After the Fiscal Imbalance is Resolved: What Then?

by Mario Rizzo

Let us suppose that not only the immediate fiscal cliff problem is solved but also the long-run fiscal imbalance is corrected. What then? Presumably federal spending will then be on a sustainable trajectory which is able to cope with cost-of-living increases. Ordinary trend economic growth will already have been figured into the sustainability of the spending trajectory.

So what room is there for more spending without derailing the whole “solution?”  Consider that the contemporary federal government – executive and legislature – exists for the purpose of giving favors to various groups in exchange for electoral support.  Thus, even assuming the unlikely event that the long-term imbalance is resolved, how do we stay within the solution range?  After all, we did not get where we are by accident.

Only a real change in the philosophy (ideology) of government will work. The pragmatic solutions of those who do not challenge the welfare-warfare state, root and branch, are not enough. They are not “pragmatic” enough!

8 thoughts on “After the Fiscal Imbalance is Resolved: What Then?

  1. In the spirit of changing the philosopy, I would ask under what moral theory does everyone have the right to retire at public expense? The affirmative case needs to be made.

    (And, please, this is the wrong site to post a comment that people have paid for their own retirments with social security taxes. They have done no such thing.)

  2. It is disturbing that the government does not give a thought to holding expenditure (at least) constant. Otherwise, government revenues from falling debt-servicing costs should be enough to deal with the fiscal cliff.

    Perhaps a debt brake would help. Germany and Spain introduced such measures. Buchanan was in favor of an constitutional amendment of such sort. But I believe the public has to feel the need to balance the budget for politicians to make it happen. In Germany recent polls show that people prefer lower deficits over tax cuts. Cutting expenditure is obviously still harder.

  3. one’s right to “retire at public expense” is derived from paying 6.2% of each paycheck for 30 years or more into the SS trust fund, matched by a similar amount from one’s employer…it has nothing to do with any morality except the moral right to have that lifelong contract honored..

  4. What contract, rjsigmund? Courts have long since made it clear that the SS tax and the SS benefits are two different things and the pols have no obligation to pay benefits at any particular level. Also, I wonder who it was who signed the “contract” on behalf of generations unborn, to be fleeced because old-time pols said so? When you invest in an actuarially sound annuity with a private firm, yes, you are entitled to your payments. When you invest in a pyramid scheme, better make sure you cash out early enough. (PS: It’s already way too late for the Boomers.)

  5. There is no trust fund; no one has an account; the taxes paid for people already on returement; and the Supreme Court has ruled there is neither a contract nor any legal rights to your retirement.

  6. Like most government programs, Social Security is basically a scam. The same amount of money that is paid in for social security, if put into a privately invested retirement fund, would provide a large multiple of benefits–double or triple the monthly income, plus the individual would own the principal!!

    It’s primary justification is that many people don’t have the self-discipline to save regularly, so, the Progressives say,uncle sam has to do it for them. Perhaps it would be better to teach school children about thrift and compound interest==the way Benjamin Franklin’s generations, and many that followed him, managed to save money for their old age.

    Instead of encouraging thrift and self-reliance, the government program fosters the false hope that someone will take of you, encourages the irresponsible, and breeds big government.

  7. When you refer to addressing the long-run fiscal imbalance, are you referring specifically to the problem of unfunded liabilities that economist Lawrence Kotlikoff has been shouting to the rooftops about?

  8. First off I would like to say wonderful blog! I had a quick question that
    I’d like to ask if you do not mind. I was curious to know how you center yourself and clear your thoughts prior to writing. I’ve had a tough time clearing my mind in getting my thoughts out.
    I truly do enjoy writing however it just seems like the first 10 to 15 minutes
    are wasted simply just trying to figure out how to begin.
    Any recommendations or hints? Cheers!

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