How would a default on interest payments work? Could the President do that unilaterally, or would it need Congressional legislation?
Personally, I think that is a likely outcome if we do not take substantial steps to cut the deficit. Uncle Sam just says to bond-holders “Too bad you lost your money. Better luck next time.”
The benefits to that approach is that removing interest payments would make it much easier to balance the budget afterwards. That combine with a balanced-budget amendment may be the best option if the worst happens.
The best option in the short-run would be transferring all domestic programs to the states, who have balanced-budget requirements. Then each state could decide whether they wanted big spending and bug taxes or lower spending and lower taxes. The remaining international programs would be easy to pay for with current revenue.
Don’t try to force a national solution that half the country will hate. Let each state decide for themselves.
Nothing will happen to address this issue until a crisis arises; it is true in the private sector with troubled companies and over levered balance sheets that do not get addressed until there is a default and a restructuring ensues. When debt markets sell off signaling to the US that its "paper" not worth what it once was, only then will Pols get with it and take harsh action that with some foresight might have been less painful than waiting until markets said now the time to fix things.
In terms of transitioning from the high trust to low trust system, is Japan or Italy ahead of the US and should experience it first? What metrics besides Debt/GDP and deficits are useful?
“What we need to prevent this from happening again”
When did it happen the first time?
“…is some sort of Constitutional amendment requiring a balanced Budget.”
I find it hard to believe that such an amendment would stick but plausible enough (eg. Requiring a 75% override by each branch of Congress to violate, so we could address and actual war).
Reining in the entitlements would solve way more than half of the problem. And fixing SS ain’t even that hard, even how long we’ve waited. [fixing Medicare will be.]
I don’t understand why you use the word “default” re SS and Medicare “obligations”, since those are not contractual/legal.
"What we need to prevent this from happening again is some sort of Constitutional amendment requiring a balanced Budget. But we missed that opportunity decades ago."
And, it's not like our current generation of leadership is very concerned with being sticklers for the letter and spirit of the Constitution.
I'm a bit more sanguine about the prospect for avoiding catastrophe simply because it's not a given that the bond market follow the same "everything is great until it is suddenly terrible" model. I already greatly minimize the amount of government bonds I'm buying. While I'm more sophisticated than the average investor, I think sophisticated investors are just the leading edge of trends.
That is, the bond market itself is kind of a balanced budget amendment. You can only continue to borrow so long as you have people willing to lend you money.
“That is, the bond market itself is kind of a balanced budget amendment.”
I think this was clearly true in the 1990s, and likely true up until the 2007-2009 financial crisis. I don’t think it’s true today, after financial bailouts, QE, ZIRP, etc.
Like you I think long term and even medium term bonds (save TIPS) are terrible risk/reward given that the “Helicopter Ben” Fed will if nothing else ensure we never have deflation again (and I say this last as a *good* thing, not a bad one, even as bailouts, ongoing QE, etc. are imo bad things indeed).
"And, it's not like our current generation of leadership is very concerned with being sticklers for the letter and spirit of the Constitution." - Unfortunately, our so-called leadership continues precedent set by others, even such esteemed as Lincoln, who suspended habeus corpus without Congressional approval. Or let's look at Roosevelt's internment of Japanese citizens. Arguments can be made there were special circumstances in these cases, but our leaders have not always been compliant with the Constitution when it didn't suit their purpose. To be clear, I do not defend the current generation of leadership on this point, they're more lame in nearly every manner.
Reducing social security and medicare payments would not be a "default" any more than reducing spending on any other program constitutes a default. I know that seems like quibbling, but one small reason we're facing such a problem with medicare and social security is all the politicians and interested parties abusing the english language to make it easier for people to pretend Social security and medicare are something other than they are.
We don't call it welfare even though that's obviously what it is. We call it "social insurance". We call numbers on a sheet of paper somewhere the "trust fund" even though there is no fund but just a mechanism for determining what payments and reductions in payment are automatic and which would require legislative action.
People on medicare and social security aren't owed anything, morally or legally, that would constitute calling a change in the program a "default". Well, they are morally owed something for having ~15% of their wages taken from them over their working career, but the obligation is from the lying bastards that set up the system and/or contributed to making it harder to fix, not current taxpayers except to the small extent those groups overlap.
I realize it's not going to make a difference, particularly when you are using the language with an audience that probably is almost universally aware of what the reality is, regardless of the language used. But still, it couldn't hurt for people not looking to get reelected to consistently use more precise language.
Americans have been lied to for 90 years that they "pay into" Social Security and after they retire they "get back their money". They largely believe it. They honestly believe that any lowering of benefits is stealing their money. Thus the metaphor, "Hands off Social Security and Medicare" as if there is a big pot of money somewhere that reformers would be trying to raid.
No, it's not technically a default. But to many people, it's worse: a betrayal. Anyone who tries to cut SS and/or Medicare without changing people's perceptions is committing political suicide.
I'm not sure if that was intended to agree with me but that last sentence is exactly why I think it's worth pushing people to use accurate language. Telling social security and medicare recipients the truth isn't likely to get many of them to care about anything other than getting money from the government. But you're definitely not going to change anybody's perception by continuing to use misleading language. Why not use accurate language if it doesn't cost anything and isn't particularly clunky?
Pretty much agree. But I can't agree with "Well, they are morally owed something for having ~15% of their wages taken from them over their working career, but the obligation is from the lying bastards that set up the system and/or contributed to making it harder to fix, not current taxpayers except to the small extent those groups overlap." They have saved much less than they would have absent the lie and the lying bastards that set up the system aren't around and the ones who continued the lie would be hard to pick out, and most everyone who knew better didn't call out the lie. But about 99% of people didn't give it a thought. So there are d*mn few people to collect from.
Innocent parties are going to get hurt no matter what is done.
“Innocent parties are going to get hurt no matter what is done.”
I agree that’s likely to happen, but not necessarily.
SS ain’t a Ponzi scheme if we have a sufficiently continually growing economy and a sufficiently continually growing pool of workers paying into the system.
And benefits need not ever be *cut*, we merely need to reduce the rate of growth of those benefit promises [e.g. by replacing the growth of benefits based on average earnings increases to being based on CPI - this one change would fix nearly 80% of the SS shortfall; I’ll send the Substack link if you need it] and once again slowly raise the full benefits retirement age. Here, too, language matters 😏
Now I agree there’s sadly a very good chance we don’t get here, because politicians - 99% of Democrats plus DJT, in particular - demagogue any changes to SS.
Medicare OTOH *is* a Ponzi scheme that cannot be fixed absent substantive changes, and the numbers are much tougher. The *only* bright spot there is that people only expect that “Medicare” will exist, they don’t have any formula or amount in mind that was promised to them.
Nah, none of these is all that hard (which is different from saying they are easy, and they are all almost f-ing impossible on a sustained basis if Dems are in charge).
Despite our somewhat dysfunctional political system - frankly, for just about everything but entitlements, I’m *thrilled* that our Founders made it difficult for Congress to “do things” - I remain very confident we will muddle through on SS, even though the inevitable delays will make it more costly to do so than if we dealt with it earlier.
Yes, tax revenues are definitely too low and levied on incomes rather than consumption. I notice that people who want to reduce deficits by less spending never have anything specific in mind. What DO they think we should spend less on? Farm and ethanol subsidies? Shifting from subsidizing investment in CO2 reducing technologies to subsidizing the reduction? Great, but that just does not add up to THAT much.
"Government employees usually demand higher salaries to compensate for inflation."
An interesting thing to observe in recent years is the rapidly declining, um, "employee advocacy" role of the leadership of the government employee unions, who are supposed to be agents and representatives of employee interests, but increasingly behave as if insulated and disconnected from those interests. This from unions formerly purported to be 'powerful' and 'feared'.
Instead, like many other left-leaning institutions, the leaderships of those organizations are no longer staffed with folks who came in after long careers in the ranks, but of professional (even 'hereditary' - not joking) white collar administrator / manager types, living fat, soft, comfortable sinecure-like jobs on extremely reliable dues revenue streams, which they hand mostly to Democrats for personal favor exchanges that are increasingly disconnected from employee interests in a kind of weird analogy to "public choice" incentive problems. This new class of people tend hold their positions for the long term and are extensions of and completely integrated into (and often pass through the revolving doors of) the the greater Democratic Party Machine, with which no """negotiation""" is genuinely an "at arms-length" interaction. Importantly, they can be relied upon to not cause trouble for The Party even when strong majorities of union members are very upset with the imposition of new woke quota policies, or even in the worst cases pretty easily leaned on with small carrots and sticks should they raise a fuss which threatens to cause trouble for the wrong people at the wrong time.
What this has meant in practice is that Democratic administrations have been able to low-ball statistics about inflation and cost of living and squeeze a tiny bit of budgetary relief by setting federal civilian employee raises a bit below inflation and so decline slightly in real terms. Like the woke policies, you can bet this causes a lot of passionate angst and grousing among the ranks - especially since there is another wave of people about to head into retirements set by recent nominal pay levels, and yet, the leadership is ... notably sanguine and insouciant about the whole matter.
What's more mysterious is why a Democratic administration that doesn't otherwise seem to have any qualms about policies that blow up the short or long-term budget orders or magnitude more severely than shaving a few real-terms percent off federal salaries would even bother worrying about this stuff. My guess is that the non-left media is able to make a lot of hay out of the message that, "While you were struggling, federal workers got a nice fat pay raise ... " and that bites politically just enough for Democrat Party leadership to want to avoid if they don't think they'll pay any price for it. And since they now have the support and contribution-streams of the gov union leadership completely locked-up, who will vote Democrat and donate to Democrats until the bitter end, then the party can just take all that for granted and know it won't pay any price.
Robert Michels did derive his iron law of oligarchy largely on the strength of his observations on German social-democratic trade unions, but one would like to think that of all people, federal employees - many white collar administrators themselves, with long careers in manipulating procedural outcomes - should be able to throw out bad union management! Perhaps they just prefer to suffer a bit to avoid making a big stink that would be politically damaging to Democrats, as your last paragraph implies? Or had they really let willing people manage their unions and so dug a hole for themselves, as Thucydides writes about the Delian League?
---
[I]f [Athenians] had more than their fair share of service, it was correspondingly easy for them to reduce any [ally] that tried to leave the confederacy. For this the allies had themselves to blame; the wish to get off service making most of them arrange to pay their share of the expense in money instead of in ships, and so to avoid having to leave their homes. Thus while Athens was increasing her navy with the funds which they contributed, a revolt always found them without resources or experience for war.
"but one would like to think that of all people, federal employees - many white collar administrators themselves, with long careers in manipulating procedural outcomes - should be able to throw out bad union management!"
I don't know if this happens to you or others, but it's funny how sometimes I discover I've been thinking a lot about a subject and accumulating a lot of observations and attempting to hang them on the skeleton of an inchoate explanatory narrative without even realizing I've been thinking about it. And then someone says something and just starting to talk about it opens up a whole can of worms. Point is, that turns out to be a big topic, and I'll spare everyone from getting too far into the weeds.
A quick summary is that the situation is "overdetermined", so to speak, as a number of long-term trends have combined to make "getting better public union leadership" both difficult to do and pointless even if achieved. In addition to details that apply particularly to the public union situation, there is the broader and more general phenomena that have affected American unions in general.
The most important of which is that - like with many other "private sphere" public institutions (to include religious ones) that threaten to rival The State and The Party in terms of loyalty, power, and influence - to the extent one of these institutions does something the The Party endorses, then The Party has The State do it, which crowds out the function for the alternative institution. On the other hand, if that institution does something The Party dislikes, then it finds a way to neutralize or suppress that function.
This is a somewhat distinct (though still related) mechanism from ordinary Conquest Law leftward drift. One ends up with completely hollowed-out (or fake, either Roman Senate or capture 'skin-suit') institutions which cannot avoid the accurate public perception that they are increasingly powerless, impotent, and irrelevant, and thus necessarily declining in status. One can manipulate the procedural outcomes of a real institution, and one often has the incentives to do so. But with a fake, Potemkin institution, there's neither any way nor any point in trying to do so. It doesn't matter if you're a card shark if the game is rigged.
Actually, in our system of divide government, just because you are correct re: the definition of words, doesn’t make you right.
We ain’t a parliamentary system.
In practice any change requires a majority in the House, 60 votes in the Senate and agreement by the President in order to make it happen. So the reality is that it is in fact very difficult to alter such spending in our political system and current political environment.
It is "difficult" only in the sense the people in Congress don't want to reform anything. Again, the top comment was right- using mandatory or "very difficult" is a way of masking the fact that no one in D.C. wants to change things.
You were doing fine until you said “no one in D.C. wants to change things”
We could have fully half of Congresscritters who legit “want to” change and it likely would still not be doable, given the 60 vote requirement in the Senate plus the need for the President to sign the bill.
I ain’t saying we are anywhere near 51% who legit want to right now. But it’s a lot more than “no one”. And of course, few of those people are gonna stick their political necks out now given the reality that we ain’t remotely close to a quorum on doing anything about it.
LOL! Sure, Andy, we could have fully half of Congresscritters who legit want to change things but we don't. We don't really even have 10%. Haven't you ever asked yourself why the two parties only push for reforms from their side when they lack a majority? Or ask yourself when something really is important to a majority party in Congress they find a way to enact it without allowing a filibuster to get in the way (see the ACA or judicial/cabinet appointments).
If Congress isn't passing something it is because there never was majority of any kind supporting it. Both parties like being able to spend money without taxing anyone. They will drive this bus right off the cliff because neither wants to stop it.
You can play the false equivalence game and pretend that both sides are equally bad, but this is not in fact the case.
Many Republicans want to address this. Rand Paul does. Paul Ryan certainly did. I amo not claiming that it is a majority of Republican Senators, but there are at least a significant minority number of conservative senators that do.
I defy you to show me even a single Dem Senator.
All the a Dems are terrible on this point. Trump is terrible on this point.
Some Republicans are bad on it. Many are good. Many are just mum. But few of even the good ones are gonna speak up when in the current environment there is ZERO upside, and non-zero downside to doing so
Separately, you simply have your facts wrong re: the filibuster. The ACA *was* passed with 60 votes! And Dems led by Harry Reid removed the filibuster for judicial appointments and cabinet appointments - the so-called “nuclear option” back in 2013. GOPers warned it was a bad idea. Go look it up.
The GOP is *highly* imperfect. Trump - who otherwise governed well as president - is bad on spending (*almost* as bad as the Dems) and every bit as terrible as the Dems on entitlements.
But you make a false equivalence when you say the GOP is just as bad as the Dems on this stuff. Because it ain’t true.
Actually, in our system of divide government, that is not true. We ain’t a parliamentary system.
In practice any change requires a majority in the House, 60 votes in the Senate and agreement by the President in order to make it happen. So you might quibble about the exact definition of the word “mandatory”, but the reality is that it is in fact very difficult to alter such spending in our political system and current political environment.
Right. Technically current law always imposes a debt limit. Realistically they always just raise the limit. So in actual real reality, whatever the """law""" pretends to be, obeying the limit is not actually mandatory. Congress can't bind future Congress, and today's mandatory is tomorrow's discretionary.
Spending requirements/restrictions are ignored all the time, Stu. In what universe are you living? The word "mandatory" in this context is almost always used to define the problem as not soluable via spending cuts or reforms. This is to what the top commenter in this thread was objecting. He was right to object to it.
I like using terms that everyone can agree on and that are obviously true. So I'll talk about "XX people" or "XY people" or "XXY people" or "people with full female parts" or "people with male and female parts" or "people who feel they are female" or "people this state's law classifies as female" or ...
I think a good candidates would be "automatic spending". It's spent automatically unless we change the law, as opposed to spending that has to be appropriated each year.
Mandatory implies that you can't shut it off, which is obviously not correct.
Entitlement spending is a purposefully loaded and misleading phrase, as they are not any more entitled to taxes on workers' wages than any other recipient of federal spending.
Does no one suggests cutting the defense budget ever or at least DoD pass an audit? As a outsider, I want to know why. If someone cares to explain, I'd appreciate it.
https://www.usdebtclock.org/ defense spending is lower than debt service now. Soc Sec and Medicare/aid are by far the largest and eat up the vast majority. Take defense to zero and it won’t help enough.
Like what? Seriously. The USA is pretty much immune to invasion. Most Navy and Air Force assets are offense-oriented. Why is our military geared towards fighting on the other side of the world? Why do we have so many bases in so many foreign countries?
The problem with maintaining a military geared towards fighting on the other side of the world is the expense and the training. You can't cut such a military back to 10% of its size and build it up again in an emergency, so you have to run it at 90% capacity all the time.
We don't need that.
If you want t argue about MAD and nuclear deterrence, that's a different matter and I'm not going to wade into it. We do not need 11 expensive carriers, strategic bombers, and all the logistics chains and overseas bases. They do nothing to protect the US from invasion.
I was a supply clerk for 3.5 years on an aircraft carrier. It was a fantastic 3.5 years in spite of the salutin' and sirrin'. An aircraft carrier is one heck of a toy. But we served no useful anti-invasion purpose.
We could no more ignore WW3 than we did WW1 & WW2. Better to try to prevent it.
We may not be able to. WW3 may already have begun. Don’t try to tell me that the former Warsaw Pact countries should not have joined NATO. It might have started sooner if they hadn’t.
How would a default on interest payments work? Could the President do that unilaterally, or would it need Congressional legislation?
Personally, I think that is a likely outcome if we do not take substantial steps to cut the deficit. Uncle Sam just says to bond-holders “Too bad you lost your money. Better luck next time.”
The benefits to that approach is that removing interest payments would make it much easier to balance the budget afterwards. That combine with a balanced-budget amendment may be the best option if the worst happens.
The best option in the short-run would be transferring all domestic programs to the states, who have balanced-budget requirements. Then each state could decide whether they wanted big spending and bug taxes or lower spending and lower taxes. The remaining international programs would be easy to pay for with current revenue.
Don’t try to force a national solution that half the country will hate. Let each state decide for themselves.
How could the US accumulate a surplus without it getting turned into defense spending, social spending, or tax cuts?
Nothing will happen to address this issue until a crisis arises; it is true in the private sector with troubled companies and over levered balance sheets that do not get addressed until there is a default and a restructuring ensues. When debt markets sell off signaling to the US that its "paper" not worth what it once was, only then will Pols get with it and take harsh action that with some foresight might have been less painful than waiting until markets said now the time to fix things.
Cutting the size of government (esp. surveillance and administrative states) 75-90% would be a good start.
That's as useful and practical as sending the national guard out to look for pots of gold under rainbows.
Who are the main bond holders here though?
In terms of transitioning from the high trust to low trust system, is Japan or Italy ahead of the US and should experience it first? What metrics besides Debt/GDP and deficits are useful?
“What we need to prevent this from happening again”
When did it happen the first time?
“…is some sort of Constitutional amendment requiring a balanced Budget.”
I find it hard to believe that such an amendment would stick but plausible enough (eg. Requiring a 75% override by each branch of Congress to violate, so we could address and actual war).
Reining in the entitlements would solve way more than half of the problem. And fixing SS ain’t even that hard, even how long we’ve waited. [fixing Medicare will be.]
I don’t understand why you use the word “default” re SS and Medicare “obligations”, since those are not contractual/legal.
If Millei can't be president, what are Argentina's immigration laws?
For what it's worth, I agree with every substantive point of Arnold's essay about the federal debt.
"What we need to prevent this from happening again is some sort of Constitutional amendment requiring a balanced Budget. But we missed that opportunity decades ago."
And, it's not like our current generation of leadership is very concerned with being sticklers for the letter and spirit of the Constitution.
I'm a bit more sanguine about the prospect for avoiding catastrophe simply because it's not a given that the bond market follow the same "everything is great until it is suddenly terrible" model. I already greatly minimize the amount of government bonds I'm buying. While I'm more sophisticated than the average investor, I think sophisticated investors are just the leading edge of trends.
That is, the bond market itself is kind of a balanced budget amendment. You can only continue to borrow so long as you have people willing to lend you money.
“That is, the bond market itself is kind of a balanced budget amendment.”
I think this was clearly true in the 1990s, and likely true up until the 2007-2009 financial crisis. I don’t think it’s true today, after financial bailouts, QE, ZIRP, etc.
Like you I think long term and even medium term bonds (save TIPS) are terrible risk/reward given that the “Helicopter Ben” Fed will if nothing else ensure we never have deflation again (and I say this last as a *good* thing, not a bad one, even as bailouts, ongoing QE, etc. are imo bad things indeed).
"And, it's not like our current generation of leadership is very concerned with being sticklers for the letter and spirit of the Constitution." - Unfortunately, our so-called leadership continues precedent set by others, even such esteemed as Lincoln, who suspended habeus corpus without Congressional approval. Or let's look at Roosevelt's internment of Japanese citizens. Arguments can be made there were special circumstances in these cases, but our leaders have not always been compliant with the Constitution when it didn't suit their purpose. To be clear, I do not defend the current generation of leadership on this point, they're more lame in nearly every manner.
Reducing social security and medicare payments would not be a "default" any more than reducing spending on any other program constitutes a default. I know that seems like quibbling, but one small reason we're facing such a problem with medicare and social security is all the politicians and interested parties abusing the english language to make it easier for people to pretend Social security and medicare are something other than they are.
We don't call it welfare even though that's obviously what it is. We call it "social insurance". We call numbers on a sheet of paper somewhere the "trust fund" even though there is no fund but just a mechanism for determining what payments and reductions in payment are automatic and which would require legislative action.
People on medicare and social security aren't owed anything, morally or legally, that would constitute calling a change in the program a "default". Well, they are morally owed something for having ~15% of their wages taken from them over their working career, but the obligation is from the lying bastards that set up the system and/or contributed to making it harder to fix, not current taxpayers except to the small extent those groups overlap.
I realize it's not going to make a difference, particularly when you are using the language with an audience that probably is almost universally aware of what the reality is, regardless of the language used. But still, it couldn't hurt for people not looking to get reelected to consistently use more precise language.
Americans have been lied to for 90 years that they "pay into" Social Security and after they retire they "get back their money". They largely believe it. They honestly believe that any lowering of benefits is stealing their money. Thus the metaphor, "Hands off Social Security and Medicare" as if there is a big pot of money somewhere that reformers would be trying to raid.
No, it's not technically a default. But to many people, it's worse: a betrayal. Anyone who tries to cut SS and/or Medicare without changing people's perceptions is committing political suicide.
I'm not sure if that was intended to agree with me but that last sentence is exactly why I think it's worth pushing people to use accurate language. Telling social security and medicare recipients the truth isn't likely to get many of them to care about anything other than getting money from the government. But you're definitely not going to change anybody's perception by continuing to use misleading language. Why not use accurate language if it doesn't cost anything and isn't particularly clunky?
Pretty much agree. But I can't agree with "Well, they are morally owed something for having ~15% of their wages taken from them over their working career, but the obligation is from the lying bastards that set up the system and/or contributed to making it harder to fix, not current taxpayers except to the small extent those groups overlap." They have saved much less than they would have absent the lie and the lying bastards that set up the system aren't around and the ones who continued the lie would be hard to pick out, and most everyone who knew better didn't call out the lie. But about 99% of people didn't give it a thought. So there are d*mn few people to collect from.
Innocent parties are going to get hurt no matter what is done.
“Innocent parties are going to get hurt no matter what is done.”
I agree that’s likely to happen, but not necessarily.
SS ain’t a Ponzi scheme if we have a sufficiently continually growing economy and a sufficiently continually growing pool of workers paying into the system.
And benefits need not ever be *cut*, we merely need to reduce the rate of growth of those benefit promises [e.g. by replacing the growth of benefits based on average earnings increases to being based on CPI - this one change would fix nearly 80% of the SS shortfall; I’ll send the Substack link if you need it] and once again slowly raise the full benefits retirement age. Here, too, language matters 😏
Now I agree there’s sadly a very good chance we don’t get here, because politicians - 99% of Democrats plus DJT, in particular - demagogue any changes to SS.
Medicare OTOH *is* a Ponzi scheme that cannot be fixed absent substantive changes, and the numbers are much tougher. The *only* bright spot there is that people only expect that “Medicare” will exist, they don’t have any formula or amount in mind that was promised to them.
1. "a sufficiently continually growing economy"
2. "a sufficiently continually growing pool of workers paying into the system"
3. "replacing the growth of benefits based on average earnings increases to being based on CPI"
4. "slowly raise the full benefits retirement age"
That's a tall order.
Nah, none of these is all that hard (which is different from saying they are easy, and they are all almost f-ing impossible on a sustained basis if Dems are in charge).
Despite our somewhat dysfunctional political system - frankly, for just about everything but entitlements, I’m *thrilled* that our Founders made it difficult for Congress to “do things” - I remain very confident we will muddle through on SS, even though the inevitable delays will make it more costly to do so than if we dealt with it earlier.
On Medicare, by contrast, I share your pessimism.
Wonderful to read someone say we can't our way out of this mess.
I lean toward agreeing a balanced budget amendment is better than what we have, but not by much.
Yes, tax revenues are definitely too low and levied on incomes rather than consumption. I notice that people who want to reduce deficits by less spending never have anything specific in mind. What DO they think we should spend less on? Farm and ethanol subsidies? Shifting from subsidizing investment in CO2 reducing technologies to subsidizing the reduction? Great, but that just does not add up to THAT much.
Really? They never have any specifics in mind? I find your assertion hard
To believe, even as I agree that anything that doesn’t include “Cut Medicare and Social Security “ probably won’t do the trick.
Thomas, do you ever look around the rest of the world to find examples of exactly the policies for which you continuously advocate here?
"Government employees usually demand higher salaries to compensate for inflation."
An interesting thing to observe in recent years is the rapidly declining, um, "employee advocacy" role of the leadership of the government employee unions, who are supposed to be agents and representatives of employee interests, but increasingly behave as if insulated and disconnected from those interests. This from unions formerly purported to be 'powerful' and 'feared'.
Instead, like many other left-leaning institutions, the leaderships of those organizations are no longer staffed with folks who came in after long careers in the ranks, but of professional (even 'hereditary' - not joking) white collar administrator / manager types, living fat, soft, comfortable sinecure-like jobs on extremely reliable dues revenue streams, which they hand mostly to Democrats for personal favor exchanges that are increasingly disconnected from employee interests in a kind of weird analogy to "public choice" incentive problems. This new class of people tend hold their positions for the long term and are extensions of and completely integrated into (and often pass through the revolving doors of) the the greater Democratic Party Machine, with which no """negotiation""" is genuinely an "at arms-length" interaction. Importantly, they can be relied upon to not cause trouble for The Party even when strong majorities of union members are very upset with the imposition of new woke quota policies, or even in the worst cases pretty easily leaned on with small carrots and sticks should they raise a fuss which threatens to cause trouble for the wrong people at the wrong time.
What this has meant in practice is that Democratic administrations have been able to low-ball statistics about inflation and cost of living and squeeze a tiny bit of budgetary relief by setting federal civilian employee raises a bit below inflation and so decline slightly in real terms. Like the woke policies, you can bet this causes a lot of passionate angst and grousing among the ranks - especially since there is another wave of people about to head into retirements set by recent nominal pay levels, and yet, the leadership is ... notably sanguine and insouciant about the whole matter.
What's more mysterious is why a Democratic administration that doesn't otherwise seem to have any qualms about policies that blow up the short or long-term budget orders or magnitude more severely than shaving a few real-terms percent off federal salaries would even bother worrying about this stuff. My guess is that the non-left media is able to make a lot of hay out of the message that, "While you were struggling, federal workers got a nice fat pay raise ... " and that bites politically just enough for Democrat Party leadership to want to avoid if they don't think they'll pay any price for it. And since they now have the support and contribution-streams of the gov union leadership completely locked-up, who will vote Democrat and donate to Democrats until the bitter end, then the party can just take all that for granted and know it won't pay any price.
Robert Michels did derive his iron law of oligarchy largely on the strength of his observations on German social-democratic trade unions, but one would like to think that of all people, federal employees - many white collar administrators themselves, with long careers in manipulating procedural outcomes - should be able to throw out bad union management! Perhaps they just prefer to suffer a bit to avoid making a big stink that would be politically damaging to Democrats, as your last paragraph implies? Or had they really let willing people manage their unions and so dug a hole for themselves, as Thucydides writes about the Delian League?
---
[I]f [Athenians] had more than their fair share of service, it was correspondingly easy for them to reduce any [ally] that tried to leave the confederacy. For this the allies had themselves to blame; the wish to get off service making most of them arrange to pay their share of the expense in money instead of in ships, and so to avoid having to leave their homes. Thus while Athens was increasing her navy with the funds which they contributed, a revolt always found them without resources or experience for war.
"but one would like to think that of all people, federal employees - many white collar administrators themselves, with long careers in manipulating procedural outcomes - should be able to throw out bad union management!"
I don't know if this happens to you or others, but it's funny how sometimes I discover I've been thinking a lot about a subject and accumulating a lot of observations and attempting to hang them on the skeleton of an inchoate explanatory narrative without even realizing I've been thinking about it. And then someone says something and just starting to talk about it opens up a whole can of worms. Point is, that turns out to be a big topic, and I'll spare everyone from getting too far into the weeds.
A quick summary is that the situation is "overdetermined", so to speak, as a number of long-term trends have combined to make "getting better public union leadership" both difficult to do and pointless even if achieved. In addition to details that apply particularly to the public union situation, there is the broader and more general phenomena that have affected American unions in general.
The most important of which is that - like with many other "private sphere" public institutions (to include religious ones) that threaten to rival The State and The Party in terms of loyalty, power, and influence - to the extent one of these institutions does something the The Party endorses, then The Party has The State do it, which crowds out the function for the alternative institution. On the other hand, if that institution does something The Party dislikes, then it finds a way to neutralize or suppress that function.
This is a somewhat distinct (though still related) mechanism from ordinary Conquest Law leftward drift. One ends up with completely hollowed-out (or fake, either Roman Senate or capture 'skin-suit') institutions which cannot avoid the accurate public perception that they are increasingly powerless, impotent, and irrelevant, and thus necessarily declining in status. One can manipulate the procedural outcomes of a real institution, and one often has the incentives to do so. But with a fake, Potemkin institution, there's neither any way nor any point in trying to do so. It doesn't matter if you're a card shark if the game is rigged.
Are you speaking of a union for federal employees or state and local?
Federal
There is no such thing as mandatory spending. Putting those two words together does not make it a reality.
Actually, in our system of divide government, just because you are correct re: the definition of words, doesn’t make you right.
We ain’t a parliamentary system.
In practice any change requires a majority in the House, 60 votes in the Senate and agreement by the President in order to make it happen. So the reality is that it is in fact very difficult to alter such spending in our political system and current political environment.
No, not impossible.
But very difficult.
It is "difficult" only in the sense the people in Congress don't want to reform anything. Again, the top comment was right- using mandatory or "very difficult" is a way of masking the fact that no one in D.C. wants to change things.
You were doing fine until you said “no one in D.C. wants to change things”
We could have fully half of Congresscritters who legit “want to” change and it likely would still not be doable, given the 60 vote requirement in the Senate plus the need for the President to sign the bill.
I ain’t saying we are anywhere near 51% who legit want to right now. But it’s a lot more than “no one”. And of course, few of those people are gonna stick their political necks out now given the reality that we ain’t remotely close to a quorum on doing anything about it.
LOL! Sure, Andy, we could have fully half of Congresscritters who legit want to change things but we don't. We don't really even have 10%. Haven't you ever asked yourself why the two parties only push for reforms from their side when they lack a majority? Or ask yourself when something really is important to a majority party in Congress they find a way to enact it without allowing a filibuster to get in the way (see the ACA or judicial/cabinet appointments).
If Congress isn't passing something it is because there never was majority of any kind supporting it. Both parties like being able to spend money without taxing anyone. They will drive this bus right off the cliff because neither wants to stop it.
You can play the false equivalence game and pretend that both sides are equally bad, but this is not in fact the case.
Many Republicans want to address this. Rand Paul does. Paul Ryan certainly did. I amo not claiming that it is a majority of Republican Senators, but there are at least a significant minority number of conservative senators that do.
I defy you to show me even a single Dem Senator.
All the a Dems are terrible on this point. Trump is terrible on this point.
Some Republicans are bad on it. Many are good. Many are just mum. But few of even the good ones are gonna speak up when in the current environment there is ZERO upside, and non-zero downside to doing so
Separately, you simply have your facts wrong re: the filibuster. The ACA *was* passed with 60 votes! And Dems led by Harry Reid removed the filibuster for judicial appointments and cabinet appointments - the so-called “nuclear option” back in 2013. GOPers warned it was a bad idea. Go look it up.
The GOP is *highly* imperfect. Trump - who otherwise governed well as president - is bad on spending (*almost* as bad as the Dems) and every bit as terrible as the Dems on entitlements.
But you make a false equivalence when you say the GOP is just as bad as the Dems on this stuff. Because it ain’t true.
Required by current law.
The law is whatever Congress says it is.
Actually, in our system of divide government, that is not true. We ain’t a parliamentary system.
In practice any change requires a majority in the House, 60 votes in the Senate and agreement by the President in order to make it happen. So you might quibble about the exact definition of the word “mandatory”, but the reality is that it is in fact very difficult to alter such spending in our political system and current political environment.
No, not impossible,
But very difficult.
Right. Technically current law always imposes a debt limit. Realistically they always just raise the limit. So in actual real reality, whatever the """law""" pretends to be, obeying the limit is not actually mandatory. Congress can't bind future Congress, and today's mandatory is tomorrow's discretionary.
And the law says it is mandatory.
Most of these mandatory costs aren't likely to change even in meltdown.
If the law can be changed or ignored it isn't mandatory as the top comment points out. It is misusing a word.
We are now going in circles in "mandatory." No need to repeat myself.
These spending requirements cannot be ignored.
Spending requirements/restrictions are ignored all the time, Stu. In what universe are you living? The word "mandatory" in this context is almost always used to define the problem as not soluable via spending cuts or reforms. This is to what the top commenter in this thread was objecting. He was right to object to it.
How about "mandatory under present law"?
I like using terms that everyone can agree on and that are obviously true. So I'll talk about "XX people" or "XY people" or "XXY people" or "people with full female parts" or "people with male and female parts" or "people who feel they are female" or "people this state's law classifies as female" or ...
I think a good candidates would be "automatic spending". It's spent automatically unless we change the law, as opposed to spending that has to be appropriated each year.
Mandatory implies that you can't shut it off, which is obviously not correct.
Entitlement spending is a purposefully loaded and misleading phrase, as they are not any more entitled to taxes on workers' wages than any other recipient of federal spending.
Does no one suggests cutting the defense budget ever or at least DoD pass an audit? As a outsider, I want to know why. If someone cares to explain, I'd appreciate it.
https://www.usdebtclock.org/ defense spending is lower than debt service now. Soc Sec and Medicare/aid are by far the largest and eat up the vast majority. Take defense to zero and it won’t help enough.
Plus there would be undesirable side effects.
Like what? Seriously. The USA is pretty much immune to invasion. Most Navy and Air Force assets are offense-oriented. Why is our military geared towards fighting on the other side of the world? Why do we have so many bases in so many foreign countries?
The problem with maintaining a military geared towards fighting on the other side of the world is the expense and the training. You can't cut such a military back to 10% of its size and build it up again in an emergency, so you have to run it at 90% capacity all the time.
We don't need that.
If you want t argue about MAD and nuclear deterrence, that's a different matter and I'm not going to wade into it. We do not need 11 expensive carriers, strategic bombers, and all the logistics chains and overseas bases. They do nothing to protect the US from invasion.
I was a supply clerk for 3.5 years on an aircraft carrier. It was a fantastic 3.5 years in spite of the salutin' and sirrin'. An aircraft carrier is one heck of a toy. But we served no useful anti-invasion purpose.
We could no more ignore WW3 than we did WW1 & WW2. Better to try to prevent it.
We may not be able to. WW3 may already have begun. Don’t try to tell me that the former Warsaw Pact countries should not have joined NATO. It might have started sooner if they hadn’t.
And the EU countries might have stepped up to their duties of protecting themselves if we hadn't let them slide and paid their bills.
Well if you are going to be picky… ;)
It takes a while to explain, but the short version is that we’ve already tried that and it didn’t work.
To understand why check out any of the following. You could start here with Robert Higgs.
https://m.youtube.com/watch?v=QzbEkXGd7Ms
Here with Milton Friedman.
https://www.freetochoosenetwork.org/programs/free_to_choose/index_80.php
Here’s an another good general introduction. It’s a book called, Beyond Politics: The Roots of Government Failure by Randy T. Simmons
https://www.amazon.com/Beyond-Politics-Roots-Government-Failure/dp/1598130501
Have you heard of the bootlegger and Baptist? They work together.
https://www.econtalk.org/bruce-yandle-on-bootleggers-and-baptists/
Then there’s Bryan Caplan’s book The Myth of the Rational Voter. https://www.amazon.com/Myth-Rational-Voter-Democracies-Policies/dp/0691138737
Of if you like cartoons from the eighties here’s John Papola’s contribution. https://m.youtube.com/user/getkonnected
People propose doing that all the time. It wouldn’t be enough.
Every so often I look for a government page explaining revenue and spending. They get harder to find close to the election.
IIRC, SS is the largest item. Interest on the national debt is a larger item than the defense budget.
https://www.usdebtclock.org/ is usually pretty up to date. You are correct on interest being greater than defense these days.