What can we, and should we do about the deficit?

Where can we and should we cut?

I last addressed this in my post of October 28th under the title: "The Deficit – One Big Hoax (Part VI)," which I urge you to re-read.

In that posting, I address the insincerity of Republicans claims of concern with the deficit, while every one of their proposed budgets would vastly increase the deficit.

I then went on to point out, that despite the gamesmanship, there is only one purpose in creating the deficit and making it an issue, and that is to eviscerate and destroy the safety net that has been built over many decades, and the protections to our health and safety, so that those who already have the bulk of the nation’s income and wealth, can further increase it at the expense of the poor and middle class.

But that does not mean that we should descend into our own fairy tale world, and pretend that the course we are on is sustainable. Increased revenue is essential, but controlling our ever-increasing costs, is equally essential.

For instance if we leave the Bush Tax cuts in place for those making $250,000 per annum or less, as has been proposed by the President, we would be increasing taxes only on the top 3% of earners and we would only be increasing tax receipts by $800 billion over 10 years. See here at 1:44 minutes. When we consider that the deficit was projected by the Congressional Budget Office (CBO) at $1.3 trillion for the year 2010 alone we can see this is a piddling sum. However if all the Bush tax cuts were left in place, the deficit would be decreased over ten years by four trillion dollars, a much more significant sum, but still not enough to solve our projected deficit, which the CBO estimates at six trillion over ten years, without counting interest payments, and assuming that no laws were to be changed, which is unlikely.

But the attempt to put a rosy, but untrue, picture on our outlook can be seen from an article which appeared in the Washington Post, written by E.J. Dionne, a man who has written many insightful columns in the past, but who posits that doing nothing would lead to $7.1 trillion in deficit reduction over the next decade. Now what is interesting about this is that the CBO says doing nothing would still lead to over a 3 trillion deficit over ten years, and doing nothing is unlikely. Most important, doing nothing would mean not extending the Bush tax cuts for those earning under $250,000, when the President, the Left, and the Wall Street occupiers give us the impression that if we just focus on the top 99% all will be honky dory. It’s a fairy tale! I say wake up!

Furthermore changing nothing, outside the Bush tax cuts, is neither likely nor desirable. If you will look here, you will find the Dionne article reproduced, with my comments interjected in red, showing why many of the things Dionne assumes could be left unchanged, need to be, and are likely to be changed.

Reverting again to my post of October 28th I point out that according to the Social Security Administration, “Projected long-run program costs for both Medicare and Social Security are not sustainable under currently scheduled financing, and will require legislative modifications if disruptive consequences for beneficiaries and taxpayers are to be avoided.” But I go on to say, “this should be addressed, not as a budget issue, but as a sustainability issue.”

As can be seen from the above we will not solve our deficit problems with increased taxes alone, and certainly not with increased taxes on the top 1% alone, or even those making less than $250,000. We need to end the Bush tax cuts in their entirety and we must look to making intelligent cuts.

It is for that reason that I address this subject. In my post entitled "The Deficit – One Big Hoax (Part VI)" I began to address some of the areas where we could, and should, beneficially cut, and I begin with the drug wars, where, I point out that there are already major voices across the political divide calling for an end to this destructive and expensive war.

According to Bernd Debusmann, a Reuters columnist:

The budgetary impact of legalizing drugs would be enormous, according to a study prepared to coincide with the 75th anniversary of prohibition’s end by Harvard economist Jeffrey A. Miron. He estimates that legalizing drugs would inject $76.8 billion a year into the U.S. economy — $44.1 billion through savings on law enforcement and at least $32.7 billion in tax revenues from regulated sales. (For a total of 76.8 billion per annum or 760,800 billion over ten years, over 3/4 trillion. And this is before we add in the benefits to the economy. 

The war on drugs has helped turn the United States into the country with the world’s largest prison population…The U.S. has 5 percent of the world’s population and around 25 percent of the world’s prisoners. Ibid  

In addition to the law enforcement expense, we must add in the cost of incarceration. Here we find that his cost alone amounts to over $6 trillion per year to the states with additional costs to the federal government.

We begin to see that cutting in order to deal with the deficit can be beneficial. The only purpose for reducing some benefits in entitlements is to make them sustainable.

I must add, however, that I do not favor states passing laws to make Marijuana available as a medicine. This has the effect of bypassing the FDA, and no substance should be made available for therapeutic purposes without the rigorous double blind studies, that all such drugs are required to undergo.

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