1/24/2013 12:30 AM ET|
Why Washington can't fix the budget
Americans want low taxes and government largesse, and are ready to punish anyone who says that's not possible. Is it any wonder politicians are afraid of hard choices?
Now that the inaugural balls are over and the speeches and celebrations are finished, Washington returns to the task it's been struggling with for years amid partisan rancor and brinkmanship: how to solve the budget mess.
Our leaders have had little success in addressing the problem, so the debt load is now larger than the economy's annual output, at roughly $52,000 for every man, woman, and child in America.
There's a reason that the problem seems never-ending. And President BarackObama touched on it in his inauguration speech when he said that he rejected "the belief that America must choose between caring for the generation that built this country and investing in the generation that will build its future."
The problem is, we can't do both. Not so long as we hitch the government's finances -- via Obamacare, Medicare and Medicaid -- to a bloated and inefficient health care system. Not while making needed investments in education and infrastructure, and providing for the national defense. And it can't be done while keeping taxes reasonable.
Thus, the bickering. The deficit commission. The congressional deficit committee. The fiscal cliff. The debt ceiling. The fact that the government hasn't operated under an actual budget since 2009. The recent flirtation with the "trillion dollar coin" idea. There is a real and growing threat that our fiscal procrastination will damage an already fragile economic recovery via a government shutdown, a debt default or a credit-rating downgrade.
So now, with the economy faltering again, continental Europe and Japan in new recessions and the United Kingdom slipping into one, too, we have politicians focused not on making hard choices to solve the problem but on finding ways to pin the blame on the other side. And it's going to get worse before it gets better.
A tough nut to crack
The political reality is that no one wants to be the bearer of bad news. No one wants to spell out the cuts that are needed. Part of the reason the Republicans lost the presidential race was because of their plan for Medicare vouchers and deep spending cuts. Even though the GOP approach would have taken a decade to balance the budget, even this fiscal tonic was too harsh for the electorate. Voters instead preferred Obama and his call that the rich "pay their fair share."
Americans want to believe that the days of ample spending, low taxes and easy credit can continue -- and they will punish anyone who tells them otherwise.
While Obama talked in his inauguration of making the "hard choices to reduce the cost of health care and the size of our deficit" -- which has been $1 trillion or larger for the past four years and likely will be for at least two more years -- no one wants to put pen to paper to outline the reforms that are needed.
Obama's 2013 budget proposal, the only working budget document we have from the Democrats, did nothing to address the long-term debt, as the chart below, lifted from that proposal, shows. That's because it doesn't propose the structural reforms that are needed to control costs associated with the aging of baby boomers.
In 2011, the three major entitlement programs -- Medicare, Medicaid and Social Security -- accounted for 44% of non-interest government spending, up from 30% in 1980. According to Credit Suisse estimates, the way things are going, by 2025, spending on these programs, plus interest on the debt, will take up 100% of tax revenues.
Mostly, it's health care. Over the past two decades, annual health care cost inflation has been running at 150% of the underlying inflation rate. Asa result, despite mediocre scores on measures of the quality of care (such as infant mortality), we pay far more per capita than anyother developed country.
What's really scary is that the chart above assumes the economy will grow at a 3.7% average annual pace through 2018 (which is doubtful), interest rates will remain near zero and that the cost-control efforts in the Obamacare legislation -- such as the tax on low-deductible health care plans and the Medicare payment advisory board that opponents have dubbed "death panels" -- will actually work as planned.
If any of these assumptions is incorrect, the long-term outlook will be even worse.
What will it take?
To really wrap your head around the scale of the problem, I recommend trying the Committee for a Responsible Federal Budget's budget simulator tool, which allows you to pick and choose ways to close the deficit and stabilize the country's debt load by 2021.
The tool was designed before the fiscal cliff deal -- which the Congressional Budget Office says will increase the deficit by $4.6 trillion over the next 10 years -- was done. So be sure to factor that in.
It also doesn't account for the impact on growth of things like tax hikes (negative) or short-term stimulus (positive). Indeed, Merrill Lynch believes the various tax hikes associated with the fiscal cliff deal will reduce disposable income by 2.1% this quarter and will drag down first-quarter growth of gross domestic product. Consumers are already expressing displeasure, with the Consumer Sentiment Index recently falling from a post-recession high all the way down to levels not seen since late 2011.
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One person's view of oppression. (Page 3 of 3)
In a reversal from the early 1980's, white-collar workers with some college education make up the majority of layoffs. This is because layoffs are not simply a compensation for an economic depression.
Layoffs are a tool of oppression of the capitalistic system, which, in its drive for ever increasing profits must drive more and more workers, both blue and white-collar, closer and closer to poverty. The education and skills of these workers has in no way changed. There is no economic depression or negative market forces. The only justification for the current trend of increasing lay-offs is the oppression of workers to increase profit.
American workers are also oppressed into poverty by the international subcontracting of capitalism. Although America has too much poverty, it in no way compares to the poverty of the third world. Work in the third world is often so difficult to find that businesses find it profitable to shut down American plants and reopen them in third world countries or to subcontract partial or complete products from foreign countries.
By oppressing people in third world countries more than workers in America can be oppressed, businesses again increase their profitability. In addition to oppressing the inhabitants of the third world however, this tendency also oppresses American workers. Area poverty is often a result of the flight of U.S. capital overseas.
The tendency to shut down industries and reopen them in third world countries is epitomized by Nike, the shoe and sports accessories manufacturer. They went from an American based company paying an average $10 per hour to a Korean company paying mere dollars per day to an Indonesian company which two years ago paid its workers a mere $0.26 per day, several cents below the subsistence wage.
China has received massive amounts of form American companies. Cheap Chinese labor and the forced prison camps, the laogai, enable China to produce pliers which cost on the order of $0.99 while an American company, such as Stanley, must charge up to $3.99 simply to compensate for the higher wages of American workers.
This outsourcing and capital flight hurts American workers by taking away jobs and forcing American companies into competition with extremely low cost third world companies. Again, poverty is the result of institutionalized capitalistic oppression.
Poverty of the working class is very accurately described by oppression. All of the aspects of the capitalist economy which drive the working class into poverty or near poverty are simply efforts to increase profit at the expense of workers. Regardless of the state of the economy, of the skills or education of the workers, or of the type of job performed, capitalism consistently oppresses workers to increase profit. This oppression through unemployment, lay-offs, and subcontracting is a direct cause of poverty for working folks.
One person's view of oppression. (Page 2 of 3)
Now that workers are forced to sell their ability to do work, capitalism has managed to devalue that capacity by producing an artificial excess of workers and an artificial shortage of work. This assertion is true, not simply leftist dogma.
There is plenty of work to be done in American society, but not all of that work is profitable. And when too many people are employed and wages rise as a result, capitalistic become less profitable. At a certain point all profit would be lost to wages. Long before this point is reached, however, an employer must 'unemploy' some of its workers in order to remain profitable. Thus capitalism has the mechanism which creates unemployment built into its very fundamental principles. Full employment cannot be attained in a competitive capitalistic economy, and workers are thus oppressed into poverty by the economic system itself.
Layoffs are another form of capitalistic oppression. Traditionally, layoffs have been a way in which businesses have coped with an economic depression. The typical layoffs were largely industrial and blue-collar workers. According to a New York Times poll, a third of all American households have experienced a layoff in the last 15 years. figures show that only about 35 percent of those laid-off full-time workers end up in a equally paid or better-paying job.
From 1981 to 1983, the median pay for a worker who lost a full-time job and later was rehired fell $62 per week in 1994 . From 1991 to 1993, the median pay drop had grown to $85 per week. Decent paying jobs in America have been replaced by jobs with lower wages, fewer benefits, and more hours. Many full-time jobs are being permanently lost as businesses increase their proportion of part-time workers. This replacement of full-time with part-time jobs creates a permanent tendency toward lower paying jobs without benefits.
While layoffs have been a part of every recession, now they are occurring in larger numbers during an . Lately this trend has gained media attention as it has broadened from a low-wage-earner phenomenon to a trend which affects middle management and white-collar workers as well.
One person's view of oppression. (Page 1 of 3)
The working class in America is a mixture of industrial and service workers who work for a wage. Although most people in America would assign themselves the class of 'middle class,' for purposes of this discussion, the working class will be defined as all workers who do not own capital and who work for a wage.
Auto workers, secretaries, custodians, retail workers, and even middle management fall into this category. This group, as defined, consists of people with very different economic means: from low-wage earners living paycheck to paycheck, to salaried middle executives of . Although superficially there may appear to be no connection between low-wage earners and middle management, they can both be viewed in terms of poverty and oppression.
While poverty has historically been the perennial plague of low-wage workers, middle executives and management have become vulnerable in recent years to the oppression of a capitalistic .
Poverty as oppression in America is a direct result of the economic mandates and tendencies of capitalism. A capitalistic economy is inherently impersonal and concerned exclusively with profit. In the ubiquitous drive for profit, oppression becomes the relationship between workers and employers as employers try to maximize profits by minimizing wages. Thus the primary cause for poverty amidst the working class is oppression.
Not only does capitalism require a marginal labor force of the unemployed to depress wages, but recently it has shown its need to eliminate employees and produce internationally to reduce costs. Thus the working class finds itself in periodic poverty due to oppression for three main reasons: unemployment, layoffs, and subcontracting.
Competitive capitalism demands a definite level of unemployment to reduce wages. A base level of unemployed workers increases the demand for lower level jobs. This lowers the acceptable wages as workers are forced to choose: either no work or whatever work they are offered, regardless of how low the wages are.
The irony is very interesting. Capitalism as an economic force took away the worker's pre-industrial ownership of the means of production. The advent of industrial capitalism ended the system of craftsmanship and divorced the worker from the means of production. This left workers with only one asset to sell - their labor power.
A. Hire more people to clean up the fraud in Medicare, Medicaid, and Social Services
B. Stop adding pork to every bill that comes down the pipe. Either it has merit or not.
C. Quit trying to be the worlds policeman. We waste trillions and come out with people who
still hate us and protest in the streets against America
This article is just more propaganda mumbo jumbo. The Reps didn't lose the Pres election it was set up by big money as a goofball vs Obama. Romney didn't even try at the end. The reason govt won't decide on a debt ceiling is because they are cleaning our clock and will keep it this way until we stop it. Stop govt spending by cutting the fat out of govt, bringing home troops, deporting illegals, eliminating depts like Dept of Energy (Via Ron Paul), election reform, and stock market reform. Try the things Buffet says he's the money expert. Our govt is full of people that do nothing because they were promised a job for campaign bribes. They spend billions on reports that a third grader could do in a week. They are not doing anything because they are picking our pockets clean. The only reason SS, medicare, and health care come up is that that is the only money left to steal. Well, the Health Care system is a mafia racket in it's own right. Hell, it's all fake money anyway....
They are the enemy and we know it but we still send these inglorious bastards back again and again.
People love to espouse and support "FREEDOM & LIBERTY", however, these words have different meanings to everyone.
"One man's Freedom is another man's Slavery"
"One man's Liberty is another man's Oppression"
We should just split the country into 4 sectors, where Christian Republicans get 1 sector, Non-Christian Republicans get 1 sector, Christian Democrats get 1 sector and Non-Christian Democrats get 1 sector.
Now all we must do is fight and argue of which group gets what sector. This could get ugly!
As a Christian Democrat, I am petitioning the Northwest sector. Since I already live in beautiful Washington State, I wouldn't have to move. LUCKY ME!
Know that the wealthiest few had exponential gains in their income over the last 30 years while the beleaguered once middle class hasn't even kept with the cost of living.
The nonpartisan Congressional Budget Office recently released a much-discussed study showing that over the past three decades the income of the highest-paid Americans has soared while the income of others has grown much more modestly.
The growth in after tax income for the years 1979-2007 reflect that the top 1% had a 275% growth in after tax income while the middle fifth had a 35.2% increase and the poorest fifth of households had a 18.3% gain during this period. Apparently, the crooked carnival farce of a system doesn't work for you if keep going down the class scale.
As the income gap widens, you will see more corruption, political and financial instability, and a greater chance of the financial collapse of the United States as a system can't be run where the top few don't want to pay their fair share and the rest of the people can barely make ends meet.
So, we will either have a mass revolution or a complete collapse of a system which benefits the fewest Americans at the expense of all others which is unsustainable.
Look at this:
U.S. Tax revenue: $2,170,000,000,000
Federal budget: $3,820,000,000,000
New debt: $ 1,650,000,000,000
National debt: $14,271,000,000,000
Recent  budget cut: $ 38,500,000,000
Let’s remove 8 zeros and pretend it’s a household budget:
Annual family income: $21,700
Money the family spent: $38,200
New debt on the credit card: $16,500
Outstanding balance on the credit card: $142,710
Budget cuts: $385
This is why Responsible Conservatives do not want to pass Obama's budget proposal.
Stop the wars, bring the boys home. Use the money to pay our debts. Stop putting the same people
back in office year after year. Vote for A MAN, not A PARTY. This is "WHY WASHINGTON CAN'T
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