Wednesday, July 1, 2015

My Republican Friend Worries About the Federal Debt

My friend wrote:

"I heard on the radio that the Congressional Budget Office has issued a dire warning about the USA's debt problem.  Check it out (I don't have the web address). Of course, NO democrats ever mention our fiscal situation."

Dear Republican Friend;

"Dire" is in the eye of the beholder, e.g., I think climate change is a dire situation. You don't. Nor do your Republican Presidential candidates, who feel so strongly about it NOT being "dire" that they've criticized the Pope for addressing climate change in his encyclical. Yet unchecked, global warming will kill us. What the CBO report says, on the other hand, is that ALL THING BEING EQUAL, a growing debt will make us very uncomfortable. Here's the bottom line of the CBO summary:

If current law remained generally unchanged in the future, federal debt held by the public would decline slightly relative to GDP over the next few years, CBO projects. After that, however, growing budget deficits—caused mainly by the aging of the population and rising health care costs—would push debt back to, and then above, its current high level. The deficit would grow from less than 3 percent of GDP this year to more than 6 percent in 2040. At that point, 25 years from now, federal debt held by the public would exceed 100 percent of GDP.

The consequences of this growth in debt are addressed by the CBO as follows:

How long the nation could sustain such growth in federal debt is impossible to predict with any confidence. At some point, investors would begin to doubt the government’s willingness or ability to meet its debt obligations, requiring it to pay much higher interest costs in order to continue borrowing money. Such a fiscal crisis would present policymakers with extremely difficult choices and would probably have a substantial negative impact on the country. Unfortunately, there is no way to predict confidently whether or when such a fiscal crisis might occur in the United States. In particular, as the debt-to-GDP ratio rises, there is no identifiable point indicating that a crisis is likely or imminent. But all else being equal, the larger a government’s debt, the greater the risk of a fiscal crisis.

Now the reason Democrats don't pay more attention to the debt problem is that the problem is easily fixed. Let's start by eliminating the estate tax and reducing corporate taxes, two of the Republicans favorite "fixes." Did you know that the House just voted (along party lines) to repeal the estate tax? Congress’s Joint Committee on Taxation estimated that repealing the estate tax would cost the Treasury $14.6 billion in the 2016 fiscal year and $269 billion over 10 years. John Boehner said $269 billion “is nothing more than a drop in the bucket to the federal government.”

Of course the only reason you'd be interested in the facts about estate taxes is to avoid them, but if you are interested in the larger picture and why the Republican crusade to repeal estate taxes is such a farce, you could read this economic intelligence report, which would tell you that you have nothing to worry about, because the federal tax currently applies to estates worth more than $5.43 million for an individual or $10.86 million for a couple. Only Republican donors of the Sheldon Adelson variety worry about this, and even they aren't too worried, because they can afford good tax lawyers.

But I digress. You will note that at the beginning of this email I capitalized "ALL THINGS BEING EQUAL." There are quite straight-forward things our "leaders" in Congress could do to remedy the fiscal situation (e.g., raise the amount well-off people like you and I have to pay into Medicare). Then again, Congress could simply implement the Simpson-Bowles plan. That would result in the savings shown below. But as you've pointed out, every item has a "constituency." That makes it hard for politicians to tackle, especially those with no integrity.

So that leaves us with the prospect of waiting until the POTENTIAL crisis that CBO forecasts occurs in 2040 and then watching as our "leaders" take stop gap measures to stem the tide. And speaking of stemming the tide, do you know what sea level rise is predicted to be by 2040?


Anonymous said...

Considering there was no air conditioning in Arizona prior to 1940, and considering I worked in the desert all summer, and no one I know died from heat stroke, why are you worried that Arizona will become unbearable?

Richard Badalamente said...

It's not all about you, my friend, nor only about Arizona, nor only about heat.
You dismiss climate change out of hand, whereas I, least consider your demons.
Perhaps you would check this out?

Anonymous said...

I don't dismiss climate change out of hand. I understand the earth probably is getting warmer. It's the consequences of getting warmer that I question, not to mention the futility of stopping it.

Richard Badalamente said...

Let's dissect your response:

"Probably getting warmer." What will it take to convince you?

The following scientific organizations endorse the consensus position that "most of the global warming in recent decades can be attributed to human activities":

American Association for the Advancement of Science
American Astronomical Society
American Chemical Society
American Geophysical Union
American Institute of Physics
American Meteorological Society
American Physical Society
Australian Meteorological and Oceanographic Society
Australian Bureau of Meteorology and the CSIRO
British Antarctic Survey
Canadian Foundation for Climate and Atmospheric Sciences
Canadian Meteorological and Oceanographic Society
Environmental Protection Agency
European Federation of Geologists
European Geosciences Union
European Physical Society
Federation of American Scientists
Federation of Australian Scientific and Technological Societies
Geological Society of America
Geological Society of Australia
Geological Society of London
International Union for Quaternary Research (INQUA)
International Union of Geodesy and Geophysics
National Center for Atmospheric Research
National Oceanic and Atmospheric Administration
Royal Meteorological Society
Royal Society of the UK

And then there's your statement that, "It's the consequences of getting warmer that I question."

Since you're a Navy/USMC vet, let me quote one of your colleagues.

"...when the effects of climate change start to impact these massive populations,” he said. “If it goes bad, you could have hundreds of thousands or millions of people displaced and then security will start to crumble pretty quickly.’’ PACOM CMDR Locklear, speaking to just the Navy's perspective on the consequences of global warming:

Closer to home, you can read what UW's Climate Impact Group forecasts as a result of warming in the attached pdf document. Or read here what NASA says about things that are happening NOW.

I could cite dozens of sources for the consequences of global warming, but it's a waste of my time, because my sense is that you just don't care -- the Pope cares -- but you don't. BTW, I have programmed my computer to send emails to your grandchildren in 2050, long after you and I are dead and buried, explaining to them that you really did care about them, but were misled about global warming by a cabal of special interests.

It's unlike you to quit at anything, so why do you say, "...the futility of stopping it."

The global warming we are experiencing now is due to the CO2 we have and are continuing to spew into the atmosphere (billions of tons/yr) and that greenhouse gas hangs out up there for a century or more. But we can turn things around; we can begin to adapt infrastructure, energy, and agriculture to better cope with warming consequences, and if we act aggressively, by 2050 we can begin to stabilize warming and hopefully, avoid a catastrophic climate destabilization.

Richard Badalamente said...

The UW Climate Impacts Group report on the likely consequences of global warming in WA can be obtained here: