patrick.net

The opening paragraph is worth repeating:
John Kasich, the Republican governor of Ohio, has done some surprising things lately. First, he did an end run around his state’s Legislature — controlled by his own party — to proceed with the federally funded expansion of Medicaid that is an important piece of Obamacare. Then, defending his action, he let loose on his political allies, declaring, “I’m concerned about the fact there seems to be a war on the poor. That, if you’re poor, somehow you’re shiftless and lazy.”

egads101 says

zzyzzx says

I bet these tiny food stamp cuts will do nothing to curb obesity.

I'll bet if you spend 10 minutes on luminosity, it won't cure stupidity!

Tim Aurora says

The point I want to hear is if we are spending too much on military or too much on these frivolous social programs

I think it's apparent that NPR should be cut, and Teacher's unions are wayyy too powerful..

Those damn Gallaghers from Shameless need to be put out of their misery!

Outsourcing takes both poor and middle class jobs. That's the real war on the Americans.

In short term a few wealthy will make a lot of profit, but long term America will lose it's middle class.

Obesity still getting worse in the US:
/?p=1231571

egads101 says

I'll bet if you spend 10 minutes on luminosity, it won't cure stupidity!

Your chart is very dishonest as it lumps military spending with only discretionary spending and doesn't show entitlements.........which is by far the biggest (and fastest growing) liability of our government.
http://en.wikipedia.org/wiki/Expenditures_in_the_United_States_federal_budget

Defense spending in 2011 was about 22% of the entire Federal budget while entitlements (Social Security, Medicare, Medicaid, and Welfare) make up over 55% of the budget and is growing fast. Military spending was over 50% of the Federal budget in the 1960's and has been shrinking (as percent of US budget) ever since.

And this does not include all of the state funding for welfare.

Isn't that dishonest? Or at least, inaccurate? M&M/SSI = 45% on your chart. 55% is all mandatory spending, which includes more than the benefits programs.

In any case, why do we begrudge the elderly their food and the poor their healthcare? Couldn't we just increase our taxes to shrink the slice that is earned benefits?

socal2 says

egads101 says

I'll bet if you spend 10 minutes on luminosity, it won't cure stupidity!

Your chart is very dishonest as it lumps military spending with only discretionary spending and doesn't show entitlements.........which is by far the biggest (and fastest growing) liability of our government.

http://en.wikipedia.org/wiki/Expenditures_in_the_United_States_federal_budget

Defense spending in 2011 was about 22% of the entire Federal budget while entitlements (Social Security, Medicare, Medicaid, and Welfare) make up over 55% of the budget and is growing fast. Military spending was over 50% of the Federal budget in the 1960's and has been shrinking (as percent of US budget) ever since.

And this does not include all of the state funding for welfare.

Dishonesty is rather common these days, it seems. Spending for Social Security when there is no surplus accruing is basically paying back borrowed money. At the end of 2011, the SS Trust Fund contained (or alternatively, was owed) $2.7 trillion, up $69 billion from 2010.

So perhaps payments to SS to make up a shortfall when there is no surplus should be considered the same as paying interest on the national debt, or paying interest and redemptions to holders of US Treasuries. My understanding is that the annual SS spending described above is gross outlays, not net outlays, that is, it includes the total amount paid to beneficiaries, most of which is covered by inflows to SS.

Not so for military spending at all.

socal2 says

Your chart is very dishonest as it lumps military spending with only discretionary spending and doesn't show entitlements

That's why the chart says discretionary spending at the top. Military is part of discretionary spending.

socal2 says

Military spending was over 50% of the Federal budget in the 1960's and has been shrinking (as percent of US budget) ever since.

http://www.usgovernmentspending.com/total_spending_1960USrn
In 1960 military spending was 36% not over 50% and that number didn't include SS or medicare or medicaid or welfare ( MC/MD/Welfare didn't exist until 1966). SS wasn't included in the unified budget number until 1968 when the three different means of budgeting were consolidated. Moving SS into the unified budget also very nicely hid the huge growth of the military.

So if you want to compare 1960 to today the discretionary spending chart is a pretty fair way to go.

"So if you want to compare 1960 to today the discretionary spending chart is a pretty fair way to go."

That can't be right, Bob. The poors did it!

CL says

n any case, why do we begrudge the elderly their food and the poor their healthcare?

That they paid for! Today's boomers have been paying Medicare taxes for going on 50 years now, and are getting close to receiving back the thousand and thousands they've been paying in.

Like SSA, Medicare is structured such that you pay in to support the previous generation(s) and the next generation(s) supports you in turn.

(This level of indirection fries conservative brains [that 'got mine screw you' fixation they have], so don't try to explain it to them)

CL says

In any case, why do we begrudge the elderly their food and the poor their healthcare? Couldn't we just increase our taxes to shrink the slice that is earned benefits?

I don't begrudge it, I just don't want them to rob me to pay for it. Let them pay for it themselves...no one is stopping them.

Bellingham Bill says

This level of indirection fries conservative brains [that 'got mine screw you' fixation they have], so don't try to explain it to them

No it's easy, ask them:

You been paying car insurance how many years? You expect any of that "investment" back after X years? No???

Simple.

Bellingham Bill says

That they paid for! Today's boomers have been paying Medicare taxes for going on 50 years now, and are getting close to receiving back the thousand and thousands they've been paying in.

Like SSA, Medicare is structured such that you pay in to support the previous generation(s) and the next generation(s) supports you in turn.

Normally, someone voluntarily bought into such a scheme would have to wait in line along with the victims of Bernie Madoff and Charles Ponzi. Any company setting up such a pension scheme would have its executives in jail as pay-as-you-go pension schemes are considered fraud by law. In this case, however, the Ponzi scam is backed by the full faith and credit of the US . . . or is it? The existing USSC cases seem to indicate that those "promises" are not formal debt obligations binding on the US government.

(This level of indirection fries conservative brains [that 'got mine screw you' fixation they have], so don't try to explain it to them)

or "I want mine, screw future generations" as built into those schemes devised by the FDR and LBJ administrations.

Vicente says

Bellingham Bill says

This level of indirection fries conservative brains [that 'got mine screw you' fixation they have], so don't try to explain it to them

No it's easy, ask them:

You been paying car insurance how many years? You expect any of that "investment" back after X years? No???

Simple.

But you are arguing the financially conservative point now, likely involuntarily ;) The youth can only be expected to pay in part of what they make based on their salaries. Meanwhile the health-care and general living costs inflated due to the policies voted for by the boomers. It is only fair and logical that the boomers get only paid out what they paid in (plus whatever yield was achieved). If that can't live up to today's rampant inflation and if more people have dropped out of the workforce sooner than anticipated and need to be subsidized and if parts of it have been looted for other purposes/programs by politicians voted in, that is not the responsibility or problem of the youth and they should not have to take on that burden. It must be closed system to be fair and sustainable, not a "kicking-the-can-down-the-road" ponzi scheme.

zzyzzx says

What's the starvation of a couple million poor

the planet is over populated. we do nature a favor by speeding up darwinism.

mell says

not a "kicking-the-can-down-the-road" ponzi scheme.

You are a good example of a person who cannot comprehend what insurance is, and misapplies Ponzi as a label.

Thanks!

sbh says

What the fuck does this mean? Do you mean "paying" the price of "anything" should now be based on a consumer's earnings? Aren't you a "free market" devotee?

It means that SS tax is a percentage of the paycheck and that that percentage should not be raised on new generations just because there is a shortfall to pay for inflated heath care costs or promised pension yields. Plenty of "socialist" countries adjust pension payouts based on what's in the pot and what is expected to come in every year so that the pot never runs out of money.

sbh says

mell says

should not be raised on new generations

Age is now what should determine the % of SS tax? When you are 65 everyone younger than you will be taxed less than you, and they themselves taxed more than those younger than them? You're Grover Norquist now? For your sole sake, for your single generational moment, in order redress the global economic condition of history that encompasses you, you propose a generational regression in SS tax? Or you could just lower the minimum wage to $2.

No, it should be tied to median incomes. SS should be an insurance that you will have some payment keeping you out of poverty if you have to drop out of the labor force early and if you work til retirement it will provide you with a small pension that is most likely always less than you paid in (inflation-adjusted). This is how it works in countries that don't have pension shortfalls. There is also some formula that determines how much you get paid out based on how many months/how much you paid in, but it will always be less since you have to cover for others and it is NOT supposed to be an inflation hedge. I find it curious that those discussing with high moral grounds fail to see that if you raise taxes on stagnant or declining median incomes you will send more people into poverty just so that retirees can get their promised yields? That's seriously wrong. Furthermore, if you are a current contributor to SS and you see your fellow politicians abuse the shit out of these funds, then it is your responsibility to fire them all. But since you think everything outside the 2 same major parties - or everything outside the Democrats - is radical, I guess SS will eventually run out of money and/or taxes will be drastically raised on the youth to the point of no return and break their backs.

mell says

SS should be an insurance that you will have some payment keeping you out of
poverty if you have to drop out of the labor force early and if you work til
retirement it will provide you with a small pension that is most likely always
less than you paid in (inflation-adjusted).

Social secutiry is not as glamorous as you make it sound. If your employer does not offer pension and you rely solely on social security, you are likely to suffer a dramatic setback in standard of living in retirement especially if your mortgage is still not paid off. That's why financial advisors recommend investing through 401K and IRA - because they know that social security by itself is woefully insufficient.

dublin hillz says

mell says

SS should be an insurance that you will have some payment keeping you out of

poverty if you have to drop out of the labor force early and if you work til

retirement it will provide you with a small pension that is most likely always

less than you paid in (inflation-adjusted).

Social secutiry is not as glamorous as you make it sound. If your employer does not offer pension and you rely solely on social security, you are likely to suffer a dramatic setback in standard of living in retirement especially if your mortgage is still not paid off. That's why financial advisors recommend investing through 401K and IRA - because they know that social security by itself is woefully insufficient.

Not disagreeing with that. That's why you want inflation as close to zero as possible, so you can plan accordingly and know that while your standard of living won't be glorious, you won't be "poor". One should always invest at the side and never rely on a government program alone, pretty much every retiree I know has done that. And again, voters need to fire any politicians who "temporarily" borrow money from the SS fund on the spot (or make it severely punishable by law), no matter what party. Otherwise they have no right to complain if they fall short later when they retire.

sbh says

mell says

No, it should be tied to median incomes.

Fine, then how do you combine that with this:

I am not opposed to a temporary tax on the uber-wealthy (2 million+ not 200K+) although I prefer to take the money back from the bailed out companies (halt the market cap would suffice, forced stock sales etc.). Oh yeah, and since this graph you presented is assumed to be true, those changes would be tied to removing the Fed entirely. Because how do you combine record company profits with the Feds continued fresh fiat "stimulus" because apparently companies are still too weak? Hint: The Feds money printing is causing this very graph you are complaining about to look like it does.

mell says

And again, voters need to fire any politicians who "temporarily" borrow money from the SS fund on the spot (or make it severely punishable by law), no matter what party. Otherwise they have no right to complain if they fall short later when they retire.

I'm not sure here, maybe someone smart can help me out.

Assuming there will be inflation (despite the Libertarian dream of ending the Fed), and assuming the Trust Funds of SSA and Medicare need to grow, at least to support future old sickies, they have a fiduciary responsibility to grow the fund. Insurance companies invest some of their profits in securities or bonds for the same reasons, right?

If the "other" side of Government is borrowing, then why can't they borrow from an entity that has cash and wants it to grow, and wants it to be in a very stable investment?

Or do we only allow certain entities, like China, Japan, Private Insurance Companies, and Pension Plans to buy US debt?

It's a free market, right? As long as one side of Government (the non-discretionary side) trusts that the Government will make good on its promise, what is wrong with the transaction?

This seems to me to be a cudgel that both sides use to beat up their opponents. Reagan did it! No, it was the Democratic Congress!!

Maybe it's not such a terrible thing? Am I missing something, or am I extra smart?

CL says

Assuming there will be inflation (despite the Libertarian dream of ending the Fed), and assuming the Trust Funds of SSA and Medicare need to grow, at least to support future old sickies, they have a fiduciary responsibility to grow the fund. Insurance companies invest some of their profits in securities or bonds for the same reasons, right?

Sort of. But just because there is inflation doesn't mean you can invest smart enough to track/beat it. Insurances calculate that into whatever they return for policies, but they can go broke theoretically, and practically as seen in 2008. The government should only invest in the safest vehicles, or, like you said, it could print money or sell debt to make up for the difference (obviously not the preferred approach). But they should never take any money out.

CL says

It's a free market, right? As long as one side of Government (the non-discretionary side) trusts that the Government will make good on its promise, what is wrong with the transaction?

True, they could use other means to fill it back up, but that is a way too dangerous game. You take out enough and are suddenly faced with a huge shortfall, then you need to print and brutally debase and/or sell some debt until nobody wants to buy your debt anymore and you go into a currency crisis. The closed system is much safer - after all, who ever keeps their promise to refill what was taken out without screwing others royally?

CL says

Maybe it's not such a terrible thing? Am I missing something, or am I extra smart?

We will see how the debt game unfolds. I say the US won't be able to pay it back without massive debasement or selective default.

bob2356 says

That's why the chart says discretionary spending at the top. Military is part of
discretionary spending.

Yah - but the chart totally ignores the fact that over 50% of the US Federal Budget (Mandatory Spending) is on social progams like entitlements and welfare.

The reason why we are spending so little of our discretionary budget on building infrastructure etc, is that mandatory spending on entitlements is GROWING and crowding everything else out.

Military spending per GDP and % of Federal Budget has been declining for the last half century. It is flatly dishonest to only complain about military spending and not address the much higher entitlement spending that is GROWING with no end in sight.

It's like all of these California cities that are going bankrupt blaming declining property values and tax revenue and not the elephant in the room.........Ponzi scheme pensions.......which is by far the biggest liabilities they have on their books.

socal2 says

Yah - but the chart totally ignores the fact that over 50% of the US Federal Budget (Mandatory Spending) is on social progams like entitlements and welfare.

The chart doesn't ignore it, the chart refutes that incorrect statement.

sbh says

It's a longish read from an erudite econometrcian (and, I might add, one of the few who writes well) whom many of you will simply ignore, but, nonetheless: He debunks dogma starting with the Phillips curve and moves on to QE. I dare you to read it. Below is a snippet.

You left out the parts where he attributes where he attributes effects such ash high-yield chase to QE. Generally I agree with him that inflation is not good and that QE is not effective, in fact it's bad. However the continued printing, debasement (albeit a small part of the total credit market) adds up and the suppression of short (and to some extent long-term) rates propels continued yield chasing in the stock market or even housing. If your takeaway from this is that the Fed/QE is not effective at all much, then why are you opposing to do away with it? Printing money and deciding who gets it is crony capitalism - you would't like if I take some of your money or value thereof and claim to have better recipients for it that have more use for it than you do. It's inherently unfair and goes along with the general mantra that the rule of law should apply equally to all incl. the Fed/gov, and counterfeiting is illegal because it destroys the monetary value.

sbh says

I bought 18% CDs back then. Today I buy common stock. Why can't you deal with it?

Who said I don't? Doesn't mean you can't have a political direction to promote a sound, stable money system for the better of the economy/society and stave off neo-keynesian, crony-capitalist cannibal anarchy.

sbh says

Because I don't want the world to suffer a massive economic destruction for the sake of an experiment in the "natural law" of money and freedom.

So now you're saying the Fed is effective, but just not to the markets, instead it somehow magically staves off depression - which one is it? My take is it prolongs depressions!
sbh says

The coercion you obsess over is the least important thing to manage. If freedom matters as much to you as you say, then you should know what you need to do.

This is not about our personal lives and I won't brag about my financial achievements like our usual suspects and economics power-players on patnet as it adds nothing to the topic on what's best for the economy.

sbh says

executive stock option is big a number one CEO compensation method. no execative want salary no more no more. stock price rise bigtime if bigtime profit. no fix cost dummy. go back and learn you suppose to know by now

doesnt amount to anything... stock options a non cash expense are "fixed expenses" spread over long period of time... 5-10 years... ASC 718 (FAS123r).

thomaswong.1986 says

your point ? compensation is fixed cost.. its not variable with increasing or declining profits. as a landlord do you increase or decrease your costs equally to "offset raising profits".

Interesting. So, you agree that corporate tax cuts don't create jobs then?

zzyzzx says

I'd like to see a NYTimes article about the War on the taxpayers

Funny how nobody was saying that 50 years ago when taxes were WAY WAY higher.

Tim Aurora says

debyne says

I don't begrudge it, I just don't want them to rob me to pay for it. Let them pay for it themselves...no one is stopping them.

Hey, I do not want to pay for the military. Whoever wants it can pay. Do you agree with that.

But defense is a constitutional requirement. Next it'll be who wants to choose to pay for police protection and the fire department. Some functions are gov't functions, others are not

Bellingham Bill says

CL says

n any case, why do we begrudge the elderly their food and the poor their healthcare?

That they paid for! Today's boomers have been paying Medicare taxes for going on 50 years now, and are getting close to receiving back the thousand and thousands they've been paying in.

Like SSA, Medicare is structured such that you pay in to support the previous generation(s) and the next generation(s) supports you in turn.

(This level of indirection fries conservative brains [that 'got mine screw you' fixation they have], so don't try to explain it to them)

...and then....

debyne says

I don't begrudge it, I just don't want them to rob me to pay for it. Let them pay for it themselves...no one is stopping them.

right on cue.

debyne says

But defense is a constitutional requirement. Next it'll be who wants to choose to pay for police protection and the fire department. Some functions are gov't functions, others are not

Sure--I want to pay the same amount per capita for defense as Sweden. And not a penny more. Can I reduce my taxes accordingly?

sbh says

Answer me this obviously extreme question: who's intention poses less risk to you as an economic entity A. Barney Frank, Nancy Pelosi ( big government liberals), or B. Phillip Morris, BP (remember the seven dwarves?, Deep Horizon).

Of course Barney Frank and Nancy Pelosi. I haven't bought anything from Phillip Morris (or even Kraft Foods) or BM for over a decade. I have to endure Barney and Nacy's pillaging every single day!

sbh says

Only government is powerful enough to countervale capitalism. Left in "an environment of extreme freedom" you and CaptainShuddup would be begging in the streets. Answer me this obviously extreme question: who's intention poses less risk to you as an economic entity A. Barney Frank, Nancy Pelosi ( big government liberals), or B. Phillip Morris, BP (remember the seven dwarves?, Deep Horizon). You don't get to quibble or mitigate. For now you take A or B. It's a shitty question, but I know what my poison would be.

Not sure where you make your assumptions from as you don't know the captain's or my job(s). In fact I moved here to enjoy more free market capitalism.

As to your question, it does not make much sense to compare big politicians to big corporations, but I buy mostly fresh (raw, non-processed) organic food from mostly local farmers, so Kraft Foods is out (although they had the best Mango pickles manufactured in India for years before discontinuing that item).

I hardly ever smoke and ride my bike mostly and am for stricter environmental regulations than quite a few libertarians as harming the environment cuts into other peoples freedom of pursuing a happy and healthy life.

By the way tobacco is not bad if you keep it raw and free of additives. Anatabine which is found in tobacco is a natural anti-inflammatory alkaloid effective against harsh auto-immune responses and brain degeneration (alzheimers etc.).

sbh says

Reality says

Of course Barney Frank and Nancy Pelosi. I haven't bought anything from Phillip Morris (or even Kraft Foods) or BM for over a decade. I have to endure Barney and Nacy's pillaging every single day!

The natural law of cockroaches proves you needn't act by virtue of purchase to be coerced by capitalism. Besides you already have and continue to purchase from these entities. Go to your kitchen and open the cabinet. Say: "Are you now or have you ever been associated with a cockroach quantum event." All your goods have been coerced by cockroaches. You don't understand reality.

Big government actually often makes it easier for those entities to dominate the market. Big dairy subsidies go to a few big non-organic farms, raw dairy farmers are harassed by the FDA goons at every step and local organic farmers have to fight global spraying and engineered crop invasion and price fixing. Luckily there are still plenty of local organic farmers to choose from here in CA, but I am sure there are states where this is harder to come by.

http://www.nytimes.com/2013/11/07/us/billionaires-received-us-farm-subsidies-report-finds.html?ref=business&_r=0

sbh says

Capitalism is amoral, sociopathic. It's Hannibal Lector.

We have to agree to disagree on this blanket statement. I'd sit down with Whole Foods, but not with Monsanto ;)

Screw Corporations and Government. What's wrong with an autonomous collective?