Arnold Kling  

Real Austerity

My Beautiful Bubble... Crowding In...

The Hill reports,

Members of the Senate Tea Party Caucus on Thursday announed a plan to balance the budget in five years, cutting spending by nearly $11 trillion compared to President Obama's budget.

The plan was proposed by Senators DeMint, Lee and Paul.

The lawmakers said they would turn Medicare into a premium support plan that would give seniors the same healthcare plan as members of Congress. They say this would save an estimated $1 trillion over 10 years.

...The trio would curb Social Security spending by increasing the retirement age over time and indexing benefits to individual incomes. High-income earners would see slower growth in their benefits while low-income workers would see increased benefits.

...It would freeze foreign aid spending at $5 billion a year and eliminate the departments of Commerce, Education, Housing and Urban Development and Energy and privatize the Transportation Security Administration.

Now, that's what I call austerity.

In a better world, theirs would be the baseline budget, rather than a budget under which the government goes broke whenever bond investors decide they can no longer have confidence in getting repaid.

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CATEGORIES: Fiscal Policy

COMMENTS (8 to date)
Mike writes:

That's what I call common sense!

1. Talk of default is disingenuous. Tax revenues more than pay for the $400 billion in interest payments per annum so long as that does not rise.

2. Credit ponzis that require perpetual inflation even when it means the mass theft of purchasing power of all Americans do not end well. And they DO end.

3. You guys can lie and distort as much as you want but at the end of the day, you are incorrect, rates are at zero, Fed is printing and debts per capita are at records NOT including private and municipal debt OR underfunded and unfunded liabilities. It is only a matter of time now.

4. Enjoy the goldbugs hysteria that YOU are creating. Gold is useless but we might be subjected to it since yu guys can't understand that ALL credit creation must be backed by collateral or it is excessive and burns off.

Richard writes:

Can we start a campaign to eliminate the term "retirement age"? It's badly misleading and serves the interests of the pro-entitlement factions by implying that the government is dictating when you can retire. Of course it's not doing that. The correct term would be "eligibility age."

David R. Henderson writes:

Well said. I agree.

Steve writes:

Any details? This looks like fantasy economics. They are talking about cutting 50% of the budget without touching defense. Need to see the details on Medicare and Social Security.


JLV writes:

A world in which this is the baseline budget is pretty much a world without liberals, no? Seems a bit mean spirited to wish non-existence on people who disagree with you.

steve writes:

No department of Commerce means no BEA or BLS. That should be interesting.


Joe Cushing writes:

What is the point in having a BEA, it's not like any policy is based on economics anyway. Both BLS and BEA produce data that would be produced by private organizations for 1/50th the cost if they wren't already being produced by the government.

mark writes:

Whatever the merits and sure there is much to like about it, it's DOA politically unless the Republicans sweep both houses and the Oval Office. In any case, there is much more to add in terms of eliminating ag subsidies, tax expenditures and frankly as a political matter they need to couple this with a middle class tax cut,a hike on taxing the wealthy. They should also provide for the cuts to be phased in over 4 or 5 years rather than instantaneous.

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