The reality of trying to shrink government

[Listening]

Lawrence Summers: The reality of trying to shrink government - The Washington Post

With the selection of Paul Ryan as the Republican vice presidential candidate, it is clear that the central issue in the presidential election will be the scale and scope of government involvement in the economy. There is disagreement over what constituted “normal” levels of spending in the past and, indeed, over what constitutes “spending.” But there is a widespread view in both parties that it is feasible and desirable that in the future the federal government should be no larger as a share of the overall economy than it has been historically.

Unfortunately, this is unlikely to be achieved. For structural reasons, even preserving the amount of government functions that predated the financial crisis will require substantial increases in the share of the U.S. economy devoted to the public sector.

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While the WashPo is toilet paper, Larry Summers has always been a decent writer.

What will follow will be his three reasons.....I'll post them later unless someone wants to drag them in.

What he says is that you better get used to the idea of more taxes or less service from the government. Well, no duh.

But why are we not hearing this from our friends on the campaign trail. Summers wraps ups his argument by saying Government will need an additional 3% of GDP. 3 freaking % !!!!

The left will not only be soaking the rich, they'll be throwing granny off the cliff....to save her.

Good luck you guys.

 

[Jackson]

Well, Larry is no longer in the picture, I can see why. He is all wrong. We know that government services will have to be cut and we had better be the masters of cutting the waste and duplicative programs before we cut the necessary services that will probably happen. But did this administaration ever suggest that? No. They will blindly cut Medicare and cut Social Security before touching other entitlements that are far more abusive.

 

[Listening]

Reason One:

First, demographic change will greatly expand federal outlays unless politicians decide to degrade the level of protection traditionally provided to the elderly. Between Social Security, Medicare, Medicaid and some smaller programs about 32 percent of the federal budget, or about 7.7 percent of gross domestic product, is devoted to supporting those over 65. The ratio of this age group to those of working age will rise from 1 for every 4.6 workers to 1 for every 2.7 over the next generation. If no other adjustments are made, this implies an increase in federal spending of 5.6 percentage points of GDP. As Americans’ health and life expectancy improve, it may be appropriate to revise upward the assumed retirement age. That would, however, be unlikely to counteract the expected 34 percent increase in the share of the population over the next generation who will be within 15 years of estimated life expectancy.

Well, Larry is no longer in the picture, I can see why. He is all wrong. We know that government services will have to be cut and we had better be the masters of cutting the waste and duplicative programs before we cut the necessary services that will probably happen. But did this administaration ever suggest that? No. They will blindly cut Medicare and cut Social Security before touching other entitlements that are far more abusive.

Let's hope they get it right. It is just to bad the left can't see that Ryan is willing to tackle the hard decisions that have to be made. Their answer is a "super (flop) committee". Talk about lack of leadership, heads up the ass, and cowardice.

 

[Pho_King]

The reality of shrinking the government is that it isn't going to happen. To do so would require a big change of attitude amongst the citizenry. And the OWS parasite that have infected this country would whine and bleat about being further victimized. That will not change. And their ranks are growing.

 

[Listening]

Reason 2 from Summers:

Second, the accumulation of more debt and a return to normal interest rates will raise the share of federal spending devoted to interest payments. In 2007, before the financial crisis, federal debt held by the public was equivalent to 36.3 percent of GDP. On a very optimistic view, where recommendations such as those of the Simpson-Bowles commission are implemented, net debt held by the public will nearly double, to 65 percent of GDP, by 2020. This implies that the federal government’s outlays to service its debt will rise from 1.7 percent of GDP in 2007 to 3.2 percent of GDP in 2020.

****************

This is probably the most onerous.

 

[kaz]

With the selection of Paul Ryan as the Republican vice presidential candidate, it is clear that the central issue in the presidential election will be the scale and scope of government involvement in the economy. There is disagreement over what constituted “normal” levels of spending in the past and, indeed, over what constitutes “spending.” But there is a widespread view in both parties that it is feasible and desirable that in the future the federal government should be no larger as a share of the overall economy than it has been historically

If we reduced the Federal government to it's Constitutionally authorized role, we could balance the budget the first year.

 

[Listening]

With the selection of Paul Ryan as the Republican vice presidential candidate, it is clear that the central issue in the presidential election will be the scale and scope of government involvement in the economy. There is disagreement over what constituted “normal” levels of spending in the past and, indeed, over what constitutes “spending.” But there is a widespread view in both parties that it is feasible and desirable that in the future the federal government should be no larger as a share of the overall economy than it has been historically

If we reduced the Federal government to it's Constitutionally authorized role, we could balance the budget the first year.

We are going to need a 30 year plan to do that. And a lot of morphine for all the hand-out addicts who will be in a lot of pain.

 

[kaz]

With the selection of Paul Ryan as the Republican vice presidential candidate, it is clear that the central issue in the presidential election will be the scale and scope of government involvement in the economy. There is disagreement over what constituted “normal” levels of spending in the past and, indeed, over what constitutes “spending.” But there is a widespread view in both parties that it is feasible and desirable that in the future the federal government should be no larger as a share of the overall economy than it has been historically

If we reduced the Federal government to it's Constitutionally authorized role, we could balance the budget the first year.

We are going to need a 30 year plan to do that.

Not if we do it the right way

And a lot of morphine for all the hand-out addicts who will be in a lot of pain.

Agreed, but since no one has the right to have government confiscate other people's money on their behalf, I say we rip the band aid right off...

 

[Listening]

Unt: Reason #3

Third, increases in the price of what the federal government buys relative to what the private sector buys will inevitably raise the cost of state involvement in the economy. Since the early 1980s the price of hospital care and higher education has risen fivefold relative to the price of cars and clothing, and more than a hundredfold relative to the price of televisions. Similarly, the complexity, and hence the cost, of everything from scientific research to regulating banks rises faster than overall inflation. These shifts reflect long-running trends in globalization and technology. If government is to continue providing the same level of these services, government spending as a share of the economy has to rise, by at least 3 percent of GDP.

 

[Listening]

A bump for the Hard Choices Larry Summers thinks we won't make.

I'll push Franco over the cliff (that's not even a hard choice).

 

[commonsensenow]

Let's hope they get it right. It is just to bad the left can't see that Ryan is willing to tackle the hard decisions that have to be made. Their answer is a "super (flop) committee". Talk about lack of leadership, heads up the ass, and cowardice.

Really? Are you that naive to believe that if they drop the top rates to 25% that they can make up the difference by "closing loopholes"?

There'll be plenty of loopholes allright ... for those who grease the proper palms.

Obama will drain the treasury, Romney will starve it. Take your pick.

Thanks for the article though, the author nailed it on the interest rate trigger. The demographic situation is what Wall Streeter's might call the "secular influence" but that's easily remedied as if you ask anyone Paul Ryan's age +- 10 and they're more likely to believe in UFO's than their first SS check.

 

[commonsensenow]

Unt: Reason #3
Since the early 1980s the price of hospital care and higher education has risen fivefold relative to the price of cars and clothing, and more than a hundredfold relative to the price of televisions.

Weellll now .. if that ain't just the science of rocketry.

Throw more and more money into something and it causes inflation ... go figure ... who would have thought that?

Ask a hospital or a college "how much of my money will that cost me?" and they get to answer "all of it".

Obviously additional legislation is in order.

 

[Listening]

Unt: Reason #3
Since the early 1980s the price of hospital care and higher education has risen fivefold relative to the price of cars and clothing, and more than a hundredfold relative to the price of televisions.

Weellll now .. if that ain't just the science of rocketry.

Throw more and more money into something and it causes inflation ... go figure ... who would have thought that?

Ask a hospital or a college "how much of my money will that cost me?" and they get to answer "all of it".

Obviously additional legislation is in order.

Oh please....let's have more.....