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» Hatrack River Forum » Active Forums » Books, Films, Food and Culture » No New Taxes! (The Impossible Budget). (Page 5)

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Author Topic: No New Taxes! (The Impossible Budget).
Samprimary
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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
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FoolishTook
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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.
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natural_mystic
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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.

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Orincoro
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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?

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FoolishTook
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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.
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kmbboots
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Why do you think that tax incrrases on the wealthy will damage the recovery?
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Orincoro
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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.

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Samprimary
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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.

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Orincoro
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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
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fugu13
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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.
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Juxtapose
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http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/07/31/MNVN1KHIRJ.DTL

It looks like a deal has been reached.

***SPOILERS***
.
.
.
.
.
.
.
.
The dems caved.

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Tresopax
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And the Republicans also caved. (Assuming it passes.)

It appears that Republicans passed on much better deals weeks ago.

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MrSquicky
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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.

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fugu13
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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.

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MrSquicky
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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.

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SenojRetep
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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 ]

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fugu13
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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 [Razz] . 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.

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Samprimary
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Well now we're through with it for now, back to politics as usua ..

http://boingboing.net/2011/08/02/wisconsin-democratic-voters-targeted-with-koch-funded-absentee-ballot-notices-advising-them-to-vote-2-days-after-the-recall-election.html

ew, wait, politics as usual isn't a relief, what was I thinking

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Black Fox
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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.
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Samprimary
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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

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rivka
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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?
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Samprimary
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its those scenes in movies we talked about where its put on a piece of paper and handed over rather than said out loud
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rivka
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*snicker*
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dabbler
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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?
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Black Fox
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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?

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SenojRetep
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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:

Defense: 20%
Human Resources: 65%
Physical Resources: 5%
Debt Interest: 6%
Other: 5%
Offsets: -2%

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.

All data from OMB historical tables.

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dabbler
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Interesting! Thanks, Senoj.
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Black Fox
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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.
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Samprimary
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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.

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SenojRetep
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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.

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natural_mystic
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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 ]

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Black Fox
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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.

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natural_mystic
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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.
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Black Fox
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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.
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natural_mystic
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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.
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Black Fox
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Totally. I am not much of a fan of the expansion of obstructionist rules in the legislature.
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kmbboots
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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.
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ScottF
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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.
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Aerin
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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.

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The Rabbit
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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.
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Black Fox
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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.
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Aerin
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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.

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ScottF
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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.

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TomDavidson
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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.
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kmbboots
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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.

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Aerin
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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.

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kmbboots
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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.

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TomDavidson
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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.)

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Aerin
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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.

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Aerin
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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.
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