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Spending: not more or less, but DIFFERENT


               
2011 Jul 23, 3:42pm   2,847 views  9 comments

by Fisk   follow (0)  

The big political discussion, over and over again, is about more or less spending.
Broadly:
(D) same or more spending largely by natural expansion of existing programs, to be covered by higher taxes and (inevitably) further borrowing as even somewhat higher taxes are not enough.
(R) less spending by reducing/eliminating many/most existing programs and cut taxes. Still more borrowing, too.
This goes in circles: (D) scream why cherished programs can't be cut, (R) argue why taxes can't be raised. Smth. gotta give.
I honestly don't know if we need more or less spending. I know we need a completely DIFFERENT spending, truly slashing "consumptive" spending [more drastically than almost all (R) dare to suggest] and hugely skyrocketing the "investment" spending [more dramatically than almost all (D) would hope].
Such as:

Wrto REDUCTIONS on "consumption":

1. Slashing Medicare/Medicaid spending while improving public health:
- limiting covered treatments based on QUALY, say 20 K/year of life. No "life-saving" 100 K/year drugs.
- only strictly life-necessary treatments. No joint replacement and other lifestyle enhancements.
- only emergency and perhaps some other cheapest care to self-inflicted sufferers such as active smokers and morbidly obese. Smoking cessation and diet to reasonable weight first.
- agressive war on smoking. Ruinous taxation, ban on smoking in all public places (incl. streets), in own home or car if children in the family under criminal charges of child abuse, moving toward total ban
- No extended heroic end-of-life care. If recovery medically most unlikely, move to hospice for palliation.
- No new children while on Medicaid. Violation to result in coverage loss.

2. Slashing welfare spending while improving the lot of poor children:
- No new children on welfare under threat of benefit loss and cancellation of parental rights with child removed for adoption
- Serious and regular scrutiny of the situation of children in drug addict/permanent welfare families. Substantially lower the bar to cancellation of parental rights and moving kids out for adoption. Many US families pay ~30 - 50 K to corrupt foreign entities to adopt kids from those countries. Instead, they could adopt kids removed from bad US "families" for free. Better for kids, better for adopters, better for US economy and lower welfare spending - win/win/win/win

3. Slashing prison costs:
- no healthcare beyond emergency and other simple treatments for those in for serious crime (say, >5 years sentence)
- prisoners for serious crimes sent for hard labor in mines, logging, Arctic oil drilling, etc. Reduction of sentences for good work. Dirt-cheap prison labor can substantially improve international competitiviness of those industrial sectors (just ask Chinese).
- self-management of prisons by prisoners. Guards only control external perimeter, otherwise prisons are run by prisoners chosen amongst themselves and/or appointed, with reduction of sentences and other small benefits
(more calls, visits, etc.) for those who execute their roles well. This is practiced in many foreign countries, reduces prison costs by ~80 - 90%.
- Empty death rows into execution chambers. Broader use of capital punishment beyond murder: for incorrigible and violent prisoners, habitual violent offenders. No forever appeals: after conviction, one appeal and the process done in 1 year. Taking example from PRC with ~5 K executions per year, a proportional number and a reasonable target for US would be ~1,000 -1,500 annually.
- Organs of executed should of course go for transplants, as another source of prison income. Waste of this resource is criminal.
Overall, prisons should be a source of INCOME, not expense. They are in many foreign countries.

4. Greatly reducing useless higher "education":
No federal grants/loans/subsidies of any sort for gender studies, women's studies, theater/acting, and other such majors, very substantially reducing and capping the same for other humanities majors and law. Most such departments would close or slash the number of faculty/students - good riddance.

5. Instead of food stamps, able-bodied recepients should be required to do ag. labor for part of harvest.
This would help reducing the number of illegals, too.

6. Only healthy low-calorie food on food stamps. Would help to reduce obesity.

7. Tort reform, cap punitive damages to 2X actual or 100 K, whichever is less.
Ban class-action lawsuits.

8. Cut defense and also require foreign nations that we protect (Japan, S. Korea, Germany, Iraq, Afganistan, etc.) to contribute MUCH more. If not, withdraw bases, troops, and protection guarantees (incl. NATO guarantees). Then Japan could resolve their territorial disputes with nuke-armed Russia and S. Korea with nuke-armed NK all by themselves. I'd think they'll pay.

9. Nearly eliminate foreign aid. That's a remnant of times when we were the richest nation in the world by far. May be some countries who we helped in the past and who now do well (Germany and S. Korea come to mind) can now return the favor.

10. Comprehensive immigration reform to cancel all family preferences (except spouses and underage children)
and replace by a point system as in Canada or Australia. Drastically reduce the refugee/asylee numbers.

11. Stomp down on illegals. Huge fines/property confiscation/deportation. "Sanctuary cities" have ALL federal funding denied. Borders to be protected by armed force/shoot on sight. This would actually cut the cost of border protection a lot.

12. Legalize all sex work. This would reduce law enforcement and welfare costs while yielding major tax revenue.
Balance of payments would also improve, as Americans would spend less $$ for that abroad.

All the above should easily cut spending by 30 - 50%

Now the "INVESTMENTS" where we need to RAISE spending equally dramatically:

1. Transport infrastructure.
- First and foremost, freight and passenger railroads, incl. high-speed rail.
- Roads/bridges.
- Free, broad wi-fi coverage over significant cities nationwide.
- Airports and seaports.
This would suck up all idle construction workers, unemployment goes down a lot.

2. Energy, energy, energy.
- Major program of nuclear reactor building, to reach 50% of electricity
from nuclear by 2020 and 75% by 2030. (France has ~80%, btw). Nuclear dump in Yucca mountain
re-activated and completed, objections from NV be damned. States and locales that object on
whatever grounds have their electricity deliveries cut by the % obtained from nuclear nationwide
(currently, ~20%). That's fair: if you don't like nuclear, don't use the energy from it.
- Hydroelectric construction where possible (Alaska especially?).
- Use nuclear and hydro energy on-site to produce artificial "oil" from coal as Germans did in WWII
- Require 50% of new cars to be plug-in hybrids by 2015, 100% by 2020
- Impose severe and increasing taxes on gas, use $$ for credits to buy hybrids and set up ubiquitous
rapid charging/battery swapping stations nationwide
- Allow deepwater drilling on both coasts as a stopgap measure. Tariffs on oil imports to promote domestic energy exploration.

3. Huge funding increases for space exploration, but disband NASA and start from scratch or via competitive contracts to private companies. Re-capture the US pre-eminence in space, humans back to Moon, Mars, and beyond.

4. Major new funding for education and research in STEM subjects. Free tuition and living wage stipend to STEM undergrads, conditioned on consistent excellent performance on tough exams.

5. Really improve HS education (esp. in STEM) through recruitment of teachers (incl. with Ph.D) at seriously raised wages (comparable to university faculty or private industry) at least in a good fraction of schools.
That's a real (and perhaps only long-term) solution to the persistent Ph.D overproduction problem, also.
Institute serious payments/prizes to HS school students for exceptional performance in STEM subjects
based on state and national competitions. Use serious money to make "nerds" more popular than "jocks".

6. National technology policy.
In particular, a large pool of govt. money to be available for start-ups. Such as, upon technical panel review (with, say, 25% passing rate): 1st stage (up to 4 M) - 100% govt. funding, 2nd stage (4 to 20 M) - 60% govt. co-funding, 3rd stage (20 to 50 M) - 30% govt. co-funding. Such programs now exist in other countries incl. Canada (Vitesse Canada), Russia, and China.

7. Get tough on foreign infringers of US property, physical or intellectual, using armed force if necessary. Protection of US property abroad against "nationalization" etc. should be at least a higher military priority than sundry nation-building projects.

Total spending in the end might not greatly differ from today, but the return in a few years would be so much better, wouldn't it?

I wonder, how many people agree at least on the majority of above points?
Am I a (D) or (R), btw?

#crime

Comments 1 - 9 of 9        Search these comments

1   Â¥   2011 Jul 23, 4:08pm  

"No "life-saving" 100 K/year drugs."

Fine. What is the production cost on that $100K/yr drug? Let's cut all drug costs down to the COGS and find other ways to incent invention other than granting monopolies and then paying extortionate prices.

The problem we have with Medicare is that we're spending 2
X per capita on it and only covering 1/3 the population. It's insane.

United States of America $7,164
Netherlands $4,233
Germany $3,922
Canada $3,867
France $3,851
Sweden $3,622
Japan $2,817

"Cut defense and also require foreign nations that we protect "

obvious. We need to cut defense in half, but that $400B/yr+ cut is not going to be pleasant. BRAC in the 1990s cost like $15B, total, and that was plenty traumatic.

"Stomp down on illegals. Huge fines/property confiscation/deportation. "

My plan is that employers that hire illegals lose their US citizenship and are deported along with the illegal worker. Problem solved!

"Nuclear dump in Yucca mountain
re-activated and completed, objections from NV be damned"

How about we bribe them instead? Better to send $20,000/yr per person affected than $60B/yr to KSA, no?

"Allow deepwater drilling on both coasts as a stopgap measure"

Dumb. Literally a drop in the bucket, unless you're aware of some elephants that haven't been found yet.

"Huge funding increases for space exploration"

ZZZzz. I hate to break it to you, but there's nothing up there but rocks. We got plenty of rocks here, free even.

"STEM"

ZZZzz. We don't need to pummel people into the sciences.

" Get tough on foreign infringers of US property, physical or intellectual, using armed force if necessary."

LOL.

"Am I a (D) or (R), btw?"

You'll fit among the Republicans quite fine.

The current economy is not that unbalanced, the main problem is that the top 10% are collecting ~50% of the national income. Without reversing that -- the US falling into kakistocracy -- you're not going to solve anything.

Plus there's that $250B/yr trade imbalance with China you forgot about.

2   Fisk   2011 Jul 23, 4:31pm  

Troy says

The current economy is not that unbalanced, the main problem is that the top 5% are collecting 70% of the national income.

The budget is unbalanced by 40% now, despite (i) record-low interest % on debt and (ii) that the boomers didn't start retiring in mass yet. Bring the interest rate to a more reasonable number
(say, the average since WWII) and it's unbalanced by ~50%.
Project forward 5 - 10 years as the bulk of boomers start retiring (1946 + 65 = 2011) and it's unbalanced by ~60%.
If that's not "that unbalanced" for you, what is?

Your only specific solution is cut defense by half.
That's just ~1/4 of the deficit in "static scoring" and less
(perhaps ~1/6) in dynamic scoring considering the reduced economic activity (less taxes from defense contractors + more unemployment/welfare/VA costs).

And we need not just to cut existing costs to match revenues.
We absolutely must simultaneously RAISE (and very substantially and rapidly so) the govt. spending on infrastructure, energy development, technology/R&D, and STEM education, else our benchmarks in 20 yrs. will be not Europe, Japan, or even PRC, but African countries or Mexico at best.

3   Â¥   2011 Jul 23, 5:33pm  

Fisk says

The budget is unbalanced by 40% now

Due to the loss of the velocity of money among the middle class.

http://research.stlouisfed.org/fred2/graph/?g=1f1

and the effective tax rate being ~10% or so means revenue is down $500B from the peak.

On the spending side, FY11 vs FY07:
Health care is up $240B
Defense is up $300B
Welfare is up $230B

Healthcare inflation is unacceptable. Just the federal cost of $880B/yr is $2800/person, what Japan pays in TOTAL for their health care.

Bumping that up to Canada-grade ($3800) would still be HALF our current expense:

https://www.cms.gov/NationalHealthExpendData/25_NHE_Fact_Sheet.asp

In return for Canadian-style single payer, we would theoretically save $4000 per capita, ONE POINT TWO trillion dollars.

And yes, the baby boom bum rush is going to hit our system en masse in 2020. God help us.

Your only specific solution is cut defense by half.

No, I suggested we go single-payer and drive our health care costs down.

Then I'd raise FICA taxes 2% over the next 10 years to put the SSA on a 25-year actuarial balance and tax the ever-loving shit out of our "job creators" to force them to actually create jobs.

The top 10% is making 50% of the income, $5T or thereabouts. Hmmm. 25% tax burden doesn't seem too high here, that's $1.25T, so total individual income would be about $500B more than now.

http://research.stlouisfed.org/fred2/graph/?g=1f2

Phase that in over 5 years.

We absolutely must simultaneously RAISE (and very substantially and rapidly so) the govt. spending on infrastructure, energy development, technology/R&D, and STEM education,

Thing is, I don't think government really has anything to add here. Could government have invented the iPad? Government's main job in the economy itself is just keeping cartels and monopolies from fucking people over, and tax the rent-seekers enough to break their business models.

Other than that, laissez faire!

OTOH, we could invest in commuter rail, domestic mfg capacity for solar stuff, some solar farms, nuclear plants, much more usable local bus lines, etc etc. But this is all a pipe dream now; who the hell are we kidding about intelligent investment in strategic needs. Just talking about it is depressing.

4   Fisk   2011 Jul 24, 1:38am  

Your propositions of tinkering around the edges of spending and taxes would have been appropriate and timely back in the 1980-s or 90-s, when the deficits were within ~3% of GDP or ~10 - 15% of the budget and were not bound to imminently worsen because of demographics (the boomer retirement).
The present situation is far more dramatic and requires equally dramatic actions well beyond numerical adjustments of tax or healthcare reimbursement rates, but profoundly changing WHERE the spending goes on a qualitative level and WHAT the obligations of society and govt. are expected to be.

BTW, your projected 1.2 T savings by going to CDN-style single-payer system would be to the economy/society as a whole, not to the fed. budget or even consolidated govt. budgets.
The GOVERNMENT expense on healthcare in Canada is not lower than in the US much or at all, it's the private funding (insurance and out of pocket) that makes the 1.2 T difference. I guess taxes could be raised to suck out the private and corp. savings realized from shifting to single-payer, but then say so.

5   Cook County resident   2011 Jul 24, 3:00am  

Fisk says

- only emergency and perhaps some other cheapest care to self-inflicted sufferers such as active smokers and morbidly obese. Smoking cessation and diet to reasonable weight first.

All of us are going to die and most of us are going to die of something expensive.

Smokers and fatsos spend less time on the retirement dole.

In the long run, Twinkies and Marlboros can save the taxpayers a fortune.

6   Â¥   2011 Jul 24, 3:35am  

"The present situation is far more dramatic and requires equally dramatic actions"

It took 20 years to get where we are now and it's going to take 20 to back us out.

Yes, debt to GDP is going to approach 1.0. This will put us up there with Germany, UK, France.

If I were King, I would focus on the 5, 10, and 25 year picture.

Things were in rough balance 10 years ago. What changed?

One thing that has changed is that gas is 2X the cost it was 10 years ago, and our trade deficit with China is over 3X ($80B to $250B).

Both of these are sucks that are pulling hundreds of billions of dollars out of the economy. We need to fix this. I'm not sure what tariffs would do, but we need something like that effect to staunch this flow that is not doing us any good.

"it's the private funding (insurance and out of pocket) that makes the 1.2 T difference. I guess taxes could be raised to suck out the private and corp. savings realized from shifting to single-payer, but then say so."

I actually don't know how the move to single-payer would work. We just can't chop $1T out of the economy overnight (even if it is dead loss). The general idea would be the savings of single-payer would be sucked up by our massive retirement care cost I guess. We'd still be spending $8000/capita but we'd be getting 2X the care we are now.

7   Â¥   2011 Jul 24, 3:37am  

Cook County resident says

In the long run, Twinkies and Marlboros can save the taxpayers a fortune.

this is why Economics is called the dismal science

8   Cook County resident   2011 Jul 24, 4:02am  

Troy says

Cook County resident says

In the long run, Twinkies and Marlboros can save the taxpayers a fortune.

this is why Economics is called the dismal science

“Nessuna soluzione . . . nessun problema!„

The minimum age for NASCAR driving, demolition work, skydiving and skateboarding should be raised to 65. I was going to add motorcycling to that list, but Harley-Davidson has that demographic covered nicely.

Condoms should banned for all couples beyond their fertile years.

Let's stop wasting youth on the young.

9   FortWayne   2011 Jul 26, 3:29am  

Troy says

Due to the loss of the velocity of money among the middle class.

what are you talking about? There is great velocity of money in the middle class. Every single deadbeat that files for a government bail out instantly gets money channeled through from the taxpayers to the banks.

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