Wednesday, December 16, 2015

Big New Budget Deal

"The big new budget deal, explained I don't have time to comment now, but maybe tomorrow. Any liberal commentary Ezra adds to the explanation of the deal I probably agree with." Laurie


Reuters Spending Deal
NPR No Gov't Shutdown Likely
Fox News Spending

50 comments:

John said...

These are the paragraphs that resonate with me... It seems the citizens and politicians of today have NO PROBLEM spending too much and taxing too little. Apparently they are all happy passing the buck on to the future generations.

"Here's what this deal tells us about both parties' priorities in 2015:

No one cares about the deficit — or, at the very least, everyone cares about other priorities more than they care about the deficit.

The basic deal here is that Republicans get corporate tax cuts, Democrats get anti-poverty tax cuts, and both sides (more on that in a moment) get some Obamacare tax cuts. What all sides give up is the deficit.

This deal adds $700 billion onto the national tab, and maybe much more than that if the Obamacare taxes end up delayed far into the future, which is definitely what Republicans (and some Democrats) are hoping for.

The deal's advocates argue that this isn't really a deficit increase so much as it's more honest accounting, because Congress extends most of this stuff every year anyway. But that's just another way of saying Congress's concern over the deficit is mostly bullshit.

If you're really concerned about the deficit, you pay for this stuff — the fact that you billed it to the credit card last year and the year before that doesn't make it somehow costless to do so into the future.

What you can say about this agreement is that Congress is being more honest about the fact that it doesn't care about the deficit — at least when it comes to tax cuts and Obamacare — than it has been in recent years. But there's nothing here that's even tries to offset the cost of this package.

"The failure to pay for this legislation is completely at odds with rhetoric about fiscal responsibility and balanced budgets," fumes Maya MacGuineas, president of the Committee for a Responsible Federal Budget.

It's particularly interesting to see this deal emerge as the first major act of the Paul Ryan speakership. Ryan made his name as the leader of the GOP's deficit panic from 2010 to 2012, and now he's begun his speakership by adding $700 billion to the deficit.

In part, this reflects a reality that's very different from 2010: The deficit has fallen sharply in recent years and is now down below 3 percent of GDP. So you can argue that it makes sense that Congress cares less about the deficit than it did in years past.

But that argument gets responsible fiscal policymaking exactly wrong. A strengthening economy is exactly when you don't want to be charging everything to the national credit card; you want to save that fiscal firepower so you have the room to maneuver the next time there's a recession and the economy needs some stimulus.

Which is all to say that these policies may be worth putting on the deficit — I'm definitely a big fan of the anti-poverty tax cuts — but this deal, as a whole, basically betrays everything the two parties have been saying about fiscal policy for the last seven years."

Laurie said...

Suddenly, Deficits Don't Matter Anymore

I think Drum is just restating the obvious. I am a little confused by the title of his post, as deficits have not mattered for a long time. He does include a good graphic.

John said...

Better Graphic

Better Overview

John said...

MP Eric's Opinionated Coverage

MP Sam's More Balanced Coverage

John said...

What frustrates me about Eric's coverage is that he is relentless in accusing the GOP of being the "extremists" when there are extremists on both sides. Our buddy Sanders being one of them. Senate Vote Results

As long as I remember that he writes opinion pieces and not news, I understand.

Laurie said...

I don't really understand your difficulty isn seeing the GOP has many more extremists than the democrats. I am not going to waste my time trying to educate you any more.

If one was to break down the representatives into 6 groups from extremely liberal to extremely conservative I think there would be 0 people in the extremely liberal group (I would put Sanders into the very liberal category with many others) There would be a very large group of moderately liberal representatives. On the conservative end there would be few, if any, moderately conservative representatives and the rest would be sort of equally spilt between very conservative and extremely conservative (probably more very conservative)

anyhow, you have made progress in understanding how to read news with a viewpoint. I am still looking for a conservative take on the news that I enjoy reading. I do cruise past NRO fairly frequently.

Laurie said...

Here is what I just found at NRO:

About the $1.1 trillion omnibus spending bill passed by Congress and signed by the president on Friday, we have only one question: What were Republican leaders thinking?

and surprisingly they had an opinion I agreed with:

"It would be bad enough had Republicans merely acquiesced to foolish policies, but in this bill they actively advanced them. The bill’s most egregious proposal will temporarily expand the H-2B visa program, quadrupling the issuance of visas to foreign workers for nonagricultural or temporary service jobs in 2016 — and it was a Republican initiative from start to finish.

"What is the rationale? There is strong evidence that large-scale hiring of foreign workers depresses wages for Americans, and it’s not as if Ferris wheels and ski lifts will go unmanned if we stop importing Peruvian labor. Clearly, Republican leaders bent to the demands of a tiny segment of employers."

John said...

And...

I don't really understand your difficulty in seeing that the DFL has as many extremists as the GOP.

jerrye92002 said...

I think Laurie's definition of "extremist" is a bit misguided. Let me give you my definition. You have one Party that wants to increase the debt by another $2Trillion or so. You have another Party that (supposedly), wants to reduce the deficit-- i.e. stop adding to the debt-- to zero. Since we are already, as a nation, in hock up to our eyeballs, which is more extreme, to stop spending money we don't have or to keep spending money like there's no tomorrow? Politicians will spread over the spectrum, but the more spending they support, the more extreme they are, and only those wanting to hold the line qualify as sensible and moderate.

Laurie said...

ok, I will take one minute to once again provide evidence for which party is more extreme:

‘It’s Even Worse Than It Looks: How the American Constitutional System Collided With The New Politics of Extremism’ by Thomas E. Mann and Norman J. Ornstein

Republicans Gone Wild: Q&A with Mann and Ornstein

John said...

Laurie,
Yes I have seen those opinions before. I still disagree with them.

The far Left just keeps wanting MORE government intervention in our lives / spending, and anyone that says NO is considered an extremist by them... That is something that I can not agree with.
US Total Spending

The Left "extremists" have pulled us to a point where the government gets to control ~35% of the country's GDP. Now the GOP let this happen over the last ~80 years because many of the changes were good, and being rational folks they saw this. The problem is that the Left "extremists" seem to be insatiable....

I hope the GOP "extremists" keep holding their ground by trying to keep 2/3rds of the GDP in the hands of the US citizens.

jerrye92002 said...

Let's try an example and see if that helps. The most extreme Republicans I know want to eliminate the deficit in 5 years, and they would do it by cutting ONE percent of the federal budget each year for the next 5 years. One Democrat alternative would have "trillion dollar deficits as far as the eye can see." Now, who is extreme? In my view, the scale of extremism does not start at "extreme right" and go to "extreme left." It starts at "sensible zero" and goes to extreme left.

John said...

Our "sensible GOP" folks just agreed to cut taxes while increasing spending.

A sensible politician is open to working both sides of the equation to eliminate the deficit and start paying down the debt.

Laurie said...

GOP Presidents Have Been the Worst Contributors to the Federal Debt

jerrye92002 said...

John, you're right. Almost every Republican is just a little too far towards the "extreme left" to suit me, and away from sensible zero on the scale. I sure wish we had more "extreme right" Republicans to pull the average back towards that ideal. Wouldn't it be great if some "extremist" proposed cutting the deficit to zero next year, and then suggested how it could be done with minimal "pain"?

Laurie, I'm not going to read it. Thank you, but Obama is on track to add more debt than all previous Presidents put together. There's no way to spin it as your headline suggests without some dang fancy circumlocutions.

jerrye92002 said...

BTW, has anybody noticed that these "I am not a robot" pictures are too fuzzy to tell what they are?

John said...

As usual, I think one would need to look at not only who was President. One would need to consider what was happening in the world, who controlled Congress, etc.

Debt vs Year

John said...

I don't know about the I am not a robot screen, I am usually logged into my google account when I access the site. Here is some info though.

Not a Robot

Laurie said...

about "the government gets to control ~35% of the country's GDP" - nearly half of that budget is returned to citizens in the form of social security or medical care. Maybe it would be more accurate to say the government gets to control ~18% of the country's GDP.

John said...

Laurie,
Even though that is so. Please remember:
- the government mandates what is collected when and from who.
- the government mandates where the money is invested.
- the government mandates who receives what benefits and when they can receive them.

There is little to no personal freedom allowed in those programs, they are nearly absolute government control.

John said...

Or have you found a way to avoid paying ~15.3% of your compensation into FICA. 7.65% from your check and 7.65% from your company that could have gone to you.

Laurie said...

I am very happy to pay into fica as I will be very happy to start collecting it at age 67. The govt has no control on how the 24% of the budget paid out each month in retirement benefits is spent.

John said...

Just remember... Unlike a personal savings account the government has no legal obligation to give you back that money. They have the power and authority to change the terms at any time since they have done a poor job of managing the premiums / payouts.

John said...

WP Disability Changes

jerrye92002 said...

Laurie, your return on your "FICA investment", assuming you live to a very ripe old age, is going to be something like 1%, ASSUMING SS does not go "broke" before then, which it almost certainly will unless serious changes are made to the program, over solid Democrat opposition and flaming demagoguery. Yet it would be so simple to save it....

jerrye92002 said...

Oh, and try dying at age 66-3/4. Unlike with a personal savings account or IRA, your heirs get NOTHING, zero, zip, bupkis.

jerrye92002 said...

Interesting outlook: "The govt has no control on how the 24% of the budget paid out each month in retirement benefits is spent." Some people would say that YOU don't have any control over how 15.6% of your pay every month is spent. The government chooses to spend every dime of your taxes (and a bit more) on somebody else's retirement. YOU don't have anything in your SS "account," ever. Personally, I would rather spend at least some of that putting away money in MY personal account, for MY family.

Sean said...

Here are a couple of realities:

1.) Most Republican politicians care far more about the deficit as a cudgel to use against Democrats than as an actual policy preference. They're more than willing to hand out their own versions of "free stuff" to their donors, and trade off cutting benefits for lower- and middle-class folks in exchange for goodies given to folks at the top.

2.) There is a sizable chunk of the Republican base that doesn't care about the deficit either and are rather concerned with preserving their part of the big government pie from being "stolen" by "others", whether immigrants or "lazy folks" or even the rich donor insiders. (This is the "keep your government hands off my Medicare" crowd.)

3.) The Trump/Carson boom this year is starting to force the GOP insiders to reckon with the fact that the group in #2 is larger than they previously thought. Ted Cruz is emerging as the likely compromise between those two views of the world (insider-compatible views on economics and social issues with nods towards the more reactionary views of the base on immigration and to a lesser extent on foreign policy).

John said...

The reality is that the GOP does not offer to hand out tons of free stuff via government controlled wealth redistribution programs. They offer to let people keep more of their own personal property, so they can use it as they wish.

I am guessing that sounds the same to Laurie and yourself, however to Conservatives and Libertarians there is a huge difference.

Also, no one has ever won an election courting <10% of the citizens. Thankful a lot of other Americans value Capitalistic and Libertarian ideals. Over the more Democratic Socialistic ideals.

Sean said...

"The reality is that the GOP does not offer to hand out tons of free stuff via government controlled wealth redistribution programs."

They do it in different ways.

"Thankful a lot of other Americans value Capitalistic and Libertarian ideals. Over the more Democratic Socialistic ideals."

So that's why Republicans attacked Obama over the reductions in Medicare reimbursements to providers? Because Capitalism and Libertarianism?

Seriously, you are so enamored with your own ideology you can't see how the world actually works.

jerrye92002 said...

"So that's why Republicans attacked Obama over the reductions in Medicare reimbursements to providers?" No, it is because free markets work and price controls do not.

"They're more than willing to hand out their own versions of 'free stuff' to their donors, and trade off cutting benefits for lower- and middle-class folks in exchange for goodies given to folks at the top." There you go again, imputing motivations to Republicans and conservatives that just aren't true, or at best, that you cannot know. Even if what you suggest-- that Republican policies favor the rich at the expense of the poor-- were true, you cannot say for certain WHY they pursue those policies. It's like I say of Obama: He is wrong every time; that doesn't make him evil.

jerrye92002 said...

Let's face it: Most voters don't understand even the difference between the Debt and the Deficit, and they don't see it as a problem because it's something in the future, like Climate Change only with a LOT more factual support. So long as they don't see the ill effects, such as a cut to Medicare (notice Obamacare didn't raise costs to seniors, they cut payments to doctors), they assume it's under control.

It's like I've said before. Democrats and demagogues keep forcing the Republican Party to shy away from real solutions to these problems, with the result that we get pulled further into the morass. I mean, whom shall we blame for Obama doubling the National Debt? Republicans?

John said...

"Democrats and demagogues keep forcing the Republican Party to shy away from real solutions to these problems."

I guess I disagree. Politicians are politicians are politicians... They all want and need votes to stay in office. And us citizens want more than we are willing to pay for. We want low payroll taxes (ie premiums) and large retirement / insurance payouts.

Rarely have I ever heard someone say... Please raise my taxes and reduce my benefits. And I am thinking any politicians who recommend this logical recipe for balancing the budget will not be elected. Forbes It is a Spending Problem

jerrye92002 said...

I guess I disagree with your disagreement. You are assuming that real solutions require higher taxes and lower benefits. I am assuming that real solutions produce greater benefit at lower cost, but are politically unpopular only because of Democrat demagoguery. I mean, Paul Ryan pushing Granny over the cliff? No politician wants to be painted like that, regardless of how good their proposal might be in reality.

John said...

Sorry. Most of the government spend is the same or less than it has been for 80 years...

The biggest problems are entitlements, and the biggest portions of those are social security and medicare. And though they are very prescriptive and government controlled, they are pretty effective and efficient.

John said...

And before you bring up that silly Heritage Return Info. Not sure what assumptions they make to screw up the rate. My guess is that they assume the USA will not find another source of funding to honor the commitments it made.

Here is a better view of reality. SS Returns

jerrye92002 said...

I don't know how you decided that Heritage has it wrong and your other source has it right, but I know which one is trying to pull the wool over my eyes. Their big argument is that the stock market occasionally has a downside, while SS produces returns as high as 4% in a "safe" investment. OK, if you had handed me my SS taxes, and I bought US savings bonds, or treasuries, which for years and years paid 4 or even 5%, I would actually have something, rather than some politician's promise that was void if I died before age 67. What is the return on investment for somebody that dies at age 66? -100%! I don't see that on the chart.

jerrye92002 said...

"...they are pretty effective and efficient."

Those are strange words about ANY government program, but the size of these makes that idea especially troublesome. Yes, Social Security is very efficient, with only about 1% administrative overhead (no doubt because of the vast sums passing through their fingers), but "effective," I think not. The purpose was to keep the elderly "out of poverty," but living on SS is, these days, very much like living IN poverty, without some other income. People with an IRA or pension often find it produces more income than SS does, and privatized SS systems can produce more income than government SS does. Efficient yes, effective no.

Medicare, on the other hand, is grossly inefficient because it is "very prescriptive" and the administrative overhead is huge. And for the same reason, the quality of care in Medicare is not as good, even, as that in private insurance programs, if you can find a doctor that will accept Medicare alone. Many seniors feel the need to buy "Medigap" policies. Efficient no, effective no.

So, with that, and knowing that these two plus Medicaid will consume all federal tax revenues within the next 20 years, might reform be a better option than "business as usual"?

John said...

Since FICA is an insurance program, some people win and some people lose. For every person who dies at 67 there is someone who lives to 90. The 101 year old is getting a HUGE return on their investment.

Reminder: Social Security is minimally in trouble.
Medicare and Medicaid are in trouble for the same reason our private healthcare insurance premiums are jumping at alarming rates. This is not a government vs private issue.

jerrye92002 said...

If FICA is an insurance program, then it can't be an investment, right? Did government lie to us? Don't you have to have something in your "account" to have an investment? There's nothing in yours, nor mine. The 67 year old who dies with a private retirement account passes it on to his heirs, and the ROI is unchanged. The 101 year old who purchased an annuity at retirement got a much better return on investment than the SS recipient did because the annuity paid better. SS is not a program to be compared with nothing at all. It should be compared with all available alternatives and will be generally found lacking.

Medicare and Medicaid are in trouble precisely because they are government programs, purely and simply. Private insurance rate increases were slowing DOWN before Obamacare came along, and Medicare and Medicaid continue to drive up costs unnecessarily.

John said...

I have been paying term life insurance premiums for ~20 years. I will be very happy if I lose all the premiums I have paid. I think it is a good investment / risk mitigation.

I think Heritage and yourself are playing games in trying to make SS look bad. FICA taxes / premiums are needed for many reasons. Mostly because the people who need it the most like to spend instead of save. Or they do not have the capability, drive or self discipline to work hard, save, invest, etc. Or they had some bad fortune.

As you said, "The purpose was to keep the elderly "out of poverty,"". People like myself (ie good job / like to invest) will do just fine with or without SS benefits. The problem is the SS needs to payout to everyone otherwise most young citizens would rebel against paying for "old folk, disabled people and dependent care benefits".

As I often say, it would make much more sense to roll SS, Medicaid & Disability into Medicaid and Welfare. We would eliminate 3 Federal programs and only the needy would receive free money and services. Unfortunately citizens would be more hesitant to fund that model. Whereas people are much more interested in paying when they see all or more of it coming back to them in the future.

You are kidding. Right? Source?
"Private insurance rate increases were slowing DOWN"

jerrye92002 said...

Nobody needs to "play games" to make SS look bad. The program is going broke and is unable to pay for the promises made. That's a bad program. That most people find it hard to live on SS alone makes it a bad program. That it goes to everybody regardless of need when it was intended only for the poor says it was flawed from the beginning. That it has been sold as an insurance program, and then as an investment, and never as a welfare program, is an admission of that failure (it's not an investment, and not insurance, because there is no guaranteed payout).

Your objections are noted and easily countered. Simply make the private retirement accounts mandatory, like SS is. It turns instantly from a government promise to a real asset. No objections because everybody would get to keep 100% of their "FICA taxes," and government could simply give welfare to those who hadn't worked enough to retire comfortably (or let them work!), just as they do now, with the productive citizens still grumbling about it, as we do now.

Of course, these private accounts would need to be phased in, but it would also help to take those SS trust fund bonds and simply distribute them, pro rata, to current SS accounts. That turns them instantly from IOUS government writes to itself into real assets.

I'm going to let you find the source on that one. A fact quickly hidden by the Obamacare supporters, so it may take a while. And it is common knowledge that Obamacare has driven insurance rates UP.

John said...

I agree the FICA tax rate should be raised to match the benefits promised.

You said cost increases were falling. Put a source where mouth is.

jerrye92002 said...

The FICA tax is too high, and highly regressive. It's been raised before and every time the tax is raised, the promises increase so that the program continues to be unsustainable. Promises need to be kept for those in or near retirement, but we have to stop making promises we cannot keep by letting those further from retirement divert their taxes to personal accounts that they own, and that cannot be taken away by early death, or by action or inaction of Congress.

As for the health care cost increases moderating before Obamacare, it is a fact, unless you can prove otherwise.

John said...

It is not highly regressive since people receive back relative to what they pay in for the most part.

If you want to fix it and make it progressive. Just tie wealth criteria to it.

Meaning people like yourself should get nothing until you have used most of your wealth. Of course, then it becomes welfare...

John said...

So many opinions... So FEW sources.

jerrye92002 said...

I wasn't talking about the payouts being regressive, I was talking about the taxes.

One could also look at the payouts is regressive. Because of the contribution limits, the rich folks aren't "allowed" to "contribute" more to "their account" and receive a higher benefit. Those same contribution limits make the tax regressive. If we just get past the notion that this is ANY sort of retirement account or investment, maybe we can start fixing it. I doubt that will happen until the whole thing goes belly up, ten years from now, when we could have had it almost permanently fixed by now had we acted when the problem was first "discovered" 30 years ago.

jerrye92002 said...

As for my sources.... I am the world's foremost authority on what I believe to be true, based on my knowledge. That truth remains the same until it is successfully challenged. There is no reason that I should change my "opinion" of the truth based on someone else's opinion, until and unless presented with sufficient facts to prove otherwise.

John said...

You sound like what you describe as a Liberal... All opinion and no sources...

Next you will say you feel they were going to drop soon.

jerrye92002 said...

The difference between me and a liberal is that I base my opinion on facts and logic and (admittedly imperfect, but nonetheless real) knowledge, whereas typical liberals base their opinions solely on fantasies about how the world should work, to serve their wished-for Utopian dreams, rather than on how it actually works.

As for the "fact" under discussion, feel free to prove me wrong, though I do not see how that advances the discussion of the topic at hand.