Last summer, a Federal Aviation Administration advisory committee study on the use of autopilot inaircraft drew a sobering conclusion: too much reliance on automation and technology are degrading pilots' flight skills. Indeed, reports indicate autopilot malfunctions were a contributing factor in numerous airline accidents in recent years.
Perhaps members of Congress should consider the implications of those findings as they take up this year's federal budget and appropriations process. Because with a majority of federal spending now running on autopilot, we're setting ourselves up for a fiscal crash.
What do I mean when I say the budget is "on autopilot"? Right now, vast swaths of government spending are classified as "mandatory." That means certain programs are funded automatically. In other words, they are funded outside of the yearly congressional budget and appropriations process.
Most Americans don't realize it, but more than half of federal spending falls into the mandatory spending category: think Social Security, Medicare and Medicaid. (To be exact, 56 percent of all federal spending was spent on mandatory spending during the government's last fiscal year.) Meanwhile, as of last year, just over a third (37 percent) of the federal budget is categorized as "discretionary" spending. This is the part of the budget over which Congress has decision-making power through the yearly budget and appropriations process.
In the last year, Congress has attempted to tackle spending in two ways. First, in August 2011, Congress passed the Budget Control Act, which laid out steps to reduce the deficit over ten years in exchange for an immediate increase in the national debt ceiling. But if you look closer at these numbers, many of the "cuts" are not actual reductions in spending -- they simply represent a slower rate of spending growth -- and entirely come from the discretionary spending category, the smallest part of the federal budget.
The Budget Control Act also established the so-called super committee to identify further potential deficit reduction targets. However, the committee failed to arrive at an agreement by its November deadline, so a series of scheduled automatic cutstotaling $1.2 trillion are now slated to go into effect in January of next year (and will be spread out through 2021).
According to the non-partisan Congressional Budget Office, of these cuts triggered by the super committee's failure, 71 percent -- almost three-quarters -- come from discretionary spending categories. Getting a serious handle on growing spending in Social Security, Medicare and Medicaid, some of the biggest programs in mandatory spending? It won't happen under this plan.
Worse yet, after the bitter trench warfare and brinksmanship of the 2011 debt ceiling deal, not only have we failed to achieve serious budget savings, it's probable we'll hit the debt limit again this year, sooner than was originally expected. That means Congress is likely to find themselves in a new debt ceiling showdown before a single cut triggered by the super committee's failure has taken effect.
Do you see a pattern here? Congress has repeatedly abdicated its responsibility for effective oversight and decision-making on critical questions of how the federal government spends money.
At a House Oversight and Government Reform on March 21, Representative Trey Gowdy (R-SC) proposed an interesting hypothetical question to Treasury Secretary Tim Geithner. If the upcoming debt ceiling increase could be "the last debt ceiling increase you could ask for -- the final one -- and you had to make it large enough for all current and future obligations, what would the request need to be?" "I just can't do it in my head," Geithner eventually said when pressed on the question. But the number "would make you uncomfortable."
There is a reason the number causes an uncomfortable feeling: autopilot spending is driving this nation into bankruptcy. President Obama has shown little inclination to step up and show real leadership on this issue. Meanwhile, the budget proposal from Rep. Paul Ryan, the Wisconsin Republican who chairs the House Budget Committee, is an improvement. Credit Ryan for seeking to preserve the Medicare guarantee while keeping costs down and personalizing Medicare for seniors. However, his budget proposal doesn't address the growth in Social Security spending.
What should Congress do? Take a cue from the world of aviation. One recommendation stemming from the FAA autopilot study cited above is that pilots should devote more time to manual flying, rather than relying on automated systems, so they are better prepared at recognizing the warning signs of an emergency. "We're forgetting how to fly," explained the committee co-chair, a pilot himself.
There's a lesson for Congress there: enough with the autopilot spending. Congress must take control of the federal budget process, which means taking responsibility for all spending programs to get the deficit under control. If Congress doesn't start relearning how to fly, we all need to be prepared for a fiscal crash.
Lenwood Brooks is policy director of Public Notice, an independent, nonpartisan, nonprofit dedicated to providing facts and insight on the economy and how policy affects our financial well being.
Follow Lenwood Brooks on Twitter: www.twitter.com/LenwoodBrooks
Robert Scheer: Obama By Default
James Marshall Crotty: Why the Trayvon Martin Circus Could Derail Obama's Re-election
In the mid-1930's, following a financial collapse only slightly less severe(!) than the one that we are now in (but that we continue to vehemently deny ...), messrs. Glass and Steagall created a piece of legislation that for the next six decades prevented a key form of financial fraud. Less than ten years after its repeal, the fraud returned with a vengeance.
Today, the so-called JOBS act will eliminate even more of Glass-Steagall and also much of Sarbanes-Oxeley.
We're not merely drifting in the wrong directions ... we're consciously dismantling the railings and running straight for that cliff. And yet, there's one factor we're choosing to ignore: OTHER nations. Nations with whom we trade (having dismantled our own non-military productive capacity). Nations who trusted our great-grandparents.
It is not possible to destroy the value of the dollar unless the world can not keep up with the demand that those dollars produce.
The world has an enormous amount of unused productive capacity and the only problem is that the economy is starving for cash.
You can not put a number on what a final debt increase should be because a growing economy needs an ever growing supply of money. If you want to grow forever then you need and infinite increase.
Someone should tell this to Paul Krugman, who keeps crying about 'austerity'.
Of course, the chickenhawk Republicans are crying the same thing about the defense budget so they deserve a talking to as well.
This has been going on since the 1840's
Drivel. Come back when you can honestly discuss the real source of problems in the economy, like deregulating banking, tax cuts for the rich, off the books spending on foreign wars, and a defense budget bigger than the rest of the world's COMBINED.
But keep on with the fear-mongering; it appeals well to a certain crowd (ie, the 61% of republicans who think Obama is not a natural US citizen - the same crowd who once toted signs that read "keep your government hands off my Medicare," yet who now are ready to abolish the program altogether.. yeah, that crowd).
Policy director.... heh-heh... right..
Check this out:
http://www.medicare.gov/Publications/Pubs/pdf/11396.pdf
Look at the section under how Medicare Part B is funded.
But I agree with your point about the stupidity of the anti-government "hands off my Medicare" crowd.
Thanks for providing the Medicare link.
I have a few questions for you.
1. How is the interest earnings in the trust fund made?
2. How does the 75% of the premiums for Parts B and D get paid?
3. How are the annual cash shortfalls in revenues versus benefits paid actually handled in the Medicare and Social Security trust funds?
4. Were the Medicare and Social Security trust funds excess taxes placed into nonmarketable Treasuries, to be used exclusively for Social Security beneficiaries?
Others feel free to provide your answers.
Don Levit
1. Reform the tax code to eliminate loopholes by business and repeal the carried interest cut that lowered it to 15% for the 1%.
2. Raise the marginal tax rate on earners of greater than $250,000 back to 1993 levels.
3. Cut the military spending in half. We would still spend more than the next 10 countries even after cutting it in half.
Those 3 things would solve the problem and there isn't any evidence that they would hurt the economy, individuals or business in any way.
No they wouldn't. They're still decent ideas, but insufficient and based on some fallacies. Here's the harsh truth: Defense should be cut. In addition...
1. Medicare/Medicaid must be reformed or we'll NEVER be solvent again. The costs of both programs rise faster than inflation and faster than our economy.
2. Taxes must be raised on EVERYONE middle class and above if in order to raise some real deficit busting revenue.
3. The cost savings from reforming Medicare/Medicaid (and cutting defense) and the revenue from the taxes increases in #2 MUST BE allocated to paying off debt. Unfortunately, it'd likely be allocated to new spending since few people in Congress care about solvency and the average voter is too ignorant to know how bad things really are on the government balance sheet.
If an African, South American, or Southeast Asian government spent money like we did, we'd be wagging our finger at them for being backwards and financially ignorant. Yet here we are, guaranteeing that future generations will be buried under a mountain of debt. Waging war in 2 countries while cutting taxes. We're a huge joke.
Cut in half = $374.4B Savings $374.4B
Raising effective tax rates on corporations: 1.7 Trillion income * 2.8% (current effective corporate tax rate is 1.8%) = $20 billion extra per year in income
Carried interest at normal income rate and moving the tax rates back up on > $250,000 earners adds $98 billion to income
This would trim the current budget by $741 billion and increase revenue by $118 billion. Current deficit per year is $1.2 trillion: 1.2 trillion - 741 billion = 261 billion deficit
Raising tax rates: 118 billion - 261 billion deficit = $143 billion deficit
Part of that $143 billion deficit is that we are paying for extended unemployment benefits still.
If unemployment goes down (and incomes go up), the revenue by the IRS will go up and that should then put us back into a surplus situation.
Single payer healthcare would considerably slow down the increase in the medicare costs.
Sources:
http://www.nytimes.com/2010/11/24/business/economy/24econ.html
http://www.irs.gov/taxstats/article/0,,id=102886,00.html
http://economix.blogs.nytimes.com/2011/05/31/are-taxes-in-the-u-s-high-or-low/
http://dealbook.nytimes.com/2011/09/12/carried-interest-tax-break-comes-under-fire-again/
http://en.wikipedia.org/wiki/2012_United_States_federal_budget
Please take a bow.
Next time you have a free moment, read a bit about federal spending, debt, and deficits (both structural and non-structural). Because if you truly believe your first sentence, then you're in for a rude awakening.
Better we should spend the money on medical treatment for Americans, updating our expiring infrastructure, and making being an American as good a deal for every citizen as the worlds best.
After all we know we are the worlds most productive workers, our rewards should be greater than being on the winning side of wars with enemies that haven't fully embraced the industrial age yet and who never attacked us.
http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf