At last the deal is done, albeit without your support. Your colleagues have cobbled together a majority in both houses of our national legislature to avert the “fiscal cliff“. They have seen the edge and walked away. It would appear that you have significant unformed reservations regarding their actions.
I have read in various sources that it is your desire to see “rapid economic growth and spending reform” which will lead to “job creation.” Regardless of the individual’s political persuasion I would suggest that there are few that would rise in opposition to your grandly stated goals. However, to quote an unknown author, the devil is in the details. Specifically what legislation do you propose to meet the laudable goals you have spelled out?
The situation that we all faced with the “fiscal cliff” realistically should never have happened. This situation is a case study in how to kick the can down the road or can I be an ostrich? This situation was set in place three years ago. In my opinion what you and your colleagues almost universally failed to do was find a middle road and pass legislation that would have prevented this New Years tragicomedy.
To my mind your colleague, Senator Tom Coburn of Oklahoma, has offered the most insightful comments I have heard to date regarding this. In a recent interview he loudly and rightfully demurred how this bill was cobbled together. If ever there was a bill that came out of the “smoky back rooms” of Capitol Hill this is it.
Seemingly everyone has avoided taking a detailed public stance on this legislation. Yet there is a well ordered methodology for everyone to publicly offer input and amendments to a piece of legislation, it is the committee system. This bill seemingly avoided any and all public hearings. You had three years to get this in place, why was it done overnite?
Mark Twain popularized a saying that was supposedly attributed to Benjamin Disraeli - There are three kinds of lies: lies, dammed lies and statistics. We see tossed about figures representing the percentage of the labor force that is unemployed. Much has been made of late that this key indicator of economic health has shown improvement.
May I suggest that the percentage of the working population employed is flat. If you look at the BLS series id number LNS12300000 you will see that prior to 2008 that between 62 and 63 percent of the population was employed. From 2008 to 2010 there was a steady erosion of the percentage of the population employed. From 2010 to date the percentage of people working has held fairly constant at roughly 58%. What specific programs do you have in mind that will move this key indicator back up to the pre recession levels of 62%?
I believe you are strongly in favor of “spending reforms.” Gee … that sounds great - what does that mean specifically? What programs do you propose to change and to what amounts will these changes have an impact. Once again that pesky devil is rearing its head. One item that is often mentioned is “entitlement reform.” Under that cloak we hear that Social Security must change or Chicken Little’s prediction will come true.
What actuaries have you personally spoken with regarding this? Have those actuaries been asked what will it take to put Social Security and Medicare on a self supporting basis? Up until now Social Security and Medicare have been self supporting, what will it take to continue that?
In the popular press there have been any number of different suggestions offered for “spending reform.” I would like to know what you think of these potential “spending reforms.”
1. Military Health Care - Changes to TRICARE could lead to savings of $16 Billion.
2. Military Retirement Program - I believe that Eric Cantor was in favor of reforms to this program that could lead to savings of $11 Billion.
3. Federal Employee Retirement Program - Again Eric Cantor has put forth claims of savings in the range of $33 to $36 Billion.
4. Agricultural Subsidies - There appears to be significant bi-partisan support to rein in various support programs offering a potential savings in the range of $30 to $33 Billion.
5. Food Stamps - Often seen as a target for fraud and misuse, depending on who you speak to the potential savings could be in the range of $2 to $20 Billion.
6. Flood Assistance - Given the disaster along the east coast and potential for incalculable payouts, the federal flood insurance program is going to be strained to the max. Should not this program be revisited with an eye to bring premiums in line with risk? Supposedly the loss to the program is in the range of $4 Billion.
7. Home Health Care - outside of Medicare there is bi partisan support for reductions in the range of $50 Billion while Mr. Cantor is suggesting cuts of $300 Billion.
8. Higher Education - Cuts have been proposed to various loan programs and/or student grants of $10 Billion.
9. Medicaid and other health programs - Which for the most part provide health coverage to our nation’s poor. In order for many senior citizens to have nursing home coverage they have to go through Medicaid. Potential savings $110 Billion.
10. Medicare - The health insurance that covers our nation’s senior citizens. As an aside did you know that Pinellas County has the highest percentage of the population using Medicare. By increasing Part B payments and other bookkeeping measures the potential savings could be in the range of $250 Billion.
11. Tax reform - Depending on the approach an individual takes the changes could be significant. The potential changes are in the range of $ 800 Billion to $1.6 Trillion.
12. Social Security - Suggested reductions in benefits paid to seniors would lead to a decline in benefits paid of $ 560 a month in ten years and upwards of $1,000 in 20 years. Recalculations of the CPI could lead to reductions of $ 112 Billion.
13. Tax loopholes and deductions - This would cover a wide gamut of strategies such as the oil and gas deductions, or corporate jets, or second home mortgage deduction and on it could go. Potentially we could see an changes in the order of $ 180 Billion.
These figures total out to between $1.5 and $2.6 trillion. The figures are from an article in Huffington Post titled Fiscal Cliff Senate Bill
There have been suggestions that if corporations where mandated to on shore their profits that would have a significant impact on our national balance sheet. The above figures do not take into consideration reductions in the budget for the Defense Department that will occur with the downsizing of our military forces as we complete the withdrawal from Afghanistan.
One suggestion for reducing total outlays is to not use an indexed amount for future expenses. In the past ten to twelve years I believe Congressional salaries have followed inflation which has lead to increase of some 20 %. What would happen if COLA’s where eliminated from the budget and all budget requests where zero based?
How do you suggest we reduce total outlays of the Federal government? What specifically do you have in mind?
I await your considered and prompt reply.