Continuing my 2020 Platform series, I thought I’d tackle the federal budget.  A difficult topic, you say?  No, not really.  As Trump likely said to Stormy, no matter what you do, you just can’t make this hard.

While no one in Washington appears to have ever balanced a checkbook, the rest of us understand the basics of managing to a budget.

We start with our account balance which tells us how much money we have or, conversely, how much we’re in debt.  We then compare our expenses against our income, taking into consideration the necessary reduction of any outstanding debt.  If the resultant budget says we’re spending more than we’re bringing in, we either need to spend less or make more.

Cool.  So we’re done here, right?

Well, we damn well should be!

Sure, sure.  Macro economic theory tells us that the federal government should increase spending during economic downturns and reduce spending when the economy recovers.  While that may seem counter-intuitive at first, it’s really no different than an individual taking out a student loan to get a better job and then using some of the additional salary to pay off the loan.  Simple.

Let’s break it down.

The Federal Deficit

I’ll start with the elephant in the room.  Seriously.  The elephant.

Republicans spent the entirety of the Obama administration whining incessantly about the rising deficit.

To be sure, while the U.S. had been running in the red since before WWII, the Obama administration made it worse.  Obama’s deficit spending (including a massive bipartisan stimulus package) was intentional and necessary to drive the economy through the financial crisis that hit the nation at the end of the Bush administration.

Still, the federal deficit was at almost $20 trillion when Obama left office.  TWENTY TRILLION.  A $20 trillion stack of $5 bills would stretch well past the moon.  Folks, that’s real money.  The Republicans were right.  The deficit was obviously a serious problem worthy of immediate action.  Since the economy was recovering nicely, it was time to start paying down the debt.

However, once in control, Trump & Company promptly changed their minds.  They passed substantial federal tax cuts that helped corporations and the rich.  Concurrently, the GOP-led government also dramatically increased federal spending.  Lo and behold, with less income and more expenses, the federal deficit continued to rise.  Imagine that!

The deficit surpassed $22 trillion in February of this year.  For those keeping score, that’s a 10% increase in just two years of Trump with no plans whatsoever to reverse the trend.  Current CBO projections put the deficit at around $34 trillion by 2029.

Some might thus call Republican lawmakers hypocrites.  I have another word in mind.

Federal Spending

I searched online for a graphic with a decent high-level breakdown of current federal spending but eventually settled on creating my own, summarizing raw CBO data.

“Income Security” includes unemployment insurance, SNAP (food stamps), child nutrition programs, etc..  “Other Mandatory” includes federal retirement benefits (military & civilian), veterans programs, etc.

In 2018, our federal spending totaled $4.1 trillion.

It is first worth noting that 8% of that is just interest on our debt.  That’s $328 billion in just one year that bought us absolutely nothing.  Zilch.  Even worse, as anyone who has tried paying only the minimum monthly amount on a credit card knows, debt maintenance quickly gets worse over time.  As our deficit grows, our interest payment grows.  It’s not a pleasant trend.

The social safety nets and the military consume the lion’s share of our national budget and they each deserve their own blog posts.  My brief take here is that these are absolutely essential elements of our government and our national identity.  Can we improve on them and make them more efficient?  Of course we can.  But we are the leaders of the free world and we take care of our own.  These should be points of national pride and not something for which we should ever apologize.

We’re thus left with 16% of our budget for the “Non-Defense Discretionary” spending that pays for everything else in our massive governmental alphabet soup (IRS, CBP, FBI, CIA, TSA, FHWA, EPA, NASA, FEMA, NPS, USDA, FDA, NIH, DOE, FCC, SEC, HUD, USPS, etc., etc., etc.).

Sure, this is “discretionary” spending and we could certainly choose not to fund any of these agencies.  Think about that for a moment, though.  Only 16 cents out of every tax dollar funds what most people think of as “The Government”.  I contend that the vast majority of people across the political spectrum would agree, in isolation, that the vast majority of these agencies are rather necessary to our way of life.  Are there some expenses that mostly appeal to one party or the other?  Sure.  Could we be more efficient across the board?  Always.  But if anyone thinks that minor cuts or tweaks here and there will save more than a penny on the dollar at best, I would love to see the math.

Federal Income

My homeowners’ association wants a ton of improvements to our jointly owned property and simultaneously complains that our HOA fees are too high.  I get it. Everyone wants something for nothing.  Free is great!  The problem is that stuff ain’t free.  No one likes paying taxes but government services also aren’t free.

Here’s my high-level breakdown of federal income:

“Other Taxes” includes estate taxes, gift taxes, etc.

In 2018, our federal income totaled $3.3 trillion.  You might have noticed that this is $800 billion less than we spent.  Hence, the problem.

In general, a free market with robust competition will provide, over time, the best economic motivation for greater innovation, higher quality, and lower costs.  The resultant strong economy will increase the tax base (both individual and corporate) and thus increase government revenue at reasonable tax rates.  The government’s economic roles are to (a) set reasonable tax rates to pay for the services that the public needs/wants, (b) maintain a fair environment, and (c) encourage/discourage market behaviors that may impact society for better/worse.  Unfortunately, our government sucks at every one of these tasks.

The recent Republican tax cuts might have been okay had they had been better targeted and hadn’t increased the federal deficit quite so much.  There were zero economic reasons for the tax cuts to be so huge; that was pure politics.  Smaller tax cuts would have garnered bipartisan support and might have allowed us to at least start to address debt reduction.  But no.  The tax cuts were instead implemented at the literal expense of our long-term national financial stability.

Democrats aren’t immune to fiscal stupidity, either. The left’s recent calls to just raise tax rates on the rich makes for great political sound bites, but doesn’t solve the problem.  Most well-off Americans already pay a ton of taxes.  In 2018, the top 20% of tax filers received 53% of all pre-tax income and paid 68% of all federal taxes; the top 1% received 16% of all pre-tax income and paid 26% of all federal taxes.  So how about the uber-rich?  While that’s a valid issue, it won’t be addressed by merely increasing upper income tax rates.  These folks can just hire whole floors of accountants to game our massively complex tax code and avoid the declaration of any taxable income at all.  There isn’t a lot of difference between 37% of zero and 70% of zero.  One of the many likely reasons Trump wants to keep his tax returns private is that he hasn’t paid any income taxes in decades.

While often overlooked, economic incentives and disincentives (largely in the form of excise taxes, tax credits, and tax deductions) are extremely important parts of the federal income equation.

Federal excise taxes are implemented on some items, but such taxes account for only 3% of federal income.  On the flip side, there are a ton of tax give-aways that not only don’t help matters – they make matters much worse.

Ethanol is just one representative example.  U.S. taxpayers have to make up for over $7 billion in annual tax credits that the government grants to Ethanol producers.  Ethanol is a low-quality biofuel which various levels of governments mandate be blended into gasoline.  Since about 40% of U.S. corn is used to create Ethanol, consumers also have to pay more for edible corn and other corn-based food products.  Furthermore, since Ethanol-laced gasoline is less efficient that pure gasoline, consumers also have to buy more of the blended gas to get equivalent mileage.  So who exactly benefits here?  Iowa.  Iowa is the top corn-producing state in the U.S. and just so happens to be the first stop during the political primary season.  Strange coincidence, huh?

Our income problem boils down to this:  There is little political upside to raising taxes, simplifying the tax code, or reworking tax incentives.  Politicians are unfortunately motivated to spend every dime they can get their hands on to get elected and re-elected for as long as they can.  They are more than content to let future politicians and future generations deal with the debt they create.  They simply don’t see the deficit as their problem and, when their primary goal is re-election, they are sadly correct.  It’s not just their fault; it’s ours.

Suggestions

Future blog posts may well expand on some of these thoughts, but here’s just a few budget-related suggestions:

Implement Federal Term-Limits:  Addressing the federal deficit will require political courage.  Unfortunately, courage will never be in large supply among career politicians.  Voters might respect a candidate that says “I will raise your taxes and take away your favorite tax incentives” but that respect won’t equate to actual votes.  Term-limits won’t completely solve this problem, but they can’t hurt.  Elected officials are often more inclined to do the right thing when they’re not up for re-election.

Eliminate the Legislative Debt Ceiling:  Trying to control the deficit with an artificial “debt ceiling” is laughable and this political football just needs to go away.  The deficit is money we’ve already spent.  We can’t just put the kitchen sink on our national credit card and then not pay the bill.  I tried that in college.  It didn’t work well.

End Government Shutdowns:  Politicians need to stop shutting down the government when they can’t agree on spending bills.  Here’s a thought.  When the government shuts itself down, the folks that cause the shutdown don’t get paid.  This group would include every single federally-elected officeholder, all federal political appointees, and all of their senior staffs.  Importantly, this group of people would NEVER receive any back pay when the government inevitably reopens.  This only seems fair and I guarantee that it would eliminate all future shutdowns.

Simplify the Tax Code:  Our tax code is way too complex.  Significant tax revisions would be required to ensure that everyone, including the uber-rich, pays their “fair share” of taxes.  In 1913, the U.S. tax code was 27 pages.  It’s now over 6000 pages – and that doesn’t include a ton of IRS regulations and associated case law.  While simplification wouldn’t itself make the tax code more fair, it might make it more transparent.  If people had better insights into the real winners and losers in the tax code, perhaps it could better inform their votes.

Completely Rethink Tax Incentives/Disincentives:  To paraphrase Jim Croce, trying to direct the U.S. economy is akin to tugging on Superman’s cape.  It might get his attention; it might not; it might just piss him off.  That said, government can and should use tax policy to nudge things in preferred directions.  While some laws and regulations are obviously required, tax incentives and disincentives can provide better motivations to encourage behaviors that benefit society… or at least increase tax revenues on less desirable behaviors.  While we already do this, it’s not used nearly enough for the right reasons.  In my perfect world, we would:

• Eliminate a ton of tax credits and deductions whose primary purpose is political.  The Ethanol tax credit is an obvious target, but there are certainly others.  The R&D tax credit, for example, encourages large companies to invest in research that makes them more money.  Do they really need a tax break for that?  If they do get one, the public at least needs to reap a large portion of the benefits.
• Implement a massive purge of charities, churches, and business organizations that can claim tax-exempt status.  While there is a valid category of organizations that deserve a tax-exemption by serving a public good, taxpayers foot the bill for way too many organizations that fundamentally operate for private, political, or commercial purposes.
• Increase tax incentives to encourage retirement savings, clean energy usage, and higher education.
• Vastly expand the federal use of excise taxes.  If a prevailing government wants to discourage a social behavior, then tax the crap out of it.  Excise taxes on alcohol, tobacco, and firearms should be increased.  Gambling and marijuana should be legalized and the government should collect excise taxes on these as well.  Making things illegal adds law enforcement, court, and incarceration costs; making them legal and expensive adds tax revenue.  Do the math.

Look for Cost Savings:  As noted above, significant money likely won’t be found tweaking individual budget line items.  That doesn’t mean we shouldn’t look for cost savings, though.  Things can almost always be streamlined; fraud can almost always be reduced; some spending is almost always stupid.  As long as the act of finding various cost savings doesn’t cost more than the amount saved, we should definitely try.  We should even look into getting a better bang for our bucks in our social programs and the military – so long as we recognize these as core requirements worthy of our money.

Get Serious about Budget Neutrality:  Every spending proposal should be accompanied by a corresponding income proposal.  A ton of legislation claims it will be “budget neutral” by assuming purely magical economic benefits.  The CBO has historically done a decent job scoring such proposals when given a decent chance, but those scores are often ignored.  While keeping the CBO non-political is likely to be tough in the current environment, it is essential.

Increase Tax Rates:  Yes, I saved this for last.  I guess it’s pretty obvious that I’m not running for elective office since, in our current environment, this statement would be political suicide.  Note, however, that I’m not looking for an overnight solution.  Trying to quickly eliminate our federal deficit would ruin our economy and make the situation much worse.  All we need is a plan that moves us in the right direction.  Even if we implement most of the above suggestions, it simply won’t be enough.  At some point we’ll need to suck it up and agree to pay for all the things we buy and also start paying down the debt incurred on things we’ve already bought.  We can’t just keep passing along ever-increasing debt to future generations.  A good start for now would be to reduce the Trump tax cuts and direct the vast majority of the added federal revenue to deficit reduction.

Everyone has an opinion on the Mueller report.  I waited a bit to share mine since I wanted to seriously consider the content.

I did think it important to actually read the report.  Not the Attorney General’s summary.  Not pundit takes on any side.  The report itself.  It’s a long, hard read and it has significant redactions.  But it is fascinating.  Congress absolutely needs to see the unredacted version, but even what we have seems to make a few things abundantly clear:

• Mueller was extremely conservative in his approach, but he did his job.
• AG Barr’s “summary” of the Mueller report wasn’t just misleading.  It was wrong.  I fully expected Barr to spin things as best he could.  He’s a conservative Republican in the Trump administration.  However, I would have never expected him to be so patently partisan.  His previously solid reputation took a huge hit.
• While the report found no legal basis for charges of criminal conspiracy against Trump, Mueller absolutely found evidence of corruption and collusion with Russia.  It’s just that none of what he found (beyond the numerous indictments already made) rose to the legal level of criminal charges beyond a reasonable doubt.  However, Mueller did lay out the case for further investigations based on the lesser standards required for impeachment or, more importantly, in the realm of public opinion.  Despite constant denials of Russian interference in the 2016 election, the Trump campaign was aware of such interference, saw no problem with it, and gladly accepted it.  Those actions may not have met the legal definition of criminal activity but that doesn’t mean it was acceptable behavior in a democracy.
• Most importantly, the report did NOT clear Trump of obstruction of justice charges.  On the contrary, the only reason Mueller didn’t indict Trump for obstruction was Mueller’s strict adherence to a questionable DOJ policy that a sitting President can’t be indicted.  Mueller explicitly laid out the cases, though, for possible immediate action by Congress and/or for possible post-Presidency charges against Trump.  Nowhere did Mueller say or imply that he was deferring to the AG to make the call.

Trump now seems intent on denying Congress any access to members of his administration for the continued scrutiny outlined by Mueller.  However, since Trump’s folks already cooperated with Mueller, there is zero basis for claiming executive privilege at this point.  Trump is only forcing House Democrats to begin impeachment hearings.

While I’d personally prefer Congressional hearings short of impeachment, Democrats will have little choice if Trump persists in his obstruction.  I have to believe that even a conservative Supreme Court will have to unanimously support the explicit Constitutional power of the House to conduct impeachment proceedings.  In no case, however, should House Democrats allow the proceedings to move to a Senate trial prior to the 2020 elections.  The current Senate will never vote to remove Trump from office and Democrats are much better off with the optics of drawn-out House hearings.

It’s also a much better political strategy for Trump to be defeated in an election rather than being removed from office.  It would not only be better for our democracy; it would be infinitely more satisfying.

The healthcare strategy in the Trump Administration’s recent 2020 budget proposal is a huge gift to Democrats.  Unfortunately, Democrats don’t appear eager to unwrap it.

The Trump proposal cuts Medicare by $800 billion and Medicaid by $1.5 trillion over the next 10 years.  That includes a cut of $100 billion to nursing homes and home health agencies that care for Medicare patients after a hospital stay.  in 2020, the National Cancer Institute gets cut by $900 million; other medical research gets cut by $1 billion more.  Wow.

Knowing that Trump campaigned in 2016 on a promise not to touch Medicare and Medicaid, his folks are currently on all the talk shows claiming that those budget numbers do indeed increase year-to-year.  While that’s technically true from a raw numbers perspective, when a budget doesn’t account for inflation or the growth of the covered population, it’s a cut.

Seemingly surprised when people notice that fact, Trump officials then randomly claim that massive savings will be realized by reducing fraud and waste (which will require more enforcement that will eat up much of the savings), reducing payments to providers (which will reduce the number and quality of providers), moving accountability to the states (which will only pass the buck on budget shortfalls), and/or anything else they can think of that might distract anyone paying even cursory attention.

The budget also endorses renewed efforts to repeal what’s left of the Affordable Care Act, despite the fact that the repeal effort failed back when Republicans controlled both houses of Congress.  Trump, however, still wants to blame ObamaCare for everything wrong with the world when, in practice, the ACA is now mostly just a guarantee of coverage for pre-existing conditions.  A repeal at this point would only mean that some people couldn’t even get expensive health insurance when 3/4 of the voting population favors requiring insurance companies to cover pre-existing conditions.

[ Here’s a thought experiment:  What do you think would happen if Congress put a repeal-and-replace bill on Trump’s desk that was EXACTLY the features of ObamaCare but renamed to TrumpCare?  Does anyone believe Trump wouldn’t claim it was a brilliant idea and sign it without hesitation?  Yeah.  I’m fine with that.  Obama would be fine with it, too. ]

The Trump budget is DOA in Congress, but the GOP is now stuck with either defending it or running afoul of Trump & Company.  Piss off Trump and put a giant target on your right side.  Piss off the AARP and write off the voters who are the most likely to actually vote.  Heh.

You’d think that Democrats could ride this to an easy win in 2020.  You’d be wrong.

Many Democrats seem enamored with some version of Medicare-For-All – essentially a move to a single-payer system either gradually or immediately.  The former is well-intentioned and may someday be a decent idea but, since 2/3 of the country doesn’t yet support it, it’s simply not worth the political capital to push it too hard in 2020.  The latter is just a horrible idea all around as it would quickly kill a trillion-dollar U.S. industry with devastating economic impacts.  And, oh yeah:  a comprehensive Medicare-For-All could cost in the neighborhood of $32 trillion over the next 10 years.  Yikes.

And yet, Progressives are quite vocally claiming that anyone on the left who dares to question Medicare-For-All is in bed with the healthcare industry.  And, okay, that may well account for some small portion of the opposition.  However, some of us would simply prefer to pursue policies that (a) have a chance to become law rather than rally chants and that (b) increase the chances of a Democratic win of the White House in 2020.  Most of us don’t impugn progressive motives no matter how ill-informed and naïve we may consider their positions.  We’d appreciate the same respect.  Thanks.  And have a nice day.

From my perspective, there’s plenty of sane, left-of-center ground that I’d love to see some Democratic presidential candidate(s) loudly claim.  A 2020 Platform for healthcare might include some of the following ideas:

ACA Protection:  Protect what’s left of the ACA.  Guarantee reasonably-priced insurance coverage for everyone, including people with pre-existing conditions.

ACA Expansion:  Improve and strengthen the ACA.  For example, reinstate the mandate that all individuals carry health insurance OR sign a binding agreement to forego ANY government-funded medical assistance.  Such an agreement would be clearly noted on all drivers licenses and other government-issued IDs.  This isn’t just about giving insurance companies a broad customer pool in order to reduce their coverage costs – although that’s a great side benefit.  Frankly, I don’t want to pay for anyone’s emergency medical care just because they decided they didn’t want to pay for health insurance.  Someone doesn’t like the individual mandate?  Call their bluff.  See if they’ll state a willingness to die if they’re in car wreck without health insurance or the ability to pay up-front.  If so, cool.  Their call.

Medicare Protection:  Medicare is a contract our country currently has with over 60 million Americans.  We also have a ton of baby-boomers who are quickly approaching eligibility and the contract must apply to them as well.  Healthcare for seniors must to be sacrosanct.  It’s good policy; it’s good politics; it’s the right thing to do.  Win; Win; Win.

Medicare Improvement:  Allow Medicare to negotiate prescription drug costs.  It’s insane that this isn’t already allowed.  The Empowering Medicare Seniors to Negotiate Drug Prices Act of 2019 is currently making its way through Congress.  Despite opposition from the pharmaceutical industry, this bipartisan bill needs to pass.  Now.

Medicare Expansion:  Allow people between the ages of 55 and 64 to optionally buy into Medicare at some reasonable cost.  The program is already there, it works, and it could use the cash influx from a healthier population than it currently serves.  It also removes a portion of the older population from the ACA marketplace thus helping to keep costs under control there as well.

Prepare for the Future:  Recognize that some version of a single-payer system might be a valid long-term goal.  Do the research.  Hold hearings.  Determine how to pay for it.  Get buy-in from the major players.  Convince the public.  And THEN introduce legislation.

Improve Healthcare:  Recognize the difference between healthcare and health insurance.  Most of the above is a discussion of health insurance – despite the fact that we all call it healthcare.  The interesting part of the semantic distinction is that government could have immediate impact enabling true healthCARE reform.  Screwing with just the insurance market is like focusing on optimizing a 911 service but forgetting that someone has to respond to the call.  Here’s just a few arenas where the government could help improve healthcare through education, regulations, and/or tax incentives:

• Require healthcare providers to empower patients with more information.  Data is good.  It’s better all around to have fully informed patients who are heavily involved in the purpose and cost-effectiveness of their own care.  This includes readable care plans, cost transparency, bill simplification, and an easy means of evaluating alternatives.  For example, the cost of a simple colonoscopy can vary by 600% from one location to another.  There’s no reason why value shopping can’t apply to healthcare if consumers have easy access to the information.  Consider an Amazon for healthcare.
• Encourage the creation and usage of low-cost healthcare alternatives.  Competition is good.  Mergers are currently rampant in the healthcare industry and many doctors are choosing to associate with hospitals rather than remain in private practice.  When there’s only one store in town, there’s only one price.  While there’s definitely a role for the personal physician who knows the patient and can customize care when needed, there’s also a role for a doc-in-a-box that can simply prescribe a Z-Pack for a minor infection.  Even within a doctor’s office, task shifting from doctors to nurse practitioners can dramatically reduce costs for some care needs.  Consider a Southwest Airlines for healthcare.
• Encourage portable, consumer-owned health records enabling consumers to manage their own healthcare rather than simply outsource it to physicians.  Require providers to share all care data with consumers in common formats so that they can, in turn, share it with other providers as they see fit.
• Encourage technology-based healthcare solutions ranging from digital therapeutics to e-health.  Technology can reduce costs while improving care.  Regulatory barriers need to fall; tax incentives should be considered.
• Promote competition in the pharmaceutical industry.  Reduce barriers for the development of generic and biosimilar products and expedite their approval.
• Increase funding of medical research.  There are major national health issues that require funding beyond what the market can reasonably afford.  In the long term, a healthier populace is the best way to reduce healthcare expenditures.  Cancer, Alzheimer’s, and HIV come to mind as deserving of government attention.  Of course, such funding needs to come with conditions that prevent pharmaceutical companies from claiming excessive profits when the underlying research is publicly funded.

My healthcare bottom lines for 2020 Democrats:  Be compassionate.  Be creative.  Don’t be stupid.