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Fiscal Challenges, Social Security and Changing the Debate
Submitted by
CalculatedRisk on Thu, 12/15/2005 - 12:22pm (30 comments)
Your chart would look different if it reflected the ideological perceptions of the Republican base as opposed to, say, the actual data.
And guess what drives the current leadership?
Elected leaders are responsive to the voters from whom they derive support.
Why not tackle small problems first? It can lead to confidence building and build political support for tackling the larger issues. The Clintons tried to reform health care and it hurt their party in elections, because voters disapproved.
Why not tackle small problems first?
I agree... we should fix this 'little problem' then go to Mars.
The problem is the large problems impact on the small ones. I don't have any faith the small ones will actually be solved if the large ones are avoided. They may just be a delaying tactic to avoid dealing with the large ones. Someone once said the only political solutions are to punt it to the future by borrowing or ignore it and hope it goes away. If the deficit does matter, then nothing else does either. Let's ignore it.
FoolsMate, good question. Speaking from experience, if you have an ongoing quality program, there is never any need to fix the "small" problems to build "confidence". Just keep knocking down the biggest problem on the Pareto chart!
But, if you are taking over a broken process (something I've done), there is a tendency to want to address some small problems - and usually team building or morale are given as the reasons. Its OK, IF (big IF) the problem is straightforward and the solution is not too controversial - otherwise it is self defeating. IMHO, SS doesn't qualify.
Usually the real reason people want to tackle a small problem is the big problems are hard - just look at health care - on the one side are advocates of free market reforms, on the other side are those that believe health care isn't amenable to a free market approach - a huge divide.
But if we can't fix health care, who cares about Social Security?
Best Regards.
Calculated Risk, I just discovered your blog and now have you bookmarked for further learning. One economics question that I haven't seen an answer to is what exactly is the true footprint of deficit spending on the GDP...
Sure, $500B is ~4% of GDP, but this is ignoring the velocity-of-money effect. If government had not borrowed and injected this $500B into the economy, wouldn't GDP be way under $10T?
Another question I have is the stimulus difference between the Treasury borrowing ~$200B/yr from the domestic economy and just taxing the $200B directly.
To me, they appear identical in immediate effects. I don't understand why we borrow from people we could be taxing.
Well, I do, but I wonder what the economic rationale is for it.
i think a major focus should be placed on energy. if we can save people money through more efficient production and usage of energy, they can put that money into health care, education, savings, etc.
Hear, hear!
they can put that money into health care, education, savings
or their mortgage repayment...
As a Georgist I kinda believe we're chasing our tails until we start taxing land value instead of income...
Great info. and chart. Removes any remaining doubts as to weight of each.
dry fly's dry wit on point once again.
Govt. spending is entirely awry.
Must slice, slice, slice without putting long time citizens on the streets, hungry, or without heat.
The longer I live, the more I see that the Founders did not put in place necessary oversight mechanisms for bills and to keep spending out of hands of politicans.
Will have to find ways to put the reins on double dipping of retirements.
All those inflated houses will have to be used for medical care costs and retirments, esp. govt. retirements on each thieving level. Totally dreaming if think the rest of us are going to pay while they ran up govt. debts.
Must slice, slice, slice without putting long time citizens on the streets, hungry, or without heat.
That really is 'it', isn't it? I mean a lot of the rest - big screen TVs huge house in the burbs... all the crap from China... unimportant.
I believe Pres. Hillary will be entrusted to fix our healthcare woes, after the financial collapse of 2007. And her plan could solve Social Security and Medicare problems as well. Goverment rationed medicine will encourage euthanasia as a standard "cure" of any life threatening illness beyond the age of 65. (Imagine "Logan's Run" with a higher exit age.)
Just real quick, could you source the $45t General Account figure used in your graph?
Incidentally, the two other figures -- Medicare and Soc. Sec. -- actually originated in the Trustee reports, yes?
Victor,
Before you post anything similar at Dead Parrots, you may want to check out my posts below.
I'm not much on providing quick shortcuts when it comes to GAO reports and data sources. Some of info is difficult to find. And it's worthwhile to help others find it in the future.
I will explain in the following posts how to find the data that GAO used to create the two revenue vs. expenditures charts that are in the GAO report cited by CR.
GAO explains elsewhere that most of their projection data for those two charts and other presentation was pulled from CBO data. But I haven't found any specific CBO reports that GAO has cited as the original sources. But it's not difficult to track down the CBO reports concerned.
CR's reference is a GAO report which employs data from "GAO's September 2004 analysis". The latest data for creating such charts in subsequent presentations (reports or slide shows) is from "GAO's August 2005 analysis".
Hang with me until I walk through the details. It's worthwhile. You will be able to find the updates in the future and the related color slide presentations which can be readily used in posts.
^
CR,
You have made a very important post. Glad to see it. Hope you follow up.
I have a slightly different take on the principal issue.
Political sound bite: "It's the U.S. Debt interest payments, stupid."
I believe that this approach will capture public interest on the matter of successive fiscal deficits. It drives the point home.
Discussing the presence and size of the deficits alone doesn't appear to be enough to capture public interest or cause appropriate alarm. Moreover, it doesn't provide a visual of explaining how the deficits are not only requiring financing, but how the interest payment obligations will crowd out discretionary funding (initially) and cut into potential financing needed for mandatory obligation programs. And that's a huge issue.
Supporting the interest payments discussion approach requires a few decent graphics. GAO comes close with its two revenue and tax provision charts (and slides, by the way). Of course, the purpose of those two charts/slides is to present the differences of funding problems associated with not extending or extending the tax cut legislation. But this is federal data one can cite in any web log post, news article, or briefing.
I believe that you and others could develop spin off interest payments graphics which would illustrate the dangerous situation that is developing. Moreover, you could provide a comparison of graphics depicting the different impacts based on changes in interest rates. The known and projected data for the net interest presentation in the two GAO graphs is available from the GAO web site. I will explain how others can find it in the following posts.
^
GAO Slide Presentations
I have been studying the GAO presentations with interest for the past few weeks after watching and listening to a couple of the Comptroller General's speeches. Interesting analysis and slide presentations, including available detailed data sources which can be referenced once you locate the information at the GAO web site.
Your post reference is a GAO report (pdf version) based on "GAO's September 2004 analysis". The latest data available is from "GAO's August 2005 analysis". More importantly, current and projected data drawn from GAO analysis which is portrayed in the two charts is available under "GAOs Long-Term Simulations" (see below).
I have located the Comptroller General speeches and testimony slide presentations in html format which duplicate some of the charts available in the GAO reports in pdf format. The slide presentations can be linked instantly, and one can link to individual slides. Before linking to individual slides, one should note that accompanying speech text, some of which offers better detail that the GAO reports, is available at the main page for the speech and accompanying slide presentation concerned. Similarly, the entire speech with charts can be pulled up in a pdf file. But the html slides and text are more easily and quickly accessed. And the slides look great.
Any general subject search at the GAO web site appears to only pull up pdf files, so that's not the way to find the slide presentations. Similarly, that approach didn't help me find the Comptroller General's speeches.
So, how does one find the speeches and slide presentations? Two paths that I found to be successful are outlined in my next post.
^
Finding GAO Comptroller General speeches and slide presentations as well as GAO subjects which include html format materials
1. Search Path One: (the limited approach)
GAO Home
U.S. Government Accountability Office (U.S. GAO)
See "Especially For" - The Press or Newcomers. Note the bottom of either page for Speeches from the Comptroller General.
Speeches from the Comptroller General
U.S. GAO - File Not Found
From the Comptroller General David M. Walker
U.S. GAO - File Not Found
The speeches include a mixture of slide presentations with available text and pdf files. Includes a few speeches not yet posted to the GAO speeches and reports listing under the Nation's Growing Fiscal Imbalance (slide presentations and pdf report files) or Social Security listing available elsewhere.
OR you can click on "Site Map" in the upper border and then click on the title, "From the Comptroller General" to reach the same page.
^
Finding GAO Comptroller General speeches and slide presentations as well as GAO subjects which include html format materials
2. Search Path Two: (specific subject search)
GAO Home
U.S. Government Accountability Office (U.S. GAO)
Locate "Site Map" in the top border.
GAO Site Map
Site Map
Nation's Growing Fiscal Imbalance
U.S. GAO - The Nation's Fiscal Outlook: The Federal Government's Long-Term Budget Imbalance
Our Nation's Fiscal Outlook: The Federal Government's Long-Term Budget Imbalance
U.S. GAO - The Nation's Fiscal Outlook: The Federal Government's Long-Term Budget Imbalance
The Long-Term Fiscal Challenge
U.S. GAO - The Nation's Long - Term Fiscal Challenge
The Nation's Long -Term Fiscal Challenge
U.S. GAO - The Nation's Long - Term Fiscal Challenge
Two separate linking options are available: (you will need both to find the slide presentations and data sources)
- "Related GAO Products"
- "GAO's Long-Term Simulations"
Related GAO Products (Long-Term Fiscal Challenge)
U.S. GAO - Related GAO Products
SLIDE PRESENTATIONS:
SEE Truth & Transparency - Comptroller General Speeches and Presentations
(top listing under Related GAO Products)
GAO Reports in pdf file format:
SEE The Long-Term Fiscal Outlook
(second listing under Related GAO Products)
Chart Data Sources:
GAOs Long-Term Simulations
U.S. GAO - GAO's Long-Term Simulations
Long-term fiscal simulation data for downloading
U.S. GAO - Long-Term Fiscal Simulation Data
Long-Term Fiscal Simulation Data
U.S. GAO - Long-Term Fiscal Simulation Data
(Slide data sources follow)
Data from Baseline Extended simulation
http://www.gao.gov/special.pubs/longterm/baselineextendedaugust2005.pdf
*Source: GAO's August 2005 analysis.
Baseline Extended
http://www.gao.gov/special.pubs/longterm/baselineextendedaugust2005.pdf
*Source: GAO's August 2005 analysis.
Data from Discretionary spending grows with the economy after 2005 and all expiring tax cuts are extended simulation
http://www.gao.gov/special.pubs/longterm/sunset_and_disc_grows_with_gdp.pdf
*Source: GAO's August 2005 analysis.
Discretionary Spending Grows with GDP and All Expiring Tax Provisions are Extended
http://www.gao.gov/special.pubs/longterm/sunset_and_disc_grows_with_gdp.pdf
*Source: GAO's August 2005 analysis.
^
CR,
Allow me compare your presentation with information based on GAO's August 2005 analysis. I will post slides which reflect August 2005 and September 2004 GAO analysis as provided in two different presentations. Note the differences. I will also post the detailed data sources for the GAO'sAugust 2005 analysis upon which the charts were constructed.
A recent GAO speech and slide presentation that includes the two charts concerned:
A Look at Our Future: When Baby Boomers Retire
December 12, 2005
U.S. GAO - A Look at Our Future: When Baby Boomers Retire
Supporting speech and charts text
http://www.gao.gov/cghome/whitehousewalker1205/walker_whitehouse1212.txt
Charts:
Composition of Spending as a Share of GDP Under Baseline Extended
Source: GAO's August 2005 analysis
U.S. GAO - Composition of Spending as a Share of GDP Under Baseline Extended
Composition of Spending as a Share of GDP Assuming Discretionary Spending Grows with GDP after 2005 and All Expiring Tax Provisions are Extended
Source: GAO's August 2005 analysis
U.S. GAO - Composition of Spending as a Share of GDP Assuming Discretionary Spending Grows with GDP after 2005 and All Expiring Tax Provisions are Extended
Tabulated Chart Data:
Baseline Extended (for chart one above)
http://www.gao.gov/special.pubs/longterm/baselineextendedaugust2005.pdf
*Source: GAO's August 2005 analysis.
Discretionary Spending Grows with GDP and All Expiring Tax Provisions are Extended
(for chart two above)
http://www.gao.gov/special.pubs/longterm/sunset_and_disc_grows_with_gdp.pdf
*Source: GAO's August 2005 analysis.
Presentation using GAO's September 2004 analysis:
Current and Emerging Fiscal and Retirement Security Challenges
January 14, 2005
U.S. GAO - Current and Emerging Fiscal and Retirement Security Challenges
Supporting speech and charts text
http://www.gao.gov/cghome/cefrsc/cefrsc.txt
Charts using GAO's September 2004 analysis:
Composition of Spending as a Share of GDP Under Baseline Extended
U.S. GAO - Composition of Spending as a Share of GDP Under Baseline Extended
Source: GAO's September 2004 analysis
Composition of Spending as a Share of GDP Assuming Discretionary Spending Grows with GDP after 2004 and All Expiring Tax Provisions are Extended
U.S. GAO - Composition of Spending as a Share of GDP Assuming Discretionary Spending Grows with GDP after 2004 and All Expiring Tax Provisions are Extended
Source: GAO's September 2004 analysis
Tabulated Chart Data:
You may have to rely on the text discussion, as tabulated chart data was not located. See text under "Composition of Spending as a Share of GDP Under Baseline Extended:" and "Composition of Spending as a Share of GDP Assuming Discretionary Spending Grows with GDP After 2004 and All Expiring Tax Provisions Are Extended:" Info is roughly half way down the text file of information.
^
Here's another interesting chart from a GAO presentation provided on December 1, 2005.
Debt per capita / GDP per capita:
Debt per Capita Could Exceed GDP Per Capita by 2030 Assuming Discretionary Spending Grows with GDP after 2005 and All Expiring Tax Provisions are Extended
U.S. GAO - Debt per Capita Could Exceed GDP Per Capita by 2030 Assuming Discretionary Spending Grows with GDP after 2005 and All Expiring Tax Provisions are Extended
Source: GAO's August 2005 analysis
Supporting chart text
http://www.gao.gov/cghome/portland1201/1201portlandtownhall.txt
>
I am hoping that someone in blogland will launch a campaign built around this issue:
"It's the U.S. Debt interest payments, stupid."
And use the GAO slides as government source data.
Plus create a few new interest payment obligation slides based on (1) GAO's conservative projections, and (2) other net interest payment projections, allowing for more interest rate growth.
This is the alarming issue that can capture the attention of voters.
Without question,
"It's the U.S. Debt interest payments, stupid."
"Now, where is that graph?"
Show it again and again.
^
Rotation Chart Presentation - the graphic loop
CR,
You have access to the software to make a post presentation jump from one chart to another in the same graphic location on a post. It's a great look.
Imagine the impact of running that loop on the following two slides in a post:
U.S. GAO - Composition of Spending as a Share of GDP Under Baseline Extended
U.S. GAO - Composition of Spending as a Share of GDP Assuming Discretionary Spending Grows with GDP after 2005 and All Expiring Tax Provisions are Extended
I've demonstrated it on my computer, just clicking back and forth.
GASP...
Now, add a couple of charts you create that allow for increases in the interest rate on net interest payment obligations. Using or not using the GAO graphics.
Total shock.
And, there is no question that the GAO analysis is conservative. Note the data rollup used in the GAO simulations.
^
The problem with a lot of "moderates" is that they are wishy washy. They let the 2 poles define the big problems and in fairness seek some compromise.
SS may or may not have long term problems, if Republican projections of economic growth due to tax cuts are right, then it doesn't.
And I still do not see how a system were everyone must prepare on the assumption that they'll live to a 100 is going to be cheaper than one that averages life expectancies.
Jen -- "SS may or may not have long term problems, if Republican projections of economic growth due to tax cuts are right, then it doesn't."
You didn't look at either of the government's GAO/CBO charts, did you? (it's a question...)
Again:
U.S. GAO - Composition of Spending as a Share of GDP Under Baseline Extended
U.S. GAO - Composition of Spending as a Share of GDP Assuming Discretionary Spending Grows with GDP after 2005 and All Expiring Tax Provisions are Extended
Click back and forth. There's your answer.
Growth in interest payments wipes out available funding and available credit (maybe) to support future Social Security payment obligations. And the interest payments obligations wipe Medicare and all other discretionary spending off the map.
Look at the second chart.
^
Movie Guy, as always - thanks for all the information (and updated data). Great stuff.
Best Regards.
CR,
I was lucky. I watched Comptroller General Walker do a few slide shows and assumed that I would find the slides at GAO. True enough, but it took a while to locate what I was looking for, and longer to find the simulation data.
I've only found the following slide once thus far, but it's a keeper:
Debt and GDP per Capita
U.S. GAO - Debt per Capita Could Exceed GDP Per Capita by 2030 Assuming Discretionary Spending Grows with GDP after 2005 and All Expiring Tax Provisions are Extended
I wish I could find a chart titled net interest payments. It would look similar depending on the projected interest rate yields.
Good luck hammering away on all of these issues. We're taking on too much water to stay afloat indefinitely. It's alarming.
It's hard to believe that we haven't turned the ship away from the 'berg. Titanic II. Same attitudes, too.
^
Agree with CR regarding his pointing out that execs view scope and that must act on best info at the time and most feasible option. (My comparison is to pro football coaches & quarterbacks. Another reason I don't think outdated univ model and types = way over-rated, a fraud on this society, and actually been hurting hurting the country for years.)
Would be nice if some of you would think about being on C-Span--with access to e-mails & call-ins(on weekends). The thinking needs to be turned around and the ship needs to be turned around. Politicians have too many vested interests. D.C. govt. staff should be a fraction of what was during Kennedy years. Huge flaw that federal has grown so much and not been told to go back to the states.
Smart Non-Partisans are the smartest out there;they seek good info. and best remedies.
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