The Deficit Commission
by Linda Beale
The Deficit Commission
Ever since Alice Rivlin spoke here at Wayne about her role on the upcoming Deficit Commission and her belief that we must cut entitlements, I have been worried. This seems like the same center-right coalition to undo the New Deal that has been rampaging in the country for four decades now–reaganomics, and with no heart.
Digby, reprinted in the Huffington Post, commiserates, at We (meaning you) Must Tighten Our Belts“. It is “interesting” to see that many millionaires feel quite at ease talking about the need to cut back on wages (blaming unions for the fact that owners have taken their businesses overseas where they can pay slave wages), delay social security benefits, tighten medicare requirements. But if you talk about taxing the rich, the response is always that this will “kill competitiveness” and “make the country poorer because there will be less investment.”
Funny, the bigger businesses get, the less competitive they seem to be–they become more like monopolies able to extract whatever they want from the consumer. Have you tried to order flowers for Mother’s Day? Every florist in a small town in Texas where my mother lives has the same national flower sales arrangements and pricing–so you can get an $8.00 azalea for $50 (plus $15 delivery). What a scam. It’s the thought that counts, but that thought costs more and more every year. Then look at the banks. I have a savings account with not a little cash in it at one of the big national banks: it pays so little interest that the bank probably spends more on tracking the interest than it does in paid interest. But their spreads are good–we lend money to them for practically nothing, but they charge an arm and a leg to lend it to the community. And Comcast–don’t get me started on them.
My problem, you see, is that I watched the movie Wall Street for the first time tonight. Made in 1987, the Wall Street of Gordon Gekko’s “greed is good” was full of evil blokes who broke up companies because they felt like it and could make more millions doing it, no matter what it did to the workers. But that Wall Street, with the LBO guys tearing up firms, was tame compared to the Wall Street during the Bush regime where groups of smart traders lived to suck the lifeblood out of their customers to make themselves rich.
I have a friend who married a Goldman banker. When the crisis broke, she was terribly offended that people thought the bankers shouldn’t get their huge bonuses. “We earned it” she practically screamed in her email to me. “Why shouldn’t we get it when we worked for it.” I remember thinking then, that something different had happened on Wall Street when even the relatively little fish in the big banks had that absolute sense of entitlement, but were quite ready to heap piles of scorn on the “welfare queens” and all those ordinary little people who had some sense of being “entitled” to Social Security in their old age.
Linda said: “…we must cut entitlements, I have been worried. This seems like the same center-right coalition to undo the New Deal that has been rampaging in the country for four decades now–reaganomics, and with no heart. “
Linda, can you actually lift your head, look at Greece, and not relate it to our own path?
My education and experience has said the same thing re: entitlements for a generation now. Greece just confirms what I have been taught and seen.
The remainder of your article is just the typical rant against big, successful business and supports the class warfare meme.
Its a informative blog. Thank you for sharing.
VoIP International Call
Actually make it 80 years essentially since the new deal folks have been wanting to repeal and replace it. The Taft wing of the Repubican party was first. They lost out in 1952 to Ike, and the wing reappeard in 1964 with Goldwater.
Actually the wing is very simple, it views the constitution as a document that puts property over people. Property rights are more important to them than human rights. This makes sense since they are the neo-federalists who thought that to vote you needed to be a person of substance. And in todays terms Andrew Jackson was a socialist! (Socialist= the community is as important as the individual not the traditional meaning, this is how you get Hitler to be a socialist).
Government is too big. Taxes are too high. And politicians are overpaid.
Side note: Louis Stone whom the movie “Wall Street” was dedicated to wrote this:
See “Funds Bank Funds” WSJ, Louis Stone, V.P., Shearson/American Express, 1982 –
“In a letter of March 15, 1981, Willis Alexander of the American Bankers Association claims that: ‘Depository Institutions have lost an estimated $100b in potential consumer deposits alone to the unregulated money market mutual funds.’ As any unbiased banker should know, all the money taken in by the money funds goes right back into the banks, in the form of CDs or bankers acceptances or other money market instruments; there is no net loss of deposits to the banking system. Complete deregulation of interest rates would simply allow a further escalation of rates by the banks, all of which compete against each other for the same total of deposits.”
I’m not a big fan of Oliver Stone’s films – like Frank Capra before him the guy really doesn’t do subtlety. But the subject matter in Wall Street didn’t really lend itself to being subtle either. The lines he drew in that film made sense to me in 1987 and still do. I am anticipating the sequel will be at least as good if not better.
And fwiw I suspect people will be referring to his film W in 20 years to understand what went wrong in this country in the first decade of this century far more than any autobiography by GWB. I recommend it highly.
One may also view the Greek situation as a revenue crisis with the wealthy paying almost no taxes.
And not to put too big a point on it but social security is essentially paid for unlike medicare, the new BFD, and most important the military. That is still not going to stop the right from going after social security just as it has for nearly 70 years. I share Linda’s concern. On the other hand my right wing GOP friends think the game is over because the demographics favor people voting themselves entitlements and soaking the rich to do so. It has not worked since Reagan so I do not see it happening now, but it is the right’s worst nightmare and brings to mind the adage “pigs get fat, hogs get slaughtered”.
You can ask my spouse and she will confirm that way back in 1989 I had advocated that the Wall Street creeps who bought companies and broke them up and laid-off workers to support the break up be given the chance to escape from any of the stadiums in the upper Midwest (Detroit was always my favorite location) filled with angry, seething ex-employees. If they made it out, they were scot free. The crowd was welcome to do what it wished with the Wall Street crony. That direct need for accountability by Wall Street has increased by an order of magnitude since then.
Linda, I hear you on the flower stuff. But the cause of the problem is the same as any other industry in this financialized economy: middle man business. The small shop do not realize how they are being sucked into a business model that makes them a slave subsidy of the national brand.
As to union labor, I posted here a while ago about Fritz Hollings and his hate for unions while also hating jobs going over seas. The dichotomy is that his selling of his southern state as a nonunion labor market was the selling of cheap labor and thus sold at the expense of higher standard of living regions in this country. The exact same thing as is/was happening regarding sending jobs overseas that he fought against, just on a smaller local scale.
And yet we still hear how union costs killed business. Well, the nonunion south lost their prior union north jobs to China!
The argument for the need to cut entitlements ignors that what they are cutting is funded not by the rich but by the non rich. It is their money. That the rich have borrowed it, accounted it as a means to offset their goals in the general budget while not paying for their goals and now are trying further to not pay as the loan is coming due is the issue. It’s called Class Warfare.
CoRev,
Try focusing on the root cause rather than one of the effects regfarding the Greek economic problem. It would appear that few people in Greece pay their income taxes, or any taxes for that matter. It’s not that they don’t have tax requirements, but it seems that few Greek nationals see any need to pay what they owe. That does tend to have a draining effect on carrying out any social responsibilities that the government may have to its people. Start here for a reference point:
http://query.nytimes.com/search/sitesearch?query=Tax+collection+Greece&srchst=cse
Here is another source of information. Unfortunately the WSJ article cited can’t be read in full unless you can sign in:
http://schott.blogs.nytimes.com/2010/04/27/fakelaki-rousfeti-and-the-4-4-2-system/?scp=2&sq=Tax%20collection%20Greece&st=cse
Then there is this more academic type of reference for those who demand “scientific” data,
whatever that may be in any study of economic acitivty:
http://www.lse.ac.uk/collections/hellenicObservatory/pdf/GreeSE/GreeSE31.pdf
It’s a 40 page pdf file, so let the linker beware.
Greece has in common with the US that they refuse to pay taxes to pay for the good life. Like always, the ordinary people will pay the price no matter where they live, it is global.
Like the article says, it has been a class warfare for decades from the top down against the bottom. Deregulation was license to take as much as you can, it legalized robbery. Therefore, none of the bankers from GS or anyone else will see a day in jail.
Divorced one
Let me extend that thought to my growing paranoia. If what I read here about the Greek crisis is true, it seems to me what we are seeing is what we were told by Reagan’s budget director: the plan was to drive the country so far into debt it would become impossible for the government to spend anything on “social services.”
It seems to me tht the present crisis in this country, as well as that in Greece, could be explained as a deliberate attemp to wreck economies, blame it on “overgenerous” social spending, and create the political climate for a return to a modern version of the ancien regime.
How else can you explain their obvious stupidity?
CoRev
and what education was that?
I wish you were as skeptical about your education as you are about, say, global warming. And then, of course, you’d need to separate your “experience” from what you have been told to believe by the well funded propagandists all of your life.
I don’t honestly know how you can do that, or why I should believe that I know any more about “reality” than you do. But I can say that my own direct experience supports the idea that the folks who run things are not honest. And my “study” of the Social Security issue… I began without any political leaning at all. I just did numbers for a living… has convinced me that the people behind the “entitlement crisis” are liars, the press are lie repeaters, the people are fools.
It is very easy to generalize from that “core of knowledge” to a suspicion… that sounds like paranoia to people with “common” sense … that what you are seeing is not what it seems.
A scary and all too realistic scenario really articulated to great effect in the excellent Shock Doctrine by Naomi Klein.
Wow!!!! How much misinformation can there actually be re: Greece taxation?
1) Greece has a VAT tax of ~19%. If you buy something you pay VAT.
2) Greece has an income tax. It is collected in this way: “An Individual – An individual whose income is only from a wage is not obligated to file an annual return. The employer deducts tax from the employee and transfers it to the tax authority every month.” Income tax rates are from 0-40%.
3) Greece also has an equivalent FICA tax. It is paid at this rate: “The employer’s contribution is 28.06% of the salary. The employee’s contribution is 16%.”
4) There are sundry other taxes, Capital Gains, corporate ,etc. How many of them are not collected/paid?
So saying that the Greeks do not pay their required taxes means that Greek employers choose to not pay their employees taxes. Not too likely.
Greece’s financial ills are unlikely to be caused by failure to pay as much as it is that they are so seriously overtaxed to the point they can no longer pay.
Regardless, it is highly unlikely that the VAT and other taxes are not collected.
Dale said: “How else can you explain their obvious stupidity?” The answer was in the question. Stupidity! Stupidly providing “overgenerous” social spending.
The ignorance over Greek tax policy is overwhelming. Never admit that they are over taxing those who make a wage or profit to pay for those who do not. Nooo, we could never admit that!
Linda,
You seem to forget in all your rightous fury, that Obama (a Democrat), the House (controlled by Democrats), and the Senate (also controlled by Democrats) are the ones who will be doing any/all of the gutting of FDR’s New Deal legacy.
Yet I noticed that you did not mention the people who are responsible once in all your rant. Don’t look at the R’s, they can’t pass anything. It’s all Obama and the Dems who are in the drivers seat and pushing this. The Dems own it all – it would be nice of you to actually acknowledge that fact – or would that be too inconvenient?
Islam will change
What nonsense. Greece is in trouble because the same sorts of people who advise the big banks advised the EU to have a common currency, and then some EU countries–cough, Germany–decided to pursue a “beggar-thy-neighbor” trade policy. From top to bottom–and it isn’t only Greece–this is the work of the “greed is good” guys, in conjunction with the too-smart-for-their-own good economic analysts.
Linda,
Funny, the bigger businesses get, the less competitive they seem to be–they become more like monopolies able to extract whatever they want from the consumer. Have you tried to order flowers for Mother’s Day? Every florist in a small town in Texas where my mother lives has the same national flower sales arrangements and pricing–so you can get an $8.00 azalea for $50 (plus $15 delivery). What a scam. It’s the thought that counts, but that thought costs more and more every year.
Have you tried Wallmart. They sell cut flowers at a reasonable price. Part of our social responsibility as consumers is to shop around.
http://reviews.walmart.com/1336/4118/category.htm
CoRev,
The Greek situation also shows that when the state runs the budget into the iceberg its the working class that gets stuck with the bill. The stick their heads in the sand crowd that are against entitlement reform in this country just assume that the when push comes to shove that the cost will be past on to the rich. The Greek case suggests that if won’t work out this way.
CoRev
first, i don’t know. but second, “overgenerous” social spending would be the work of the people who make the decisions, which are generally not “the poor.” it seems to me it would be as easy to run an economy on the rocks by “overgenerous” social spending as it is to do it by overspending on the military or underregulating the finance industry. if the result is that you produce a situation in which a perfectly rational worker-paid retirement plan becomes “unaffordable”, then something “stupid” has been done. unless it was deliberate sabotage.
Cardiff
my head is not stuck in the sand. i KNOW the numbers. and the structure. there is no “entitlements” crisis in this country. there is possibly a debt crisis, but the money did NOT go to “entitlements” and is not ever going to go to entitlements. you have been scammed.
the cost of Social Security is NOT passed on to the rich. that’s the whole point.
buff
no doubt O and the dems are sold out to the same Wall Street interests that brought us Reaganomics.
what makes me sad is that you and i agree about some things, but you keep dividing the world up inot R’s good D’s bad.
or as someone said before I was born: “the real power is always non partisan. but they need a furious right and a furious left always going after each other to distract the people.”
the R’s do a pretty good job of distracting the people from their own interests. so, lately, have the D’s.
Cardiff
Walmart has done a pretty effective job of driving small business to ruin. the republicans have done a pretty effective job of blaming it on the government.
people who can think of nothing but the lowest price and the lowest taxes will get what they deserve: a lifetime in situations subject to short notice at minimum wage.
Well, let’s see. CoRev claims Linda is spreading misinformation, and then offers a bunch of unsupported claims and misdirection to back up the insult. Do we take CoRev’s assertions about how things should work in his little world for granted, or do an ever-so-easy look around? Hmmm…given CoRev’s history, let’s look around.
The Federation of Greek Industry estimated last year that tax evasion costs the Greek government $30 bln/year. In 2009, the Greek government deficit was Eur 32.3 bln, which at today’s exchange rate would be $42.3 bln. So tax cheating is estimated to amount to as much as 70% of last year’s deficit.
From the NYT: “Some of the most aggressive tax evaders, experts say, are the self-employed, a huge pool of people in this country of small businesses. It includes not just taxi drivers, restaurant owners and electricians, but engineers, architects, lawyers and doctors.” CoRev implies that what matters is VAT and payroll deduction, and leaves out the self-employed altogether.
Oh, and then there is CoRe’vs handwave at “other taxes” which he treats with a rhetorical question rather than evidence. Ah, again we have what your regular NYT reporter can turn up, and that CoRev can just as easily ignore. In the northern suburbs of Athens, 324 residents amit to owning swimming pools – a taxable addition to property. Aerial photos show that in those suburbs, there are 16,974 pools.
What must we conclude from the easily available evidence? We must conclude that CoRev owes Linda an apology. Oh, and we also learn that we should never trust CoRev.
coberly,
I and you have been here long enough. My point is the consistant lack of acknowledgement that the Dems and Obama are the source of many of the AB’s posters and commenters agnst sets me off. Its like the game of “name that party” when you see a politicain in trouble with some scandel. Inevitably if its a Rep the party will be mentioned in the first paragrapg while if its a D it will get buried way down the story.
I don’t mind bashing the R’s when they deserve it, I had many complaints about the R’s when they were in power. Just since I started reading AB, then for the past 40 months (since the 2006 election), and now in almost glaringly obvious lack of pointing the finger at the guilty since Obama took office, the lack of any even hand-wave acknowledgement that the Dems were involved and supported policies (and now INITIATE the policies) that AB posters don’t approve of is glaring. The hypocrasy is at times overwelming.
Look at almost any Bush policy that the left and Dems screamed about now on the war – well now its Obama policy and all good. The Dems overwelmingly and bi-partisanly supported the war. Without fail through today. Heck even VP Biden is claiming that Iraq will be a Obama success story (and thus validating and assuring Bush’s legacy, a fact I find hilarious). Yet not a peep from AB.
How about non-war stuff?
Everyone screams about Bush and TARP and conviently forgets that Obama and the Dem Congress were fully onboard with it. (As was McCain).
NCLB – remember how Ted Kennedy (D-Senator) said after he participated in the Rose Garden signing, “This is just a down-payment.” ?? Yet the D’s support of this legislation has fallen down the memory hole.
I could go on. But the title of this post should be:
“Obama and Democratic Congress vie to gut FDR’s New Deal.”
Islam will change
Heck you can beat that at almost any grocery store around. And deliver them yourself which will mean a WHOLE lot more than a bundle of flowers that will die in a week.
And I don’t shop florists for live plants which my wife would much rather have…
Coberly,
people who can think of nothing but the lowest price and the lowest taxes will get what they deserve:
Like cheap flowers from wallmart?
K,
The its great. Greece doesn’t need a bailout and can get the money from its own citizens – correct? So the Germans don’t have to through good money after bad. Seems like the Bundesbank should be throwing a fit over this.
But I do note that the grateful Greeks, after getting a huge bailout, have shown their thanks by rioting in the streets. Like a huge sign saying,”Don’t come to Greece!”
My prediction: Greece will not get its fiscal act together and will need another bailout within 5 years.
Islam will change
Oh, my mistake. CoRev owes Jack an apology.
On the assumption that I’m the “K” in question, I have a question. So?
The point of my post was that CoRev was puffying his chest out and making “I’m so smart” form of propoganda about taxation in Greece, without a single fact on his side. I don’t mean he didn’t present facts. I mean that none of the facts he presented did his case any good. The relevant facts all suggest CoRev is wrong.
At no point did I suggest Greece is out of the wooods, nice, or grateful. They are in the situation they are in, and they are responding to it the way they are. OK by me.
I am a little baffled, though, at the frequency of prediction about things far in the future, with no accountability. Why is your prediction about the future of Greek government finances of note?
buff
be a little careful. not sure exactly who got the bailout, but the greeks rioting in the street are rioting because their standard of living has just been cut to the bone. i do not know if they brought it on themselves, but it is unlikely they would see it that way. and i am sorry to say that i suspect the ususal suspects. the high end politicians in collusion with the financial elite.
KH, my mistake was to forget the reference. Yours is to again counter with a uselss set of personal comments and no reference. BTW, here’s mine: http://www.worldwide-tax.com/greece/greece_tax.asp You’re a hit and run comment bully who brooks little open discussion.
KH also makes this conclusion culled from that overwhelmingly accurate and scientific source, the NY Times: “CoRev implies that what matters is VAT and payroll deduction, and leaves out the self-employed altogether.”
But, when doing a modicum of research we find that Greek self employment is ~36% (from here: http://www.eurofound.europa.eu/comparative/tn0801018s/tn0801018s_2.htm ), and in KH’s world that is tantamount to 100% of the tax cheats. What’s the liklyhood of 100% of the Greek self employed being tax cheats? We know what it is in KH’s world. And, since he believes there are a large number of pools in a single neighborhood, that is proof positive that tax cheating is rampant on the pool tax. (A tax I never mentioned, but again in KH’s world amounts to a truly significant amount.)
The totality of KH’s tax cheating deficits must equate to 100% of the deficit since it couldn’t be somthing as simple as over payment of entitlements.
KH, this is the comment to which I responded: “ It would appear that few people in Greece pay their income taxes, or any taxes for that matter.” So, owing Jack an apology, not hardly. Much of the tax revenues is automatically collected.
How much misinformation do we need to be subjected to before someone takes a look at the real situation?
So KH, I repeat: can you actually lift your head, look at Greece, and not relate it to our own path?
Cardiff, I agree. Consider the Greek situation being similar to one of our middlin states going bankrupt, expecting the Fed Govt to bail it out. But in the EU, as is happening here in the soak the millionaire states, they are just getting up and leaving.
Peace and globalization has some interesting unanticpated consequences.
Buff
I essentially agree with you about “the” democrats. And I would not be surprised if many commenters on AB were a bit partisan in what they see and what they don’t see. But when you, and I, jump on the partisan shoutfest we are playing the game the “real power” wants us to play.
Now I don’t know if the “real power” is a self conscious conspiracy of elite rulers (like the paranoid conspiracy theories of others would have it) or if it is just the natural result of people looking out for their own interests. with some people getting more interest than others.
so please, if you can, give us more insights and less democrat baiting. i’ll join you in beating up the democrats as long as we can be reasonably even handed about it. the bad guys are in both parties. and actually, i didn’t notice that linda even mentioned the R’s.
I couldn’t follow the logic of this post. How does the second paragraph flow into the third? The poster seems to suggest that all rich people work for big businesses, but that obviously makes no sense. Then the third paragraph rolls into the fourth where we start to attack Wall Street but it has nothing to do with any of the proceeding paragraphs.
The final paragraph atleast follows from the first, people are going to be upset at losing their entitlements just as Goldman Banker were pissed at losing their bonuses. But the stuff in the middle made zero sense and clouds any real point the person was trying to make.
Sorry just a mess of a post
buff
see. i told you we agreed about the important stuff.
Dale said: “Walmart has done a pretty effective job of driving small business” Another urban myth? I see no evidence of it in my small business centered locale. What has effexcted small businesses more are Govt (all levels) policies and taxation.
But then I’m more pragmatic than most idealogs.
coberly,
They just got handed to them on a platter a large chunk of money. Not taking that money or refusing the strings attached would have been far, far worse than any cuts in their standard of living they will face now. And KHarris has adequately shown that they have plenty of wealth to save them selves….
KHarris,
My predictions have over the time I’ve been posting here to be much more correct than anyone else here. On the war and the Dems I’m still sitting at 100%.
So what’s your prediction on Greece? They will need a handout again in three years? I’ll buy that one.
Islam will change
buff
“they” is still pretty vague. exactly who is “they”?
and the consequences of not taking the money… i’m not so sure about.
corev
good god. then i’d hate to meet the rest of the ideologues.
David
you may be expecting too much from “logic.” my modest observation is that logic is in the eye of the beholder. but in case you missed it, the point of linda’s post was that “the deficit commission” is after “entitlements” for the poor, and not at all interested in entitlements for the rich.
where i depart from Linda is her idea that “entitlements” have something to do with “heart.” The fact is the poor pay for their own Social Security and they could pay for their own Medicare, or even a univresal health care. Without taking money from the “heartless” rich.
where I depart from the Deficit Commission is their steady Big Lie: that entitlements have anything at all to do with “the deficit.” much less being the key to controlling it.
as for the conclusions you draw from “seems to suggest..” even you should recognize the illogic of that.
Coberly,
where I depart from the Deficit Commission is their steady Big Lie: that entitlements have anything at all to do with “the deficit.”
If the government buys a single pencil it adds to the deficit and national debt. So how is it that purchasing a pencil adds to the deficit but billions of dollars of entitlements do not.
Come on CoRev, you know you need to look beyond your small business centered locale to understand that the consolidation of retail has closed down small business. Plenty of research on it.
You are correct that government policy has had the greatest effect on small business, but it’s not policy related to regulation for safety and labor, nor is it taxation in the sense of more taxation.
I do not find your comment on this regarding you being an example of pragmatic thinking. Seems more like narrow focus. But, you do examplify ideology as it’s all ideology. Facts is the distiquishing quality as to ideology.
CoRev
i don’t know about Greece. I know about American social spending which is regularly called overgenerous by people i know to be lying about the numbers. it is easy for me to generalize from that to be suspicious about the cliams about Greece.
actually
it’s what the local small business owners tell me.
Cardiff
Social Security pays for itself. And lends money TO “the budget.”
You see, that pencil does not pay into the government. But Social Security pays in more than it takes out.
complex idea, i know.
I suspect what we will see next year is not an effort by Democrats to massively cut entitlements, but instead a bill which does make changes of some kind to entitlements coupled with tax increases. The Commission will report back in December. It likely will have recommendations that split the baby. My guess is that unless the Commission fails to come to any consensus, the report will figure prominently in Obama’s State of the Union message. His hope I think is to begin to change the public narrative from the kind of academic snipping illustrated by this post to the somber reality that if we think the deficit picture is terrible, we have but two options on the table. There is no possibility that a bill cutting spending only will pass Congress. There is also no way a bill relying only on tax increases will pass Congress without some entitlement changes. There will be a great deal of time to fight about the details when the time comes, but if anyone thinks it will be all one way or the other, I question his or her political acumen, if not his or her economic insights.
They is the Greek Government. Sorry for the lack of clarity. I thought it was obvious we were talking about the entity that was getting the bailout. And not taking th emoney and defaulting would have been much worse both for Greece and for the Euro countries also (why do you think the Bundesbank coughed up the cash – it wasn’t do to a sense of altrusim, they did the math and letting Greece default was the worse option.)
I just spent a week in the UK and this alternated with the Gulf Oil Spill for #2 story every day (#1 was the upcoming UK elections). Almost every paper had mutli-page in-depth analysis on it. Far more than you would get from the NYT or anywhere else in the US.
Islam will change
but dad, oops coberly, baiting the Dems is sooooo much fun…
🙂
Coberly,
Obviously your not seeing the forest throught the trees. Of Course the elite class is going to overspend economies to put them in jepordy. That’s what the entire political arguement abroad and in the United States is all about.
You can’t control behavior and free-will unless you create a dependant class of people, and you can’t create a dependent class of people with an economy that produces wealth based on effort. So you must overload that economy with big government spending to weaken it to the point so that a dependent class is maintained.
Once a dependent class can be maintained it will grow,because over time it takes more and more producers to maintain the same number of dependents, and the result is more dependents. The elitle power structure then can control the population based on the needs of the dependent class, and the final result is the combination of econmies and the end of free-will and sovreignty.
I thought you were a good study of Marxism??????
coberly,
The azaelas are up and blooming, and I need to plant about 6-7 more groups for next year (and transplant the group hiding next to/in the prickly pear, need some serious gloves for that). And some roses bushes…and something that will attract hummingbirds.
I gotta stop or I’ll fill up my weekend dance card…
Cardiff: “So how is it that purchasing a pencil adds to the deficit but billions of dollars of entitlements do not.”
You haven’t been paying attention to the details of the Social Security funding system. It is only an entitlement because all working people pay their share into the program throughout their working lives. There is a disability aspect to the program in the event of an untimely death or serious injury or illness. But basically you, me and the rest have been paying our share plus a bit more so that the system doesn’t need to be funded by the general Treasury receipts. You see Cardiff some would have you believe that what you and I have been paying in all these years has gone to pay for other important things like war and tax cuts for the very wealthy. What they’re not telling you is that that money was borrowed by the Treasury from the Social Security Trust Fund and Treasury is obliged to pay it back. Just like the T Bills that so many wealthy people hold. A T Bill is a T Bill. If the Trust Fund Ts are unsupportable then so too are every other T bill, even those held by China, Japan and Korea. They would really be pissed off if the debt owed to them isn’t paid. So the Social Security Trust Fund assets are just as fungible, shall we say. It isn’t too tough to figure out. Less war spending and a bit more tax receipts from those who’ve been getting a nearly free ride for a long time now would secure the system. Pay back’s a bitch.
Cardiff,
Don’t even bother talking SS here until you’ve read Bruce’s SS primer at the top. Otherwise you will end up embarressing yourself and not understanding what every one is talking about since you won’t know the (assumed) basics.
Plus its a good read…
Islam will change
Coberly,
Social Security pays for itself. And lends money TO “the budget.”
Are refering to only the retirement benefit, or are you including the Survivors and Dis-ability as well.
Buff, I find baiting the GOP so much fun, but I have expressed concerns about Obama and social security from June of 2008 when he proposed the doughnut approach to contributions and Darth Volker joined his team. I have no problem being critical of the Democrats just not for the reasons that GOP attacks Democrats. As noted talking about endless war, we disagree over whether Iraq is winding down and I do expect that Obama will get push back on Afgahnistan soon–perhaps because of the fiscal problems we are debating here. Give people a choice–either we have to get out of Afgahnistan or everybody’s social security check–present and future–gets cut by 25% and I guarantee the geezers and some non geezers as well will be out in the streets. I think I attack the GOP as much as anybody here, but I try and hold the Democrats and Obama to the same standard and while I think they are a bit more subtle than the GOP you are quite right that the bottom line is not that much different.
Don’t even bother talking SS here until you’ve read Bruce’s SS primer at the top.
Did I say something wrong?
Jack,
Nobody is seriously talking about not paying back the debt we owe to China, Japan and Korea. However, most of the serious people are putting social security and other entitlements on the table as programs to possibly cut in order to balance the budget. The Chinese, Japanese, and Koreans probably would like us to cut back on our current entitlement commitment since its gives us a greater capacity to pay them back. It’s hard to say or downright arbitrary to say the last dollars spend went to pay for tax cuts, war, or buying a pencil, filling a pot hole, saving a job, or whatever else the federal government spends money doing. My point was like with Greece is that the middle class and people with low incomes should not just assume they will be able to pass the debt off to the rich. The austerity measures in Greece are both wide and deep, and they appear to fall mostly on the working class.
Cardiff,
No….you didn’t, but Coberly wants to talk Social Security, so he drug into the debate. In the minds of AB’ers, Social Security is not in trouble in any way shape or form, because you can always just keep increasing the burden on the generation behind you, to keep it going, and cut the defense budget at the same time. Seems simple to them, but just as long as you fall in line with that utopian view, you’ll fit in fine here.
Of the four options to solve the S.S. Trust Fund issues, raising taxes, cut spending and divert funds to Trust Fund, Cut Benefits, and/or Raise Taxes you will always get the same answer…..and that is, to Raise Taxes and cut Defense.
Buff
I still don’t know enough. but “the Greek government” may not be the Greek people. And until I am satisfied that the bankers have not screwed the people, with the collusion of their government, i can’t join you in thinking “the people” should be grateful because “the government” got a handout.
buff
i am genuinely glad you have something more useful and fun to do than blogging. i have acres of blackberries to do. stopped here and got caught up in the mad dance.
survivors and disability also collect a dedicated tax and pay for themselves. disability is running a cash flow deficit, but that means they are cashing their bonds. which, i understand, is a legitimate business event, not the same as bankruptcy, or even borrowing.
if i have one point to make about social security it is that it pays for itself. Medicare should pay for itself, but people are too dumb to understand that they are paying for their own medical insurance so they are willing to take handouts from the government. invincible stupidity.
almost as stupid as saying that Social Security is responsible for the deficit.
Cardiff
talking tough is not the same as knowing what you are talking about. those “serious people” are liars. in fact they are damned liars. or fools.
how the hell can you balance a budget by cutting the one program that is in the black? and “off budget” to boot?
the reason for the deficit is tax cuts and spending on wars. and “stimulus” for recessions.
decding to pay for your sports car and your gambling debts by cutting the kids food budget would be immoral. when it’s money the grandparents gave the kids for food, it’s a crime.
get it straight in your mind that Social Security is collected separate from “the budget” for a reason. stealing from it to balance the budget is theft.
jimi
the only reason to cut defense would be to find the money to balance the non social security budget.
The generation about to retire already paid for its social security. the generation behind them will need to raise their own tax to pay for their own longer life in retirement. the fact that you can’t understand the pay as you go concept does not alter the fact that everyone who pays into social security gets their money back with a good enough effective “interest.”
steve
cutting the baby results in a dead baby.
the whole point about the Solomon story is that he did NOT cut the baby.
as for economic insights, you don’t seem to know a damn thing about how Social Security is funded, or why.
and if political acumen is “finding excuses for thieves and liars” well you can have it.
The masses cannot vote themselves properity as long as the wealthy can buy congress.
Good point.
ilsm won’t change.
The problem with entitlements is the US government killed the goose.
Sorry, I have been occupied all say.
The point, I think being missed, is that entitlements are only a problem because of militarism, okay maybe the rest of the 14% of GDP the US G wastes on corporate welfare and war profiteering.
The $2T or so in lent from excess SS tax (off budget) receipts went to buy a war or two which profiitted a very few, and took those $2T away from better investment that might have improved US productivity.
The SS taxes paid for a few wars and a lot of graft, corruption and war profits which depleted the US productive base. And tax cuts for a few.
Corporate welfare.
Yes, cut entitlements, paying for them might hurt war profiteers and corporate welfare.
But do not cut deficits for the rich who might pay taxes instead of collect T bill stamps and make the US government less uselessly leveraged.
Surpluses are no good either!
Admittedly, I skimmed the comments, but I didn’t see anything regarding the Fiscal Sustainability Teach-In that occurred the same day as the Peterson Fiscal Summit.
http://fiscalsustainability.org/
Has any commentor questioned whether deficits should be a primary concern? If you accept that they are a primary concern, you’ve already conceded the war that needs to be fought.
See this article for a great description of what I’m getting at:
http://neweconomicperspectives.blogspot.com/2010/04/do-not-confuse-solvency-with.html
Coberly,
We are paying for the people in retirement now. The money has less value now then it did before, so the burden on the future generation is greater. When the Trust Fund/Treasury Bonds are to be cashed in we have to find the money from somewhere, the only place it will exist is for the younger generation to increase it’s burden compared to the previous generation, and that will be amplified based on the size of contributors to recipients ratio.
If the surplus was made up of real economic assets then there would be no issue becuase of the built in surplus, but that’s not the case.
kharris:
I couldn’t said it better. Thank you for the chuckle
Praha:
You should have come to “Showdown in Chicago.”
Jeff,
The deficit doesn’t matter if you raise interest rates, allow inflation, and have GDP growth to counter it.
Why is an increase in interst rates not a deeper burden on the private sector? How does inflation not cause a deeper burden on the private sector? Where is the confidence in GDP growth with the current trade deficit?
These things make it easier for the public sector to handle it’s deficit, but applies a deeper burden on the private sector. How can that not be a primary concern?
divorcedone:
Textiles did cross the ocean. What is cheap in a product? Overall the true cost of Labor is still ~10%. Materials is ~50% and the rest as you witnessed we are negiotiating.
Islm,
O.K. Fine, but that still doesn’t asnwer the question of what’s getting cut, and what’s getting taxed to make up for the S.S. Surplus “IOU’s”
I doubt just looking at Defense spending is going to cut it.
Jimi,
Deficit spending always decreases the burden on the private sector at the risk of causing inflation.
CoRev:
You have to leave your house to find out about the Impact of WalMart
jimi said
“ but Coberly wants to talk Social Security, so he drug into the debate.”
jimi, you may have forgot, but this debate is all about Social Security. go back and read Linda’s post. Note the word “entitlements.” Then have your mother show you the fifth and sixth last words in the main post.
jimi
generally “having to find the money” to repay your debts is considered “your problem.” not the fault of the guy you owe the money to.
whatever you meant about the value of money escaped me. but you ought to understand the reason for pay as you go with wage indexing is to finesse the “value of money” question. well, you ought to understand it anyway. not sure your mother could help you with that one.
jimi
probably cutting defense is at least arguable. what is not so arguable is raising the taxes on the part of incomes over 100k to REPAY the money borrowed FROM social security, that (partially) made the tax cuts possible that the rich were going to use to grow the economy.
jeff65
the “deficits” is a smoke screen for cutting Social Security which has nothing to do with the deficits, except in the minds of the press and the public. a lie carefully nurtured by Peterson and his ilks, including it seems the Presidents advisors and most of the Congress.
What is this bullshit about the word entitlements? It’s being used as though it were the equivalent of welfare. Social Security is not a government hand out. Anyone who believes that it is is a damn fool and has possibly not been paying his/her FICA contributions along with he rest of us. Social Security may be the only economic program run by the US government that has actually worked well over a prolonged period of time. It is not in the red as is so much of the general budget. It is not, by law, a part of the general budget. It has an independent funding stream. Look at your pay stubs. See, FICA and Income tax are listed seperately. I repeat for those too dense to understand it when only said once. Social Security is not simply an entitlement program. It is a program paid for by those who will be owed benefits in the future. They have paid FICA contributions for 30 or 40 years so they are “entitled” to the benefits of the program. If you think that it’s a hand out how do you explain those FICA deductions from your pay?
Cardiff,
Why is it that you put foreign holders of T Bills before the Trust Fund, a major T Bill holder? Why is the debt to the Chinese any more important than the debt to our own working citizens. And if you listen to jimi you’ll only be magnifying your personal ignorance on the subject of Social Security, the Trust Fund and the dedicated funding stream that makes the entire program work.
Militarism is 5% plus of GDP, not counting the hidden stuff, start there.
The Europ zone runs about 1% of GDP on their militarists, they learn by wearing themselves out from 1870 to 1945.
If you have read my stuff over the years you would know I am an insider in the war machine “acquisition” buisiness.
Largely coprporate welfare.
Shutter about 70% of the Air Force: reduce outlays by $140B per annum for stuff that eats the US’ feed corn and just does not grow anything.
The Navy is good for another $140B a year at least same reason.
The Army similar cut, and stop using it and the Marine Corps for occupying them.
Then raise fees for the 7 or so percent of corporate welfare that is the rest of the “discretionary budget.
Surplus!!!
And all the old folks get to eat better than cat food.
jimi
if borowing money “causes a deeper burden” why is it that every business and most households do it.
deficits paid for by inflation are just a way for the government to borrow money without actually having to pay it back. this sounds terrible, but it works. note however, that to make sense, the deficit spending has to be spent on something that is at least arguably an “investment.” something that makes it easier for the next generation to make money. keeping your work force alive through a depression used to count. but now that china is on line, not so much.
note that the inflation rate is effectively the interest rate on a loan you roll over.
Jimi,
Great point thanks for making this:
“The deficit doesn’t matter if you raise interest rates, allow inflation, and have GDP growth to counter it.”
The problem with Reaganomics is that the monetarism and the laffer curve harmed GDP growth,wasting the leverage on war and tax cuts.
You are correct though any policy which harmed GDP growth, like monetarism and Voodoo economics of the republican regimes would destroy any use from leveraging federal spending.
Boom, bust and financial trickery is all the US recieved from Reagan and two Bushs with some abatement from Clinton.
However, Clinton enjoyed a modest peace dividend where actions of GHW Bush started the decline of war machine burden down to about 3% GDP.
There is a link between leveraging for war profiteers and harming the US.
It’ been discussed since a few libruls told the French government that it was better to let the Prussians have Alsace, anyway (see 1870), than to build a huge war machine at the expense of the Fernch GDP.
So, you are correct in the last few words leverage has to yield growth in production not war profits that take away from productivity.
The militarist and corporatist pillaging of the US economy the past 30 years is why the US cannot get out of the dumps, nothing to do with entitlements!
coberly,
We all know the agenda. I’m just wondering why expend all of the energy to convince people that SS is funded apart from deficits when there is nothing to fear from deficits anyway?
Jimi OASI stands for ‘Old Age/Survivors Insurance’, your attempt to drive a wedge between them makes no sense at all. Are you making the claim “screw the widows and orphans, what counts is my ROI while I live”?
And since everyone advocating ‘reform’ does so on the basis of combined OASDI numbers extrapolated over the Infinite Future Horizon WTF is your point?
If you want to break out DI from OAS and argue that each should be argued on it’s own terms the NorthWest Plan is way ahead of you, Dale has numbers breaking out the challenges and the fixes to each in isolation or in combination.
Throw me in that Briar Patch Big Boy.
Cardiff: “Did I say anything wrong?”
Well other than donning a t-shirt with the slogan “I am with Stupid” with an arrow pointing straight up perhaps not. But your argument boils down to 160 million workers willingly sacrifycing their own self-interest so the Chinese Central Bank should not get spooked.
My argument, though not normally expressed quite so directly, is that Clinton demonstrated that the U.S. had the will to tax capital and cut spending in a way that justified lending us money at low rates. This led to what I saw as a confidence driven re-investment expansion that despite some falso starts (can anyone say WebVan?) led to a combination of RealWage increases and low inflation that turned “deficits as far as the eye can see” of 1992 into general fund surpluses and put a Social Security system whose outlook was deteriorating from1993 to 1996 into a position that it looked to be overfunded going forwards.
No you didn’t say anything ‘wrong’. Just showed that your knowledge base of the numbers as reported the last dozen years left you tragically underequipped to play Social Security Ball with the Big Leaguers.
Steve there is a strong legal, economic, and moral argument for adressing Social Security in isolation.
If the perceived need is to adjust SS’s future Income Rate match it’s Cost Rate and so bring it into both Short Term and Long Term Acturial Balance then Coberly and I (with an assist from Arne) have presented a numerically vetted plan to accomplish that within the current structure using official assumptions. If the argument is that financing the payback of the existing Trust Funds that will be required to keep that particular component of the Income Rate manageable we are prepared to show that our proposal makes that perfectly affordable for both Labor and Capital and certainly cheaper for capital overthe medium term. Let’s talk and exchange numbers.
But if the argument is that employers and workers should keep paying in a combined12.4% of payroll while accepting benefit cuts simply to keep Pete G Peterson paying taxes on his “carried interest” at economically unjustified reduced rates applicable to capital gains, we have to cry foul.
It’s called Utilitarianism and Democracy. And Plutocrats and their enablers don’t have to like it.
I get it you guys like to have the same arguement over and Over again and just needed a new thread to start it up again.
Nevermind
David
there is some truth to that. any idea why the argument is never settled?
Jeff
because the liars are using the deficits to call for cuts in social security. and the so called mainstream press belives them. and so do most of the people.
now if you can convince the people that we have nothing to fear from deficits, and they say, well, then, leave my social security alone, i’m not sure i’d bother explaining again and again that social security has nothing to do with the deficits
because by then the liars would have found a new “crisis” that proves that we need to cut social security.
coberly,
I’m fairly certain “we can’t afford it” is the only bullet they’ve got left in the gun. Showing that the govt can afford to buy anything that is for sale in it’s own currency would open people’s eyes on a lot of other spending issues at the same time. It might even be easier to explain. It would make it clear that grandma eats cat food because we choose it to be so.
As of 1Q10, not any more. $1.5B in the red, not counting interest.
I’m not sure how entitlements got equated solely to OASDI. They are not! There are many hundreds of other entitlement programs, and many of them are significantly underfunded unlike OASDI. Nearly all the underfunding needs to be borrowed on the open bond markets.
The issue re: refunding OASDI trust T-Bills is that they compete with the world’s need to borrow on the open market. So timing is not good and can impact other Govts’ borrowing needs.
Other than the underfunding issue, one of the next important issues is the unanticpated demands. Entitlements are given based upon pre-determined conditions (age, sex, income, health, physical condition, infrastructure type, and many, many more). Entitlements go directly to individueal and to organizations, public and private. It is these demands, based upon those predetermined qualifiers, that are often unknown. It is not uncommon to find that an entitlement can be under utilized due to lack of knowledge it even exists, or many other socially charged reasons.
Getting a total list of all the Federal entitlement programs is no easy matter. Once a little known entitlement program is well known, its constituency can quickly and significantly grow.
Regardless, entitlements are not the problem as much is their funding streams. Underfunding is clearly a budgettary problem, especially in poor economic times.
CoRev,
SS has been singled out by the com mission memebrs as ‘where the money is’, all 2T plus. If you have a list of other, send a beginning list of the top twenty to me.
Dan, let’s start with the most obvious. Medicare, medicaid, the new healthcare program, the various welfare programs, education grants/loans, even many of the Hiway progams are entitlements. Below is an older partial list of entitlement progrmams with budgetted amounts. It might be from the early 90s.
As you can see there are many. Some with dedicated funding streams and trust funds leaving them partially funded. Some come directly from the General Fund.
Cardiff,
Basically you didn’t get up to the playing field everyone else is at. I was trying to be nice. Go read Bruce’s excellent primer and come back. Its worth the time and give you a deeper understanding of the issue. If you think I’m just trolling for Bruce, well you haven’t been here long. But he did an excellent job (with coberly assistance) of putting together a good solid primer so you can talk issues. So go read it you won’t regret it.
You do have part of the problem identified form the bulk of your comments. The General fund really doesn’t want to have to pay back the SS T-Bills. The SS surplus has been hiding the out-of-control spending during the last twenty years or more. Now the surplus has ended and the SS wants to cash in those treasuries. Well our Democrat controlled congress and Obama is loath to actually pay them back and seeks to restore that funding stream to the positive so the general fund can continue raiding the excess. The point coberly is trying to make is that SS is actuarilly sound by itself, its the general fund that’s a huge and growing mess. And Congress is now looking (incorrectly IMHO) at the SS income stream as just another revenue stream like your income taxes. That’s the entire point in a nutshell.
But go read Bruce’s primer at the top. The details are important.
Islam will change
Blackberries, I don’t have any, but have relatives on a farm west of here that have them plus Parker county Peaches. Yum….
Anyway today will be another busy day!
Troy
and why not count interest. when you get interest from the bank on money you depositied, do you not count it?
jeff65
go for it.
CoRev
if you want to question what you are calling ‘entitlements’ okay by me. i might even agree with you about some. But you have to understand that when the bad guys talk “entitltlements” they mean they want to cut social security. in fact they don’t give a damn about the deficit. they are just using it as an excuse to go after social securty.
medicare is the big one in your list. the obvious fix for medicare is to bring costs down. that can be done. the next obvious fix for medicare is to explain to the peoplle it’s their own medical insurance, and if costs are going up, well they need to plan to pay more or go without. if they decide to go without, fine by me… as long as they know what they are doing. which they don’t.
btw. thanks for the list.
Bruce,
Well other than donning a t-shirt with the slogan “I am with Stupid” with an arrow pointing straight up perhaps not.
Nice start to a post. Its fine if you think this way and have a reason. However, you failed to provide a basis for your insult. A more credible way on your part would have been to have said you’re stupid for reasons a, b, and c. You failed to do this wo what we has left is troll that lacks logic and leads with insults.
My argument, though not normally expressed quite so directly, is that Clinton demonstrated that the U.S. had the will to tax capital and cut spending in a way that justified lending us money at low rates.
Interest rates started coming down in the 1980s because of the actions taken by Paul Volker that were supported by president Reagan. Interest rates were lower in the 90s under Clinton but then lower again in the 00s under Bush. So Clinton gets no special credit for bringing down interest rates.
No you didn’t say anything ‘wrong’. Just showed that your knowledge base of the numbers as reported the last dozen years left you tragically underequipped to play Social Security Ball with the Big Leaguers.
I didn’t know there was a major league for t-ballers.
Just to point out what Fox is saying I saw last night Fox engage in saying your taxes even if you make less that 250k are going up Obama is a liar!!! It was interesting that the left and right stopped the congressional deficit commission (all be it for opposite reasons). When the report comes out with some of each column on the list recommened it will make the next congress a real donneybrook, likley nothing much will happen until 2013 after the presidential election makes the decision. Given that the republican campaign begins about Jan 1 2011, bug them about the issue.
Buffpilot,
The website has not settled anything on social security so I would appreciate it if you would not act like what Bruce and Coberly are authorities on the issue. The way I read them is that they present facts and then imply conclusions that don’t follow from the facts.
Here is a fact. Both social security funding and general non social security funding are functions of a single federal government and funded by a single congressional body (Conress and the Senate) that has authority over both. My conclusion from this fact is that if you want to address government spending and deficits you should look at what you are spending money on. We are spending a lot of money on social security, so its on the table. Now for preference, I would like to raise the retirement age rather than increase taxes or lower benefits.
CoRev,
Your list supports my initial contention that the use of the term entitlement as applied to Social Security is very misleading. With little exception the programs on the list are all generla fund transfers. Medicare has a dedicated tax, but must be supplemented by the general budget. Social Security does not fit that list. The only expense that is to be paid from the general budget to the SS program is interest on the Trust Fund Treasuries, and for good reason. Those Special T-Bills represent the funds borrowed by the Treasury to support the general budget. In that manner various adminnistrations were able to misrepresent the actual deficits by making believe that there is a “unified” budget, which is specifically prohibited by law. Pay back’s a bitch.
Lessee, buffy makes predictions, buffy keeps score, buffy declares victory for buffy. We are all very impressed.
Perhaps I did not make myself clear. There are lines of work in which prediction is what you are paid for. Actuaries. Economists. Gamblers. Private equity. Then there are lines of work in which predictions are a silly, self-stroking distraction. Pundits. Shills. Politicians. So, let me ask, what consequence will your predictions have, other than to impose the annoyance of “buffy makes predictions, buffy keeps score, buffy declares victory for buffy” at intervals, depending on how confirmation bias is working for you at any given time?
Little anecdote. Once, a wet-behind-the-ears co-worker asked me what I thought of some market or other. My answer was that I didn’t have a view. He said “you have to have a view.” Now, his rage when I maintained my refusal, and his eventual departure from the firm are not important to the point of this anecdote. The fact that he had a view of the market was, for him, a mark of his studly-ness. We were meant to grapple over predictions, because that’s what manly men do. Well, buffy, you just keep up that manly predicting thing you do. Fits right in with your manner of expression, your view that killing innocent brown people is morally superior to risking the death of members of our armed forces who volunteered to put themselves in harms way. All so very manly. Pardon me while I don’t play along.
CoRev,
Straw men won’t do. At 36%, self-employed workers make up a whopping big part of the tax base. Thanks for digging up a factoid that supports my argument.
I realize that sneering at the NYT (or any other source which doesn’t agree with your view) is part of the whole lack of accountability thing you pursue in your comments. Sneering doesn’t change the facts.
So, CoRev, having accused Jack of “misinformation” calls me a bully. Why? Because I have a long record or testing CoRev’s statements against fact and logic – and wow, do the results come in lop-sided.
As to trying to engage me in the comparison of Greece to the US, so sorry. My choice was to point out that you were full of horse-plop in implying that others were engaged in misinformation. That goal accomplished – again – I really don’t need to respond to your every instruction.
I’ll be back to bully you again soon. Ta ta.
Bruce,
“Are you making the claim “screw the widows and orphans, what counts is my ROI while I live.”
No….not at all—-Chill Out Dude!
I’m not an enemy of S.S.!
It was more of a question, wondering if the money set aside from the payroll tax in the OAS and DI Funds also loaned money to the budget. If you read more into it, I’m sorry, but was simply asking for clarification.
Just to recap:
CoRev – “There are sundry other taxes, Capital Gains, corporate ,etc. How many of them are not collected/paid?
“Regardless, it is highly unlikely that the VAT and other taxes are not collected.”
Kharris – “The Federation of Greek Industry estimated last year that tax evasion costs the Greek government $30 bln/year. In 2009, the Greek government deficit was Eur 32.3 bln, which at today’s exchange rate would be $42.3 bln. So tax cheating is estimated to amount to as much as 70% of last year’s deficit.”
CoRev – Kharris is a bully.
For those who missed the entire Bush administration, here’s how this works. A guy with a policy position not supported by the facts – Dick Cheney or CoRev, for instance – sneers at contrary views. When the holder of contrary views responds in a way that damages the weak but dearly held position, the guy (Cheney or CoRev) tries to push them outside the discussion by applying labels like “traitor” or “bully”.
So, CoRev makes an accusation of misinformation, offering no evidence. I respond with evidence that CoRev is in fact wrong. CoRev says I’m a big bully who doesn’t want “open” discussion. All done, now.
Jeff,
That comment is only true if future growth is guaranteed. Where do you see growth coming from?
40% of our GDP is now in Financial. Remember Clinton’s “We are a service economy now?” We don’t have the manufacturing power anymore, we gave it all anyway. We are not trading in a manner that is in our best interest. Where is the growth going to come from to make these deficits not matter?
It is going to come from a cut in the standard of living by the people through interest rates, inflation, and higher taxes.
You can tax the rich if you want, but unless it is a long term strategy, there will be other economic consequences from that decision. In an atmosphere where employment and growth are not expected to come back like they used to, the smart kids better make their decisions wisely.
Let’s cut to the chase. Regardless of the lame excuses and misleading manipulation of the actuarial assumptions it boils down to one thing. The general budget has been supplemented by the Trust Fund receipts for nearly thirty years now. That is about the length of time since FICA was increased in order to additionally supplement the Social Security Trust Fund. Various administrations have abused the general budget and with the aide of the lie of a unified budget were able to trash that budget far more so than was admitted at the time. It was a useful ruse to hide the excesses of war, waste and mismanagement along with an irresponsible income tax structure. A very thin slice of the population has been benefiting to an inordinate extent by those manipulations. They want it to stay that way. One side of the Social Security issue is based on lies, misrepresentations and distortions. That’s the way a con works. The Social Security system is not the problem. The general budget is the problem, if there is any real problem. Cut war and waste spending. Tax all income. Stop giving favorable tax treatment to those who least need the favor. Stop the rest of the bull shit.
Jack,
Why is it that you put foreign holders of T Bills before the Trust Fund, a major T Bill holder? Why is the debt to the Chinese any more important than the debt to our own working citizens.
If we defaulted on our bonds held by other countries they would not lend anymore which would be a disaster right now for us. If we defaulted on one of our foreign obligations this would put in doubt on all of our debt which would drive interest rates sky high. Its often said that the social security trust fund has the full faith and credit of the United States behind it. This is to suggest that we have the same incentives to make good on this obligation that we do on our foreign obligation. However, this is just not true. We could cancel all or part of this debt freeing money to pay off other debt. No paying the trust fund would not drive interest rates shy high. Therefore, to say that the social security trust fund is just like another bond is not true since the penalty for defaulting on it is not at all like defaulting on our foreign obligations.
Its a false sense of security to think that the social security trust fund is as stable and untouchable as other government notes and bonds.
Cardiff
think of it this way.
the guy who delivers your groceries asks you if you want to buy a lottery ticket. well, okay, you say, here’s ten bucks for the lottery ticket.
next month you get a bill for the groceries. but, you say, i paid for the groceries. no, says the store,
we put your payment into the lottery. your number did not come up. you still owe for the groceries.
you protest. you say, no, i paid for the groceries, and i bought a lottery ticket separate. the store says, no, “both the groceries and the lottery ticket are functions of a single store and funded by a single board of directors that has authority over both. we put your money on the lottery. now you have to pay us for the groceries.”
the reason you can’t get this logic is because there is a shunt in your brain.
jimi
why growth is going to come from cutting taxes, of course. isn’t that where it always comes from?
now, to be honest i don’t know if being a financial services economy changes the nature of deficit spending. but blaming the deficit on social security is still a lie. and cutting social security to pay for it is a criminal act…. that will cut the standard of living of the people directly.
Jack, here I can agree with you. Entitlements are not just OASDI, Medicare and Medicaid. It’s many. many more programs. Indeed, since OASDI has an independent funding stream, and is nearly completely funded annually, it is the least of our deficit problems.
It does effect the return on the bond markets as the Special OASDI T-Bills are converted from Federal to private ownership.
Jack, on this one you are just wrong. The original SS Bill called for excess funds to be xferred to the general fund. That is true for nearly every Trust Fund based program.
What confuses most is the on/off-budget issue. As I remember the history it has been on and off several times. That term is mostly an accounting term to define which column the funds are tracked, and how it is applied in the excess/deficit calculations needed to determine whether the budget is balanced.
This is from memory. Bruce has a better handle on the nuances.
As for your comment: “ The Social Security system is not the problem. The general budget is the problem, if there is any real problem. ” The real problem is that there is a diminishing amount of discretionary spending in the annual budgets. Y’ano that means our Congress Critters and their administration bretheren have a harder time justifying sharing that portion of the budget with their family, friends, and supporters.
Cardiff: “However, this is just not true. We could cancel all or part of this debt freeing money to pay off other debt. No paying the trust fund would not drive interest rates shy high. Therefore, to say that the social security trust fund is just like another bond is not true since the penalty for defaulting on it is not at all like defaulting on our foreign obligations.”
That is a totally fallacious argument. In addition to which it is only your assinine opinion of how our government should deal with its concrete obligations to its own citizens. I’d suggest that you begin to double the amount you pay in taxes if you are so inbtent to give away money. Leave the money owed to the rest of the workiing class intact. Full faith and credit means equal obligation to that of any other obligation that the Treasury faces. Here’s a plan. Tax all income, capital gains, dividends, inheritance, etc, raise the marginal rates on those earning huge annuals. Let all that extra income tax go to paying off foreign debt. Let current income tax receipts cover entitlements. There are lots of alternative ways to meet ones obligations. Why expect only working class folks to bear the brunt of those obligations? Especially given that the wealthiest cictizens have enjoyed the greatest benefit from past tax changes and, for that matter, from the war expenditures.
Cardiff, you are showing your ignorance. Both Bruce and Dale are acknowledged experts re: OASDI here and on other fora.
Because you are oversimplifing the budget process you are essentially correct, but it is like saying birth starts with a sex act. True, but have you selected the correct act?
Cardiff
are you saying we can stiff the widows and orphans because there isn’t a damn thing they can do about it.
that, i am afraid, is the morality i am afraid of.
I brought this forward because Cardiff appears to have missed it. He was arguing that the government could do whatever it wanted with Social Security because the government is all one entity.
Cardiff
think of it this way.
you have your groceries delivered and pay the delivery guy for them. then the guy who delivers your groceries asks you if you want to buy a lottery ticket. well, okay, you say, here’s ten bucks for the lottery ticket.
next month you get a bill for the groceries. but, you say, i paid for the groceries. no, says the store,
we put your payment into the lottery. your number did not come up. you still owe for the groceries.
you protest. you say, no, i paid for the groceries, and i bought a lottery ticket separate. the store says, no, “both the groceries and the lottery ticket are functions of a single store and funded by a single board of directors that has authority over both. we put your money on the lottery. now you have to pay us for the groceries.”
let me beg your indulgence
Cardiff is still unclear on the concept.
It is as if Mr Cardiff and Mr Coberly went to the bank on the same day. Mr Coberly deposits ten thousand dollars. and Mr Cardiff borrows ten thousand dollars from the bank.
A year or so later the bank calls up Mr Cardiff and wants to know when he is going to start making payments on the money he borrowed. Mr Cardiff says, well, you know, I’m having trouble finding a source for that money just now. Why don’t you take it from Mr Coberly’s account? After all it’s the same bank.
And the bank president, a Mr Bernanke, says, that sounds sound to me. After all, that’s where the money is.
Of course the irony is
that Mr Cardiff’s friends have been saying all along that that savings passbook the bank gave Mr Coberly is “just a phony iou.” There is no real money in the bank. It’s all been spent.
Which should tell you that there game is not just to steal the money, but to break the bank. See, Mr Bernanke and Mr Cardiff and their friends all work for a New Concept in Banking, called the Payday Loans and Company Store. A franchise of Peterson and Co.
CoRev,
Cardiff, you are showing your ignorance. Both Bruce and Dale are acknowledged experts re: OASDI here and on other fora.
Does Krugman quote them?
Coberly,
Your analogy is defective. In the movie its a wonderful life the citizens of Bedford Falls put their money into the Bailey savings and loan and the bank invested the money in homes, businesses, and other assets to members of the community. The assets had intrinsic value and generated income or have a resale value. What they do with the trust fund is like if George Bailey to the money and spent in on his one consumption for trips to the caribbean, dinners and gifts for his mistresses, new cars, and other luxury items.
Jack,
The point is that if not paying the social security trust fund back has no international consequence so the term full faith and credit of the United States is meaningless as applied to the fund and offers no guarantee that the fund will ever be repaid. If the legislative body that borrowed the money is the same body that wrote the social security laws then it really seems that it’s up to them to decide on the future of the entitlement programs they created and that our constitution says they can either cancel or continue as they see fit. In this case the lender is also the lendee.
The current status is that there is a debt commission and they have put entitlements on the table. The can do it and they are doing it, which is consistent with my take on this issue.
Coberly,
Its not all or nothing. I already said i’m willing to wait for my social security and favor raising the retirement age.
Oh, and I take it that you agree with me that with respect to our international standing, defaulting on the social security trust fund, and the sense that we don’t meet today’s obligation would not make our country less credit worthy in the bond market.
Cardiff
i don’t get your point. The Bank in my analogy is the United States. It uses the money for — supposedly — necessary investments in infrastructure, defense, even tax cuts that will allow “the rich” to “grow the economy.”
what we are talking about is that one of the rich a Mr Cardiff in my analogy has found it’s not convenient for him to repay the money he borrowed, so he suggests the bank get its money back by taking it from Mr Coberly’s savings account.
You seem to have a mental block about this. your “George Bailey” taking the money for his own use is pretty similar to my “Mr Bernanke” conspiring with “Mr Cardiff” taking the money for their use.
Cardiff
your take is that of a swindler. The Congress took the money on the promise that it would be used for the retirement of the people it took the money from. Now it wants to do something else with it. The only justification you give is that they can get away with it. It’s still a swindle. But it’s worse than that. It’s just a lie being used as an excuse to kill Social Security.
If you want a government of crooks, you are going about it the right way.
I think that as a matter of law, Cardiff is wrong.
The money collected by the payroll tax and lent to the government is legally required to be paid back to the Social Security fund as the fund needs the money. What congress and the president can do is change the payout schedule so the fund does not “need” the money. This would be a criminal act itself, unless of course “the national good” required it. So they are lying about the national good.
But Cardiff’s problem goes deeper than that, and I would suggest you don’t ever lend money to Mr Cardiff because he will always be able to think of a good excuse not to pay you back. In fact, I suggest that if you think you might ever meet Mr Cardiff, you take along a sprig of garlic and a crucifix.
He appears to be one of those who wants to turn America into the kind of country where the government takes money from people and spends it on whores for the king and his “nobles.”
You see, they claim to be against “big government” but what they are really against is any kind of government that protects the people from the rich. They are all for the kind of government that taxes the people for their own personal benefit and throws their enemies into the Bastille.
It is revolting and nauseating that America has come to this: Where Mr Cardiff’s “take” would be plausible to the people, and apparently the plan of the President and his “experts.”
Cardiff:
I am confident Krugman reads Webb. On SS, he is the man. Rosser and Baker acknowledge Webb. Your point is a strawman to the legitimacy of their points.
You are arguing spending when you should be arguing loss of revenue. Why the loss of revenue:
– Productivity Gains skewed to Capital rather than Labor since the early eighties. Capital gains are taxed at a lower rate.
– Median Household Income which has been stagnant or decreased since 2001.
– The 2001/2003 tax breaks which were skewed towards the upper 3% of the taxpayers doing something even Hoover didn’t do.
– The Irag and Afghanistan war which is funded out of the GF with no tax provisions to fund it.
– The recession since 2001.
– How many people Unemployed, Not In Labor Force, or Underemployed? 20 Million?
Fix the last and the problem of spending goes away. Attack spending on enntitlements and you create a bigger problem.
Hmmmmm……”Whores for the King and his Nobles.” That just gave me a good idea!
CoRev
“Linda, can you actually lift your head, look at Greece, and not relate it to our own path?
My education and experience has said the same thing re: entitlements for a generation now. Greece just confirms what I have been taught and seen. “
You’d better stick to posts on global warming because the only way we are similar to Greece is we are a country and we have entitlement programs. Which makes us just like the rest of the developed world.
Bailout in five years?? They wont last til 2011 on what has initially been talked about.
Coberly,
If you want a government of crooks, you are going about it the right way.
It’s too late, we passed that point November 2008. :)All joking aside…..I actually agree with you. We should try to save Social Security, and make it work better for future generations. As I Have said before, I am not an enemy of S.S., and I would like to figure a path to save it. I believe it is wealth redistution, but I am willing to accept that necessary evil, because in theory it does have a well intentioned goal.I think you have misinturpreted me in the past when I said that I didn’t believe that it would be around for me. It’s not that I don’t want it to work, but that circumstances due to human nature, the American Culture, and Politicians would have destroyed it well before I would ever have seen anything.Do I believe that it is going anyway for sure?…No, but it’s not looking good. A leader with vision could save it and make it better, but don’t see that coming down the pike anytime soon.
well Jimi
I appreciate that. The only way I can see to save it would be to go to the Tea Party and tell them that “the government” is planning to take away their Social Security. I don’t know if some kind of Constitutional amendment would make it harder for the Congress and the President to steal it or cripple it, but I’d be willing to try.
I take your Nov 2008 to be a refrence to the election of Mr Obama. I am afraid you may be right.
As for wealth distribution… not really. It really is insurance. It has to be mandatory because every fool in the country just knows he is going to be rich and won’t need it. Then the rest of us end up paying for his welfare when he doesn’t make it. With Social Security he pays for at least most of his own needs when he gets old and no one will give him a job.
I know you don’t like the government nanny… but look around you. How long do you think we’d last without it. Even the strong would be dragged down by the foolish. This has been known since the first council of grandfathers (and grandmothers).
Jeff
Saw it, loved it, cant get enough of it. Bill Mitchells web site is the best there is (just a nose hair ahead of AB) on economic issues. So much clarity to the paradigm. Focuses on “real” economic needs and issue and not “monetary”
Side note. Did you see at Warren Moslers site a reprint of post he made in 2001 (I think) regarding the European Monetary Union? It was quite prescient in describing the shortcomings and giving a pretty good blow by blow description of how and why it would fail.
Cardiff: “The point is that if not paying the social security trust fund back has no international consequence so the term full faith and credit of the United States is meaningless as applied to the fund and offers no guarantee that the fund will ever be repaid.”
How do you not see the self contradiction of your own statement? If “full faith and credit of the US” is meaningless in one context it is then meaningless in all contexts. There is no picking and choosing when full faith is involved. That is the full part of the statement. The money you may have in your pocket or in some account is no more secure if your contnetion is valid. It the Congress can reneg on one contract by legislative fiat, it can do so with any contract. If one form of a T Bill has no guarantee of repayment then no other form has any better guarantee. How can that not be clear to you. Any such legislative action to cut or change benefits in any way has no bearing on the Trust Fund assets. The debt to the Fund remains. The only effect is to leave ever greater amounts of the FICA contributions that flow into the Trust Fund available for misuse through their replacement for even more T Bills while the actual money flow is diverted to the general budget and away from the rightful beneficiaries.
The Deficit Commission may very well be intent on subverting the intention of the Social Security legislation that currently exists. Its participants seem predisposed to that conclusion and are only examining ways by which such a subversion can be made to look valid and proper to the public. If we as voters allow that to happen then e are the fools. Contact your three key representatives; two Senators and a Representative in the House. Cajole your friends and neighbors to do the same. Only significant numbers of voters speaking out loud about their intentions at election time in regards to those in Congress who allow the subversion of Social Security to occur can have a positive effect in shuting down such an attempt. The truth of the mattter is clear. Our Congress only has to have the fear of rejection to recognize that truth.
Cardiff, If ou believe otherwise you are a fool or a dissembler.
coberly,
Obama looks like we are going to see a ‘Nixon goes to China’ moment. No way Bush would have been able to get this through even at the height of his popularity. Only the Dems can gut FDR’s New Deal and they sure look like they plan to.
I always thought Nixon’s opening to China was one of his great legacies, for all his monumental faults. Will we look back at Obama’s legacy and see his gutting SS with the same positive thoughts?
I doubt it either…
Islam will change
Cardiff
raising the retirement age would be a death sentence for a lot of people, generally the poorest, those Social Security was supposed to help.
I suspect you are right that the United States could steal money from its own people without hurting its standing on the credit markets.
The “class warfare meme” should be expanded. And shouted from the rooftops.
zak,
I don’t disagree, but in our corporate media the term class warfare is only applicable when the very wealthy class is asked to begin to carry their fair share of the load. You see the wealthiest Americans seem to believe that their great wealth is some how all their own doing with no assistance from the structure of our economy, a government determined phenomenon, and the laws of our nation, another result of government action. They make believe that that govenment is the enemy and it’s class warfare to ask them to suppport the government that works so hard to protect their wealth. Given that the elected representatives that make up that government seems to hold the same perspective, don’t look for any change any time soon. Our wealthiest citizens own more than just the assets of our economy. They own those elected representatives with very little exception. Party identification is irrelevant and only for the purpose of paying lip service to electoral choice and democratic representation.
Terry,
Iraq is and has been winding down. No argument from me on that. The idea that we won’t still have between 30-50 thousand US troops in Iraq on election day 2012 is silly. We will still be there. Just like Korea wound down in 1953 and we still have roughly 37,000 there now. See Germany and Japan for two other obvious examples….
We are not leaving becuase it not in our interest to do so…and from 20/20 historical hindsight its in the Iraqi’s people interest for us not to leave…