Response to IOUSA
In case you've missed the hype, IOUSA is a documentary making the case that the U.S. budget is hopelessly out of control and that our current spending patterns will bankrupt our children. The film features such noteworthy characters as Alan "Bubbles" Greenspan, Robert "Don't Regulate Credit Default Swaps" Rubin, and former presidential candidate Ron Paul.
This film should be viewed as part of a larger effort to dismantle Social Security and Medicare, the country's core safety net programs. The reality is that our budget is essentially fine, it is our health care system that is out of control. But fixing health care would require going after the drug companies, the insurance companies, and highly paid medical specialists. But those folks are all powerful, so the IOUSA crew went after old people instead.
You can get CEPR's movie review here.
The Washington Times today reported that the United States ranks high, right behind Mexico and Turkey, on poverty and inequality (economic). I find this terribly sad and cringe at any suggestion that we DO NOT have a class system. Mobility is ruined. I write about it in more depth at www.northernvox.com
October 22, 2008 1:24 PM | Reply | Permalink
The insurance/pharma/med complex isn't all-powerful, but it sure is better at pumping money in the direction of people it likes than mere old people are.
As far as I can tell, the bulk of the effort to dismantle Social Security and Medicare is being done by trying to convince people that they've already been dismantled, and that no one paying in now will receive benefits from them later. Which belief is certainly aided and abetted by republican administrations that pretty much ignore their obligations to the public...
October 22, 2008 2:29 PM | Reply | Permalink
How is it that every penny spent by the government on improving the lives of human beings who are citizens of the United States is subject to endless microscopic scrutiny and questioning, but the $650 Billion spent annually on war (aka the "Defense" budget) is so utterly and forever sacrosanct? We spend as much as the entire rest of the world combined on war every single year. That folks, is where the problem is. We are burning money on the waste, fraud and abuse of defense contracts but nobody says anything about it because they might be called "weak" on defense.
Thus, the question arises in my mind at least: is there anything more patriotic than preventing our economy and our nation to fall to pieces by cutting the defense budget by 60-75%?
Personally, I know of no other way to instantly provide massive budget relief for human needs and to get the economy moving again. For the brief period of time the defense budget shrank in the early 90's, out nation's economy boomed. You don't need to be a rocket scientist to figure out what the problem is with the federal budget. You do have to have some balls to stand up and say so, however, and at this point very few of our members of Congress and certainly our nominee for President have not displayed any cajones at all on this issue.
October 22, 2008 3:26 PM | Reply | Permalink
Sadly you are right. Even more pathetic is that a society usually directs its resources toward its value. That doesn't say much for the social state of affairs in the US.
October 22, 2008 3:38 PM | Reply | Permalink
How is it that every penny spent by the government on improving the lives of human beings who are citizens of the United States is subject to endless microscopic scrutiny and questioning, but the $650 Billion spent annually on war (aka the "Defense" budget) is so utterly and forever sacrosanct?
Well, the film features Ron Paul, who would agree with you on that, so maybe there is hope.
October 22, 2008 5:42 PM | Reply | Permalink
Polemical movies (propagandistic when Pete Peterson's involved) aimed at (mis)educating economically unsophisticated citizens make easy targets for sophisticated economists.
Unhappily, CEPR's appropriately critical "movie review" lacks that sophistication. Indeed, it looks rather like a rant typed out in a short afternoon an an old Commodore VIC-20. Take this argument as an example:
It is easy to see that the national debt is not really a measure of intergenerational burden. While the taxpayers collectively can be seen as owing the debt, taxpayers (or at least some of them) also own the debt. This is not a payment across generations; it is a payment within generations
Note: "taxpayers (or at least some of them) also own the debt"
For the past many years foreign central banks have been the major purchasers of USTs and GSE debt. It would be nice to be told by CEPR authors what percentage of the federal debt is owned by taxpayers.
A minor point? Hardly.
The argument (made later in the movie review by CEPR) that SSTF special-issue bonds are identical ("full faith and credit") to ordinary bonds depends for its correctness in the ability of the Treasury to redeem these bonds. Treasury expects to do so by selling ordinary bonds and using the proceeds to pay off the Trustees' special-issue bonds -- effectively, a roll-over of debt.
But what happens if the debt market at the time of redemption is no longer supported by foreign buyers. Will there be an adequate domestic demand? And if so, what alternative businesses (think the internet in 1996 and thereafter) will be starved of development funds.
CEPR should answer these questions. Pot shots taken at easy targets (Peterson and friends, as examples) don't rise to the level of a real critique.
October 22, 2008 9:34 PM | Reply | Permalink
But what happens if the debt market at the time of redemption is no longer supported by foreign buyers
Mr. Paulson, meet Mr. Bernanke. He wants to buy everything you've got, and he never runs out of Federal Reserve Notes.
October 23, 2008 12:11 AM | Reply | Permalink
Color me a (mis)undereducated and a "economically unsophisticated" noob. But I'm having trouble with this review. I will have to read everything and get back to you with some substance to back it up. I happen to hate debt, and I think the National Debt is indeeed a massive problem and I think "the U.S. budget is hopelessly out of control." Hmmm... I 'll give it some thought Dean. I'm willing to be educated properly on the issue if you can beat out D. Walker's argument.
October 23, 2008 3:20 PM | Reply | Permalink