Morning Read: Should Congress “go big” to tackle deficits?
The Adirondack Daily Enterprise notes this week that Rep. Bill Owens (D-Plattsburgh) has embraced the idea that a congressional supercommittee should “go big” on a grand scheme to cut budget deficits.
“The long-term health of our nation depends a great deal on the success of the super committee,” Owens said in a prepared statement. “Members of this panel have an opportunity to set aside politics and do what is best for the country by working together to reduce the deficit.”
A letter was sent to the committee — which is trying to hammer out some kind of budget-balancing deal — by roughly 100 Republicans and Democrats, arguing that “all options for mandatory and discretionary spending and revenues must be on the table.”
So far, the GOP leadership has refused to budget on the idea that a budget plan would include significant revenue increases. What do you think?
Are you hoping for a plan that erases the debt without hiking your taxes? If so, what major programs are you willing to give up?
Or do you think some people should pay more in taxes to close the gap?
Tags: analysis, economy, politics, tax policy
The myth is that we “give up” services.
The truth is that privatizing government agencies will lead to more and better services.
If SS included means testing you could easily fix the problem. I bet a large portion of the 1 in 3 getting SS in Hamilton county that NCPR was describing don’t need these funds to maintain their big lake front homes. Problem solved. This also fits the re-distribution plan supported by democrats.
JDM:
Can you provide specific examples to back up your comment?
I ask because in Essex County, the real fear is that the privatization of the Horace Nye Nursing Home (which the county runs at an annual loss of about $3 million) will lead to a reduced quality of care for patients there. And that fear is expressed, in large part, by a group of fiscally conservative Republicans.
To make a comment that includes the phrase, “The truth is…” should require something to substantiate it.
I’m currently reading “Miracle at Philadelphia”, a virtual day-by-day account of the Constitutional Convention. Although the questions on the table were different the divisions were the same and the ideological approaches as well. “The more things change…” You know the rest.
In the end the Convention delegates compromised enough to get the job done. My hope is that today’s members of congress can do the same.
The rich need to be taxed more. Not “their fair share”. Just simply more.
Chris Morris: The example of Horace Nye is an example of a government lose-lose situation.
You lose first by having a government-run nursing home. You lose again with the government agencies that over-regulate the industry.
Ask the people at Horace Nye how much money they had to spend to cope with regulatory issues, Chris. It literally drove them out of business.
The nursing home is still operating (although at a major loss), so it hasn’t been driven out of business, and certainly not “literally.”
I’m not going to argue for or against privatization of government services. But again, to make the claim, “The truth is that privatizing government agencies will lead to more and better services,” should require some examples, or some proof.
If our wonderful elected leaders want to start some place, those in Albany and those in Washington should start by paying 100% for their health insurance and retirement.
Until then, I don’t want to hear anything from them about anything.
I will argue against privatization of government services. There are many services – health care and education for example, where the profit motive doesn’t really help to get efficiencies and may well make things worse. Child welfare, fire and police protection are other examples.
JDM, I hate to burst your fantasy but here is data that privatizing government services does not save money and actually costs more.
http://www.pogo.org/pogo-files/reports/contract-oversight/bad-business/co-gp-20110913.html
http://www.nytimes.com/2011/09/13/us/13contractor.html?_r=1
But the “going big” story means raising taxes and trimming entitlements to make the government expenditures sustainable over the next – 50 years?.
and JDM – the alternative to raising taxes a little on the wealthy is to severely reduce medicare for everybody under 55 – (the GOP say so as not to scare the seniors). Dropping medicare for the wealthy (your solution) won’t do it.
If Horace Nye is privatized it will not be as good as it is now and will probably cost the patients there a little more than it does now,but will cost the tax payers less.
Here’s of fun fact from an article in today’s NYT, by former Reagan and H.W, Bush official Bruce Bartlett http://economix.blogs.nytimes.com/2011/06/07/health-care-costs-and-the-tax-burden/:
The US Govt. (not private) payments for healthcare (meaning mostly Medicare for seniors and Medcaid for the poor) = 7.4% of GDP.
% GDP to provide insurance to all 6.8 Luxembourg
7.4 Israel
8.1 Japan
8,4 U.K.
8.5 Norway
In other words, these countries provide near-universal medical care to there citizens for about what we pay to only insure the elderly and poor (and not so well for the latter).
JDM, please note that since Americans give a total of about 16% of GDP, mostly through individual or employer contributions, for healthcare, (5% more than France =,the next highest).
Bartlett:”In other words, if we had a health care system like those in
most developed countries, we could, in effect, give every American an increase in their disposable income of 8% of GNP- about what they pay in FEDERAL INCOME TAXES, and healthcare no worse than what they have in Britain or Japan.” Or France, where my daughter lives now, and for whose healthcare system she has nothing but praise,
And Newt – the people in those other countries – France especially – are happier and healtheir with their (much cheaper) health care than we are with our super expensive health care.
This is stupid of Owens. Deficits are not the problem. People who can’t find work is. We should be borrowing more money now, at these historically low rates, and rejuvenating the economy with infrastructure projects. Buried power lines, for example.
Otherwise, though, I’m with JDM: the private sector is always better, because God made it that way, which is why I’d advocate legislation that sends all our tax money straight to Halliburton, eliminating the middleman.
The federal deficit ballooned primarily because of the spending on two wars and the simultaneous Bush tax cuts that reduced federal revenues. “Going big” is as simple as reversing this – ending the wars and reducing foreign military bases along with letting the Bush tax cuts expire.
The two big senior citizen programs that the Federal government runs are a pension plan (Social Security) and health insurance (Medicare). These are financed by worker contributions and can be stabilized for the long term by tweaking contributions and better controlling health care costs.
To reduce unemployment and increase GDP and tax receipts we need the government to invest in repairing and modernizing our infrastructure which can be done by borrowing money at today’s zero percent rate.
The deficit and unemployment are not that hard to solve if lobbyists and political zealots would stay out of the discussion so the plan could represent the best interests of the average citizen.
Examples of privitization include private hospitals, private colleges, private retirement programs, private care for the elderly.
To the extent that we leave failing programs such as Social Security and Medicare/Medicaid, Education (primary and college), and just about everything, short of national defense (which is a constitutionally sanctioned use of government), we would be better off.
Chris: Horace Nye is still “in business”, I realize. They are in the process of going out of business, unless tax payers want to swallow a tremendous burden. Last I heard, it wasn’t worth the fee to list it for sale.
This is bad for the area, I agree. The answer is not more government.
JDM, did you read the links myown provided? Here’s an excerpt:
The government pays billions more annually in taxpayer dollars to hire contractors than it would to hire federal employees to perform comparable services. The federal government approves service contract billing rates—deemed fair and reasonable—that pay contractors 1.83 times more than the government pays federal employees in total compensation, and more than 2 times the total compensation paid in the private sector for comparable services.
Federal government employees were less expensive than contractors in 33 of the 35 occupational classifications POGO reviewed.
In one instance, contractor billing rates were nearly 5 times more than the full compensation paid to federal employees performing comparable services.
And here’s the link again. Take a look: http://www.pogo.org/pogo-files/reports/contract-oversight/bad-business/co-gp-20110913.html
JDM – if functions such as schools and colleges were totally privatized only the rich could afford them. Which is the way it was back in the monarchy and aristocracy days. Think about our history – we started out with very limited government and everything privatized during the 18th and 19th centuries. It didn’t work very well – which is why things are the way they are now.
America decided it wanted a more egalitarian society where even the lower classes could have the opportunity fulfill their dreams. Your prescription is to take us back to the 1800s where money and class were the sole determinants of success, economic security was non-existent except for the rich and the lack of government funded opportunities prevented commoners from reaching the American dream. No thanks.
Walker: I guess you didn’t read all the news items about 2 weeks ago.
Here’s one example: Federal employees earn higher average salaries than private-sector workers in more than eight out of 10 occupations, a USA TODAY analysis of federal data finds.
Apparently, pogo found one category where that wasn’t the case, and wrote about it.
myown: “if functions such as schools and colleges were totally privatized only the rich could afford them.”
If we allow our government to spend more than it takes in, nobody will be able to afford anything, let alone realize the “American dream” of a few decades ago.
JDM, read the link: POGO’s study analyzed the total compensation paid to federal and private sector employees, and annual billing rates for contractor employees across 35 occupational classifications covering over 550 service activities. Private sector compensation was lower than contractor billing rates in all 35 occupational classifications reviewed. But because the private sector is paying big bucks to CEOs and shareholders, the overall cost of the service is higher.
Read the report. Preferably with an open mind.
JDM says “If we allow our government to spend more than it takes in, nobody will be able to afford anything, let alone realize the “American dream” of a few decades ago.”
If we continue to allow the wealthy to corner a higher and higher proportion of the nation’s wealth, only the wealthy will be able to afford anything, like a banana republic. Those “few decades ago” you mention take us back to the Reagan administration, when tax cuts and deregulation started us on this downward slide.
Walker: your history seems to be slanted to the left.
I can do a lot better job of spending my money than Obama and a bunch of congressmen can.
The only way to control government is to starve it to death, and it feeds on my money.
One thing you overlook in your history lesson: when the rich got richer, the poor got richer, too.
In the private sector, everyone is either “rich”, or works for someone who is.
The public sector only feeds off the private sector’s wealth, and like an out-of-control leech, needs to be squashed.
By your logic, JDM, anyone who works for the private sector feeds off the private sector’s wealth, and like an out-of-control leech, needs to be squashed. Like they did in Russia before 1917. The good ole days! I’m totally with you on that, JDM. The most powerfulest people are the most awesomest! And all of them totally deserve to be the richest, because they never cheated or gamed the system. They were just awesomer!
I appreciate your awesome support, oa.
oa: before 1917 in Russia?
When the tyrannical Czar tried to maintain tyrannical control of his people?
Because in that scenario, you have tyrannical Obama trying to maintain control of his people, and as in Russia, the people revolted and overthrew the tyrannical government.
In Russia, you had many different factions trying to gain control in the malaise that followed.
Here, we have the tea party movement, and now the occupy Wall Street movement.
Hmmm. Maybe you’re on to something, oa.
I agree the French system is better, but not necessarily because it is totally government funded; but because it is affordable. It is affordable because the entire health care industry makes less money than it does in the US. I don’t know if our health care industry is willing to take that big of “haircut”?
But we have the worst of both worlds, we have private players making large amounts of money largely from the government. We already have a government health care system in the US. The Health care system in the US is essentially crony capitalism.
Reducing Health care costs is the key to cutting the deficit.
But anyway lets face it, we all know the super committee is going to fail and then automatic cuts are to take place, but we all know that won’t happen as congress will just override the cuts. Why do we even go through this charade?
We will never voluntarily cut our debt in any real way.
“oa: before 1917 in Russia?
When the tyrannical Czar tried to maintain tyrannical control of his people?”
No, when the czar let the rich people do pretty much whatever they wanted to people who worked for them. What you call tyranny, I call awesome!
I’ve got nothing against the “rich,” whoever they are and whatever rich means. Some got rich by working hard and having a bit of luck. Some had more luck than hard work but that’s okay too. Some are born into it while others marry into it. There is no one size fits all when it comes to being wealthy.
Some who are rich make a big deal out of it while others prefer to lead simple lives. Some see their wealth as a chance to help others while others only look to help themselves to more.
I think it’s an attitude thing. Some people, be they rich or poor or somewhere in between, don’t feel the need to prove anything while others feel they need to prove something.
Put it to you this way. If anyone ever asks you, “Do you know who I am?” your best response is to say, “If you don’t know who you are, how in the hell am I supposed to know?”
You have to tackle the problem one step at a time. What do you do if you are a family that is in a pinch? Cut your spending first? Or do you start spending more first, or cut and spend more at the same time that you are trying to earn more with no good prospects??
All the “projected” spending cuts we see are almost always never achieved, ever. All the revenue increases are usually done, no probelm.
So we can do both and get larger deficits and a deeper hole. Or we can take it one step at a time and fix the spending issues first for a change.
And now there is a report from the Bureau of Labor Statisics that says Federal workers are underpaid by 26.3 percent compared with similar non-federal jobs. That makes it extemely unlikey that privatization of of those government workers could save any taxpayer dollars.
http://www.washingtonpost.com/politics/federal-pay-gap-widens-report-says/2011/11/04/gIQArDeFnM_story.html?wprss=rss_business&wpisrc=nl_wonk
myown: That’s quite an article. Too bad they forgot to include any data. Too bad they forgot to reference any data. Too bad they didn’t include any links to anything at all.
In fact, the article says that they “used an old method”. But they don’t include any methodology references.
They simply said, “blah blah blah 26.3% underpaid, blah blah blah”. no questions, please.
JDM – nice to see you are interested in data. I guess you could always ask the Washington Post author for the source of his report.
As long as you are of the inquiring mind:
http://www.americanprogress.org/issues/2010/10/federal_pay_myths.html
http://www.economistsdoitwithmodels.com/2011/11/06/what-im-reading-today-teachers-are-overpaid-edition/
Hey, in case anyone thinks the government needs MORE money, this article says that the cell phone surcharge that was “supposed” to pay for our county’s 911 service has been going to New York State – and they are keeping it!
Besides, the 911 system is already paid for.
We just got done paying the Spanish-American War surcharge in the 1990’s.
We will probably be paying 1000x over for our 911 system – and NYS will keep the proceeds!
And some here want to give the government MORE money…… well…
http://www.watertowndailytimes.com/article/20111108/NEWS03/711089892