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In The New Republic, Peter Orzag argues that to fix our budget mess, we need less democracy. Specifically, he argues that implementing the following four recommendations more consistently would improve the budget situation.
I have my doubts…
Tags: Comission, Commission, Debt, Deficit, IPAB, OMB, Orzag, Taxes, TNR
The government will shut down…the government won’t shut down…Compromise! Finally, the Federal government has came to a compromise to reduce our swelling national debt. Or have they? The chart below shows that cutting the deficit has a lot about rhetoric and little about substance.
Congress did save $78.5 billion in their latest agreement. Since the original budget deficit for fiscal year 2011 was $1.6 trillion, however, the negotiated savings only amounted to 5% of the deficit.
Lots of rhetoric; little action.
Tags: 78.5 billion, Deficit, Obama Budget
The cover of The Economist this week looked at America’s budget deficit. According to their estimates, “America’s budget deficit in the fiscal year that ended on September 30th stood at $1.3 trillion; at 9% of GDP, the second-largest since the second world war.” The short run cause of this deficit is the recent severe recession, the wars in Iraq and Afghanistan, and the stimulus spending. In the long run, however, entitlements will further destabilize the country’s fiscal soundness. Entitlements such as Social Security, Medicare and Medicaid “…will double the federal debt by 2027; and the number keeps on rising after then.”
Nevertheless, the prospects for Japan look even bleaker. While the U.S. debt has exceeded 50% of GDP, Japan’s debt is near 200% of GDP. Further, Japan is aging quickly; the median age in Japan is 44.6. Although a long life expectancy is a good thing, it will be difficult to support so many older workers without a concurrent rise in the number of workers. Since the birth rate in Japan is so low (2nd lowest in the world), fewer and fewer youth are entering the job market. More immigration could help, but it is currently difficult for non-Japanese immigrants to gain citizenship even after working in Japan for many decades.
More from the Economist:
The state of California is in serious fiscal trouble. Those troubles extend the state’s flagship university system.
“The scenario that assumes failure of the May 19 state ballot propositions would leave the UC system with a net budget reduction of $322 million, or 10 percent, in the 2009-10 year. Taken together with the state’s underfunding of student enrollments and inflationary cost increases, the scenario would leave the university with a total budget gap of $531 million in 2009-10. The university’s current state-funded budget is $3.2 billion.”
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