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Ignoring Our Deficit Is Irresponsible

Posted by Larry Doyle on January 22, 2013 11:28 AM |

Do you remember where you were and what you were doing in 2005? Although much has transpired over the last 8 years, in many regards 2005 seems like just last week. As I think most would attest, if we think the last 8 years went by quickly, the next 8 will go by even quicker. Why is that such a concern?

For the very simple reason that if we do not prepare NOW, the future for our nation and ALL citizens of the United States will be decidedly more challenging. Why so? As the Financial Times addresses today,

It is the 2020s when the big spending will start. The baby boomers, into their 70s, will start getting sick; the Social Security retirement age will stabilise at 67 in 2022; and the CBO is unwilling to assume that certain controls on medical costs will stick for more than a decade. The revenue and spending paths will become irreconcilable. Debt will pile up – and quickly.

Not preparing for this “imminent” problem strikes me as the height of irresponsibility. Thinking that we might simply devalue the currency as a means of financial artifice, this “screwing the kids”, is equally disingenuous but regrettably all too common.

I would propose right now that if President Obama is adamant about generating increased revenue then he start the adult conversation by addressing means testing across all government entitlement programs. What should the means testing cutoff be? Sufficiently high enough so that nobody might believe that the individuals in question should be concerned about their future security.

I do not think that President Obama should be worried that this means testing will be a significant drag on Democratic Party prospects. At the margin, I would venture to guess that more Republicans than Democrats would be impacted. But the question should not be which groups  are impacted more or less. The question is simply that our nation as a whole will be impacted. Future generations will be most negatively impacted if we choose not to address the deficit NOW!!

If President Obama wants to talk about fairness, nothing comes close to this topic of entitlement reform and addressing the deficit.

What do we need in order to address rather than ignore the deficit?

Leadership.

Larry Doyle

Isn’t it time or overtime to subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook.

I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

 

  • Ed Pefferman

    Larry,
    “Ignoring are deficit is Irresponsible”….novel idea.

    Ed

  • Ed Pefferman

    Larry,
    Do you wonder why no one read your comments on this
    post?
    Have you ever heard the addage….”People that live in
    glass houses shoudn’t through stones”
    You are such an easy target.
    What happened to transparence?

    Ed

    Ed

    • LD

      Ed,

      When you think you have posted a comment but then it does not seem to appear here it is because I typically try to delete or clean up the drivel and spam so as not to clutter the site.

      You STILL have yet to add one comment with any sort of substance.

      Perhaps you may care to avail yourselves of a whole host of the links here at the site and then come back to us next fall or winter.

  • Vince

    Larry, you are hitting a sore spot.

    The last time I checked people who paid more are getting less and now are being asked if we deserve it or need it.

    Annuities don’t work that way.

    If the Fed wants to means test me how about just send me back the money….just sayin…..

    • LD

      I think the means test should be announced now and implemented in over a scaled period beginning in say 5-7 years.

      These are Ponzi schemes.

      I would much rather see a means test than a total crash which would cost us even more.

  • NRG

    excellent, though I prefer the word immoral to irresponsible…they know of what they do…

  • Ed Pefferman

    Larry
    I sent that comment to you at 11:30 AM. It wasn’t
    Posted untill 4:30PM.
    In the mean time, I was sent some”boiler plate dribble
    about pinging and that my message had been sent to
    another planet.
    ED

    • LD

      Bye bye Ed!!

  • Ed Pefferman

    Larry,
    So much for your integrity

    Ed

  • Eddie

    Economic understanding how a mature and peaceful society can function without intervention by government.

    Understanding the only use for government is to thwart unprovoked force, we need that from government, but that’s all government can do because all it is, is force.

    Government is not even a choice in the peaceful affairs of a society. For some reason our culture has elevated it’s role way beyond our founders intentions, maybe people think it can reach and touch many and for that reason it’s a solution to every whim, feeling, boom, bust or grand vision, but it’s not.

    We don’t even need to teach freedom and liberty, we don’t need public schools, we just need to look at the history of mankind, it’s what succeeds and continues, not governments they all fail…

    So support freedom, reduce government which reduces costs and watch prosperity flourish and cover the deficit.

    Just sayin…

  • Lisa

    Chris Martenson of Peak Propserity writes about Obama’s inaugural speech on this topic of the deficit,

    There was not any mention of budgetary limits or fiscal constraints. The closest Obama came to mentioning the looming fiscal train wreck that our entitlement programs represent was by making the statement that if we just reject certain beliefs, we can have it all.

    President Obama said: “But we reject the belief that America must choose between caring for the generation that built this country and investing in the generation that will build its future.”

    Every single actuarial study ever done, either by this administration or the prior one, or by private foundations or researchers has come to the unmistakable conclusion that hard choices between past promises and future opportunities is exactly what must be made.

    It is, to put it bluntly, not a matter of ‘belief,’ just math.

  • Evelyn

    There are much better ways of decreasing the deficit:

    –We can reduce the cost of medical care in this country to the cost that is common in other rich countries, — Germany, Sweden, Switzerland, and all the other industrially developed countries in Europe, who spend about 12% of their GDP on medical care, because their whole system is better than ours. (And almost all are NOT government run, single-payer systems; the delivery of services is private and the performance is better than ours, as you can see in their health numbers versus ours.) Our cost for medical care is almost 18% of GDP. We are clearly spending over $900 Billion per year (6% of our GDP!), more than we would if our medical systems were run as well as the rest of the rich world.

    – Everybody should pay income taxes on the imputed income that companies pay for their health insurance. At this time, all those who are NOT paid by a company for their insurance pays for insurance in after- tax money, but people who are paid for insurance by their companies do not pay any taxes on what is also, in the real world, income. That is terribly unfair and grossly stupid, especially since it is people with jobs who are the ones NOT paying taxes on income, and the people who are self employed and often struggling that are paying those taxes.

    If just these 2 things were done over time, — and the first item would take time — we would be BETTER THAN JUST OK ON THE DEBT.

    • LD

      Evelyn,

      Strikes me that the medical industry in our country is not all that dissimilar in this regard than finance, energy, and the military-industrial. The favors/payoffs provided to these industries by government are VERY expensive.

      • Evelyn

        No, I don’t think the medical industry is anything as bad as that; although there is certainly much stealing of services, it isn’t the really big amounts.

        Unfortunately, this is not a question of favors/payoffs and general immorality, — not much, anyway. It’s worse than that. The whole way in which health care is delivered is horrendously inefficient, — the system makes it too easy for doctors, hospitals, etc. to cause increases in costs while appearing to be doing good work, and the overheads due to the complexity of the system are awful.

        If the system were simplified and there were improved controls, we could cut costs drastically. That has been done in some hospitals and group services and we know it works, but making it happen generally would mean great changes.

        The US population is very wary of changes, so it will not happen soon without the country’s concentration on the unbelievably high cost of medicine in this country.

        • LD

          Evelyn,

          I think people are aware but feel that there is little that they can do about it.

          • Evelyn

            It does not appear so to me. There is a great deal of outrage about the big debt and cutting expenses, including the high cost of Medical care, but very little about the fact that the rest of the rich world can do a fine job of health care for all for 6% of GDP less than we do. Why hasn’t the government — or some group interested in public policy do something about it??

            For instance, why has no one done a careful study of, say, France and Switzerland, both of whom have high quality services and compare them, in detail, to the practices here in the United States, and try to determine where our money is being wasted? And what kind of organizational principles are needed to provide an efficient system?

            I don’t see anything being done to analyze this and little talk about this issue at all. Its as though the country is yelling for us to do something, but no one has a clue on how to start.

          • LD

            Evelyn,

            Thank you again for continuing our dialogue. You ask,

            Why hasn’t the government — or some group interested in public policy do something about it??

            I would revert back to my original premise. Special interests have been hard at work in Washington for a long time to make sure that those on Capitol Hill are sufficiently taken care of so that nothing is done about this.

            In regard to other groups interested in public policy? Regrettably they are drowned out by the special interests highlighted above.

            I personally believe our country might only change if we had some smoking gun type documentaries produced by 60 Minutes perhaps that literally expose and embarrass both the health care industry and the politicians so that the public both “gets it” and “demands changes”. Regrettably the forces trying to maintain the status quo are big and strong and spend a lot of money to see that the current situation persists.

            Thanks for your interest in my work and support of my blog.

  • Bill

    I”m afraid Obama’s only interest is in continuing to shower enough largess on his voter blocks through deficit spending to gain sufficient control of Congress in the 2014 elections such that he and his democrat myrmidons can finish their wrecking job on the country in the last two years of his reign.






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