Tag Archives: Medicare

What are Deficit Hawks Thinking?

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At every budgeting cycle the Republican deficit hawks work themselves into a frenzy of concern about budget deficits. To remind you, the annual deficit is the amount our government has spent beyond what it has taken in that year. Implicitly included under the umbrella of deficit is the debt, which is the credit card balance we owe for all past unpaid deficits.

Certainly debt and deficits are liabilities and it would be great if we could avoid them completely and spend only what we take in, but we realistically cannot operate without dipping into our credit card sometimes. The contention arises around how to control spending in order to avoid crippling credit card payments.

To reduce our credit burden, both parties strive to increase efficiency and reduce waste, fraud, and abuse. Beyond that, Democrats generally aim to raise revenue from the wealthy and corporations, and (to a far lesser extent) reduce military spending, while protecting and expanding social programs. Republicans mostly push for cuts to social programs, while increasing tax cuts (only for the wealthy), and opposing new taxes (only on the wealthy), while maintaining or increasing defense spending.

Democrats assert that the rich and powerful do not pay anything near their fair share and can afford to contribute far more, while Republicans assert (incorrectly) that the rich and powerful deserve even more money that will supposedly then “trickle-down” to help poorer people.

Not many appreciate that the concept of a “trickle-down” economy did not originate with Ronald Regan who put it forth as a credible economic principle. It was originally a satirical joke made by Will Rogers back in 1932 to mock then President Hoover’s response to the Great Depression in giving more money to rich people.

I’m going to forgo a lot of additional argumentation and simply skip ahead to the conclusion that Republicans are simply wrong on both the merits and the ethics of their budget logic, and rather try to understand their thinking.

I’m going to put aside sheer greed and self-interest as uninteresting. My interest is in how well-meaning people can come to support Republican policies.

First and perhaps foremost, Republicans believe incorrectly that rich people and corporations deserve (are entitled to) more money because the rich deserve it and can make the best use of it. Second, they love a strong military because either they are fearful, love having the biggest guns, love war profits, or are just afraid of looking weak on defense. Finally, they believe that regular people deserve nothing and should either get rich or die quietly without bothering anyone.

These biases result in the following internal logic. A) we must give as much as we can to rich people, and B) we must maintain or expand the military, so C) the only way we can accomplish both is to siphon away money from the 99%. This is accomplished by finding new ways to tax or increase costs for regular people, by destabilizing and pillaging the social security fund that they paid into, by compromising or withholding their healthcare, and by deregulation that shifts the cost of doing business from rich corporations to ordinary communities.

To extract wealth, they continue to perpetuate the joke of trickle-down economics. The term may be discredited, but the concept still underpins their worldview. They extract wealth by grossly downplaying the amount of money being spent on the military, and by exaggerating the cost of social service programs (see here).

And they have elucidated no limit whatsoever in just how much more the rich and powerful deserve. In fact the expressed American value is that personal wealth should be unlimited. Therefore, their goal of decreasing the debt and deficit can never be achieved no matter how much they extract, no matter how much damage they do, no matter how many people they impoverish, the rich can and will never have enough under the logical framework they have constructed.

Thus is the folly of their worldview, their rationalizations, and their policies. Their concern about the debt and deficit may or may not be genuine, as is their belief that the rich should receive even more. But to achieve both, the vast majority of people have to suffer. The end result of their thinking can only be incredibly harmful, unsustainable, and unethical budgetary policies enacted under the pretext of responsible deficit reduction.

National Defense and Social Security Myths

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Most of us Americans figure we’re pretty well-informed about the realities of our national economy – at least in the big picture. Here are the Top 5 budget categories that you’ve probably seen cited everywhere by most every expert and trusted source:

  1. Social Security: $1,354 billion
  2. Medicaid (also NIH, CDC, FDA and more): $889 billion
  3. Medicare: $848 billion
  4. National Defense (direct budget only): $820 billion
  5. Unemployment (and most family and child assistance programs): $775 billion

Lists like this are usually invoked in order to provide support for a particular (false) mainstream narrative.

Mainstream Narrative: National Defense spending is not where we should be concerned. Rather it’s those big social entitlement programs that are the real problem, and the most worrisome of all is Social Security. In fact, we need to take immediate drastic action to prevent Social Security from bringing us to economic ruin!

But bear with me while I call that narrative into question.

First, that National Defense number of $848 billion is far too low. That only includes certain budgeted expenses. It does not include Supplemental Funding (which pays for most of our wars). Veterans Care and Benefits, Overseas Contingency Operations, Additions to the Base Budget, Interest on War Debt, and many other separately allocated costs.

To understand how misleading that is, imagine trying to convince your spouse that your gambling budget is only a very reasonable $200 per night. But that is just your betting limit. You neglect to include your Vegas hotel, limo rental, meals, bar-tabs, payments on the debt incurred by your previous losses, lost work, and additional payment for any “special deals” that you just can’t pass up.

Similarly, if we tally up all the buried line items that should fairly be included under National Defense spending, the total cost is far higher. The actual figure depends on which items you choose to include, but a conservative total of about $1.7 trillion is what my AI-assisted research came up with. No matter how you cut it, a more honest accounting puts National Defense spending well above Social Security levels. It should be number one by a large margin on any honest list.

Also, military spending has incredibly low stimulative value. While it provides some jobs, it does not stimulate secondary growth as does say a bridge or a building. It is essentially “lost” economic value except for the relatively few who extract wealth from it. But I digress. Maybe I’ll expand on that in a future blog article.

In any case, that addresses the first half of the false narrative, the deceptively low figure cited for military spending. Now let’s shift to the other half, Social Security spending. The figure of $1.3 trillion spent on Social Security is arguably just as misleading as is the figure for military spending.

People paid into their social security fund. Virtually all of that $1.3 trillion is money that is simply being paid to people who invested into it. There is only a relatively small deficit which amounted to $41.4 billion in 2023. That deficit was entirely paid out of the social security trust fund; excess revenue that was set aside in previous years to cover future shortfalls.

Now, those of you who are sophisticated about these things might say – wait a sec. Social Security is not like a savings plan where individual contributions are set aside. Instead, each working generation must fund the benefits paid to the retired generation.

But I contend that that explanation is another part of this false narrative. Regardless of how it is managed, Social Security is for all intents and purposes a savings plan. And isn’t that how all savings banks work? None of them literally put your money away in a lockbox. The money you deposit is used to fund withdrawals by others. When you eventually decide to withdraw your savings, that money will in a sense come from those future depositors.

To provide another analogy, what would you say if you went to take out your savings from your local bank and they tried to explain to you that they don’t have enough revenue coming in to give you back your money? You see, they say, it’s really not a savings plan as much as it is a pay as you go plan. You’d say that’s not acceptable.

We should not be manipulated into thinking of paying into social security as paying for others current benefits, but as paying for our own future benefits. But we tend to buy into the former perspective because we’re worried the funds won’t be there for us. That’s another part of the false narrative.

While it is true that, if we make no changes, Social Security will become “insolvent” in 2033, that is intentionally made to sound more scary than it is. It only means that at that time we’ll have to reduce benefits or increase revenue. It doesn’t all just collapse like some Ponzi scheme.

In fact, it isn’t that hard to “fix” Social Security. Just in the last few years there have been multiple bills proposed to keep Social Security solvent through the population wave. These include the Social Security Fairness Act, Biden’s 2025 budget proposal, and the You Earned It Act. All of these were voted down.

These legislation, and the many that preceded them, were not voted down because they would not work. They were voted down precisely because they would work. Just as with the border crisis, too many lawmakers don’t want to fix it. They want to keep fear mongering about it failing, and they cannot do that if they actually were to fix it.

Even worse, for some legislators it is more like their management of the Post Office. Their interest is in seeing it fail. They wanted the Post Office to fail so that their private business donors could profit from this business. Similarly, their big donors desperately want to get their hands on all that social security money. To those Privateers, Social Security funds are like Blackbeard’s Lost Treasure Hoard.

If President Bush’s full-court press to privatize Social Security had not failed in 2005, all of our Social Security funds might be invested in Bitcoin futures right now. Don’t think for one moment that the Privateers have given up on getting their hands on Blackbeard’s treasure.

If I sound conspiratorial, I’ll admit partially to that. While I don’t believe that a Capitalist cabal of billionaires sits around smoking big cigars and plotting the pillaging of our Social Security trust fund, I do believe that these efforts arise naturally as an emergent collective behavior borne of a lust for profit.

As did those before us, we need to wisely continue to resist these efforts to siphon wealth from the general population into the hands of the few. Toward that end, here is my alternate narrative that I hope you will consider.

Alternate Narrative: Those in power strive to bury, obfuscate, and minimize our level of military spending for many reasons, but mostly just so the population will not push back against it. One method they use to distract from military spending is to compare their fake accounting against social spending numbers, numbers that are also at times misrepresented. Social Security is both their most shiny object to distract us from their levels of military spending and the greatest prize for Privateers who want to control those funds. For our own sake as well as our posterity, we need to resist both excessive military spending and the privatization of critical social services.