CR - may I play a bit of devil's advocate here ? Would you care to beef up the argument about why a structural deficit is bad for the economy ? Over the long-run if it's "excessive" then it clearly drives out investment. On the other hand a moderate/modest level seems to provide constant, low-level of fiscal stimulas that contributes to moving the economy forward. The problem is when it gets out of control, as it was, and begins feeding on itself.

Then beyond that how would one proceed ? The problem with policy recommendations is that they don't occur in political vacuums. I'd like to argue that without a fundamental change in the bitterly partisan politics of this country rational consideration of balanced policies is highly unlikely. (BTW - on this note on GOOG Video Charlie Rose's program is readily available and I recommend a review of David Brooks' solo appearance along with Rahm Emanuels').

3rd - structural deficit first ? I though trying to tackle SS was the easiest because the case was clearer and closer, then healthcare and then basic spending.

BtW if you look at GDP stats for gov't spending it's been relatively constant around 20% since 1951,but slowly declining from 21 to 19%. Of that defense has been 4-5%, Nondefense has been 2-2.5% and state & local 10-12%.

Based on that it's not entirely clear where and how to get going. Thoughts or comments ?

Obviously need to expand the SS comment, eh ? In terms of sheer magnitude believe healthcare entilements are the biggest l.t. problem, last I saw the #'s. My comment on SS was motivated by political and strategic calculations, partly. While it's a while before we begin crossover the baby demographics suggest it's a problem we need to work on now. Partly illustrating my point with how difficult it is to wrestle these things. Another key reason was that as a smaller, better understood problem if we could do something innovative and rational it would build up a resevoir of political momentum for tackling these other problems. Based on my readings (I highly recommend Radical Center from the New America Foundation) it's my guess that we need to evolve SS into a user-funded savings program rather than a transfer program. If we succeeded think what that would do for savings, investment capital & (ala an earlier exchange) the question of savings propensities.

But would like to return to arguments about where to trim - when you look at the numbers non-defense federal programs aren't that big, of defense it's not clear how much net difference Iraq reductions would make. So two critical questions here are a) where to start and b) what political coalition can one put together to push it thru.

For what it's worth.

Dryfly - here, here. But thruout Am. history the emergence of a 3rd party reflects new political entities reacting to deep changes in the socio-economic structure (boy, that sounds almost pontifical). I'd refere you to "Team of Rivals" and the collapse of the Whigs and the emergence of the Rips, I mean Republicans. In the meantime as representative samples (other than Radical Center) may I point you to Charlie Rose - Rahm Emanuel / Bill Clinton / Roger Rosenblatt as well as Charlie Rose - David Brooks
which a) outline centrist policies and strategies and b) are amazingly convergent. They'd also be close to CR's policy recommendations. My fantasy is that a 3rd party would, representing close to 63% of the populace preferences according to the the NBC/WSJ polls over the last 3-4 years, start to face up to these multiple challenges with workable policies that have the political backing of "more of us". PLEASE.

Sorry, letting my angst get ahead of me. But I do believe that these are representative of what we need to be doing and how we need to go about it.

Shouldn't the graph be in the negative in the late 90's? I thought we were running major surpluses.

Jim,

Sorry, all those FICA taxes you paid went right out to your grandparents and parents. Both my grandfathers together paid in less than $500, and before my last grandmother died the four of them had collected over $100,000 in 1980 dollars!

k harris,

So the inference is that none of the surplus was used to reduce total debt?

BTW this calender exercise explains the "worthless IOU" narrative. 20 years ago nobody even dreamed of claiming that the increased FICA taxes were in fact scheduled to be invested in "worthless IOUs". Treasury bonds were (and are) the safest instrument available.

It wasn't until the 90's that the truth start dawning on some people that depletion was receding at the rate of 1.3 years per year and instead of coinciding with the peak of Boomer retirement (2023), it was coming at a time when the demographic challenge of the Baby Boom would have been largely met, and certainly be declining steadily.

Privatizers's solution to the Crisis that was rapidly healing itself? Call the Full Faith and Credit of the United States into question by making specious distinctions between various categories of Treasury Instruments. Those distinctions just are not there, governmental obligations are government obligations. Arguments that the Bank of China's money is safe but that that of American retirees is not is to imagine a rather strange set of political affairs in the years 2017 to 2023 (the current range of dates for actually having to pony up General Fund cash to repay Social Security.)