Links 2024-01-09 - Crazy Train
with apologies to Ozzy Osbourne
These two links are to pieces a bit longer than the usual, but they are important stuff. Both are basically in the sardonic theme of “have a nice day”.
The first is a podcast where Richard Hanania interviews Brian Riedl on Riedl’s area of expertise: U.S. government fiscal policy. This one will not leave you all warm and fuzzy. Some flavor from the transcript:
In fact, I mean, that's why we don't make any progress on this issue. Because when I talk to people, everyone has their easy solution.
Oh, just tax the rich. Just cut foreign aid. Just get rid of immigration or add immigration. You could do all of those. It wouldn't come close.
Basically, you have $116 trillion cash shortfall in Social Security. You can't tax the rich by $116 trillion. You would need tax rates of about 500%. Even if you zeroed out foreign aid, you zeroed out defense, you tax the rich 100%, none of it comes close.
Ultimately, the only three things that can produce the lion's share of the savings is some combination of reforming Social Security, i.e. raising revenues or cutting benefits or raising the age, health care reform, Medicare reform, or raising middle class taxes.
And that's not to say we shouldn't do other things. I'm not saying we can't cut foreign aid. We absolutely, if we raise taxes, should include taxing the rich. Defense spending absolutely should be on the table. But the point is, that stuff is so small, really, all the tax money is in the middle class, and all the spending space is in Social Security and Medicare.
Of course, neither Republicans nor Democrats are willing to touch any of those for obvious political reasons. And that's why the problem never gets solved.
The second is a post from Scott Lincicome discussing our demographic future. A big part of the problem with the unfunded liabilities1 of Social Security and Medicare is that our population is aging and will start declining in the coming decades. It is one reason why we very, very much need a lot more immigration. In fact if it wasn’t for immigration, we would be further along the path of population decline. From the post:
My Cato colleague David Bier expanded on this issue in his recent Senate testimony, showing all the ways that increased immigration could improve U.S. demographics—and thus economic growth, innovation and entrepreneurship, and the workforce. Indeed, immigrants have long been a driver of expanding U.S. labor force growth: Between 1995 and 2022, the workforce increased by almost 33 million people, and about 70 percent of that growth came from immigrants (16.1 million immigrant workers and 6.7 million children of immigrants), while just 9.9 million were U.S.-born citizens without a foreign‐born parent.
The sad fact is these problems have extremely strong inertia working against solving them. No amount of wishful thinking coupled with bad math will get us there.
No matter what they told you, there is no investment or trust fund whereby you pay into these programs to draw out your funds later. They are pay-as-you-go welfare. Generally speaking, the young subsidize the old. Always have and without difficult-to-see-from-here change always will until we no longer can.