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  1. #1
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    Default We must cut entitlement spending

    Here's a short article from the Economist that I think lays it out pretty well.

    The elephant in the room
    http://www.economist.com/blogs/daily...mericas_budget

    America's fiscal problem cannot be solved unless entitlements are tackled

    THE Republicans want to cut "wasteful" spending; Barack Obama has proposed a spending freeze on discretionary items such as education and national parks. But the big items are the entitlement programmes—Social Security, Medicare and Medicaid—that are set to take up an ever larger part of the American budget. The chart shows the proportion of GDP spent on entitlements and interest, compared with the proportion of GDP that the government is expected to raise in the form of revenues. It originally appeared in USA Inc, an analysis of America's fiscal situation compiled by Mary Meeker for KPCB, a venture capital firm (best known as Kleiner Perkins). The data come from the Congressional Budget Office's "alternative fiscal scenario", which is based on today's underlying fiscal policy but also incorporates some widely expected changes, such as an increase in the threshold for the alternative minimum tax rate. As can be seen, entitlements and interest will absorb all government spending by 2025. But when the CBO did the same sums a decade ago, says Ms Meeker, the critical point was reached in 2060. In short, the fiscal position is deteriorating rapidly. Where then is the appetite for cutting entitlements or increasing taxes sharply?


    It won't be possible to ignore this problem for much longer.

    (I'm at work so I might not be able to respond to comments in a timely fashion. All apologies)

  2. #2
    pathwise dependent FDG's Avatar
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    The economist is no more a reliable source, most of its articles are populist in nature. The only serious financial and economic publication that's left is the Financial Times.
    Anyway, any 40-year-onwards projection is a laughable exercise in futility, and everyone with a brain should be able to understand why. It's impossible to forecast inflation rates for the next year, how can anyone think about forecasting growth rates for 40 years?
    ENTj 7-3-8 sx/sp

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    Senior Member Eckhart's Avatar
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    Default

    I am sorry, I tried to use dict.cc to translate without success, but what means entitlement in that context?

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    The economist is no more a reliable source, most of its articles are populist in nature. The only serious financial and economic publication that's left is the Financial Times.
    Anyway, any 40-year-onwards projection is a laughable exercise in futility, and everyone with a brain should be able to understand why. It's impossible to forecast inflation rates for the next year, how can anyone think about forecasting growth rates for 40 years?
    Because it's what these people do for a living.

    They wouldn't get paid to do it (especially not by the economist) unless they were pretty damn good at it.

    If you want to respond to the contents of the article as opposed to writing it off because of the inherent difficulties involved in predicting things, be my guest.

    Otherwise, I think your time would be better spent somewhere else.

    I am sorry, I tried to use dict.cc to translate without success, but what means entitlement in that context?
    Spending on Medicare, Medicaid, and Social Security.

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    pathwise dependent FDG's Avatar
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    Guess what I also DO that for a living and I KNOW it's bullshit to try to do so. They're probably asked "do this because we want to write an article", thus they need to provide some bollocks estimate to justify their salary. It's completely impossible to predict interest rates and growth rates 40 years onward, so any discussion based on such a projection is chitter-chatter.
    Let's not even mention that saying stuff like "it's the economist, they get paid for it, they must be right!!!" is one of the worst logical fallacies EVER. Shall I make a list of people that were paid to do things which ended up being WRONG?
    ENTj 7-3-8 sx/sp

  6. #6
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    Okay, let's put this another way: Entitlement spending will be cut, sooner or later.

    Current trends are unsustainable. If entitlement spending isn't cut sooner, there will come a day when the US can no longer find a lender willing to lend us enough money to pay the interest on what we already owe. When that day comes, the US will default on federally-issued debt instruments and you will be lucky to find an open Social Security office, let alone a Social Security check.

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    Default

    We can cut a lot of defense spending as well.

  8. #8
    Oberon
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    Quote Originally Posted by MacGuffin View Post
    We can cut a lot of defense spending as well.
    ...and we should. Our era of policing the world should never have started, but it's at the very least high time that it ended.

  9. #9
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    Whats a better way to predict future rates or growth and spending FDG?

    1) take current proposed legislation, current fiscal trends etc. etc., and give that info to the best economist you can and ask them to plug said info into a predictive growth model

    2) do nothing.

    It's not perfect but its the best we've got to go on.

    Given that it's the economist (an internationally respected financial publication), I'm fairly certain that all the facts and charts are backstopped to the greatest extent possible, and that whoever was tasked with obtaining those facts and making the charts was a pretty friggin intelligent person. You don't get a job at the economist coming out of E. Louisiana Technical College.

    Thus, I'm willing to put more credence in an article from the Economist involving a predictive model, than I am in just about anything else (barring a congressional hearing on the subject).

    Lastly, I don't really dig the salmon colored paper the Financial Times is printed on.

    We can cut a lot of defense spending as well.
    Yep.

    I've found that on this site, many more people are willing to bring up the subject of cutting defense than are willing to bring up cutting entitlements.

    Hence this thread.

  10. #10
    pathwise dependent FDG's Avatar
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    Okay, so you want to believe in something wrong because you want to. That's fair, but completely incomprehensible from my point of view, sorry.

    Whats a better way to predict future rates or growth and spending FDG?

    1) take current proposed legislation, current fiscal trends etc. etc., and give that info to the best economist you can and ask them to plug said info into a predictive growth model

    2) do nothing.
    That's naive, it shows you probably know nothing about the subject (okay, this is ad hominem, but I couldn't help it). You can, for example:

    - show confidence bars, place a 90° skewed probability distribution along the y axis in such a way to let people know that the central line is just an average estimate
    - write the assumptions explicitly, and draw a different curve for every set of assumptions.
    - rather that simulating future unknown paths, derive a theorethical argument which proves that extremely high levels of entitlement spending are unsustainable (this would be the simplest way by far, since it has been done before)

    Given that it's the economist (an internationally respected financial publication)
    The economist is not a publication, it's just a magazine. A publication would be "Journal of Economic Literature".
    ENTj 7-3-8 sx/sp

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