I just listened to an overview of 'the deal' on WSJ radio. Basically a 'star chamber'-like (my term) panel that will decide what to cut. Then the proposals from the panel get an up/down vote in the houses of congress. This sounds a little like the military base closing approach. If the panel can not reach consensus or the houses fail to pass the proposal(s) then automatic cuts take effect. But if that happens the automatic cuts do not touch Medicare/Medicaid or Social Security.

 

What is wrong with this? What could go wrong?

 

Here is the basic picture of what is already projected.

 

 

The drivers to the spending are:

 

a) Medicare/Medicaid (HHS)

b) Social Security

c) Interest on debt (Department of Treasury)

 

See #9 above for detail of these and other elements.

 

Medicare/Medicaid and Social Security are the drivers. Interest on debt is basically a function of these two elements since we are having to borrow to make the payments on these programs. The true 'untouchable' in this equation is the interest on the debt. There is nothing - other than begging the (privately owned) fed to keep rates low - that anyone can do about this line item.

 

For those calling for a cut in military spending - it is there. It may not be as dramatic as some want. But using historical trends the 2016 estimate would be close to the expected historical trend line. At best, there is maybe $100-$200B more in military spending that could come out. Also, note that almost all other federal spending goes down in current year dollars (not inflation adjusted or 'baseline' dollars). So the cuts in all other aspects of government are planned in currently. Looking for more cuts in these areas is likely an exercise in futility.

 

So this very small group must address these sacred cows that will change the fundamentals of our society or they will fail in their mission and the problem will still be with us.

 

Questions:

1) Do you believe they can do it?

2) Do you believe congress can vote on it if they do?

2) Do you want a very, very small group coming up with a plan to change the fundamentals of our society structure?

 

Take care.

An article on what this subject is about.

 

http://www.businessweek.com/magazine/why-the-debt-crisis-is-even-worse-than-you-think-07272011.html

 

...But that’s nothing compared with the real threats to the U.S.’s long-term economic health, which will begin to strike with full force toward the end of this decade: Sharply rising per-capita health-care spending [read Medicare/Medicaid], coupled with the graying of the populace; a generation of workers turning into an outsize generation of beneficiaries [read as Social Security]. Hoover Institution Senior Fellow Michael J. Boskin, who was President George H.W. Bush’s chief economic adviser, says: “The word ‘unsustainable’ doesn’t convey the problem enough, in my opinion.”

 

Bracketed inserts and highlighting added to original quote.

 

Boehner said it is time to 'eat our peas'. I hope that there is realization that the only 'peas to eat' that make a difference in the overall situation are the entitlement programs.

Spending has been fairly flat since Obama came in office, although it is at such a high rate that it clearly needs to be cut. On the tax side, I saw someone the other day saying we don't even need to raise tax rates. If we would just eliminate the tax credits currently in place, there would be $1 Trillion in added revenue.

 

I believe it's up 27% in 3 years. Not exactly what I would call fairly flat. Unless it were my pay.

As a guy who shares most of the principles of the Tea Party, I'm not opposed at all to tax hikes. The problem is I don't want to have to pay more in taxes just so the President can continue careless spending. If I'm guaranteed that my higher taxes result in a dramatic reduction in debt, I'm okay with that & would be fully on board with it. But President Obama is not showing me any propensity toward reduced spending, so I basically oppose any tax hike idea he puts forth.

 

Agree completely.:thumb:

Spending has been fairly flat since Obama came in office, although it is at such a high rate that it clearly needs to be cut. On the tax side, I saw someone the other day saying we don't even need to raise tax rates. If we would just eliminate the tax credits currently in place, there would be $1 Trillion in added revenue.

 

I won't go so far as to say you're wrong on the first statement about "fairly flat" spending under Obama. Do you have some numbers to back this up?

 

When you mention the elimination of tax credits, what specifically are you speaking of? I know there was discussion about eliminating the mortgage interest deduction & charitable contribution deduction. Is this what you have in mind or something else?

I believe it's up 27% in 3 years. Not exactly what I would call fairly flat. Unless it were my pay.

 

Big increase at the start of his term due to the bailout. Flat since then. I will see if I can pull the numbers from some place and post them. But if you look at post #16, the graph there shows what I am talking about.

Big increase at the start of his term due to the bailout. Flat since then. I will see if I can pull the numbers from some place and post them. But if you look at post #16, the graph there shows what I am talking about.

 

I believe that spike (better seen in #9, yellow) is the end of 'stimulus' spending. So that is end of stimulus funding. But the bill comes due in the 2012 - 2016 as the interest on debt or funds to pay treasury bonds that come due is spent (also yellow line #9 2012 through 2016.)

Big increase at the start of his term due to the bailout. Flat since then. I will see if I can pull the numbers from some place and post them. But if you look at post #16, the graph there shows what I am talking about.

 

Very true. The banks and Freddie and Fannie were bailed out in 2008 to keep them from taking massive losses on the 'toxic assets' - i.e. bad mortgages that were then starting to come home to roost via walk-aways and foreclosures. This was supposedly needed to keep the big, almost national, banks from taking severe hits or failing - supposedly.

Big increase at the start of his term due to the bailout. Flat since then. I will see if I can pull the numbers from some place and post them. But if you look at post #16, the graph there shows what I am talking about.

Spending increases for each year...

 

2001 - 5.5%

2002 - 5.2%

2003 - 10%

2004 - 4.55%

2005 - 4.35%

2006 - 12.5%

2007 - 3.7%

2008 - 3.57%

2009 - 6.9%

2010 - 16.13%

2011 - 5.56%

2012 - -2.63%

 

I got the budget numbers from... http://en.wikipedia.org/wiki/United_States_federal_budget

Spending increases for each year...

 

2001 - 5.5%

2002 - 5.2%

2003 - 10%

2004 - 4.55%

2005 - 4.35%

2006 - 12.5%

2007 - 3.7%

2008 - 3.57%

2009 - 6.9%

2010 - 16.13%

2011 - 5.56%

2012 - -2.63%

 

I got the budget numbers from... http://en.wikipedia.org/wiki/United_States_federal_budget

 

Thanks woodsider. The 2.63% for 2012 is the lowest increase since 2000 and the numbers outside the bailout show there aren't big government spending increases happening under Obama.

Thanks woodsider. The 2.63% for 2012 is the lowest increase since 2000 and the numbers outside the bailout show there aren't big government spending increases happening under Obama.

That's actually -2.63% as in decrease. However I disagree saying there aren't big spending increases. When spending jumped because of the bailout it wasn't taken back out. That's the problem with government. Once something is there it's there for good. This is how the precentages look when you compare each year to the 2 years previous (2001 - 1999, 2004 - 2002, 2011-2009, ect...)

 

2001 - 11.76%

2002 - 11.11%

2003 - 15.79%

2004 - 15.00%

2005 - 9.09%

2006 - 17.39%

2007 - 16.67%

2008 - 7.41%

2009 - 10.71%

2010 - 24.14%

2011 - 22.58%

2012 - 2.78% (goes from a decrease to increase)

 

Year over year Obama had the one big jump in spending but the spending is still there. We always hear the bailout used as the only increase in spending but why is it still there then? The last budget Bush submitted was the 2009 budget for $3.1 trillion. The 2012 budget is still at $3.7. Bush has isn't free of blame here. He started this spending spree but to suggest Obama hasn't taken it to the next level is disingenuous.

I believe it's up 27% in 3 years. Not exactly what I would call fairly flat. Unless it were my pay.

 

It may look flat, but it is looking flat at a much higher level. The numbers of 5.5% and 2.6% are times a much higher level of expenditures. That old game of manipulating figures.

And Bush is being held responsible by individuals in the Tea Party. Tea Party members are willing to get rid of anyone that does not measure up to cuttting government.