We like to think of ourselves as an innovation nation but our government is a warfare-welfare state. To build an economy for the 21st century we need to increase the rate of innovation and to do that we need to put innovation at the center of our national vision. Innovation, however, is not a priority of our massive federal government.
Nearly two-thirds of the U.S. federal budget, $2.2 trillion annually, is spent on just the four biggest warfare and welfare programs, Medicaid, Medicare, Defense and Social Security. In contrast the National Institutes of Health, which funds medical research, spends $31 billion annually, and the National Science Foundation spends just $7 billion.
That’s me writing at The Atlantic drawing on Launching the Innovation Renaissance. Here is one more bit
Our ancestors were bold and industrious–they built a significant portion of our energy and road infrastructure more than half a century ago. It would be almost impossible to build that system today. Could we build the Hoover Dam today? We have the technology but do we have the will?
The nonreality of the current tax debate
An objective look at the reality of today’s economy, our demographics and our income distribution suggests that the current tax debate is terribly misguided.
.. the increasing tendency of Republicans to engage in reverse Robin Hoodism — paying for huge breaks for the wealthy by raising taxes or cutting spending on the poor — in an economy that generates too much inequality before taxes kick in is unjust and terrible policy
.. For Democrats, it means abandoning the notion that we can have everything we want and send the bill to the top 1 percent, and accepting that the corporate tax system is a hot mess that needs repair.
.. But “get it from the rich” can’t be the extent of every Democratic tax plan.
.. private business will provide optimal levels of public goods and services such as education, transportation, health care and retirement security, global protection (both defense and climate), the justice system, labor and financial market oversight, and anti-poverty and countercyclical policies
.. Since 1970, the federal revenue share of the gross domestic product has averaged 17.4 percent, ranging from around 15 to 20 percent. It’s just under 18 percent today. Congressional Budget Office analysis reveals that meeting the promises of Social Security and Medicare would require about 2.5 percentage points more than that by 2027.
That takes us slightly past the upper bound of the historical record, but the extent of our aging demographics is historically unique.
.. Tax reform .. should be revenue positive.
How the baby boomers destroyed everything
The root illness remains undiagnosed, but here it is: the baby boomers, that vast generation of Americans born in the first two decades after World War II. The body politic rests on the slab because boomers put it there, because decades of boomerism produced the problems and disaffection of which 2016 was merely the latest expression.
.. the unusual prevalence of sociopathy in an unusually large generation.
.. How does that disorder manifest? Improvidence is reflected in low levels of savings and high levels of bankruptcy. Deceit shows up as a distaste for facts, a subject on display in everything from Enron’s quarterly reports to daily press briefings. Interpersonal failures and unbridled hostility appeared in unusually high levels of divorce and crime from the 1970s to early 1990s. These problems expressed themselves at generationally unique levels in boomers, to a greater extent than in boomers’ parents or children at comparable ages.
.. They were the first generation to be raised permissively, the first reared on television and subject to its developmental harms, and the only living group raised in an era of seemingly effortless prosperity.
.. By 1994, boomers held a majority of House seats, a proportion that peaked at 79 percent in 2008 and remains a still formidable 69 percent. The rest of government went the same way: Boomers make up 86 percent of governors, about three-quarters of the proposed Cabinet, and much of the judiciary and bureaucracy. Except for youthful Silicon Valley, the private sector also fell into boomer hands decades ago and remains there.
.. Since it was politically untenable to locate blame in obvious places, other explanations were manufactured for the nation’s woes. (Immigrants!)
.. boomers who, despite their hippie reputation, are net Republican.
.. So what if Social Security faces partial insolvency after 2034, or that climate change has scientists and generals fretting for the world circa 2040? By then, the median boomer will be dead.
.. Nor do I assert that all of their co-generationalists are sociopaths. They aren’t. But I don’t shrink from arguing that an unusually large fraction of boomers behaves sociopathically, with the power to realize their agenda.
.. It explains why Reagan lowered taxes on income while raising them on capital gains (when boomers had salaries but not portfolios), why Bill Clinton lowered taxes on houses and stocks (when boomers owned those in quantity), and why Bush II cut taxes with unseemly attention lavished on the “death tax” (just as the boomers’ parents neared expiration)
.. Today’s seniors (boomers) are much wealthier relative to the present young than the seniors of the 1980s were to then-young boomers.
.. All those tax breaks, bailouts, easy money, deregulation, and the bubbles they spawned supported that boomer wealth accumulation while shifting the true costs to the future, to the young.
.. no amount of tax reallocation could keep the government together and goodies flowing, so boomers tolerated astounding debt expansion
.. BOOMERS show no appetite for maintaining the assets their parents accumulated. Public higher education, nearly free for boomers, has become dauntingly expensive. Infrastructure is neither built nor maintained
.. overconsumption, underinvestment, and appetite for risk
.. When problems grow large, boomers resort to deceit, and the huge degradation of truth suggests just how bad things have gotten. Whether it be misrepresentations by Worldcom, Lehman Brothers, Bill Clinton, Newt
.. The dubious draft deferments of the 1960s became the off-balance-sheet obligations of the 1990s, ginned-up weapons of mass destruction of the 2000s, and today’s phantom terrorism in Bowling Green and Sweden. “Alternative facts” are just the most recent consequences of the boomers’ declaration of epistemic bankruptcy.
.. If Trump has given America one gift, it’s a free hand to condemn the generation of which he is the impeachable id.
Will Donald Trump Cave on Social Security?
Sam Johnson, the chairman of the House Social Security subcommittee, introduced a billthat would slash Social Security benefits for all but the very poorest beneficiaries. To name just two of the bill’s benefit cuts, it would raise the retirement age to 69 and reduce the annual cost-of-living adjustment, while asking nothing in the way of higher taxes to bolster the program; on the contrary, it would cut taxes that high earners now pay on a portion of their benefits.
.. most current retirees rely on Social Security for more than half of their income, and future retirees are expected to rely even more on the program.
Recently, he put forth a proposal to reform the budget process by imposing automatic spending cuts on most federal programs if the national debt exceeds specified levels in a given year. If Congress passed Mr. Trump’s proposed tax cut, for example, the ensuing rise in debt would trigger automatic spending cuts that would slash Social Security by $1.7 trillion over 10 years, according to an analysis by the Center for American Progress, a liberal think tank. This works out to a cut of $168 a month on the average monthly benefit of $1,240. If other Trump priorities were enacted, including tax credits for private real estate development and increases in military spending, the program cuts would be even deeper.