Budget Things

[zoogs]

CBO Report | The Long-Term Budgetary Impact of Paths for Federal Revenues and Spending Specified by Chairman Ryan (March 2012)

 

At the request of the Chairman of the House Budget Committee, Congressman Paul Ryan, the Congressional Budget Office (CBO) has calculated the long-term budgetary impact of paths for federal revenues and spending specified by the Chairman and his staff. The calculations presented here represent CBO's assessment of how the specified paths would alter the trajectories of federal debt, revenues, spending, and economic output relative to the trajectories under two scenarios that CBO has analyzed previously.

 

Let's not turn this into a name-calling or political punchline-tossfest. I hope the academic tone of this report will inspire a similarly academic discussion.

 

Takeaways

* - I am pretty uneducated, and of course, there are various other necessary disclaimers in any attempt to make future projections. Starting with, no president could set policy in stone for 40 years.

• Ryan's plan appears hinged upon slashing spending. Very specifically, we would see little change in (% GDP) spending in "Major Mandatory Health Care Programs" from Actual, 2011 figures up through and including the 2050 projection. It would increase from 5 to 5.5 to 6%, and then dip down to 5.75% in 2050. The Extended Baseline Scenario on the other hand, has this number rising steadily and reaching 10.75% by 2050.
  
• Identical numbers for social security spending.
  
• The spending slash: "Other Mandatory and Defense and Nondefense Discretionary Spending" will drop from 12.5% in 2011, to 6.75% in 2023, and ultimately to 3.75% in 2050 under the Ryan plan.
  
• Extended Baseline has this number dropping from 12.5% to 8% in 2023, to 7.75% in 2050.
  
• Total spending as % GDP in 2050: 16% vs 26.5%, Ryan vs Extended Baseline.
  

The reason I lay those numbers out is because, per the report, "spending in this category has exceeded 8 percent of GDP in every year since World War II. Spending for defense alone has not been lower than 3 percent of GDP in any year during that period." I believe that that this 'discretionary spending' category covers everything apart from SocSec and healthcare. I do not see how Ryan's plan for slashed spending approaches the realm of feasible. Actually, I would say the Extended Baseline is also optimistic.

 

On the other hand,

• Extended Baseline scenario entails a rise in Total Revenues from 15.5% 2011 actual to 21.25% in 2023, and 26.25% in 2050. I believe this is expected to come from taxing (please fill me in on where else the Total Revenue may be derived, if I'm wrong --)
  
• The Ryan proposal would see this number rise from 15.5% to 18.75% in 2023, and subsequently fixed at 19% through 2050. This is accomplished only by the spending cuts specified above, from 24% 2011 actual to 16%."Debt Held By the Public" would fall from 68% GDP, 2011 actual, to 10%.
  
• The Extended Baseline forecasts "Debt Held By the Public" to be 40% in 2050; a gradual reduction from the 68% 2011 actual figure. I believe this is characterized as unsavory but possible. On the other hand, Extended Alternative Fiscal Scenario has spending balloon from 24 to 39.25% in 2050, revenues capped at 18.5%, and the debt figure in excess of 200% -- something characterized as completely unsustainable.
  
• Definitions: Extended Baseline are projections "which adhered closely to current law";
  
• Extended Alternative Fiscal Scenario "incorporated several changes to current law that were widely expected to occur or that would modify some provisions of law that might be difficult to sustain for a long period."
  
• That the extended alternative numbers are so thoroughly alarming is, I think, well... thoroughly alarming
  

So I'm hoping some far more intelligent people than I are going to chime in here and have a good discussion about spending and budget issues in general. I'm not looking for a ridicule-or-defense of Ryan, or any other candidate. It seems clear that this country is facing highly significant challenges in shaping its long-term budgetary future. What's there to be done? What are various approaches, and what are their strengths/drawbacks?

 

I hope that most everyone who reads this thread will find in it something to learn from somebody else. We often talk about rising above political platitudes, empty slogan, biased "debating" and needless partisanship. Let's do that here, and have a real discussion.

[knapplc]

So.... you're not looking for wine advice?

[zoogs]

I would welcome some actually

[BigRedBuster]

Great topic.

 

I started this in another thread but I'll discuss it here.

 

First off, I believe we should cut across the board back to 2008 spending levels. Why 2008? If you look at the level of spending since, it has skyrocketed. If you work for the government, your department must work off of what htey were given in 2008. If your department was started after 2008, sorry....it's gone.

 

THEN...EVERYTHING IS ON THE TABLE. Here is just a start.

 

Defense = We have over 700 military installations around the world outside out borders. This is insane. We need to figure out how we can reach where we need to go with the technology we have or develope it and close almost all of those.

 

We also need to stop being the world's police without some type of money being paid to us by the rest of NATO or hte UN.

 

I love our military and am very proud of what we do. But, we should be able to do it more efficiently.

 

SS = This needs to be on an as needed basis. This was never meant to be a retirement fund. Tell all people who are under 45 that this will only be here if your net worth is under XXX. There is absolutely no reason why some old couple driving a $1,000,000 bus down the road on perminant vacation with another two million in the bank needs a SS check.

 

I'm currently 45 so I'm not playing to my pocket book.

 

Farm bill = If the price of commodities is over the break even point, there is no reason why a farmer should get a government check.

 

My family owns a farm. I still think this is needed.

 

Drug testing to receive welfare = It is absolutely idiotic that I am tested randomly for drugs to earn money when I work but it's against someone's right if we check them for drugs to get my money given to them. How will this save money? Maybe some of these people will get off of drugs to get their money and our Medicaid costs will go down.

[knapplc]

My dad sent me this video. I watched a fair portion of it, and it seemed to make sense to my feeble brain. Note that I'm the furthest thing from an economist you can get. Anyone know where this guy is wrong, or is he right and we're screwed?

 

[BigRedBuster]

Aren't you the one that in another thread asked me what is wrong with government spending? I was so shocked at the question that honestly, I didn't know how to respond. I was trying to come up with a good resonse to explain that if we don't cut spending DRASTICALLY, we are going to end up like Europe and Greece.

 

Well, that video basically sums it up.

 

Now, one area that is better than what is implied. If we start improving this issue and we can get our economy started again and if we can get manufacturing back to the US then there will be more tax income.

 

BUT....what I have tried to explain in other threads is that we have a system where so many people rely on the government with absolutely no worries about where the money is coming from that it is bound to just continue. Their only answer is to tax the rich more. Unbelievable.

 

There is a quote somewhere that implies this and I think is so true. Democracy is a great form of government until the majority realizes they can vote in their own government support. Everyone just thinks the government can do what ever they want for them and someone else will pay for it.

[sd'sker]

So.... you're not looking for wine advice?

more like 'whine advice', amirite? (i just saw an opportunity for a pun and could not resist, sorry).

[carlfense]

BUT....what I have tried to explain in other threads is that we have a system where so many people rely on the government with absolutely no worries about where the money is coming from that it is bound to just continue. Their only answer is to tax the rich more. Unbelievable.

What? Has anyone here said that the only answer is to tax the rich more?

 

Step away from the strawman.

[sd'sker]

BUT....what I have tried to explain in other threads is that we have a system where so many people rely on the government with absolutely no worries about where the money is coming from that it is bound to just continue. Their only answer is to tax the rich more. Unbelievable.

What? Has anyone here said that the only answer is to tax the rich more?

 

Step away from the strawman.

framing is so important in politics. taxing the rich more really means taxing the rich their fair share. and although it does affect the overall economy (as does huge unpaid for tax breaks), it is bigger than that. it is about the social compact we all accept as americans.

[knapplc]

BUT....what I have tried to explain in other threads is that we have a system where so many people rely on the government with absolutely no worries about where the money is coming from that it is bound to just continue. Their only answer is to tax the rich more. Unbelievable.

 

I have not said this is the only answer. I agree with a lot of what you're saying about cutting spending, the whole nine yards. We'd likely agree with a lot of cuts (like your comment about 700 military bases around the world), among other things.

[BigRedBuster]

Please show me a democratic candidate that has talked extensively about cutting spending. Not just some pet project of the right. I'm talking drastic cutting of spending.

[knapplc]

Please show me a democratic candidate that has talked extensively about cutting spending. Not just some pet project of the right. I'm talking drastic cutting of spending.

 

Who are you asking this of? Because I've never made this claim, nor, I believe, has anyone else in this discussion. Where is this coming from?

 

Further, simply talking about cutting spending isn't going to cut spending. Nobody in this election is going to cut spending. If we believed every campaign promise Gitmo would be closed and we'd have unparalleled government transparency right now.

[BigRedBuster]

Well, that is what needs done. I know for a fact that Obama won't do it. When someone proves to me that they won't do something that needs done then a change needs to be made and the next person up gets a chance.

 

Please take your video to heart. If we don't do this, we are in for a drastic wake up call. Look at the chart of government spending since Obama came into office. Obamacare is an albatross that piles on top of that. Sorry if you want to give me a sob story about little Mrs. Smith down the road that is having a hard time paying for health care. WE CAN"T AFFORD IT. We can't afford just about ANYTHING we are doing because we have borrowed so much money that the interest alone is eating us alive.

[Comish]

If I recall correctly, Baseline Budgeting starts with an assumption that everything will cost a certain percentage more each year and that is built in.

 

So, lets say the baseline for year 2012 is X (plus 5%....just guessing on the percentage)

 

Then IF congress can finally agree to a particular budget of 2012 plus 3%.............they crow/whine/proclaim/whimper they have actually "CUT" 2% from their budget. When if fact, the real world knows it is a 3% INCREASE.

 

Getting everyone on board with plain spoken and honest verbiage would at least be a start !

[BigRedBuster]

Every single private company in America has had to make drastic changes and cuts to survive through a pathetic economy that Washington caused. There is no reason why government employees shouldn't be forced to do the same thing.