The Least You Should Know
The Least You Should Know
November 8, 2010
If you live in the United States, you probably have an opinion on the best way to reduce the deficit. And you probably know almost nothing about the topic. I certainly fall into that category.
If you listen to pundits and politicians, you’re getting your information from professional liars. If you’re reading books, you’re getting your information from professional liars who also write well. If you read newspapers and magazines, you’re getting only the information that someone has decided will be good for sales. If you say you “do your own research,” you’re probably a liar, possibly an idiot, and maybe some sort of analytical genius. And frankly, I can’t tell you guys apart.
Prior to the last presidential election, as a public service, I commissioned my own survey of economists to see what they thought of the big issues. I learned that the experts are all over the map on most questions. Can you feel comfortable holding an opinion in which 40% of the experts disagree?
This made me wonder what is the least a citizen needs to know in order to have an informed opinion on the national budget debate. Here’s my starter list. I invite you to add to it.
My Budget Questions…
By what percentage would you need to cut the entire national budget to achieve fiscal health in the long run, assuming tax rates stay where they are?
How much would we need to increase taxes, as a percentage of all Federal taxes, to achieve fiscal health in the long run, assuming government costs rise only with inflation?
By what percentage would we need to raise taxes on rich people (let’s say the top 2% of earners) in order to guarantee fiscal health, assuming no other change in expenses or taxes?
For an economy such as ours, at what level does the national debt become a death spiral? And where are we now in relation to that point? How soon would we reach it at our current pace?
—— End of Questions —–
On the same topic, I’m a fan of the 30-year back-weighted budget plan. You start cutting budgets only slightly in the early years, when reductions are psychologically and politically difficult, and you defer the bigger cuts for the later years, when technology enables you.
For example, I think it would be much harder to cut the military budget by 10% next year than it would be to reach a 50% reduction by year thirty, so long as we make it a national priority to do so. In thirty years we’ll be able to crush smaller countries with nothing but, for example, one indestructible robot with laser eyes. Meanwhile, big countries won’t be dumb enough to screw with each other, thanks to nuclear weapons. It should be much cheaper to protect ourselves in the future, thanks to technology, if we start now and plan it that way.
Likewise, with health and social services, any cuts today would be cruel. But big cuts in the future might be feasible if we aim our technological sights on improving how we deliver those services.
I imagine a future in which we become so adept at the prevention and early detection of problems that health care costs become a fraction of what they are today. On top of that, I predict that in thirty years, end-of-life care will include a doctor-assisted euthanasia option. That would cut costs a great deal.
There’s a nearly universal opinion that it would be unethical to push our problems on future generations. That would be a reasonable point of view if no one worked on solutions for reducing costs between now and then. But I believe we could accomplish big budget cuts in the future if we made it a serious goal today. Technology gives us that option.
The best part of my 30-year, back-weighted plan is that it would create the illusion, if not the reality, of a better future. Optimism is what drives the economy. What we have now is something that looks more like a hopeless budget death spiral, and people are hoarding their investible cash. A feasible and predictable budget plan would goose the economic engine and improve government revenue in the short run.
If you are a pessimist who believes that government spending will increase every year no matter what, I can’t disagree. You might be right. But it has never been a national goal to use technology to greatly reduce spending by year thirty. Goals can matter.
As part of my 30-year, back-weighted plan, we could include provisions to raise taxes at an ever-so-slight pace for each of the future years as a hedge against not making the cost reductions. The economy is pretty good at absorbing any sort of change that is both gradual and predictable. And if you knew your taxes would only increase, for example, 1% over the entire next five years, you might be willing to live with it, even if 40% of all economists tell you it’s a bad idea.
Here’s where I remind you not to make and life-and-death budget decisions based on what you read in a cartoonist’s blog. I’m just thinking out loud.