“The single biggest threat to our national security is our debt”
Admiral Mike Mullen, former Chairman of the Joint Chiefs of Staff
My last blog, “Why the National Debt Is Such a Threat to the U.S.” observes that our debt is very large by historical standards and will just keep getting worse under current policies now in effect. This has many severe consequences for the well-being of our country.
What do we do about it? We have to shrink the size of our annual deficits which are continuing to make the debt bigger and bigger. The deficit for the 2014-2015 budget year just ended is $483 billion which is 2.8% of GDP. Since our economy has been growing at a rate of only 2.2% for the past five years, this means that the debt is still growing faster than the economy. We have to do better than this.
The above chart from the Congressional Budget Office shows that the main contributors to the deficit, and therefore also the debt, over the next 20 years, will be entitlements (Social Security, Medicare and Medicaid) and interest payments on the debt. All other programs, i.e. almost all of traditional federal spending, will decrease as a percentage of GDP.
This means that there are just two basic ways to solve our debt problem: trim entitlement spending and/or increase government revenue. We’ll need to do both. Furthermore, it is unrealistic to expect middle-income and lower-income people to pay higher taxes when their wages have been stagnant for many years. New tax revenue will have to come from the wealthy including upper-income wage earners. The best way to do this is by cutting back on the annual $1.2 trillion in loopholes and deductions built into the tax code.
Only one Senate candidate from Nebraska is willing to both trim entitlement spending and raise additional tax revenue: Jim Jenkins, a registered independent from Calloway. The Democratic candidate, David Domina, will not support any significant reining in of entitlement spending. The Republican candidate, Ben Sasse, is too beholden to wealthy contributors to be willing to raise their taxes by cutting back on their tax deductions.
We badly need elected representatives in Washington who will make it their top priority to “fix the debt.” Jim Jenkins is such a person. I hope you will vote for him!
The Bible calls taxes of 20% slavery and taxes over 10% tyrrany. Our tax rate is already well over 30%. The biggest 2 reasons for our high government expenditures are 1) high medical costs and 2) the government paying to support the aged instead of their own children or relatives. High medical costs can be dramatically lowered by requiring health insurance payouts to be in the form of vouchers. Social Security costs can be dramatically lowered if grown children care for their own aged parents, which is one of the Ten Commandments (honor your father and mother). Even military costs can be lowered if we lower the number of active duty army soldiers and rely more on the Reserves (while keeping the Navy and Air Force funding at current levels). Taxes don’t need to be raised to pay our debt-they are already unconstitutionally high-Americans are slaves b/c our taxes are higher than 20%.
Basically you are agreeing that the three entitlements, Social Security, Medicare and Medicaid, are the primary drivers of our debt. It’s simply not realistic to expect society to return to the old model of children caring for their aged parents. For one thing, many struggling families don’t have the means to do this.
I agree with you in essence for how to respond to high medical costs. But I think that Avik Roy’s plan, “Transcending Obamacare” is a better way to proceed. He proposes keeping the Obamacare exchanges and gradually migrating both Medicare and Medicaid recipients over to the exchanges. The exchanges provide subsidies to buy private healthcare insurance. This is conceptually equivalent to a voucher system.
The federal government is highly inefficient, wasting hundreds of billions of dollars every year. But how do we correct this in practice? If we had either a balanced budget amendment or term limits, our excessive spending habits would be corrected, but I despair of ever attaining this high standard. In the mean time our debt is going up, up, up. Do we wait for the next, and much worse, fiscal crisis before we act?
Jack, I agree with your support of Jim Jenkins, especially in backing his economic position. And I would vote for him if he was a viable candidate instead of being a candidate that could take votes away from the one viable senate candidate that might actually be able to add his vote to a hoped for new majority in the U.S. Senate that can offer a Paul Ryan type offset to the economic policy of the president. As I have said before, we must present viable candidates that not only mirror your position on economic policy but who have also been able to clearly enunciate positions on the many other issues facing us as a country.
I’m expecting Ben Sasse to be elected. I’m just not confident that he will support the fundamental Romney-Ryan type of tax reform that we need to turn our economy around. But I am confident that Jim Jenkins would support this type of reform and more. That’s why I plan to vote for him.