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» Hatrack River Forum » Active Forums » Books, Films, Food and Culture » No New Taxes! (The Impossible Budget). (Page 7)

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Author Topic: No New Taxes! (The Impossible Budget).
Destineer
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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.

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Aerin
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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 ]

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dabbler
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It's basically an annuity. Which I'm fine with. It needs tweaking but I think as a principle, it's sensible.
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Aerin
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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.

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Destineer
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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.

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natural_mystic
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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.

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Aerin
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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.

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natural_mystic
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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.

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Aerin
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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.

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Stone_Wolf_
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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.
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Aerin
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Stop stewing over imagined wrongs on the Internet, Stone_Wolf. If you are bored, I suggest www.moneycentral.com.
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Stone_Wolf_
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I'm not stewing, nor imagining...just trying to help you see something you seem to be having trouble with.

[Smile]

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Aerin
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Now...you're lying. Smugly. Seriously: http://money.msn.com/retirement/

Much, much better use of that extra emotion and time you seem to have lying around.

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Stone_Wolf_
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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.
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Aerin
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Since you don't seem to like that link, try http://www.theatlantic.com/megan-mcardle/. That will help with the larger political picture.
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Black Fox
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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.

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natural_mystic
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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.

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Aerin
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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.

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Black Fox
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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.

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natural_mystic
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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.

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Samprimary
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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.

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Shan
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*giggle* at Samprimary.

The Onion strikes again.

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Aerin
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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.

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The Rabbit
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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.

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Aerin
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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.

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The Rabbit
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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.

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Aerin
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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.

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SenojRetep
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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.

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The Rabbit
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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.

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Mucus
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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.

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Mucus
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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.

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ScottF
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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.

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odouls268
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I'm very happy the actual thread subject is being talked about in here. [Smile]

Serious.

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Black Fox
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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.
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Black Fox
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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.

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Mucus
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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

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natural_mystic
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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.

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Black Fox
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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.

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Stone_Wolf_
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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
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kmbboots
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Exactly that, Black Wolf. Well said.
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SenojRetep
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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.

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Stone_Wolf_
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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.

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Mucus
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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* [Wink]

* e.g. is defaulting on debt, theft?

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Black Fox
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"The poor and the old": Some how I feel I could twist that into half of our population.
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Stone_Wolf_
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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.
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Aerin
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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.

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kmbboots
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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.
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Stone_Wolf_
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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.
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kmbboots
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How would that be harder than figuring out income taxes?
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Stone_Wolf_
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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.

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