Republicans demand to deal directly with the President.
The overwhelming feeling I'm getting is that Republicans are essentially saying, "We have marching orders to accept no increase in taxes whatsoever. You can cut into pensions, health care, or even token defence spending reductions, but not taxes."
I'm sympathetic to the fact that many of these Republicans were elected in regions where even the appearence of wavering on conservatism is grounds for immediate defeat. Were many of these Republicans to agree to new taxes even on the top 0.000001% of earners in the US, they would have the tea party express finding candidates that would merely need to scream, "He believes in taxing the talented, to pay for the lazy! Look at his record, he voted with the liberals!" and that would mean defeat for them.
I also don't believe we can just tax our way out of this hole of deficit and debt, but with the extraordinary shift of resources (or money if you will) going into the hands of the expressly wealthy over the last 30 years or so, and with taxes currently set at least historically low percentages, I can't see how a serious push towards tackling the debt and getting the government back into budget cannot include tax increases for the upper tier of earners. The money isn't in the middle class or the poor.
This isn't to say there are not other things that in reality are just as much a waste in principle, but even things like earmarks or waste in our schools, pale in comparison to the revenues lost during the Bush tax cut era. Those cuts which were always supposed to be very temporary in nature almost seem to be becoming what is seen as the standard acceptable rate.
I don't blame anybody in particular, it's human nature to hold on viciously to whatever advantages we can get. But it was a costly decision for Obama to agree to extend them, but since he did, and got tons of concessions for it, the Democrats cannot faulter on this principle now. It's terrible that with Aug 2nd coming sooner than we think, the Republicans are digging their heals in, I don't think the Democrats have any choice but to do the same, and let the damage whack the Republicans with their majority. They did it back during the Clinton administration while Gingrich was speaker, and it bit the Republicans then, it will bite them now.
Posted by fugu13 (Member # 2859) on :
quote:Those cuts which were always supposed to be very temporary in nature almost seem to be becoming what is seen as the standard acceptable rate.
While the cuts were passed with a deadline, they were never supposed to be temporary. They were always expected by those who passed them to be permanent. Not that keeping them all is a good idea, but the intent was definitely permanence.
Posted by BlackBlade (Member # 8376) on :
quote:Originally posted by fugu13:
quote:Those cuts which were always supposed to be very temporary in nature almost seem to be becoming what is seen as the standard acceptable rate.
While the cuts were passed with a deadline, they were never supposed to be temporary. They were always expected by those who passed them to be permanent. Not that keeping them all is a good idea, but the intent was definitely permanence.
Perhaps I misunderstood, but weren't the tax cuts passed as a response to what was seen as a booming economy and a surplus budget left over from the previous administration.
A sort of, "Hooray extra money, lets give it back to the American people."
Posted by SenojRetep (Member # 8614) on :
quote:Originally posted by BlackBlade: It's terrible that with Aug 2nd coming sooner than we think, the Republicans are digging their heals in, I don't think the Democrats have any choice but to do the same, and let the damage whack the Republicans with their majority. They did it back during the Clinton administration while Gingrich was speaker, and it bit the Republicans then, it will bite them now.
Failing to reach a deal on the debt limit would have significantly different consequences than failing to pass the budget.
Other than that, I'll quote something I posted in the $15 trillion debt thread:
quote:Just to give a sense of how much can be gained by increasing income taxes on the wealthy, consider Jan Schakowsky's suggested progressive tax rates, proposed as part of the "People's Budget" from the House Progressive Caucus. They would increase marginal rates to 45% on income over a million dollars and 49% on income over a billion dollars.
The result is about $80 billion a year (according to liberal estimates); again, that's not nothing, but it's nowhere near sufficient to cover deficits. There's just not that much you can do to increase revenues without increasing taxes on the middle class.
So if we're going to have a grown-up conversation about tax increases (which we should have) it needs to include discussion of middle class tax increases.
Posted by fugu13 (Member # 2859) on :
Returning projected surplus to taxpayers was certainly a part of the rhetoric, but so was that cutting taxes would make everyone better off long term. Many of the tax cuts didn't even phase in for years after, and the second round of tax cuts, in 2003, didn't even have the surplus to talk about.
Based on the score for the progressive income taxes under Schakowsky's budget, raising millionaires' marginal tax rates to 100% would increase revenues by at most $700-800 billion a year (and likely significantly less than that; such draconian tax rates would likely compel most millionaires to manage their money in ways unforeseen under the original estimates). Even using that upper bound on total increased revenues, it could cover about half of our current fiscal deficit.
Just another evidence that tax increases on the wealthy alone cannot solve our budget problems.
Posted by Lyrhawn (Member # 7039) on :
quote:From Blackblade: I'm sympathetic to the fact that many of these Republicans were elected in regions where even the appearence of wavering on conservatism is grounds for immediate defeat. Were many of these Republicans to agree to new taxes even on the top 0.000001% of earners in the US, they would have the tea party express finding candidates that would merely need to scream, "He believes in taxing the talented, to pay for the lazy! Look at his record, he voted with the liberals!" and that would mean defeat for them.
I have ZERO sympathy for this problem. It's a problem they've created entirely by themselves and for themselves. They've created a culture where any compromise and any deviation from the party line is tantamount to treason to the Constitution. They've made their bed, now they have to lie in it. The real problem is that they'd rather kowtow to their own stupid cult of ideology than do what's right for the country. Obama backing down on this particular issue so they can save face isn't worth it, in my opinion. Taxes have to go up. Maybe not dramatically, but they do. There's really no way to cut spending to solve the magnitude of this problem.
Gravy train is over.
Posted by Bokonon (Member # 480) on :
fugu, how bad would it be if we modified the capital gains tax (moved them up to 20/25 (or 30)%, and extended the time of the higher short-term tax to 3-5 years?
Posted by Speed (Member # 5162) on :
quote:Originally posted by BlackBlade: Were many of these Republicans to agree to new taxes even on the top 0.000001% of earners in the US...
I imagine it would take some pretty clever verbiage to increase tax on 3 people. Unless you just came out and named them in the bill. "The Bill Gates/Warren Buffett/Oprah Act of 2011" Posted by umberhulk (Member # 11788) on :
I don't want to say anything really dumb. Trust me, I really, really don't. But how does having debt to other countries really hurt us? Like, does it impact the value of the dollar a lot. Because based off of my very naive understanding, countries (China) keeps giving us shit. And they arent, to my unworldly knowledge, giving some ultimatum getting they're money back.
I probably just said something really dumb.
Posted by Orincoro (Member # 8854) on :
No, it's not dumb. It's a fundamentally important question, to which there is no simple answer.
Others can add their two cents, but the answer I would give you is this: think of the American national debt as less than a solid number figure.
All nations carry debt, and debt is not in itself a negative thing. Instead, the national debt is like a reputation. If you are an attractive economy with lots of potential for growth, and lots of stability, you will attract investors (eg, China). These investors will give you their money, and not ask for much more back, because giving you money is considered "safe." It will be sure to pay off for them in the long term.
However, if you have taken too much money, other countries become *less* sure that you will really ever be able to pay them back what they have lent to you. They believed in your potential for growth before, but now they don't know if you'll grow *that* fast. So now they will only give you money if they get promises of higher payment, to compensate for their added perceived risk.
If your debt reaches a point where you are spending more money servicing your debt (making the interest payments), than you doing paying down the debt (paying the principle amount), then the debt will continue to grow bigger and bigger. You default on your debts, and reneg on any promises of paying them. The fear from other countries that you might do this is the problem with an excessive debt (even a bigger problem than the prospect of defaulting), because it means that you are no longer able to borrow money cheaply, and so your economy suffers when it is already moving rather slowly. Money can't move to places where it needs to be, because it is feared that it will not be payed back in the end.
The paradox is that once default occurs, and transfers the liability for your debts to the lenders themselves, sparing you the pain of paying them back, your own economy is free to recover. You will be distrusted for a time, but quickly you will be able to shoulder debt, and so grow your economy again- what was a fool's bet at long odds becomes attractive again at short ones. So, though it is painful (politically and economically) to default on debt, it can pave the way for future growth, given a healthy enough international market.
Posted by Samprimary (Member # 8561) on :
quote:Originally posted by BlackBlade: I'm sympathetic to the fact that many of these Republicans were elected in regions where even the appearence of wavering on conservatism is grounds for immediate defeat. Were many of these Republicans to agree to new taxes even on the top 0.000001% of earners in the US, they would have the tea party express finding candidates that would merely need to scream, "He believes in taxing the talented, to pay for the lazy! Look at his record, he voted with the liberals!" and that would mean defeat for them.
Then defeat is (1) what they deserve, and (2) greatly beneficial to the future of our nation.
Posted by fugu13 (Member # 2859) on :
quote:fugu, how bad would it be if we modified the capital gains tax (moved them up to 20/25 (or 30)%, and extended the time of the higher short-term tax to 3-5 years?
Probably a pretty bad idea. Increasing the capital gains tax is tricky enough as-is (and raising it would mostly penalize the activities we want to encourage; the amount earned by the much-decried hedge fund managers is barely noticeable in the grand scheme of things), and if there's a horizon on it, everyone who pays a lot of capital gains taxes and has some flexibility in realizing those gains (such as hedge fund managers) will just restructure their income to avoid most of the taxes.
quote:I don't want to say anything really dumb. Trust me, I really, really don't. But how does having debt to other countries really hurt us? Like, does it impact the value of the dollar a lot. Because based off of my very naive understanding, countries (China) keeps giving us shit. And they arent, to my unworldly knowledge, giving some ultimatum getting they're money back.
Not dumb at all. Pretty much it doesn't hurt us, it helps us.
quote:The paradox is that once default occurs, and transfers the liability for your debts to the lenders themselves, sparing you the pain of paying them back, your own economy is free to recover. You will be distrusted for a time, but quickly you will be able to shoulder debt, and so grow your economy again- what was a fool's bet at long odds becomes attractive again at short ones. So, though it is painful (politically and economically) to default on debt, it can pave the way for future growth, given a healthy enough international market.
And given the credibility of avoiding another default in the future, which is the big reason people avoid loaning money to countries that have defaulted, especially if the default was viewed as not absolutely necessary. There's little point to lending vast sums if there's much of a chance you'll ultimately lose almost all your money on the deal, no matter how good the prospects seem at the moment. Some countries have managed to persuade int'l bond purchasers to return after a default, but some have had to finance further growth almost entirely without -- which, strangely, hasn't always failed to work.
There's little doubt a US default would be a devastatingly catastrophic event, making the economic troubles of the past five to ten years (yes, I do mean to extend it back that far) seem like candyland. There's no need for one, either; US debt is still within perfectly manageable territory (and is by far mostly held by US citizens). We need to start slowing its growth and then reducing it, because it went up at a disturbingly fast rate in the past decade, and it would be nice to have some buffer, but default isn't remotely a good option.
Posted by Geraine (Member # 9913) on :
The budget isn't impossible, it can be solved pretty easily.
Just invade China. Once we have them under our control, we can just force them to forgive our debts to them completely.
Problem solved.
Posted by FoolishTook (Member # 5358) on :
I think our debt should probably be a secondary issue to getting the economy growing again. That in itself will help shrink the debt.
Posted by fugu13 (Member # 2859) on :
The economy is growing again. If you mean, growing more, the question of how to do that is rather more complicated than most people seem to think it is.
Posted by natural_mystic (Member # 11760) on :
quote:Originally posted by FoolishTook: I think our debt should probably be a secondary issue to getting the economy growing again. That in itself will help shrink the debt.
I think that these can be done together to some degree - by which I mean a real debt reduction plan can be decided on to be phased in slowly over a few years so as not to imperil the very fragile recovery. In the short term I would do a second stimulus in the form of infrastructure projects. The apparent equanimity with which Washington views the current unemployment rate is most disconcerting.
As far as debt reduction goes, I think any credible plan involves raising taxes (phased in as appropriate), perhaps a return to Clinton-era levels, and a serious attack on the growth in the cost of medical care. (ACA does some good things in this regard, but does not go far enough).
Posted by Samprimary (Member # 8561) on :
quote:Originally posted by fugu13: The economy is growing again. If you mean, growing more, the question of how to do that is rather more complicated than most people seem to think it is.
Tax cuts.
*gestures wildly at a chart of the Laffer curve*
Also cut entitlement socialism programs. But mostly tax cuts.
Posted by fugu13 (Member # 2859) on :
Your comedy routine is getting a bit abstract, Samp Posted by BlackBlade (Member # 8376) on :
This chart has been making the rounds a lot these days.
Posted by Bokonon (Member # 480) on :
quote:Originally posted by fugu13:
quote:fugu, how bad would it be if we modified the capital gains tax (moved them up to 20/25 (or 30)%, and extended the time of the higher short-term tax to 3-5 years?
Probably a pretty bad idea. Increasing the capital gains tax is tricky enough as-is (and raising it would mostly penalize the activities we want to encourage; the amount earned by the much-decried hedge fund managers is barely noticeable in the grand scheme of things), and if there's a horizon on it, everyone who pays a lot of capital gains taxes and has some flexibility in realizing those gains (such as hedge fund managers) will just restructure their income to avoid most of the taxes.
See, I guess I don't necessarily think it would penalize activities we want to encourage. I would think that extending the "short-term" window would slow flipping of options/stock grants, forcing more people to stay "long" in companies, which I would think could provide some stability to the corporations. As far as raising the capital gains rate, it's been higher in the past, has it not? How bad were the effects then?
Also I would think keeping the long-term rate below the top marginal income tax rate, or even better (???) putting it on a progressive scale like income, could gain extra revenue, without much adverse effect.
Of course, this is just me brainstorming. I'm sure studies have been done around this.
One more thing; if one is interested in reducing unemployment, and increasing wages in real terms, what are some of the popular theories about doing so?
Posted by fugu13 (Member # 2859) on :
quote:I would think that extending the "short-term" window would slow flipping of options/stock grants, forcing more people to stay "long" in companies, which I would think could provide some stability to the corporations.
Short term capital gains are already taxed at whatever rate an individual normally pays. The lower rates are only for long term capital gains (more than a year). This makes sense, especially as the capital gains tax is on nominal dollars, not real dollars. So, someone who keeps an asset for twenty years and sees it go up by exactly the amount of inflation -- perhaps from $100 to $220 -- owes taxes on $120, despite its real value not having gone up at all. Having a higher capital gains tax rate will in more than a few situations discourage long term holding, as people will be more likely to get out when they can get some money in order to avoid the inflation penalty, especially if future inflation is very uncertain but current inflation is low (just like the current situation).
Also, publicly companies don't really have any major stability issues that I know of.
Much as I would like to get rid of the tax (and feel it would be a strong net benefit, especially in the long term), I'd be happy to include a small increase in it in tax reform (as I don't think that would be a super huge negative, and would result in increased revenue), but a limited time large increase doesn't make much sense. I don't think there's much to gain from making it progressive, either.
quote:One more thing; if one is interested in reducing unemployment, and increasing wages in real terms, what are some of the popular theories about doing so?
Doing both at once is the especially fun part . Some measures I'm coming around to are increased mandatory paid vacation time, stricter enforcement of existing overtime laws, and increases in tax rates at the top end.
Posted by Samprimary (Member # 8561) on :
quote:Originally posted by fugu13: Your comedy routine is getting a bit abstract, Samp
This is celebrity impersonations. Here, I'm impersonating far, far too many republicans.
Posted by PSI Teleport (Member # 5545) on :
quote:Originally posted by BlackBlade: This chart has been making the rounds a lot these days.
Thing's failing to take into consideration the other ways politicians would come up with to spend money if we weren't so bogged down already.
Posted by Samprimary (Member # 8561) on :
In ten minutes, Mt. Gox opens up again, and the internet libertarian currency of the future ~BITCOINS~ shall flow free; perhaps this is the way we can escape the drudgery of all this debt.
Posted by T:man (Member # 11614) on :
I keep reading the title as 'No New Texas!'
Really messing with my head.
Posted by Vadon (Member # 4561) on :
quote:Originally posted by fugu13:
quote:One more thing; if one is interested in reducing unemployment, and increasing wages in real terms, what are some of the popular theories about doing so?
Doing both at once is the especially fun part . Some measures I'm coming around to are increased mandatory paid vacation time, stricter enforcement of existing overtime laws, and increases in tax rates at the top end.
Oh there you go being all sensible-like. Here I was thinking of threatening violent revolution against the upper echelons of society if things don't improve, but you had to go and rain on my parade with rational thought.
Posted by fugu13 (Member # 2859) on :
Note that the top end will include a non-trivial part of what we commonly think of as the middle class (out of necessity). Also, I view other measures I've come out strongly for (notably tax code simplification) as pretty essential, too.
Posted by dabbler (Member # 6443) on :
As someone who will be leaving training in a year and entering a well compensated profession, I'm very willing to have taxes increase for the moderately-middle classes (say, slightly higher at 100k, and definitely higher at the 200k mark).
Posted by BlackBlade (Member # 8376) on :
Honestly, I think there's a 50/50 chance a compromise will be reached by August 2nd. I would be extremely surprised if Obama falls back on the 14th ammendment, but I think the Republicans haven't just drawn lines in the sand, they've carved into their own flesh and made blood oaths that higher taxes are not going to happen, come what may.
I think it's reckless and irresponsible, but then again it was reckless and irresponsible that we've gotten this deep into debt. I do find it somewhat laughable that Cantor's response to, "What compromises are you willing to make?" was in essence, "Just talking about raising the ceiling is all the compromise we can muster."
Spending cuts to programs such as Medicare, programs near and dear to the Democratic party have already been put on the table, and we can't even talk about letting the Bush tax cuts expire for Americans making over 250,000 a year? Subsidies for oil companies can't go on the chopping block?
I confess I kinda hate that fiscal discipline is suddenly the order of the day when the Republicans don't control the White House, if they are trying to reform as a party that's fine, but there's only two ways to get out of debt, spending cuts, and revenue increases. Right now the Republicans have indicated that not only are big spending cuts essential, they won't even consider cutting taxes so as to increase revenue unless those new taxes are met with cuts to spending that are equal to or exceed those taxes. In essence, you can rob Peter to pay Paul, but only if Paul personally matches whatever funds you took from Peter.
I think this is going to work out one of two ways.
1: The Democrats cave, pass the spending cuts in exchange for the Republicans voting for the treasury being able to continue spending. The Republicans look like heroes to their caucus.
2: Neither side caves, Aug 2nd arrives, Obama invokes the 14th ammendment and says the constitution authorizes him to raise the debt ceiling because the debt of the US is not to be questioned according to that section of the constitution. Republicans look like heroes, and they scream that Obama is just following the tenor of his entire administration, spending recklessly, expanding government, and usurping power.
edit: I guess what bugs me about the Republicans sudden shift to fiscal discipline, is that they are not owning up to their share of this debt. Obama didn't create our debt, though he certainly authorized spending that added to it significantly. Republicans need to own this problem as much as the Democrats, and not just use it as a political point they can use to rouse their base. Yes raising the debt ceiling is frustrating if you believe in small government, but those funds have already been spent, the government is not asking for more money they can spend, they are asking the Congress to authorize payment on things that have already been purchased. If start not paying the debt, then the credit of the US economy plummets in a very real way. Either we start paying for it now, or we can pay for it in other ways when the economy collapses.
[ July 12, 2011, 04:42 PM: Message edited by: BlackBlade ]
Posted by twinky (Member # 693) on :
The debt ceiling was not this big a deal before President Obama took office. It was raised several times under President Bush without a peep from the Republican leaders who are so adamantly against it now.
I think that is certainly an indication of using this for political gain rather than a true ideological position.
Posted by Aerin (Member # 3902) on :
The debt limit was raised several times under President Clinton as well. It has been raised under every president for past few decades.
I don't have the link, but I saw a graph showing who votes to raise the limit and when.
Republicans vote to raise the limit when the Republicans are in power. They vote against when the Democrats are in power.
Democrats vote to raise the limit when the Democrats are in power. They vote again when the Republicans are in power.
It was truly eye-opening.
Of COURSE this is all for political gain. It's ALWAYS for political gain primarily. BOTH SIDES are jostling for political gain.
This includes then-Senator Obama:
quote:The votes to raise the debt ceiling -- there have been 10 since 2001 -- are famous for political posturing. Our research showed that President Obama is no exception. Back in 2006, he joined with other Senate Democrats to vote against raising the debt limit, a measure supported by President George W. Bush.
"The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. It is a sign that the U.S. Government can't pay its own bills," Obama said.
So no hand-ringing and holier-than-thou attitudes about which party is evil when. It doesn't stand up to scrutiny.
Posted by BlackBlade (Member # 8376) on :
What a convulted way of dealing with this issue. This issue should not be one where these sorts of gymnastics are required. It also gives the Republicans an out so far as actually solving this issue. They can instead wash their hands of the whole thing and portray the Democrats as forcing their agenda but still get some of these spending cuts. It seems they are banking on Democrats being willing to do anything to prevent the treasury from running out of money.
The problem is revenue as part of the total solution, the Republicans needs to stop coming up with solutions that don't require their sacrificing from their side of the table.
Posted by Aerin (Member # 3902) on :
quote:Originally posted by BlackBlade: This chart has been making the rounds a lot these days.
Megan McArdle explains why this is a disingenous chart.
In short:
1. How long do you think Democrats will try to keep milking the "Blame Bush" thing? You know, at some point, you actually have to govern or admit you can't.
2. Each line item gets approved to be in the bill on its own. You could make a chart have ANYTHING be the final straw. If I were making it, it would have farm subsidies and Medicare at the top, and it would be just as true.
Posted by BlackBlade (Member # 8376) on :
Aerin: Thanks for the links, I'll have a look at them in a bit hopefully.
Posted by kmbboots (Member # 8576) on :
Would you feel better if, instead of referring to them as "the Bush era tax cuts", we referred to them as "the tax cuts from 2001 and 2003 that were supposed to have expired by now"?
Posted by kmbboots (Member # 8576) on :
BlackBlade, the link basically just says that we can't blame President Bush for what congress passed during his term and that President Obama should have been able to change it by now.
It doesn't address whether the tax cuts should be changed if people are all that bent about the deficit which is what the data indicates.
Posted by Aerin (Member # 3902) on :
No, I'd feel better if you understand that all previous legislation led to the current situation, not just the previous legislation you don't like.
And no, read it again. It says that treating some budget decisions like holy inevitabilities while cherry picking other budget decisions to be the bad guys is deliberately foolish and disingenous.
But hey, it only needs to fool some of the people, so I guess it worked.
Posted by kmbboots (Member # 8576) on :
All previous legislation? Really? I am pretty sure that some legislation is more responsible than other legislation.
Posted by Aerin (Member # 3902) on :
Sure - the legislation that hasn't been revoted and doesn't need to be renewed. Which...of course are not tax cuts of any kind. You are referring to the entitlements.
However, the tax cuts were due to expire. Congress voted to keep them and Obama signed the bill. Man up and take responsibility, people.
-----
KMB, do you really not understand that if your budget includes 13 line items and you only have enough money coming in to pay for the first 10, it is not only the last three items that should be examined?
Posted by fugu13 (Member # 2859) on :
quote:BlackBlade, the link basically just says that we can't blame President Bush for what congress passed during his term and that President Obama should have been able to change it by now.
You should reread the link. What was passed by Congress and signed by Bush didn't extend until now (though, granted, many of those involved no doubt wanted it to continue). It was only with the positive action of Congress and signature of Obama that the tax cuts continue (in large part). Laying that all at the doorstep of Bush is stupid.
quote:It doesn't address whether the tax cuts should be changed if people are all that bent about the deficit which is what the data indicates.
Of course it doesn't. It's addressing the fallacious way blame has been assigned.
Posted by kmbboots (Member # 8576) on :
And extending the tax cuts for those making over $250,000 a year was the wrong thing to do. Sadly, because stonewalling Republicans in the Senate were holding unemployment benefits hostage, it had to be done or many families would suffer and the economy would take a further hit.
So, yeah. Democrats were responsible for caving in to Republicans.
Posted by Aerin (Member # 3902) on :
*laugh* That is one impressive determination to toe the party line. I guess everyone wants to imagine they are always the good guys.
I do wish you understood more about economics and politics if you insist on posting in these threads.
Posted by kmbboots (Member # 8576) on :
quote:Originally posted by Aerin: KMB, do you really not understand that if your budget includes 13 line items and you only have enough money coming in to pay for the first 10, it is not only the last three items that should be examined?
Do you not understand that if each of those three items make up more of your budget than the other ten combined, it makes sense to look at those?
Posted by fugu13 (Member # 2859) on :
quote:And extending the tax cuts for those making over $250,000 a year was the wrong thing to do. Sadly, because stonewalling Republicans in the Senate were holding unemployment benefits hostage, it had to be done or many families would suffer and the economy would take a further hit.
As a substantial part of the deficit is due to the cuts for those making under $250k a year, you still don't get to blame the future deficit crunch on Bush.
Posted by kmbboots (Member # 8576) on :
Fugu13, I don't care about who gets blamed; I care about what policies are responsible and who votes for those policies and why.
Posted by fugu13 (Member # 2859) on :
quote:BlackBlade, the link basically just says that we can't blame President Bush for what congress passed during his term and that President Obama should have been able to change it by now.
So long as you correct your misunderstandings.
Posted by kmbboots (Member # 8576) on :
quote:Originally posted by Aerin: *laugh* That is one impressive determination to toe the party line. I guess everyone wants to imagine they are always the good guys.
I do wish you understood more about economics and politics if you insist on posting in these threads.
And I wish that you did. How do you recall what happened with the vote to extend the tax cuts? And, again, I don't care if we call them the Bush tax cuts or the 2001 and 2003 tax cuts.
Posted by twinky (Member # 693) on :
quote:Originally posted by Aerin: Republicans vote to raise the limit when the Republicans are in power. They vote against when the Democrats are in power.
Democrats vote to raise the limit when the Democrats are in power. They vote again when the Republicans are in power.
That's unsurprising. This time, however, the sticking point is the Republican refusal to countenance tax increases. I don't see a realistic route to surplus for the US that doesn't include tax increases. Do you?
Posted by BlackBlade (Member # 8376) on :
Is it really likely Moody's would downrate us to AA by mid-late July if progress isn't made? That seems extreme.
Posted by fugu13 (Member # 2859) on :
Reading the article, they only say they'll begin a process in mid-late July for evaluating if the rating should be downgraded; that gives them plenty of time to see what happens on August 2nd while still reviewing.
Posted by BlackBlade (Member # 8376) on :
quote:Originally posted by fugu13: Reading the article, they only say they'll begin a process in mid-late July for evaluating if the rating should be downgraded; that gives them plenty of time to see what happens on August 2nd while still reviewing.
I thought that's realistically what would happen, the article seemed unclear, tending towards alarmist on that point.
Posted by BlackBlade (Member # 8376) on :
McConnel is starting to read the writing on the wall.
Regarding what Obama will say going into reelection if no solution is settled on,
quote:“He will say Republicans are making the economy worse,” Mr. McConnell, who is recognized as one of his party’s top political strategists, said in an interview with the radio host Laura Ingraham.
“It is an argument that he could have a good chance of winning and all of the sudden we have co-ownership of the economy. That is a very bad position going into the election.”
That's exactly right, Republican 'co-ownership' of the economy is exactly what will be completely clear if this isn't resolved. Spending cuts are already on the table, but tax loophole closing won't even be considered. It's not hard to portray your opposition as being irresponsible, cynical and unpragmatic if they are essentially all three of those things.
It seems terrifying that at this moment, the Republican party honestly seems stuck and unable to move. Establishment Republicans like Boehner thought it would be business as usual and that a deal would ultimately be reached, Michelle Bachmann has decided to jump on the Tea Party train and is trying to call a bluff that honestly I don't think anybody is making right now. She's basically saying, "I've been in the senate a long time, this is all a ruse, I'm voting no no no, don't worry, nothing bad will happen."
It's so stupid that this is going on. What ultimately is becoming horribly clear is that no deal can be made, the Republican party does not have a concensus within their own party, there really are fools willing to see what happens when Aug 2 comes along.
Posted by kmbboots (Member # 8576) on :
How did they not have "co-ownership" of the economy before? That is what is bizarre.
Posted by fugu13 (Member # 2859) on :
quote:I thought that's realistically what would happen, the article seemed unclear, tending towards alarmist on that point.
The article the WP linked about the potential downgrade, I mean. The WP article is pretty alarmist (well, there's a lot to be alarmist about the possibility of the US going down in rating, but it isn't quite as likely as the article makes it seem. What all the ratings agencies have basically said is if the debt ceiling isn't raised in time, the rating is probably going down).
Posted by BlackBlade (Member # 8376) on :
quote:Originally posted by kmbboots: How did they not have "co-ownership" of the economy before? That is what is bizarre.
Mmhmm.
Posted by BlackBlade (Member # 8376) on :
This is sickening, if true.
Reid says Cantor is the only obstacle to a deal being made. Washington Post
Cantor stands to gain financially if American Bonds are downgraded to AA from AAA.
It's quite possible Cantor shorted the treasury as many have based on the belief the economy is going to get worse before it gets better. It's also possible he simply has accountants managing his investments that are operating on that philosophy. But it is also possible he is fully cognizant that he himself stands to gain financially if no deal is reached, and that he can also utilize the fallout politically by trying to spin the narrative and insist he was just sticking to his refusal to raise taxes, and that ultimately Obama is the one who let our rating drop.
Disgusting if true.
edit: Fixed second link.
[ July 14, 2011, 04:22 PM: Message edited by: BlackBlade ]
Posted by Mucus (Member # 9735) on :
I dunno, at $15,000 with an ETF that only moves -200%, I have to think that there would be easier ways to make money from (potential) corruption.
Posted by kmbboots (Member # 8576) on :
Here is a link to Rep. Cantor's income statements.
The financial gains thing is a complete nonstory. He's got millions in investments set to move the other way if treasuries do badly; this is a small, sensible hedge to moderately counteract the impact of a drop in US ratings. He'd still lose considerable money, just less than if he didn't have the hedge.
In fact, I'm more worried that there are people in Congress with lots of money tied up in investments who don't have hedges like this. It's a smart financial move to make, given the uncertainty about the future of US ratings.
Posted by Blayne Bradley (Member # 8565) on :
Can the President simply just sign an executive order to raise the debt ceiling?
Posted by fugu13 (Member # 2859) on :
No.
edit: I'm sure someone can make an argument the other way, but I'm pretty sure which way it would come out. The big question is less whether he can raise the debt ceiling or not and more how much discretion he has in picking which spending gets cut.
Posted by odouls268 (Member # 2145) on :
It's a pretty simple solution really. No spending money that doesn't exist.
Apocalypse inbound. for the record, I saw this coming. I told the guy sitting next to me at the time when I thought of it in 2008. His name, ironically enough, was Noah.
Posted by Destineer (Member # 821) on :
quote:Originally posted by fugu13:
quote:One more thing; if one is interested in reducing unemployment, and increasing wages in real terms, what are some of the popular theories about doing so?
Doing both at once is the especially fun part . Some measures I'm coming around to are increased mandatory paid vacation time, stricter enforcement of existing overtime laws, and increases in tax rates at the top end.
Do you think reducing the work week along with these measures would be of further help?
Posted by fugu13 (Member # 2859) on :
I'm not so hot on reducing the work week, overall. Work weeks are already pretty well protected for lower level employees (in that employers have to pay them overtime -- note I call for more enforcement of that), and for higher level employees the work week seems more dominated by industry norms (that don't seem out of line, globally, and will probably continue somehow whatever legislation attempts). Additionally, I think the extra work week crunch that is happening right now is more a symptom of trying to do more with less staff. The redundancy required by more vacation time should ameliorate that pressure indirectly.
Posted by Geraine (Member # 9913) on :
I'd like to point out that President Obama voted against raising the debt limit before he was president, so using the argument that "it has been raised before so what is the problem now?" is kind of lame.
Posted by Mucus (Member # 9735) on :
Yeah, we watch the Daily Show too.
Posted by kmbboots (Member # 8576) on :
And President Obama has said that he was wrong to do so. Also, we weren't in a (or just barely climbing out of) a recession at the time.
Posted by Jon Boy (Member # 4284) on :
quote:Originally posted by Geraine: I'd like to point out that President Obama voted against raising the debt limit before he was president, so using the argument that "it has been raised before so what is the problem now?" is kind of lame.
quote:Originally posted by kmbboots: And President Obama has said that he was wrong to do so. Also, we weren't in a (or just barely climbing out of) a recession at the time.
So in other words, the President is just learning this stuff as he goes along.... Alright, good to know.
Jon, while yes it is a fallacy, it still applies. I'm all for people changing their positions, but the reason I brought it up is because it shows the President has no idea what he is doing. He has changed positions so many times it makes him look weak and unsure what he is doing.
[ July 20, 2011, 07:56 PM: Message edited by: Geraine ]
Posted by Bella Bee (Member # 7027) on :
quote: So in other words, the President is just learning this stuff as he goes along....
Well, if people could only elect candidates who already knew all there was to know about being president (and/or were psychic), the list of possibilities would be kind of short.
And I'd have thought it would be nice to have someone who might actually learn from their mistakes. But there you go.
Posted by BlackBlade (Member # 8376) on :
quote:Originally posted by Jon Boy:
quote:Originally posted by Geraine: I'd like to point out that President Obama voted against raising the debt limit before he was president, so using the argument that "it has been raised before so what is the problem now?" is kind of lame.
Oh sweet heavens above, I have so needed a term for this concept. It feels positively liberating to finally have one. Thanks!
Posted by Rakeesh (Member # 2001) on :
quote:So in other words, the President is just learning this stuff as he goes along.... Alright, good to know.
Just to clarify, she says, "Yes, he opposed it when circumstances were (drastically) different," with the clear implication that opposing it in one instance and then in another very *different* instance isn't necessarily contradictory.
Your response, "So he's learning it as he goes!"
C'mon, man. That is so...so *partisan* and just bizarre an exchange that I'm surprised at you, Geraine. It really appears-because your zinger doesn't at all apply to what was said-that you arrived with your mind made up, and little things like, y'know, context arent about to be considered.
Posted by Jon Boy (Member # 4284) on :
quote:Originally posted by Geraine: Jon, while yes it is a fallacy, it still applies.
Um . . . how, exactly? The fact that he voted one way before has no bearing on the question of whether or not we need to raise the debt ceiling <i>now</i>. Unless you just want to consider emotional appeals rather than logical ones.
Posted by Rakeesh (Member # 2001) on :
The only way it would count (for rational, not political reasons) that he voted one way before and is proposing different methods now, it seems to me, is if circumstances were identical or at least similar.
If they are, then by all means the call of flip-flop! is fair game. But (to get really simplistic, since it seems that's what we're doing), just because I oppose wearing a rain coat on a hot sunny day doesn't make me some sort of hypocrite if I wear one in a deluge.
Posted by Geraine (Member # 9913) on :
You are right Rakeesh, it was a partisan statement. My apologies. I guess I'm just frustrated with this whole ordeal. I get passionate and lose my wits at times.
Does anyone know why the Democrats are opposing a balanced budget amendment? I've tried to look for a reason why but I can't. I assume it is the other stuff in the bill Republicans are proposing. A balanced budget amendment just makes sense to me.
It isn't like this just popped up all of the sudden. We have had years to deal with this. For both parties to wait this long to try and get something done a couple of weeks before the deadline is pretty stupid.
I'm actually torn as to whether or not I agree with the debt ceiling being raised. At what point do we say enough is enough? What GOT us here in the first place? I think people are trying to fix this without really explaining to the American people how we got this much debt. Obviously spending is still an issue. Many think the Government should be spending more, but I see this as perpetuating the problem.
Posted by mr_porteiro_head (Member # 4644) on :
quote:The only way it would count (for rational, not political reasons) that he voted one way before and is proposing different methods now, it seems to me, is if circumstances were identical or at least similar.
It seems to me that the same argument works both ways.
Posted by kmbboots (Member # 8576) on :
Geraine, there are(at least) two ways to address a deficit. One is to cut spending. Another way is to raise taxes. Now. Raising taxes on the middle class makes little sense when we want to put more money into the economy. That is because people without a lot of money to spend, spend what they have. Cutting government spending when we want to put more money into the economy is also a bad idea because government spending is still spending and that puts money into the economy. It doesn't just vanish, it goes to buy things and pay people. (Well maybe we could stop paying off Afgan warlords and such but that is another problem.)
And cutting government assistance now, when people are hurting because of unemployment would cause people to suffer.
The time to cut spending is when the economy is good.
Now. What does make sense is a reasonable tax on people who already have more money than they can spend.
I am reasonably sure that Democrats would be willing to compromise on a bill that included getting rid of the tax cuts on the very wealthy.
Do you know why the Republicans are adamantly opposing raising taxes on the very rich?
Posted by Bokonon (Member # 480) on :
Geraine, the reason this deadline is more important is because the House is forcing the issue. They control the purse-strings, after all. There is no procedural reason why we can't raise the debt ceiling right now in the same way we have done it in the past, and deal with the cuts/taxes separately.
Here's my take on why we are here, and why no one wants to explain it.
It's easy to see major factors (I do not claim this list is complete) as to why the debt is what it is now.
- Two (now a couple smaller ones more) wars funded by debt, essentially. And until the current president were kept off the books (due to Congress and the previous president) - Tax cuts passed that were not matched by either revenue in other places (closing loopholes) or cut spending. - An aging population, with lower population growth, causing increased stress on Social Security and Medicare - A healthcare system that is the worst, by far, in terms of cost efficiency. This ties into the point above. - Funding a military industrial complex, instead of a military. - Worst economic downturn in 70+ years/Protracted elevation of the unemployment rate means continuing reduced revenue for the government from taxes.
Welfare (as in food stamps, unemployment benefits, housing subsidies) isn't the problem.
The Democrats have agreed to many more cuts than revenue increases (something like 3:1, if I recall). The Republicans (in the House, the Senate Republicans seem more willing, if support for the "Gang of Six"/Simpson-Bowles plan is taken at face value, which I do) are completely unwilling to vote for anything but the most token revenue increases.
After all, despite the richest of the rich paying a huge amount of the taxes, EVERYONE'S _federal_ tax burden is at it's lowest in forever. Lower than the 90s boom, the 80s boom, the 70s stagflation, etc...
We've gone to the Laffer Curve well enough times at this point that trying to use it as a justification again is, well, laughable. We need revenue hikes, whether from closing loopholes, eliminating/reducing deductions or simply raising taxes. We also need cuts, but the biggest places are Military, and health care. And the best solution [EDIT: for health care], given by the actual experience of the world, is NOT an employment-based private system, or even Obama's/Romney's/Early-90's Republican plan of universal coverage by fiat with exchanges. It's some form of single payer, anything to reduce total costs.
And realize that in the short-term, any cuts to the government budget will likely reduce growth of the economy in the near term. If cut deep enough, it could even push the economy back into a recession.
Essentially, the House Republicans are calling for austerity measures of the kind implemented in England and other places in response to the financial crisis. Notably, these countries are currently growing more slowly than the US. That said, it may be that the short term (5 years or so) pain of the measures may lead to faster growth later. That said, what do you tell the millions of citizens out of work that they just need to hang on for another few years, and things should be rosy, probably? Oh, and btw, your unemployment runs out in about a year. Oh, it is shown that the chronically unemployed are likely the last folks to regain decent jobs once the economy does pick up (this is likely a human nature kind of issue, which no Congress can effectively control).
In case you haven't noticed, any solutions (left wing/right wing) are going to tick off large swaths of the populace. The solutions have trade-offs.
That's why no one wants to explain it. It's complicated and there isn't a free lunch.
[ July 21, 2011, 02:07 PM: Message edited by: Bokonon ]
Posted by fugu13 (Member # 2859) on :
quote:Raising taxes on the middle class makes little sense when we want to put more money into the economy. That is because people without a lot of money to spend, spend what they have. Cutting government spending when we want to put more money into the economy is also a bad idea because government spending is still spending and that puts money into the economy.
There is no way out of the deficit for the foreseeable future without either cutting government spending or raising taxes on a substantial part of the middle class.
Also, while it is anemic, we're in an economic "boom" right now, not a bust. What we're looking at as the next part of the cycle is a *further* downturn (probably not a very bad one, as we didn't go "up" much) -- though nobody knows when, or if the "boom" will become more of an actual boom first. Now is quite possibly the *most* feasible time for spending cuts or tax increases for the next ten years-ish, and we definitely need to act within that time frame, at least some.
Posted by kmbboots (Member # 8576) on :
We may be defining middle class differently. I am mostly talking here about people who are just getting by and who can't really squeeze much more out for taxes.
Which probably isn't a good use of the term. I need to break it down into smaller pieces.
Using myself as an example: I pretty much live paycheck to paycheck but don't buy anything on credit and have no debt but medical bills. I rent and my rent and utilities take up a little more than a third of my take home pay. I am saving for a sofa but have little savings other than my employer retirement account. Yes, I know the way I manage my money is appalling, but my point is that I could pay a little bit more in taxes and still buy "stuff" and increase demand. People who couldn't manage to pay their bills and still buy some "stuff" shouldn't have their taxes raised. People who already can buy tons of stuff but who have lots of money left over should have their taxes raised.
Posted by fugu13 (Member # 2859) on :
quote:We may be defining middle class differently. I am mostly talking here about people who are just getting by and who can't really squeeze much more out for taxes.
That's never really been the definition of middle class. That's pretty much the definition of *poor* (though you probably mean "just getting by" differently).
Middle class is very hard to define, but there's pretty broad agreement that households of two to four people earning $40k to $95k a year fall into the middle class. An individual earning $25k per year would frequently be considered middle class, especially in rural and smaller urban areas. In some areas, an individual earning $100k per year would still be considered middle class.
quote:People who already can buy tons of stuff but who have lots of money left over should have their taxes raised.
If you want to address the deficit without moderately substantial spending cuts, you're looking at tax increases that extend at least down to $80k a year in household income. While there would be larger tax increases on people earning more income, there aren't enough of them to take care of the deficit.
Posted by BlackBlade (Member # 8376) on :
quote:Originally posted by Geraine: You are right Rakeesh, it was a partisan statement. My apologies. I guess I'm just frustrated with this whole ordeal. I get passionate and lose my wits at times.
Does anyone know why the Democrats are opposing a balanced budget amendment? I've tried to look for a reason why but I can't. I assume it is the other stuff in the bill Republicans are proposing. A balanced budget amendment just makes sense to me.
It isn't like this just popped up all of the sudden. We have had years to deal with this. For both parties to wait this long to try and get something done a couple of weeks before the deadline is pretty stupid.
I'm actually torn as to whether or not I agree with the debt ceiling being raised. At what point do we say enough is enough? What GOT us here in the first place? I think people are trying to fix this without really explaining to the American people how we got this much debt. Obviously spending is still an issue. Many think the Government should be spending more, but I see this as perpetuating the problem.
Geraine: You may not think this, but it seems like you equate the debt ceiling with say the card limit on a credit card. They aren't the same thing.
The debt ceiling does not dictate how much money the government can spend, rather it indicates how much debt the government intends to honor. In this particular instance, the government has already allocated or to use a crude word, spent these funds. Refusing to raise the ceiling does not force the government to balance it's cheque book. Rather, we are saying the credit of the US Treasury is not willing to actually pay on these debts.
As far as a balance budget ammendment goes, it sounds like a great idea in theory, the government only spends that which it has money to spend. But in reality it would mean that if there are unforseen costs that need to be paid that are not a part of that budget tough cookies do without. If you needed a loan for emergency heart surgery, would you feel comforted if your bank said, "I'm sorry sir, you asked us not to authorize use of funds that are not a part of your stated budget, but we laud your fiscal responsibility."
Some of the most critical expenditures in our history have required us to take on debt. The Louisiana Purchase, the space program, WWI/WWII. Could we simply have the congress authorize use of these emergency funds if the situation required it? Yes, but if we are being practical that means Congress has to decide together whether to act quickly and efficiently, and a Democracy is not a good vehicle for that sort of thing. It would mean that congressmen and congresswomen would play their petty games by witholding votes for an important expenditure just because they could. Sending the Air Force to Libya? Not this time. Expanding Unemployement benefits in a recession. Sorry Jack.
It makes more sense to keep Congress involved with authorizing the final budgets as submitted by the Executive Branch, but giving the Executive Branch the leeway it needs to make sudden quick decisions with the funds it has been given.
Posted by kmbboots (Member # 8576) on :
quote:Originally posted by fugu13:
quote:We may be defining middle class differently. I am mostly talking here about people who are just getting by and who can't really squeeze much more out for taxes.
That's never really been the definition of middle class. That's pretty much the definition of *poor* (though you probably mean "just getting by" differently).
Middle class is very hard to define, but there's pretty broad agreement that households of two to four people earning $40k to $95k a year fall into the middle class. An individual earning $25k per year would frequently be considered middle class, especially in rural and smaller urban areas. In some areas, an individual earning $100k per year would still be considered middle class.
quote:People who already can buy tons of stuff but who have lots of money left over should have their taxes raised.
If you want to address the deficit without moderately substantial spending cuts, you're looking at tax increases that extend at least down to $80k a year in household income. While there would be larger tax increases on people earning more income, there aren't enough of them to take care of the deficit.
If I were making $80k a year, I could (should) pay a lot more in taxes without severe hardship. I make about $45k now. Of course, I don't have children to consider. I live in an urban area if that makes a difference.
Posted by fugu13 (Member # 2859) on :
quote:If I were making $80k a year, I could (should) pay a lot more in taxes without severe hardship. I make about $45k now. Of course, I don't have children to consider. I live in an urban area if that makes a difference.
You'd already be paying a good bit more in taxes, of course .
You'd see your taxes go up a decent bit in any tax-increase based deal to majorly reduce the deficit (your earnings are higher, a lot higher, than a three or four person household earning $80k in a similar location). If you feel you don't have the wiggleroom for that (I suspect you do, given your description of your spending habits; you probably have at least $10k more of discretionary income before taxes than a typical family of three earning $80k per year, but I don't feel that means the gov't needs to take that away), then your only alternatives are to not support all that much deficit reduction or to support spending cuts (in addition to some tax increases on the higher end).
Posted by Destineer (Member # 821) on :
Isn't there a third way? Couldn't we let deficit reduction wait until after the current slump is over, and people are making more money as a whole?
Posted by fugu13 (Member # 2859) on :
quote:Isn't there a third way? Couldn't we let deficit reduction wait until after the current slump is over, and people are making more money as a whole?
Unfortunately,
quote:while it is anemic, we're in an economic "boom" right now, not a bust. What we're looking at as the next part of the cycle is a *further* downturn (probably not a very bad one, as we didn't go "up" much) -- though nobody knows when, or if the "boom" will become more of an actual boom first. Now is quite possibly the *most* feasible time for spending cuts or tax increases for the next ten years-ish, and we definitely need to act within that time frame, at least some.
edit: and I did mention the third way, with "not support that much deficit reduction" Posted by kmbboots (Member # 8576) on :
I hope I have not given the impression that there can be no spending cuts. I do think that most spending cuts other than Social Security and Medicare/Medicaid or defense are small drops in the bucket, but certainly there is some fat and waste to be trimmed in any budget.
I don't think we can morally cut Social Security or Medicaid/Medicare but I would be fine with a raise in retirement age and need testing. And we should lift the cap.
Not wasting (what are we up to now?) $1,225,000,000,000 on stupid wars would have been a good idea, too. We should skip that in the future.
Perhaps more gentle deficit reduction?
Just out of curiosity, why are we looking at a further downturn next?
Posted by Destineer (Member # 821) on :
quote: I don't think we can morally cut Social Security or Medicaid/Medicare but I would be fine with a raise in retirement age and need testing.
I'd be overjoyed by the latter, but probably not OK with the former. It seems to me that the retirement age is too high right now for people whose jobs involve much physical labor.
Posted by kmbboots (Member # 8576) on :
Destineer, that is a good point. I wonder if that could be managed with needs testing?
Posted by fugu13 (Member # 2859) on :
quote:I don't think we can morally cut Social Security or Medicaid/Medicare but I would be fine with a raise in retirement age and need testing. And we should lift the cap.
For social security, raise the retirement age slightly and add means testing and that is a spending cut (and a perfectly fine spending cut at that). I'd also like to decrease the social security tax rate while removing the cap on taxed income, leaving it revenue neutral, though that isn't a spending cut, just making things less regressive.
quote:Just out of curiosity, why are we looking at a further downturn next?
The economy moves in "boom" and "bust" cycles. That just means improving or declining. Right now we're improving, so the next cycle will be a bust. It might be the boom becomes stronger first, of course, but signs aren't pointing that way, and a boom only lasts six or seven years. We're in year two since the GDP started moving up again, so we have perhaps four or five years of increase (quite possibly slow increase, at least for most of them) left before the next bust. Imposing spending cuts and tax increases in or a year or two before a bust would be a very bad idea, so we're talking about implementing them over the next two to three years, at latest, pretty much, and since the economy's not doing all that fantastic, either, that means passing them now and phasing them in over that time period.
Posted by kmbboots (Member # 8576) on :
All of that makes sense even if it is a tad depressing. I would guess that employment isn't kind enough to lag as much on the downward slide as it does on the upward climb.
Posted by fugu13 (Member # 2859) on :
It does somewhat, but even so it's a bad idea to raise taxes and cut spending right then: it'd accelerate the loss of employment, right when that'd be the worst thing.
Posted by kmbboots (Member # 8576) on :
Am I understanding that there isn't anything we can do to alter the timing of these cycles? That there are cycles makes sense; that we can't affect those cycles makes less sense.
Posted by Bokonon (Member # 480) on :
We can flatten them, or exacerbate them, as far as history seems to tell. And there have inevitably been unintended consequences.
Posted by fugu13 (Member # 2859) on :
I'm certain we can and do affect the timing. However, I'm also pretty certain that the interactions are so hideously complicated, and the instruments we have available to manipulate the situation so gross in scale, that even if we understood about it a heck of a lot better, we still wouldn't be able to manipulate it with intent.
We can definitely affect their size with some intent, though, and we know a decent bit about how to do that. It just turns out that increasing the heights of booms increases the depths of busts, and decreasing the depths of busts decreases the heights of booms (the latter situation is the goal of neo-Keynesian economics). Timing, though, is extremely difficult, in large part due to the interactions with politics. Measures intended to decrease busts can end up boosting booms, and leading to bigger busts down the road, and so forth.
edit: plus, the political willpower to retard booms sufficiently to improve busts a lot has proven almost impossible to come by (unsurprisingly).
Posted by kmbboots (Member # 8576) on :
So...our last resort is revolution? Posted by fugu13 (Member # 2859) on :
A revolutionary government would have even less willpower to enact such laws.
Posted by Raymond Arnold (Member # 11712) on :
I want to weigh in on these debates, but the more effort I've put in, the more I've realized that loads of really smart people dedicated their lives to studying them still don't really know anything for sure.
Posted by Raymond Arnold (Member # 11712) on :
The cap on spending they are demanding will never be approved, it doesn't make sense historically, nor does it make sense for the programs we already have in place, and yet they are willing to see just what happens if the government defaults.
Insanity.
Posted by fugu13 (Member # 2859) on :
I wish the saner Republicans had the guts to tell them to take a hike, like they want to. Unfortunately, they seem to view that as a likely route to ousting by the tea party. Sadly, they might be right, not because the tea party is actually all that large an influence, but because it has turned out to be successful at mobilizing key minorities of voters on taxing/spending issues, often for bad reasons, in Republican primaries.
I think the most likely route out for saner Republicans will be a few key Republicans with gravitas and influence (and not worried or not running for reelection) speaking out against the insanity.
Posted by Stray (Member # 4056) on :
quote:The president said he was offering to cut $1tr in discretionary spending, while seeking $1.2tr in revenues, which could have been achieved with raising income tax rates.
That seems like a low ball offer for spending cuts, compared to what Obama has offered previously. Not to mention 1.2 trillion in revenue from income tax increases doesn't seem right, I was under the impression the White House had given up on increasing taxes while favoring the Bush Tax cuts expiring, and closing loopholes.
The article seems a bit vague, we may need more details, but I am very surprised to hear Obama be so frank and negative about Boehner. Boehner seemed to be our best hope from the Republicans in reaching a deal.
So much for this week. We've got one more before there's hell to pay.
edit: Another thing though is Boehner refusing to talk with Obama and choosing to work with Senate/House leaders is a big slap in the face for Pres. Obama. He may have had legitimate concerns with "new taxes", but it's hard to know the particulars, we have to rely on their descriptions of why talks broke down.
Posted by Bokonon (Member # 480) on :
BB:
quote:had given up on increasing taxes while favoring the Bush Tax cuts expiring, and closing loopholes
Haven't you heard, those things are tax increases, these days...
Posted by Orincoro (Member # 8854) on :
I get so pissed when grocery stores *raise* their prices and stop offering two for one deals. And I hate that I can't get the same coupon prices on multiple items in one visit! What right do they have to RAISE those prices? What right?
Posted by Samprimary (Member # 8561) on :
At the last minute, Boehner added a repeal of the Healthcare Reform mandate to his list of demands. That's why he walked.
Samp: Well the government suddenly removing the requirement for an individual mandate would have been hilarious to behold as insurance companies for once would have been suckered into dropping their disgusting practices in exchange for getting us all in their networks, only to have the situation suddenly turned on its head.
But that seems like such a weird thing to haggle over at that point, maybe Boehner brought up the mandate so that he'd have more to haggle with since TBH the Republicans basically came to the table with virtually nothing.
Posted by Orincoro (Member # 8854) on :
quote:Originally posted by Samprimary: At the last minute, Boehner added a repeal of the Healthcare Reform mandate to his list of demands. That's why he walked.
He was always going to walk. I mean, if he did that, it tells me he was planning to make it an impossible negotiation anyway. Hopefully the American people will finally catch on to what an enormous scumbag he really is.
Posted by kmbboots (Member # 8576) on :
quote:Originally posted by Orincoro: He was always going to walk. I mean, if he did that, it tells me he was planning to make it an impossible negotiation anyway. Hopefully the American people will finally catch on to what an enormous scumbag he really is.
To some degree, they are. If polls are any indication, people are getting extremely tired of the GOP's gambles and view Boehner's negoatiations in an outright cynical sense.
It's also advancing the opinion of pretty much any non-conservative voter (and a healthy chunk of conservative voters, too) that the Tea Party is a bunch of dangerous idiots.
Posted by Samprimary (Member # 8561) on :
Also, just take images like these. Take them and jam them into the face of these people and pray that there's enough of a spark of intelligence left in them to kind of maybe perhaps sort of wake up.
quote:And, perhaps most telling of all, a Senate GOP Leadership Aide told Politico, "Background guidance: The President killed any chance of its success by 1) Embracing it. 2) Hailing the fact that it increases taxes. 3) Saying it mirrors his own plan."
What a bunch of infants.
Posted by Orincoro (Member # 8854) on :
quote:Originally posted by Samprimary: Also, just take images like these. Take them and jam them into the face of these people and pray that there's enough of a spark of intelligence left in them to kind of maybe perhaps sort of wake up.
The GOP points to the alarming increase in debt incurred "during" the Obama administration. Never mind that these commitments predate his presidency and are incurred as debt *because* the republicans refused to pay for them in the first place.
Posted by Darth_Mauve (Member # 4709) on :
OK. The big question.
Who will profit by the debt ceiling not being raised?
I don't mean politically. Politics are too ephemeral.
I mean who can make billions using some financial investment so that if the debt ceiling is not raised, and the US defaults, and our rating is lowered and interest rates go up.
We were told when the housing bubble burst that everyone suffered--owners, agents, banks. Everyone suffered the terrors of the recession--except those who predicted this would happen and invested accordingly. They made billions.
I find it quite possible that someone has invested in a similar scheme, and has greased the wheels in just the right places, so that come August 3rd, they will be billions richer, even if the rest of the economy of the US collapses.
If there is such an investment, and those who make it helped insure that the default happened, I would label that treason.
Posted by BlackBlade (Member # 8376) on :
Darth_Mauve: I really can't see this development as some sort of "grease the wheels at all the perfect moments" development. It honestly appears to be a horrifying moment where the planets alligned, the Wright Brother Pigs were born 15 years ago and we just didn't realize it, utility companies finally turned off the heat for account ending in 666, and the groundhog saw his shadow at that instant. It wasn't a sudden surprise that broadsided everybody, the seeds were planted a long time ago. I'm sure the opposite will be screamed by both parties when we get downgraded by Moody's.
------
Link. Good job working with Senate leaders Boehner! Edit: Also, I'm loving the stupid political posturing at this critical time.
For those who don't wish to read another article. There is at present no plan close to having enough votes for passage in both the House and Senate. Anything short of a debt increase beyond the next Presidential election runs the risk of getting us downgraded. Republicans are still insisting on no closing of loopholes, raising tax rates, or letting the Bush tax cuts expire. Democrats have distorted spending cuts advertised, and will not accept a plan that does not do one of the three things I just listed.
Posted by Orincoro (Member # 8854) on :
quote:Originally posted by Darth_Mauve: If there is such an investment, and those who make it helped insure that the default happened, I would label that treason.
At the very least, conspiracy to commit securities fraud, and insider trading, along with a long list of related crimes.
Posted by BlackBlade (Member # 8376) on :
A very good breakdown of the likely Democratic strategy at this point.
At this point I wonder if anybody is working under the assumption that a deal is not reached, and what needs to be done in that regard.
Posted by Orincoro (Member # 8854) on :
That is the strategy, and it's the best way to go. The republicans have been negotiating with one arm tied behind their backs, with the house on fire. Boener already showed that he was too weak to get approval of an incredibly sweet deal for him in the Grand Bargain, walking away from it. Now he's going to have to eat whatever the senate gives him. You cannot pass partisan legislation from the house alone. He was incredibly foolish to imagine that he could.
Posted by BlackBlade (Member # 8376) on :
Annnnnd we're going to lose two more days while the Republicans furiously try to write in bigger spending cuts so they meet the 1.2 trillion target as opposed to the 850 billion in cuts the CBO says are in the Boehner plan as is. This mind you is being done purely so Boehner can get enough Republican votes for House passage of his non-starter debt ceiling plan. It's completely understood the Senate will not pass it.
Also, it turns out the Treasury by doing some creative accounting and estimating says that we may or may not have until Aug 10th, to hammer out a deal. Essentially after Aug 2nd, we are maxed at the limit, but by using income tax funds as they come in, the treasury could still pay for things like Social Security cheques, until Aug 10th at the very latest. At any time up until that date they could simply say, "Whelp, that's the last dollar."
Obviously credit rating agencies are not going to be impressed. It's pretty much akin to us saying, "Hey I don't have your money now, but hey don't worry, I've got this guy who owes me big and he told me the money is in the mail, I just need a few more days!"
Posted by Blayne Bradley (Member # 8565) on :
Do you think the US could just sell its aircraft carriers?
Posted by BlackBlade (Member # 8376) on :
quote:Originally posted by Blayne Bradley: Do you think the US could just sell its aircraft carriers?
Is that a serious question?
Posted by Samprimary (Member # 8561) on :
No, yeah. Are you being serious?
Posted by Blayne Bradley (Member # 8565) on :
Well if you can sell them for more they're worth you can make a profit AND not lower the budget!
Posted by rivka (Member # 4859) on :
And I have a bridge you cannot pass up!
Posted by TomDavidson (Member # 124) on :
To be fair, I'd buy an aircraft carrier if the price were right. I'd probably need a bigger trailer, though.
Posted by rivka (Member # 4859) on :
quote:Originally posted by TomDavidson: if the price were right.
Which is probably not "more than they're worth".
Posted by TomDavidson (Member # 124) on :
What is the ROI on an aircraft carrier, anyway?
Posted by Blayne Bradley (Member # 8565) on :
Considering costs overruns, graft, inefficiency in the military-industrial complex...
Posted by rivka (Member # 4859) on :
quote:Originally posted by TomDavidson: What is the ROI on an aircraft carrier, anyway?
How should I know? YOU're the one in the market for one.
Posted by scifibum (Member # 7625) on :
Really depends on what you're displacing.
Posted by kmbboots (Member # 8576) on :
I don't think either Monona or Mendota is big enough for an aircraft carrier. Lake Michigan on the other hand...
Posted by Lyrhawn (Member # 7039) on :
Those things lose a third of their value the moment you drive them away from the dock. Decades of wear and tear, and I don't even want to THINK of the mileage on them.
You'd be lucky to not have to PAY to have someone haul them away.
Of course, then you have to see about insuring it.
Posted by Ron Lambert (Member # 2872) on :
Don't forget the problem of disposing of the spent fuel rods from the nuclear reactor.
Posted by Stone_Wolf_ (Member # 8299) on :
Not to mention the 1,500 people it takes to make the ship work...unless you want working planes on board too...then it's more like 5,000.
Posted by Danlo the Wild (Member # 5378) on :
Bush +Bernanke +Obama +Geithner = ARMAGEDDON
So. If I take out a Credit Default Swap out on the USA defaulting on it's T-bills, and I "win" who pays me off? LAWL
Posted by Tresopax (Member # 1063) on :
The insurer who sold you the Credit Default Swap...
Posted by TomDavidson (Member # 124) on :
All right, all right; you've convinced me. Clearly we as a country should be giving these lemons away.
Posted by Orincoro (Member # 8854) on :
Well doesn't the entire NASA operating budget Equal about the cost of operating one aircraft carrier?
Posted by BlackBlade (Member # 8376) on :
quote:Originally posted by TomDavidson: All right, all right; you've convinced me. Clearly we as a country should be giving these lemons away.
The Taiwanese frequently joke that their navy is comprised entirely of WWII US naval vessels that were sunk in action and dredged up by them.
I'm sure they'd take whatever carriers we are giving away, the PRC doesn't even have a carrier yet. Taiwan beating them to it would be hysterical.
Posted by mr_porteiro_head (Member # 4644) on :
Brazil has a single aircraft carrier that they bought from France when France was upgrading.
Posted by BlackBlade (Member # 8376) on :
Boehner's no go plan can't get enough Republican votes for passage today, so they are going to spend the rest of today and tomorrow trying to cow (R) lawmakers into cooperating with Boehners posturing. It's unclear if the Senate could even vote on it tomorrow, but if they can it won't pass.
Assuming Boehner is successful and it is shelved that same day in the Senate, we will then have negotiations all weekend where it is hoped some sort of ammended version of the Boehner plan will survive, and go back to the House for vote next week. It's clear Boehner is hoping the prospect of default will cause Reid and the Senate to blink, and they will grudgingly pass his plan in some form close to how it exists now. The White House is not going to sign into passage any deal that does not extend the debt limit into the next Presidential election. I can't believe Congress expects us to deal with this circus in just a few months.
I think the Democrats are certain they can pin default squarely on the Republicans, and the Republicans simply don't have the unity of purpose this time to really come together on a plan.
One thing interesting to note is that historically for a long time the Republicans have been noted for their ability to vote as a block and stick together. This in stark contrast to the Democrats who has such a wide base. I can't remember vote in recent memory where the Republican party had this much infighting.
edit: Dare I say it? The Republican party as a monolith seems largely gone. It seems apparent that perhaps certain Democrats might find dealing with certain Republicans to be advantageous in getting their agendas passed. How shocking!
Posted by Danlo the Wild (Member # 5378) on :
I figured it out guys.
By the Republicans NOT raising the Debt Ceiling, the USA must then on August 2nd, operate off of a "balanced budget."
Meaning, they can only spend the $2.2 trillion in tax receipts, instead of the $3.8 trillion they've already spent.
Get it?
The Bond Holders will get paid, Soldiers will get paid....
and everyone else will fight for the rest.
WELCOME TO INSTANT AUSTERITY!
Posted by Stone_Wolf_ (Member # 8299) on :
We should definatly specify the difference between an "aircraft carrier" and "supercarrier", the latter of which only the U.S. have any of currently (although the Brits are building two, the French are talking about making one in the future and the Russians got 40% built before running out of money).
Supercarriers are generally 70k tons or up, medium class carriers are around 40k tons and light carriers are 20k or so.
A few countries have light and medium carriers...
The U.S. has 11 supercarries, 10 of which are Nimitz Class at 100k tons, the last being the USS Enterprise, at 93k tons.
Posted by Geraine (Member # 9913) on :
I'm down with buying an air craft carrier.
Tom, we could play a real life game of Battleship. Posted by Blayne Bradley (Member # 8565) on :
quote:Originally posted by BlackBlade:
quote:Originally posted by TomDavidson: All right, all right; you've convinced me. Clearly we as a country should be giving these lemons away.
The Taiwanese frequently joke that their navy is comprised entirely of WWII US naval vessels that were sunk in action and dredged up by them.
I'm sure they'd take whatever carriers we are giving away, the PRC doesn't even have a carrier yet. Taiwan beating them to it would be hysterical.
*Yet* is a little disingenuous, the Shi Lang is just about complete.
Posted by TomDavidson (Member # 124) on :
I think it's the other way around; the addition of the "yet" implies that the Chinese are on their way to a carrier, where its omission would not.
Posted by James Tiberius Kirk (Member # 2832) on :
Nope, not tonight. Not that it matters - the Senate will not pass it, and the President will not sign it. He just had to push the Boehner bill in order to save face now. Meanwhile, the interests of individual Tea Party members contradict the best interests of the GOP (and the country) as a whole. I guess there's just enough of them for this to be a problem.
Should be a fun day on Wall Street tomorrow.
Posted by Danlo the Wild (Member # 5378) on :
Wall Street won't freak out more than 200 to 400 points.
They will get paid no matter what.
The BOND HOLDERS are priority #1.
Posted by Samprimary (Member # 8561) on :
quote:Originally posted by Blayne Bradley: *Yet* is a little disingenuous, the Shi Lang is just about complete.
Lol, they called that hunk of junk the Shi Lang?
Posted by Blayne Bradley (Member # 8565) on :
Yup, and its hardly a hunk of junk. You gotta start somewhere. The navy goons at SA are excited about it, now they'll finally have someone to play with.
To quote one of em:
quote: As I've said more times than I can count, underestimate China at your peril. The PLAN has a helluva lot more assets than a "rusted hulk of a carrier and a frigate." They don't want to or have to play on our turf, but we have to be able to convince them we can play on theirs. The Great J-20 freakout of 2010 was really a shame, because the overblown concerns over what is at most a prototype overshadowed two much more important developments: the continued buildup of the PLAN and the estimation by Adm Willard (PACOM Commander) that the DF-21D has achieved IOC.
*******
Buying a carrier like that, even in terrible condition, is actually pretty shrewd of the Chinese. It may be worth little more than scrap to anyone else, but to the Chinese, it's a treasure-trove of lessons learned; little things that the Russians discovered through years of trial and error that never would have taken them decades to figure out on their own.
*********
Are you saying that the Адмирал Кузнецов-class is something to shrug at? They're no Nimitz, but still...
********
It's still a cheap as hell way to get a carrier. $30 million plus repairs and completion. Even if they had to spend about a billion to finish it that's still a quarter the cost of a Nimitz, and probably competitive with what it'd cost to build one themselves.
Again, it doesn't particularly matter if she's a preexisting design if all they use her for is training pilots and practicing how to work a CVBG.
[ July 29, 2011, 02:22 AM: Message edited by: Blayne Bradley ]
Posted by Samprimary (Member # 8561) on :
quote:Originally posted by Blayne Bradley: Yup, and its hardly a hunk of junk. You gotta start somewhere.
Yes, evidently. With a pile of junk.
(keep in mind, also, that if I hated China, I would love more than anything to watch them sink billions into carriers this late in the game)
Posted by Mucus (Member # 9735) on :
Personally, I think that the carrier is pretty much a white elephant.
The consolation is that the military-industrial complex will probably convince the US to spend way more than the carrier is worth in order to "counter" it, and given the current financial state of the US, that is a game the CCP would be more than happy to play.
Posted by salcedocine (Member # 12613) on :
Just out of curiosity, does anybody think there's an actual chance of war with China if the U.S defaults on its debt?
Posted by Mucus (Member # 9735) on :
You can't collect money from a pile of radioactive ash*
* Besides, with a total guess-estimate, the interest China collects on the roughly 1 trillion in USD debt it holds is "only" 10 billion over a year (using a rough guess of 1%). The Olympics cost four times that while they're spending roughly ten times that per year on high speed rail.
It simply wouldn't be cost effective to have a war over such a small amount of money.
Posted by fugu13 (Member # 2859) on :
Why would there be a war with China? There's no motivation at all. I mean, maybe if we did something ultra stupid like defaulting on China's debt, they'd just make a big (justified & successful) fuss at world organizations and get a lot of political leverage out of it.
Mucus: China's carrier is pretty much a non-issue for the US military. We can already counter it almost effortlessly, plus the strong rumors are that it will be used as a training platform so when they have better carriers (that one isn't really a typical carrier in the first place, but is for a sort of odd strategic positioning) they have some people who know what they're doing. Very useful long term, but nothing to change anything in the short term.
Posted by Orincoro (Member # 8854) on :
quote:Originally posted by Mucus: Personally, I think that the carrier is pretty much a white elephant.
The consolation is that the military-industrial complex will probably convince the US to spend way more than the carrier is worth in order to "counter" it, and given the current financial state of the US, that is a game the CCP would be more than happy to play.
Eh, I think that's rather silly. History proves rather convincingly that military buildups favor economies with access to resources. It really doesn't matter how poorly the us economy seems to be doing at this moment. The us still owns the largest manufacturing sector in the world, and access to more material resources than china, and a far better geographical defense posture. One thing the cold war showed fairly convincingly, I think, is that attempting to compete directly with US naval power is a losing bet for almost any nation. W have access to all the sealanes in the world, major ports thousands of miles apart in different oceans, and the means to move enormous resources across them. China couldn't match that. They depend on the streength and stability of our economy to begin with. Competing with us would be biting the hand that keeps their lifelines open, even a thy are very aware that we could close down on them if we needed to.
But really, I just think talking about short term market economics when discussing military potential is taking large account of minute factors. Look at the state of the soviet economy when hitler invaded, for example. It didn't matter. Russia had more resources, and given time to amass forces, they ground the Germans down. Economics change when military competition comes into play.
Posted by Lyrhawn (Member # 7039) on :
Yeah, what fugu said. China getting a couple of several decade old designed carriers isn't really that big a game changer. It gives China the opportunity to project power far more broadly, which makes them a bigger player on the world stage, but it's hardly significant in a hypothetical war. Leaving aside the fact that, for the moment, China's naval forces aren't nearly as well trained as America's are, there's also the fact that we have like ten carriers, dozens of destroyers and cruisers, hundreds of fighters, and dozens of submarines.
What exactly would the United States need to build to counter this new "threat?" We're nowhere near an arms race. We've already finished the race and are enjoying extremely expensive cocktails in the race lounge. China and others are just now moving into the starting blocks.
Posted by Orincoro (Member # 8854) on :
quote:Originally posted by salcedocine: Just out of curiosity, does anybody think there's an actual chance of war with China if the U.S defaults on its debt?
No. For every dollar that china recieves in interest from the US on debt service, 50 flow through the Chinese economy in trade. You don't attack the source of your wealth, and your biggest trading partner over interest rates.
Also, considering that china has no other larger markets for her products, she depends on the US to keep her economy from imploding. If we stop buying their products, they have to stop making them. Meaning they have to stop growing. If they stop growing, they collapse.
Posted by Mucus (Member # 9735) on :
quote:Originally posted by Lyrhawn: What exactly would the United States need to build to counter this new "threat?" We're nowhere near an arms race.
I think looking at it in terms of "need" is clearly wrong. The US didn't "need" to continue to spend billions on weapons that are really meant to counter a Soviet-era style military. It also doesn't "need" to spend billions on wars against a rag-tag group of terrorists who have only really killed a couple of thousand people.
Terrorism is just a good bogeyman and the fact is that Congressmen and politicians are already looking toward China as the next boogeyman for all sorts of issues and to justify any number of silly things.
So the way to look at it is not whether the US "needs" more arms, clearly it hasn't needed much of what it currently purchases for many decades now. But whether China can scare or give justification for a few tea party politicians to vote for more military spending. In the case that China decides to train its pilots by flying them up and down the US coast, I think its inevitable that politicians already leaning toward buying more arms due to job concerns can easily be persuaded into buying a few more toys. The attack ads against politicians "soft on China" almost write themselves.
Posted by Mucus (Member # 9735) on :
quote:Originally posted by Orincoro: One thing the cold war showed fairly convincingly, I think, is that attempting to compete directly with US naval power is a losing bet for almost any nation.
"Directly" is probably also the wrong way to look at it. I think its clear that China has no real intention of competing directly with the US military. China will continue spending much more on internal security than external for a long time.
Rather, I look at it in terms of what the US feels it has to do to maintain an overwhelming military advantage in all cases.
The US doesn't merely match China's military spending, it spends more than the rest of the world combined. When China ramps up its spending, India ramps up its spending, so does Europe, and the US is going to have to pace the combined sum. Its also going to have to spend much more than 1:1 in order to both maintain an overwhelming advantage and in order to do research and development on how to do that (while China can just steal and copy the results).
And this at a time when the US is looking at cutting things like education, social security, healthcare while leaving defence spending relatively unscathed.
Posted by BlackBlade (Member # 8376) on :
Pres. Obama is set to address the nation about negotiations live in just a few minutes.
Should be very informative.
Posted by Destineer (Member # 821) on :
Great ending to Krugman's column today:
quote:But making nebulous calls for centrism, like writing news reports that always place equal blame on both parties, is a big cop-out — a cop-out that only encourages more bad behavior. The problem with American politics right now is Republican extremism, and if you’re not willing to say that, you’re helping make that problem worse.
Posted by BlackBlade (Member # 8376) on :
Word on the street is freshmen Republican congressmen are insisting a balance budget amendment be included in the Boehner bill before they will vote for it.
Two minutes until Obama's comments.
Posted by BlackBlade (Member # 8376) on :
As expected mostly conciliatory in tone. Obviously it's an attempt to appear rational and compromising, sorta like Clinton in the 90s when a similar thing happened.
I just do not see how a deal can be reached when Republicans cannot even reach an internal deal about what they want. Unless Republicans break ranks in large numbers with Democrats I just can't see this happening this weekend.
Posted by Tresopax (Member # 1063) on :
Republicans can't unite behind their own plan, so they are left with only two options: Break ranks and join the Democrat plan or essentially accept blame for a default. The reasonable Republicans won't do the latter, so I think option one is the most likely outcome now.
...
Krugman is absolutely right though. Much of the problem here stems from the media and the way we draw conclusions about the political world - from the fact that Republicans have gotten away with creating an alternative fictional conservative reality where you can default on your debt and yet end up with a happy ending where our budget is balanced. This has happened because there exist Republican outlets like talk radio or Fox News willing to create and sell that reality, while more reputable news sources are too concerned with looking balanced or politically correct to call them out on it every time. In reality, there is a truth, and if we pretend that there are alternative truths that we can pick and choose from on things like this, we'll end up in a situation like the one we are in.
Posted by fugu13 (Member # 2859) on :
quote:The US doesn't merely match China's military spending, it spends more than the rest of the world combined. When China ramps up its spending, India ramps up its spending, so does Europe, and the US is going to have to pace the combined sum. Its also going to have to spend much more than 1:1 in order to both maintain an overwhelming advantage and in order to do research and development on how to do that (while China can just steal and copy the results).
But China didn't significantly ramp up its spending for the carrier. It spent a pittance on the beast originally, didn't do squat with it for years, and is throwing maybe $1 billion at it over the past few years/current period. That's hardly a changing balance of power, and it doesn't seem to reflect some major new priority in their military; if they hadn't spent a billion on it, they very likely would have spent the billion on something else, rather than the carrier. I mean, it took maybe a third of a percent of their military budget this year. In terms of the sums of the military budgets you indicate (which I don't think the US is tracking as closely as you seem to, but even so), or the US military budget, that's a rounding error. It'd take a much more major military building initiative (like an entire carrier program) to stimulate noticeably more US military spending.
Posted by Mucus (Member # 9735) on :
quote:Originally posted by fugu13: But China didn't significantly ramp up its spending for the carrier. It spent a pittance on the beast originally, didn't do squat with it for years, and is throwing maybe $1 billion at it over the past few years/current period.
I agree, and I think that is part of the beauty of it. Between the Varyag and the high speed rail, I think we can establish that the upcoming Chinese carrier program will be a) fast b) provocative c) cutting corners
Thus, while useless in actual combat, for a pittance, China has gone from no carrier to carrier, and has gone from buzzing Taiwan every once in a while to buzzing Hawaii or California.
So the next Republican president isn't merely going to say that "Xi Jinping is rearing his head," he/she will be able to point at actual Chinese planes flying around (outside) the USA.
In that environment, are they really going to be able to oppose something like this?
quote:New ones, even bigger and more expensive, are on the way. The new supercarrier Gerald R. Ford, due to join the navy in 2015, will cost $5.1-billion, not including warplanes, it’s fleet of escorts and operating costs over a half-century life. Eventually, the U.S. Navy wants 11 Ford-class ships to replace all 11 of the existing supercarriers.
link Posted by Blayne Bradley (Member # 8565) on :
quote: But China didn't significantly ramp up its spending for the carrier. It spent a pittance on the beast originally, didn't do squat with it for years
This isn't quite correct, it spent 1.5 years towing it to China, about 4 years studying it and official repairs began in 2005 when it was finally moved to a dry dock and reconstruction efforts began.
They bout 4 landing and take off sets from Russia, the plan seems to be 1 land based training mockup carrier and three for actual carriers since 3 is the minimum number to have 1 CVG out at any one time.
Posted by fugu13 (Member # 2859) on :
Of course China was going to get carriers at some point; you can't be a global power without them, and China wants at least the trappings of a global power.
And I'm quite in support of the supercarrier replacements even if China doesn't have a counter . The threat of the US projecting overwhelming power on short notice has been a major factor in the relatively peaceful last several decades (yes, even including wars the US has been involved in). That is the among the last parts of our military capacity we should allow to be impaired.
Posted by fugu13 (Member # 2859) on :
quote:This isn't quite correct, it spent 1.5 years towing it to China, about 4 years studying it and official repairs began in 2005 when it was finally moved to a dry dock and reconstruction efforts began.
That's completely compatible with what I said. And the repairs weren't going at much of a pace for at least the first couple of years after 2005.
Posted by Ron Lambert (Member # 2872) on :
Krugman's claim that the main problem in American politics today is "Republican extremism" is based on a distorted view that anyone taking a stand must be at fault for disrupting business as usual.
America's problem is certainly not that it is undertaxed. Rather, it is overtaxed. The real problem any time anyone's budget is unbalanced is overspending. Thus the conservative Republican, Tea Partier stand against the Democrat desire to raise taxes, and their insistance upon real, meaningful spending cuts, is the most ultimately sane and responsible viewpoint in American politics.
That said, I do not think that allowing the country to go into default on paying its bills is a sensible way to get to the desired goal of fiscal reform. If the government defaults, the interest rates the government has to pay will be raised, which right there will greatly increase the amount of interest that needs to be paid, thus putting the country further behind in any hope of balancing its budget.
The reality that the Tax and Spend Democrats still control the Senate must be taken into account. So a compromise that includes many spending cuts but also a few tax increases, is probably the only way that any progress can be made before the next election gives Republicans control of the Senate and the White House as well.
It is vain to wait for the amateurs in the White House to exercize any effective leadership whatsoever. Republicans will have to compromise with Democrats, irresponsible as the Democrats are.
Posted by TomDavidson (Member # 124) on :
Be sure to call your representatives and tell them that, Ron.
Posted by Bokonon (Member # 480) on :
Call me crazy, but I think the most sane viewpoint on this issue is a combination of tax code changes (closing loopholes, rate hikes if necessary) with spending cuts.
Across the board.
No one gets out of it, not the rich, poor, corporations, mom&pop shops. Not SS, Medicaid, defense, subsidies, education.
We're the country of E Pluribus Unum, for crying out loud; despite what right-wing reactionaries say, we are all on same team. So lets come up with a compromise.
--
Ron:
quote:America's problem is certainly not that it is undertaxed. Rather, it is overtaxed.
Wrong. At best you can say there are some inefficiencies in specific parts of the tax code, but looking at all federal taxes (income, capital gains, FICA), all income levels are experiencing SOME OF THE LOWEST TAXATION LEVELS IN DECADES. And if we went back to Clinton-era tax levels we would still be at SOME OF THE LOWEST TAXATION LEVELS IN DECADES. At this point, if tax cuts aren't stimulating the economy, more of the same ain't going to change anything. The Laffer Curve is a freaking curve, after all, not a straight line.
Posted by Samprimary (Member # 8561) on :
I love it when the democrats are referred to by the coached label "Tax and Spend Democrats" or "Tax and Spend Liberals" — it's amusing that this is an effective, manipulative language framing despite being, well, sound policy.
Far better than, in contrast, "spend and spend conservatives." Or whatever you want to call them.
At this point it's clear he has to basically capitulate to these Republican holdouts by putting still more unacceptable proposals into his bill, just so he can say the House passed it and the Senate blocked it. Either way, the real lesson here is that Boehner can't whip the Republican party into the feight train it used to be, previous speakers did not have this problem.
I don't necessarily blame him for being unable to, none of the previous speakers were dealing with the Tea Party caucus, but I do blame him for not being able to then bypass that caucus by dealing with the Democrats. It's clear the Republican party does not have its house in order, and while that gives us a lot to jeer about, to me it merely demonstrates our government is unable to function properly.
I believe the system will adjust, it always does, but it's so stupid that this time all of us have to endure a big mess, before sheer rage forces our representatives to act like adults.
Posted by BlackBlade (Member # 8376) on :
Oh also, I'd like to apologize on behalf of representatives Chaffetz and Lee of Utah for their roles in this crisis.
They are idiots, and extremely inexperienced in politics, especially Lee.
Posted by FoolishTook (Member # 5358) on :
Samprimary, still riding that horse, I see.
I don't know of many conservatives who supported Bush's spending policies. In fact, most conservatives were so fed up with his spending, they didn't bother voting for another mediocre republican (John McCain) in 2008.
Five years from now, I'd like to see how accurate the projected spending of Obama's policy changes compare to his actual spending--provided he gets elected to another term.
Posted by Samprimary (Member # 8561) on :
quote:Originally posted by FoolishTook: Samprimary, still riding that horse, I see.
There's a lot of horses to ride here. We're in the middle of a manufactured crisis. Unless someone wants to ride out in the opposite direction or seriously contest that this is the 'fault of both parties equally,' (A time-honored favorite here) I'd say the guilty party (bad conservatives fixated on bad policy) gets the hooves.
Posted by mr_porteiro_head (Member # 4644) on :
quote:Oh also, I'd like to apologize on behalf of representatives Chaffetz and Lee of Utah for their roles in this crisis.
They are idiots, and extremely inexperienced in politics, especially Lee.
Bleh. I hate false apologies, especially those that are really insults.
Much better to just say that you're ashamed of them.
Posted by fugu13 (Member # 2859) on :
I don't think BlackBlade is falsely apologizing, though it is also an insult.
Posted by Rakeesh (Member # 2001) on :
quote:Originally posted by FoolishTook: Samprimary, still riding that horse, I see.
I don't know of many conservatives who supported Bush's spending policies. In fact, most conservatives were so fed up with his spending, they didn't bother voting for another mediocre republican (John McCain) in 2008.
Five years from now, I'd like to see how accurate the projected spending of Obama's policy changes compare to his actual spending--provided he gets elected to another term.
Where were these so-many conservatives, to the point that few conservatives know any other conservatives who supported those policies, at the time?
It seems to me that this is a retroactive groundswell of opposition among conservatives throughout the first four years.
Posted by mr_porteiro_head (Member # 4644) on :
He's in no position to give an apology on behalf of them. It's not a real apology at all.
It is, though, better than false apologies that are insulting the person being apologized to, like "I'm sorry that you're such a poopy head.".
Posted by mr_porteiro_head (Member # 4644) on :
BB, sorry for just coming out and so directly criticizing your posting style like that. It was pretty obnoxious of me.
Posted by BlackBlade (Member # 8376) on :
Porter: I absolutely am in a position to apologize on behalf of two men who represent me in Congress. I think they are doing a terrible job representing me. I completely understand there are others in Utah, more numerous than I, who may feel they are doing exactly what they want, I think they are wrong.
Further, my readings about Rep. Lee based on statements he's made in public lead me to believe that he is extremely naive and inexperienced at working on Capital Hill, and that inexperience has lead him to bad conclusions about what he ought to be doing.
edit: Also no hard feelings, you're entitled to be as brittle as you feel you should be when I write things. I like participation in this thread. You have a knack for saying things that give me pause as to how I am acting.
Posted by mr_porteiro_head (Member # 4644) on :
quote:Porter: I absolutely am in a position to apologize on behalf of two men who represent me in Congress.
No you're not, any more than you are in a position to speak on their behalf. You have neither been given authority to represent them, nor can you honestly think the apology accurately reflects their thoughts and feelings on the matter.
Posted by mr_porteiro_head (Member # 4644) on :
quote:you're entitled to be as brittle as you feel you should be when I write things.
No I'm not. Posted by BlackBlade (Member # 8376) on :
quote:Originally posted by mr_porteiro_head:
quote:Porter: I absolutely am in a position to apologize on behalf of two men who represent me in Congress.
No you're not, any more than you are in a position to speak on their behalf. You have neither been given authority to represent them, nor can you honestly think the apology accurately reflects their thoughts and feelings on the matter.
Of course my apology does not reflect their feelings and thoughts on the matter. I'm offering the apology they should be offering.
And what's this about whether or not I represent them? I can't represent my own representatives.
Posted by natural_mystic (Member # 11760) on :
quote:Originally posted by FoolishTook: I don't know of many conservatives who supported Bush's spending policies. In fact, most conservatives were so fed up with his spending, they didn't bother voting for another mediocre republican (John McCain) in 2008.
Until the economy went off a cliff, Bush's big spending items were Medicare Part D and various wars. The wars were initiated in Bush's first term, as was the passage of Medicare Part D. Neither of these unfunded expenditures seemed to hurt Bush at the polls in 2004.
Posted by Bella Bee (Member # 7027) on :
BB - I'm staying out of the whys and where-with-alls (I have actually no idea who these people even are), but I will say that if you didn't vote for them you don't have to apologize for what they get up to. It's not your fault or your responsibility because you just happen to live there.
And I say that as someone who has only had the chance to vote for the winner of local representation one time! My entire life has been spent going 'It's nothing to do with me what they've done!'
Posted by MrSquicky (Member # 1802) on :
quote:Originally posted by Rakeesh:
quote:Originally posted by FoolishTook: Samprimary, still riding that horse, I see.
I don't know of many conservatives who supported Bush's spending policies. In fact, most conservatives were so fed up with his spending, they didn't bother voting for another mediocre republican (John McCain) in 2008.
Five years from now, I'd like to see how accurate the projected spending of Obama's policy changes compare to his actual spending--provided he gets elected to another term.
Where were these so-many conservatives, to the point that few conservatives know any other conservatives who supported those policies, at the time?
It seems to me that this is a retroactive groundswell of opposition among conservatives throughout the first four years.
I was one of them. Well, I don't know that I really fit into the "conservative" box, but I am deeply concerned with fiscal responsibility and was a registered Republican at the time.
It was a very lonely time. Fiscal responsibility - and let's be clear, this isn't just a Bush issue. It was largely a problem of ridiculous behavior and policies by the Republicans in Congress. - was thrown out the window. It was a non-starter in many circles and considered "treasonous" questioning the President in others. There were some people concerned with it, but I wish that there were a tenth of people who are so worked up about it now who made it a primary concern then.
Also, alongside with it being a serious problem with the Republican legislators, you do know that most of them from that period are still in office, right? If people were really fed up with the spending during Bush's term, I'd expect them to have maybe voted out the people most responsible for it.
Posted by natural_mystic (Member # 11760) on :
quote:Originally posted by BlackBlade: Oh also, I'd like to apologize on behalf of representatives Chaffetz and Lee of Utah for their roles in this crisis.
They are idiots, and extremely inexperienced in politics, especially Lee.
From what I have seen and heard of Lee, while I think he is dangerously wrong, I would not call him an idiot. Not at all. I suspect he will be a force for a long time.
Posted by mr_porteiro_head (Member # 4644) on :
If you have authority to represent me in some capacity, you can speak in my behalf, offer apologies on my behalf, make promises on my behalf, etc..
You have no such authority with your two representatives.
Or, if you're confident that you know my mind on the matter, you can do similar things. ("I'm sure I speak on behalf of everybody here when I say that we really appreciate...").
But you cannot in good faith say something on behalf of somebody else that you know they would disagree with.
"On behalf of our gracious host, OSC, and our tireless moderator, JB, I want to apologize for allowing the wrong sort of riff-raff to register on these forums."
Even if I thought that this were an apology that you guys should be making, claiming that I'm making it on y'all's behalf is utterly dishonest.
Of course, you're not being dishonest like that, because it's understood that it's a fake apology that you're offering.
Posted by Ron Lambert (Member # 2872) on :
On behalf of the human race, I want to apologize to all the animals who have been slaughtered as they innocently tried to cross the road, by our speeding cars and trucks.
(This apology excludes chickens, who have inspired way too many absurd jokes.)
Posted by BlackBlade (Member # 8376) on :
quote:Originally posted by natural_mystic:
quote:Originally posted by BlackBlade: Oh also, I'd like to apologize on behalf of representatives Chaffetz and Lee of Utah for their roles in this crisis.
They are idiots, and extremely inexperienced in politics, especially Lee.
From what I have seen and heard of Lee, while I think he is dangerously wrong, I would not call him an idiot. Not at all. I suspect he will be a force for a long time.
Very well, he's a forceful idiot.
He may be knowledgeable in some things, but understanding this issue is not one of them as far as I have seen.
Posted by Samprimary (Member # 8561) on :
quote:Originally posted by Rakeesh: It seems to me that this is a retroactive groundswell of opposition among conservatives throughout the first four years.
Well, you see, now that the captain is a democrat, it's time to plant the scuttle charges aboard the S.S. 'mericuh — that'll sure show him
Posted by FoolishTook (Member # 5358) on :
quote:Until the economy went off a cliff, Bush's big spending items were Medicare Part D and various wars. The wars were initiated in Bush's first term, as was the passage of Medicare Part D. Neither of these unfunded expenditures seemed to hurt Bush at the polls in 2004.
It was a very different time in 2004. The unemployment rate was 5.5%, terrorism was fresh in everyone's minds, the deficit threat was a few years off, and John Kerry was the other option.
If people have the perception that Obama's outspending Bush, it's likely due to the fact that he spends as if the deficit didn't exist. And it seems out of pace with reality.
Medicare Part D:
This is what Rush Limbaugh said about it in 2006:
quote:The Democratic Party is the party of entitlements; but the Republicans come up with this Medicare prescription drug plan that the polls said that the public didn't want and was not interested in. That is not conservatism.
Frustration with the Republican Party is partially responsible for the formation of the Tea Party.
Posted by natural_mystic (Member # 11760) on :
quote:Originally posted by FoolishTook: It was a very different time in 2004. The unemployment rate was 5.5%, terrorism was fresh in everyone's minds, the deficit threat was a few years off, and John Kerry was the other option.
This comment is exactly the sort of thing that confirms liberals' fears that most conservatives only find fiscal conservatism (re: spending only) when there is a democrat in office.
The unemployment rate was 5.5% - so it's fine to expand government spending? Now when the private sector is expanding anemically and unemployment is over 9% it's time to cut back. This is precisely backwards. When the private sector is not spending due to a lack of aggregate demand, an increase in government expenditure is (a) less likely to crowd out private sector expenditure, and (b) can increase aggregate demand.
Did the threat of terrorism blind fiscal conservatives to the fact that wars cost money?
The 'deficit threat' is still a few years off- at least going by bond rates. This is not to say that I am sanguine about the debt; I think a long term plan should be put in place, but not at the expense of the recovery.
Posted by Orincoro (Member # 8854) on :
See, you know what I love about being a democrat? When it makes fiscal sense to do so, we lower spending. When it makes fiscal sense to do so, we raise spending. Or at least we try to.
I was, what? Diagusted? Horrified? By speaker boehners comments last week about "job killing spending". Does the man choke on words like this? Or is he less educated in economics than I was as an 18 year old music student the first time I got to vote?
Posted by FoolishTook (Member # 5358) on :
quote:The unemployment rate was 5.5% - so it's fine to expand government spending?
Nope. My point was that the economy was doing well, better than it had been doing, and people tend to reelect presidents according to the economy.
Bush was reelected for various, one of those reasons being he was the lesser of two evils.
quote:The 'deficit threat' is still a few years off- at least going by bond rates. This is not to say that I am sanguine about the debt; I think a long term plan should be put in place, but not at the expense of the recovery.
In theory, I agree with this. However, I think we should at least cut the rate of growth and avoid adding any new spending programs. Of course, from what I hear, that's all anyone is proposing anyway, which is kinda puny. But I'll take it, as long as we don't damage the recovery with tax increases.
Posted by kmbboots (Member # 8576) on :
Why do you think that tax incrrases on the wealthy will damage the recovery?
Posted by Orincoro (Member # 8854) on :
Took, cutting spending at this point has a much harsher effect on the recovery than new taxes would. Raising marginal tax rates (ie, lapsing the Bush tax rates) would have no real effect on the recovery.
Kmboots: I think he labors under the assumption that Republicans are right, and that somehow these marginal rates, as well as lower capital gains taxes, increase liquidity and "create" jobs, when actually they contribute to heavier wealth condensation among the rich- whereas the government would distribute that money in spending, and encourage growth at a time when private business has no incentive to invest in growth.
Look, the idea that lower marginal tax rates encourage job growth is just wrong. At worst, if somebody tells you that, he's lying. At best he's misinformed and mistaken. It is not difficult to trace the long term effects of lower marginal tax rates on job growth. When the rates go down, job growth slows. When the rates increase, job growth increases, as a general rule. That's not a 100% causal relationship, but it is a clear indication of what actually works. There is 70 years of fiscal policy and actual results that support this.
Posted by Samprimary (Member # 8561) on :
I'm under the impression that this is pretty much through. The damage is already done. The downgrade is inevitable.
The tea party will also find out in short order to what extent we negotiate with economic terrorists.
Posted by Orincoro (Member # 8854) on :
I actually suspect there wont be a down grade across the board. Agencies don't wanna take the heat for it if the us ends up making all it's payments
Posted by fugu13 (Member # 2859) on :
quote:I'm under the impression that this is pretty much through. The damage is already done. The downgrade is inevitable.
Only one of the ratings agencies seems to have signaled an intent to downgrade if disagreement goes on too long, even if a deal is reached without a default ("too long" being left somewhere nebulous). That's not enough to trigger a lot of the problems of a downgrade, since as long as two out of three ratings are AAA, US debt counts as AAA for most regulatory purposes. Also, I suspect the agency saying otherwise is bluffing.
Posted by Juxtapose (Member # 8837) on :
***SPOILERS*** . . . . . . . . The dems caved.
Posted by Tresopax (Member # 1063) on :
And the Republicans also caved. (Assuming it passes.)
It appears that Republicans passed on much better deals weeks ago.
Posted by MrSquicky (Member # 1802) on :
The ratings agencies are already under threat. The Dodd-Frank act nominally instructs companies to remove reliance on the established ratings agencies for a range of things related to assessing the riskiness of assets. If they decided to push the matter by dropping the US's rating, we'd be likely to actually see that happen, possibly with other hits, especially in light of how pissed the Eurozone is at them now.
They may talk tough, but as long as the US pays its bills, there's no way they'll downgrade us. I think the tough talk was mostly aimed at beating back things like the Dodd-Frank act anyway. Because, as has been shown over and over, when you're dealing with the Democrats, just act tough and they'll fall all over themselves to give you what you want.
Posted by fugu13 (Member # 2859) on :
A lot of the regulations that require holding minimum amounts of AAA rated assets aren't US regulations. Also, I'm not sure there's anything in Dodd-Frank that'd let people reasonably hold a less-than-AAA rated asset as one of their stabilizing assets, since the original point was that *even* AAA rated assets might be too risky to hold as core stabilizing assets. Continuing to use an asset that the ratings agencies thought risky enough to downgrade in that role is just asking for trouble!
Most of the stuff that let institutions overvalue crappier assets related to the market pricing rule, which isn't what's at stake here at all. That just lets them overvalue assets based on beliefs about the current market value being ridiculous (generally only when market liquidity is nil). But that doesn't let them take a crappy security and treat it like a higher rated one.
Posted by MrSquicky (Member # 1802) on :
The expressed point of the Dodd-Frank provisions, as I understand it, aren't to allow risky securities to be used, but rather to foster to creation and adoption of ratings that don't rely on the established ratings companies. and the changes I'm talking about aren't direct U.S. risk ones, but requirements that companies need to use something other than the ratings agencies to assess risk.
In that case, it's pretty much the opposite of what you were talking about. The ratings agencies have shown that they will rate absolute crap as AAA, so these ratings are no longer reliable.
I'm not linking this to them potentially downgrading the US debt directly in saying something like the US will say that AA debt is just as good as AAA debt, but rather saying that pissing the US off when it is at least talking about doing severe damage to them is not something that they are going to be doing.
Based on their culpability in the 2008 mess, the ratings agencies are in a precarious spot. If there's a strong push to acknowledge the reality that their AAA ratings aren't something that can be trusted along with the establishment of some other rating that people have more confidence in, at least officially, they're out of business.
Posted by SenojRetep (Member # 8614) on :
quote:Originally posted by BlackBlade: I can't see how a serious push towards tackling the debt and getting the government back into budget cannot include tax increases for the upper tier of earners. The money isn't in the middle class or the poor.
Back to the OP and thread title, it's interesting to note that the compromise bill does not seem to include any new taxes. There's some possibility that the bipartisan commission could recommend new taxes as part of the second round of deficit reduction, but in the baseline "do nothing" scenario, all $2.2T comes from spending cuts.
So, does this represent "a serious push towards tackling the debt and getting the government back into budget"? Personally I feel it's pretty weak tea; $2.2T over the next decade (about half of which we were already counting on due to planned decreases in defense spending) when planned deficits are on the order of $10T (and unplanned but likely deficits are probably that large again) doesn't really strike me as sufficient. I'll be interested to see what comes both from the bipartisan commission and from the 2012 budget debate (coming soon to a Congress near you!), but as of right now I'm only slightly less pessimistic than I was previously about the long term fiscal health of the US federal government.
<edit>Here's an interesting rundown of the deal from The Atlantic. It seems the total reductions are $2.5T (not $2.2T) and that the $1T in expected savings from military draw downs in Afghanistan and Iraq are not included in that total.</edit>
[ August 01, 2011, 03:19 PM: Message edited by: SenojRetep ]
Posted by fugu13 (Member # 2859) on :
quote:In that case, it's pretty much the opposite of what you were talking about. The ratings agencies have shown that they will rate absolute crap as AAA, so these ratings are no longer reliable.
That's exactly what I just said, not the opposite . Then I also said that if even the ratings agencies are downgrading something, financial institutions would be hard pressed to call it a reserve grade asset (and would be amply penalized for doing so, even if they found a way to do so within their regulatory framework).
That is, if you have a bunch of ratings agencies calling total crap AAA, imagine what AA looks like.
I do see your point about the general precariousness of the ratings agencies' situation. I don't think it is likely there'll be a major movement against them, though, because the only feasible paths out I see involve mandatory fees of some sort to separate the people offering securities from the people paying for ratings, and that won't fly right now.
Also, while I think the agencies might be reluctant to actually downgrade absent a more significant event, don't forget that the entire reason they're rattling their sabers is to look more credible -- to be more proactive and visible on potential problems. The US gov't might not like them for it, but it will be reassuring to a lot of their customers.
Posted by Samprimary (Member # 8561) on :
Well now we're through with it for now, back to politics as usua ..
ew, wait, politics as usual isn't a relief, what was I thinking
Posted by Black Fox (Member # 1986) on :
Come on, politics will never be a "clean" game. It is a competition for power and every quality and technique that promotes being elected into office or getting your policy solution implemented is promoted by the system. The thing to realize is that people do these things because they work. To be honest, the general ineffectiveness of our present day legislature to get anything done is indicative of our hobbled legislature and a constitution that needs serious revising to deal with a nation composed of over 300 million people.
Posted by Samprimary (Member # 8561) on :
quote:Come on, politics will never be a "clean" game. It is a competition for power and every quality and technique that promotes being elected into office or getting your policy solution implemented is promoted by the system.
brb opening 'sam's political assassination for hire'
discreet, reasonable rates
Posted by rivka (Member # 4859) on :
What's a discreet rate? Is that one that merely makes your eyes widen, rather than one that makes them pop out of your head?
Posted by Samprimary (Member # 8561) on :
its those scenes in movies we talked about where its put on a piece of paper and handed over rather than said out loud
Posted by rivka (Member # 4859) on :
*snicker*
Posted by dabbler (Member # 6443) on :
So I was wondering today... if you take the current govt federal revenue and look back in history when the govt spending bill was equal to that amount, when was that and what would it look like compared to our current spending?
Posted by Black Fox (Member # 1986) on :
The problem with that outlook dabbler is that you are working with a limited context. What you have to take in account is that our current revenue stream was decided upon using a different prediction of GDP growth etc. Well, at least the Bush era tax cuts were. I would argue that not letting them expire was an almost criminal act that was promoted for purely political reasons.
Honestly, we're setup for a double dip. Local government spending cuts have already cut into consumer spending and the federal government cuts will do the same. This will of course dry up even more revenue which should make the next set of budget talks a real winner.
Also Sam, I would never joke about political assassination. Plus, how much better is the second slimiest manipulative politician?
Posted by SenojRetep (Member # 8614) on :
Our current federal revenues are about 15% of GDP. The last time federal outlays were at that level was during the period after WWII and before and during the early part of the Korean War (1948-1952). The budget during that period is broken down by super function roughly as follows:
Defense: 33% Human Resources: 33% Physical Resources: 8% Debt Interest: 10% Other Functions: 20% Offsets: -5%
Today the budget breaks down along superfunctions roughly as follows:
The big difference is obviously increased proportional spending on Human Resources, primarily SS, SSDI, Medicare and Medicaid (along with numerous other programs like sCHIP, Housing Assistance, Unemployment Insurance, etc) with decreased proportional spending on everything else, particularly the "other" category, which includes stuff like Education, Energy, etc.
Interesting! Thanks, Senoj.
Posted by Black Fox (Member # 1986) on :
Yes, but you know that is a terrible way to present the federal budget, even if the government tends to package it that way. We love to just include social security along with regular federal spending while we include social security taxes with general government revenue. Those should clearly go into a separate "box" when we are talking about making a budget.
Posted by Samprimary (Member # 8561) on :
quote:Originally posted by Black Fox: Also Sam, I would never joke about political assassination.
I will, if it makes an excellent case for why it's silly to just write all this off under a theory of how politics will never be 'clean' enough to be above things like it, or poll fraud, or hacked elections.
There is a line where political gamesmanship turns into unethical manipulation. People may disagree where it lies, but it's there.
Posted by SenojRetep (Member # 8614) on :
quote:Originally posted by Black Fox: Yes, but you know that is a terrible way to present the federal budget, even if the government tends to package it that way. We love to just include social security along with regular federal spending while we include social security taxes with general government revenue. Those should clearly go into a separate "box" when we are talking about making a budget.
Well, personally I favor removing the firewall the separates SS and Medicare from the rest of the federal budget. I think we should have a single tax structure and a single spend structure and allocate money to SS and Medicare via the same process we do for other federal programs.
I do grant, though, that given the current funding structure it's an over-simplified way of presenting the budget.
Posted by natural_mystic (Member # 11760) on :
quote:Originally posted by Black Fox: The problem with that outlook dabbler is that you are working with a limited context. What you have to take in account is that our current revenue stream was decided upon using a different prediction of GDP growth etc. Well, at least the Bush era tax cuts were. I would argue that not letting them expire was an almost criminal act that was promoted for purely political reasons.
From the Dems' perspective, do you think there was another chip that could have been used to induce the Republicans to extend unemployment benefits and provide additional stimulus in the form of the payroll tax [eta relief]?
ETA Mind, I do find the hard pivot to deficit reduction so soon after the extension of those cuts a bit ridiculous.
[ August 03, 2011, 06:19 PM: Message edited by: natural_mystic ]
Posted by Black Fox (Member # 1986) on :
Probably not given the Republicans current intransigent behavior. To be honest I don't see how on earth they are going to get the Republicans to extend unemployment benefits again, so in some ways the Dems may have been better off not giving into that bargain. I just think its sad that by barely controlling a single house of the legislature the Republican Party basically has carte blanche.
Sam P. - There is certainly a line where political gamesmanship turns into unethical manipulation, but you also live in a system that promotes that kind of behavior. There is a kind of cognitive dissonance in loving the system, but hating the results. I just love it when everyone gets all surprised when people do bad things. That does not mean that I condone the behavior. Also, to be honest, I was trying to be somewhat sarcastic. However, I don't think that the game for power will ever be completely clean. The rewards are great enough that people will try and cheat. Heck, we can't get athletes to stop using performance enhancing drugs and the payoffs from that are nothing compared to winning the presidency or control of government.
Posted by natural_mystic (Member # 11760) on :
quote:Originally posted by Black Fox: Probably not given the Republicans current intransigent behavior. To be honest I don't see how on earth they are going to get the Republicans to extend unemployment benefits again, so in some ways the Dems may have been better off not giving into that bargain. I just think its sad that by barely controlling a single house of the legislature the Republican Party basically has carte blanche.
Actually that deal happened before the republicans had control of the house. It happened because the democrats did not have a super majority in the senate, thus could not defeat the filibuster.
Posted by Black Fox (Member # 1986) on :
I suppose I should have clarified a bit there. I wasn't trying to imply that controlling the house caused the Democrats to take that compromise. Simply that I find it sad in general that controlling a majority of the government does not give you a whole lot of power when the opposing side simply says no. I was simply stating that the Republicans controlling the House basically means that unemployment extensions will probably not happen without the Democrats piling on the compromise. There is just something wrong with the minority party dictating the policy of government.
Posted by natural_mystic (Member # 11760) on :
I understood. I was just pointing out that the system was even more dysfunctional than that- a party with control of none of the legislative bodies can demand concessions by virtue of having 41 votes in the senate.
Posted by Black Fox (Member # 1986) on :
Totally. I am not much of a fan of the expansion of obstructionist rules in the legislature.
Posted by kmbboots (Member # 8576) on :
As the dysfunction of government and the economic suffering of the middle class serve the political interestd of the Republicans, they hold all the chips they need.
Posted by ScottF (Member # 9356) on :
quote:Originally posted by Black Fox: Yes, but you know that is a terrible way to present the federal budget, even if the government tends to package it that way. We love to just include social security along with regular federal spending while we include social security taxes with general government revenue. Those should clearly go into a separate "box" when we are talking about making a budget.
There's no special box for SS tax. It goes into general government coffers to be spent however and wherever deemed necessary. Maybe that's what you're saying too, but given that there is no SS "fund", it seems fairly accurate to represent it as the lumped in figure it is.
Posted by Aerin (Member # 3902) on :
Cut social security and Medicare. We spend billions every year giving welfare to people who are solidly middle class and should have saved. If they didn't, then moving in with family is the consequence of not working and not saving.
Do that, and not only is there no need to raise taxes, then magically there will be enough money to fund education and infrastructure.
The baby boomers are robbing their grandchildren blind. This will be the first generation of Americans to leave the world much, much worse than the one they grew up in.
Posted by The Rabbit (Member # 671) on :
quote:There's no special box for SS tax. It goes into general government coffers to be spent however and wherever deemed necessary. Maybe that's what you're saying too, but given that there is no SS "fund", it seems fairly accurate to represent it as the lumped in figure it is.
I'm not sure what you mean by this. There are no physical coffers, period. There are only balance sheets and there is in fact a separate balance sheet for social security funds.
Posted by Black Fox (Member # 1986) on :
quote:Originally posted by Aerin: Cut social security and Medicare. We spend billions every year giving welfare to people who are solidly middle class and should have saved. If they didn't, then moving in with family is the consequence of not working and not saving.
Do that, and not only is there no need to raise taxes, then magically there will be enough money to fund education and infrastructure.
The baby boomers are robbing their grandchildren blind. This will be the first generation of Americans to leave the world much, much worse than the one they grew up in.
I don't think you can just blame those people for not saving enough. I think a lot of these people had no idea that so many would make it to the ages that they are currently at. In addition, They paid social security taxes their entire lives and had those taxes actually been used as they were supposed to instead of being used to make up for revenue shortfalls in other areas we wouldn't have our current problem. Basically, we were faking a larger revenue stream by playing with social security taxes as if it were regular revenue, which it was not intended to be. It is just a lot easier to con the population into raiding Social Security than it is to make them pay higher taxes.
Posted by Aerin (Member # 3902) on :
Yep, it sucks. It is going to suck for someone.
Not saving is unbelievable. If you don't save, then you have to work. That an entire nation thought otherwise is too bad.
Congress knew what it was doing when it started cashing out the Social Security fund. You can blame who started it (I do) but every Congress since perpetuated it. Not only did all these people not save, but they cashed out the savings that was being made for them.
Someone has to suffer. It's too bad it's the peope who already spent their retirement twice, but better them than their grandchildren (or worse, other people's grandchildren), who are the ones suffering now. Why should they pay for the old people who didn't bother managing their own affairs? Actions have consequences, and raiding the Social Security fund means it's empty now. Cut social security and treat the destitute elderly like the destitute everyone else.
We don't have to raise taxes. Instead, put old people on the same welfare system as everyone else, including children: if you are truly destitute, apply for welfare. If you can survive by working and living with roommates, then you have to do that.
Posted by ScottF (Member # 9356) on :
quote:Originally posted by The Rabbit: I'm not sure what you mean by this. There are no physical coffers, period. There are only balance sheets and there is in fact a separate balance sheet for social security funds. [/QB]
I was referring to coffers in the generic sense. There may be a balance sheet for SS, but the actual dollars collected are not set aside in any way - they're appropriated and spent as general federal funds.
Not that it matters all that much, as SS output is outpacing the input at an ever-growing rate. I'm amazed at how some people struggle with the basic math that happens as a result of people living longer.
Posted by TomDavidson (Member # 124) on :
quote:If you don't save, then you have to work. That an entire nation thought otherwise is too bad.
To be fair, the government told those people that it was saving on their behalf, that that's what Social Security was. They were lied to, and I think blaming them for it is unnecessary. That many of them now understand the truth but are still trying to cling to what they perceive as promised entitlements is a legitimate beef, I believe, but I don't really begrudge them that; our generation has gone our whole lives knowing that we'd have to save for our future, but many of our parents really did think that they wouldn't have to -- that real estate and Social Security would take care of everything.
Posted by kmbboots (Member # 8576) on :
I think that many people did do their best to save, but that isn't always as simple as Aerin makes it sound when you are working a job that barely pays your rent or if you have a sick child or get sick yourself or have your retirement savings wiped out by unethical (but still legal) business gambling or if you should lose your job for any reason or have medical bill at all...
Lift the cap. Tax the income of the wealthy at the same rate that ordinary people pay for social security.
As delightful as it would be to make octogenarians work till they drop, (oooo...maybe in some physically demanding job for added giggles) there aren't all that many jobs available for them. Having them shuffle to homeless shelter to welfare office to food pantry and back with their walkers (wait...just who is paying for that walker!) would also be a hoot.
Posted by Aerin (Member # 3902) on :
Someone has to suffer. Social Security was never intended to be enough to live on anyway. It was treated as something it was never meant to be, and then badly managed and looked after. For all the protests that they were lied to, I've known all my life Social Security was a ponzi scheme and the fund was being raided to pay for goodies of the day. It wasn't an enormous secret.
The question isn't whether or not there is going to be a pinch. The question is who gets to feel it. Therefore: the people who didn't manage their affairs, didn't save, and voted for politicians who robbed the savings account in plain sight. It has to be someone. It should be them.
NOT their grandchildren. Not those who weren't even alive when all the self-deluded decisions were being made.
Of course, if any elderly are truly destitute and unable to work, then they should be taken care of the same way their destitute and disabled grandchildren are taken care of: welfare and Medicaid. If it is good enough for children, it is good enough for old people.
----
Of course, most old people won't go to homeless shelters if they lose or get sharply reduced social security. They'll live in smaller places or move in with family. Which...is what we tell people of all other ages to do when they can't afford the lifestyle they want: live the lifestyle you can afford. You won't starve and you won't sleep on the streets (food stamps + Medicaid + housing welfare), but unless you saved, you won't live a middle class lifestyle either.
And then there is no problem paying for bridges and the subway and schools - things that only the government can do.
Posted by kmbboots (Member # 8576) on :
I don't think that a country that won't take care of its ill or its elderly can be considered great by any meaningful measure.
There are elderly people living on the streets now. They are already having to choose between medicine and food. Already working past the age where their bodies can stand it. Why on earth would we choose to push more of them to that extreme? We don't have to.
Posted by TomDavidson (Member # 124) on :
quote:The question isn't whether or not there is going to be a pinch. The question is who gets to feel it. Therefore: the people who didn't manage their affairs, didn't save, and voted for politicians who robbed the savings account in plain sight. It has to be someone. It should be them.
Personally, I feel like this is an open question. I certainly understand the impulse to say "the people who are least prepared for this crisis, for whatever reason, should suffer the most." But my own feeling is that there's enough blame to go around, and consequently the people who would be least tangibly harmed by the "pinch" are the ones who should be pinched the hardest. My goal here isn't some kind of social breeding experiment, to reward the wise and good and punish the foolish; my goal here is to minimize actual harm.
It's not a matter of old people vs. young people; it's a matter of people with assets vs. people without them. And I'm very interested in protecting the people without assets.
(This isn't just an academic issue for me, mind; my own mother is destitute, has been working under the table for years even when she can find work (which means that her SS payment would be a pittance even could she bring herself to "retire"), and carries thousands of dollars in debt that she'll never be able to pay back. She has refused for years to let me help her in concrete ways, although she did bend to let me cover the down payment on the house in which she's living. She hasn't had medical insurance in years, and bounces from "holistic" remedy to holistic "remedy" like a Ping-Pong ball. In ten years, her life will be a constant agony, and it's entirely her fault -- and yet I would see that suffering reduced.)
Posted by Aerin (Member # 3902) on :
No. You made either made a mistake in reading what I wrote or else you deliberately are misrepresenting what I wrote (I suspect the latter), but in either case you are barking up the wrong tree.
Go back to tree hunting and you might be worth responding to.
Posted by Aerin (Member # 3902) on :
quote:I don't think that a country that won't take care of its ill or its elderly can be considered great by any meaningful measure.
We totally should. Food stamps + welfare + Medicaid + housing assistance. Absolutely support those things.
Posted by shadowland (Member # 12366) on :
quote:Originally posted by Aerin: Therefore: the people who didn't manage their affairs, didn't save, and voted for politicians who robbed the savings account in plain sight. It has to be someone. It should be them.
I think a valid argument could be made that people paying into Social Security were trying to manage their affairs and were saving. So that just leaves the group that voted for politicians who robbed the savings account in plain sight. Do you have a method of determining who specifically comprises this group?
Posted by Destineer (Member # 821) on :
How about we instead let the burden fall on the people who can bear it easiest? What's so crazy about that idea?
ETA: This could be done by means-testing social security.
Posted by Destineer (Member # 821) on :
quote:We don't have to raise taxes. Instead, put old people on the same welfare system as everyone else, including children: if you are truly destitute, apply for welfare.
This might have worked before the Clinton-era welfare "reform." But now you can only take home five years of benefits total, and only two years at a stretch. So you'd have to retire exactly two years before you die.
Posted by Stone_Wolf_ (Member # 8299) on :
Planning to die soon? Now's the time to retire! Still have plans for breathing? Get back to work!
Posted by Aerin (Member # 3902) on :
quote:I think a valid argument could be made that people paying into Social Security were trying to manage their affairs and were saving.
No they weren't; they were paying payroll taxes. Paying taxes is not the same thing as saving. (President Bush actually floated the idea of putting the payroll taxes into accounts for each individual. It got shot down. Payroll taxes are straight up taxes still and as always.)
This is really, really basic stuff. Unless for the next lesson I have to explain that just because you have a credit card, that doesn't mean you have money.
------
So disability gets moved to the welfare system. If you can prove you are unable to perform work of any kind, then you can stay on food stamps and housing assistance and Medicaid and welfare.
People live much, much higher than they need to - there are roommates and multi-family houses. I know society is okay with asking people who don't have money to do that; we tell young people who can't afford to live alone to live with family or take on roommates now.
Don't want to seek out a Golden Girls setup when you're old? Then live in a smaller place now and SAVE.
[ August 04, 2011, 11:36 AM: Message edited by: Aerin ]
Posted by Aerin (Member # 3902) on :
Paying taxes is not the same as saving. It really isn't. Not even a little bit, and not in any shape or form.
The Supreme Court has ruled as such on multiple occasions. If social security dissapears, no one has legal standing to sue to reinstate based on having paid in.
That is absolutely, completely basic. If someone thinks paying social security is saving, then they don't understand the first thing about either saving or how the government runs. I'm completely serious.
ETA: The post I was responding to disappeared.
Posted by shadowland (Member # 12366) on :
Yeah, I deleted my post. I figured it wasn't worth it. That's all I have to say on the matter.
Posted by Destineer (Member # 821) on :
quote:So disability gets moved to the welfare system. If you can prove you are unable to perform work of any kind, then you can stay on food stamps and housing assistance and Medicaid and welfare.
Why make all these changes when the system we have will work fine, if we only pay social security to people who are actually in need?
Posted by Aerin (Member # 3902) on :
quote:when the system we have will work fine, if we only pay social security to people who are actually in need?
Why have two systems? Talk about inefficiencies - there are two entirely different systems, and the difference is age. Fold in the old people into the general population, and then you help all the people in need, you don't get a pass on having to take care of yourself when you can because of a birthday.
That's what I really want - smash this artificial distinction between the old and in need and everyone else in need. We have socialized medicine: for old people. We have socialism in general: for old people. A quarter of American children live in poverty. Less then 7% of American old people live in poverty.
It is a shameless, tragic, generational money grab. It didn't start out that way, but it's that way now. Get rid of the myth that an extra birthday allows you to pick your grandchildren's pockets, and let's treat all disabled and destitute the same (decently. And if you don't want to live like that when you're old, then you'd better save.
The great, great advantage of living below your means now is that it blesses you twice: you can save more, and you HAVE to save less. It takes less to maintain your lifestyle in retirement, because you are living on less. Good things all around.
Let's abandon the myth that present tightness is more important than saving for retirement. Saving for retirement should come off the TOP - and then figure out what kind of lifestyle you can afford on what's left.
Posted by Mucus (Member # 9735) on :
It seems to me that means-testing social security is kinda backward when you think about the normal reason for cutting high marginal taxes.
The normal conservative explanation for why higher taxes on higher tax brackets should be avoided is that it discourages those that can make additional money from actually working. With less of an monetary incentive to produce, they would just sit on their proverbial asses.
Now consider a person that is approaching retirement, they have the option of saving up or simply relying on social security. However, if they save up, then due to means-testing, they won't get social security and to add insult to injury, they'll get taxed on the investment income from their saving as well. Instead, it is more rational to not save and avoid the tax.
So it seems to me that means-testing social security is probably counter-productive.
Posted by Stone_Wolf_ (Member # 8299) on :
Regardless of what the courts ruled or your assertion that "it's basic"...social security is presented as a way to save for retirement...you pay in, you get paid. I don't think it is fair to say to all those old people, "Thanks for all your decades of money, you get -nothing- back!" Robbing their grandkids pocket's indeed!
Posted by Destineer (Member # 821) on :
quote:Why have two systems?
Well, because it's politically impossible in the current climate to pass any expansion of welfare or similar benefits for the poor. In particular, if we were to try repealing the 90s welfare "reform" (which would be necessary if welfare was going to provide security to poor retirees), we would get exactly nowhere. In today's atmosphere even Democrats wouldn't be willing to back up such a plan.
I'm not even sure it's politically possible to institute a social-security means test.
Mucus, good point. I don't know how to answer it, but I suspect that fugu (who was also in favor of means-testing last time I checked) would have a good answer.
Posted by Aerin (Member # 3902) on :
quote:Now consider a person that is approaching retirement, they have the option of saving up or simply relying on social security. However, if they save up, then due to means-testing, they won't get social security and to add insult to injury, they'll get taxed on the investment income from their saving as well. Instead, it is more rational to not save and avoid the tax.
So it seems to me that means-testing social security is probably counter-productive.
This I agree with. There are serious problems with means-testing social security.
That's why social security shouldn't be the way to secure a middle-class retirement. In fact, retirement shouldn't be funded by the government at all.
If you get a middle class retirement either way, it is WAY more sensible as a middle class person to spend all you've got and then claim you need social security because you're broke.
If, instead, you don't promise a middle class retirement and instead put destitute old people in with destitute all other people, then it makes sense to save. In order to get a middle class retirement, you have to save for it. You don't get one handed to you, funded by your (or someone else's) grandchildren, who have to live with roommates or put off forming their own families because of the burdens of keeping old people in a 3-bedroom house for thirty years.
---
Stone_Wolf, that payroll taxes been used for almost thirty years to pay for general items is not a secret. I knew it, as a teenager. There's no getting around that this is a sad situation. It would be lovely to stay on Love Boat when it comes to social security. However, the ride is over. Defunding infrastructure and education and jacking up taxes in order to pay for middle class lifestyles for old people who didn't save isn't made okay just because no one says what is is out loud.
Posted by Aerin (Member # 3902) on :
quote:Well, because it's politically impossible
Soon, very soon, funding inefficiencie is going to be politically impossible. When it is, that's the way to tack: treat poor old people like poor other people, and middle class old people like middle class other people.
Of course, the other way to do this is to put EVERYONE on social security and Medicare. That will make very obvious that it isn't possible to support a middle class lifestyle for an entire nation on credit, and then the serious changes WILL be made to remove the illusion that's the ponzi scheme is okay.
I also think that would be absolutely fantastic because it infuriates and appalls me that old people get socialized medicine and children don't. Why the HECK aren't children on Medicare? Why is it okay to say old people matter and children don't? Why is the proportion of children in poverty five times the proportion of old people? Despite the sob stories that appear every time someone mentions delicately that money doesn't grow on trees, children stil clearly get the shaft. The current system is robbing children so many ways I am losing count: no socialized medicine, defunded infrastructure and schools, higher taxes, cripplingly expensive college tuition, and poorer benefits promised. While their grandparents shine their no-debt-needed diplomas in an empty 3-bedroom house they can afford because they started getting government checks on their 65th birthday, despite their assets.
But kids don't vote. Who cares if they suffer.
[ August 04, 2011, 01:15 PM: Message edited by: Aerin ]
Posted by Destineer (Member # 821) on :
Well, until then -- until after welfare is redesigned to accommodate the tide of needy elderly -- let's keep social security around. Does that sound prudent?
Posted by Destineer (Member # 821) on :
I like the idea of putting everyone on Medicare! The difference is, I think it would work out great.
Posted by Aerin (Member # 3902) on :
Not financially. Which is the way we are all talking about.
If you ignore the money aspect, you can do whatever you want. Checks for everybody!
Posted by Aerin (Member # 3902) on :
quote:Originally posted by Destineer: I like the idea of putting everyone on Medicare! The difference is, I think it would work out great.
What difference?
I don't care if adults are on Medicare or not. I absolutely want children on Medicare, though. Adults can get a job. Kids can't.
If you are taking a stab at me, then you aren't paying attention to what I think about health care in general. That's fine that you don't know. It is not fine that you speak as if you do.
Posted by Destineer (Member # 821) on :
We'll see. As has been pointed out ad nauseum (or at least, until I for one want to puke) the Canadian and European health systems work out fine.
Posted by Destineer (Member # 821) on :
I know that you actually do want guaranteed health care for children. I don't know if we've talked about this before, but I've certainly seen you talk about it.
Posted by Aerin (Member # 3902) on :
The "not financially" was directed at the Social Security comment, about whether keeping that status quo was prudent.
Posted by Destineer (Member # 821) on :
I see, thanks for the clarification.
I think you have to balance financial prudence with humanitarian concerns. Ditching SS entirely right now would ruin a lot of lives. It's just not moral to leave the elderly poor with no recourse (except maybe for two years, if they haven't already used up their lifetime welfare benefits).
Posted by SenojRetep (Member # 8614) on :
Some (rough) quantitative information on means testing SS and Medicare:
The Peterson Foundation sponsored a "Fiscal Summit", essentially a budget writing contest. They got representatives of six different think tanks to submit proposed budgets.
One of the organizations to submit a budget was the Heritage Foundation. Their proposed budget included a means test on both Medicare and Social Security, decreasing benefits to retirees with individual non-Social Security incomes in the $55-110K range, and eliminating them for those making more. This would limit benefits for an estimated 9% of retirees and eliminate them for about 3.5%. The estimated result (not taking into consideration the sort of strategic decisions that Mucus pointed out) is a budget difference of about 1.5% of GDP (or about $200B/year).
My point is that, while there seems to be some level of consensus across the political spectrum that means testing is a good idea, it's at best only a part of a comprehensive budget solution.
Posted by kmbboots (Member # 8576) on :
Aerin, I think that your idea of who is helped by social security is a tad distorted.
For example:
My parents both worked their whole lives with a 10 year gap for my mother when she had small children. She went back to work as soon as the youngest was in school. We did not live in a fancy house - everyone shared a room with at least one sibling. We had enough to eat but it was pretty plain and we all wore hand me downs and clothes my mother and grandmother made. And clothes from thrift stores. My mother is a thrift store goddess. We did not go on family vacations and we only had one car. My brother was born with a serious heart problem and his medical bills pretty much wiped out what they had saved. The rest of us had some medical bills, too. My mom needed dental work but went without. All of us kids worked as soon as we were old enough - babysitting or yard work and then "real" jobs once it was legal.
My dad slipped and hurt his back at work and got fired (which wasn't legal but the company could afford a better lawyer). Dad was flat on his back for about 18 months and (although he made a little money doing phone sales) that pretty much killed those savings.
My parents are in their mid-70s and both still work full time. Jobs for people their age, though, don't pay so well. With social security plus what they earn, they can afford to live together in a small apartment. Medicare made it possible for my dad to get treatment when he recently broke his arm just below the shoulder, get a pacemaker which is saving his life, and get his diabetes medication.
I suppose that after 47 years of marriage, we could split them up among my sisters. One has a fold out sofa and my nephews could give up the bedroom they share. Taking on the debt for their medical care would wipe out the savings that my siblings and I have built up. Let's hope we don't have any bills of our own!
And my family is better off than most. The implication that my parents are money grubbing thieves, just waiting to drain the blood of their grandchildren is beginning to piss me off.
Posted by Aerin (Member # 3902) on :
Quintupling taxes on the young generation now in order to pay for an older generation who doesn't want to double up with family pisses me off. When that becomes financially impossible, saying the answer is to increase taxes even more pisses me off.
See, sob stories. No plans, no mention of the nephews' gutted future, no vision, no reforms, no mention of money. Just more sob stories and putting a hand out crying for it to be filled. I get the sob stories. I'm aware of them. But if you want to talk about the system, you have to talk about money. Sob stories aren't enough, and they aren't a rebuttal to the viscious truth that social security is broke and it was a ponzi scheme all along.
I actually think it is okay to have to spend down savings before receiving government assistance. I completely believe in government assistance when it is needed, but it isn't needed until you tap the family and personal savings reserves first. I bet if you redirect the mortgage/rent for the house being paid now, you could add a room onto one of the children's houses for your parents - a room and a kitchenette, even. It won't be fun, but none of this is fun. For anyone.
My father is older as well and he'll be working until the sun sets. His goal is to get his hours down to 40 hours a week before his 70th birthday. The difference is that an enormous chunk of what he makes as a should-be-retired will be taken from him.
quote:I think you have to balance financial prudence with humanitarian concerns. Ditching SS entirely right now would ruin a lot of lives. It's just not moral to leave the elderly poor with no recourse (except maybe for two years, if they haven't already used up their lifetime welfare benefits).
I agree. I honestly believe that the bill to banish social security would include a provision to expand the period for which people qualify for welfare to cover those who are unable to work and will not become so (short of the fountain of youth). (The reason the welfare reform was even possible was because the disabled don't do welfare - they recieve social security. There's no way SS would be abolished without that being taken care of.)
Posted by kmbboots (Member # 8576) on :
What house are you suggesting they mortage/rent? What savings? What savings they did have were eaten up by medical bills and that's with Medicare.
My point is not to make anyone feel sorry for my parents. They are fine. My point is that the are better off than most and that narrow edge of "fine" is possible because of Medicare and Social Security both of which they have been paying into for 60 years.
What do you suggest for the elderly who have no children to support them?
Posted by Stone_Wolf_ (Member # 8299) on :
Please address that these people paid into a retirement insurance plan all their lives and it is vastly unfair to take away their fully paid for benefits.
Posted by Aerin (Member # 3902) on :
They paid into a retirement insurance plan while simultaneously cashing out that retirement insurance plan. That means it's now empty. That does suck, but it is not unfair.
If you buy a house, pay the mortgage, and then open a home equity line of credit and spend the value of your house, then it doesn't matter that you paid your first mortgage. Not when you took out a second and spent it.
If you save once, then you can spend it once. The SS fund was spent at the same time it was being filled.
It's like a life insurance plan: if you cash out the life insurance plan, then you don't get a life insurance payment at the end. You already got the money. It's been spent. You can be mad at your own bad money management, but you can't be mad that it isn't fair. It is fair.
Posted by Aerin (Member # 3902) on :
quote:What do you suggest for the elderly who have no children to support them?
The same resources that exist for the non-elderly who have no one to support them.
Posted by Stone_Wolf_ (Member # 8299) on :
That house analogy is so very flawed...it's more like, you paid for your mortgage, but the bank took your payments and used them to pay out their debts, and then took your house saying, sorry, we are out of money, if you really wanted to keep your house, you should have saved up and been ready for us to take it and give us more money for it.
Posted by Aerin (Member # 3902) on :
Nope. The same Congress that promised future benefits and took your money is the Congress that spent it on other things. In your analogy, the bank isn't elected. Congress was - over and over, and re-elected and re-elected, all while spending away the Social Security fund, which is now as empty as the Weasley's vault.
If Congress can't be trusted or relied on and don't count, then their promises of retirement funding don't count either. Either they were the money managers or they weren't (they were), and what they did they did in public. With the public's consent and affirmation.
Money's gone and the promises aren't legally binding. Supreme Court agrees.
Posted by Stone_Wolf_ (Member # 8299) on :
I addressed this half a page up...I don't give a rip about legality. It is wrong, ethically. And when you say stuff like:
quote:Just more sob stories and putting a hand out crying for it to be filled.
...you are even more wrong.
These people paid in good faith, their whole lives. Just because the system is flawed and self serving doesn't mean that the expectation of our government paying out what it agreed to pay out after taking people's money makes these people worthy of your disdain.
Your attitude more then your view point is aggravating and inappropriate.
Posted by Aerin (Member # 3902) on :
I GET that it is sad. There is absolutely no question that more need than money to fill it is sad.
The question is not how to eliminate need. The question is who feels it most. Every "but we promised!" statement ends with "and so we will take everything we want from the youngest generation, despite the suffering it's causing them!"
If you don't want the last half of that sentence, don't say the first. The fact is that the fund is empty, and if you act like it isn't, then you taking resources from young people, who will suffer as a result. Unacceptable.
And if someone is relying on social security for retirement, that wouldn't work even if the fund wasn't empty. It was never meant to be a sole source of income - who doesn't save for retirement? If you don't save, you are saying you WANT to work for the rest of your life. Bad money management, even if it wasn't accompanied by a "sure, spend all my savings now" nod at the voting booth.
Posted by kmbboots (Member # 8576) on :
I suppose it is time for me to recognize the futility of trying to teach empathy (for anyone other than heiresses) to Aerin.
Maybe you will learn it on your own someday. With any luck, you will get old, too.
We can take care of our poor children without casting off our poor elderly, we just need to shift the burden of that onto those who can most afford it. Our problem is not that there isn't enough; our problem is in how we distribute what there is.
Posted by natural_mystic (Member # 11760) on :
quote:Originally posted by Aerin: Soon, very soon, funding inefficiencie is going to be politically impossible. When it is, that's the way to tack: treat poor old people like poor other people, and middle class old people like middle class other people.
Of course, the other way to do this is to put EVERYONE on social security and Medicare. That will make very obvious that it isn't possible to support a middle class lifestyle for an entire nation on credit, and then the serious changes WILL be made to remove the illusion that's the ponzi scheme is okay.
1. Old people aren't just like their class counterparts in that they are far more likely to suffer from disabilities and, in the event that they are out of work, there is a documented bias against hiring them. Given that they probably can't find a job anyway, giving them greater support does not have the effect of inducing otherwise-employable people to remain unemployed.
2. My understanding is the SS is not enough to support a middle class lifestyle. Or do we have a different definition of middle class?
Posted by Mucus (Member # 9735) on :
quote:Originally posted by Stone_Wolf_: These people paid in good faith, their whole lives.
I'm in a different country, so I don't have a dog in this fight. However, I don't think you can cleanly separate the government from the people, after all, it is a "government *of* the people, *by* the people." If the government blew the money, the people blew the money too.
You can make the case that the people in this case told themselves self-serving lies (and many people IRL do), but I don't think one can neatly shift the fault away from people to the government as if they are two totally independent groups.
(Note: I'm deliberately not commenting on whether social policy should take into account who is "at fault")
Posted by Stone_Wolf_ (Member # 8299) on :
So, Mucus, by your statements you are implying that average citizens should monitor federal spending and then, once it's clear to these average citizens that their elected officials are spending too much to the point that their SSI benefits are gone, they should stop the federal government's over spending?
How exactly was that supposed to work?
Posted by Aerin (Member # 3902) on :
Oh, please, kmboots, don't insult me by pretending that because you are clearly bad with understanding money, that means you have more empathy. I have tons of empathy. That means I don't support too-expensive programs that jack up our economy and impoverish the future in favor of taking care of those too good to ask family for help.
If you want to impress me with something, try showing a smidgeon of competence in money management. If all you want is credit for empathy, then knock yourself out and hope your landlord will accept EmpathyBucks.
Posted by Mucus (Member # 9735) on :
quote:Originally posted by Stone_Wolf_: How exactly was that supposed to work?
These are *elected* officials, are they not?
Posted by Stone_Wolf_ (Member # 8299) on :
Boots: I highly advise against responding to kat's above post...she's way off and anything you say (while justified) will only make things worse. Let it go, she doesn't get it.
Posted by Stone_Wolf_ (Member # 8299) on :
Mucus: Sure, so we impeach them? And then what, call for their spending to be reversed? And then have emergency reelections?
Unrealistic beyond measure.
Posted by Aerin (Member # 3902) on :
The House sets the budget. Every single member of the House is up for relection every two years.
There is, in fact, a way of showing displeasure over bad money management. People simply didn't.
---
That is, in fact, why the House initiates budget bills. If it has to do with money, it comes from the House. It doesn't take an impeachment to replace a House member - the first time the House raided the SS fund, there should have been an outrage and the authors of the bill and all those who voted for it should have been replaced at the next election. The next year's budget would NOT have had the same provision, I guarantee.
Democracy is ANNOYING. You have to PAY ATTENTION. It's HARD. No kidding. In exchange for a "do whatever - I don't care" attitude, voters are getting the just rewards of that. "We did whatever. Money's gone. You didn't mind at the time."
Posted by kmbboots (Member # 8576) on :
Bad policy is not grounds for impeachment. And, sadly, the wealthy have a disproportional say in both who gets elected (campaign finances) and what they do once they get elected (lobbyists and more campaign donations).
Posted by Aerin (Member # 3902) on :
Every two years there is an election. For all the whining about who gets what campaign donations, reps still need the votes. There are more middle class and poor than wealthy. They should have voted accordingly.
They didn't.
"It's not our fault" doesn't work in our country. Good for us. Rather...just and fair for us. We get the government we deserve. A government that spent their retirement before they made it there is exactly the government apathetic bad money managers deserve.
Posted by Stone_Wolf_ (Member # 8299) on :
You don't actually know the definition of the word empathy do you?
Posted by Aerin (Member # 3902) on :
Apparently you think it means "bad with money" and "believes in the power of wishful thinking".
Sad commentary aside, insulting me won't reverse the financial habits American's let Congress get away with for the last thirty years.
If you have a plan for spending money that has already been spent, I'm all for it. Otherwise, your plan is to spend the younger generations' money.
I know you're just insulting me because you're angry, can't understand the money situation, and you're losing the argument, but you should still knock it off.
Posted by Stone_Wolf_ (Member # 8299) on :
I'm not angry or insulting...you can still have the same opinion of the financial situation and be nice about it...show some empathy...as I said before, it's not your beliefs that rankle, it's your attitude.
Posted by Aerin (Member # 3902) on :
I'm wrinkling my forehead as I write.
I actually find this demand to be more "empathic" more than a little sexist. Because I talk about money, that means I'm broken? Because I don't end every paragraph in tears, then I'm being rude? I have most certainly expressed sadness at the present situation on multiple occasions, but the response to my very clear and cogent point that the money has been spent already is "be more sad about it!"
Quit demanding I weep and wail incoherently before bestowing your worthless approval.
Posted by Stone_Wolf_ (Member # 8299) on :
Posted by kmbboots (Member # 8576) on :
How is empathy sexist? Why do you think that we took money out of the social security "pot" but can't put money into it? There is a lot of money in this country, just not in the right places.
Posted by Destineer (Member # 821) on :
quote:I agree. I honestly believe that the bill to banish social security would include a provision to expand the period for which people qualify for welfare to cover those who are unable to work and will not become so (short of the fountain of youth). (The reason the welfare reform was even possible was because the disabled don't do welfare - they recieve social security. There's no way SS would be abolished without that being taken care of.)
I see. That seems like an unlikely outcome to me, actually. More likely we'll keep doing what we've been doing, namely inching up the SS retirement age. Eventually that will effectively abolish the program, with no need to institute unpopular "socialist" improvements in welfare.
I'd rather see SS turned into a de facto welfare system for the elderly. In some ways that might be less cost-efficient than putting them on welfare, but keep in mind that large changes to the bureaucracy are themselves expensive undertakings by nature.
Posted by Aerin (Member # 3902) on :
Hmm...
Actually, raising the social security age is both necessary (we live so much longer than in the 1930s) and...okay, I think it has unintended racist effects (MOST of us live so much longer, but not all). Considering the life expectancies and the differences between them between the different ethnicities, continually raising the SS age while still requiring everyone to pay creates a system where a whole lot of brown people support the old white people.
Social Security isn't savings, and one of the ways you can tell is that if you die before you start collecting, then you don't get to bestow your contributions in your will. Creating a system where huge numbers of people HAVE to pay in but are less and less likely to benefit really bothers me.
Since racial minorities are more likely to be on welfare in their youth but caucasions are more likely to collect SS for longer, merging the systems eliminates the current system where there is a gold-plated version of welfare for white poor people and a clunkier, less-generous version of welfare for minorities.
[ August 04, 2011, 03:24 PM: Message edited by: Aerin ]
Posted by dabbler (Member # 6443) on :
It's basically an annuity. Which I'm fine with. It needs tweaking but I think as a principle, it's sensible.
Posted by Aerin (Member # 3902) on :
If it actually were an annuity, I would be more fine with it also. If it were voluntary, if it were legally protected, and if it were hands-off to spending on general fund, it would be much more palatable.
If it were actually an annuity, President Reagan would have died in prison and the elderly would be able to sue. Taxpayers would opt in and be able to opt out. It mimics an annuity without the protections of an annuity, which means it is a non-voluntary ponzi scheme. Which I am not fine with.
Posted by Destineer (Member # 821) on :
quote:Actually, raising the social security age is both necessary (we live so much longer than in the 1930s) and...okay, I think it has unintended racist effects (MOST of us live so much longer, but not all).
Classist effects, as well, since it's much more difficult and harder on the body to work at a blue-collar job well into your 60s. On average.
Anyway, I like your welfare-expansion idea fine, but I don't think it's going to pass Congress any time soon.
Posted by natural_mystic (Member # 11760) on :
quote: 1. "Cut social security and Medicare. We spend billions every year giving welfare to people who are solidly middle class and should have saved. If they didn't, then moving in with family is the consequence of not working and not saving."
2. "Congress knew what it was doing when it started cashing out the Social Security fund. You can blame who started it (I do) but every Congress since perpetuated it. Not only did all these people not save, but they cashed out the savings that was being made for them.
Someone has to suffer. It's too bad it's the peope who already spent their retirement twice, but better them than their grandchildren (or worse, other people's grandchildren), who are the ones suffering now. Why should they pay for the old people who didn't bother managing their own affairs? Actions have consequences, and raiding the Social Security fund means it's empty now. Cut social security and treat the destitute elderly like the destitute everyone else.
We don't have to raise taxes. Instead, put old people on the same welfare system as everyone else, including children: if you are truly destitute, apply for welfare. If you can survive by working and living with roommates, then you have to do that."
3. "Someone has to suffer. Social Security was never intended to be enough to live on anyway. It was treated as something it was never meant to be, and then badly managed and looked after. For all the protests that they were lied to, I've known all my life Social Security was a ponzi scheme and the fund was being raided to pay for goodies of the day. It wasn't an enormous secret.
The question isn't whether or not there is going to be a pinch. The question is who gets to feel it. Therefore: the people who didn't manage their affairs, didn't save, and voted for politicians who robbed the savings account in plain sight. It has to be someone. It should be them."
4. "Why have two systems? Talk about inefficiencies - there are two entirely different systems, and the difference is age. Fold in the old people into the general population, and then you help all the people in need, you don't get a pass on having to take care of yourself when you can because of a birthday.
That's what I really want - smash this artificial distinction between the old and in need and everyone else in need. We have socialized medicine: for old people. We have socialism in general: for old people. A quarter of American children live in poverty. Less then 7% of American old people live in poverty.
It is a shameless, tragic, generational money grab. It didn't start out that way, but it's that way now. Get rid of the myth that an extra birthday allows you to pick your grandchildren's pockets, and let's treat all disabled and destitute the same (decently. And if you don't want to live like that when you're old, then you'd better save."
5. "Soon, very soon, funding inefficiencie is going to be politically impossible. When it is, that's the way to tack: treat poor old people like poor other people, and middle class old people like middle class other people.
Of course, the other way to do this is to put EVERYONE on social security and Medicare. That will make very obvious that it isn't possible to support a middle class lifestyle for an entire nation on credit, and then the serious changes WILL be made to remove the illusion that's the ponzi scheme is okay.
I also think that would be absolutely fantastic because it infuriates and appalls me that old people get socialized medicine and children don't. Why the HECK aren't children on Medicare? Why is it okay to say old people matter and children don't? Why is the proportion of children in poverty five times the proportion of old people? Despite the sob stories that appear every time someone mentions delicately that money doesn't grow on trees, children stil clearly get the shaft. The current system is robbing children so many ways I am losing count: no socialized medicine, defunded infrastructure and schools, higher taxes, cripplingly expensive college tuition, and poorer benefits promised. While their grandparents shine their no-debt-needed diplomas in an empty 3-bedroom house they can afford because they started getting government checks on their 65th birthday, despite their assets."
6. "Quintupling taxes on the young generation now in order to pay for an older generation who doesn't want to double up with family pisses me off. When that becomes financially impossible, saying the answer is to increase taxes even more pisses me off.
See, sob stories. No plans, no mention of the nephews' gutted future, no vision, no reforms, no mention of money. Just more sob stories and putting a hand out crying for it to be filled. I get the sob stories. I'm aware of them. But if you want to talk about the system, you have to talk about money. Sob stories aren't enough, and they aren't a rebuttal to the viscious truth that social security is broke and it was a ponzi scheme all along."
7. "Nope. The same Congress that promised future benefits and took your money is the Congress that spent it on other things. In your analogy, the bank isn't elected. Congress was - over and over, and re-elected and re-elected, all while spending away the Social Security fund, which is now as empty as the Weasley's vault.
If Congress can't be trusted or relied on and don't count, then their promises of retirement funding don't count either. Either they were the money managers or they weren't (they were), and what they did they did in public. With the public's consent and affirmation."
8. "Actually, raising the social security age is both necessary (we live so much longer than in the 1930s) and...okay, I think it has unintended racist effects (MOST of us live so much longer, but not all). Considering the life expectancies and the differences between them between the different ethnicities, continually raising the SS age while still requiring everyone to pay creates a system where a whole lot of brown people support the old white people.
Social Security isn't savings, and one of the ways you can tell is that if you die before you start collecting, then you don't get to bestow your contributions in your will. Creating a system where huge numbers of people HAVE to pay in but are less and less likely to benefit really bothers me.
Since racial minorities are more likely to be on welfare in their youth but caucasions are more likely to collect SS for longer, merging the systems eliminates the current system where there is a gold-plated version of welfare for white poor people and a clunkier, less-generous version of welfare for minorities."
9. "If it actually were an annuity, I would be more fine with it also. If it were voluntary, if it were legally protected, and if it were hands-off to spending on general fund, it would be much more palatable.
If it were actually an annuity, President Reagan would have died in prison and the elderly would be able to sue. Taxpayers would opt in and be able to opt out. It mimics an annuity without the protections of an annuity, which means it is a non-voluntary ponzi scheme. Which I am not fine with."
I read the above as making/taking the following arguments/positions: (a) The government should not be giving money to people who shouldn't need it. Some of these people don't need it and some would not have needed it (See 1)
(b)Implicit in the argument in (a) is the view that, as the government has borrowed against the trust fund, the funds are not there. In particular payroll taxes should be viewed like any other tax, so, in paying SS, it is the government giving money away, rather than returning money. This is explicitly stated in 2. (see 1,2...)
(c)Given that SS is not sustainable, someone has to take the hit, and it should be current recipients of SS. Those who are destitute can be moved to welfare. (See 2, 3)
(d) The current receivers of SS are deserving of this hit because (a) the should have saved more, and (b) they voted in governments who appropriated from the trust fund. (See 2, 1, 3,7)
(e) Young people should be getting more from the government in terms of healthcare, infrastructure ... (See 5.)
(f) Old people should be treated the same as young people. (See 5, 4)
(g) Taxing more to solve this is bad, perhaps because it is generational theft. Taxing even more after that is bad. (See 6)
(h) As tweaks go simply raising the SS age is possibly unfair to minorities[/blue collar workers].
(i)SS is not savings. To pay and not collect is bad. A system in which that is fairly common is bad.
(j) The involuntariness of SS, the lack of legal protection of SS and the ability of congress to appropriate from the trust fund all make SS bad.
Fair representation? My responses: (a) I disagree with this. I don't think a lack of extreme cynicism in the government makes it fair to violate a trust so completely.
(b) If or when the government reneges on the IOU this fear will be born out. Until then SS is OK but needs tweaks. I will mention a tweak later.
(c & d) As I mentioned, I don't consider a lack of cynicism sufficient to make it moral to punish old people in such radical fashion. I also don't buy the attempt to tie moral culpability to a lack of political awareness. Further, the president who decided to cut progressive income tax rates and borrow from the regressively taxed trust fund would have received relatively few votes from the low-income voters who would be most hurt by the abolition of SS.
(e) Agreed.
(f) I think there are good reasons to classify old and young people differently as I pointed out in an earlier post.
(g) I find this the weakest part of your position, but I assume this is pretty axiomatic to you so I won't dwell on this. As I don't find the old people irresponsible for relying on old people, and I don't find a return to Clinton-era tax rates horrific, I would definitely see that happen before abolishing SS.
(h) I think this tweak can be tweaked. I would focus more on class than race, for one thing, as interracial differences can be partially explained by the differing demographics of each class. For example, I might say that you have to pay payroll tax for 43 years or be of a certain (increased) age. Thus if you have started working at 18 in a physical job, you can retire earlier than someone who entered the workforce at, say, 28. In terms of racial fairness, I suspect that minorities would be the most hurt by the abolition of SS.
(i)This might be an axiomatic difference. I find the existence of SS to outweigh the injustice that accrues when someone dies before collecting. Indeed I assume the actuaries count on this happening.
(j)I don't have a problem with the involuntariness of SS; the others I've talked about above.
Posted by Aerin (Member # 3902) on :
All of your "don't punish old people" mean "punish young people instead".
If there were a solution that had no pain at all, then yay! Not a problem. (A return to Clinton-era tax rates would not be sufficient to solve the problem.) Since I don't see a solution that doesn't include pain, I find it incredibly more reprehensible to visit the pain on the innocent young who weren't even born when the bad decisions were being made than on the those who voted for the lawmakers who made the bad decisions.
I don't see any solution there that doesn't benefit old people at the expense of young people.
Rather than focusing on why the old people shouldn't suffer, tell me why you think young people should suffer instead.
Posted by natural_mystic (Member # 11760) on :
1. It's only suffering for young people if the program won't be around or is dramatically diminished when they are seniors. I hope to avoid that.
2. I don't consider raising taxes to Clinton-era levels as inducing suffering. Many of the current retirees paid taxes at times when the rates were far higher. [you've edited since I wrote this ETA - I was ambiguous -you've edited since I wrote this, but before I posted it.]
3. I am in favor of tweaking SS to make it more sound. This induces suffering, but orders of magnitude less than that the abolition of SS would cause.
4. The growth curve on SS is not scary- unlike Medicare (whose growth curve is, with some caveats, less scary than that of private health care). i.e. to a large degree the future fiscal health of the US is tied to it's ability to control healthcare costs. If that happens, then I predict SS will be fine even if the trust fund has to borrow funds from the general fund for some period (even if that transaction is entirely abstract). If that doesn't happen, then who knows.
Posted by Aerin (Member # 3902) on :
1. A lifetime hobbled by poor infrastructure, student debt, and high taxes is not remedied by social security at the end (for some). Letting education and infrastructure fail and depressing the birth rate by putting the burden of supporting the whole nation on the same people who are supposed to having children is a good way to guarantee that social security will NOT be there for them. (Even the "trust fund" is predicted to run out before today's 20somethings hit retirement. There is no forecasted rebound. Social Security will NOT be there for them.) (Or for you, if you're reading this and you're 28 or younger. PLEASE oh PLEASE be or start saving for your retirement - 15% a year. Not a huge deal. Start now.)
2. Raising taxes to Clinton levels won't solve the problem. Not enough children and too little savings. If you don't want to support yourself, you have to either save beforehand or have more enough kids to have them do it without removing their ability to take care of themselves. The baby boomers did neither.
3. For those who would be destitute otherwise, move them into the general welfare system. This prevents anyone from starving to death while still fixing the broken system.
4. The curve of SS isn't scary, but it is inexorable. There is no forecasted return to solvency. There is no future predicted where outlays are once again less than reciepts. There is no rebound coming. What is happening now will be the future.
Your solutions are based on events that have been forecasted otherwise and on the avoidance of the real consequences of displacing all that pain. It is a solution that robs the current young generation absolutely blind of their present and their future, having already shortchanged their (tiny) pasts.
Posted by Stone_Wolf_ (Member # 8299) on :
quote:Originally posted by kmbboots: The implication that my parents are money grubbing thieves, just waiting to drain the blood of their grandchildren is beginning to piss me off.
quote:Originally posted by Stone_Wolf_: Your attitude more then your view point is aggravating and inappropriate.
quote:Originally posted by Aerin: So if two or more people are telling you at the same time you're being disrespectful, it takes...serious contempt and disrespect to imagine they are all wrong and only you know the truth.
Food for thought.
Posted by Aerin (Member # 3902) on :
Stop stewing over imagined wrongs on the Internet, Stone_Wolf. If you are bored, I suggest www.moneycentral.com. Posted by Stone_Wolf_ (Member # 8299) on :
I'm not stewing, nor imagining...just trying to help you see something you seem to be having trouble with.
Much, much better use of that extra emotion and time you seem to have lying around.
Posted by Stone_Wolf_ (Member # 8299) on :
I'm sorry that you can't see it...and if you prefer, I can stop trying...but please do not assume my emotional state nor call me a liar, both things are very rude.
Posted by Aerin (Member # 3902) on :
Since you don't seem to like that link, try http://www.theatlantic.com/megan-mcardle/. That will help with the larger political picture.
Posted by Black Fox (Member # 1986) on :
Hey balancing the budget is easy when you just execute all the people over 60! Just so you all know there was a lot of sarcasm in there.
You know, I tend to be a realist when it comes to things, but I'm so tired of people spouting off about how we're all epically doomed and the sky is falling unless we just do X. Whenever anything bad happens all those people take it as evidence that everything they spouted off about was right. Come on.
Also, don't spout lies. Social Security will be there. That being said, it will most likely not be there at the level it is today because of people thinking wrong headed policy solutions.
That all being said, you know why I think young people should suffer? Because they can deal with it. It might, might just be a nice gesture to not put our grandparents into the suicide box. Also, I'm not asking young people to suffer I'm asking myself to suffer. I have already given quite a bit for this country and I'm not afraid to give some more.
What has robbed my generation are the people in power in our government and those running our financial sector. You can't always blame sheep for being eaten by wolves.
Posted by natural_mystic (Member # 11760) on :
1. You'll have to justify the claim that it is SS that is crowding out infrastructure improvements. From a purely fiscal perspective I can claim that it is defense that is doing the crowding out. The absence of infrastructure improvements is also largely due to the absence of political will. There is at least one party that would rather return money to the electorate or corporations in the form of tax cuts than invest in infrastructure. The drivers of the rising price of education does need to be addressed. But it's unclear what this has to do with SS. In particular, you need to make a compelling argument for why SS is a tradeoff for these things. I genuinely don't see it. Tying SS to birthrate is also iffy.
2. My prescription is Clinton-tax levels + tweaks + try and address hc costs, then see where we are.
5. I'm also fine with raising the SS cap. I gather the numbers are skewed because Greenspan et al. dramatically underestimated the rise in inequality back in '82.
I will briefly add that I don't think SS recipients are great savers, so they are pretty good conduits to the private sector. Cutting off this would probably have a pretty disastrous effect on a struggling economy any time in the near term.
Posted by Aerin (Member # 3902) on :
1. Since 1960, the percentage of the budget that is checks mailed to people has doubled, while the percentage spent on education and infrastructure is now less than half. Bridges are crumbling, highways aren't being updated, and public transportation is eking by. The proportion spent on defense has remained the same.
2. So...raise taxes (not enough) and make the system even more racist and classist than it is already.
3. And...raise taxes some more. Kind of a one-solution guy, right?
4. If the point is to get money in the system, there are much, much better ways. It doesn't help to get money in the system when the economy is crashing because of all the debt.
-----
So for all the talk about what is fair and just, that gets thrown out the window. The reason to put it on young people is because...we can! They won't commit suicide! Who cares what a crappy world we are giving them - we do it because we can! No. Not okay.
Posted by Black Fox (Member # 1986) on :
The proportion spent on defense has remained the same. That being said there is no USSR at the moment nor anything close to that going on.
Not all taxes are equal Aerin. There are a number of ways of increasing government revenue beyond just laying it on the income tax.
Also, it should not be the federal government's job to fix all of our infrastructure. Interstates sure, but not 90% of the roads that you use. Go complain to your state and municipal government.
Posted by natural_mystic (Member # 11760) on :
1. Read my whole argument. Again, though, if the SS money was not going to be spent on infrastructure anyway then SS did not crowd it out. The proportions spent on these things reflect political will. In particular, less could have been spent on defense and more oninfrastructure. 2. Read my tweak to make it not racist or classist above. Incidentally, as I pointed out, your plan to demolish SS would almost certainly disproportionately hurt minorities and blue collar retirees, so your plan is both racist and classist. In addition to being agist. 3. With revenues as low as they are, I am indeed very open to raising more revenue. Incidentally, are you in favor of returning to Clinton-era tax levels, or are you a no-tax-ever person? 4. Bond rates are very low. The economy is not crashing because of all the debt. Or rather, the economy is not crashing because of government debt. Households are struggling with debt, but you exacerbate this by cutting off money to the economy.
Posted by Samprimary (Member # 8561) on :
quote:WASHINGTON—After months of heated negotiations and failed attempts to achieve any kind of consensus, President Obama turned 50 years old Thursday, drawing strong criticism from Republicans in Congress. "With the host of problems this country is currently facing, the fact that our president is devoting time to the human process of aging is an affront to Americans everywhere," said Senate Minority Leader Mitch McConnell, who advocated a provision to keep Obama 49 at least through the fall of 2013. "To move forward unilaterally and simply begin the next year of his life without bipartisan support—is that any way to lead a country?" According to White House officials, Obama attempted to work with Republicans right up until the Aug. 4 deadline, but was ultimately left with no choice except to turn a year older.
Posted by Shan (Member # 4550) on :
*giggle* at Samprimary.
The Onion strikes again.
Posted by Aerin (Member # 3902) on :
I did read your whole argument, nm. I'm not convinced by it, and I don't see how you address my central argument: old people are stealing from the young and giving them a raw deal.
Put everyone on the same system. The current system is intergenerational warfare where the old wreak the world and don't care because by the time the people who are making their lifestyle possible get to be their age, they'll be dead.
Posted by The Rabbit (Member # 671) on :
Aerin, You are ignoring a lot of facts. Thirty years ago, SS was a pay as you go system but we recognized that this wasn't going to work once the Baby Boomers reached retirement. So we increased the FICA tax and created the SS trust fund. As result, baby boomers (and everyone else whose been working and paying FICA for the last 30 years) have been paying not just for the older generation but have also been paying for their own retirement.
The only problem with this is that over the past 30 years (well primarily the past 10 years) we've been borrowing that SS money so we could pay lower taxes for the military and other services. In order to pay the Baby Boomers back the money they paid into the SS fund, other taxes will have to be raised.
Its not fair to simplify that by saying old people are stealing from young people. Old people have been paying into a fund for their entire working life with the promise that they would be paid out of the fund when they retired. That's not stealing. Not by any stretch of the imagination. Its a social contract. Old people collect money from social security based on the amount they've paid into it. They aren't thieves.
If there are any thieves in this process -- its those who are recommending we not pay the debt we owe to social security. Not paying your debts is equivalent to stealing. The tea party and everyone else who is recommending cutting SS rather than raising taxes is proposing that the US government should steal rather than collect taxes. Its so hideously immoral it makes me sick.
Posted by Aerin (Member # 3902) on :
Rabbit,
We've had this conversation before. You firmly believe that the trust fund is filled, despite the money being used up in general spending.
With that firm conviction in your head, of course none of this makes sense to you.
I am not interested in talking to you because I don't believe SSBucks are real money. You do. There is nothing to say.
Posted by The Rabbit (Member # 671) on :
quote:We've had this conversation before. You firmly believe that the trust fund is filled, despite the money being used up in general spending.
Sorry, I didn't recognize you under that screen name Kat or I wouldn't have bothered.
We have had this discussion before. If you're reading comprehension were above the third grade level you'd know that isn't what I firmly believe.
I've said it before and I'll say it again. The American People have a legal and moral obligation to repay the money borrowed from the SS fund. We can change the laws and get out of the legal obligation -- but we can't change moral law. We collected that money with the promise that it would be spent in a particular way and we have an obligation to do that -- even if it means raising other taxes.
Posted by Aerin (Member # 3902) on :
Yes, you've explained what you firmly believe. You've also never answered the arguments against and you toss in nasty insults as well.
I definitely have no interest in talking to you. You are unpleasant to talk to and your convictions about the issue are self-serving and deliberately blind.
----
As for moral law, there is a moral obligation not to defraud the younger generation. Considering their complete innocence in this matter and that the older generation was complicit in creating this situation, their moral claim is higher.
So any discussion of "moral obligation" is disengenuous and self-serving here - either discuss ALL the moral aspects, or else admit that you only want OTHER PEOPLE to be moral when it serves your own purposes.
Posted by SenojRetep (Member # 8614) on :
SS (and Medicare) are totally crowding out infrastructure spending. As taxes for dedicated and mandatory social programs have increased over the past several decades, there's a decreased ability to tax the middle class in support of discretionary spending. This results in the starvation of the discretionary budget at the hands of mandatory programs. <edit>Also, spending on "on budget" social programs (like Medicaid, SSDI, Unemployment Insurance, etc.) has steadily increased as a proportion of the discretionary portion of the budget at the expense of education, energy, infrastructure and all the rest.</edit>
It's also not true that Defense spending has remained as a constant proportion of the budget over the past 50 years. It decreased roughly linearly from about 50% of the budget in 1960 to a low of about 15% in 2000. It rose slightly to 20% after 9/11, but is set to continue decreasing (in proportion to the rest of the budget and as a percentage of GDP) over the next several years.
Furthermore, revenue has been almost exactly constant at 18% of GDP since 1950. There are occasional spikes (like during the boom in the late 1990s when it increased to 20%) and dips (like in the aftermath of the recession), but total revenues have been remarkably constant regardless of the exact break down of income tax rates. So to say we can fund our increases in social welfare spending by returning to previous tax rates with a few little tweaks is, IMO, naive. If we want the social welfare programs of Western Europe, we'll need tax rates on par with Western Europe, which will mean significant tax increases (like doubling) not only for the wealthy, but most importantly for the middle class.
Posted by The Rabbit (Member # 671) on :
quote:You've also never answered the arguments against and you toss in nasty insults as well.
I'm unaware of an arguments I haven't answered, perhaps you can give some explicit examples.
You have never responded to my key argument. We took money from people with the promise that it would be spent on Social Security. It's dishonest to break that promise. What you are suggesting is theft pure and simple.
Posted by Mucus (Member # 9735) on :
quote:Originally posted by The Rabbit: ... Not paying your debts is equivalent to stealing.
I would have to disagree with this as a general principle.
Whether we're talking about junk bonds, sovereign debt, or credit card debt, both lenders and debtors are aware that default is a risk and one that has to be prepared for. If we take the chance of default out of the equation, then there is little motivation for predatory lenders to curtail their activities and lend responsibly.
I think it is better to think of investing in bonds as a, well, investment. You take risks to earn a return and sometimes that risk pays off, sometimes it doesn't.
I think that one could argue that the concept of default=stealing is one that leads to odd consequences such as the libertarian concept of inflation=stealing.
Posted by Mucus (Member # 9735) on :
quote:Originally posted by Aerin: As for moral law, there is a moral obligation not to defraud the younger generation.
Or recent immigrants or the children of immigrants.
The concept of imposing debts on people that haven't even been born yet especially reminds me of the dubious concept of original sin.
Posted by ScottF (Member # 9356) on :
quote:Originally posted by SenojRetep: Furthermore, revenue has been almost exactly constant at 18% of GDP since 1950. There are occasional spikes (like during the boom in the late 1990s when it increased to 20%) and dips (like in the aftermath of the recession), but total revenues have been remarkably constant regardless of the exact break down of income tax rates.
Underrated post. This consistency can be largely attributed to the incredibly convoluted and easily manipulated tax code currently in place. You can increase taxes on "the rich" all you want but our current tax system was designed to be manipulated. Which is why you get some people making gobs of money and paying no taxes. It's also why a huge portion of income earners pay zero income tax.
I'm a firm believer that *everyone* who earns an income should pay income tax. I don't care if you earn 30k a year or 30M a year, pay your relative share. That's why a flat tax is needed. I've also heard some very compelling arguments for a consumption tax that would replace the inane tax code we now have.
Posted by odouls268 (Member # 2145) on :
I'm very happy the actual thread subject is being talked about in here.
Serious.
Posted by Black Fox (Member # 1986) on :
quote:Originally posted by Mucus:
quote:Originally posted by Aerin: As for moral law, there is a moral obligation not to defraud the younger generation.
Or recent immigrants or the children of immigrants.
The concept of imposing debts on people that haven't even been born yet especially reminds me of the dubious concept of original sin.
You all realize that most of our "debt" is to ourselves? We're basically paying ourselves interest. That dynamic has been changing over the last decade, but it still holds true.
Posted by Black Fox (Member # 1986) on :
quote:Originally posted by ScottF:
quote:Originally posted by SenojRetep: Furthermore, revenue has been almost exactly constant at 18% of GDP since 1950. There are occasional spikes (like during the boom in the late 1990s when it increased to 20%) and dips (like in the aftermath of the recession), but total revenues have been remarkably constant regardless of the exact break down of income tax rates.
Underrated post. This consistency can be largely attributed to the incredibly convoluted and easily manipulated tax code currently in place. You can increase taxes on "the rich" all you want but our current tax system was designed to be manipulated. Which is why you get some people making gobs of money and paying no taxes. It's also why a huge portion of income earners pay zero income tax.
I'm a firm believer that *everyone* who earns an income should pay income tax. I don't care if you earn 30k a year or 30M a year, pay your relative share. That's why a flat tax is needed. I've also heard some very compelling arguments for a consumption tax that would replace the inane tax code we now have.
A flat tax with exemptions is no better. You could take the current progressive system and simply take out all the crazy deductions and it would work a great deal better. Also, a flat tax does not address the problem that when we tend to talk about taxes as a nation we only talk about income taxes. We don't talk about capital gains, consumption taxes, corporate taxes, fees, and a host of other possible taxes.
However, progressive tax systems have the problem of treating all incomes across the nation as equal. If you live in NYC you are being screwed by the current tax system as you will be treated as being wealthy in that city when you are just getting by. On the flip side, if you live in Nebraska or Alabama you are living it up on the current system as you can be an extremely wealthy person in those states and not pay nearly the same amount of federal taxes as the guy in NYC who is basically living in a broom closet.
Posted by Mucus (Member # 9735) on :
quote:Originally posted by Black Fox:
quote:Originally posted by Mucus:
quote:Originally posted by Aerin: As for moral law, there is a moral obligation not to defraud the younger generation.
Or recent immigrants or the children of immigrants.
The concept of imposing debts on people that haven't even been born yet especially reminds me of the dubious concept of original sin.
You all realize that most of our "debt" is to ourselves? We're basically paying ourselves interest. That dynamic has been changing over the last decade, but it still holds true.
That has no contradiction with what I wrote, its just not detailed enough.
As The Rabbit summed up in the timeline, the baby boomers were the ones that started investing in the SS trust fund, but they were also the ones that blew the invested funds on lower taxes (I'm not even sure if we should use past tense here, the baby boomers are still working their way through the system and still tend to vote against higher taxes).
Going forward, more and more of the debt will have to be paid by other generations, like the baby boom echo. So in one sense, the "debt"* is to be paid from Americans to Americans i.e. "ourselves" but in another sense, the debt is being inherited from one generation to another (And with immigration, a growing number of people and their children with no connection with the policies of the baby boomers).
So its all a bit of perspective.
* Is there any reason to put debt in quotes? I don't think anyone is really debating that the debt exists, the debate is about how to deal with that debt
Posted by natural_mystic (Member # 11760) on :
quote:Originally posted by SenojRetep: SS (and Medicare) are totally crowding out infrastructure spending. As taxes for dedicated and mandatory social programs have increased over the past several decades, there's a decreased ability to tax the middle class in support of discretionary spending. This results in the starvation of the discretionary budget at the hands of mandatory programs. <edit>Also, spending on "on budget" social programs (like Medicaid, SSDI, Unemployment Insurance, etc.) has steadily increased as a proportion of the discretionary portion of the budget at the expense of education, energy, infrastructure and all the rest.</edit>
It's also not true that Defense spending has remained as a constant proportion of the budget over the past 50 years. It decreased roughly linearly from about 50% of the budget in 1960 to a low of about 15% in 2000. It rose slightly to 20% after 9/11, but is set to continue decreasing (in proportion to the rest of the budget and as a percentage of GDP) over the next several years.
Furthermore, revenue has been almost exactly constant at 18% of GDP since 1950. There are occasional spikes (like during the boom in the late 1990s when it increased to 20%) and dips (like in the aftermath of the recession), but total revenues have been remarkably constant regardless of the exact break down of income tax rates. So to say we can fund our increases in social welfare spending by returning to previous tax rates with a few little tweaks is, IMO, naive. If we want the social welfare programs of Western Europe, we'll need tax rates on par with Western Europe, which will mean significant tax increases (like doubling) not only for the wealthy, but most importantly for the middle class.
1. If I claim SS did not crowd out infrastructure investment, and you respond SS+medicare+Medicaid+ SSDI+ Unemployment Insurance do crowd out infrastructure investment, it's not really a rebuttal. Taking this to its logical conclusion, if you spend all your money not on infrastructure it is tautological that there is no money to spend on infrastructure. However, without some evidence to regard the SS component as being quid pro quo the infrastructure spending, I don't find it very meaningful. For example, Reagan chose to cut taxes (and borrow against the ss fund) rather than pay for more infrastructure. Bush II came into office with a surplus. Again, he chose to cut taxes and run up a deficit rather than pay for infrastructure. A possible source of confusion is that it was inappropriate for me to use the phrase 'crowding out' when talking about how congress chooses to allocate money.
2. I'm not sure if the defense spending comment is meant to address something I said (as I made no claim about historical percentages spent on defense).
3. I very specifically talk about the need to get the cost of healthcare (both private and government provided). I explicitly mention that there is a lot of trouble if this is not dealt with. My mention of Clinton era tax levels + tweaks is a narrow prescription for how to make SS viable without breaking trust with millions of seniors. I focus on SS because the discussion is about SS.
Posted by Black Fox (Member # 1986) on :
Mainly I did that because I think people have poor imaginations. People have turned the word "debt" into the equivalent of saying Voldemort. I think that is funny.
That being said, I hate debating the debt, deficit, and fiscal policy as a whole online. We are all so hyper focused we can never plan in the long term. The humorous thing about the situation is that our inability to long term plan helped get us into the spot we are in today and our inability to long term plan will insure that we go about the problem in the most inefficient manner possible. We all want a solution today and will do amazingly destructive things to get that result.
Yes, future generations will have debts to pay off and guess what: they'll have to maintain the roads we build, build upon the base of knowledge that we left them, and deal with the quagmire of context that we leave them in terms of laws, political systems, national borders, and I could keep on going.
The thing is we turn the debt into some kind of atomic moral issue rather than viewing it as a problem to overcome while still maintaining our moral obligations.
Posted by Stone_Wolf_ (Member # 8299) on :
quote:Originally posted by Black Fox: The thing is we turn the debt into some kind of atomic moral issue rather than viewing it as a problem to overcome while still maintaining our moral obligations.
+1
Posted by kmbboots (Member # 8576) on :
Exactly that, Black Wolf. Well said.
Posted by SenojRetep (Member # 8614) on :
1. Fair enough. You didn't address my concern over the increased level of SS taxes meaning that there is less capacity for middle-class income taxes which could be used to support infrastructure.
But I'm not really that interested in the quid pro quo causal relationship you seem to be talking about. More, I'm suggesting our budget reflects our national values, and currently our budget is highly weighted against investing in infrastructure, education and other forward-looking policies, in favor of supporting those with immediate economic needs.
2. I was correcting Aerin's statement which had been reiterated by Black Fox. I hadn't intended to suggest I was correcting you.
3. The growth in social spending isn't just a growth in healthcare spending. It's also due to a steady expansion of federal programs that benefit the poor and the old. I think it's a noble impulse that causes us to want to help those in need, but when spending on social welfare is 17% of GDP and increasing steadily at 0.2% a year, I think we need to evaluate how realistic it is to sustain that growth. Personally, I feel the amount taxed and spent currently on SS is disproportionate to the value of the program in our society, when compared to other funding priorities.
Posted by Stone_Wolf_ (Member # 8299) on :
quote:Personally, I feel the amount taxed and spent currently on SS is disproportionate to the value of the program in our society, when compared to other funding priorities.
Rather pacific...care to elaborate?
I'm a bit frustrated that "throw money at the problem" seems to be the knee jerk solution. Take for example education. Yes, they need money to work, and yes reforms would not be free, but...just budgeting more money isn't the only solution, nor even automatically helfull.
Posted by Mucus (Member # 9735) on :
quote:Originally posted by Black Fox: The thing is we turn the debt into some kind of atomic moral issue rather than viewing it as a problem to overcome while still maintaining our moral obligations.
I don't necessarily disagree, I just don't think my socialist views on social security and the like would be particularly popular. Therefore, in this bit of the thread I'm pretty much only discussing and thinking about the atomic moral issues*
* e.g. is defaulting on debt, theft?
Posted by Black Fox (Member # 1986) on :
"The poor and the old": Some how I feel I could twist that into half of our population.
Posted by Stone_Wolf_ (Member # 8299) on :
I tend to agree with you Mucus that the general idea that default = theft is not valid, but in this particular discussion, I think not giving SS benefits to the elderly is morally wrong.
Posted by Aerin (Member # 3902) on :
But the poor and the old are not the same.
You'd be much more accurate to say the poor and the young are the same. Over 20% of American children live in poverty. Less than 7% of American seniors do.
Posted by kmbboots (Member # 8576) on :
quote:Originally posted by Stone_Wolf_: I tend to agree with you Mucus that the general idea that default = theft is not valid, but in this particular discussion, I think not giving SS benefits to the elderly is morally wrong.
I would be okay with not giving SS benefits to people above a certain level of wealth.
Posted by Stone_Wolf_ (Member # 8299) on :
Or even better (as it would be expensive to determine who qualifies and doesn't and continue to monitor it etc) is if we simply had an easy way for people to voluntarily abstain...they could get a bumper sticker or a button so we could thank them.
Posted by kmbboots (Member # 8576) on :
How would that be harder than figuring out income taxes?
Posted by Stone_Wolf_ (Member # 8299) on :
Um...people figure out their own income taxes...and then the IRS pays people to check/audit their rules...and the police and courts to enforce them...and then jail for the offenders...
All I'm saying is that enforcement is expensive, so if we are trying to save money denying SS benefits to the rich (who are relatively few) might cost more then it saves.
Posted by kmbboots (Member # 8576) on :
Right. The government has those income tax reports already and could easily use them to figure out who doesn't need SS and not send them a check.
Posted by fugu13 (Member # 2859) on :
quote:All I'm saying is that enforcement is expensive, so if we are trying to save money denying SS benefits to the rich (who are relatively few) might cost more then it saves.
That's not really a concern. People already fill out all the information that's needed. Then the gov't can trigger reductions at some level of the quantities people are already calculating. The cost would be trivial in relation to the revenue.
Posted by SenojRetep (Member # 8614) on :
I mentioned earlier, but I'll say again, by optimistic estimates, means testing (i.e. excluding benefits from the wealthy) both SS and Medicare would save about $200B/year under the current benefit structure (depending on how aggressively you did it). While that would help with the deficit, it wouldn't in and of itself, be sufficient. Ditto with raising the cap on FICA. And neither addresses the underlying issue of unsustainable spending growth (bending the curve, in Orzag-ese).
Posted by Stone_Wolf_ (Member # 8299) on :
Sure...200B/year sounds worth it, and all things considered, I wouldn't be against denying the wealthy benefits (of course the definition of "wealthy" would have to be reasonable).
Posted by fugu13 (Member # 2859) on :
quote:I mentioned earlier, but I'll say again, by optimistic estimates, means testing (i.e. excluding benefits from the wealthy) both SS and Medicare would save about $200B/year under the current benefit structure (depending on how aggressively you did it). While that would help with the deficit, it wouldn't in and of itself, be sufficient. Ditto with raising the cap on FICA. And neither addresses the underlying issue of unsustainable spending growth (bending the curve, in Orzag-ese).
I only view tweaking social security as fixing the future of social security, a program both politically indestructible and a bad idea as a source of general revenue. The combination of means testing, removing the income cap on social security taxation (while lowering the rate considerably so it brings in only a little new revenue), and slightly raising the retirement age will make social security entirely sustainable (and coincidentally lower the tax burden on the poor and lower middle class).
And be wary of measuring poverty in the elderly. If you use the income cutoff, you will drastically undermeasure, because elderly people have much, much larger medical expenses even with good insurance, much less without.
Posted by Aerin (Member # 3902) on :
On the other hand, as mentioned before, the problem with means testing is that it makes it much, much more clear that social security would be nothing but welfare. Making social security for everyone if they pay is the only thing that makes it politically viable - if you raise social security taxes while also removing benefits from those who pay most of those taxes, then you HAVE turned social security into just welfare, and the political will to keep it going will vanish.
That is an annuity program is a fiction, but it's a fiction that allows it to exist. You remove the ability of that fiction to exist, and that just might be the impetus to get rid of it altogether.
Posted by kmbboots (Member # 8576) on :
quote:The deficit-reduction plans under consideration will accelerate this trend. Under current law, an average -income worker (that's someone making about $43,000 a year) is projected to get the inflation-adjusted equivalent of about $15,000 a year in Social Security benefits in 2050. Under the Simpson-Bowles plan, that would drop to about $12,700. That's not nothing, but it's not much. In fact, neither amount is very much. Social Security is not a generous program. It's actually among the least-generous of any developed nation, and in making it less so, we raise the question of what, exactly, seniors with insufficient retirement savings are supposed to do.
Bolding mine.
Posted by fugu13 (Member # 2859) on :
quote:On the other hand, as mentioned before, the problem with means testing is that it makes it much, much more clear that social security would be nothing but welfare. Making social security for everyone if they pay is the only thing that makes it politically viable - if you raise social security taxes while also removing benefits from those who pay most of those taxes, then you HAVE turned social security into just welfare, and the political will to keep it going will vanish.
I think the large numbers of elderly voters will somehow manage to keep supporting sending them money. Especially given the majority of them would see a drastic reduction in standard of living, right away, if it were removed. It already is a welfare program, of course, so I'm not really worried about it being turned into one.
Posted by Aerin (Member # 3902) on :
Not if the large numbers of elderly are no longer getting checks - in order to make the means testing make a dent, it can't be for just the millionaires. In other words, to make the means testing worth it, you have to cut off a big enough number to make it politically dicey.
But look especially at the future generations - will future generations support a 15% tax off the top when those who pay the most won't even benefit?
----
Modeling Europe while it is in the process of imploding seems like a particularly bad idea. If you want to copy the social programs, you'll have to copy their monstrous debts, doubled tax rates as well, and cliff-jumping economy as well.
Posted by SenojRetep (Member # 8614) on :
quote:Originally posted by fugu13:
quote:I mentioned earlier, but I'll say again, by optimistic estimates, means testing (i.e. excluding benefits from the wealthy) both SS and Medicare would save about $200B/year under the current benefit structure (depending on how aggressively you did it). While that would help with the deficit, it wouldn't in and of itself, be sufficient. Ditto with raising the cap on FICA. And neither addresses the underlying issue of unsustainable spending growth (bending the curve, in Orzag-ese).
I only view tweaking social security as fixing the future of social security, a program both politically indestructible and a bad idea as a source of general revenue. The combination of means testing, removing the income cap on social security taxation (while lowering the rate considerably so it brings in only a little new revenue), and slightly raising the retirement age will make social security entirely sustainable (and coincidentally lower the tax burden on the poor and lower middle class).
And be wary of measuring poverty in the elderly. If you use the income cutoff, you will drastically undermeasure, because elderly people have much, much larger medical expenses even with good insurance, much less without.
I question the wisdom of saving SS and letting the rest of the budget burn. SS rates of taxation are currently about 3X those of Medicare, despite the fact that Medicare expenditures are nearing parity with SS. It does us little good if we make SS sustainable without addressing the broader problems.
To Kate's point: if we want to fund seniors at higher levels without impairing our ability to fund all the other things we want to fund (roads, education, defense), we need to tax at much higher levels. Average federal revenues in developed nations are about 40% of GDP, allowing them to pay quite generous stipends to the elderly, the poor, and the sick. How do you propose we get to that point of revenue generation here in the US?
Posted by SenojRetep (Member # 8614) on :
quote:Originally posted by Aerin: Modeling Europe while it is in the process of imploding seems like a particularly bad idea. If you want to copy the social programs, you'll have to copy their monstrous debts, doubled tax rates as well, and cliff-jumping economy as well.
Not all of Europe is imploding. Scandinavian countries are in much better fiscal shape than the US, as are the Netherlands, Germany, the UK and maybe a few others.
The problem with the PIIGS was they wanted benefits commensurate with those provided in other European nations, but were unable to unwilling to tax at sufficiently high levels to support such spending.
Posted by Samprimary (Member # 8561) on :
It's interesting in light of how the euro teeters near total crisis, but it's exceedingly difficult to pin the roots on their social coverage, which are standard about everywhere in the modernized world outside of here. It's actually to the delight of many eurozone left-wingers that the most threateningly unstable systems tended to have been borne of either tax loopholes or the liberalization of internal economic management (Ireland, in particular). As usual, though, they tend to take a blind eye to other prodding factors like Greece's absurd glut of public servants and prosperity nets they doled out with no sense.
I guess you could get a true test out of whether Germany feels tempted to roll back on their own social programs as readily as they get tempted to buck off the euro and its layabout problem.
Posted by Aerin (Member # 3902) on :
Germany IS rolling it back - their retirement age has been raised to 67 and other benefits have been tightened.
Posted by kmbboots (Member # 8576) on :
And their elderly - and everyone - is free from the crushing fear of any health emergency sending you into the poor house.
And they get a lot more vacation. Posted by SenojRetep (Member # 8614) on :
quote:Originally posted by kmbboots: And their elderly - and everyone - is free from the crushing fear of any health emergency sending you into the poor house.
For now. Their healthcare costs are rising faster than ours (although ours are still much higher in absolute terms). And they're paying about 2X as much as we are in taxes. So again, how do we get to 40% of GDP in revenues? It's great to say we want these benefits, but we have to pay for them too.
<edit>Actually, I take that back. While some European countries' healthcare costs are rising more rapidly than the US's, Germany is not one of them (at least not in the most recent data I could find, which ends around 2000). See this table which shows that for the 1990s the growth rate in US healthcare costs was actually about average for OECD countries.</edit>
Posted by kmbboots (Member # 8576) on :
We don't have to be exactly like them, but more like them than we are now would be good. We have swung way over to the plutarchical side of the pendulum and we need to find our way to a more balanced policy.
Posted by MattP (Member # 10495) on :
quote:While some European countries' healthcare costs are rising more rapidly than the US's, Germany is not one of them (at least not in the most recent data I could find, which ends around 2000)
This is one reason I'm very fond of the German system. It seems like an almost ideal blend of free market and regulation which is in many ways similar to how US car insurance works. (And car insurance rates are generally reasonable and not increasing substantially over time.)
Posted by SenojRetep (Member # 8614) on :
quote:Originally posted by kmbboots: We don't have to be exactly like them, but more like them than we are now would be good. We have swung way over to the plutarchical side of the pendulum and we need to find our way to a more balanced policy.
Kate, you have strong opinions on this issue; you've shown that several times. Why shy away from making a concrete proposal?
How far should we go? How should we pay for it? I don't need a 10-page plan or anything, but I would find a concrete statement about what level of benefits you'd recommend and a structure for paying for them very enlightening.
Posted by kmbboots (Member # 8576) on :
Pay for which, exactly?
Closing corporate tax loopholes. Disincentives for moving jobs overseas to match. Closing tax loopholes in general and raising rates on the wealthy and, later when the economy can stand it, on the middle class as well. There is no reason that tax rates should be lower now than they have been since the 1950s. Stop bleeding money into useless wars. Raising the cap and need testing for social security and Medicare.
There's a start.
We need to get more money into the hands of people who need it - shrink the gap between the very wealthy and everyone else.
Posted by SenojRetep (Member # 8614) on :
quote:Originally posted by kmbboots: Closing corporate tax loopholes. Disincentives for moving jobs overseas to match. Closing tax loopholes in general and raising rates on the wealthy and, later when the economy can stand it, on the middle class as well. There is no reason that tax rates should be lower now than they have been since the 1950s. Stop bleeding money into useless wars. Raising the cap and need testing for social security and Medicare.
While this sounds an awful lot like a litany of zombie talking points, I'll try to do a rough wag on pricing them.
Concrete suggestions: end wars, close "loopholes," needs test, raise the cap, return to historical tax rates for the rich. My scores: $150B, $1T, $200B, $500B, $100B. Total increase in revenues: 14% of GDP, putting our total federal revenues at 29% of GDP, on the very low end of the OECD.
By "close loopholes" I assume you meant eliminate all tax expenditures, including popular ones like mortgage interest deduction, child care deductions, earned income deduction, and charitable donation deductions, significantly increasing the tax burden of the middle class. Sticking just to "corporate" loopholes would, at a guess, decrease that number by about an order of magnitude. I also assumed "lift the cap" meant eliminate the cap, meaning FICA taxes are paid at the current rates on all income. I also think it's fair to mention that (as a rough estimate) about 75% of the increased revenue is due to increased tax burden on those making less than $250,000/year.
Our current expenditures are about 25% of GDP, so with your increased revenues we're able to fund at current levels, with a small surplus left over. However, due to expected cost growth in healthcare and other social welfare programs, that surplus will be gone within the next 5-10 years.
<edit>Also, note that I haven't factored in any strategic behavior on the part of tax payers, like businesses choosing to incorporate in Europe or Asia where corporate rates are lower. This probably wouldn't change the numbers very much directly, but it might lead to other behaviors which would impact them, like increasing unemployment.</edit>
Posted by TomDavidson (Member # 124) on :
Personally, I would bring back the estate tax, dramatically increase the capital gains tax, institute a 50% marginal tax rate above $450,000 in household income, and cap deductions (but not credits) at 25% of gross tax due.
Posted by kmbboots (Member # 8576) on :
Yes. I figured you would assume that "life the cap" referred to FICA taxes as we have been talking about that for most of the thread.
How much less than $250,000 a year? It would have to be more than $106,800 (ish) a year as people already pay FICA on that much. We might also consider taxing investment income.
Posted by fugu13 (Member # 2859) on :
quote:I question the wisdom of saving SS and letting the rest of the budget burn.
Who said anything about that? I only pointed out that social security should not be viewed as a source of funding or an irreparable money drain, just a moderately effective transfer program that needs some tweaking to be more effective and appropriately funded. Not that I'm a huge fan of social security (I'd prefer to replace it with a transfer program that has nothing to do with age), but I recognize that it is a nigh-indelible part of political reality.
Posted by SenojRetep (Member # 8614) on :
Kate-
My assumption wasn't about if we were talking about FICA, it was about whether you meant "eliminate" when you said "raise", rather than either simply moving it higher, or partially lifting it where income over $100,000 is FICA-ed but at a lower rate.
Most of the increase under $250,000 is from elimination of tax deductions, not lifting the cap. And keep in mind this is "back of the napkin" sort of stuff; I'm not uber-confident in my estimates. But I would say the increase is shared pretty evenly among those making below $100K and those making above that.
Tom:
Capital gains and estate taxes aren't things I've really looked into, so I barely have guesses on what sort of revenue those proposals would generate. Raising marginal rates to 50% (rather than the Clintonian 39%) on incomes over $450,000 wouldn't directly* increase revenues more than a few decimal points. There just aren't enough people in the category to make a very big difference.
*A slight caveat: there is some small evidence that decreasing income disparity increases GDP. If that holds true, than wealth redistribution from rich to poor may have indirect positive impact on revenues.
Posted by SenojRetep (Member # 8614) on :
quote:Originally posted by fugu13:
quote:I question the wisdom of saving SS and letting the rest of the budget burn.
Who said anything about that? I only pointed out that social security should not be viewed as a source of funding or an irreparable money drain, just a moderately effective transfer program that needs some tweaking to be more effective and appropriately funded. Not that I'm a huge fan of social security (I'd prefer to replace it with a transfer program that has nothing to do with age), but I recognize that it is a nigh-indelible part of political reality.
I agree it's realistically difficult to imagine major changes to SS. But I have a hard time looking at it in isolation, because it causes huge structural issues for the rest of the budget. Taxes flowing into SS are unavailable to be used on other national priorities, so I have a somewhat adverse reaction to the idea that SS is "fine" it just needs some tweaking to be solvent. It's true, but I feel it ignores the negative impact SS has on the rest of our federal budget.
Posted by fugu13 (Member # 2859) on :
quote:I agree it's realistically difficult to imagine major changes to SS. But I have a hard time looking at it in isolation, because it causes huge structural issues for the rest of the budget.
What about my proposals create or leave remaining huge structural issues for the rest of the budget?
quote:Taxes flowing into SS are unavailable to be used on other national priorities
Untrue at the moment. Granted, SS is issued bonds in exchange, but the tax monies definitely are repurposed in times of surplus. I'm fine with that happening now and then, I just don't think it should be at all a goal.
quote:It's true, but I feel it ignores the negative impact SS has on the rest of our federal budget.
What negative impact, if SS becomes fully sustainable, as would happen with the changes described?
Posted by SenojRetep (Member # 8614) on :
The way I look at it, there's a finite amount of money the US public is willing to give to the US government. Historically, it's about 18% of GDP, but maybe we could change the culture and increase that amount (although I would guess current cultural forces are actually pushing in the opposite direction).
If all we can expect to get is 18% of GDP and 8% of that is going to fund SS, it doesn't leave much over to satisfy other obligations and priorities, like infrastructure, R&D, education, etc., let alone a surplus to pay down debt.
This is what I meant by the structural issue I have with SS; it's not that the program can't be made sustainable at current rates of taxation. It's that I feel those rates of taxation are sufficiently high that they make it impossible to adequately fund our other national priorities out of the remaining tax base.
Posted by fugu13 (Member # 2859) on :
I don't think the 18% ceiling is as hard as all that; we're actually in a bit of a trough right now on true total gov't revenue, once state and local get factored in. What's more, there's a fair bit of evidence that people can and will accept higher rates -- that the US is more resistant to such increases than other countries does not mean it is infinitely resistant. Especially for transfer programs, which are both extremely efficient (in terms of "waste" and effectiveness, both) and extremely popular.
quote:If all we can expect to get is 18% of GDP and 8% of that is going to fund SS, it doesn't leave much over to satisfy other obligations and priorities, like infrastructure, R&D, education, etc., let alone a surplus to pay down debt.
The changes I've outlined might, a few decades hence, cause SS to briefly kiss 8%, but it should decline back down to under 7% after that. There's a demographic "bump" we're still working out, but then the ratio of workers to those supported by social security is expected to increase again by a good bit before reaching a fairly steady state.
And, as I said, above, 18% isn't really a limit.
On a different note, I read a very interesting post recently where someone said that the whole idea of keeping health care costs down doesn't make as much sense as it seems. The US health care industry is a high productivity, high skill area we want to encourage, and a lot of the reasons for growing costs are because people want to consume more healthcare, even if it takes a lot of expenditure to reach a little longer life. Not that there isn't plenty to reform in US healthcare, but that controlling costs is the wrong way to think about it. Make basic healthcare affordable for everyone, yes. Make healthcare produce similar levels of health and health satisfaction as it does in other countries (for the same money), yes. But then let people spend lots of money on healthcare, and leave the system structured so that's possible, because that's a good thing, not a bad one.
Posted by kmbboots (Member # 8576) on :
So...the "greatest country in the world" could take care of its own but we should just accept that we are too selfish (moreso than the rest of the world apparently) so we shouldn't even try.
Posted by SenojRetep (Member # 8614) on :
Yeah, that's what I said.
Look, I'm glad you gave me some details for ways to increase revenue. They're not very popular, but they're a meaningful start on what we would need to do if we want to keep spending the way we're spending. But don't pretend there's all this money floating around out there that you can just pick up and give to people who are suffering. Those revenue increases will hurt people, people who feel they have a right to the money they've earned and who won't be able to afford as big a house or as nice a car or as good a college for their kids as a result. These aren't hedge fund managers, they're grocery store managers.
I think we could spend Denmark into the ground if that's what we wanted to do. But for 60 years (actually, for a lot longer than that, but the OMB on-line records only go back so far) no one's been able to make that pitch successfully. Maybe it'll be different in the future, but I don't see why (and actually I think we're getting more selfish and skeptical of government rather than less, which I think is very unfortunate). Wishing it were different won't solve the problem.
<edit>And, personally, I find your "take care of their own" language asinine. The entire argument is about what that means, and your presumption in setting yourself up as the sole moral authority on the adequate provisioning of the poor and old strikes a very sour chord with me.</edit>
Posted by kmbboots (Member # 8576) on :
Because you don't believe they are our own? Or some other reason?
Posted by SenojRetep (Member # 8614) on :
First, I apologize for my previous post. It wasn't in keeping with the sort of respectful dialogue I think Hatrack ought to stand for.
But I also don't want to play this cute game where you ask me one line questions and I give careful, measured responses and we dance around until one of us can take umbrage, or feel insulted or something. If you want to talk about the federal budget, including the proper role for social welfare in it I'm fine with that. But the moralizing tone of your last two posts isn't something I find particularly worth engaging with.
<edit>But to your question, I was specifically saying that "taking care of" our own is a subjective judgment. I don't imagine there's a person anywhere who doesn't want to "take care of" our own; I just imagine their belief about what counts as "taking care" of someone, and the proper role of the government in doing so, and the relative trade-off between "taking care of our own" and a person's right to the profits of what she produces, differs significantly from mine, or yours.</edit>
Posted by kmbboots (Member # 8576) on :
My answers are going to be short as I am posting from my phone. Or this could wait till Monday if you prefer.
The obscene percentage of wealth concentrated in the hands of a very few while we are contemplating cutting funds for the elderly, depriving them of Medicare, is a moral issue.
Posted by SenojRetep (Member # 8614) on :
Fugu-
I didn't see your earlier response.
The 18% figure I cite has held true for a long time. I agree, there's no reason it should be a hard limit, but for whatever reason we haven't really been able to crack it yet. Until I see practical evidence that the US public will accept much higher rates, I'll continue believing that it's unreasonable to expect significant increases in revenue.
But even if federal revenue went up to, say, 25% of GDP, I still think spending 7-8% on SS reflects a poor prioritization of funds. There are many people (certainly not all, but I would guess at least a sizable minority) who are potentially productive for 5-10 years after SS retirement kicks in. I would favor changing the "one size fits all" system into something that makes much more personalized decisions about an individual's continued ability to hold down a job. This would increase the fairness of the program, as people would get more uniform benefits, rather than poor unhealthy people only collecting for a couple of years and rich, healthy people collecting for much longer. I would set the threshold such that, on average, people collected for about the final five years of their lives, which is in line with the original intent of SS. This would, I believe, reduce annual spending by more than half without decreasing monthly stipends. It would significantly increase retirement age for people not working in labor intensive fields, but I see that as a benefit rather than a cost.
The healthcare thesis is provocative, but my initial reaction is that encouraging more spending on something that produces little good for society isn't a very good idea. Perhaps I'm the one moralizing now, but I don't think the billions of dollars we spend on sustaining our parents, grandparents, and other loved ones for an additional few days at the end of their lives contributes very much to the Gross National Happiness.
Cosmetic plastic surgery on the other hand...
Posted by SenojRetep (Member # 8614) on :
quote:Originally posted by kmbboots: The obscene percentage of wealth concentrated in the hands of a very few while we are contemplating cutting funds for the elderly, depriving them of Medicare, is a moral issue.
This is based on a false premise that has been refuted in at least two separate threads. There isn't enough wealth concentrated in the very few for even stratospheric tax rates on them to fund the sort of spending you advocate. If you want to do more for the poor, the sick and the old that's great; but don't delude yourself that it won't cost the middle class anything to do so. If you exclude the middle class (up to $250,000) tax increases from your proposed tax reforms, federal revenues would only increase by about 3% of GDP, which isn't even enough to fund our current programs, let alone the sort of growth in social spending you advocate. So stop pretending.
Posted by Blayne Bradley (Member # 8565) on :
But you could adjust it to that less of the wealth was concentrated in their hands and instead put into the hands of consumers which would drive growth, create jobs, make stuff more affordable, increase GDP , improve infrastructure, lighten transportation costs and increase availiability and allow us to better take care of our own.
Posted by TomDavidson (Member # 124) on :
quote: There isn't enough wealth concentrated in the very few for even stratospheric tax rates on them to fund the sort of spending you advocate.
Actually, I think this is untrue. There isn't enough income, but there is absolutely enough wealth. Posted by fugu13 (Member # 2859) on :
quote:Actually, I think this is untrue. There isn't enough income, but there is absolutely enough wealth.
I can't come up with any calculation where that isn't a ridiculous statement. What do you base that on?
Posted by Stone_Wolf_ (Member # 8299) on :
quote:...I don't think the billions of dollars we spend on sustaining our parents, grandparents, and other loved ones for an additional few days at the end of their lives contributes very much to the Gross National Happiness.
Sounds like Logan's Run...sorry old folk, time to die!
Posted by Black Fox (Member # 1986) on :
1. In response to a post above, Germany scaled back most of their social programs in the 1990's and has also instituted serious tax increases in the last 5 years or so. I know they bumped their VAT from 15% to almost 20% about 4 years ago. Surprise, they handled their fiscal issues by both cutting spending across almost all government programs and raising taxes.
2. As noted above SS spending will smooth out once we're done with our demographic issues. Also, I'm a firm believer that eventually medical costs will come down, but for now we're at this odd point where more medical technology is actually radically increasing the cost of treatment rather than decreasing it. Mainly, if you have a non-curable disease and then find a cure you are stuck with the unfortunate fiscal situation of spending a lot of money to cure them, but then you also have that nice added benefit of not having people die.
3. SS spending and medical spending on the elderly makes life much easier for the middle class. Instead of having Grandma and Grandpa live with their kids, they get to live on their own and not "tax" the spending of their children. This is a win for everyone. It also cuts down on social issues that can cost a lot of money and time.
4. To just say SS is expensive and maybe does not give us the best bang for the buck so lets get rid of it is an unimaginative solution to the problem. There are so many ways to combat the costs. The government could set back retirement age, promote later retirement by creating meaningful payout increases for those that retire later on in life and contribute more to the program, and legally separate SS taxes and spending from the general budget.
5. Old people don't add to the bottom line, so let's put the money into an investment that gives us a real return. Let's be honest, that pretty much sums up your argument. The problem with that is government's purpose is not to make the best investments in terms of financial return, but the best investments for the general welfare. Now, it certainly might be in the interest of the general welfare to at times make the best financial investment, but certainly not all the time.
I like to think about it like this: there are police officers protecting me right now that were trained with revenue generated long before I was even born or was paying taxes. There are F-15's and F-16's flying air superiority missions built from monies and government funded research from long before I was born or paying taxes. I drive on roads built before I was born. I live in a city laid out by urban planners long before I was born. I stand on the investment of hundreds of generations of peoples. I don't think it is a terrible thing to spend some money on the latest generation on its way out.
Posted by SenojRetep (Member # 8614) on :
BF-
Were you talking to me, or Aerin? I think she's the only one who's advocated abolishing SS. I think we should scale it back dramatically, but I pretty specifically said that SS should continue to exist.
1. Good for Germany. We should do the same; raise taxes and decrease outlays. Not this year, or the next, but soon and for a long time.
2. I don't believe it will "smooth" out as much as you anticipate. Japan has an inverted demographic pyramid, so do many European countries, and all signs indicate the US is continuing in that direction. IMO, there will continue to be a smaller tax base than can be reasonably expected to support the retirement base at the levels currently envisioned, especially as life expectancies continue to increase.
3. It certainly spreads the burden over society, but it's less efficient. Providing G&G with the means to live on their own artificially inflates all sorts of costs from housing to food to transportation.
4. I agree. That's why I'm not suggesting we abolish SS, but rationalize it so that it better reflects what I believe our national fiscal priorities are.
5. I agree again. There's a time for compassion and support. But I also think that if our compassion for the elderly hamstrings our ability to educate our children, its a bad fiscal policy.
Your arguments for police and F-15s and other investments don't answer. SS isn't an investment; it's a nice thing we've done to protect a class of individuals who historically in our country have suffered privations as a result of their inability to engage in work. It's a good thing; it speaks to our better nature. We should keep doing it. But we shouldn't let it get in the way of doing other good things as well. And I believe that the current and projected future funding levels impede progress on other important priorities, and will continue to inhibit our ability to grow and progress as a country into the future.
Posted by SenojRetep (Member # 8614) on :
BTW, one thing I was thinking about after the back and forth with Kate last night is the problem with using $250,000 as a tax rate increase threshold. Specifically, I think $250,000 household income is ridiculously high. 75% of households have income below $75,000. But $250,000 has become a cognitive anchor in all our discussions of taxes.
I believe that lots of households with adjusted incomes between $75-250K could afford to pay more (increases even over Clintonian levels), but no one from either party has made a serious suggestion about raising taxes on anyone but those making over $250K, because of what I believe was an ill-conceived campaign promise. Such increases would perhaps make us feel good, because it's promoting economic equality, but it won't have anything like the necessary effect on federal revenues.
Posted by kmbboots (Member # 8576) on :
Sorry for another short post.
What does proceeding into the future mean if not better lives for the citizens of the country? All of the citizens, including the old and sick ones. If they don't proceed, we don't proceed as a country.
I think that $250K could be lower but it is a start.
Posted by SenojRetep (Member # 8614) on :
Kate, did you see my earlier suggestion of personalizing SS retirement age? In what way is that leaving the old and sick behind to die? I think you have a binary view of the issue, that any decrease in SS outlays is tantamount to throwing G&G into the street, and it just isn't so.
And no politician is treating $250K as a start. It might make you feel good to think of it in those terms, but the reality is Obama's pledge has made the path to fiscal solvency much more difficult for the country, both directly and indirectly.
Posted by kmbboots (Member # 8576) on :
You might note that I have suggested need based SS several times. That is a change right there.
We haven't even gotten congress to agree to $250K yet.
Posted by SenojRetep (Member # 8614) on :
That's true; you have, my mistake. I don't understand the point of your question then; in what way has anything I've suggested amounted to leaving the old and sick behind?
Posted by fugu13 (Member # 2859) on :
First, the 18% number. While that's held moderately constant for federal gov't revenue, total gov't revenue in the US has trended strongly upwards over the same period. See here: http://www.usgovernmentrevenue.com/revenue_history . That's strong evidence that federal gov't revenue has at least the potential to increase as a percent of GDP. What's more, we're currently well below the peak after a drop in 2008. It also completely undermines the crowding out needed expenditure story, as most of the expenditures you identify should stay fairly constant as a percent of GDP -- and we managed to provide them when total gov't revenue was a much lower percentage from peak of GDP.
quote:2. I don't believe it will "smooth" out as much as you anticipate. Japan has an inverted demographic pyramid, so do many European countries, and all signs indicate the US is continuing in that direction. IMO, there will continue to be a smaller tax base than can be reasonably expected to support the retirement base at the levels currently envisioned, especially as life expectancies continue to increase.
Luckily, this is fairly easy to predict several decades in advance, because the people who will be working in a given time are already born, and most of the rates of change are extremely predictable. Current projections ( http://www.census.gov/population/www/projections/natchart.html for snapshots) have the US problem peaking in the vicinity of 2025, then settling down a good bit by 2050, into a configuration not quite as good as in 2000, but about the same as now. And to preempt, we saw the population pyramid changes coming in places like Japan, too. Also, our population pyramid (and economy) will be greatly improved if we substantially liberalize immigration policy.
I agree completely that tax increases must extend well below $250k (they'll likely need to hit at least as low as $100k) to have their needed impacts.
quote:Your arguments for police and F-15s and other investments don't answer. SS isn't an investment; it's a nice thing we've done to protect a class of individuals who historically in our country have suffered privations as a result of their inability to engage in work. It's a good thing; it speaks to our better nature. We should keep doing it. But we shouldn't let it get in the way of doing other good things as well.
Agree completely. That's why my proposed approaches take care of that . Again, with the tweaks specified, social security would peak at maybe 8%, and then decline, I guesstimate to a tad under 7%, not much larger than currently (due to substantially fewer people receiving the benefit while maintaining it for those who need it, in a population pyramid that's close to the current one).
quote: I would favor changing the "one size fits all" system into something that makes much more personalized decisions about an individual's continued ability to hold down a job. This would increase the fairness of the program, as people would get more uniform benefits, rather than poor unhealthy people only collecting for a couple of years and rich, healthy people collecting for much longer. I would set the threshold such that, on average, people collected for about the final five years of their lives, which is in line with the original intent of SS. This would, I believe, reduce annual spending by more than half without decreasing monthly stipends. It would significantly increase retirement age for people not working in labor intensive fields, but I see that as a benefit rather than a cost.
The ideas behind the approach aren't too bad (my personal preferred approach is just to have a guaranteed minimum income for everyone that declines gradually with income earned). The specifics don't work, though. People are unproductive and need support much longer than five years at the ends of their lives; targeting five years means leaving huge numbers of people unable to earn much, if any, income without assistance.
quote: The healthcare thesis is provocative, but my initial reaction is that encouraging more spending on something that produces little good for society isn't a very good idea. Perhaps I'm the one moralizing now, but I don't think the billions of dollars we spend on sustaining our parents, grandparents, and other loved ones for an additional few days at the end of their lives contributes very much to the Gross National Happiness.
I suspect you'll feel differently when you're experiencing those days . Also, most of what we're talking about isn't a few days, but a few years. And I'm not sure why people working in health care earning money contributes less to the GNH than other jobs .
I'm not saying use gov't force to redirect huge sums of money to those ends, I'm saying let people redirect the money they have to those ends. I want a reasonable minimum healthcare made available for all for moral reasons, but I also want people to have the freedom to pay (and pay substantially, if they want) for more healthcare. The trick is figuring out the dividing line between reasonable minimum and payment supported.
Posted by SenojRetep (Member # 8614) on :
Fugu-
Thanks for the detailed response. I'm afraid mine will likely be less well thought out.
I appreciate the additional information on state and local revenue increases over time. I would dispute, though, it's value in predicting capacity for increased federal revenues, beyond the natural increase as employment picks up and the effects of the downturn dissipate. But, honestly, I'd be glad if we could demonstrate significantly increased federal revenues. I think most federal programs are based on good ideas, so if we can increase revenues to cover them that would be fine. I remain skeptical, but would not be disappointed. However I do think planning as if it's a foregone conclusion that we could raise federal revenues of 29% of GDP would be foolhardy.
On demographics, I'll bow to superior research.
Not remembering precisely what your recommended tweaks were. Means testing and raising the retirement age? I just don't remember. I think you're underestimating most people's ability to remain employable, even in a diminished capacity. But I would be comfortable with a system that used thresholds of employable capability rather than a fixed distance from end of life. I'm most concerned with making benefits more uniform across society, while recognizing that some people's health and professions allow them to work much longer than others.
Finally, I have experienced old age death among my grandparents, more recently with my wife's grandparents, and imagine I'll face it soon with my own parents. Which is to say I'm not wholly inexperienced with the difficult decisions that have to be made when death approaches.
I wouldn't dispute the right of an individual to spend money on expensive treatments that will have minor impact in extending their loved ones' lives. But encouraging such a system perpetuates the idea, I believe, that we are obligated to "do all we can" before we're able to admit "defeat" in the face of death. I don't think that's a healthy attitude to have about death, so I don't think we should encourage (and perhaps that we should actively discourage) such behaviors. But I haven't given it a lot of thought, and as I write it my own opinion sounds fairly monstrous to me, a good indication that I'm probably strongly overstating my views on the matter.
Posted by Destineer (Member # 821) on :
quote:On a different note, I read a very interesting post recently where someone said that the whole idea of keeping health care costs down doesn't make as much sense as it seems.
Do you have a link for this? I'd love to read it.
quote:But encouraging such a system perpetuates the idea, I believe, that we are obligated to "do all we can" before we're able to admit "defeat" in the face of death. I don't think that's a healthy attitude to have about death, so I don't think we should encourage (and perhaps that we should actively discourage) such behaviors
Ah, see, I think that's exactly the correct attitude to have toward death. I'd feel very differently if I believed in an afterlife, though.
Posted by fugu13 (Member # 2859) on :
quote:Thanks for the detailed response. I'm afraid mine will likely be less well thought out.
I don't have time for a lengthy reply, but no worries, I'm enjoying the conversation .
quote:However I do think planning as if it's a foregone conclusion that we could raise federal revenues of 29% of GDP would be foolhardy.
Definitely. I only foresee a slight rise, to perhaps 20 or 21%, being possible/necessary without a drastic public rethinking. And after a drastic public rethinking, I hope it will still only be a slight rise overall.
quote:I'm most concerned with making benefits more uniform across society, while recognizing that some people's health and professions allow them to work much longer than others.
It's a very difficult question. I can definitely understand the desire for that sort of approach. I'm not sure there's any feasible way to approach it, though, much less avoid the likely problems with gaming the system. One reason I like guaranteed minimum income is that it is extremely simple to implement, and since earned income would only partially crowd out the subsidy, there's (somewhat) less incentive to game the system.
quote:Do you have a link for this? I'd love to read it.
quote:Originally posted by SenojRetep: That's true; you have, my mistake. I don't understand the point of your question then; in what way has anything I've suggested amounted to leaving the old and sick behind?
No. You haven't. But when rhetoric about spending priorities places progess as a country in opposition to care for those in need, I feel that a reminder that they are "the country" as much as anyone is in order.
I sympathize with your point about end of life expectations. I think that conversations about what is realistc are usef. Iul. Don't mention this around your tea partiers, though. I believe they refer to those as "death panels".
Posted by Samprimary (Member # 8561) on :
well, at least I can say I saw this coming.
Posted by kmbboots (Member # 8576) on :
What?
Posted by Orincoro (Member # 8854) on :
quote:Originally posted by kmbboots: I believe they refer to those as "death panels".
My godmother is an older lady with chronic pain conditions who has suffered from 4 different forms of cancer. We were discussing the issue of healthcare a few weeks ago when I visited her, and she said: "sweetie when they check me into the hospital for the last time I *want* a death panel! What do I have to take care of *everything?*" It was sort of funny. I think she's right though.
Posted by Samprimary (Member # 8561) on :
quote:Originally posted by kmbboots: What?
the downgrade, the economic hostage-taking, etc. I feel I have a pretty good estimation of at least the next two years of the american economy now.
Posted by Orincoro (Member # 8854) on :
Meh, you called an inevitable across the board downgrade. In truth, S&P only downgraded because they knew the others weren't going to.
And you never know. Maybe the next round of elections will see a return to moderate, non-single-issue voting and... oh never mind you're right, we're F***ed.
Posted by Samprimary (Member # 8561) on :
At first I was happy some sort of compromise was on the table until I read,
quote:...the tax increases would be offset by permanently extending the George W. Bush-era tax cuts past their 2012 expiration date, a move that would increase deficits by about $4 trillion over the next decade.
$250 billion, by shuffling a few people into higher tax brackets, removing some write-offs, and in exchange $4 trillion in lost revenue.
We'll give you about 6 cents, if you give us a dollar. Yay!
Posted by Rakeesh (Member # 2001) on :
Man, I need to watch more Sopranos if I wanna follow their fiscal policy!
Posted by Orincoro (Member # 8854) on :
quote:Originally posted by BlackBlade: Republicans offer a compromise that includes "new revenues".
At first I was happy some sort of compromise was on the table until I read,
quote:...the tax increases would be offset by permanently extending the George W. Bush-era tax cuts past their 2012 expiration date, a move that would increase deficits by about $4 trillion over the next decade.
$250 billion, by shuffling a few people into higher tax brackets, removing some write-offs, and in exchange $4 trillion in lost revenue.
We'll give you about 6 cents, if you give us a dollar. Yay!
Well sure, but that 4 trillion is gonna be made up for in increased economic activity. Just like the revenue gaps the bush cuts have produced so far have done... So.
Posted by Orincoro (Member # 8854) on :
And.... Wow that link could not have a more fitting picture. Looks like four people who care little about what will be happening in 10 years.
Posted by SenojRetep (Member # 8614) on :
quote:Originally posted by BlackBlade: $250 billion, by shuffling a few people into higher tax brackets, removing some write-offs, and in exchange $4 trillion in lost revenue.
We'll give you about 6 cents, if you give us a dollar. Yay!
I'm not sure that's accurate, although I haven't looked at it in depth. This CBS news reports says that the net effect would be $300 billion in increased revenue from federal taxes, mostly due to sharply restricting the mortgage interest deduction and deductions due to state and local taxes.
The Post article you link to later in its copy seems to substantiate this point when it says "[o]ther Democrats challenged the notion that Republicans had made any major concessions. Lowering the top rate from 35 percent to 28 percent would eat up most of the extra revenue generated by limiting itemized deductions, they said, leaving very little savings to reduce future borrowing."
Again, I haven't looked at it closely, but it seems like the $300 billion in increased revenue from taxes is net and includes the cost over the next ten years of the lowered tax rates. Additionally, the GOP plan raises another $300 billion in non-tax revenues through increasing fees for federal services, etc. And it cuts $700 billion in planned federal spending, with 2/5 coming from agency budgets, 2/5 from Medicare and Medicaid benefit restrictions and 1/5 from a revised method for calculating SS COLA.
Posted by TomDavidson (Member # 124) on :
Speaking personally, by the way, limiting my mortgage interest deduction would result in a fairly sizable tax increase.
Posted by twinky (Member # 693) on :
quote:Additionally, the GOP plan raises another $300 billion in non-tax revenues through increasing fees for federal services, etc.
So they want to cut the progressive top tax rate and increase the regressive fees for services.
Posted by SenojRetep (Member # 8614) on :
quote:Originally posted by TomDavidson: Speaking personally, by the way, limiting my mortgage interest deduction would result in a fairly sizable tax increase.
For me, too. Of course, the tax increase due to restricting the mortgage insurance deduction would be greatest for those with the largest mortgages. See, for instance, this post by Suzanne Mettler on the relative benefits of the mortgage interest deduction. 69% of the benefit is accrued by the approximately 20% of households with income greater than $100,000.
Posted by SenojRetep (Member # 8614) on :
quote:Originally posted by twinky:
quote:Additionally, the GOP plan raises another $300 billion in non-tax revenues through increasing fees for federal services, etc.
So they want to cut the progressive top tax rate and increase the regressive fees for services.
I assume they are proposing cutting all tax rates, although I don't know the relative amounts. And both the deductions called out (mortgage interest and state and local taxes) primarily benefit the wealthy. I don't think it's clear what the net effect on the progressivity of the revenue burden would be, even including the proposed increases in fees, tariffs, etc.
Posted by twinky (Member # 693) on :
She should break down the $100,000+ bracket into 3-4 brackets: $100-250k, $250k-$1M, $1-10M, $10M+. I would expect the share to fall off drastically as you move up through those brackets, and the top two brackets there are the ones who have been making out like bandits on a greater and greater scale with each successive tax cut post-1997.
Posted by TomDavidson (Member # 124) on :
Far more interesting to me would be info on the percentage of household income taxed.
Posted by natural_mystic (Member # 11760) on :
The mortgage interest deduction always seemed wrong-headed to me. Presumably within a short time of its implementation the housing market would have absorbed its impact resulting in a rise in home prices as buyers effectively have a bit more to spend and sellers know this. Thus it amounts to a transfer from the government to home sellers, a transfer I'm not sure there's much utility in making. (Or am I missing something?)
Having said that, by the same token, presumably a restriction on the home mortgage deduction will result in a drop in home values. Given the roots of the GFC, the problems with underwater mortgages, this being a balance-sheet recession etc etc, is now the time to push for this?*
*I'm not unbiased here: I would be sorely inconvenienced by such a restriction.
Posted by The Rabbit (Member # 671) on :
However "wrong-headed" the mortgage interest deduction may be, this is pretty clearly a horrid time to get rid of it. Not only is it likely to cause a further drop in housing prices, it will also lead to another round of defaults and foreclosures as people who entered their mortgages with the assumption that they would be receive a tax break find they can no longer afford to make their payments without it.
Posted by SenojRetep (Member # 8614) on :
More info in the form of a House Ways and Means report on the impact of Mortgage Interest deduction (among others) on different income categories.
Summarizing from Table 3, the average value in 2009 of the MID for different income classes is: 10,000-20,000 = $280 20,000-30,000 = $520 30,000-40,000 = $640 40,000-50,000 = $800 50,000-75,000 = $1230 75,000-100,000 = $1490 100,000-200,000 = $2860 > 200,000 = $6650
<edit>From the same source, the average value of the state and local taxes deduction: 10,000-20,000 = $46 20,000-30,000 = $79 30,000-40,000 = $123 40,000-50,000 = $168 50,000-75,000 = $302 75,000-100,000 = $433 100,000-200,000 = $1013 > 200,000 = $6556 </edit>
<edit2>Also, it's perhaps useful to point out that among all credits, these two and the charitable contributions credit are the least progressive. The distributions of benefits for all other credits are significantly skewed toward lower incomes, relative to those three.</edit2>
<edit3>Also important to note is that those are the average values to those who claimed the benefit. Given that very few households in the lowest income classes will claim the benefit (since they are relatively unlikely to have a mortgage or owe sufficiently large state and local taxes), and that most households in the upper income echelon will, it's not immediately clear how the "average" member of the income class is affected, other than it'll probably be a significantly dilated version of the benefit calculated above.</edit3>
[ November 09, 2011, 04:39 PM: Message edited by: SenojRetep ]
Posted by MrSquicky (Member # 1802) on :
I really should do my own looking for this, but I'll throw out, has anyone seen a break down (preferably including income categories) of the deductions from primary versus second houses?
It seems to me that losing the second house provision may make sense, even in the current environment.
Posted by Mucus (Member # 9735) on :
I don't think it would be terribly difficult to adjust income taxes in the lower brackets so that the change is revenue neutral among people with lower incomes. In fact, since many people in this group are renting anyway, it might not even have to be a big change.
quote:Problem #3: The deduction is wildly regressive. The tax savings for households earning more than $250,000 is 10 times the tax savings for households earning between $40,000 and $75,000 a year, according to recent research by James Poterba and Todd Sinai.
If there ever was a case for small-government egalitarianism, then this is it. Eliminating the home mortgage deduction and replacing it with an across-the-board tax cut would equalize after-tax incomes without a single new government program.
quote:Originally posted by The Rabbit: However "wrong-headed" the mortgage interest deduction may be, this is pretty clearly a horrid time to get rid of it. Not only is it likely to cause a further drop in housing prices, it will also lead to another round of defaults and foreclosures as people who entered their mortgages with the assumption that they would be receive a tax break find they can no longer afford to make their payments without it.
So you read the second paragraph of my post?
Posted by Geraine (Member # 9913) on :
Rabbit, if they can't make their house payment without it, they aren't going to be able to make their payment with it. The mortgage interest deduction lowers taxable wages. It isn't a hard credit.
If I am single and make $40,000 a year and I pay $6,000 in mortgage interest, it is better for me to take the flat $10,000 off. For a family of two it would be beneficial to take the $6,000, as I get the $3750 deduction per person as well. All in all it really isn't going to save you much. When I was paying $11,000k in interest a year on my mortgage it amounted to something like $300.
I think people often confuse the mortgage interest deduction with the tax credit that ended last year. The tax credit got you some nice money, but the mortgage deduction? Not so much. Lower income families will more than likely have no taxable earnings after normal deductions anyway, so for many of those families the mortgage deduction does nothing for them currently.
The net result is that this would mostly affect middle and upper class families, while essentially leaving lower and lower middle class families alone.
The higher the mortgage, the more interest a person pays. Take that credit away, and you automatically raise taxes, though not by much.
Don't get me wrong, I think it is a positive thing. I'm all for simplifying the tax code. I'd be fine with removing all deductions but I would want some pretty comprehensive tax reform. I don't know the last time some of you have looked at the Circular E (IRS Publication 15) but the tax tables are utterly overwhelming.
Posted by natural_mystic (Member # 11760) on :
quote:Originally posted by Geraine: Don't get me wrong, I think it is a positive thing. I'm all for simplifying the tax code. I'd be fine with removing all deductions but I would want some pretty comprehensive tax reform. I don't know the last time some of you have looked at the Circular E (IRS Publication 15) but the tax tables are utterly overwhelming.
What is it about the tables that you find overwhelming?
Posted by Geraine (Member # 9913) on :
quote:Originally posted by natural_mystic:
quote:Originally posted by Geraine: Don't get me wrong, I think it is a positive thing. I'm all for simplifying the tax code. I'd be fine with removing all deductions but I would want some pretty comprehensive tax reform. I don't know the last time some of you have looked at the Circular E (IRS Publication 15) but the tax tables are utterly overwhelming.
What is it about the tables that you find overwhelming?
The tax tables. There are literally thousands of them. The fact that I am so close to the next tax bracket that if I work literally 3 hours of overtime I actually get paid LESS than if I didn't.
The 10-35% marginal rates aren't too bad. The problem lies in the formula the IRS uses to calculate your tax liability. Then you factor in all of the deductions, credits, etc. and you suddenly have a massive mess when you go to file your taxes. It does wonders for H&R Block.
OASDI and Medicare are easy to calculate, and I appreciate that. In my perfect world, Federal Income Tax would be based on a flat percentage with different wage base limits, like OASDI is currently framed.
For example you don't pay federal income tax on the first $20,000 you make, once you hit $20,001, any future earnings are automatically taxed at 10%. When you hit $80,000 this goes up to 15% on future earnings, $150,000 goes to 20%, $500,000 it goes to 25%, etc. Those aren't the numbers I'd choose, just throwing numbers out there so you get the idea.
That would help the lower and middle class while the wealthy shoulder more of the tax burden. No W-2 forms would be needed, and nobody would need to file anything at the end of the year.
Posted by TomDavidson (Member # 124) on :
quote:For example you don't pay federal income tax on the first $20,000 you make, once you hit $20,001, any future earnings are automatically taxed at 10%. When you hit $80,000 this goes up to 15% on future earnings, $150,000 goes to 20%, $500,000 it goes to 25%, etc.
You realize that this is the status quo, right? That what you're describing is in fact a marginal tax rate?
What you seem to be saying is that you find claiming deductions to be excessively complicated. You can of course simplify this by not claiming any but the default.
Posted by The Rabbit (Member # 671) on :
Geraine, I know how the mortgage deduction works. I'm not a fool.
I've always had enough deductions to justify itemizing even without a mortgage. I don't know how common that is but if you start from that position its pretty simple. If you are in a 20% tax bracket and your mortgage interest payment is $1000/month (a fairly modest mortgage in many parts of the country) and you have other deductions that are greater than or equal to the standard deduction, eliminating the mortgage deduction would increase your tax burden by $2400. If you are on edge of solvency, that additional tax burden could easily push you over the edge.
Posted by Geraine (Member # 9913) on :
Rabbit, it wasn't my intention to imply you didn't. My point is for most households in America, especially those living in poverty, eliminating the mortgage deduction would not have an effect, and is effectively a progressive tax increase on the middle and upper classes.
Tom: It is a form of marginal tax, but it is not the status quo. Right now the IRS looks specifically at your gross taxable wages for the year, and that is what determines your tax owed. Your taxable wages can be manipulated by things such as medical, 401(k), dependents, etc.
If you remove the deductions as well as the loopholes, and replace the tax system with a tiered structure that is calculated based on YTD wages instead of End of Year wages, there would be nothing for an individual to file.
Posted by TomDavidson (Member # 124) on :
quote:Right now the IRS looks specifically at your gross taxable wages for the year, and that is what determines your tax owed. Your taxable wages can be manipulated by things such as medical, 401(k), dependents, etc.
So your problem isn't with the tax tables; it's that we allow deductions.
Posted by Blayne Bradley (Member # 8565) on :
So apparantly Congress is going to absolve themselves of the sequesting trigger of the supercommittee?
Posted by BlackBlade (Member # 8376) on :
Of course, why should this time be any different than when they setup the stupid thing?
[ November 18, 2011, 01:11 PM: Message edited by: BlackBlade ]
Posted by Lyrhawn (Member # 7039) on :
That was fairly inevitable.
I'd love to see someone block it though.
Posted by Samprimary (Member # 8561) on :
what a surprise
apropos of nothing, did you know congress il literally less popular than the notion of america becoming a communist country?
Posted by twinky (Member # 693) on :
9% and 11% is almost certainly within the statistical margin of error, but it's still pretty embarrassing.
Posted by BlackBlade (Member # 8376) on :
Seriously, I remember when we were all up in arms about Larry Craig perhaps not leaving the Senate. I'm freaking sick of Charlie Rangel. I remember him being asked by a reporter whether his ethics violations necessitated his resigning, he looked at him like he was speaking another language. Of course not! Charlie Rangel doesn't answer to ethics!
Posted by Samprimary (Member # 8561) on :
quote:Originally posted by BlackBlade: Does garbage like this make you feel any better?
quote:Originally posted by Geraine: Rabbit, it wasn't my intention to imply you didn't. My point is for most households in America, especially those living in poverty, eliminating the mortgage deduction would not have an effect, and is effectively a progressive tax increase on the middle and upper classes..
She just formulated a very clear example of what section of society might feel an effect. A family at the brink of solvency could see their total outlay increase by roughly 1/6th of their mortgage payments. And that is on a decidedly modest mortgage, in many areas.
Posted by Orincoro (Member # 8854) on :
quote:Originally posted by Geraine:
quote:Originally posted by natural_mystic:
quote:Originally posted by Geraine: Don't get me wrong, I think it is a positive thing. I'm all for simplifying the tax code. I'd be fine with removing all deductions but I would want some pretty comprehensive tax reform. I don't know the last time some of you have looked at the Circular E (IRS Publication 15) but the tax tables are utterly overwhelming.
What is it about the tables that you find overwhelming?
The tax tables. There are literally thousands of them. The fact that I am so close to the next tax bracket that if I work literally 3 hours of overtime I actually get paid LESS than if I didn't.
They would literally pay you less? That is hat you are saying? By working more you stand to be compensatd for that work with a net decrease In pay? Really?
Posted by scholarette (Member # 11540) on :
quote:Originally posted by Orincoro:
quote:Originally posted by Geraine:
quote:Originally posted by natural_mystic:
quote:Originally posted by Geraine: Don't get me wrong, I think it is a positive thing. I'm all for simplifying the tax code. I'd be fine with removing all deductions but I would want some pretty comprehensive tax reform. I don't know the last time some of you have looked at the Circular E (IRS Publication 15) but the tax tables are utterly overwhelming.
What is it about the tables that you find overwhelming?
The tax tables. There are literally thousands of them. The fact that I am so close to the next tax bracket that if I work literally 3 hours of overtime I actually get paid LESS than if I didn't.
They would literally pay you less? That is hat you are saying? By working more you stand to be compensatd for that work with a net decrease In pay? Really?
It is possible that making more disqualifies him for some tax credits, like the earned income credit. But didn't we go though this with mal at some point showing that this was flawed?
Posted by Lyrhawn (Member # 7039) on :
A lot of people get confused about the fact that moving into a higher tax bracket doesn't mean your entire income is taxed at that level, just the income made over the threshold.
But it is possible that crossing said threshold disqualifies him for some sort of tax credits. Most people aren't that aware of their own tax situation, and for that matter, most people aren't so on the cusp that going over wouldn't outweigh the negatives, but it's certainly possible.
Posted by Orincoro (Member # 8854) on :
Of course. But at no point is a person literally compensated for his work less than if he had worked fewer hours. He may miss out on credits, but you do not *earn* less money.
Posted by Lyrhawn (Member # 7039) on :
At what point does that become a distinction without a difference? The bottom line is less money, and being wrong about how his money is being withheld, while still being right about the cause, doesn't really change anything substantive.
Either way, I think the most likely answer is that he's simply doing his taxes wrong.
Posted by Mucus (Member # 9735) on :
If you are close to the poverty line, you can get a negative effective marginal tax rate due to the loss of certain tax credits and government transfers, in Canada anyways. It is a bit silly.
Posted by Samprimary (Member # 8561) on :
quote:Originally posted by Lyrhawn: Either way, I think the most likely answer is that he's simply doing his taxes wrong.
I started doing taxes for my company at 23 and even in that byzantine mess I never really found any situation that would be true there unless I really, really was doing my taxes wrong.
Of course, I don't do my own taxes anymore, I hire professionals. I could ask them if there's ever those sorts of situations these days, but honestly the system is so favorable to people like me that I doubt we're really talking about a real problem.
Posted by TomDavidson (Member # 124) on :
Well, that's probably the point, Samp; presumably Geraine isn't independently wealthy, so it's possible that he's getting some sort of credit right now that he'd lose if he went over the limit. I will say that I grew up very poor, and we occasionally ran into situations like this -- but never from federal taxes. Usually there were high-value services (provided by local and state governments, and charities) that were provided to us based on our income level that, if we nudged our income too high, would be retracted, forcing us to replace their assistance with a high-cost option that more than wiped out the income gain. Again, though, this wasn't a tax problem.
Posted by Orincoro (Member # 8854) on :
And regardless, blaming this supposed catch-22 on tax credits is a bit disingenuous. If the credits weren't there, he would be working more hours for the same money anyway. losing a benefit is not losing earnings, and the solution to the problem would be just to eliminate the benefit entirely, with the same result.
He can talk about this as a perverse incentive, but not with much gravity. As a net thing, the elimination of the tax credit would have only a negative effect on his income. He's just sore that he can't collect *and* earn enough not to qualify for it. Which is just sour grapes over a problem that doesn't really exist anyway.
Posted by Blayne Bradley (Member # 8565) on :
Obama says he will veto the bill to remove the trigger?
Posted by Lyrhawn (Member # 7039) on :
Are you asking or telling? I haven't heard him say that. But I'd like to.
Posted by Blayne Bradley (Member # 8565) on :
It was on the Colbert Report.
Posted by Lyrhawn (Member # 7039) on :
News reports indicate that Press Secretary Carney, when pressed by reporters, refused to commit the President to a veto, but he's threatened some sort of action of they "water down" the trigger.
Vague but threatening.
Posted by Blayne Bradley (Member # 8565) on :
Today has been a great day, the supercommittee has failed and the defense budget will get cut!
Posted by Lyrhawn (Member # 7039) on :
The Democrats will probably come out ever so slightly ahead in this. Polls show a majority of people agree with their plan to cut and raise taxes...
But if the trigger does go through it will be a mixed blessing. Most people don't support cuts to defense spending, necessary as I think it might be. The trigger is a pretty harsh mistress. However, cuts are still cuts, and everything has to feel the pinch. If Democrats stick to their guns and let the cuts go through, they might be able to work it to their advantage, especially if it forces Republicans to attack them for cutting spending.
I will say though, that Democratic plans to count less money for Iraq and Afghanistan is exactly what the GOP is calling it; a gimmick. You can't count that as savings.
Posted by MrSquicky (Member # 1802) on :
quote:The Democrats will probably come out ever so slightly ahead in this. Polls show a majority of people agree with their plan to cut and raise taxes...
I don't know, it strikes me that the Republicans staked out a position (no tax increases) that they knew was going to fail from the very start. I get the feeling they may have put more planning into what they were going to do after the talks failed than the talks themselves. I expect to see their strategy emerge in the next couple of weeks.
---
Although, maybe that is just me seeing strategy behind good old fashioned stupidity. I don't know, I see the Republicans moving more and more away from both what the majority of the country wants and things that would actually work in reality and I figure that they're doing it for a purpose.
Posted by Lyrhawn (Member # 7039) on :
I think they fully expected the Democrats to cave weeks ago, and have no idea how to get out of this. The only people with them are their core base of voters. Independents are solidly with a tax AND cut plan. If Obama can bring on Candidate 2.0, a souped up version of how he ran four years ago, he'll mop the floor with them AND pick up seats in Congress.
I think they thought the no new taxes plan was going to work great, because they've rolled Obama so much already. Look what happened at the debt ceiling debate. They got an all cuts trillion dollar cut. I think they're floored that Democrats are refusing to do it all on cuts, and the only thing they know how to do is stick to their guns, because caving means that they piss even their base off, who are perfectly content to watch things collapse.
This is all by the seat of their pants.
Posted by MrSquicky (Member # 1802) on :
That's possible. Did you see Meet the Press this past Sunday? Jon Kyl basically said, "The Democrats just weren't willing to negotiate. We offered a wide range of spending cuts and they wouldn't go with any of them. They kept saying that we'd need to raise taxes as well. I mean how do you deal with people who aren't willing to completely cave and give you everything you want?"
The weird thing for me is that at least some of the Republicans have got to know that the things they are asking for are ridiculous. And I mean, not in the "our opponents aren't going to give this to us", but in the "this doesn't match with reality and/or this will severely damage the country" sort of way. That's the sort of thing you bring as a negotiating position. They shouldn't want to get them, let alone be unwilling to take anything less.
I mean, I'm starting to think that the march of insane plans from fantasyland that we're getting in the Republican primaries represents things that they are actually going to try to accomplish.
Posted by Lyrhawn (Member # 7039) on :
lol I didn't see it, but I'll catch the clip later. What you just paraphrased has basically been their main talking point for weeks now.
The problem with the GOP is that this line was working fine a year ago. But the time to compromise was a year ago when they had the high ground. But they've ridden this issue into the ground now, and now the Democrats are on top of it. They badly miscalculated after Dems caved on the debt ceiling deal.
I read an article that came out right after the debt ceiling deal about how it wasn't as bad for Democrats as it looked, because Democrats could stonewall for tax cuts during the Super Committee, and if the GOP wouldn't cave, all they had to do was wait. Bush tax cuts are set to expire. Military spending is going to take a huge half trillion dollar hit. Dems are going to get a lot of what they want simply by doing nothing at all. With Obama actually threatening a veto of a GOP plan to kill the trigger, it looks like that's exactly what they are doing, and it's brilliant.
A year from now, the GOP is the party that wanted to sink the nation to protect the rich, and the Dems are the party that made the tough choices to cut spending and raise taxes on the wealthy when the GOP wanted to punt yet again.
Posted by BlackBlade (Member # 8376) on :
This seems so counter-intuitive I feel like I must be missing a major aspect of this development.
Why on earth is a two month extension of the payroll tax cut, which has extremely broad bi-partisan report suddenly dead in the water? They are saying it's these same freshmen congressmen who fouled up the debt limit deliberations. But if these numbers are accurate, how could the freshmen put a stop to it by themselves? Their numbers are not *that* significant. So what is at work here? Why is Boehner so beholden to this new group?
Either way, not letting the Bush tax cuts expire, while simultaneously letting the payroll tax do just that seems like such a hefty crate of ammunition to just hand the Democrats.
Posted by twinky (Member # 693) on :
I heard a Republican Congressman interviewed about this on my way to work. He says the House wants to extend the payroll tax cut for a year, not two months, and that two months would just be punting -- Congress nominally resumes on Jan 23, so this debate would start up again pretty much immediately with at two-month extension. A year extension, he said, would give workers and employers more certainty.
Posted by rivka (Member # 4859) on :
quote:Originally posted by twinky: He says the House wants to extend the payroll tax cut for a year, not two months, and that two months would just be punting
And put the debate right in the peak of campaigning time, which they don't want.
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. Some measures I'm coming around to are increased mandatory paid vacation time, stricter enforcement of existing overtime laws, and increases in tax rates at the top end.
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You mean like I did in my last post?