patrick.net

Or maybe cutting taxes for the rich, increasing military spending and fighting two wars is a failed system...

Why is it that anytime a government (local, state, federal) wants to stimulate business growth, job growth and tax growth they offer tax cuts?

As far as the war(s) - I think we should declare victory in both wars, bring the troops home and resist the temptation to start a new war with Iran. Then we could drastically slash the military budget.

Honest Abe says

Why is it that anytime a government (local, state, federal) wants to stimulate business growth, job growth and tax growth they offer tax cuts?

Anything else is teh socializm

Then we could drastically slash the military budget.

yeay, instant double unemployment rate : )

Social Security is a retirement insurance program administered by the Federal Government and while it's an accounting fiction, they have in fact taken in around $1.5T of surplus payroll taxes in FICA that, with the $1T of accrued interest, should go out as SS benefits before we start talking about Social Security's drag on the general fund.

We can agree that Medicare has some serious structural problems and is going to blow up this decade if not fixed. It will be an interest battle, one if things go right I will be watching from Canada or Japan.

Well said Tatupu70.

Key phrase: “Absent a change in policy."

Obviously "changes in policy" might include things like raising taxes or spending less on the military, or raising the level that payroll taxes are applied to, or raising the retirement age, or making health care less expensive (which would have been accomplished better if republicans had been willing to play ball).

As much as Abe hates to admit it, a lot of so called social spending that he doesn't like is ultimately an extremely good investment on many levels. This is even true if viewed purely on a financial (long term fiscal) level.

The statement doesn't "predict" anything, its intent is to clearly state the critical importance of policy changes.

Honest Abe says

Why is it that anytime a government (local, state, federal) wants to stimulate business growth, job growth and tax growth they offer tax cuts?

As far as the war(s) - I think we should declare victory in both wars, bring the troops home and resist the temptation to start a new war with Iran. Then we could drastically slash the military budget.

Abe, is that really you ?

I agree with everything you said here.

Marcus, thanks for agreeing with my logical and common sense statements. BTW,"Absent any change" goes both ways. In other words, the financial situation can get WORSE...not better. Do you honestly believe that government will suddenly become MORE responsible? Even if the government squeezes the shoes of EVERY American, which they will, and raises more tax money, they will not spend the money wisely. Rather it will disappear in more fraud, more waste, more pork projects, more ego projects, more pandering for votes, more entitlements, and more war.

The only way to fix the problem is to starve the beast. NO more borrowing, NO more tax increases, and NO more deficit spending.

I was almost with you. its interesting to me how people's sentiments can agree in so many ways but diverge so radically in others.

The problem with 'starving the beast' is that government regulation and intervention is the only thing that stops the corporations from completely & continuously raping the US citizen. As an example you can insert 'laws' in place of 'regulation' and you'll get my point. If you 'starve the beast' then there's basically no one to oversee and enforce the laws that are in place to protect us. And as we've seen over and over self-regulation by corporations is simply non-existent.

I think that one thing we can agree on is that America is a culture that supports 'winning' above all and certainly corporations with their mandates for profit above all else are inclined toward this, and this encourages graft. Personally I think human beings are inclined toward graft anyway, but thats just me... Anyway, what you need to have in place is a strong regulatory structure that enforces laws but is also transparent and accountable. The regulation & enforcement is the way to keep corporations honest and the transparency and accountability is the way to keep the government honest.

In a lack of government you're essentially asking for business - corporations - to move into the places where gov has traditionally managed and to take those processes over, and sadly I think because of the tenaciousness and the disingenuous of arguments like yours this is basically what is happening more and more. The government involvement has become weakened and the ideological basis of our government - ie that government can be a tool to help society as a whole grow & prosper - is being lost, and corporations have in many cases become the agencies that are intended to regulate them - they get people in who use the regulatory agencies as tools to assist their companies - and this has led us directly to weakened regulations and oversight that has allowed situations like the Gulf oil spill to occur.

So by 'starving the beast' - ie making the government an entity that basically has no power whatsoever, right - what you're basically asking for is rule by corporation. And you expect this to function more humanely and to manage our resources and efforts to our own best advantage?

Over and over what corporations are showing us is that they are concerned with only extracting profit from us while providing as little back in return as possible. Again the gulf oil spill is a good example where the profits have been extracted for private gain while the mess of their lack of planning and disastrous cleanup has been left for the public - ie you and me - to endure and suffer through. I don't think you're arguing for this sort of thing to occur, but its the end game of the ideas you're putting out.

My feeling is that what you're really asking for is transparency & accountability in government, not 'starving the beast'.

Congress certainly likes to spend more than it brings in, it always has it always will, but every other industrial country has worse levels of debt, and in europe, where they gave away the keys to the printing press they have no easy way out now. For now those guys are the real worry. If the euro goes bust, we are in for another very deep downturn, one we cant afford at the moment.

No, what I'm really asking for is HONESTY in government, a limit to its size and that it protect and defend the Constitution (something every law enforcement, military and political "leader" swears to do). Is that too much to ask?

So answer these questions: (1) How can anyone trust a government who's lies are even lies. (2) How many laws, rules and regulations do we need before government gets it right and "protects" us all? (3) Why is it government can never, ever, live within a budget? (4) Why does politics attract sociopaths? (5) Why is our own government swindling its citizens by continually and constantly debasing our currency? (6) If there are laws against counterfeiting, why is our own government allowed to counterfeit? (7) If there are laws against price fixing, why is "The Fed" allowed to price fix interest rates? (8) Why is it possible for welfare recipients in California to use their taxpayer funded debit card in gambling casino's and strip joints? (9) Isn't it time to stop the insanity? (10) Do our "wise" leaders think this is how the country should be run? UGH.

I've got about 90 or 100 more questions, but its getting late.

Troy says

Honest Abe says

Why is it that anytime a government (local, state, federal) wants to stimulate business growth, job growth and tax growth they offer tax cuts?

Anything else is teh socializm
Then we could drastically slash the military budget.
yeay, instant double unemployment rate : )
Social Security is a retirement insurance program administered by the Federal Government and while it’s an accounting fiction, they have in fact taken in around $1.5T of surplus payroll taxes in FICA that, with the $1T of accrued interest, should go out as SS benefits before we start talking about Social Security’s drag on the general fund.
We can agree that Medicare has some serious structural problems and is going to blow up this decade if not fixed. It will be an interest battle, one if things go right I will be watching from Canada or Japan.

I don't think moving to Japan is exactly the best idea in the world if you are looking to reside in a fiscally sound country with no retirement entitlement issues :P

Ptipking222 says

I don’t think moving to Japan is exactly the best idea in the world if you are looking to reside in a fiscally sound country with no retirement entitlement issues

Dunno what's up with Japan, really. They have the lid affixed to medical costs through their national insurance system.

Old people don't really cost much and I strongly suspect the gov't can and will import Chinese and/or Pilipina nurses to take on the burden (RP wages are about at Chinese levels AFAIK) on geriatric care.

I oscillate between Japan being totally screwed and golden this century. I think their lifestyle and general thriftiness is much more in balance than ours.

Here's a population pyramid comparing 2005 and 2050 -- the translucent color is population missing in 2050, and the solid color is population added.

>No, what I’m really asking for is HONESTY in government,

Thats a far cry from 'starve the beast'...

I think honesty is something that needs to be enforced, unfortunately, in the case of both corporations and government. Thats why I'm in favor of a strong government but with very strict checks and balances and transparency. I can't imagine any way in which the system & policies you seem to be aching for would do anything but take us further away from that.

The crazy thing about 'government' is: that they are us! Look, you could go out and run for a position in your local council and then, hot damn, YOU would be government. Its not some mysterious entity completely removed from our lives.

> a limit to its size

What departments? For what purpose? This sounds like a platitude to me.

> and that it protect and defend the Constitution
> (something every law enforcement, military and political “leader” swears to do). Is that too much to ask?

What specifically in the Constitution do you want 'defended'?...

There is no transparency in government spending. You should see the things that I've seen get put on the books from Science grants form NSF and NIH.

oakman, are you at ORNL?

EBGuy says

ORNL

nope

The biggest problem in this country now is that people expect pennies from heaven. They want all of the government services that they are used to getting like, roads, bridges, schools, hospitals, health care (limited as it is), fire protection, police protection, etc. but they are all unwilling to pay for it.

We have the teabagger wingnuts screaming, "Don't raise my taxes." But they want a huge expansion in law enforcement to deal with the immigration issue among other expansions in government to take care of other issues they deem necessary for our country. But, they don't want to pay for it.

We talk about providing education, health care, etc. for our children yet consistently the voters reject proposals that ask the public to pay the bills for these services. How else is government supposed to build roads, build bridges, provide education, provide (limited) health care services, provide fire and police protection?

We complain about unfunded mandates coming from the Federal Government. Voters, especially voters in California, pass propositions that create unfunded mandates and then reject any proposal to create tax funds to fund the very propositions they passed.

It seems that everyone wants something for nothing. We are a nation of complainers. We pay the least amount of taxes in the industrialized world. That's why we have the worst roads, education systems, transportation infrastructures, etc. in the industrialized world.

Americans should learn to pay up front for these things they expect from government and stop whining when the bill comes due. If you use it or benefit from it indirectly, pay for it and get over it.

abeabe say

” In other words, almost EVERY penny collected in taxes will go towards paying ONLY the interest on the debt and spending on the major entitlement programs (Socialized Insecurity, Medicare, etc)."

When Social Security benefits are discussed, it's usually in conjuction with comments such as yours ("socialized insecurity') about how they're a drain on the system. Yet no one complained when the amounts paid in were substantially more than the amounts paid out - and that these monies were used for purposes other than paying out to retirees. We pay Medicare taxes all our lives and pay $100 per month part B premiums when we're drawing Medicare, but that's not mentioned either.

Is there fraud in Medicare? Sure, but the fraud is the problem - not the fact that it's a health insurance that ensures our elderly receive appropriate medical care. The extreme examples of abuse of treatments for end-of-life issues aren't the norm, but they're used to describe all that's wrong with the system. Let's address the fraud, not the program.

http://www.ssa.gov/history/hfaq.html
From 1937 to 2007 Social Security took in 13.0 trillion in income (with an additional 55.5 billion in interest earned).
From 1937 to 2007 Social Security paid out 10.0 trillion to beneficiaries.

I don't see the drain caused by recipients - except that, as we know, the monies paid in and interest earned weren't held in trust by the govt. as promised. That sucks. But it doesn't mean that the program isn't viable.

abeabe, you'll be getting old someday. You'll need medical care and draw social security, unless you work for a state agency and instead will collect public employee pensions. Don't you want a safety net for old people, or shall we put them all on ice flows - the ones that are melting due to global warming...

I think Abebabe and the rest who hate social security and medicare should simply use this site to return the amounts written to them on their social security checks while donating the amount that is spent on them for their medicare coverage when they get to be retirement age and are "forced" to draw benefits.

https://www.pay.gov/paygov/forms/formInstance.html?nc=1271991815942&agencyFormId=23779454&source=patrick.net

It's put up or shut up time folks.

Typical liberal socialist comment. I'd rather have ALL my money back and take care of myself. You can keep your socialistic insecurity. Its nothing but a government mandated ponzi scheme, but you'll never admit it. The few young workers forced to "care for" the numerous retirees.

Does that seem fair to you? You pinko libs can't even explain why counterfeiting is illegal, can you? Hahaha.

Right on Comrade !!

There’s that unattractive emotion again.
Honest Abe says

Its nothing but a government mandated ponzi scheme, but you’ll never admit it.

What would you do,… soylent green maybe ? For many decades, retirees cleaned up with social security, that is getting far more out of it than they put in. Even an extreme majority of conservatives like their social security and their medicare.

You’re obviously just trying to push buttons Abe, and as much as you try, I don’t believe that you are the Neanderthal that you portray yourself to be.

Well, well, well...I was right after all. You can't force yourself to admit socialized insecurity is a ponzi scheme, what a surprise. Denial is willful and deliberate ignorance.

And once again, why is counterfeiting illegal? Come on, give it a try. I don't believe you, sir, are the financial idiot you appear to be. But then again, maybe I'm wrong.

ok are you suggesting that the federal reserve, by increasing (or decreasing) the money supply is counterfeiting? Is this some type of argument based on a law or legal wording? or are you saying that it is common sense that they should not be able to "debase" the currency by printing and that this is counterfeiting? or are you talking about organized crime gangs who copy legal tender bills and put them into circulation? Im no lawer but im pretty sure the crime of counterfeiting cant be done by those who make the laws and legally control the money supply.

Honest Abe says

Well, well, well…I was right after all. You can’t force yourself to admit socialized insecurity is a ponzi scheme, what a surprise. Denial is willful and deliberate ignorance.
And once again, why is counterfeiting illegal? Come on, give it a try. I don’t believe you, sir, are the financial idiot you appear to be. But then again, maybe I’m wrong.

Well, only the US treasury/Bureau of Engraving and Printing can legally print money. So, if someone else does it's conterfeiting and is against the law.

As to social security being a ponzi scheme, that is ridiculous. It's a pension plan. The population varies by age--there aren't the same number of people in their 20s as there are in their 40s at any time. The baby boom exaggerated this effect. SS was designed to sometimes runs a surplus and sometimes run a deficit in any one year. Not sure how a Ponzi scheme could have run a surplus for 70 years ($3 Trillion, no less).

Honest Abe says

You can’t force yourself to admit socialized insecurity is a ponzi scheme

Everyone gets paid, so it's not a ponzi scheme, and eventually who knows, maybe it will be managed better. Maybe someone will actually implement Al Gore's "lock box" idea accounting for it separately, and not always borrowing from it. But I will acknowledge that the way it is utilized and accounted for as part of the revenues from which this years budget is framed, combined with the huge upcoming retiree bubble from the baby boom, does have a sort of ponzi scheme effect. But it's not something that can't be dealt with and fixed for the future.

They will raise the income level that payroll taxes are paid on (yes for those unfortunate ones who have to support us boomers ), and they will raise the retirement age to 68 ( at least). And eventually we boomers will die, and then hopefully it will be dealt with in a more stable way.

Social Security is another one of those programs that people like Abe never look at very deeply. Like other social safety nets, or whatever you want to call them, there is a financial benefit to it that I don't believe you ever consider. That is, if you didn't have it, who pays for those who don't plan well and or far outlive their savings ? We pay anyway. And it would be far uglier. What do you think happens ? Everyone has children who take care of them ? Or maybe churches and charities pick up the tab ?

Just like with public education and health care, there is a fiscally responsible aspect to it that you (Abe) and others like you for some reason are not willing to consider.

Honest Abe says

Typical liberal socialist comment. I’d rather have ALL my money back and take care of myself. You can keep your socialistic insecurity. Its nothing but a government mandated ponzi scheme, but you’ll never admit it. The few young workers forced to “care for” the numerous retirees.
Does that seem fair to you? You pinko libs can’t even explain why counterfeiting is illegal, can you? Hahaha.
Right on Comrade !!

So you will take care of yourself. Where in the world are you going to buy a private medical insurance policy once you turn 70? Unless you retire with enough money in the bank to pay for worst case medical problems for the rest of your life then you are full of crap. People who say they will take care of themselves are the first in line to suck off the public teat when the spam hits the fan.

A very good article from "Fortune" last year on the social security problem ( sorry about all the details and complexity Abe ).

http://money.cnn.com/2009/07/29/news/economy/fixing_social_security.fortune/index2.htm

marcus says

Al Gore’s “lock box” idea accounting for it separately, and not always borrowing from it

Things is, the "lockbox" idea is just putting trillions into cash with no interest return.

That is possible but about $1T of the SSTF's $2.5T is accumulated interest that the general fund owes the SSTF.

Norway's pension fund is around $450B in assets and it is highly invested in the world's markets. IF you pull up a mutual fund statement on any major equity, Norway's pension fund owns 1-2% of the company.

That works for a nation of 5M but it's hard for a fund with the SSTF's footprint to invest in the market, and market investment carries its own risks, too:

http://news.bbc.co.uk/2/hi/business/7937360.stm

The core problem is that we are a nation of idiots so pro-Freefdom hucksters like Honest Abe can bamboozle enough people to sell them and their existing savings down the river.

A very good article from “Fortune” last year

"raising the 'covered wage' limit, but not to outrageous levels . . . and most important, raising the retirement age to 70, with a special "disability" earlier-retirement provision"

f--- this guy. Let's raise the FICA tax to "outrageous" levels, but as a compromise ditch the employee match above the existing FICA cut-off.

SS is actually going cash-negative as we speak, ~5 years early.

http://brucekrasting.blogspot.com/2010/06/social-security-at-mid-year.html

While this is not a bad thing per se, it is part of the New Normal. It's going to take 30 years to dig out from the hole we dug in the past 10-15.

If we're lucky.

Sloan's kinda a piece of work, btw:

"To say, well you've got to pay another 12.4% and no one else has to do anything, no one else has to retire later, nobody has to take a cut in benefits, we're just going to come and take your money. People in my income class will turn against Social Security en masse and the next time there's a change in administrations you won't have Social Security."

http://www.openleft.com/diary/14529/

biology determines retirement age for many people depending on occupation not the govt. If they go on disability at age 52, they are effectively still retired. Just sayin I dont think raising the age is in the cards.

The plan has been in place for several years to raise the retirement age. Social security payouts were based on projected life expectancy and, when it was created, we died sooner. So, yes, raising the age is certainly in the cards.

elliemae says

Social security payouts were based on projected life expectancy and, when it was created, we died sooner. So, yes, raising the age is certainly in the cards.

This is somewhat misinformed.

http://www.ssa.gov/history/lifeexpect.html

We've already adjusted rates up to account for longer retirements.

Raising the age isn't the best solution available, especially with 10% unemployment. Even without shaking down high-income earners (for higher contributions that they won't get back) a every modest adjustment to rates (under 100 basis points) over the next 20 years will "save" the system over the 75 year horizon.

There is no crisis here and the people who say there is are trying to sell you something.

What I meant was that, according to the Social Security act of 1983, full retirement age is adjusting up from 65 yrs to 67 for those born in 1960 or later. Early retirement eligibility begins at age 62; Medicare eligibility remains at 65. So we are adjusting retirement age for RSDI eligibility.S

And you're correct - there is no crisis - other than that they (you know, THEY in the political powers that be) have allowed the "trust fund" to be used for purposes other than the payment of retirement benefits. So the money that would have been available for pay-out and the interest that it would have earned isn't there. Unfortunately, we need to suck it up and pay for the program out of ongoing funds. Obviously this distresses lil' abener...

Social Security was always meant to supplement retirement rather than to pay for it. I've seen many, many people attempting to get by on Social Security alone. With the recession and so many jobs/companies/retirement funds gone, I imagine it'll be the norm for awhile. That sucks.

Troy says

marcus says

Al Gore’s “lock box” idea accounting for it separately, and not always borrowing from it

Things is, the “lockbox” idea is just putting trillions into cash with no interest return.

I don't think so, although that is sort of what Sloan suggested. They could have invested the surplus all along treasuries, (enhancing demand for those securities ) but accounted for it separately. Instead what they did is, let's say you had a year with a $300bln SS surplus, when they (congress or the media) described the deficit for that year being $400bln, the deficit was actually $700bln. It just needed to be accounted for separately so that the government didn't essentially spend the SS surplus.

They used the SS surpluses to say that the annual deficits were less than they were.

You watch, when SS cash flow starts going seriously negative, they will separate it from how they frame the budget deficit. IT will be two separate deficits, even though when it was a surplus, they were fine using it to offset the stated deficit.

Oh yeah - because old people should have saved for their old age and it's their fault that the country is going to hell in a handbasket.

We always have to have someone to blame in tiny soundbites: abeabe says

In other words, almost EVERY penny collected in taxes will go towards paying ONLY the interest on the debt and spending on the major entitlement programs (Socialized Insecurity, Medicare, etc).

Reality isn't as interesting.

Hah, well im from Canada, as far as I know I still get to retire at 65. We just let people immigrate here to cover the tax base, and from decent countries. Some people resent all the asians and indians, but those guys go to work to make a buck. They are not lazy, they start all kinds of businesses and have enough children to grow the population.

There is so much propaganda in the US, if the average people got together and voted together they could do alot, if I could move to france I would in a heart beat, retire at 60, 35 hour work week, more holidays, and better restaurants.

jljoshlee3 says

and have enough children to grow the population

dunno, this is kinda a bad thing, really.

Of course, Canada has the space, but one advantage I see up there is having the population of California but with 5-10x the mineral wealth. Then again if productive enterprise is hobbled by a lack of labor then pop growth is good, but somehow I don't think that's this case this century.Then again (again) importing smart people is never a bad thing since without enough smart people the stupid people tend to take over. Just look at us down here.