Asymmetrical Information

Jane,

Those "massive liabilities" are a perfect example of what you called problems created by our own prosperity (or words to that effect). The worst case scenario is that Social Security and Medicare will degenerate into needs based programs (and in my opinion, that's actually the best case scenario).

Bottom line; we're not going to go bankrupt and nobody is going to starve to death in the streets. There's plenty of money. We've just made a few promises we can't afford to keep. So a few elderly folks will have to move in with the kids and a few will have to give up that cruise they'd been planning. Hey, socialism doesn't work. Big surprise, that. But lesson learned - press on.

Specify that you’re referring to the unified budget deficit, a useful concept for some purposes but not the only way of interpreting “budget deficit.” If you used the primary deficit, you’re conclusion won’t hold, because some of those accruing liabilities to which you refer will have to be included. (And it seems reasonable to me to talk about an actuarially accurate budget deficit, which would include all the accruing liabilities and thus wouldn’t be anywhere near balance.)

On the other hand, “meaningless” is a bit of an exaggeration. The fact that we expect the full-employment budget to be nearly balanced during a time of economic contraction (so the actual budget won’t be, but that’s another story) is a potential problem (for a Keynesian like me, anyhow). It suggests that the loose fiscal policy about which everyone has been complaining is arguably not loose enough.

it's not meaningless, because it confirms that the current deficit -- current gov't spending -- is not the problem, the long term liabilities such as SS and medicare are the problem. further, while this obviously remains a point of contention, it suggests that rolling back the tax cuts is not necessary (rolling them back won't change the long term problems, and there really aren't any short term problems to speak of, unless you think the rich retaining too much of their income is a problem).

Does Keynsianism so warp one's brain that its practitioners believe that we're in an economic contraction right now?

I should have said, “The possibility that we expect…during a serious economic slowdown….” And note that I was referring to next year, not right now. But we never know if we’re in a contraction until it has already been going on for a few months, at least. When I read comments like yours, Anthony, it increases my subjective estimate of the probability that we are already in an actual contraction. The gods have a wicked sense of irony.

As you may suppose by my "name", news comes slowly to my area of 'murica. What indicates the economy is slowing?

Time to end social security and medicare. Cut off the accrual of benefits today, not one second later, and things will be ok.

It's beyond time that people realised we were making promises that we can't keep and stop making them things. On the SS track, I don't know anyone under 35 of any class that expects to get any sort of benefit from the government. Some fools think that they'll be ok because they work for the government, but I'd definitely suggest no one count on any sort of government retirement benefit, whether "insurance" or "employment" based.

We are working our way back to an 1850s regulatory burden, thanks to simple economic physics if nothing else. Despite what tenured idiots like JDB think, the world is libertarian, and one can only try to deny it for so long.

I'm with Hey. We need to stick a fork into Social Security as soon as possible. I'm quite a bit above your age threshold and I don't expect to ever see a dime of what I've thrown down that rathole. (And running my own business I've had the joy of throwing twice ...)

I've long been an advocate of an "opt-out option": Give everyone at a certain age (45?) a choice: the feds keep everything you've "contributed" thus far and you get zero benefits -- but you also won't have to pay another dime (at least into this government boondoggle) for the rest of your days.

I don't care to calculate how much I'd lose, but I'd honestly opt-out right now -- and I strongly suspect millions of others (especially those under-35ers) would join me. With luck it could cut off SS's oxygen ...

The worst case scenario is that Social Security and Medicare will degenerate into needs based programs (and in my opinion, that's actually the best case scenario).

I'd argue that the worst-case scenario is that the government makes a serious attempt to keep those promises via substantial tax increases.

"All of which is meaningless, because we're still accruing massive liabilities for feeding and providing health care to future senior citizens, including (gulp!) me. But I thought it was worth noting."

Accruing massive liabilities? True.

"Randy": "We've just made a few promises we can't afford to keep."

Fraud is fine and dandy? False.

valjean: this: "And running my own business I've had the joy of throwing twice" in re: ss/FICA, is one of the few myths I've seen you perpetuate. Everyone, "throws away twice", whether or not they're writing the actual check. Employees merely have it withheld, from their paychecks, before it even hits the topline of their "gross pay".

Mark,

I won't go so far as to call it fraud. I'll give its inventors and today's slow learners the benefit of the doubt and merely presume they were/are grossly idealistic.

Brandon,

I don't see tax increases being politically feasible. I think the generations that will be forced to confront the issue will see it rightly as throwing good money after bad. But you may be right, and that would be ugly.

Liberals believe "Liberals believe individuals have a right and a responsibility to participate in public debate.

It'd be interesting to do an analysis of the number of major conservative vs. liberal leaning blogs/news sources with some kind of response or feedback mechanism. Alternet is one of the few large left leaning news sources which allows responses from the public. But generally speaking, such features seem to be slightly more common on conservative leaning news sources, unless I'm imagining things. (Though I did get kicked off of Free Republic and banned for insulting the CIA, so there's at least some censorship). Libertarian/Anarchist news sources are far and away the best in this regard, IMHO. ( I have slashdot in mind here as much as A.I. )

Given how much people have come to rely on the blogosphere,

Conservatives believe that people should be allowed to express their faith, and their views on other controversial topics, even when those views make others uncomfortable.

It seems that many conservatives beleive that government should explicitly endorse Christian (or more recently Judeo-Christian) religion. A tolerant atheist is not good enough.

I'd like to see both "what it means to be a liberal" and "what it means to be a conservative" explicitly define "helping." What form of help should be delivered and how much. Who is responsible for the costs. That'd clear up both lists a lot.

The comment should have read;

Given how much people have come to rely on the blogosphere, a thorough analysis of it by a publisher like O'Reilley would be interesting.

Mark,

Without giving you a full rundown of the self-employment taxes to which I'm subjected, I can assure you I pay twice in this area. (And, of course, many more times in other areas.) I'm fully aware of withholding, thank you, having not always been as joyful as I currently am.

"one of the few myths I've seen you perpetuate ..."

Any others? As a devoted atheist I simply can't abide myth perpetuation!

Randy,

How long have we've known that SS/Medi-Caid/Care
have been untenable?

From the little I've seen, Reports about the "problems of long-run viability" inherent in those programs go back to the '70's.

Since then, we've already had one "train wreck" and massive tax hike/ "bailout" c. mid-'80's.

I think this story's a little long in the tooth to be chalked up to mere "gross idealism".

Such "idealism", if that's truly the case, amounts to self-fraud, at the minimum, no?

Mark,

Good point. But at every critical point in the past we have allowed tax increases to be part of the "solution". The supporters have seen these increases as progress towards the goal, thus maintaining their idealistic illusion of "winning". This may continue for some time, but more and more people are coming to the realization that it cannot continue forever, and even the most idealistic are starting to see the burden this is placing on future generations. The good news is that these future generations can vote the whole mess out of existance. And I encourage them to do so. The concept may or may not have been fraudulent. But to continue it most certainly is.

Randy,

"The good news is that these future generations can vote the whole mess out of existance. And I encourage them to do so." + "...to continue it most certainly is(fraud)." x 2. No doubt.

Well, you say you are worried about your future, and that pensions and SocSec may not take care of it. One thing you COULD do, and it's sort of, well, traditional, is have a couple of kids and hope that they will have your interests at heart when you are 75.

Even without the discussion of future liabilities we need to put this "good news" in perspective.

First, getting the defict down to half its share of gdp was an easy political target selected for its "taking point" value.

The point is we are 5 years into an economic expansion -- use to be this meant that a recession was due any moment. We should be in balance or running a surplus at this point in the cycle.

Moreover, it is still a conditional evaluation.
If we are in the middle of a long expansion and face several more years of strong growth the deficit is ok. But, if we are entering a recession with the deficit already at this point it is a very different situation.

> The point is we are 5 years into an economic expansion -- used to be this meant that a recession was due any moment. We should be in balance or running a surplus at this point in the cycle.

"should" is an interesting choice of words. We've rarely been in balance or running a surplus at this point in the cycle, so why "should" this time be any different?

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