Solve the Budget Deficit - NY Times interactive

[SpeedTchr]

Interesting and fairly informative "game" in the NYT about solving the budget deficit.

https://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html

Here was my solution:
https://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html?choices=hm61pjm0

 

[zagoshe]

Interesting.

Not surprisingly, most of my solution was in budget cuts

 

[MileHigh]

Took me about five minutes. Too bad it would take Congress 50 years.

 

[RickStain]

I came up with about 48 percent budget cuts/52 percent tax increases and ran a very large surplus.

It'll suck like hell for a few years, but it gets the debt paid off (or a at least a good chunk of it) and sets up future generations nicely.

 

[Michael_ Gee]

This gizmo would be more realistic if every item was accompanied by an estimate of how much more likely said item would make the chances of the voters throwing you the hell out of office. THEN it would give the user a sense of why it is indeed hard to balance the budget.
It's always easy to tell somebody else to make "hard choices." But when crunch time comes, every voter shrieks "not mine!"

 

[trifectarich]

I loved the idea the moment I saw it. I've long believed I could eliminate the deficit if you just give me a couple of days in Washington; I wouldn't be popular, but I'd get it done. I jumped right into the Times proposal. Took me about 20 minutes.

What I should do is send my completed proposal to every member of Congress.

 

[TrooperBari]

This gizmo would be more realistic if every item was accompanied by an estimate of how much more likely said item would make the chances of the voters throwing you the hell out of office. THEN it would give the user a sense of why it is indeed hard to balance the budget.
It's always easy to tell somebody else to make "hard choices." But when crunch time comes, every voter shrieks "not mine!"

So the key to progress is electing an executive and legislators who are OK being one-termers?

 

[Michael_ Gee]

That's one option, Bari. The other is to admit that nobody gives a damn about the budget deficit except members of the party out of power, for whom it's a club with which to hammer the other guys (that's a bipartisan tactic). Voters SAY the budget deficit is a bad thing, but voters say lots of things. They also say they want lower taxes and more services.
In arithmetical reality, the budget will only be controlled by dealing with medical care costs. That is, either by limiting government spending on medical care, meaning old people, children, and poor people will be more likely to get sick and die due to lack of care, or by limiting the money made by health care industry employees and institutions such as doctors, nurses, hospitals, insurance companies, etc.
Run for office on either of those platforms. I dare you.

 

[deskslave]

It would also be more realistic if it reflected the costs of cutting certain costs. For example, if you cut the federal work force by 200,000, then you have to pay unemployment benefits, severance pay, etc. You'd probably still end up with a saving, but every action, opposite reaction, etc.

(This is a much bigger issue in the U.K., where the safety net is much larger than the one in the U.S. If you fire a £25,000-a-year worker, you essentially save nothing once unemployment benefits, housing allowances, etc., are taken into account.)

 

[mustangj17]

56 budget cuts, 44 percent tax increases, but I wasn't happy with that.

I was happy with seeing an option for a bank tax. What the hell, if you are going to punish the rich citizens, punish the rich banks first.

 

[BTExpress]

So the key to progress is electing an executive and legislators who are OK being one-termers?

Well, the "career politician" is just about the biggest obstacle to getting anything meaningful done.

 

[RickStain]

In arithmetical reality, the budget will only be controlled by dealing with medical care costs. That is, either by limiting government spending on medical care, meaning old people, children, and poor people will be more likely to get sick and die due to lack of care, or by limiting the money made by health care industry employees and institutions such as doctors, nurses, hospitals, insurance companies, etc.
Run for office on either of those platforms. I dare you.

There are two different budget issues.

One is the middle-of-the-century 8-million-pound gorilla that says that the baby boom generation is a demographic timebomb that will consume the entire economy if we give them even half of what they've been promised in social spending.

That one can only be solved by health-care cost-cutting.

But there's also the immediate problem of a deficit equal to 10% of our GDP and debt that is now roughly the size of our GDP. Medical cost-cutting won't dent that much.

 

[Michael_ Gee]

It's just like with sports, BTE. There's a very finite period between being experienced enough to know how to do the job properly and so experienced all you care about is keeping the damn job.

 

[Michael_ Gee]

PS: Rick. There's nothing about the budget that 4 percent annual GDP growth and a decline of about three percent in the unemployment rate wouldn't cure. 1. Added tax revenues would drive the deficit down. 2. Any presense the public cares about the deficit would be abandoned.
I have yet to see any evidence that proposals from the political elite (both parties) to cut the deficit amount to anything more than shifting the tax burden further from the wealthy to the middle class while cutting expenditures on the middle class and poor. None.
It's just another indication that we are ruled, not governed, ruled, by organized wealth, a fact obscured by the tribal nature of our political system.

 

[RickStain]

4 percent GDP growth and 6% unemployment would help, but it wouldn't be enough to outpace this level of debt.

But the problem is this:

Right now, the government is pumping 10% of GDP into the economy by borrowing it, and we *still* have 9.6% unemployment and tepid growth. If the economy were left to its own devices and not propped up by government borrowing, it'd be much much worse.

Meanwhile, we are also losing something like 4% of the economy every year to interest on the debt, and that's growing at about 10% per year right now. That's a millstone around the neck of the economy, pulling back growth and slowing it down.

How on earth are we going to get back to strong growth and low unemployment in this catch-22? You stop government borrowing, the economy crashes back to the bottom of the hill. You don't stop government borrowing, the hill gets a little steeper every year.

Post WWII, we survived this level of debt by being the only world economic power left that didn't destroy its manufacturing infrastructure with a devastating war. This time, we face strong global competitors.

 

[Michael_ Gee]

One solution would be protectionism. Our debt is intimately related to the balance of payments deficit. Protectionism is of course a bad word in economics, although all the booming economies of Asia practice it vigorously. "Free trade" is another one of those code words, like "balanced budget," for "subservience to the interests of organized wealth." Free trade platitudes are how a Democratic candidate indicates he deserves corporate financing.

 

[RickStain]

Protectionism would be *very* bad for those middle classes you are so concerned about. Wait till they find out how far their middle-class wages don't stretch when faced with American-made prices.

 

[Michael_ Gee]

The theory is, if American companies are selling goods at American-made prices, they must offer their employees higher wages or nobody buys their products and they go broke. Again, we can't have it both ways. If the trade balance is bad, then the deficit will continue to be large no matter what else we do, or the dollar will decline in value to match the trade deficit -- a/k/a solving the problem through inflation.

 

[Baron Scicluna]

Protectionism would be *very* bad for those middle classes you are so concerned about. Wait till they find out how far their middle-class wages don't stretch when faced with American-made prices.

I don't think American-made prices would skyrocket so much. There's the whole supply/demand thing. Would people want to pay $1,000 for a pair of sneakers made by a worker paid $7.50 an hour? Probably not. The prices would go down to what the market demands.

The prices there are now would probably go up a little bit if there was protectionism. But a lot of the prices have remained relatively the same, taking into account the growth of inflation.

Whatever money that has been saved sending the jobs overseas has gone right into the company's pocket. If the company could get away with selling $1,000 sneakers, they would.

 

[RickStain]

Supply/demand cuts both ways. If Americans won't demand the more expensive goods, then no one will supply them and all the jobs we are supposed to be gaining will disappear. The reason companies can't get away with $1,000 sneakers is both that Americans won't demand them and that their competitors would supply them cheaper. You take away suppliers but keep the same demand, prices will go up. (I hate being so simplistic about it, because the real world is often more complicated, but that's the basics).

Meanwhile, the world's largest manufacturer (us) would face retaliatory actions by all the purchasers of our goods. The manufacturing jobs we've lost so far have been bad enough, the ones we'd lose in addition would be disastrous. And you think the Chinese would keep generously funding our deficit spending once we stop buying their goods? The government would be forced to stop propping up the economy.

Protectionism would be disastrous for just about everyone. It just doesn't work.

The theory is, if American companies are selling goods at American-made prices, they must offer their employees higher wages or nobody buys their products and they go broke. Again, we can't have it both ways. If the trade balance is bad, then the deficit will continue to be large no matter what else we do, or the dollar will decline in value to match the trade deficit -- a/k/a solving the problem through inflation.

Exactly. There's nothing that can be done to avoid the coming economic pain. We borrowed our way to growth in the 90s when we didn't have to, we lived it up, and now things are going to suck. Our choices are to accept it now, or try to fight it off with short-sighted policies that will only make the inevitable comeuppance that much worse.