That’s working out so well in Oklahoma!
The only way to get close to a balanced budget would be to slash military spending. That will never happen.
Not even close. We could zero out military spending. Not spend 1 penny on it and still have a major fiscal deficit. Military spending has been a large downward spiral in the US since Vietnam/Cold War. The idea that defense is a huge component of the federal government isn’t true anymore.
If we cut our military spending in half in next decade, mandatory spending outlay growth from Medicare/Medicaid/ACA would still have us spending more.
Even if the 2017 tax bill was reversed, we’d still have a deficit problem b/c of the growth of mandatory spending. We as a nation were close to consensus in the late '90’s under Clinton when you saw some reforms get close to the finish line. We’ve split in a big way since.
The future mandatory spending growth as described by Wahoo is almost entirely caused by the cost of health care in the US, as most of that spending growth will be in Medicare and Medicaid.
So the only way to bring that spending down is to either cut back on the treatment those programs provide, or to lower the prices of that treatment. The first option is very unpopular with voters, and also IMO bad policy. The second option, using some type of “all-payor price setting” system, would be good policy IMO but would face massive opposition by the GOP on general principles and from the health industry who would fight tooth and nail.
If you really want to get serious about federal spending, you have to address the cost of health care. Full stop.
According to the OMB, in the last five years the budget deficit has ranged from $466 billion to $719 billion. And according to the OMB, in the last five years DoD military spending has ranged from $562 billion to $608 billion.
I’m gonna call this one for @Mark_Asher.
After posting the above, I found a Vox article about a California proposal to try controlling medical prices
That’s the kind of thing that we need to experiment with IMO. Every other developed country uses some form of significant medical price controls, which makes sense as the normal market feedback loop for health care prices is imperfect due to inelastic demand. Therefore, a regulatory “patch” on pricing is needed. This CA proposal looks like it has some interesting ideas.
It’s not in a “downward spiral.” Defense spending has been more or less flat as a percentage of GDP since the end of the Cold War. So in fact real defense spending is increasing with time, since GDP is (usually) growing with time.
Mandatory spending - Social Security, Medicare etc. - does indeed dwarf defense spending (which is only 16% of the total Federal budget when including mandatory spending). But within the category of discretionary spending, defense takes up 57% of it.
So if you’re talking about changing discretionary spending - which the GOP loves to do, pretending that cutting public TV or the CDC will somehow magically slash the deficit - defense spending is where you should be looking if you actually expect to make any kind of a dent.
Closing corporate tax loopholes and raising capital gains taxes is also required. As demonstrated by the latest giveaway, cutting taxes does not in fact pay for itself (shocking!) The government ran a $200 billion deficit … for the month of March.
Yeah, that’s the thing. You can’t really even discuss balancing the budget unless you put military spending on the table. The Republicans will never go for that because the ultra-wealthy will never support it. The military protects their position and their holdings, both domestic and international.
Really, the only sane way to even begin to talk about balancing the budget is to consider both cuts to military spending and revenue increases. Sure, you can also talk about trimming social spending to some degree too, but the idea that you can balance the budget without cutting defense spending and without revenue increases is unrealistic. We’re talking a possible trillion dollar annual deficit now.
Magnet: past 5 years doesn’t matter after tax cut. Read latest CBO report that is current law.
Sharpe: It’s health spending but mores the increase in number of elderly. Social Security expenditures are increasing about 75% of total health spending. That said agreed about prices but disagree strongly on price controls. Be interesting to see California experiment with it and I even encourage it since I don’t live there. I would anticipate very mixed results with little effects in high urban areas.
Human Ton: You’re right defense spending up in real terms. I meant in % of GDP where we averaged over 4% since Cold War and down now in the mid three’s and staying there. We are actually at 3.1% according to CBO which is about a third lower than 93 in GDP percentages. That’s a significant decline.
I’m not sure we would still have a deficit, but your point is sound.
A lot of far left sources claim stuff like military spending being 55+% of federal spending, but that’s only it’s percentage of discretionary spending.
When you account for mandatory spending, like Social Security, defense ends up being only around 15% of the federal budget.
It’s still a big chunk, but it’s not as big a chunk of overall spending compared to the big mandatory chunks.
Wahoo, without price controls, given the reality of inelastic demand in the health care market, how would you reform health care pricing? I don’t love price controls and would strongly prefer the market work. However, the healthcare market has a deep imperfection in the form of inelastic demand so market-based reforms just don’t work. There is no developed country in the world using fully (or even mostly) market-based healthcare pricing. So how else are you going to deal with this issue?
The same OMB source projects future annual budget deficits through 2023 to range from $706 billion to $977 billion. Annual military spending is expected to range from $613 billion to $735 billion. Assuming there is not another war, which is quite an assumption.
Since reducing military spending also means not incurring new interest expenses, I’m still calling Mark the winner on this one.
You don’t usually account for mandatory spending because it’s, ya know, mandatory.
It makes more sense to count defense budget as a percentage of discretionary spending since that’s the part that can actually be adjusted through appropriations.
That’s silly.
You need to look at the overall government spending, because that’s the only way to actually have an impact on the overall level.
Just because spending is mandatory doesn’t mean you have no control over it.
Sure, but it is also patently clear that the only meaningful way to decrease spending involves health care, and military. And health care is best done through controlling costs. You know, like every other civilized nation does.
And military? That’s the big bugaboo. Dropping it down to 2% of the federal budget means we save a few hundred billion a year, and still have the military budget larger than the next 5 nations combined.
I think you mean 2% of the GDP, not budget…
Heh, yup. What I get for dashing one off on my phone while getting the kids ready for bed.
Well, it kind of does. The only way to change the big ticket mandatory spending is to change eligibility requirements, which requires updating the authorizing law. That’s 60 votes in the senate.
I suppose there’s probably some spending around the edges that could be cut without too much controversy, but the big money is in SS, Medicare and Medicaid. Good luck with that.
No, you can reduce the cost of things like services provided to the recipients of Medicare and Medicaid. That could have an immense impact on federal spending.