posted
And I am unsettled by the enormous and growing gap between the wealthiest actual human beings and the rest of us. I am unsettled by the percentage of wealth that is accumulating in the hands of those that already have obscene wealth. I am unsettled by the unbalanced political influence this gives those who already have power and influence where the poor have none.
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quote:Originally posted by kmbboots: And I am unsettled by the enormous and growing gap between the wealthiest actual human beings and the rest of us. I am unsettled by the percentage of wealth that is accumulating in the hands of those that already have obscene wealth. I am unsettled by the unbalanced political influence this gives those who already have power and influence where the poor have none.
I'm unsettled by all those things too (although I'd say the poor have relatively little influence, not none, but don't let me hinder your absolutism).
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posted
Hey. If you are unsettled enough to vote for people who will fix it, then I have no problem with you.
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Blayne Bradley
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posted
Left wing social engineering works, thats the thing however.
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According to the Table 3.1 here, spending broadly on social services has increased approximately linearly from about 3% of GDP at the end of FDR's administration to about 16% of GDP now.
According to Table 2.3 at the same site, total receipts (including FICA taxes) have bounced between 17% and 19% of GDP, only barely exceeding 20% during WWII and for one year at the end of Clinton's presidency.
So even if we return taxes to what they were at the time of FDR or JFK, and even if we kill all military spending permanently, and even if we were able to wipe out interest payments on the debt somehow, and killed all spending on roads, schools, energy, R&D, etc. Even if we did all that, if the long term trend continues we'd have about 15 years before we were running a deficit on social programs alone.Posts: 2926 | Registered: Sep 2005
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quote:Unless the structural issues aren't demographic, in which case it still could be. The rate of increase in outlays isn't just a function of changing demographics.
They pretty much are, for the purposes of our entitlement programs. We could raise taxes enough to fund every entitlement program we have, most definitely. As I said, bad idea, but entirely in the realm of possibility.
Unless you're doing something silly like including new federal gov't programs in your projection? If so, yes, eventually you'd have more government programs than it was possible to handle. That's a silly sort of thing to argue about, though, so I assumed you were talking about the growth in entitlement programs.
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quote:Unless the structural issues aren't demographic, in which case it still could be. The rate of increase in outlays isn't just a function of changing demographics.
They pretty much are, for the purposes of our entitlement programs. We could raise taxes enough to fund every entitlement program we have, most definitely. As I said, bad idea, but entirely in the realm of possibility.
Unless you're doing something silly like including new federal gov't programs in your projection? If so, yes, eventually you'd have more government programs than it was possible to handle. That's a silly sort of thing to argue about, though, so I assumed you were talking about the growth in entitlement programs.
Okay. Besides demographics and new government programs, isn't there also a persistent expansion of current government programs? Medicare has expanded (both in the number and, more significantly, the costliness of procedures and products covered), SSDI enrollment has expanded, thresholds for food stamps have gone down, etc. The federal government has not been effective at limiting the expansion of programs, nor the addition of new programs, which makes me think that the political will to do so will not exist in the future, barring pretty hard caps on increasing spending. So I believe that whatever expansion in spending is due to that, rather than the demographic shift, won't be solved when (if?) demographics stabilize.
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quote:Originally posted by kmbboots: And I am unsettled by the enormous and growing gap between the wealthiest actual human beings and the rest of us. I am unsettled by the percentage of wealth that is accumulating in the hands of those that already have obscene wealth. I am unsettled by the unbalanced political influence this gives those who already have power and influence where the poor have none.
I agree fully and the problem isn't simply that the poor suffer, the situation is destabilizing. Once people amass a certain amount of power (whether that's economic, political, physical, social or religious power) they are able to use it to accumulate more power. That creates a positive feedback loop that creates greater and greater disparity. Once you get off balance by some amount, the process becomes auto-catalytic and it's almost impossible to stop before society explodes.
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quote:Originally posted by kmbboots: SenojRetep, what do you suggest we do with people too old or sick to work?
Kate, your question strikes me as quite absolutist. I don't know that there is one answer for everyone, and I certainly don't feel that I could give a sufficient answer here.
How much (as a percentage of GDP) do you think we should spend on supporting those who are too old or too sick to work?
I think your question is ridiculous at many levels. Clearly, the percentage of GDP that should be spent on the old and sick depends on dozens of factors include the percentage of the population that are old and/or sick and the over all wealth of the society.
We are the wealthiest society the world has ever seen. We aren't even close to needing to throw the sick and the old out in the cold so we can continue to feed the children. We can afford to care for everyone, the question is whether or not we consider that a priority or would rather sacrifice the weak in preference to individual economic freedom.
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quote:Originally posted by kmbboots: Balancing the budget.
I think we should start by setting targets for spending and receipts, first for the overall budget (including SS, Medicare and Medicaid) and then for individual programs within the federal budget. Personally I would target it at 20% of GDP. I think there should be hard checks in place when revenues fall under or spending exceeds the target, including automatic tax increases and forced spending cuts.
Next I think we should decide how to apportion spending and receipts, given the income/outlay targets. Personally I favor increased spending on infrastructure and investment and decreased spending on military and social programs. For receipts I think we should lower corporate tax rates to more closely resemble global averages, simplify the tax code to three brackets while eliminating most or all non-charitable tax deductions, lift the cap on FICA exemption while folding it into income taxes (ending the fiction that social spending is different than other federal spending), and return to Clinton-era tax levels.
Once we've done that, I think we should focus much more on "last mile" questions of how to deliver services effectively. Greater integration and empowerment of local organizations, smoother coordination with state and federal agencies, including requiring federal (and preferably state, although that's a separate issue) politicians to act as true liasons to their constituents.
That's off the top of my head. I'm sure there are lots of holes in it, but I think the biggest issue is setting hard targets and sticking to them.
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quote:Originally posted by kmbboots: SenojRetep, what do you suggest we do with people too old or sick to work?
Kate, your question strikes me as quite absolutist. I don't know that there is one answer for everyone, and I certainly don't feel that I could give a sufficient answer here.
How much (as a percentage of GDP) do you think we should spend on supporting those who are too old or too sick to work?
I think your question is ridiculous at many levels. Clearly, the percentage of GDP that should be spent on the old and sick depends on dozens of factors include the percentage of the population that are old and/or sick and the over all wealth of the society.
We are the wealthiest society the world has ever seen. We aren't even close to needing to throw the sick and the old out in the cold so we can continue to feed the children. We can afford to care for everyone, the question is whether or not we consider that a priority or would rather sacrifice the weak in preference to individual economic freedom.
Okay. For today, though, at our current levels of GDP and wealth and age distribution, what is the proper percentage. How much of every dollar someone making $50,000 a year this year in the US earns do you think the federal government should take to pay for social programs this year in the US? When you say we aren't even close, how would you know when we were?
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posted
SenojRetep, can you put that in terms of actual people who will be hungry and without medical care? We agree that things can and should be done more efficiently. What I am trying to get you to acknowledge is that cutting social programs will hurt people.
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quote:Originally posted by kmbboots: SenojRetep, can you put that in terms of actual people who will be hungry and without medical care? We agree that things can and should be done more efficiently. What I am trying to get you to acknowledge is that cutting social programs will hurt people.
Cutting social programs will hurt people.
<edit>That was maybe glib. I acknowledge cutting social programs will hurt people, just like cutting military spending puts guys like Jeff C. in a tough spot. I think there are ways to cut that will hurt less and ways that will hurt more, and think we should focus on how to decrease outlays as painlessly as possible (for instance, raising retirement ages, means testing, rationalizing prescription drug benefits, etc.) At 20% of GDP, I think that we could do a good job (although maybe not as good as we do now) at providing for the needs of the poor and the old and we could do a good job (although maybe not as good as we do now) of providing for our common defense while still spending only what we take in and we would be doing a much better job at providing our children and grandchildren a prosperous and hopeful future.</edit>
posted
The really, really difficult thing is, having social programs can also hurt people. It would be wonderful if the government could just take money from people without making anyone too much worse off (note: effects often extend beyond the people money is taken from), then unequivocally make others better off.
Unfortunately, it doesn't work like that. While the benefits of social programs can seem obvious if you imagine just subtracting the direct effect of the social program, that frequently isn't the case.
For instance, take unemployment insurance. Would people be better off if unemployment insurance didn't have a limited term? It seems like they would be -- except during times of high employment, there's a dramatic upsurge in people going off unemployment (into jobs of roughly equivalent pay to their old one) directly before their benefits run out. If there isn't that deadline, that increased incentive to get a job, a lot of people take a lot longer getting a new one. (Note: I'm not saying I wouldn't tweak many things about our unemployment insurance situation, just pointing out that extending a social program can have severe negative consequences even as it looks good for the people receiving it).
This is not a general argument against social programs. But it is an argument towards being extremely aware of the counterfactuals, especially given the reality of growth. Even a small increase in growth, over the long run, ultimately lifts the standards of living of even the poorest far more than even extensive social programs. A smaller piece of a much larger pie really does matter, as illustrated by the differential between the poor in developing (and even many fairly developed countries, such as in eastern Europe) and the poor in the US.
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posted
fugu...as a social trend, perhaps you are right, to actually having an impact into people's lives on a day to day basis, I disagree.
Example: A family who can't quite make ends meet gets food stamps. $400 extra a month only to be spent on food. This makes a real impact in their lives, helping to make ends meet (plus helps the economy by all the products purchased).
Now take all the money out of the food stamps program and put it into, say, small businesses, as grants, or low to no interest loans. Some of the families who were on food stamps will get a job in those small businesses, but some will not, and will not make ends meet and either not have enough to eat, or not make rent or not have money for gas etc ad nauseum.
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posted
Another point: if we spend 1% less in GDP than we take in every year and if GDP increases at 5-7% a year then our federal debt would be paid off in just 60-80 years!
<edit>Of course the last time we had four consecutive years, let alone 80, when spent 1% GDP less than we took in was...never.</edit>
posted
Here's another fun note. If the federal government seized all deposited savings* of every person in the United States we could pay off a third of the federal debt right now! Of course, under the current budget plan it would be right back where we started five years from now (although savings might take a little bit longer to recover).
*Not counting Swiss bank accounts or other offshore holdings.
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posted
What do you guys think of setting a limit on private holdings, such as 1,000,000,000 (one billion dollars), and after that has been reached, all other profits are distributed?
I know that is a very vague consent and a lot of details would make it into either a good or bad thing, but as an idea, what do you think?
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posted
BTW, my suggested 20% of GDP, presuming local and state taxes remained (on average) at current levels, would put our total tax burden at around 29% of GDP. That's still fairly low for an OECD country, but higher than, for instance, Australia, S. Korea, and Ireland and on par with Switzerland, Spain, Canada and New Zealand.
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quote:Originally posted by Stone_Wolf_: What do you guys think of setting a limit on private holdings, such as 1,000,000,000 (one billion dollars), and after that has been reached, all other profits are distributed?
I know that is a very vague consent and a lot of details would make it into either a good or bad thing, but as an idea, what do you think?
It wouldn't generate much revenue. The number of people with holdings at that level is fairly small. Assuming it had no further economic impact (which it certainly would), such a policy applied right now would net a one time payoff on the order of $600 billion. And each year going forward it would be probably less than a twentieth of that amount. That's not nothing, but it's also not the solution.
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quote:Originally posted by Stone_Wolf_: Would it make a big difference if the limit was half a billion SR?
I don't know. I was using the Forbes list of 400 richest Americans for my data and it doesn't list anyone with less than $1 billion.
My guess, though, is that it would net something like an additional $300 billion for the one time payment and maybe $15 billion (plus the $30 billion or so from before) a year going forward. Still not that significant.
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posted
The point is that density matters. The billionaires are super rich, but there aren't that many of them. If we want to significantly increase total tax take it means increasing the tax burden on households making 2-3 times the median income. There just aren't enough rich folks for soaking them to make up the deficit. That's one reason why, back in the 50s and 60s when the top marginal rate was much higher than today total receipts as a percentage of GDP weren't that much higher than they were 10 years ago.
The real negative impact on federal revenues of Bush's tax cuts isn't due to the cuts for the wealthy, it's due to the cuts for the middle and upper-middle class.
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quote:fugu...as a social trend, perhaps you are right, to actually having an impact into people's lives on a day to day basis, I disagree.
Example: A family who can't quite make ends meet gets food stamps. $400 extra a month only to be spent on food. This makes a real impact in their lives, helping to make ends meet (plus helps the economy by all the products purchased).
Now take all the money out of the food stamps program and put it into, say, small businesses, as grants, or low to no interest loans. Some of the families who were on food stamps will get a job in those small businesses, but some will not, and will not make ends meet and either not have enough to eat, or not make rent or not have money for gas etc ad nauseum.
I really don't understand what you're trying to say here, but I'm fairly confident you didn't follow my post, either.
quote:What do you guys think of setting a limit on private holdings, such as 1,000,000,000 (one billion dollars), and after that has been reached, all other profits are distributed?
I know that is a very vague consent and a lot of details would make it into either a good or bad thing, but as an idea, what do you think?
It doesn't matter what other details there are, anything like that is a drastically bad, counterproductive idea. It would do nothing but encourage people to circumvent it, likely in harmful ways, and make people less likely to do things that create great good in the world.
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posted
I'm not saying it is a catch all solution for the deficit/economy, but I think that at a certain point, these mega wealthy people are just tying up the life blood of this country.
So, let's say for the sake of argument that we do it, and take that 900 billion and spread it out to the people, and the 45 billion or so per year as well. If my math is right, then that's $9,000 for the big one time, and $450 a year to every single man, woman and child in the US.
Think about what that would do to our economy in the pockets of Mr. and Mrs. Joeblow vs the mega rich who sit on their golden egg and don't actually spend it!
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quote:Even a small increase in growth, over the long run, ultimately lifts the standards of living of even the poorest far more than even extensive social programs.
I disagree with the above statement as it effects real people in the real world. My example was why.
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posted
I don't see how it is feesible to pay off this debt. If you watch that stupid digital debt counter, the interest alone is going up so fast that it's unrealistic for us to think we can bring it down. I think the gov't knows this and they mostly use it as an excuse to point fingers at the other side of the political table. In the end, despite what each side says, neither will ever be able to solve the problem.
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quote:I disagree with the above statement as it effects real people in the real world. My example was why.
But your example doesn't make any sense in relation to what I wrote.
quote:I'm not saying it is a catch all solution for the deficit/economy, but I think that at a certain point, these mega wealthy people are just tying up the life blood of this country.
This is a massive, fundamental misunderstanding of wealth. Wealthy people are generally wealthy by holding ownership of large chunks of corporations. For instance, huge amounts of Bill Gates' wealth (which, I should point out, he's giving away nearly entirely for exactly the causes you say the money should be spent on) are tied up in Microsoft corporation. That wealth is Microsoft. The only way to turn it into cash is to sell it to someone else, who will then be rich people "holding onto" a bunch of wealth. The only way to "get rid" of the wealth is to "get rid" of Microsoft and all the benefits (pains aside) it provides by its existence (including paying lots of salary to lots of people and providing a platform for huge numbers more people to make money with).
quote:And yet they own a huge portion of the national wealth.
No, actually. Billionaires in the US have a little over 2.5% of US net wealth. That's not a huge portion.
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quote:But your example doesn't make any sense in relation to what I wrote.
How is that...you said that if the money used for "entitlements" was used for growth in the long run poor families would be better off.
My point was that "growth" does not put groceries on the table, and food stamps do. What's not relevant?
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quote:How is that...you said that if the money used for "entitlements" was used for growth in the long run poor families would be better off.
My point was that "growth" does not put groceries on the table, and food stamps do. What's not relevant?
You completely missed that what I was talking about was understanding the full effects of entitlement programs, not saying all entitlement programs should be cut.
As for growth not putting groceries on the table, considering growth has put more groceries on the table than any food stamps program, by orders of magnitude, I think I disagree pretty strongly. Growth is what's feeding the billions of the world who weren't being fed before (the number of people who are undernourished is dropping precipitously -- and not due to food stamps -- and a substantial portion of the remainder is due to war and ethnic strife, which is outside the realm of economic growth and food stamps).
Coincidentally, I think the food stamps program is great. Well, sort of. I favor increasing the amount, and giving it in cash.
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quote:You completely missed that what I was talking about was understanding the full effects of entitlement programs, not saying all entitlement programs should be cut.
No, I got what you are saying. And I even said I agree, on a huge scale. My point you keep missing (which isn't that it's wrong to cut entitlements) is that while growth helps everyone in the long run, entitlements help right now and they help a lot.
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quote:No, I got what you are saying. And I even said I agree, on a huge scale. My point you keep missing (which isn't that it's wrong to cut entitlements) is that while growth helps everyone in the long run, entitlements help right now and they help a lot.
Then you're still missing what I'm saying, which is entirely compatible with that.
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posted
I wasn't even responding to you initially, but to a totally different discussion, and you were the one who said you disagreed with me, when, as you say, we actually agree. Which confused me, because I didn't see any way you were disagreeing.
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quote:Originally posted by Stone_Wolf_: If we agree then what was your point?
Not speaking for fugu, but I took his point to be twofold: 1) that short run pain (like the loss of unemployment insurance) sometimes (often?) leads to personal long run benefits (getting a job) and 2) that if decreased spending on social benefits increased economic growth (even just a little) it could have a net positive effect on the total number of people going hungry each year.
As an example, if my taxes were raised in order to pay for more food stamps I couldn't afford to buy quite so many cheap plastic Walmart toys for my kids and therefore lots more people in China (and Walmart employees in America) would be hungrier as a result.
<edit>My response was OBE, but I'd be interested in knowing if my understanding of fugu's point was accurate.</edit>
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posted
That's basically it. This doesn't mean I don't support programs that try to address most directly those people who without assistance are going to be ill nourished, or undereducated, or unhoused, but that just because a program provides a proximate benefit to a person who appears to need that benefit when the program is in place doesn't mean that if the program didn't exist the person would still need that benefit.
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posted
Let me ask a different question that maybe Rabbit will find less ridiculous than my last (evidently even in its amended form). <edit>Not that I'm asking Rabbit specifically to answer, although I'd be interested in her opinion. I'd be interested in anyone's response.</edit>
This year the US federal gov't will spend about $2 trillion on social programs, including SS, Medicare, Medicaid, SSDI, unemployment insurance, food stamps, and the VA. Do you feel that's about right, or that we should be spending more? If we should be spending more, about how much more do you feel it would take such that we were able to cover the needs of the population?
I'm fine (for the purposes of discussion) with the idea of spending a significantly larger amount of money on social welfare. I just want to know how much of a portion you feel is needed. I'd also be interested in how you would propose to structure taxes such that revenues covered the amount of spending. And whether you think the amount needed to cover social welfare expenses of the population is likely to continue increasing as it has in the past.
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posted
BTW, after a tweak the proposed amendment to end ethanol subsidies passed the Senate today, with the same 33 Republicans being now joined by 38 Democrats in voting for it.
Unfortunately Pres. Obama has previously said he will veto such a bill (although I guess technically if the bipartisan love holds, they have a veto-proof majority for ending the subsidies, at least in the Senate).
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posted
Which tax breaks are those? As far as I know, Big Oil's "tax breaks" fall into two general categories: standard business deductions (which aren't really tax breaks at all, and apply to every business), and alternative energy research subsidies. Is there some other kind they're getting? Which would you like to end?
(edit: also, as far as I'm aware, oil companies pay more in taxes, measured as a percentage of before tax earnings, than non-oil industrial companies. Not exactly the sign of companies living on fat tax breaks).
And I'd think Congress is willing to end ethanol subsidies because those subsidies are harmful to pretty much everyone except corn farmers.
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posted
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.
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posted
Here's an interesting read from Alan Auerbach (UC Berkley economist) on the mid and long term debt projections. He calculates deficit projections under the assumptions of perpetuating the AMT and Medicare Doc fixes and compares it to the CBO scores. Essentially it shows that the CBO score for the budget likely underestimates total deficits over the next 10 years by about $5 trillion. And that's assuming Bush tax cuts expire as does stimulus spending. If those assumptions are reversed it adds another $5 trillion over 10 years.
But for me the real story is Figure 3 (page 22). Under every projection, revenues (as a percent of GDP) will be flat after 2013 and spending (as a percent of GDP) will linearly increase. All non-mandatory (i.e. non-social) spending will fall, as a percentage of the budget as more and more money (absolutely and proportionally) goes to providing social goods.
The good news is Auerbach is reportedly on Obama's short-list to replace Austen Goolsbee as the head of the Council of Economic Advisers. So if he's appointed, and he manages to avoid being captured by Washington interests, maybe he can bring some sense to the budget process.
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