The Realities of the US Fiscal Situation

I am quoting something here I have free subscription to for the moment through a friend, so I will not attribute any of it, but rest assured it is a respected international market analysis firm and this is all quotes from their recent writeup.

An informed and rational debate about fiscal priorities is impossible without the various sides first accepting the reality of the current situation. ....In the eyes of many opponents, the Republicans are portrayed as being in the pockets of the rich and the industrial military complex, while the Democrats are attacked for having a quasi-socialist agenda....These extreme views are exaggerations and act against achieving the compromise solutions that will be needed to deal the very real fiscal challenges.

The current situation.

1. U.S. government spending is not out of control at the moment:  federal outlays as a % of GDP are in line with their historical average.

2.  The U.S. has a small government by international standards:  out of 21other industrialized countries, only 4 have lower government spending as a % of GDP; and the gap cannot be explained by the absence of a publicly-funded universal health care system in the U.S.  (in other words, the U.S. spends less than most other countries after taking out what they spend on healthcare).

3.  The U.S. health care system is hugely inefficient compared to other countries, judging by the massively higher spending and poorer health results.   Obamacare may be flawed, but the previous status quo was unacceptable.

4.  The U.S. is a low-tax country, but the system is distorted by a the lack of a national sales tax ("value added tax") forcing excessive reliance on income taxes.

5.  The persistance of large fiscal deficits highlights the need for major reforms to both entitlements and taxes.  However, politicians of all persuasions face the challenge that entitlement programs are very popular with voters.

I long for a reasonable debate on all these issues, but I don't see it happening as to do so would require legislators to educate the voters and acknowledge the validity of other points of view.  I have no idea when that might happen.