a simple "contact us" form (just a single text area) where you can write your comments and they automatically get routed to your reps in Congress and Senate -- very efficient use of the voter's time!


3. The Healthcare System is interesting. The US simply pay a lot more than all other industrialized nations (and still everyone isn't covered).

These two graphs are quite telling: http://www.rwjf.org/images/pr/thumbs/full/45110.jpg http://media.economist.com/images/20090627/CBB677.gif

I think the problem is manifold, but here are some things that may be problematic (please let me know if you agree or disagree):

# Doctors risk getting sued for maltreatment, and thus they prescribe all possible medications, take too many samples and generally spend too much resources.

# On the same note, they also pay large insurances against lawsuits, increasing the costs further.

# Medicine prices are higher in the US, for reasons I don't fully understand.


Intressting, I'm from switzerland :)

In our system you need to have health care insurants. Its alot to pay but as far as I can tell we have one of the best systems and everybody really gets good treatment (my father is a doctor my mother is a nurce and my sister is studying medicin). Witch seams not to be the case in america (I watched Sicko, other then that I have know knowlage).

I can only compaire to some other europen countreys but when you get hurt in italy for example the first rule is to get to switzerland as fast as possible.


"Maintain important overseas installations such as Japan and Taiwan." - there are no US bases in Taiwan currently. Perhaps this is referring to Korea?

http://en.wikipedia.org/wiki/List_of_United_States_Air_Force...


2) I'm pretty sure Western Europe is fine with Russia without US intervention, thanks.


This all makes good sense and would make a great political party's campaign.

The problem is, it wouldn't work. The economy, as small as any small country, isn't a piece of programming. You don't audit and refactor, or rewrite parts and plug it all in. It's made of generations of flesh and bones, all of which have worked their guts out to get whatever it is you're trying to take from them.

In a tyranny, maybe. In democracy, you have no chance of getting anywhere which such an overhaul.


This is a completely bullshit way of thinking. Its also just another example of the defeatist attitude so many people in this country have. "Oh, the problem is too big to handle" or "Welp, that's just the way it is".

You ABSOLUTELY audit and refactor a society. Every time the country has gotten a bit more free with a new law or court decision, that's a refactor that improves the system.

Sometimes people have added parts to the system or revised bits that end up for the worse. Examples include Prohibition, Jim Crow laws, Defense of Marriage Act, software patents, etc.

One thing that would help society out a lot would be societal unit tests. Set baselines as to what works and doesn't, and if some new changes breaks the tests you go back and refactor again.


I'm tempted to extend the analogy by pointing out that we already have a unit testing framework: a constitution and judicial review. Test only work if you have an idea of how the system is supposed to run and assertions that respect that idea.

Another analogy that I like to use is one that relates governments to operating systems:

Federalism is a microkernel operating system. The states are user land processes where we can experiment with the code without taking down the entire system. When we discover something that is a universally good principle, we implement it at the kernel/federal level. After all, another name for the states is "Laboratories of Democracy".


Look, I get it, you're pissed. But the real world isn't a framework, and that's all I'm saying.


The real world isn't a framework but we only understand it in terms of frameworks.


Which is why the US was founded as a federal republic.


Specifically, a federal democratic republic. There's no contradiction between "republic" and "democracy". "Republic" refers to sovereignty (the people hold sovereignty rather than a monarch), while "democracy" refers to power (the people hold power rather than a dictator).

Some democracies are not republics--the UK is a constitutional monarchy. Some republics are not democracies--the Roman Republic was an oligarchy and to some extent the early United States was, too.


Maintain important overseas installations such as Japan and Taiwan.

The US hasn't had a base in Taiwan for 30 years. Maybe you're thinking of Korea?


On point #3, while I'm sure it can be better, it is worth noting out that historically medicare has done better at cost management than private healthcare (http://krugman.blogs.nytimes.com/2009/07/29/medicare-versus-...). I don't have the answer either, but health is one of those areas we know enough about yet to optimize using the same techniques you would in manufacturing, for instance. It is about investing in preventative measures as it is in reactive treatments. In Canada we face similar issues where more of our tax dollars being spent on healthcare with lesser returns. This is due in part to an ageing population, but can also be attributed to the lack of broader innovation in the delivery of care. A first step would be to encourage a more team-oriented approach where the doctor's lobby group (aka union) doesn't retain so much influence and control over policy decisions. From afar it looks like the private insurance lobby is one of the larger distractions preventing the US from getting down to the real issues of efficient and effective health practices.

On the business front propping up failing business models is a tough one. There is something to be said about preventing a complete and sudden collapse. The number of unemployed would hit the system in so many other ways. What we have seen from the auto industry, as much as I disagreed with the bailouts, is reinvention and retooling. I hope they take their bailouts with a great deal of thankfulness and invest wisely. I look at the next generation of companies like Tesla Motors and hope that more auto industry giants will seek to innovate and evolve rather than focus on just getting bigger (and slower).

The message I believe we all (conservative and liberal) can and should agree on is respect for the tax payer dollar. Money in government isn't free, the debt and deficit isn't free. As they plan out capital and operating expenses they need to do so with an passion towards building a better country while taking calculated measures and risks. Government's role, in my mind, isn't to innovate itself but instead to facilitate innovation by its people. It should focus on facilitating the success of the people through "just enough" regulation which means refactoring how they work on a regular basis to find the most effective means in which to operate. They need to continue to question their own purposes, not get comfortable in the security of a public sector job for life. Most importantly they need to share with their shareholders, we the people, on their progress in an open and transparent manner. I don't need fancy marketing campaigns to tell me about the good work that they do, but I don't want to see them hiding it either. One way to do this is to add a more direct measure of how tax dollars are spent. In Canada we pay a good portion of our taxes into a general revenue pool. I would like to see that eliminated in favour of a clear indication of what portion of my taxes go towards specific ministries or sectors of government. I think that next level of granularity would provide a bit more awareness that public money really belongs to the public.


It's fairly widely understood (though I guess not by Professor Krugman) that Medicare offloads some of its own costs onto the private sector by the below-market rates it pays providers.

He's also neglecting to make a real comparison of the services that private health care provides vs. Medicare. Sure, private insurance premiums may have risen faster than Medicare spending during the '90s, but Medicare wasn't even paying for prescription drugs (a huge cost driver) until Part D was implemented in 2006.


> It's fairly widely understood (though I guess not by Professor Krugman) that Medicare offloads some of its own costs onto the private sector by the below-market rates it pays providers.

This is fairly widely claimed, but it's a pretty weak claim. Doctors are not required to accept Medicare. They choose to do so. They choose to accept the rates Medicare offers. When one party offers an amount for a second party's services, and the second party accepts, they have just established the market rate for that transaction.

This claim also conveniently ignores the fact that insurance companies do the same thing. Check over a medical statement from your insurance company some time. You'll see where the doctor billed $300 for "nasal deconfrabulation", your copay was $25, and the insurance paid $125. Total due: $0.

> He's also neglecting to make a real comparison of the services that private health care provides vs. Medicare. Sure, private insurance premiums may have risen faster than Medicare spending during the '90s, but Medicare wasn't even paying for prescription drugs (a huge cost driver) until Part D was implemented in 2006.

The status of Medicare in 2006 seems to have little relevance to Medicare today. The first question is how much Medicare spends today per client vs how much private insurance spends per client, on average. The second question is how coverage differs in these scenarios. How does Medicare compare to the average insurance policy? I don't know the real answer to these questions, but I know Medicare's coverage or lack of coverage for prescription drugs in 2006 isn't relevant.


They choose to accept the rates Medicare offers. When one party offers an amount for a second party's services, and the second party accepts, they have just established the market rate for that transaction.

Not when second party holds a monopoly on a certain patient population, as does Medicare for the elderly. The healthcare market is so distorted by government intervention that calling anything a true 'market rate' is laughable.


How much of the patient population does Aetna have a "monopoly" on? How about Keiser? Medicare most certainly does not have a monopoly on healthcare. Not for any reasonable definition of "monopoly".

And again, doctors do not have to accept Medicare. It doesn't matter how "monopolistic" Medicare is. There's no force that makes doctors accept it. They can simply decline to accept Medicare just as they can Aetna. If Aetna pays below the rate a doctor is willing to accept, then they simply don't work with Aetna. The same applies to Medicare.


Doctors don't have to serve that patient population... they choose to. (It is a huge % of the market though)

It's not medicare, but there have been instances where hospital systems have dropped (or threatened to drop) medicaid because accepting and dealing with it became too onerous.



more liberal than conservative yet no suggestion to raise taxes which are at their lowest levels in 50 years (http://www.chamberofcommerce.com/business-advice/tax-prepara...) ? not even on billionaires sucking the government dry via the bush tax cuts (http://voices.washingtonpost.com/ezra-klein/2010/11/the_bush...) ?


Great ideas! But please someone fix this site design. Current design undermines all data credibility.


End all offensive military actions overseas. Finish winding down Iraq and abandon Afghanistan wholesale. These actions have cost several trillion dollars over the last 10 years. We can't get that money back, but we can stop spending more.

Once you realize that the military is not a collection of armed forces so much as it is the US's largest social welfare program, these policies and figures start to make more sense. Put it this way: We're paying our troops there so we don't have to pay them here.

Don't look for this to change anytime soon.


i see this point made every time the discussion about military spending comes up, and i hate it so so much.

what this argument boils down to, for me, is "we need to keep killing foreigners so that our economy doesn't suffer", and this is a morally reprehensible position.


It sounds less defensible to pay young able-bodied men to kill foreigners than to pay the same to study or plant trees here.

Plus, how much of the money that we funnel to Iraq actually goes back to the US economy, compared to if we spent it in the US directly?


Yes, it is. I hate it, too. But that doesn't affect the truth of the matter.


True, and numerous families across the US depend on the active and guard pay of the armed forces. However, by bringing troops home, there are a number of secondary costs that can be reduced, or eliminated. For example, one of the more famous recently has been the discussion of AC in Afghanistan. Per the NPR article:

http://www.npr.org/2011/06/25/137414737/among-the-costs-of-w...

We are spending 20 billion a year to truck energy supplies across some of the worst terrain in the world so that we can provide AC to thousands of horridly inefficient tents for our soldiers in the field. For comparison, that's more than the entire yearly budget of NASA. And its only one of numerous logistics and support costs we incur in our active warzones.


The 20 billion a year air conditioning cost is marketing nonsense. Specifically, this number comes from someone selling energy-efficient tents to the Pentagon, and it's pretty clear they made up this number. At the very bottom of the article, the Pentagon states it spends $15 billion on energy for all military operations around the world (i.e. everything, not just air conditioning).

This might be a good time to read Paul Graham's article on PR: http://www.paulgraham.com/submarine.html

(I don't mean this as an attack on araes or the suggestion to reduce military spending.)


Not taken that way. I expect the real number is somewhere between the 20 billion from this article, and the 1.5 billion the Pentagon responded with in their reply. 1.5 billion is probably the line item in the budget that says "tent AC", while different calculations assuming sundry costs can reach higher, and some of it probably is PR inflation.

The main point not being the specific final total, but rather that the cost, and other logistical costs like it, would be reduced or possibly eliminated if troops weren't in the field.


A lot of your points seem to cover international issues/action.

The US needs to come to the realization that it is part of the world economy and not the ruler/leader.

A large percentage of the US economy was damaged in the events that occurred after September 2001. Trying to to do business, travel or get workers to the US requires so much paperwork that a lot of business has simply gone elsewhere. Even trying to do financial trade in the US these days ends up with so much taxes or the threat of your money being taken as it may be linked to some terrorist organization.

And your health insurance.... well I like collecting dividends. If you like I could go into the oil industry, I will say thank you to the American tax payer for electing to go to war and making me some money.

The US has managed to dig itself into a great big hole and gave people like me money. Congratulations on your sinking economy and thank you.

So keep watching that propaganda you call Fox News :)


Disproportion between givers and takers of money makes democracy weak at this. In democratic country, bigger and poorer group can always take some money out of smaller and richer group.

See http://en.wikipedia.org/wiki/File:Income_Taxes_By_Country.sv... - all top countries are democratic.


1. 85% of the $14 Trillion deficit over the past 3 years was not any items you described but these items:

-TARP

Until we decide to have the bank lobbyists pay for their transgressions we will continue to be in deficit no matter what entitlement cuts are passed.

Two options:

Right now individuals pay 2/3rds of gov expenditures not corporations.

1. Reform corp tax law. There should be no Google or MSFT only paying 5% instead of the full 30% corp tax.

2. Reform internet sales tax. If states have adequate tax revenue than the Education and Medical entitlements on the Fed level can be cut back.


>85% of the $14 Trillion deficit over the past 3 years was not any items you described but these items: -TARP

TARP was $300B, of which the government will recover all but $25B, according to the CBO. The "bailout" in general (considering all acts that fall under that umbrella term) consisted of about $3.5T in payouts, the vast majority of which is expected to be recouped.

Also, you're confusing debt with deficit. The debt is $14T, the deficit is just over a billion. Your 85% figure appears to have been drawn from your sphincter.


>> The debt is $14T, the deficit is just over a billion

The US budget deficit is far more than $1 billion.

http://www.bloomberg.com/news/2011-03-10/u-s-had-record-222-...


I meant trillion.


You seem to have forgot one point: the trillions spent in the Middle-East are to protect the supply of cheap Oil — so step 0. is: Sell your car, insulate your house.


We get more oil from the gulf and Canada than we do from the Middle-east. That's not to say energy savings are a lost cause.


You still pay it at international prices, that are set by events in the Golf.


Tearing the healthcare system down to it's nuts and bolts would costs a lot more than to continue reforming. I spent some time consulting hospitals an implementing electronic medical record systems for hospitals. It costs a hospital millions of dollars and thousands of hours to install and train people for these systems. Too many hospitals are too deep in these EMR systems to start from scratch again. Their margins are only around 1-2 percent as it is.

I agree, the healthcare system is a complete mess, but think of it like re-writing software. Sometimes continuously refactoring code is a much wiser decision than completely re-writing the code


A hospital's margins are only 1-2%? Do you have a source for that?

Maybe they can pull that off by paying themselves all the profits, but there's no way that I buy that hospitals have thinner margins than grocery stores before that. Hospital administrators are very well off on average. Their fees are way too large to be running so close to the wire, given their expenses.


I was curious about this, so I searched around a bit.

This is the most recent I found -- a median of 3.1 percent: http://www.reuters.com/article/2009/08/19/us-hospitals-usa-i...


Interesting. I wonder how much of their operating expense is due to administrator salaries. A breakdown of expenses throughout hospitals and the health system would be really fascinating to see, and could probably shed light on potential solutions.


Do you have a source for the expenses that the average hospital incurs?


By "sometimes" you mean, "nearly all the damn time".

As an incrementalist coder, it frustrates me to see how non-incremental the approach to solving social problems often is. Decouple, solve one thing at a time, etc.


Also: refactoring is good.


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