Balance the budget!

[catsittingstill]

The New York Times has an interactive puzzle where you try to balance the budget. The web page is here.

My choices are here (if I've figured out how this works.)

You know, you can do almost all of it simply by restoring taxes to their Clinton-era levels? I remember the Clinton years. The economy was quite healthy. I would like to see taxes indexed to inflation but that wasn't an option.

I did also reduce Social Security payouts for the very rich (but didn't make poor people, with their lower life expectancy, work longer) and institute a carbon tax (the latter not so much for the money but for the inevitable emphasis on conservation and switching to sustainable energy. I don't like that it hits the poor harder, but I hope we can find ways to fix that.)

Anyway, you are free to disagree with me. Go to the link and try your hand.

Comments

[keris]

I like that a lot better than the one the BBC linked several months ago (pre-Budget). Their one gave a series of either/or choices of things which weren't comparable (things like "would you cut education or health?" Answer: neither!) and didn't have options like pulling out of foreign wars. It was interesting that (before I looked at your answers) I made very similar choices to you (I couldn't work out how to save it). Main differences were that I didn't like a carbon tax (hitting the poor, for not very much gain in revenue) and I was harder on agricultural subsidies and taxes on the rich. But I think we could work together as finance ministers *g*.

[catsittingstill]

The carbon tax does have that problem, and I recognize it as a problem, but can't think of any economic incentive for carbon reduction that would work better. It's not the money I want so much, but the push to move to renewable (or at least carbon-neutral) energy, which, in my opinion, we should have started thirty five years ago, or so.

I'm not enamored of the agricultural subsidies--I'd be willing to let those go--I mean, trade them, for, say, support on the carbon tax, and some ideas about how to keep it from hitting the poor so hard :-)

[autographedcat.livejournal.com]

I think the most useful thing about the tool is that it helps give lie to the mistaken notion that "We can balance the budget if we only do X", where X is any number of things.

Like most complex questions, the budget requires a complex solution, and this helps to illustrate this to people who don't necessarily comprehend the enormity of the problem set.

[randwolf.livejournal.com]

I wonder what economic model the NYT is using? Because tax revenues depend on the overall economy, there is no way to make the calculation without an economic model, so the choice of economic model is crucial. Also, of course, federal deficit numbers tell nothing about the impact on personal economic welfare.

Oh. Without a model of health care spending, the exercise is going to produce invalid results. See. But we don't talk about that any more.

BTW, You've got an extra http in your "my choices" link.

[randwolf.livejournal.com]

That's a very good point. I wonder, though, if it is going to reach the people who we most need to reach. There's plenty as consider the NYT an agent of Satan, or at least a bastion of the lying liberal media.

Bring back the fairness doctrine! Put a Communist on Fox!

[benet.livejournal.com]

I've never really understood that meme; every time I've picked up the NYT and glanced at the editorial page, I've found it about as right-wing as I could stand without actually throwing the paper across the room in a rage.

[catsittingstill.livejournal.com]

It was interesting playing around with it--how little difference most of the cuts made, and what a big difference the taxes made.

[catsittingstill.livejournal.com]

We can only reach people who have actual contact with the real world. That's a given. But if we reach all of *them* maybe it will make a difference.

[catsittingstill.livejournal.com]

That would explain Doubthat. Maybe he's not just a fluke outlier.

[catsittingstill.livejournal.com]

I have fixed the link.

There's a details page for the interactive puzzle that contains links to the models and assumptions they were using. I didn't check it out, but feel free to look at it if you like.

It's here." (http://economix.blogs.nytimes.com/2010/11/13/behind-the-timess-deficit-project/)

[durconnell.livejournal.com]

I thought this post from Kevin Drum summed it up fairly well. The problem is medical cost inflation. Social Security is very close to fully funded through the next 75 years as long as Congress treats the trust fund treasury bonds the way it treats regular treasury bonds. Discretionary spending can be(and is) changed year to year. The real problem is that medicare/medicaid costs are rising much faster than revenues.

http://motherjones.com/kevin-drum/2010/11/deficit-commission-serious

In particular, look at the CBO graph.

[pocketnaomi.livejournal.com]

You came out almost exactly where I did, judging from your description (I didn't go look yet). I didn't send taxes quite back to Clinton-era levels in all cases, sometimes if Obama had an intermediate position I took it, while making up the difference by reducing military spending on everything except veterans' benefits. Those I left strictly alone, and would increase if it were permitted. But I did stop them from buying new ships, and I did cut back the troops in Iraq and Afghanistan, mostly because I want that done anyway, not for the money, just as your reasoning (and mine) went for the carbon tax.

[randwolf.livejournal.com]

Ah. I missed it. Auerbach and Gale did their model, who are respected sources. Their model is real, though I think they use some rather politicized data sources--it's an awful situation when the Social Security and Medicare actuaries slant their data but, after all, they are subject to political pressure.

However, I think the bottom line on this comes from Auerbach and Gale's own papers:

The current U.S. fiscal deficit is enormous, but its enormity is temporary--or at least is expected to be. The real concerns lie in the ten-year projection and long-term outlook. The medium-term and long-term budget shortfalls will create growing burdens on the economy.

However, if we don't address employment (and through employment, aggregate demand) in the short term, the medium and long-term problems become much worse, because tax revenues will fall and transfer payments will rise. I fear we may end up with the worst of both worlds: harsh austerity in the short term, and medium and long-term debt.

Why we are talking about balancing the budget in the short term when the short-term issue so clearly is jobs is a source of wonder and horror to most economists I respect.

[randwolf.livejournal.com]

Journalist Eric Alterman wrote a whole book on this entitled, yes, What Liberal Media? He puts it down to a right-wing propaganda victory, and that's certainly part of the story. But also, I think, most US newspapers are fairly far right. Against that background, the NYT looks liberal, even if it's to the right on Nancy Pelosi, herself almost exactly at the US center as far as I can tell.

When Grover Norquist and Noam Chomsky are treated as equally radical by a news source, I will believe it is unbiased.

[randwolf.livejournal.com]

True. But I don't think anything in the NYT is going to reach them. They are more likely to be persuaded by conservatives who have given up on the radical right, people like Charles Johnson (Little Green Footballs) and John Cole (Balloon Juice.) But these are bloggers. I know of no major news source that has swung from right-wing to moderate, yet that is what we need.