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New York Times Budget Puzzle

I doubt many of these "savings" fully account for the other side of the ledger. A carbon tax is going to drive down economic growth elsewhere. I'd prefer taking a balance of payments approach. Best are revenue neutral ideas such as raising the gas tax and offsetting with lower payroll tax for the workers and phased out subsidies for non-workers on social security, etc. This is an American solution that doesn't raise taxes but lowers fuel imports and encourages the most economical use of fuel. That would mean more money circulating inside the economy, which would add jobs and thus raise tax revenue from a broader base while lowering transfer payments.

I also have hopes for QE2 (3, 4, etc. whatever it takes without overdoing it) to produce a Plaza Accord effect. QE2 is really about China, (and somewhat about Germany and Japan) not playing by modern currency rules. China reacted right away by raising rates. I think their currency will either strengthen or they'll lose control of inflation. QE should (has) help exports and will (hasn't) hopefully hurt imports.

Balancing trade gaps would go a long ways to balancing the budget.
 
Sirkickyass said:
Oil at $35 a barrel in 2030?

Care to wager?

www.longbets.org
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i picked $35 somewhat randomly. and i meant in todays dollars...i dont pretend to know what kind of currency fluctuations will happen in the next 20 years.

Oil is at $82.41 today...i believe it will be less than $41.20 in 2010 dollars in the year 2030.

But i'm a poor graduate student with student loans and a penchant for late night online shopping...200 dollars is a lot more to me than it is to you.
 
TheItinerantSon said:
i picked $35 somewhat randomly. and i meant in todays dollars...i dont pretend to know what kind of currency fluctuations will happen in the next 20 years.
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That's part of the reason my eyes popped. It sounded like you were talking about nominal dollars, which makes the number crazy.

Oil is at $82.41 today...i believe it will be less than $41.20 in 2010 dollars in the year 2030.
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Disagree. Developing world and population growth alone will overcome countervailing factors.

But i'm a poor graduate student with student loans and a penchant for late night online shopping...200 dollars is a lot more to me than it is to you.
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The beauty of longbets is that you're not paying out for 20 years. Today you are a poor graduate student with student loans. In 2030 that will not be case.
 
Gail Collins and David Brooks talked about the puzzle today:

https://opinionator.blogs.nytimes.com/2010/11/17/bean-counters-to-the-rescue/?hp

Gail Collins: David, did you do the budget puzzle in The Times on Sunday? I really enjoyed seeing if I could eliminate all the shortfalls for the next 20 years. (Thank you, David Leonhardt and Co.) The first time I did it, about two-thirds of my savings came from increased tax revenue rather than spending cuts. But in the end, I got it down to 50-50. How about you?

David Brooks: Boy was I excited when I saw that chart. There I was with my cognac and slippers spending another leisurely morning brunching with Bill and Melinda, Sergey and Larry, Bruce and Bono, Kanye and Taylor when my eyes alighted on that chart. Well, of course, we threw back a few shots and played pin the tail on the deficit.

As I told Denzel when he arrived, you don’t want to be anywhere near a 50-50 spending-cuts-to-taxes split. That’s because international studies have shown repeatedly that higher tax revenues inevitably get spent whereas spending cuts really do go to reduce the deficit.
I was aiming for 70-30. Raising taxes on employer health benefits does double duty because it gets you revenue and it gives the health care system some cost control. Other than that, I was all over the mortgage interest deduction, agriculture subsidies, reducing our nuclear arsenal, raising the retirement age and the Social Security cost-of-living adjustment.

Gail Collins: Look, I had a glamorous weekend, too. After the dog threw up there were several hours of unmitigated excitement involving a mouse in the garbage can. But about that budget. Obviously, some of the options were of the meat-cleaver variety. For instance, I happily eliminated farm subsidies with my mind on big agribusiness, but if the ones to help small farmers practice better land conservation are in there, I want some of that money back.

David Brooks: My big personal hit was the mortgage interest deduction. I bought a house counting on it, but now I figure I have to give it up for the good of the country. I’m willing.

Gail Collins: This is why you are known among your friends as David the Celebrity Patriot. I was going to shelve the mortgage deduction but the housing market is in such a mess now that it seemed like, um, a bad moment. And I’m such a pessimist I suspect that particular bad moment could still be with us in 2030.

But we part company on this business of raising the Social Security retirement age. It sounds seductive. (Push it to 70 and get $247 billion by 2030.) The much-made argument is that people are living longer so they should retire later. But the longevity is skewed to the high-income earners, and if there’s one thing we already have enough of in this country it’s government programs to make the rich richer.

David Brooks: Sorry, we’ve got to raise the retirement age. If you are 60 right now, you can expect to live another 22.4 years. There’s no way young people can subsidize the oldsters for nearly a quarter of their lives. Especially when children today will be getting a negative net return on the money they put into the system. The whole thing will go kablooie if we ask people to surrender to a program that makes them worse off.

Gail Collins: We will agree to disagree on that one. On the positive side, there were some things I really did enjoy hitting the computer to delete. Cancel or delay some weapons programs: Yes! No more contracts for two different engines for the very same F-35. Return the estate tax to Clinton era levels! Get rid of the Bush tax cuts for the wealthy! And if Mitch McConnell’s ready to get rid of earmarks now, you aren’t going to see me standing in his way.

David Brooks: I’m actually with you on those weapons systems. I’m for keeping some earmarks though. They’re useful for getting legislation passed and they make congressmen so happy! I would repeal all the Bush tax cuts too, including the middle-class ones.

Gail Collins: There are some proposed cuts that I don’t really agree with but I’m tired of fighting about them. I don’t think medical malpractice reform is going to save any money — and even in this puzzle it’s only $13 billion over the next 25 years. But every time we start talking about health care costs there’s this shrieking about malpractice suits, and it just cuts off the conversation and gives people who don’t want to do anything an easy out. So I’ll concede malpractice reform, but I want an asterisk there saying we have to do it very, very carefully. Also, if foregoing the next 1.4 percent raise for federal civil service workers will get the Republicans to stop talking about laying them off, I concede.

David Brooks: In the spirit of compromise, I’m willing to give you the consumption tax if you’re willing to lower corporate taxes, to improve competitiveness.

Gail Collins: I’ll totally sign on to lowered corporate taxes if we get rid of all the loopholes, too.

Did you notice that at the beginning of the exercise, when the options were all discretionary domestic spending, the savings were $12 billion here, $14 billion there. Then you get to health care, and capping Medicare growth saves you $562 billion by 2030! It’s far and away the biggest single option.

Many of the same people who spent the last campaign wringing their hands over earmarks ($14 billion) were also warning the voters that Obamacare is going to cut Medicare or, in their parlance “get between you and your doctor.” They poisoned the well on the one issue that would actually solve the budget crisis they claim to be so worried about. Not that I’m bitter or anything.

David Brooks: I guess I also keep coming back to the biggest square on that page, Medicare. If we don’t cut that, nothing else matters.

I bet between us we could come up with a package in about five minutes. The problem is never with the policy substance. The problem is finding a political strategy to get it passed. Maybe next Sunday, David Leonhardt and his team could put together a chutes and ladders type game. Roll the dice and try to move your piece through the legislative process. Pass a bill and get re-elected!

That game would be really hard.
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Sirkickyass said:
Disagree. Developing world and population growth alone will overcome countervailing factors.
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So my thinking is based on the fact that this, already exists, and is relatively primitive compared to what Craig Venter will do with mycoplasma laboratorium. maybe 20 years is too soon...but im pretty confident that the material cost of doing things will fall off a cliff in our lifetimes.

regarding the bet, i thought you have to pay up front based on teh FAQ on teh website

https://www.longbets.org/rules#stakes said:
Minimum stakes for a Long Bet is $200 from each side.

There is no maximum amount. The bet money, treated as a donation to the The Long Now Foundation, must be paid at the time the Bet is made, and is tax-deductible immediately.
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if theres a way around this...then i'm game.
 
I don't know why I don't post more since I've been stalking this site for years, but this seems like something I want to chime in on.

https://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html?choices=d35160r2

It seems like our results are pretty similar Sirkickyass. From what I've gathered your from the Bay Area too, so that may have something to do with it. Anyway, here is my reason I would rather reduce the military/troops than reduce the Navy & Airforce fleets and cancel weapons programs: We currently have more advanced military than any nation in the world. We have as many aircraft carriers as the rest of the world combined. By maintaining a technological advantage, even with a reduced troop level, we would maintain the ability to deter any military attacks against the US and still have sufficient troops for true peacekeeping missions. With reduced troop levels, it would also be tougher to instigate wars such as the wars in Iraq and Afghanistan. This obviously isn't a well thought out or researched plan, but I feel our main advantage is technological and that is a larger deterrent than troop levels.
 
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