–”‹Nothing in the Congressional compromise reached over the weekend makes a significant dent in our $1.5 trillion deficit.
–In addition to an existing nearly $10 trillion of outstanding Treasury debt, the U.S. has a near unfathomable $66 trillion of future liabilities at “net present cost.”
–Aside from outright default, there are numerous ways a government can reduce its future liabilities. They include balancing the budget, unexpected inflation, currency depreciation and financial repression.
Bill Gross–America has 66 trillion of future liabilities
Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Aging / the Elderly, America/U.S.A., Budget, Economy, Health & Medicine, House of Representatives, Medicare, Office of the President, Politics in General, President Barack Obama, Senate, Social Security, The National Deficit, The U.S. Government
16 comments on “Bill Gross–America has 66 trillion of future liabilities”
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But, you know, those Tea Partiers are terrorists, hostage-takers, Hobbits, what have you, for daring to address this issue.
These numbers are based on the assumption that nothing changes. It is precisely these numbers that are at issue in Simpson-Bowles, the Gang of Six, etc. #1, sober awareness of the issues long predates the advent of the Tea Party. On the other hand, the take-no-prisoners polarization, where [b]both[/b] extreme left and right are defending positions that are internally incoherent, leads to paralysis, with the result that responsible reforms are held hostage. Will we do it? Granted gridlock is not new, but there were partial legislative successes in the mid-eighties on tax and entitlement reform — legislated by the likes of Bob Dole. There was deficit reduction in the nineties, and the brakes were put on the acceleration of the debt. I find it sobering that over 50% of our current national debt was accumulated in the last ten years (under [b]both[/b] the Bush and Obama administrations).
Well, if you believe a site like downsizinggovernment.org the budget can be balanced by essentially eliminating everything from the budget except most of defense, some of Medicare, and presumably some of Soc Sec– and of course all without raising taxes, which is in the end the one absolute demand they make. A bunch of the cuts these guys want are simply transfers back to state budgets (e.g. zeroing out the DOT budget; what they really mean is that state gas taxes rise to meet the loss of federal revenue); others represent a surrender in the war on poverty; still others represent fantasies that the private sector will want to pick up the slack in a way that is acceptable to the majority of voters. They haven’t gotten around to Interior’s budget, so I don’t know whether they’ll recommend giving away the national parks system. At least they have enough sense to realize that privatizing the various scientific research/data functions in Commerce would be a bad idea.
The economics behind all of this is pretty much garbage. Whatever merit there is to the Keynesian plan, it presupposes a normal state in which the budget is balanced or runs a bit of a surplus. If you run up debt in the bad times, you have to pay it back when times are good; it cannot be allowed to mount up indefinitely. Meanwhile, the lay picture that appears to drive the tea bag notions is that money paid in taxes simply disappears. That’s not true, of course, as the local economy of the DC are or around every military installation in the country shows. The only money that does disappear, ironically, is that which is used to retire debt. And if you’re going to tell me that what Von Mises says, save your breath. If it were a true picture, everyone would have adopted it already.
The obvious solution is to give up the dogmatic resistance to tax increases. In spite of what people say, we aren’t heavily taxed, and never mind how much the rich are paying out. There is lots of room between the tax structures of the late 1960s and what we are paying now. All of the fighting of the last two weeks testifies to our representatives saying for us that we don’t want government cut all that much; so if not running a deficit is that important (and at the moment, it is), then we need to suck it up and admit that we need to pay more to get it done. It’s not to hard to look at the list of cuts I linked to above and see that there is a lot of truth to the liberal assertion that the tea bag party is willing to balance the budget on the backs of the poor; for all the justifiable criticism of current programs, what they propose is not better programs, but no programs at all. We can be more magnanimous than that.
[i]The obvious solution is to give up the dogmatic resistance to tax increases[/i],
an even obviouser (heh, heh) solution is to give up the addiction to spending! Dept of Energy, Dept of Education, United Nations payments, most foreign aid, much of Dept of State, Fannie & Freddie, much of the Dept of Commerce. Automatic yearly budget increases, no reform of SSN or Medicare. Talk about a [i]target rich environment![/i]
Oh the horror of it all, [i]A bunch of the cuts … are simply transfers back to state budgets [/i], EXACTLY!! Let the states (excuse me, THE PEOPLE) decide what they want and don’t want. Not elitist professional bureaucrats in Washington. It’s called Constitutional Conservatism by the way.
But then Washington will lose all the power!!!!!
Exactly my friend, exactly!
The biggest lie of all times????? We have a $3.7T spending binge this year (not a budget, thanks Dems) and there is just no where to cut anything!!!! Oh my……..
…which is like saying that the solution to starvation is to give up the addiction to food.
In the real world, the federal gasoline tax is never going to go away. DOD, for one thing, would never stand for it: they don’t want to have to rely on an “interstate” system in which I-90 is unusable because South Dakota cannot get away with raising taxes enough to pay for maintaining its stretch, and I-10 in unusable because Texas is too cheap to pony up for its section. Perhaps the trucking industry would object for the same reason. State governments are perhaps a better place for administering the work, and that’s what happens now. But given the history of having to pass national civil rights laws, and the various local corruptions, I’m not sold on the notion that states represent the right level to do anything, much less everything. They are just as capable of the kind of officiousness that you ascribe to the feds, but also callousness, corruption, laziness, inefficiency, and every other sin of which bureaucracy is capable. Frankly it seems to me that much if not most of the time the “elitist professional bureaucrats in Washington” do a better job, precisely because of their distance from the problem. I am a ruthless pragmatist when it comes to this, with no use for dogmas about so-called constitutional conservatism.
I’m not absolutely against cuts either. But the rejection of any tax increases, especially considering the history of taxation in this country, is stupidly dogmatic. It seems to me that accepting modest tax increases would make the cutting a lot easier, but at any rate I reject the refusal to even consider increases. It’s impractical.
C Wingate, I think what is making those of us crazy that are trying so hard to keep this a spending discussion is that we will spend over $1 TRILLION more this year than we did just 5 years ago. . Sorry, but that is absolutely NOT a revenue problem. Yes, there are likely places where we could eliminate loopholes in the tax system (I am in favor of Herman Cain’s ‘consumption’ tax which would eliminate the IRS and just collect a 23% tax on everything you buy. That would mean the poor pay their fair share, and the rich pay in proportion to their spending, but I digress) and they should be evaluated, but do you really think eliminating the tax deduction for capital expenditures is going to increase jobs and revenue? Those capital expenditures for most corporations will simply move overseas.
Put spending back to the levels of 2006. When we are finally out of Iraq and Afghanistan (and the ‘not war’ in Libya) those dollars should be spent reducing the debt.
I’m really not against increasing the revenues for the Federal government. Currently some +45% of income earners pay no Federal income taxes. We need to get them on the rolls.
There are some (depending on whose figures you believe) 14 million folks unemployed. Lets get at least 13 million of them back to work paying taxes, off unemployment and off food stamps.
Let’s reform the tax system so that GE doesn’t earn about $5B in 2010 and pays Zero income taxes in the US. And let’s eliminate the IRS tax code which is the playground of lobbyists and causes so many economic distortions.
The Constitution expressly says the Federal Government is charged with promoting the common good. Navigable waterways, air corridors and airports, and intersate highways would seem to fall into that catagory. It’s an area that the Federal Government seems to have done a good job at (in my opinion).
I don’t consider Constitutional Conservatism a dogma. It is a “world view” like Socialism or Central Planning. It has never been demonstrated and it truly defies logic that a group of bureaucrats can make better decisions for hundreds of millions of people than those people can for themselves about how to spend the money they earn by working. The USSR, Cuba, Venezuala, North Korea, and now even Red China demonstrate just the opposite. When you kill personal initiative by oppressive government and/or taxation, you kill the economy.
On a smaller scale, states that have right to work laws, business friendly environments, lower taxes, and less onerous regulations seem to be doing better economically than places like IL, CA, MI, and many northeastern states. Examples would be TX, MS, VA.
Hmmm, if I read the end of the article correctly, Bill Gross actually voted for Obama. Unbelievable if true! What a turkey – he should get what he deserves, never mind him quoting Davy Crockett and all.
Those of us who meanwhile stayed sober and did the right thing will keep on trying to do the right thing, ‘killin bars’ if we have to, and helping those around us see what the right thing to do is as a citizen of the USA.
Capt. W., it doesn’t defy logic. In fact, it’s evident from observation that a lot of people have to be told to take basic and reasonable precautions.
But I tell you what: I have a very simple compromise solution for both parties. Raise revenues to match expenditures in the last Bush budget– or even the last Clinton budget, if you want a lower number we can still live with. Then cut to that. Surely the Republicans cannot object to raising enough money to meet the spending they voted for those many years back.
My state – right to work, no regulations (business can do anything it wants), Republicans in control for 2+ decades, huge tea party contingent. Result thus far, high unemployment, above average poverty, below average education, below average health. But I am still waiting for all the great stuff to happen. Until then thank god for Mississippi.
Neither side is serious about spending cuts. The Boehner bill a few months ago had real savings that kept getting downgraded by the CBO from billions eventually to mere millions…a joke when you look at the deficit spending. But the democrats are worse. The Reid plan assumed that military spending would be the same for Iraq and Afghanistan for the next decade, then assumed it wouldn’t be…voila!, trillions in “savings”.
Bush then Obama have been [url=http://blog.heritage.org/2011/02/22/federal-workforce-continues-to-grow-under-obama-budget/ ]expandign the federal work force[/url]. Obamacare will expand the federal employees all the more. [url=http://www.heritage.org/budgetchartbook/growth-federal-spending-revenue ]Federal spending has exploded since 2008[/url]. What are we getting for this increased spending? Immediately cut back to 2007 levels. Did we have too little government or to much in 2007?
Someone did a study and for every $1.00 increase in revenues, spending increased by $1.30. If we allow that math to occur, increasing revenues makes matters worse. C. Wingate, do you understand this? No matter what the tax rates are, federal revenue has just about always stuck at around 18% of GDP. Currently, the spending is near 25%. That is why spending must be capped at around 19% (or less if you want to make inroads against the deficit). C. Wingate, do you understand this?
Rand Paul calls for a balanced budget over 6-7 years. That is hardly radical extremism. As someone who is expanding his family this week (adopting our third child), I would like to leave a an inheritance to my kids and grandkids, not a pile of IOUs.
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#10 sounds like he’s describing my state, South Carolina, where for decades Republicans have controlled almost every office from dog catcher to the State House, taxes are supply-side low (with sales taxes making sure the poor pay their share), we have a balanced budget law, and the governor has impeccable tea party credentials.
But when one points out that being in a one-party state has not resulted in a conservative paradise, but instead has done nothing to chance our historical spot near the bottom of a range of quality-of-life measures, from school achievement to infant mortality to infrastructure to unemployment rates, expect two responses:
1. It’s Washington’s fault!
2. We didn’t elect the right Republicans!
Those who insist that a balance budget amendment is part of the cure ought to look at states that have such mechanisms built into their constitutions–they don’t result in better fiscal health for the states in question. California. Alabama.
http://blogs.reuters.com/great-debate/2011/08/01/three-reasons-conservatives-should-oppose-a-balanced-budget-amendment/
RE: “huge tea party contingent . . . ”
Heh.
Yes — hopefully they’ll eventually infiltrate the Republicrat legislature that we have, so that they can approve Governor Haley’s sensible and wise budgets based on the rate of inflation growth rather than the usual “spend everything we have projected we might receive” budgets.
Yes, if only we could be more like the states filled with the intelligentsia like Mitchell and Ennis . . . *then* we could be just like California. ; > )
Oh yes, I forgot — Three Cheers for the South Carolina Five!!!!! Duncan, Gowdy, Mulvaney, Scott, & Wilson!
Give us another 100 or so like that in the House and we’ll get somewhere great — [not, of course, by Mitchell and Ennis’s and Wingate’s standards, but then that’s understandable given what they believe about the role of the State, the Constitution, central planning, private property, and individual liberty.]
Woo hoo for the five and let’s go out and have a few more contested primaries.
#10 and #12, I know it’s implied rather than stated explicitly, but you’ve earned the “worldview lecture.” That automatically makes me pay attention to what you have to say.
[i] it’s evident from observation that a lot of people have to be told to take basic and reasonable precautions[/i]
Agreed, and many need lessons in life. We in the church do a lot of that teaching. It’s not included in the Constitution as a duty of the Federal Government. The public school system used to do that type of teaching also until the Federal Dept of Education turned public schooling into indoctrination.
[i]Surely the Republicans cannot object to raising enough money to meet the spending they voted for those many years back,,,,,, [you] can agree to that[/i]
Why would I agree to that? I am not a Republican nor a compassionate conservative. I am a Constitutional Conservative who voted against, and will vote against, those who have and who continue to drive the Federal spending binge and put the country in true peril of honest, actual default when we either can’t pay our interest due or print money to buy our own debt.