So, What's the Solution?

So, I've been harping lately on the federal budget, our enormous budget deficit, and what to do about it. As I've pointed out, the breakdown of the federal budget (projected for 2010) goes something like this:

• Entitlements for Senior Citizens: $1.15 trillion ($700B for Social Security, $450B for Medicare)
• Income Security Programs: $770 billion ($290B for Medicaid, $480B for other programs)
• Veteran Benefits: $60 billion
• Debt Service (i.e. interest payments): $140 billion
• Defense Spending: $710 billion
• Everything Else: $760 billion

Our projected deficit for this year is $1.26 trillion. Cutting this deficit will not be easy, and there are no simple sound-bite solutions. However, since I complain about this issue a lot, I feel obliged to present my ideas for solutions, because if I simply whined without providing ideas, that would make me, well, your average Republican Congressperson.

After the jump are the ideas. These are necessarily long-term ideas. Even the easiest of them would take a decade to implement, but the journey of a thousand miles begins with a single step. A decade from now, I will still only be 35, and, with any luck, most of the current Congress will no longer be screwing up our country.

The Rant: I've Hit My Breaking Point

These days, I'm pretty much just incensed about the Massachusetts Senate race and how Scott Brown is looking more and more likely to win. I am angry not just because Martha Coakley is such a weak candidate, but because I simply do not understand what is going on in this country.

The storyline in the national media is that Republicans and Tea Partiers from across the country are coming out of the woodwork in rebellion of the leftist Democratic agenda and in rejection of Obama. This does not make any sense to me, because (1) the Democratic agenda is not even left-of-center, let alone socialist, and (2) for every person who disapproves of Obama from the right, there are probably two more who disapprove of him from the left; I sincerely believe that much of this country believes Obama has not done enough to implement his campaign promises.

A Summary of the Health Care Bill

Since it's difficult to figure out what exactly Congress has been debating for the last year, here's a brief summary I've compiled about the House and Senate versions of the health care bill. The numbers here are very rough and rounded (and probably just wrong in some cases), but they are more intended as heuristics for what the bills hope to accomplish. Much is compiled from wikipedia, and this Washington Post article.

Insurance Mandate
House bill: 2.5% tax increase for people who do not have health insurance

Senate bill: 2% tax (or $750, whichever is greater)

Both bills have a schedule of subsidies to offset the costs for people making up to 400% of the poverty line, or about $90,000 for a family of four.

Employer Mandate
House: Small business with payrolls less than $500,000 are exempt, and businesses with payrolls less than $750,000 have reduced contribution requirements.

Senate: Small businesses with fewer than 50 employees are exempt. For other businesses, there is a mandate to provide coverage or (in most cases) a pay a $750 per employee fine.

Medicaid Expansion
Both bills expand Medicaid by about 15 million people, or about 30% of the existing Medicaid program (this is the major cost-driver of the bills).

Revenue Generation
House: A "surtax" of 5.4% on individual tax liability on about the richest 0.5% of people and families (this probably ends up being between a 1% and 2% tax increase).

Senate: A 1% tax increase on the richest 1% of people and families, combined with selected cuts in Medicare.

Insurance Company Regulation:
Regulations are myriad and complex, including prohibitions on refusing coverage, prohibitions on dropping coverage, minimum standards, etc.

Who's Socialist Now?

 I wanted to quickly present a few numbers about the George W. Bush administration. (These numbers are rough and rounded, but they work well enough for my purposes.) Under Dubya, adjusted for inflation:

• The size of the federal budget increased by 33%, the largest increase since L.B.J.;
• Defense spending increased 67%, the largest increase since World War II;
• Education spending increased 36%, the largest increase since Johnson;
• Spending on income security programs increased 36%, the largest increase since the Ford administration;
• Spending on general government operations increased 25%, the largest increase since Nixon; and
• The size of the federal budget increased 33%, the largest increase since Johnson.

So, basically, Bush II was the biggest spending president since Lyndon Johnson, who had a couple feathers in his cap—like Medicare and the original Elementary and Secondary Education Act—as well as a very large black eye (Vietnam).

Now, people might say that this doesn't prove anything, because the Tea Partiers have repudiated George W. Bush as a drunken fratboy on a spending spree. There's only one problem in this argument: The Republican Congress that rubber-stamped W.'s agenda.

If you look again at those numbers, but look only at the first six years of Bush's presidency—when Republicans controlled Congress—all but one of those comments remain true. For the overall size of the federal budget, the comparison no longer remains true, because Bush is narrowly edged out by—oh, Irony!—Ronald Reagan.

So, if you want to point fingers at who were the people to expand the size of the federal government by its greatest increases since the Great Society, look no further than John Boehner, Mitch McConnell, and Bush's other lapdogs in Congress.

Is the Federal Government Really Too Big?

The New York Times published a letter to the editor by a fiscal conservative who claimed not to be a political activist but was drawn to the Tea Party movement:

We are...displeased with our government of late and are concerned about our nation’s future. Our Depression-era parents taught us to live within our means. And to keep our house in order. This is a lesson lost in Washington.

A question I have been thinking about for some time now is whether such people are correct. Is Washington spending too much and taking in too little?

The obvious answer is, "Of course." The estimated federal budget for the coming year involves receipts of $2.3 trillion and outlays of $3.6 trillion. The federal government would need to take in over 50% more in taxes than it currently is collecting to balance the budget. This is not an ideal state of affairs, but it's the one we have, because this country has neither the political will nor, likely, the economic capacity to hand over one-quarter of our GDP to the federal government.

Ignoring that elephant in the room for the moment, is a $3.6 trillion federal government too big? Let's look at where that money is going.

Will the Real Conservatives Please Stand Up?

In his column a few weeks ago, Paul Krugman lists what he sees as the three categories of people who are opposed to health care reform: (1) the "crazy right," i.e. "the tea party and death panel people," (2) the "fiscal scolds" whose greatest concern is the deficit and national debt, and (3) the progressive left, whose dreams of a single-payer system, or at least a public option, have been killed. His response to each of the three groups is effectively (1) it isn't worth responding to lunatics, (2) the bill if anything will reduce the deficit, and (3) yes the progressive left didn't achieve all its goals, but it got something, and that's at least a step in the right direction.

But Professor Krugman is leaving out an important group—an group that has real objections to health care reform that deserve to be taken seriously and whose views merit a serious response. The people to whom I refer are the true libertarians who view all government programs with suspicion, and who believe that we should return to a pre-1937 state of affairs.