A Conservative For Tax Increases

A crack in the orthodoxy?

Conservative blogger and activist Morgen Richmond has an interesting piece over at Hot Air in which he suggests that the current GOP orthodoxy against tax increases of any kind ought to be taken off the table:

I think there is one key issue where the GOP is making a tactical mistake in conceding ground to the President, and that is the insistence on ruling out any tax increases as part of a comprehensive budget reform deal. Now before you write me off as just another RINO, I’ll hold up my track record as a conservative activist against anyone. And as a successful business owner in California, I deal first-hand with the challenges of one of the nation’s most onerous tax and regulatory regimes.

But I am mystified why the GOP has adopted such a hard line when it comes to tax policy, particularly within the framework of a budget deal which would include a major re-structuring of federal entitlement programs. I get the arguments. That a pro-growth approach of lowering rates, and eliminating deductions and loopholes, would actually be the most effective means of generating revenue in the long run, by expanding the tax base. I can also appreciate that from a political perspective it makes sense to stake out an initial bargaining position as far to the right as can be reasonably defended. And the Ryan plan is reasonable, by any fair assessment, considering the enormity of the fiscal imbalances it seeks to redress.

But regardless of how effective or reasonable the plan may be, it won’t make one iota of difference without a Republican president in place to enact it. And this is the mistake I think the GOP is poised to make, in handing the President a weapon he will use over and over again between now and November. To distract the public from the seriousness of the problem, and from the fact that he has no credible plan to deal with it. That the GOP is planning yet another giveaway to the 1%, at the expense of the poor, the elderly, and the sick.

Yes, this is class warfare, yes this is partisan demagoguery…and let’s face it, there is a better than even chance that it’s going to work.

As you might expect, the response to Richmond’s suggestion has been less than enthusiastic, as a persual of the comments to his post will demonstrate quite clearly. However, Richmond makes a point worth considering if only people would listen.

In addition to the political price that the GOP may end up paying in November for this Norquistian intransigence on taxes, the simple truth of the matter is that it is politically impractical. Unless the GOP has an unassailable conservative majority in the House, a filibuster proof majority in the Senate, and control of the White House, and is able to maintain such control for an extended period of time, it simply isn’t going to be possible to pass a comprehensive deficit reduction plan that doesn’t include at least some tax increases, or tax reforms that results in revenue increases (also a no-no for the Norquisitors). In fact, I’m not sure that it would be possible for the GOP to pass a plan that doesn’t include tax increases even if they did hold the amount of power noted above. In the first instance, nothing will get passed without compromising with the opposition, something that Ronald Reagan was well aware of from his time as California Governor and which he practiced consistently when he was President. In the second, even Republican legislators are going to have constituents to worry about and gutting Federal spending isn’t necessarily going to be a popular thing to do in some sectors. So, as a practical matter, the current Republican position on taxes is both politically dangerous and out of touch with the realities of governing.

That doesn’t mean that I’m arguing that the fiscal conservatives should surrender. Far from it. They need to be tough negotiators on the items important to them and insist that comprehensive deficit reduction include real spending cuts, not just cuts in the rate of growth of spending. This will mean sacrifices for the sake of the long term fiscal health of the nation, as will the tax increases. That’s what it’s going to require to get ourselves out of the mess that we’ve created for ourselves. One thing is for certain, though, stubbornly refusing to even consider a tax increase for reasons that have nothing to do with fiscal reality isn’t going to accomplish a damn thing.

FILED UNDER: Deficit and Debt, Taxes, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. KariQ says:

    Anyone who claims they are serious about reducing deficits has to talk about reforming Medicare, cutting defense, and increasing taxes. If they aren’t willing to do all three of them, then they are just posturing.

    It’s good that we’re starting to see a few Republicans, here and there, talking about increasing taxes. If they also start talking about reducing our military, I will feel much encouraged.

  2. legion says:

    @KariQ: You’re _slightly_ mistaken. What you’re seeing is a handful of Conservatives mention the idea of raising taxes. You will not see Republicans saying things like this. Even guys like Paul Ryan, who are actively trying to raise taxes on the lower & middle classes, won’t say it out loud for fear of Rich Folks getting the vapors.

  3. Herb says:

    This will mean sacrifices for the sake of the long term fiscal health of the nation, as will the tax increases.

    Sacrifices like funding NPR and Planned Parenthood.

    I mean, not to diminish the argument, which has teeth, but the current GOP aren’t even serious about the sacrifices we need to make. When they’re not picking the low-hanging fruit (NPR, PP, the NEA, PBS, what have you), they’re trying to snip away at the safety net. Maybe those efforts should be applauded for intent, but they’re just not that effective in the big scheme of things.

    Truth is, an effort to reduce the deficit is not just going to cut away at the Democratic agenda, but it’s also going to have to roll back some of the Republican agenda too. They’re not willing to concede that, and so….stalemate.

  4. @Herb:

    I don’t disagree that spending cuts usually end up being low hanging fruit. At the same time, though, I am fine to let PBS, NPR, and Planned Parenthood get their funding from sources other than the American taxpayer both as a matter of general principle and because I think its hypocritical to call for tax increases and spending cuts elsewhere while spending money on what are essentially luxuries.

  5. Hey Norm says:

    They should…but they won’t. Not until after Romney wins the election, if somehow he wins the election. The the real world of governing would force him to. Bush had a housing bubble to protect him from economic realities for most of his Presidency. Romney won’t have a bubble…at least not one that we can see today.
    I don’t understand how suddenly agreeing with Obama after, literally, a decade of intransigence gains you anything politically. Obama would literally be left saying…

    “No shit, Sherlock…now what other of your stupid orthodoxies are you finally willing to admit you are wrong about?”.

    Remember the debates when not a single candidate said they would take a 10:1 spending cuts:revenue increases deal?
    Talk about an Etch-a-Sketch moment.
    Never. Going. To. Happen.
    Never.

  6. Brummagem Joe says:

    That a pro-growth approach of lowering rates, and eliminating deductions and loopholes, would actually be the most effective means of generating revenue in the long run, by expanding the tax base.

    One small problem. This approach conspicuously failed to work during the Bush admin so I don’t think we need to take this blogger seriously quite apart from the fact he’s just some blogger not the GOP. Doug for some strange reason thinks Republicans are actually serious about attempting to reduce the deficit. Heck they’re already reneging on the budget sequestrations deal they agreed upon last year. Anybody who has made even a cursory examination of Ryan’s farcical budget has to understand this. He’s proposed almost $5 trillion of spending cuts over ten years and reducing the tax bands to 10% and 25% which will reduce revenues by close to $5 trillion also over ten years. This revenue shortfall is to be made by closing loopholes but he refuses to name a single tax loophole he’s going to close. NOT ONE. Other than to very serious people this is totally mickey mouse budgetting.

  7. Hey Norm says:

    Ryan’s plan, which Romney severly endorses, calls for descretionary spending at 3.something% of GDP…when it’s now 12.something%. Of course they will have to raise taxes. You can’t cut spending that much. You would have anarchy. The American public loves the sound of “Spending Cuts”. They don’t actually like “Spending Cuts”.

  8. Brummagem Joe says:

    @Doug Mataconis:

    I am fine to let PBS, NPR, and Planned Parenthood get their funding from sources other than the American taxpayer both as a matter of general principle and because I think its hypocritical to call for tax increases and spending cuts elsewhere while spending money on what are essentially luxuries.

    You may be fine with it Doug but a lot of people aren’t. Quite apart from the fact it’s chump change in terms of the federal budget.

  9. Hey Norm says:

    “…a pro-growth approach of lowering rates, and eliminating deductions and loopholes, would actually be the most effective means of generating revenue in the long run…”

    Yeah…because that formula has worked so well for the last decade. Republicans are so full of $hit, it’s hard to believe some days.

  10. Tsar Nicholas says:

    Sorry, Chief, but the opinions of Morgen Richmond (about whom I’ve never heard a prior word, BTW) are worth nearly the same as a block of ice in Volgograd in January.

    Now, if Boehner, McConnell, Cantor, Kyl, McDonnell, Kasich, Rubio, Toomey or Thune were to start talking about agreeing to tax hikes, then I’ll consider for perhaps a nanosecond paying attention before concluding they’ve been replaced by alien replicants, like in those Body Snatchers movies. If the GOP nominee, Romney, starts talking about the putative need for tax hikes, then I’ll pay attention for so long as it takes me to wonder whether he’s become addicted to crack cocaine.

    Speaking of which, raising taxes in a weak economy with substantial unemployment sort of would be like treating one’s headache by smashing in one’s skull with a ball peen hammer.

  11. An Interested Party says:

    Speaking of which, raising taxes in a weak economy with substantial unemployment sort of would be like treating one’s headache by smashing in one’s skull with a ball peen hammer.

    Apply that same logic to cutting government programs that help those same unemployed people…

  12. Blue Shark says:

    And the Ryan plan is reasonable, by any fair assessment

    …Wrong.

    …I quote Dick Cheney “Deficits don’t matter”

    …Bush was sworn into office with billions in deficit surplus. Fighting two major wars off the books and the prescription care off the books and the tax cuts off the books….etc. etc. etc.

    …The argument the deficits our are biggest challenge in America today is so tired that even the right wing echo chamber is bored with it.

    …All of this trickle-down crap has been tried. It didn’t and does not work.

    …This is not a difficult problem, but the wish list of the modern Republican party will preclude any solution from being implemented what-so-ever.

    …The republican party does not have answers, they just have obstruction. Will they learn from the thrashin’ they are about to take in November. Absolutely not.

  13. Brummagem Joe says:

    @Tsar Nicholas:

    Speaking of which, raising taxes in a weak economy with substantial unemployment sort of would be like treating one’s headache by smashing in one’s skull with a ball peen hammer.

    True Nicko. And of course the same could be said of making extensive spending cuts in a weak economy as I’m sure you would agree. However, if revenues are to return to the area of 18-22% of GDP which is where they’ve been for most of the last 40 years taxes are going have to go up because all the increased revenue can’t come from GDP growth. This is a matter of math not politics. So really the debate is not about whether taxes have to increase but when and on whom the largest part of the burden will fall….the middle classes or those with higher incomes.

  14. Ben Wolf says:

    @An Interested Party: It’s been explained to Tsar ad nauseam that for the private sector, a tax hike and a spending cut are identical. You’re dealing with someone who has an absolute commitment to not learning one single thing.

  15. anjin-san says:

    I am fine to let PBS, NPR, and Planned Parenthood get their funding from sources other than the American taxpayer both as a matter of general principle and because I think its hypocritical to call for tax increases and spending cuts elsewhere while spending money on what are essentially luxuries.

    So NPR is the problem? I notice you did not mention corporate welfare for oil companies that are the most profitable businesses in history. Guess we can’t risk weaning them from the government teat…

  16. Herb says:

    @Doug Mataconis:

    “spending money on what are essentially luxuries”

    True, but they are luxuries the American people can afford, as seen in how much we spend on their private-sector counterparts as well as how much we give in donations to these same organizations.

    If we talk about stuff we can’t afford, the Republican agenda is going to need some revision. Can we afford to bomb Iran? Can we afford to keep running for-profit prisons? A massive drug war? A border build-up? Bigger and more intrusive law enforcement agencies? Can we afford to keep letting individual states take out more than they’re putting in?

    Seriously, we’re not just talking about questions of budgeting. We’re talking questions of philosophy.

  17. Dave Schuler says:

    IMO to the extent that opposition to any form of tax increase is the conservative orthodoxy, it’s self-defeating. Rather than focusing on taxes they should be focusing on the size and impact of government. Tax expenditures, i.e. loopholes, simultaneously cut taxes and extend the reach of government. Consequently, the elimination of tax expenditures shouldn’t be anathema but, because their elimination increases taxes, they are. Self-defeating.

  18. Tsar Nicholas says:

    @An Interested Party:

    @Brummagem Joe:

    Hey, I’m all about helping the unemployed. And, yes, Joe, I realize that you can’t cut off all federal spending, especially in a weak economy.

    Ergo:

    Let’s enact comprehensive tort reform and labor and employment law reform measures, to help spur net hiring. Let’s start drilling for more oil, as that would create tons of high-paying jobs. The same for shale and natural gas. Let’s dam up a lot more rivers, as that would be a great use of public money. I’m not opposed to public works projects. Especially if they’ll help reduce energy costs. That said, however, I don’t think we should piss away public money on unnecessary programs.

    Do we really need at the federal level departments of commerce, education and labor? Can’t we reign in the EPA? Can’t we further reign in Medicare reimbursements for hospitals and doctors? Granted, the Feds have made some headway there over the past 15 or so years, but still some of those medical billings are beyond the pale. Can’t we further reign in AFDC? Again, there’s been a lot of progress there since the mid-1990’s, but still eligibility requirements are pretty loose.

    Shouldn’t we zero baseline foreign aid for countries with histories of being hostile to us or to our allies? Do we really need to spend federal tax dollars on the National Endowment for the Arts and for Humanities, NPR, Planned Parenthood and PBS?

    Let’s also reduce the max. weekly cap for unemployment insurance benefits, as extended benefits merely act as disincentives to reenter the workforce. We should also block grant all Medi-Caid monies to the individual states.

  19. grumpy realist says:

    @Tsar Nicholas: Dude, you might want to look at what is IN those departments of the government before you start slashing so wildly. Just in the Dept. of Commerce we’ve got such agencies as the Patent and Trademark Office and NIST.

    Yeah, getting rid of patents and trademarks in the US. That’s going to be REALLY great for the economy.

    NOT.

    (Have you Republicans gone absolutely insane?)

  20. KariQ says:

    While we’re at it, let’s balance the budget by eliminating waste, fraud, and abuse. Ought to be trillions there, huh? Honestly, none of those things are big enough to provide enough savings to be a factor, even if we eliminate some of the programs completely. Never mind the philosophical argument, the practical ones say that there just isn’t much money there.

    Cut Defense. Reform Medicare. Increase Taxes. That’s what we need to do. Everything else is just nickle and dime stuff.

  21. I had one idea for the NPR/PBS thing: they can keep their funding, but pass a new law that any programming paid for with taxdollars must be released into the public domain.

    It’s easy to blather about public good, but let’s see how commited they really are if someone turns of the multi-million dollar merchandising spigots.

  22. Hey Norm says:

    Excellent…tort reform…the Republican answer for everything a tax cut can’t cure. Christ…no wonder they f’ed this country up so bad during the Bush Administration.

  23. Brummagem Joe says:

    @Tsar Nicholas:

    Hey, I’m all about helping the unemployed. And, yes, Joe, I realize that you can’t cut off all federal spending, especially in a weak economy.

    Hey who’d have thought it. Nicko is a closet Keynesian*. Then alas he reverts to a menu of Republican boilerplate bs. And it’s rein Nicko! Reign describes the rule of your namesake….er…you did say you were lawyer with 17 years litigation experience….where did you get your law degree?….a University of Bombay correspondence course?

    *As a general comment I’m always amused when Republicans emphasising the need to avoid increasing taxes in a recession back themselves into accepting Keynes’ demand theories. LOL. The problem is they want to keep cutting taxes during expansions even though it has long term implications for the deficit during the next downturn. I’ve got news for you Nicko, corporations (who conservatives love to compare with governments) as a general principle aim to reduce leverage in the fat years because they know they are likely to take on debt in lean years.

  24. Tsar Nicholas says:

    @KariQ:

    Cut Defense. Reform Medicare. Increase Taxes. That’s what we need to do.

    Yes (in part), hell yes, no.

    Like any federal department DOD can and should be cut. I agree. Not what you might have expected, but true. I would not cut one penny, however, from items our troops need to survive (body armour, night vision, training, etc.) nor would I cut one penny in medical care for veterans.

    We don’t need any more advancements in tanks. We don’t need anything further in artillery. We don’t have to worry about fighting for the Fulda Gap.

    We do need to retain air superiority, however. We should be expanding our drone programs. They’ve worked wonders. In light of China we need to maintain the ability to have naval supremacy in the South China Sea.

    Medicare absolutely needs to be reformed, and I would start by further reigning in reimbursements. Have you ever seen those billings? Granted, it’s not the absurd boondoggle of yesteryear, but still the government has huge leverage and should be using it to the fullest. Private health insurers often write down medical bills by 90% and those adjustments willingly are accepted by the providers. There’s a lot of room for Uncle Sam to reign in hospitals, labs, clinics and doctors, without driving them out of their practices.

    Tax hikes in a weak economy are like dealing with blurry vision by gouging out one’s eye.

  25. Tsar Nicholas says:

    @Brummagem Joe: Joe, give me a break. The grammar police thing on a Internet thread is the hobglobin of various complexes. You don’t need to be at that level of sheer pettiness. Yes, rein in. BTW, it was U.C. Berkeley. Back then they called it Boalt Hall. Now I think they call it Berkeley Law.

    Joe, that Keynes reference is so off base it’s absurd. Stimulus spending on public works projects is not inconsistent with conservative economic theory nor is it the hallmark of Keynesian theory. Keynes thought that in economic equilibrium all private sector activity was constant (zero sum) and that government spending was the only prospective positive variable. That’s the biggest load of bravo sierra of all time.

    Joe, you made a Freudian slip with your corporations reference. Yes, cutting leverage during expansions is a sound policy. Why don’t liberals ever allow that approach with government deficit spending during expansions? Why does the left always want to spend more and more and more?

  26. It is an interesting two-step:

    1) Republicans put out a “starting position” budget that is not serious
    2) Republicans respond to criticism by saying that Democrats are not serious

    At what point was anyone putting out a serious budget? I’m pretty sure the most serious suggestions have come from the various bipartisan committees, and those suggestions were dropped as hot potatoes by BOTH parties.

    Ah well, that’s the state of play as both parties also go all in on November 2012, and the hope or dream that they can do better with a new congress (if not a new President).

  27. (Though … the Grand Bargain keeps looking better and better in the rear-view mirror.)

  28. An Interested Party says:

    And the Ryan plan is reasonable, by any fair assessment, considering the enormity of the fiscal imbalances it seeks to redress.

    This is an indication of how unrealistic the writer is…once people know about the full details of what Ryan wants to do, his plan will go absolutely nowhere…

    Let’s start drilling for more oil, as that would create tons of high-paying jobs.

    Oh sure, the people of Florida will have no problem with drilling for oil along their coastline…

    Can’t we reign in the EPA?

    Oh absolutely! People enjoy breathing noxious air and drinking polluted water…

    Shouldn’t we zero baseline foreign aid for countries with histories of being hostile to us or to our allies? Do we really need to spend federal tax dollars on the National Endowment for the Arts and for Humanities, NPR, Planned Parenthood and PBS?

    Precious little droplets of water in an enormous ocean…yeah, that’s the way to balance the budget…

    Let’s also reduce the max. weekly cap for unemployment insurance benefits, as extended benefits merely act as disincentives to reenter the workforce.

    Bull$hit…where’s the proof for that claim?

    We should also block grant all Medi-Caid monies to the individual states.

    Sorry sweetie, but block grants are a conservative wet dream that are also going nowhere…

  29. superdestroyer says:

    Morgen Richmond is from California and should be well aware that high taxes does not equal balanced budget or good government. As the state legislature in California clearly demonstrates that if it receives more income it will spend it. Governing is about goodies, who gets them, and who pays. All tax increases will do is increase spending.

    The choices for American is to either raise income taxes to fund government (that means a doubling of income taxes) or cutting spending to match current revenues. Either will be painful but the only alternative is kicking the can down the road and dealing with a bigger problem later.

    My guess is that if everyone had their incomes doubled, then people would be willing to live without PBS, NPR, or planned parenthood.

  30. Tsar Nicholas says:

    @An Interested Party:

    Oil: What about the people in Montana, North Dakota, Texas, Alaska, Oklahoma and Wyoming? Can they drill for more oil? Also, you didn’t address shale. Can the people of West Virginia have a lot more high-paying jobs? You didn’t say anything about natural gas. Can the people of Wyoming, Northern Colorado, New Mexico, Texas, Oklahoma, Louisiana and Arkansas have a lot more high-paying and stable jobs?

    EPA: You do realize, don’t you, that states and local governments can and do have similar agencies with similar regulations and enforcement mechanisms? Here in California, by way of example, we have CEQA, Cal-EPA, the State Water Resources Control Board, the California Air Resources Board, local water and air boards, county environmental managemnet departments and even municipal environmental enforcement agencies. Do we also need the Feds doing the same things? Isn’t that a serious case of duplication of efforts, on the public dime, no less? Can’t we spend less federal dollars in this arena?

    Foreign aid, etc.: If it’s too little to cut why not cut it anyway? Since it doesn’t really matter?

    Extended unemployment insurance benefits: Talk to anyone receiving them.

    Block grants for Medi-Caid: Why not try them out and see what happens? Can that system be less efficient and less effective?

  31. Brummagem Joe says:

    @Tsar Nicholas:

    Why don’t liberals ever allow that approach with government deficit spending during expansions?

    No Freudian slip Nicko….Why don’t you ask Bush or deficits don’t matter Cheney

    Stimulus spending on public works projects is not inconsistent with conservative economic theory nor is it the hallmark of Keynesian theory.

    So why were Republicans opposed to the 2009 stimulus program?…. and of course deficit spending to prop up aggregate demand during recessions is one of the key elements of the Keynesian demand management theorem.

    Joe, give me a break.

    Nicko you’re the only one of the fruitcakes here I give the time of day to because you’re obviously not a dummy so why keep recycling this bs. It’s an insult the intelligence and you know it.

  32. wr says:

    @Doug Mataconis: ” I am fine to let PBS, NPR, and Planned Parenthood get their funding from sources other than the American taxpayer both as a matter of general principle and because I think its hypocritical to call for tax increases and spending cuts elsewhere while spending money on what are essentially luxuries”

    Yes, Doug, health care for poor women is a luxury. As long as you’re a well-off man, that is.

  33. Tsar Nicholas says:

    @Brummagem Joe: The “give me a break” comment was in reference to your grammar police quip.

    Bush and Cheney were retards when it came to the issue of the deficit. But you didn’t answer my question: why won’t the left ever permit less federal spending during expansions? It’s a two-way street.

    Joe, the 2009 stimulus program was a pork boondoggle of a flaming train wreck of a farce. Did we dam up any rivers? Did we build any nuclear power plants? Did we build any LNG or LPG plants? Did we build any extra guided missile cruisers? Did we ramp up submarine construction? Joe, they spent a lot of money to fix highways, streets and curbs, and like items, in Democrat Congressional districts. I think every pothole here in Sacramento was fixed. Great. Not much else happened around here, however, nor anywhere else in Northern California. The GOP was correct to oppose that bill.

  34. An Interested Party says:

    My guess is that if everyone had their incomes doubled, then people would be willing to live without PBS, NPR, or planned parenthood.

    Do you sniff glue or huff paint? That would certainly explain the statement above…

    @Tsar Nicholas: In case you haven’t heard, there is more drilling going on in this country now than in the past few years and that increased drilling hasn’t done anything to lower gas prices

    It is hardly surprising that the local EPA in California is doing so much…but in Texas? Oklahoma? West Virginia?

    As for foreign aid, sure, why not, but I suspect defense contractors and the Israel lobby won’t like those cuts too much…

    In regard to unemployment benefits, sorry, but the people I know who are getting them would love to get a job and aren’t simply sitting around being lazy on the government dole…

    Finally, Medicaid block grants…no, thanks

  35. Hey Norm says:

    Nick…
    We spent less during the Clinton expansion. The facts don’t match your ideology.
    The stimulus worked. We know that because the rate of growth slowed as the stimulus slowed. The facts dont match your ideology.
    As for why we didn’t build more with the stimulus…the right insisted on a huge percentage of inefficient tax cuts…the one size fits all prescription for every conceivable economic condition.

  36. Hey Norm says:

    I watched a great documentary, on PBS, last night about the Grand Coulee Dam.
    Republicans fought spending the money for it.
    In the end the dam powered the war effort, and enabled the development of the Pacific NW. No dam…no Seattle.
    We can’t do anything like that today…because Republicans insist on giving the rich tax cuts instead.
    That’s the choice in November. Invest…or tax cuts for the rich.
    It’s that easy.

  37. Tsar Nicholas says:

    @An Interested Party:

    Who said anything about gas prices? I’m talking about jobs. Can we drill for more oil — and exploit more shale and natural gas too — and thereby put a lot more people to work?

    I didn’t say we should eliminate the EPA. Just cut it down to size. Lots of other big states — New York, New Jersey, Florida, etc. — take similar approaches to that of California’s state and local enviromental agencies.

    I didn’t say we should cut aid to Israel and I didn’t say to cut all foreign aid. I said zero baselines for countries with histories of being hostile to us or to our allies. Make them prove they deserve it. Do we need to be giving money to the oil-rich Kingdom of Saudi Arabia sight unseen? To Egypt? As far as the defense contractors, they have plenty of potential customers outside of questionable governments. Taiwan, South Korea and India always could use more weaponry.

    Regarding unemployment benefits, we travel in different circles. Tons of people on extended benefits wait until the dark at the end of the tunnel before really bearing down and searching in earnest for gainful employment.

    I’d prefer the Feds try something different with my tax dollars for Medi-Caid. The current program is pretty darn crappy. My mother is on it. Lots of people in her senior citizen complex are on it. It stinks.

  38. suyperdestroyer says:

    @Hey Norm:

    You cannot do big projects these days because first the NIMBYs will fight you every step of the way. Then the environmental lawyers will drag things out for years. And then the contracting and procurement rules will make things too expensive.

    It is probably impossible to build a pipeline, a hazardous waste disposal facility, a nuclear power plant, a coal fired electrical plant or even something as easy as a high speed train.

    The laws were changed in the 1970’s, by Democrats, that makes it virtually impossible to do big projects. That is why a new airport has not been built in decades. That is why the the emerging world is building nuclear power plants while the U.S. moves to shut the industry down.

  39. Ben Wolf says:

    @Tsar Nicholas: The fossil fuel sector is no longer manpower intensive. It cannot lead new jobs creation, no matter how many wells are dug because machines now do most of the work. The only effective method of creating mass employment is via consumer spending and to do that the private sector needs more dollars. The way to make that happen is for the federal government to provide those dollars by spending them into the economy, or by large additional tax cuts for the middle class and poor. Personally I favor tax cuts and increased spending, though the spending needs to take different forms than we’ve become accustomed to.

  40. Brummagem Joe says:

    @Tsar Nicholas:

    Joe, the 2009 stimulus program was a pork boondoggle of a flaming train wreck of a farce…Joe, they spent a lot of money to fix highways, streets and curbs, and like items, in Democrat Congressional districts. .

    Like I said Nicko, your bs is a bit of an insult to the intelligence. You obviously have no more idea of what the stimulus program consisted of and why it was structured as it was than you have about Keynesian economics.

  41. KariQ says:

    @Tsar Nicholas:

    Cut Defense. Reform Medicare. Increase Taxes. That’s what we need to do.

    Yes (in part), hell yes, no.

    Because, of course, I insisted that the tax increases had to start immediately. This moment. *sigh*

  42. Hey Norm says:

    Nick…
    Yeah…you’re always ranting about French Nukular…but you never acknowledge that it’s heavily subsidized by the Government…SOCIALISM!!!

  43. matt says:

    Hello from Texas where the EPA just finally got the Benzene levels in the local water down to a safe level. Where the refinery row has been polluting the local land that a section of town is being evacuated due to high levels of highly toxic chemicals. These same refineries have huge storage tanks full of chemicals that they cannot even identify because the tanks have been around for decades. Oh and those same tanks that are storing unknown toxic chemicals are starting to leak. Yet Koch is throwing a tantrum because the EPA won’t let them burn petroleum coke here to further add to the terrible air quality. I’m getting tired of having to wash the layers of unknown substances that settles on my car and other items outside…

    Yeah sure the EPA is just strangling business…

  44. matt says:

    Where the refinery row has been polluting the local land so bad that a section of town is being evacuated due to high levels of highly toxic chemicals

  45. Tsar Nicholas II says:

    Oh, my goodness. The Bolsheviks have massed and are attacking in waves.

    @Hey Norm:

    We didn’t spend less during the 1990’s expansion. Those were reductions in the growth rates of spending, not actual cuts. Against which Clinton fought tooth and nail. Don’t you remember the shutdowns? Clinton and his liberal allies in Congress fought against reductions in the growth rates of federal spending, not actual cuts, during a massive expansion! Why won’t the left ever agree to spend less federal money?

    The stimulus “worked” in the same sense that running up a huge credit card balance to purchase fluff items works.

    @Ben Wolf:

    The fossil fuel sector no longer is manpower intensive

    Are you joking? Who operates the well machinery? Who manages the railroad facilities from which the oil is transported from wells to refineries? Who manages the refineries? Who manages the pipelines? Who maintains and repairs all of the foregoing? Who manages the terminal rack facilities? Who drives the trucks which take the refined fuels from the terminal racks to the gas stations and bulk plants? Who maintains and repairs those trucks?

    @Brummagem Joe:

    Joe, what major projects were built with the near trillion dollars we spent on that stimulus? Where are the new LNG, LPG and nuclear power plants? Where are the new dams? Where are the new submarines and guided missile vessels? Where did that money go?

    Joe, that money went to small union jobs in Democrat districts.

    P.S. — Before I went off to law school, Joe, my education was in economics and finance. Had we not had that recession and that weak recovery, in 1990-1992, I would have wound up either at Cigna, at The Hartford, or at Aetna, managing investment portfolios. Believe you me, I’m fully aware of Keynesian economics.

    @KariQ:

    I didn’t interpret it that way. I would say no way to tax hikes next year, the following year, five years later, and 10 years down the road. Twenty years too. That’s how I roll.

    @Hey Norm:

    Nuclear power here wouldn’t need to be directly subsidized. All we need are environmental waivers and OHSA waivers. Maybe a very small degree of loan guarantees. Besides, there’s nothing wrong with spending public dollars when it’s an investment as opposed to waste. Nuclear power is an investment. It’ll save far more dollars long term than it’ll cost. It’ll boost our national security, in that we won’t have to be so reliant on bad governments in the Middle East. It’ll create a lot of high-paying, stable jobs. Win-win. Even hard core conservatives can on occasion get in touch with big government spending. We just want that spending to be on things that pay real dividends.

  46. suyperdestroyer says:

    @matt:

    Could you give a cite on the refinery issue.

  47. dennis says:

    After 2000-2006, I find it very hard to take seriously Republicans’ gyrations over spending.

  48. Just 'nutha ig'rant cracker says:

    @grumpy realist: You have to remember that Tsar, on alternating days during the past two weeks has been a litigator, a manager in a company that bulk purchases oil and gas, a corporate lawyer specializing in mergers and acquisitions, and I can’t remember what all else, so sanity in his case is open to question.

    I really think he should change his screen name to Baron Muenchhausen, it would be closer to reality.

  49. Tsar Nicholas II says:

    @Just ‘nutha ig’rant cracker: Chief, have you ever worked at a company with a SVP/General Counsel? How is this so unfathomable to you? Dude works as a litigator and transactional attorney for various law firms for 9 years. Then runs his own business and does contract legal work (litigation and transactional and ADR work for 4 years. Dude joins petroleum marketing and distribution company as SVP/General Counsel 4 years ago. At that company he handles all transactional and litigation matters for the business and manages the company’s credit department and its HR department. Why are you not able to comprehend any of that? Why is this so far above your head? It’s a basic career path for an attorney in the private sector.

    One final point about federal spending. Together the EPA, the Dept. of Commerce, the Dept. of Labor, the Dept. of Education, and HUD, add up to around 300 billion in annual federal dollars. Let’s cut that in half. How is is not worthwhile and reasonable to save 150 billion federal dollars derived from departments that have so much excess fat? Cut Medicare reimbursements without driving healthcare professionals out of business. That alone is tens of billions of less federal dollars annually. Then cut the fat from DOD (that alone is many tens of billions of less federal dollars annually), eliminate the complete fluff spending, start dealing with the entitlement time bomb, and take steps to create net jobs. Then take stock and see what else can be jettisoned. There’s no need for tax hikes. Tax hikes are self defeating. In a weak economy they’re suicidal.

  50. matt says:

    @suyperdestroyer: Well I would but I am worried I’ve disclosed too much information about my location as is.

  51. An Interested Party says:

    After 2000-2006, I find it very hard to take seriously Republicans’ gyrations over spending.

    Oh, but Republicans really, really, really do care about too much spending–as long as a Democrat is in the White House…

    @Just ‘nutha ig’rant cracker says: Don’t you get it? We should be honored that such a preeminent person graces us with his presence to share such important insights…between him and Drew, we learn all about how the world works…

  52. KariQ says:

    Regarding unemployment benefits, we travel in different circles. Tons of people on extended benefits wait until the dark at the end of the tunnel before really bearing down and searching in earnest for gainful employment.

    Of the people whose unemployment benefits have run out, only 25% have found work, and 80% of those are earning much less than they did before they lost their jobs- about 70% of their previous salary.

    http://www.ritholtz.com/blog/2011/12/the-smaller-lies/

  53. Ben Wolf says:

    @Tsar Nicholas II: And so the point will be made again, because you’ve made the same error again.

    A spending cut IS a tax increase. Either way you reduce the flow of money to the private sector and reduce incomes. You continue to advocate for the thing you don’t want.

  54. Brummagem Joe says:

    @Just ‘nutha ig’rant cracker:

    I really think he should change his screen name to Baron Muenchhausen, it would be closer to reality.

    Impossible to tell of course but lets just say Nicko does not demonstrate the intellectual horsepower of someone who has passed the notoriously difficult California bar (and I’m closely related to someone who has). He does however seem to possess metal working expertise.

    An Interested Party says:
    Thursday, April 5, 2012 at 00:13
    between him and Drew, we learn all about how the world works…

    They could be the same person….the similarity is quite marked.

  55. Tsar Nicholas II says:

    @Ben Wolf:

    You really don’t know how and on what items the federal government spends your tax dollars, do you?

    Chief, when the Feds pay an OSHA inspector a salary to visit factories, shops, bulk plants, warehouses, and like businesses, and said OSHA inspector then levies fines for whatever ticky tack issues he sees, if you remove that federal money it doesn’t take one penny away from the private sector; it stops transfer payments from the private sector to the government and it puts one OSHA inspector out of work. Take that last paragraph and juxtapose it upon the following: NLRB hearing officers, NLRB case workers, NLRA mediators, DOL inspectors, DOL case workers, DOL attorneys, AG inspectors, AG case workers, EEOC case workers, EEOC attorneys, EEOC hearing officers, EEOC administrators, EPA inspectors, EPA case workers, EPA administrators; so on, so forth.

    Forest management. Parks policing. Parks landscaping. Fish & game inspectors. Wetlands management. Conservation planning. Traffic pattern studies. Traffic planning. SSA case workers. SSA administrators. VA benefits coordinators. VA billing administrators. DOJ file clerks. DOJ calendar clerks. DOJ paralegals. DOE case workers. DOE project managers.

    I could go on for days, but I’ll stop there. You get the point, Presumably.

    Chief, the federal government spends enormous gobs of our money each year on items that don’t involve any revenue whatsoever to the private sector. Quite the contrary, as mentioned above, in many instances they entail transfer payments from the private sector (businesses and individuals) to the government. You need to understand that. A federal spending cut is not a tax increase. Even John Galbraith is laughing out loud at that comment.

  56. Rob in CT says:

    The only tax increase the GOP likes is a payroll tax increase.

    A principled conservative who worries about the long-term fiscal picture could indeed support other tax increases (whether it be income tax, cap gains, or a carbon tax), and some have occasionally popped up to do so (Bruce Bartlett comes to mind).

    Not right now, though. The recovery is still very fragile.

  57. Rob in CT says:

    I give you OSHA, folks, the Little Satan (obviously EPA is the Great Satan).

    No mention whatsoever of the benefits to the public from safe workplaces, clean(ish) air and water, reasonably safe food, and so on.

    The private sector will not provide these things on its own. Sorry, we tried that. It would be nice if the fantasy was true, but it’s not. Actual history tells us that the lack of government regulation of such things is unsafe workplaces, abuse of workers and egregious pollution.

  58. Hey Norm says:

    I don’t think anyone is proposing new taxes or tax increases until next year. The Bush Tax Cuts are curretnly scheduled to expire at the end of December, so the new tax rates would go into effect January 1, 2013.

  59. Hey Norm says:

    Also the recovery may not be as fragile as you think.
    The weekly jobs claims are at a four year low.
    ADP reports over 200K jobs added in March…we’ll see for sure tomorrow.
    March retail sales smoked everyones expectations.
    March auto sales were at a 5 year high.
    And most telling of all…we haven’t seen any “Bad Economy Spells Doom For Obama” headlines from Doug in some time.

  60. Brummagem Joe says:

    @Rob in CT:

    I give you OSHA, folks, the Little Satan (obviously EPA is the Great Satan).

    OSHA’s dirty little secret is that in fact most of the regulations governing the industries it regulates are written by, or at least heavily influenced by, the industry being regulated.

  61. Brummagem Joe says:

    @Hey Norm:

    The Bush Tax Cuts are curretnly scheduled to expire at the end of December, so the new tax rates would go into effect January 1, 2013.

    If all the Bush cuts expire on December 31st and the agreed sequestrations begin taking effect on January 1st 2013 as proposed it wipes something like 7 trillion off the projected deficit over ten years and so the deficit problem largely goes away. Big ifs granted but that’s the math. It’s a meat cleaver approach but in the present gridlock it maybe the best we’ll get.

  62. Hey Norm says:

    This is off-topic…but WTF.
    I just read where Alan West (R-FLA) tore into Obamacare last night in a town-hall meeting…then admitted that he actually is in favor of the provision that allows young adults to stay on their parents’ health insurance plans until the age of 26, and the provision that prevents insurance plans from discriminating against people with preexisting conditions.
    How does he think those provisions get paid for? Does he think Insurance Companies just give those benefits away?
    You really can’t begin to make up how stupid today’s Republicans are.

  63. Tsar Nicholas II says:

    @Rob in CT: Chief, I’m not saying to eliminate OSHA. I’m saying cut the fat. Perhaps in Connecticut it’s like the wild west but out here in California we have Cal-OSHA. That’s the state version of OSHA. Cal-OSHA does the same things as the federal OSHA. Literally. An exact duplication of effort. On the public dime.

    Can’t we spend less of your federal tax dollars on OSHA and yet still maintain the necessary government regulation for workplace safety?

    Along similar lines, do we need to spend billions of federal tax dollars on the EEOC when every state in the country has a corresponding state agency? Here in California, for example, we have the DFEH. They do the same things as the EEOC. Again, literally, the same things. So too does every other state labor and employment agency.

    Can’t we spend less of your federal tax dollars on the EEOC and yet still maintain the necessary government regulation to prevent and to punish workplace abuses?

    Can we spend less federal dollars anywhere besides DOD? Is DOD the only federal agency you’d be willing to cut? Yikes.

    How about this: You and I are given plenary and absolute power to deal with the deficit any way we choose. I’ll agree to cut $200 billion in DOD spending by eliminating what I believe are unnecessary weapons programs, e.g., M1A1 tanks, Stryker brigades, F-16s, Ospreys, MIRS rockets, artillery, etc. I’ll also agree to a revenue net neutral tax reform package that eliminates all deductions but flattens and lowers rates. In exchange you have to agree to cut $200 billion in spending from the remainder of the federal government outside of DOD. If you agree to that then we’ve cut $400 billion in federal spending in one year and we haven’t raised any taxes. To avoid a net negative impact on GDP we massage the numbers to provide loan guarantees to Taiwan, South Korea, India, Israel, and to other friendly nations, to pick up the slack in weapons orders and deliveries.

    Would you do that? Or is federal spending so sacrosanct to you, regardless of fat and duplication of efforts, that you simply have to have a tax hike in order to agree to less federal spending?

  64. wr says:

    @Tsar Nicholas II: “Chief, when the Feds pay an OSHA inspector a salary to visit factories, shops, bulk plants, warehouses, and like businesses, and said OSHA inspector then levies fines for whatever ticky tack issues he sees, if you remove that federal money it doesn’t take one penny away from the private sector; it stops transfer payments from the private sector to the government and it puts one OSHA inspector out of work”

    Right. And it creates lots of high-paying work for doctors and funeral directors, since companies will be free to go back to the unsafe practices of pre-OSHA days.

    And before Tsar and Drew and all the other corporation humpers fly into a tizzy at the notion that a corporation could ever be anything but wonderful to its employees, please read up on Massey Energies mass murders of their coal miners. Once you can explain how it’s a good thing for a company to deliberately allow their employees to be killed in order to save a few dollars, I’m ready to listen.

  65. Hey Norm says:

    Nick…You just spelled out about $1.50 in savings from OSHA, the EEOC, etc.
    There is this myth amongst Republicans that there is all this waste, fraud, and abuse in Government. But everytime someone goes looking for it they come back with $1.50 in savings.
    As for your “deal”…
    You want to take $200B out of defense in a year? The President wants to take something like $400B in ten years and everyone is yelling about him decimating the military.
    You want to take $200B out of discretionary spending, a $600B budget, in one year? That’s a 33% cut in spending.
    What do you think slashing Government spending by $400B, about 11 or 12%, in a single year would do?
    It’s no wonder Republicans f’ed up this country so bad during the Bush years…

  66. george says:

    Speaking of which, raising taxes in a weak economy with substantial unemployment sort of would be like treating one’s headache by smashing in one’s skull with a ball peen hammer.

    Which means making cutbacks to all of medicare, social security, and defense. Which politician of either party is willing to cut all three of those to any extent? Or even any two of them?

  67. DRE says:

    @legion: The strange thing about all this to me is that real conservatives should be insisting on tax increases if they are necessary to pay for programs that are in place. Don’t they believe in the operation of markets? Don’t they understand that allowing policies that benefit people without having anyone actually pay for them individually creates a powerful incentive to create new programs? If the Republican party was serious about governing conservatively in the context of our governing institutions, they would be focused on advocating for small government, market based solutions to problems, but insisting that whatever programs are adopted be paid for. Low taxes should be a goal which can be obtained by winning the political arguments about which policies are implemented. The fact that lowering taxes is treated as an independent good which is the highest priority shows that they really are just the shills for the economic elites who wish to maximize their wealth in a large government economy. (Of course there are other moralistic constituencies whose authoritarian governing preferences they cater to as well).

  68. Rob in CT says:

    Can’t we spend less of your federal tax dollars on OSHA and yet still maintain the necessary government regulation for workplace safety?

    Ah, a more reasonable position than the one I believed you were taking. The honest answer to this particular question is: I don’t know.

    Is DOD the only federal agency you’d be willing to cut? Yikes.

    No. I’m not taking an absolutist position on cuts. I just want to see DoD in there along with entitlements and the various targets you’ve identified. And I am deeply skeptical of Conservative claims about the wastefulness of agencies that regulate industry.

    I’ll agree to cut $200 billion in DOD spending by eliminating what I believe are unnecessary weapons programs, e.g., M1A1 tanks, Stryker brigades, F-16s, Ospreys, MIRS rockets, artillery, etc. I’ll also agree to a revenue net neutral tax reform package that eliminates all deductions but flattens and lowers rates. In exchange you have to agree to cut $200 billion in spending from the remainder of the federal government outside of DOD. If you agree to that then we’ve cut $400 billion in federal spending in one year and we haven’t raised any taxes. To avoid a net negative impact on GDP we massage the numbers to provide loan guarantees to Taiwan, South Korea, India, Israel, and to other friendly nations, to pick up the slack in weapons orders and deliveries.

    Would you do that? Or is federal spending so sacrosanct to you, regardless of fat and duplication of efforts, that you simply have to have a tax hike in order to agree to less federal spending?

    First, I reject the revenue-neutral tax reform. Revenue needs to rise back to ~18-20%, especially given the demographic issue we’re going to have with Medicare (and to a lesser extent, SS).

    However, running with your example: I would indeed be willing to match DoD cuts with cuts to other spending. And I think that’s doable. Medicare is the big boy here. Perhaps some gains could be made by instructing federal agencies to only focus on states where the state-level equivalent agencies either don’t exist (unlikely) or are not doing much of anything (more likely), but I doubt there would be much of a dent made that way. I’ve no particular objection, though I’d want to see an analysis before agreeing to it.

    My preference is to phase-in cuts and tax increases carefully, as I think cutting $400B in one year is drastic enough to have potentially nasty consequences. Cut maybe $100B per year for 5 years.

    Generally, I’d look to end up with a mix of 2/3 cuts (half military, half non-military) and 1/3 tax increases, all phased in over time. Say 10 years. It’s true that such an approach results in increased debt load, which is a downside, I admit. I think it’s safer economically, though, and frankly a double-dip recession triggered by aggressive austerity is worse for our fiscal situation.

  69. DRE says:

    @Tsar Nicholas: Here in California, by way of example, we have CEQA, Cal-EPA, the State Water Resources Control Board, the California Air Resources Board, local water and air boards, county environmental managemnet departments and even municipal environmental enforcement agencies. Do we also need the Feds doing the same things?

    Here in California we have a geographic situation that is unlike much of the US. All of our major population areas are at least a couple of hundred miles from any other state, so we probably could take care of these issues ourselves. We could probably get along fine as an independent country for that matter. Maybe even bettter with respect to environment issues, because then we could negotiate treaties with Mexico which has population centers much closer to ours. But trhoughout most of the US there are major metropolitan areas than cross state lines, where state based regulation would likely be completely ineffective.

  70. Rob in CT says:

    Also, regarding tax reform: flattening the rates… I might argue that one too. Remove (again, I’d go with phase-outs*) deductions and run an analysis to see the results. Then adjust the rates, yes, but I’d be pushing for increased progressivity, particularly at the top end. Right now, the $100k-$250k group appears to have a higher tax burden than the $250k+ crowd. I want a smooth progressive curve, which would require shifting some of that middle class tax burden upward.

    * – for instance, the mortgage interest deduction. This really should go away, or at the very least be capped. However, a lot of average people made long-term decisions based on the old rules, and this has been exacerbated by the housing market crash. Just yanking the rug out from underneath these people is a bad idea. Hence the phase-out. You dole out the pain over time.

  71. DRE says:

    @Tsar Nicholas II: Dude works as a litigator and transactional attorney for various law firms for 9 years. Then runs his own business and does contract legal work (litigation and transactional and ADR work for 4 years. Dude joins petroleum marketing and distribution company as SVP/General Counsel 4 years ago. At that company he handles all transactional and litigation matters for the business and manages the company’s credit department and its HR department.

    Chief, when the Feds pay an OSHA inspector a salary to visit factories, shops, bulk plants, warehouses, and like businesses, and said OSHA inspector then levies fines for whatever ticky tack issues he sees, if you remove that federal money it doesn’t take one penny away from the private sector; it stops transfer payments from the private sector to the government and it puts one OSHA inspector out of work. Take that last paragraph and juxtapose it upon the following: NLRB hearing officers, NLRB case workers, NLRA mediators, DOL inspectors, DOL case workers, DOL attorneys, AG inspectors, AG case workers, EEOC case workers, EEOC attorneys, EEOC hearing officers, EEOC administrators, EPA inspectors, EPA case workers, EPA administrators; so on, so forth.

    I think our society might do better spending more on the second paragraph and less on the first.

  72. An Interested Party says:

    Oh, my goodness. The Bolsheviks have massed and are attacking in waves.

    Obviously that explains the pseudonym, but if you really believe that the array of criticisms you’ve received all come from that far on the left, you are even more delusional than I thought…

  73. Tsar Nicholas says:

    Oh, my goodness. The Bolsheviks have regrouped and again are attacking in waves. Kidding, kidding.

    @Rob in CT:
    @Hey Norm:

    Rob and Norm, you’re both very much underestimating the extent of duplication of efforts, fat and waste. It’s not merely the EEOC and OSHA. Do you want me to give you the entire alphabet soup? OK, here goes:

    The Feds have the EPA. Every state in the country has a counterpart agency. The Feds have OSHA. So too does every state. The Feds have the EEOC. Every state has a corresponding agency. The Feds have HUD. Every state has a counterpart agency and many have several layers of counterpart agencies. Banks are double, triple and even quintuple regulated. The Feds have the DOL and they enforce wage & hour laws under FLSA. Every state in the country has counterpart agencies. The DOI has fish & game. Every state does too. The DOI has the Dept. of Forestry. Every state with forests has a counterpart agency. The Feds have the SEC. Every large state and most of the remainder have counterpart agencies. The DOJ prosecutes bank fraud, mortgage fraud, securities fraud, environmental damages, and whole host of other items. Can’t the bulk of those prosecutions be turned over to the individual states? The DOJ spends billions of dollars each year prosecuting drug and gun offenses. Why? Those are state law offenses and should be prosecuted by local prosecutors.

    When conservatives talk about the need to reduce the size and scope of the federal government they’re not merely whistling Dixie. There’s a staggering degree of overlap and waste. These are public dollars about which we’re speaking. It’s our money. There need to be drastic cuts to the various federal agencies.

    Now, having said all that, Rob touched upon the elephant in the room: Medicare. Have you ever seen those billings by doctors, hospitals, clinics, labs, etc.? There’s an enormous amount of room to cut Medicare reimbursements without driving healthcare providers out of business. Private health insurers regularly write down medical billings by 90% or more. The providers are OK with that. They accept it. Medicare discounts far less and thereby pays much higher percentages of medical billings. Why? That’s public money. Medicare has huge leverage. Not too many physicians are on the bread lines. The for-profit hospitals are printing profits. Quest Diagnostics and their ilk are drunk with money.

    We drastically can cut Medicare without compromising healthcare. This absolutely is critical. If we don’t we’re looking at a incipient fiscal disaster.

    Lastly, let’s talk about the “Third Rail.” This is the giant mondo elephant in the room.

    Give me absolute power and the first thing I would do is raise the retirement age to 75 for everyone born after 1965. But that doesn’t really change or immediate problems.

    This is where liberals really have to decide the importance of liberal ideology.

    The Boomers are getting their Social Security. Gen. X will get their Social Security. Gen. Y will not. The money won’t be there for them. The math doesn’t work. No matter how you slice it.

    If all we do is raise payroll taxes we’ll destroy net job growth and we’ll pour gasoline on a conflagration.

    The left has to be willing to agree to private accounts for the younger generation. Similar in scope and operation to HSA accounts. We need to wean off younger workers from this program. Those who still are many decades away from age 65. The program perhaps made sense when the average life expectancy was so much lower and the population was so much lower. In any event it’s a moot point. The program is in place. It’s water under the bridge. No longer does it make sense, however. Not for those born after 1980.

    If we don’t deal with Medicare and especially with Social Security none of this banter about the budget deficit will matter. Soon our debt to GDP ratio will be catastrophic and for the first time in our history an entire generation will have a worse standard of living than its predecessors.

  74. Hey Norm says:

    Dear Nickie…
    “…When conservatives talk about the need to reduce the size and scope of the federal government they’re not merely whistling Dixie. There’s a staggering degree of overlap and waste…”
    Then why don’t they ever…ever…go after it? Because it’s vastly overestimated in their rhetoric.
    Why didn’t Bush go after it when he had full control over Congress?
    Because. It. Is. A. Myth.

  75. Tsar Nicholas says:

    @DRE: Wow. Do you really not understand the difference between a private company paying the salary of an attorney who works for said private company and the federal government paying the salaries of federal workers? How exactly does “society” pay for my salary?? Yikes. Chief, my salary is paid by the private owners of a private company that earns private profits. On the other hand, your tax dollars (and mine, and Rob’s, and Norm’s, and Joe’s) pay the salaries of OSHA inspectors, EEOC case workers, DOL inspectors, DOJ admin. workers, etc., etc., etc. Whoa. That’s really, really scary. For your sake I hope somehow I’m misunderstanding that comment of yours.

    Getting back for one moment to Gen. Y and to Social Security, some will say that private accounts are a disaster in the making and that in the end the government will have to bail out those accounts in any event, resulting ultimately in larger payments. I disagree with that. Those who are savvy enough to opt for private accounts will be savvy enough to diversify and not to take untoward risks. But here I’m nevertheless willing to compromise. I’d be willing to limit private accounts to a mandatory diversified portfolio of short-term government debt, short-term agency debt, short-term muni bond debt and short-term, high-grade corporate debt. Far too paternalistic for my tastes, but sometimes you have to give up ground.

  76. Tsar Nicholas says:

    @Hey Norm: Norm, you’re joking, right? Conservatives for decades have been trying to go after federal spending. Tip O’Neill wouldn’t discuss it. Gephardt and Clinton fought tooth and nail against it. Daschle fought like a demon against it. Obama, Reid and Pelosi last year caved in to the GOP, granted, but only by half measures.

    Norm, Bush was a retard when it came to federal spending. He wasn’t a conservative. Citing Bush on this topic is like me citing Zell Miller and then asking you why Democrats want to increase military spending. Come on, Norm, you know better than to use Bush as a talisman for putative fiscal restraint by conservatives.

    The specter of federal deficit spending is not a “myth.” You really need to rethink that. If you have kids and if they’re not going to inherit gobs of money they won’t be able to retire. Seriously. Debt is a four letter word. Ultimately the bills come due. It’s inevitable. Gen. Y will face much higher inflation rates and much higher interest rates than Gen. X and the Boomers faced. Slower macro growth. Weaker job growth. You can disbelieve me all you want. Fine. Disbelieve it. European leftists for decades categorically refused to believe that deficit welfare spending was a problem. Conservatives were shouted down and ridiculed. Well, look at Europe now. Look at Greece. Look at Spain. Look at Italy. Look at Ireland. Juxtapose those calamities to the U.S., with the latter’s much larger population and higher endemic rates of crime and blight. Not a pretty picture.

  77. DRE says:

    @Tsar Nicholas: Of course I understand the difference. My point is that what you describe yourself doing is functionally equivalent but in a different interest. Private entities pay you to protect and further their interests. Society (our elected government) pays these regulators and enforcement personnel to protect the common interest. And much of what you and they do is in direct conflict. It’s hardly surprising that you would believe your contribution is more valuable, and that they are a waste. On the other hand I believe that our society as a whole would benefit by making sure that the common interest is as well protected as powerful private interests are, and am suggesting that this is not currently the case.

  78. Rob in CT says:

    The Feds have the EPA. Every state in the country has a counterpart agency.

    I know this perfectly well, Nick. I work in environmental claims, man. Most of the time, EPA isn’t directly involved. Of the files I have right now, only a small number involve the EPA directly. Mostly it’s the state (or local) agencies, or private party claims.

    In my experience, often state agencies are not particularly vigilant. I’ve lost count of the number of times I’ve seen environmental investigations just quietly lull for years at a time because nobody at state DEP was paying full attention (for whatever reason, be it underfunding, poor leadeship, etc). Sometimes that’s just prioritizing, and that’s ok. But for every case I’ve seen where directives from DEP result in delination to the nth degree, I’ve seen a case that just sat for a few years ’cause it wasn’t on fire. How that adds up to duplication of effort, I don’t know.

    I can think of 1 case where the EPA really is guilty of stepping in unnecessarily (and making things much worse than they needed to be – really, this one instance did involve egregious behavior by EPA). It’s not my case, but I’m familar enough with the details to know they messed up big time. They’re not perfect. But generally they do not get involved in every little mess (indeed, there are rules that generally prevent such).

    So I guess I just don’t follow your argument. This may be a case where you assumed you could bluster about it, figuring I didn’t have any actual experience…

    I’m open to the possibility that there is too much overlap, in general, between federal and state counterpart agencies. However, you seem to be shifting over to “turn XYZ over to the states.” Well, that doesn’t necessarily save money (it could actually cost money), depending on the details. Mainly what it does is shift money (off the Federal budget down to some state budget). My guess is that you assume it would then be cut at the state level.

    As for Medicare: yeah.

    For Social Security – much less is required to deal with SS. Retirement age to 75 strikes me as more than is needed (but that’s because I’m not refusing to accept tax increases back to normal post-WWII levels).

    There is indeed some tension between the liberal dedication to medicare and social security and other liberal goals.

    some will say that private accounts are a disaster in the making and that in the end the government will have to bail out those accounts in any event, resulting ultimately in larger payments. I disagree with that. Those who are savvy enough to opt for private accounts will be savvy enough to diversify and not to take untoward risks. But here I’m nevertheless willing to compromise. I’d be willing to limit private accounts to a mandatory diversified portfolio of short-term government debt, short-term agency debt, short-term muni bond debt and short-term, high-grade corporate debt. Far too paternalistic for my tastes, but sometimes you have to give up ground

    I think you overrate investor “savvy” and the degree to which savvy even helps. However, that’s at least an interesting compromise offer. Not that Social Security is really the problem. The long-term problem is almost entirely about medical costs.

  79. Rob in CT says:

    @Tsar Nicholas:

    And Paul Ryan? What’s his excuse? Where was he during the Bush the Lesser years? Voting in favor of the tax cuts + increased spending, that’s where. So no, I call bullshit on your “No True Scotsman” attempt.

  80. Brummagem Joe says:

    @Tsar Nicholas:

    Private health insurers regularly write down medical billings by 90% or more. The providers are OK with that. They accept it. Medicare discounts far less and thereby pays much higher percentages of medical billings.

    LOL….Your ignorance never fails to amaze Counsellor Nicko….. Private carriers write down most billings but not by 90% and Medicare consistently pay lower reimbursements than private carriers…..that’s why many doctors and hospitals won’t take Medicare patients.

  81. grumpy realist says:

    If Republicans were *really* interested in cutting Medicare costs, they’d be squawking much more about the responsibility of each American to reach 65 having taken good care of his health…

    Since 70% of aging is tied to lifestyle, why shouldn’t we start trimming the health services of people who don’t exercise/eat junk food/get obese? Or smoke cigarettes? Drink too much? Or at least charging them a much higher percentage of the costs?

    Also, cut down on all those Medicare scooters. Get your fat duff out of the couch and walk, right?

    Hmmm? Republicans? Hello?

  82. Hey Norm says:

    Nick…
    Oh I see…Bush wasn’t a Conservative.
    Well I guess that’s as good a dodge as any.

  83. DRE says:

    @Tsar Nicholas: The left has to be willing to agree to private accounts for the younger generation. Similar in scope and operation to HSA accounts

    But of course it would be unconstitutional to mandate either of those, even with just a tax penalty, so the people who can no longer work or who get sick but haven’t adequately prepared will just have to be allowed to die in peace because there will be no funding stream to pay for retirement or health care.

  84. Brummagem Joe says:
  85. Tsar Nicholas says:

    @Rob in CT: We run in different environmental circles. Here in Cali. we have 5 enforcement cases against us and all are by state/local agencies. All vigorously are and have been administered. All have been cleaned up, monitored, sampled, re-sampled, re-monitored, nitpicked, for years and years, and now, finally, mercifully, are in NFA status. Hundreds of thousands of dollars later.

    What I’m saying is cut EPA and the rest of the federal alphabet soups in half. That saves a lot of federal dollars. I’m not talking about shifting money around and playing a shell game. In various places the Feds don’t need to spend any money whatsoever and there won’t be a net negative effect on enforcement. Cali. is the perfect example and Cali. alone is more than 10% of the nation’s population and by far the nation’s largest local economy. Hell, you can’t blow your nose in Cali. and not have ARB or SWRCB probing every orifice in response. Believe you me, neither air nor water quality in Cali. would suffer one iota if the EPA completely was excised from this state.

    Ryan is a minor leaguer. Elect me emporer with the power to rule entirely by fiat. You’d see some real cuts, Chief. 😉

    @DRE: I’m not making a statement about relative values. You’re entirely missing my point. There’s also a fundamental dichotomy of which you apparently are insouciant.

    When private companies spend money the potential losses are encapsulated. If River City Petroleum goes out of business because they spent too much money the pain will be felt by several hundred people and by couple of dozen or so counterparty businesses. When the government spends money, however, the prospective negative ripple effects are felt by the entire population.

    Public money doesn’t exist in a vacuum. If we don’t cut federal spending and if the U.S.’s debt to GDP ratio reaches 125%, for example, the pain will be suffered by hundreds of millions. By way of example look at Europe. Slow growth. High unemployment. High interest rates. All three of which lead to a vicious cycle. To avoid that happening here we need to spend less federal dollars. I’m not denigrating what federal employees do. I’m not saying that what I do is “worth more” than what they do. What they do, however, is on the public dime. That’s the inherent difference. Hence the need for different treatment.

  86. the Q says:

    To Tsar,

    Chief, give up your mantra of overlap and waste. this is but a small part of the problem. How about the $25 billion that was lost as a result of the inheritance tax not being in effect in 2010?

    And you don’t know shite about how pollution policy and enforcement of these policies in California are actually promulgated. I won’t bore you with the details, just suffice to say if you knew what you are talking about, especially if you are a Californian, then you would know why we have an AQMD and how this differs from the federal EPA.

    In fact, our regulations are much more stringent than federal laws, since the pollution in the LA basin is much different than pollution in Wisconsin, hence the need for state’s to set their own policies to deal with local issues.

    Many of your suggestions make sense as far as cutting spending, but you lose all credibility with the “don’t raise taxes” mantra.

  87. DRE says:

    @Tsar Nicholas: @DRE: I’m not making a statement about relative values. You’re entirely missing my point.

    I’m not missing your point, I’m making my own. But you are missing mine. If a business spends too much on lawyers and goes out of business it is isolated as you say. My concern is with businesses spending money on lawyers (or lobbyists) in order to either avoid regulation or avoid the consequences of violating them, and then imposing costs on the public as a result. It is fine for you to argue that the regulations are unnecessary or impose too much cost, but that is a different matter from saying that those who enforce the regulations are a waste. If the regulations are worthwhile then they have to be enforced. I happen to believe that workplace safety, environmental protection, and labor relations are legitimate public interests that are not the priority of private businesses. The overall economy bears the cost of both regulators and private lawyers and administrators. Either one could be cut without directly affecting economic production but there is the potential for significant indirect effects.

  88. Brummagem Joe says:

    @the Q:

    And you don’t know shite about how pollution policy and enforcement of these policies in California are actually promulgated.

    Actually the Counsellor doesn’t know shite about anything. Based on the quality of his dialectic I’d say my very intelligent wired haired fox terrier dog Norman would have as much chance of passing the CA bar as Nicko…..but he is almost as funny as Norman.

  89. matt says:

    @Tsar Nicholas: I agree that we should be pushing new Nuclear power plants. Gen IV designs such as the LFTR are ready to go and while some other countries are starting to build facilities we’re still relying on mostly Gen II reactor designs for power. Obviously burning less oil decreases demand a little. Burning less coal is always a hug plus because fly ash alone can be more radioactive then some nuclear waste and that’s not even dealing with the mercury and other nasty chemicals released by burning coal. IF we made a serious push into LFTR reactors we could have extremely safe reactors that have passive shut down capabilities. The ability of some of these GEN IV reactor designs to run off what we currently consider nuclear waste while neutralizing the radioactivity is just icing on the cake.

  90. Ben Wolf says:

    @Tsar Nicholas II: Every dollar the government spends goes to the private sector. Furthermore the federal government is the only source for new net financial assets the private sector has. It can’t be any other way because government has a monopoly on creating dollars. The enormous error in your obssession with government “taking” money from the private sector is that you think businesses can somehow create money. Sorry but that’s called counterfeiting when it happens. The private sector creates wealth, not money, and to create wealth it needs the dollars which government supplies.

  91. Rob in CT says:

    We run in different environmental circles. Here in Cali. we have 5 enforcement cases against us and all are by state/local agencies. All vigorously are and have been administered. All have been cleaned up, monitored, sampled, re-sampled, re-monitored, nitpicked, for years and years, and now, finally, mercifully, are in NFA status. Hundreds of thousands of dollars later.

    Oh, I’ve seen diligent enforcement. I’ve seen lax enforcement too is all. I don’t have a specific territory assigned to me, you see, so I see sites all over the place. There are a handful of states I’ve missed by chance. Also, how deep I get into a particular matter varies greatly because sometimes it’s a no-brainer coverage denial (which is dependant on both policy language and state insurance coverage law: what works in New York doesn’t work in New Jersey, and so on).

    Anyway, EPA tends to not get involved except in the really big sites. I think I could agree that CA could probably handle even the big Superfund sites fine on their own (with the caveat that if there was a dispute between CA and a neighboring state, the feds might be needed). How would you actually go about doing that as a practical matter? Writing a CA-exemption into the various federal laws? Or just telling EPA quietly to ignore Cali?

    Ryan’s not a minor leaguer. He’s a major league fraud.

  92. Brummagem Joe says:

    @matt:

    I agree that we should be pushing new Nuclear power plants.

    As it happens I’m also in favor of nuclear energy but there are two big problems. Firstly PR. It’s going to take a huge educational effort to convince the general public that nuclear power is both safe and economical. There is massive public scepticism out there which hasn’t been helped by recent events in Japan. Now who other than the govt has the resources and the reach to conduct such a PR campaign? Secondly and even more important capital. Nuclear generating stations cost four times as much to build as conventional fossil fuel ones and take much longer to construct. So the cost has to be amortized over a much long timeframe. Who is going to produce this capital other than govt? Basically all the major nuclear industries in Europe and Japan were underwritten by govt. either because the generating corps were state owned or subsidies.

  93. Tsar Nicholas says:

    @matt: Yes!! Were I in charge there would be these new-generation nuclear power plants dotting the entire landscape. Let’s stop transferring wealth to the likes of the House of Saud and start enriching American workers while simultaneously lowering the costs of power for everyone. I love it.

    @Ben Wolf: Is this one of those clever, subtle veins of sarcasm and irony that one sometimes observes on Internet threads? Are you pulling my leg and laughing at how I haven’t been able to figure out the joke? I hope so. Really, I hope so. If not, however, if you’re serious, if you actually believe at face value what’s stated in that paragraph . . . . I’m speechless. Literally. I don’t know what to say. I don’t know where to start. I . . . . it would be tantamount to endeavoring to explain a laser light show to a person blind from birth. Keynes saw that comment and began rolling over in his grave. Galbraith just read that comment and rolled over in his grave. Seriously. They did. That’s the left, mind you. Von Mises just read that paragraph, rolled over in his grave, his ghost committed hari kari, then immolated itself.

    Ahem. OK. I’m going to run one example by you. Just one. I could write 10,000 of them. But obviously that would be a waste of bandwidth. Overkill too.

    Here you go:

    Private syndicated commercial real estate partnership in California borrows money from Wells Fargo Commercial. The money loaned to the partnership by Wells Fargo is derived from custodial account deposits made into Wells Fargo by Canadian hedge funds and by the proceeds of the bank’s own investments in Euro-denominated equity and bond funds.

    California partnership takes the loan proceeds from Wells Fargo then builds a retail strip center mall. Then it leases said mall to several corporate tenants, including Planet Fitness, Dollar Stores and Great Clips, along with a few mom and pop tenants. Tenants pay rent to California partnership. Rents mostly are derived from Mastercard and Visa charge payments for services rendered. Partnership earns net income from those rents. Eventually the partnership sells the shopping center, pays off the loan to Wells Fargo, and keeps the net equity as a capital profit. Partnership takes the proceeds from that capital transaction and issues returns of capital plus dividends to its partners via wire transfers.

    Was the U.S. federal government, in general, and federal government spending, specifically, responsible for 100% of the revenue and then the profits involved with that transaction scenario? If your answer is “no, duh, of course not,” then OK. But if your answer is “yes, federal spending was responsible for 100% of the revenue and then the profits involved with that transaction scenario,” then Chief it’s time to log off the Internet and to check yourself into an ER for immediate medical attention.

  94. Ben Wolf says:

    Private syndicated commercial real estate partnership in California borrows money from Wells Fargo Commercial. The money loaned to the partnership by Wells Fargo is derived from custodial account deposits made into Wells Fargo by Canadian hedge funds and by the proceeds of the bank’s own investments in Euro-denominated equity and bond funds.

    No

    Banks are never constrained by their deposits. See, in 1917 we had this thingie called the Federal Reserve Act which abolished private banking. The Federal Reserve became the monopoly supplier of reserves to banks, which those banks can access at any time. Banks do not check their deposits or reserve levels before making a loan, Tsar. Anyone who has worked in reserves management at a bank can tell you that.

    When a credit-worthy customer walks into the door and applies for a loan the bank simply approves it and relies on its overdrafting with the Fed. At the end of the day reserves management checks to see whether the bank has sufficient reserve levels on hand for the check they just issued to clear. If it doesn’t then it goes to the interbank market or to the Fed’s discount window to obtain what it needs.

    Banks leverage government money under the reserve system. The money supply temporarily expands when a loan is made and then contracts when the loan is paid back plus interest. It’s basic accounting: the loan and liability net to zero with no creation of net financial assets. You clearly do not understand the difference between wealth, which uses the dollar only as a metric, and money itself which is required so that transactions can occur.

    Only the federal government can create new dollars, and it does so when it spends more into the economy than it takes out by taxation. We call that deficits.

  95. Tsar Nicholas says:

    @Rob in CT: No, I don’t want to write new regulations to deal with a regulatory scheme. Cut the EPA’s budget. Make them figure out how best to spend it. Make them do with less. If they want to spend every penny of their remaining dollars on Superfund sites in Texas, then OK. If they want to be more judicious with your tax dollars (and mine), however, then bully for them.

    Take that paragraph and juxtapose it upon DOL, EEOC, OSHA, DOI, DOE, SEC, HUD, NLRB, etc., etc., etc. Tamp down Medicare spending.

    Don’t phase in the cuts over too many years. That’s a common mistake by politicos. The problem with phased-in spending cuts is that it keeps kicking the can down the road. That’s not how private companies do it. In the private sector when it’s really time to cut you cut to the bone, all at once. Amputating the arm is better than letting it rot away from gangrene.

    Give it a year. Then take stock. How is the economy growing? What percentage of the displaced federal workforce have been absorbed back into gainful employment in the private sector? Can we cut more? Have we cut too much? If there’s still room to cut then you cut hard again. Rinse, repeat. Until we get our fiscal house back in order.

    Take steps to grow the economy and to create jobs. Build a few dozen of those new-generation nuclear power plants. Build some new LPG and LNG plants. Build some new oil refineries. That in turn lets you build rail, road and pipeline links.

    Take California’s MICRA statute and make it a national tort reform law. Help lower medical costs for everyone, including Uncle Sam, by drastically reducing medical malpractice insurance premium costs.

    We don’t need to raise taxes. Let’s see how much we can accomplish with spending cuts and regulatory reforms. (Sorry, force of habit.)

    Rob, if we keep waiting and waiting to make cuts to the federal government it’ll wind up being too late. The left has to realize this. Otherwise we’re headed for a fiscal and economic disaster. I don’t mind Greek food. I love Italian food. I love Spanish wine. I don’t want the U.S. to wind up, however, like Greece, Spain and Italy.

  96. Tsar Nicholas says:

    @Ben Wolf: Ah, I get it. Sorry, Chief, for not catching on sooner. My bad. You’re one of those Ron Paul disciples that on occasion I read about on the Internet. That reference to the Federal Reserve. The veiled reference to “new money.” The stilted, rote recitation of the creation and use of bank reserves. I get it now. No problem. Say hi to the folks at Bellevue.

  97. David M says:

    @Tsar Nicholas:

    Don’t phase in the cuts over too many years

    If I understand this correctly, you’re extremely worried about the effect any tax increases would have on the economy, but still support massive immediate spending cuts? That’s so ideologically blinded and inconsistent that it’s almost literally unbelievable that a person could hold both positions.

  98. Ben Wolf says:

    We don’t need to raise taxes. Let’s see how much we can accomplish with spending cuts and regulatory reforms.

    Spending cuts are tax increases.

    Take California’s MICRA statute and make it a national tort reform law. Help lower medical costs for everyone, including Uncle Sam, by drastically reducing medical malpractice insurance premium costs.

    Tort reform has never successfully lowered medical costs.

    Build a few dozen of those new-generation nuclear power plants.

    The market hates nuclear power.

    If there’s still room to cut then you cut hard again. Rinse, repeat. Until we get our fiscal house back in order.

    Europe is doing this. Their unemployment rate is rising and their economic growth is falling.

    That’s not how private companies do it. In the private sector when it’s really time to cut you cut to the bone, all at once.

    Government is not a business and cannot be run like one.

    I don’t want the U.S. to wind up, however, like Greece, Spain and Italy.

    The U.S. is not in danger of becoming Greece, Spain or Italy, who borrow in foreign currencies and run trade deficits they cannot counter via monetay policy. You have no understanding of why those countries are in trouble, only an anti-government ideology.

  99. Ben Wolf says:

    @Tsar Nicholas:

    Ah, I get it. Sorry, Chief, for not catching on sooner. My bad. You’re one of those Ron Paul disciples that on occasion I read about on the Internet. That reference to the Federal Reserve. The veiled reference to “new money.” The stilted, rote recitation of the creation and use of bank reserves. I get it now. No problem. Say hi to the folks at Bellevue.

    What aspect of my reference to the Federal Reserve is inaccurate? Go ahead and tell us, I’ll wait.

  100. Brummagem Joe says:

    @Tsar Nicholas:

    Ah, I get it. Sorry, Chief, for not catching on sooner. My bad. You’re one of those Ron Paul disciples that on occasion I read about on the Internet.

    Actually no Nicko. It’s MMT nothing to do with Paul who would be shocked at such a suggestion. As I said you don’t know shite. What a pity, I was so looking forward to king kong meets godzilla…LOL

  101. matt says:

    @Brummagem Joe: You are very correct that PR is a nightmare for nuclear power right now. What the public needs to learn is that the Fukushima plant was using old Gen I and Gen II reactor designs that are absolutely out of date. I have no idea how you would run a PR campaign to highlight the differences between the old dirty unsafe gen I and gen II designs in comparison to the much leaner and passively safe Gen IV designs. probably an entity on the level of the federal government would be needed to do so.

    For now all I can do is open the eyes of those around me 😛

  102. Brummagem Joe says:

    @matt:

    It would take years of public education and there isn’t the political will or resources. And then without govt support the economics don’t work either which is where the counsellor is up a gum tree.

  103. Tsar Nicholas says:

    @David M: Actually, no, it’s not inconsistent nor is it blind. There’s a lucuna in your thinking.

    The government already is spending far too much money in the abstract, far more than it needs to in order to provide necessary services, and to top it off it’s spending far beyond its means. Cutting 20% of government spending, for example, when the government already is spending at least 20% too much merely is reining the government back to the size at which it should have been operating in the first instance.

    If a private company is spending more than it’s taking in it has several options, right? One approach would be to hire a bunch of new salespeople to try to increase revenue. Well, don’t you see the problem? Those people will cost money. They won’t work for free. Then what happens if they don’t sell as much as you need them to sell? The company even is in worse shape.

    Now substitute in the foregoing paragraph the federal government for that private company and tax increases for more salespeople. That’s the analogy.

    The way it works in the private sector is that when a company is losing money and is insolvent or heading for insolvency is cuts its expenses to the bone. All at once. It learns to do as much (or nearly as much) with a lot less. It doesn’t cut small amounts here and there over the course of years. That doesn’t work. That only kicks the can down the road. Makes an untenable situation stay untenable.

    All I’m saying is that the federal government should do what private sector companies for decades have done in hard times: get its fiscal house in order. Tighten its belt. Spend less money. Then take stock.

  104. Ben Wolf says:

    All I’m saying is that the federal government should do what private sector companies for decades have done in hard times: get its fiscal house in order.

    So you advocate a government which puts its balance sheet before the private sector’s. What a shock.

  105. Tsar Nicholas says:

    @Ben Wolf: Oh, brother. Dude, I’m fully aware the U.S. won’t ever default on its debt, as Greece will and as the other PIIGS countries might. Obviously we can devalue our currency. They, on the other hand, are tied to the Euro and can’t devalue their currency. You’re so hell bent reflexively to contest everything that I say that you’re seeing things in my comments that aren’t there. What I’m saying here is that I don’t want the U.S. to wind up with an untenable debt to GDP ratio, high interest rates, endemic slow to negative growth and endemic high unemployment. Put aside the default dichotomy. Europe, in general, and PIIGS in particular, are disasters. Because for decades they had left-wing social welfare and tax policies. Don’t you get that?

  106. David M says:

    @Tsar Nicholas: Saying no to all tax increases for the sake of opposing all taxi increases in unrealistic. Saying no to tax increases because of their effect on the economy while advocating large spending cuts without regard for the economy is incredibly inconsistent. It makes no sense to hold both positions, as they contradict each other.

    Anyway, the federal government should never be run like a business, the analogy is about the worst possible. It’s so wrong it’s not even worth refuting.

    I’m curious whether you agree the federal budget should increase every year? Should the government be spending more on Medicaid and Medicare next year than it did this year? How about for transportation?

  107. Brummagem Joe says:

    @Tsar Nicholas:

    All I’m saying is that the federal government should do what private sector companies for decades have done in hard times: get its fiscal house in order. Tighten its belt. Spend less money.

    Ohhh Counsellor I’ll pass over the fact you said exactly the reverse of this earlier in this thread (and put it down to your usual muddled thinking) and just wonder where this marvellous economic education you to claim to have received took place if you were taught the simplistic idea that govts and corporations are remotely the same.

    Why isn’t a national economy like a corporation? For one thing, there’s no simple bottom line because much of it is involved in the provision of uneconomic but socially desirable and/or essential services. For another, the economy is vastly more complex than even the largest private company.

    Then there’s the fact that even giant corporations sell the great bulk of what they produce to other people, not to their own employees — whereas even small countries sell most of what they produce to themselves, and big countries like America are overwhelmingly their own main customers.

    Yes, there’s exports to other economies but six out of seven American workers are employed in service industries, which are largely insulated from international competition, and even our manufacturers sell much of their production to the domestic market.

    Getting the salient differences Counsellor or do you need a jack and jill coloring book?

  108. wr says:

    @Tsar Nicholas: ” No, I don’t want to write new regulations to deal with a regulatory scheme. Cut the EPA’s budget. Make them figure out how best to spend it. Make them do with less. If they want to spend every penny of their remaining dollars on Superfund sites in Texas, then OK. If they want to be more judicious with your tax dollars (and mine), however, then bully for them. ”

    So instead of figuring out what our needs are and budgeting accordingly, we should simply come up with an arbitrary figure to have agences and let them do whatever they want with it? This may well be the single dumbest thing the Tsar has ever said.

  109. wr says:

    @matt: ” What the public needs to learn is that the Fukushima plant was using old Gen I and Gen II reactor designs that are absolutely out of date. I have no idea how you would run a PR campaign to highlight the differences between the old dirty unsafe gen I and gen II designs in comparison to the much leaner and passively safe Gen IV designs”

    That’s actually the easy part of the PR campaign. The hard part is convincing people that all those nuclear execs and government officials who swore up and down that Fukushima was entirely safe while knowing it wasn’t are really telling the truth now…

  110. wr says:

    @wr: ” to have agences ”

    “To give agencies.” Sigh. I do miss that edit feature…

  111. Tsar Nicholas says:

    @David M: Why shouldn’t the federal government in these times be run like a private business? Why do you categorically refuse even to consider that approach?

    Not running the federal government like a private business has gotten us into this mess. You know what they say, about the definition of insanity, don’t you?

    I’m curious whether you agree the federal budget should increase every year? Should the government be spending more on Medicaid and Medicare next year than it did this year? How about for transportation?

    Annual COLA adjustments (capped, at the long-term, 50-year CPI-U avg. inflation rate) for the salaries of all federal workers who aren’t jettisoned in connection with my slash and burn plan. Annual COLA adjustments (capped the same way) for Social Security benefits and for SSI benefits. Capped annual COLA for all members of the military, in terms of wages and salaries.

    No, I would spend less for Medicare next year than what was spent this year. Medicare is a incipient train wreck of a disaster and it needs to tamped down.

    I would block grant all Medi-Caid monies and send to the states accordingly. Then I would base the following year’s grants on the experiences of the prior year. If the federal shortfall was x___ amount of dollars in the prior year then I’d factor that in for the next year’s disbursement.

    No, I would cut DOT along with every other federal agency, including DOD. Regarding DOT, the only items for which I would retain the same level of spending are airplane safety, maintenance, inspections, repairs, etc., and air traffic controllers. Everything else goes to the chopping block.

  112. Brummagem Joe says:

    @Tsar Nicholas:

    Not running the federal government like a private business has gotten us into this mess.

    Counsellor Nicko BSc (Econ) Failed, University of Bombay (Correspondence Course)….LOL

  113. David M says:

    @Tsar Nicholas: It’s a good response, if predictable. Yes, the business analogy is so incredibly misguided it does not deserve a response, and no I won’t give it any further consideration. (It’s probably close to the opposite of a business,(

    Block grant = cut spending on Medicaid, and specifically on poor people, while pretending otherwise.

    Anyway, Medicare spending should be increasing with the demographics as more people retire, and Medicaid spending should be increasing as the population increases. And transportation funding is close to the last place anyone should look to reduce spending. (It’s similar to the GOP looking to cut spending at the IRS.) Cutting spending just to cut spending is pointless.

  114. Tsar Nicholas says:

    @David M:

    Block grant = cut spending on Medicaid, and specifically on poor people, while pretending otherwise.

    No, not at all. Certainly you realize that Medi-Caid is a joint federal-state program. Aren’t the individual states in a better position than D.C. to determine how best to allocate those monies, along with eligibility requirements, reimbursement rates, etc.? Plus as stated if there was a federal shortall one year I would factor that in the following year. Back and fill technique.

    Medicare spending should be increasing with the demographics as more people retire, and Medicaid spending should be increasing as the population increases.

    That’s the European way of handling social welfare spending. Destination: train wreck.

    Also, regarding American demographics, it used to be that people turned 65 and then they retired on the spot. No longer. A far higher percentage of the over-65 population is not retired and still is working. Why provide them with public money healthcare when so many of them can be covered by employer-sponsored group health insurance?

    Now, mind you, I’m not saying to means test. I’m saying that if we continue blindly to spend more and more federal dollars on Medicare we’re heading for a fiscal calamity that negatively will affect the younger generations for the rest of their lives.

    Cutting spending just to cut spending is pointless.

    Really? It’s “pointless.” Wow. Even though it’s your tax dollars (and mine) about which we’re speaking? Why not have the Feds spend less of your money if they can spend less of your money? To me that’s the polar opposite of pointless.

  115. Ben Wolf says:

    Why not have the Feds spend less of your money if they can spend less of your money?

    Most people don’t mind paying taxes to help a woman in Detroit get surgery for uterine cancer. If you don’t like paying taxes you can always renounce your citizenship and move to a country that doesn’t levy them.

  116. David M says:

    @Tsar Nicholas: All states will do with a block grant is spend less money, period. There’s no state efficiency genie with a magic wand ready to cover more people for less money. Medicaid is known for paying providers less than Medicare and much less than private insurance, so short of a single payer or NHS solution there’s no other way to save money there other than simply telling poor people they are out of luck.

    The number of people covered by employer insurance has been steadily dropping, so I doubt your scenario is accurate. Anyway, I can’t see a lot businesses wanting to provide health insurance to the elderly, so I’m not sure what you’re describing is a good thing.

    The fact that the government would spend more on some things as the population increases is pretty much common sense, spending less in this scenario is basically unworkable. Shifting medical costs from the government to the private sector doesn’t really accomplish anything, medical costs overall are the problem, not just medicare. If you are correct and things are unsustainable, shifting the same costs from the government to someone else doesn’t solve anything.

    And cutting spending just to cut spending is not only pointless, it’s the opposite of what should be done. We could spend less money in the near term by eliminating transportation funding and pell grants, but that wouldn’t be smart.