Taxes

OK. We've had a lot of discussion about how taxes should not be used.

The question I want to pose here is: if you were in charge of putting the budget together, where would you allocate the spending?

Feel free to tinker with gov't...like firing federal employees, downsizing the military, cut federal contracts.

As always, I expect a lot of thread drift on this one. But since you can design your own budget, I really don't expect a lot of drama. You don't have to defend what you do, but and explanation of why might be nice.

Kill collective bargaining. If you want a raise, earn it. If they won't give it to you, go elsewhere. Marginal employees have been riding this dead horse for way too long.(I'm sure this will piss someone off) Our education system is a prime example.

http://www.nytimes.com/interactive/2...oices=zwgrcj10

Kill collective bargaining. If you want a raise, earn it. If they won't give it to you, go elsewhere. Marginal employees have been riding this dead horse for way too long.(I'm sure this will piss someone off) Our education system is a prime example. Originally Posted by roscoe14850

whether it is collective bargaining or any other system that allows marginal employees to "hang out"

Take a school system that has a 3% raise pool where it is dictated that no one can get less than 2% or more than 4%. I'll spare taking you through the math, but practically speaking the financial difference between being the best and the worst in a given year is about the spending power to buy a cup of coffee a day at Starbucks (a regular coffee, not one of those fancy drinks).

Kill collective bargaining. If you want a raise, earn it. If they won't give it to you, go elsewhere. Marginal employees have been riding this dead horse for way too long.(I'm sure this will piss someone off) Our education system is a prime example. Originally Posted by roscoe14850

Federal employees don't have collective bargaining for pay and benefits.

Kill collective bargaining. If you want a raise, earn it. If they won't give it to you, go elsewhere. Marginal employees have been riding this dead horse for way too long.(I'm sure this will piss someone off) Our education system is a prime example. Originally Posted by roscoe14850

whether it is collective bargaining or any other system that allows marginal employees to "hang out"

Take a school system that has a 3% raise pool where it is dictated that no one can get less than 2% or more than 4%. I'll spare taking you through the math, but practically speaking the financial difference between being the best and the worst in a given year is about the spending power to buy a cup of coffee a day at Starbucks (a regular coffee, not one of those fancy drinks). Originally Posted by atlcomedy

What do you propose for "marginal" employees (and who makes that determination?)? I guess they just lose their jobs and be kicked to the curb with no income for their family.

http://www.nytimes.com/interactive/2...oices=zwgrcj10 Originally Posted by pjorourke

PJ, I'm shocked. You referencing the NYT.

What can I say? I like to read the enemy so I know how to beat them.

Besides, it was a good interactive.

Bottom line, you can't balance the budget raining taxes or just hitting discretionary spending. You have to hit defense and entitlements. The fairest way to hit entitlement is just push back the starting dates (slowly, but not to slowly) until it is equal to the expectation of life at birth (currently about 70). Thats the only way you ever get the thing in balance. We'll hear a lot of noise about cutting off the "rich folks". But the truth of the matter is that there aren't enough of the little buggers, even if you could solve the near intractible definition problems (what is rich, when is it measured, etc.).

What do you propose for "marginal" employees (and who makes that determination?)? I guess they just lose their jobs and be kicked to the curb with no income for their family. Originally Posted by charlestudor2005

What you worried what the curb feels like

Seriously though, in many cases (I'm not talking about PJ's Fortune 100 CEO's) the difference between being marginal (probably not the best term but the OP used it, substitute "poor performer") and a solid performer is not ability or aptitude but work ethic, giving a damn and a willingness to go the extra mile (I know I used a bunch of tired cliches). If the poor performer knew the consequence of his actions was the curb, he'd modify his behavior.

The NYT interactive is interesting, but I remember some discussion from a few months ago suggesting that its economic growth assumptions are far too optimistic, and that therefore it's far more difficult to reduce the deficit than one might think.

Yes, the only way you can make any real headway is to slash entitlement and defense spending. I mean virtually with a chainsaw, not a scalpel. That's obviously not even remotely possible. People would start rioting in the streets.

The only way you can reduce the deficit to an acceptable level on the tax side is by imposing a huge tax increase such as a VAT. Don't look for that to happen anytime soon, though, since few congresspersons seem to like going on political kamikaze missions.

So politicians will probably spend a lot of political capital over the next year or so arguing about where to cut $10 billion here and $10 billion there while we're running a $1.65 trillion dollar deficit.

Something very big is going to have to be done sooner or later. That's why so few of us in the investment world expect year-over-year GDP growth rates over the next 5-10 years to average anywhere near what they were in the 25-year period 1983-2007.

That's why so few of us in the investment world expect year-over-year GDP growth rates over the next 5-10 years to average anywhere near what they were in the 25-year period 1983-2007. Originally Posted by CaptainMidnight

In fairness though, that period had some of the most significant technological innovations that transformed how we work driving huge gains in productivity.

This is easy per se. Define the mission of Federal, State and County/City governments and eliminate redundancy. Example: why a Federal Department of Education? That probably best belongs at the County level. Why have Federal Unemployment taxes and benefits vs at the State level? Most economies are more localized than national. Just some thoughts.

This is easy per se. Define the mission of Federal, State and County/City governments and eliminate redundancy. Example: why a Federal Department of Education? That probably best belongs at the County level. Why have Federal Unemployment taxes and benefits vs at the State level? Most economies are more localized than national. Just some thoughts. Originally Posted by FatBastard

Not saying that isn't a valid idea...but to PJ's point unless you hit some of the big cost centers you aren't going to solve the problem...

In fairness though, that period had some of the most significant technological innovations that transformed how we work driving huge gains in productivity. Originally Posted by atlcomedy

Yes, but the same can be said of the post-World War II period -- and for that matter, even the pre-World War II period!

In the 1950s and '60s we enjoyed rapid technological advances in a lot of areas -- aviation, computers, space program (with all its related spinoffs), etc. Those were significant drivers of economic growth. The only thing that interrupted it was the gross mismanagement of the economy in the 1970s by the government and the Federal Reserve, essentially resulting in a lost decade.

And although the 1930s was obviously an extremely depressing decade, don't forget that it was also a time of fantastic innovation! The state-of-the-art passenger aircraft in 1930 was the Ford Tri-Motor, but by 1940 the 4-engine DC-4 was already on the drawing board. The 1930s also saw the introduction of radar, TV, a better electrical grid, rapidly developing agricultural mechanization, and significant automotive advances. That set the stage for a fantastic boom in the 1940s, interrupted only by World War II. Of course, the war set the stage for boom times in the 1950s and '60s, since much of the industrial capacity of what would otherwise have been our global competitors was bombed away! (It would take almost a generation for it to be more or less rebuilt, which was yet another reason for the difficulties we experienced in the 1970s.)

So we've enjoyed the bounties offered by innovation throughout much of our history.

But my basic point is that an extended period of slow growth can be expected to follow a large, unprecedented, and entrenched increase in government spending. It's sort of like a very big meal that must be digested.

Three of the largest and most unproductive segments of our economy are government, education and healthcare. If we are going to keep increasing our standards of living, we are going to have to get those segments productive and slash the hell out of them.