CBO Releases Long Term Budget Outlook
by Bruce Webb
CBO Director’s Blog summary of Long Term Budget Outlook (Interesting side comment: “Later this week, CBO will release a report on a number of different policy options for changing Social Security”). Elmendorf, not surprising given his history and current job, is fully on the side of the deficit hawk/hysterics.
Report text (1.2MB PDF) Long Term Budget Outlook
These were just released at 9AM Eastern so I haven’t had a crack at them yet. Feel free to beat me to the juicy parts and put them up in comments. I’ll update this post as necessary through the course of the morning.
Interestingly if we examine the above two figures we see that ‘Extended baseline’ which essentially means ‘Current law’ shows the deficit vanishing by 2014 and Debt Held by the Public stabilizing through 2035. Making some of the “If this goes on the sky will fall!” rhetoric around Obama policy a little overstated, just as with Social Security a plan of “Nothing” getting oddly some pretty good projected results.
One thing that is not new, but worth noting as the presidential deficit commission sets its sights on cutting Social Security benefits – CBO estimates that in the 20 years to 2030, Social Security outlays will rise from 5% of GDP top 6% of GDP, while the cost of major medical programs will rise from 5% of GDP to 10%. So we are going to get cuts to Social Security, but not to the pace of rise in health care costs.
The two basic assumption on medicare expenditures both seem unrealistic.
The low cost scenarios assume that Doctors will not get their pay increases– probably unrealistic.
The high cost scenario assumes that federal programs under the new health care bill to trim the growth in medicare expenditures will be ineffective — this also seem unrealistic.
Of course this leaves up with the most realistic scenario probably being somewhere in the middle — maybe the best case alternative to assume if you are trying to make a realistic estimate of the scope of the problem.
kharris
and please look harder at that picture. we are going to have more people retired, and we are going to have higher medical bills. is that the time to CUT the programs that pay for this. that we use to pay for our own future retirement and future medical costs?
since we are likely to have a hundred percent increase in our real wages by that time, we are not talking about taking away our food, or even our car, to pay for our Social Security and Medicare. WE are talking about, perhaps, going without that third Lexus or that second vacation in Vegas in order to be sure we have enough to eat when we are old, and enough money to pay the doctor.
but the oh so intelligent people who tell us what to think have convinced most of us that the only way to respond to expected higher costs is to stop paying for them.
Spencer
so why base our decisions on assumptions that may turn out to not be true. the fact is that we can continue to pay as we go for both Medicare and Social Security, and adjust as circumstances suggest at the time.
the only reason we would have to “do something now” would be if there was a way to put the money in the bank and earn interest so we could live on it in the future. there is in fact no way to do that.
all cutting either program will do is ensure that future elderly are more desperate than they need to be. and ignores the fact that those future elderly can pay for their own retirement, and their own health insurance with no hardship… as long as they “pay as you go” while working.
because the reality is not going to change for succeeding generations. so they will pay for their own futures by “pay as you go” just like their parents did and their children will.
unless Biggs can convince you that his crystal ball shows that the future generations will get a tenth of a percent lower return than his magic guaranteed private investment plan, and you are fool enough to believe him, think it matters, think his guarantee is better than Social Security’s, and forget about the other things that Social Security pays for… like death, disability, and earning less than you expected over a lifetime.
Please allow me to say this again
and maybe again until people understand it.
CBO says, “over the long term, the budget outlook is daunting. The retirement of the baby boom generatioin portends an… increase in the population receiving benefits from Social Security, Medicare, and Medicaid…moreover per capita spending for health care is likely to continue rising than spending per person on other goods and services… without significant changes in fovernment policy, those factors will boost federal outlays sharply relative to GDP….”
there are a number of fallacies implicit in this. the main overriding fallacy is that prediction of higher costs must be met by cutting the programs designed to meet those costs.
somehow we are suppposed to believe that if our grocery budget is going to go up, we need to eat less, because of course it is written in gold that we MUST spend the SAME PERCENT of our income on cars and groceries as we have always spent… even if the size of our income changes, as well as the size of our family. and if our medical costs are expected to increase, we need to cut our insurance. this is insanity.
if we are going to live longer, and if our medical expenses are going to go up, there is no reason we can’t pay a HIGHER PERCENT of our income for these things. and it turns out that because our incomes are going up, that higher percent will still leave us MORE money for other things than we have today.
supporting fallacies to this main invitation to insanity comes from words like “sharply increase.” what does “sharply” mean? it means a rise of 2% in the case of Social Security. but 2% is a 33% increase from 6%… so that is sharply. a tiny rise becomes “sharply” if it is applied to a tiny base.
and the fallacy that Social Security is “government spending.” the fact is that it is NOT government spending. it is YOU spending for your own retirement. and your own health insurance. “the government” doesn’t spend a dime. the rich don’t pay for it. you pay for it. and you get very good value for your money. in the case of Social Security you get your money back. all of it. plus an effective interest at least equal to inflation and the growth in wages. with Medicare you may not get all of your money back. that is good. it means you have stayed healthy. or you could hit the lottery and get your money back a hundred-fold. you won’t think that is “lucky.” but you’ll be glad you paid your insurance if it happens to you.
Spencer CBO is somewhat handcuffed by their long term methodology and their charter to work equally for both sides of the aisle. For example they scored the Ryan Roadmap under particular constraints imposed by Ryan’s staff, in other words they answered the question they were asked, but included enough information that readers knew what had been done and why.
We are probably best served seeing both alternatives as sitting at the outside of the probability interval, for CBO to settle upon some ideal policy path in between would be to step outside the mission they are tasked to do.
CBO says
“All told…the ageing of the population and the rising cost of health care will cause spending on the major mandatory health care programs and Social Security to grow from roughly 10% of GDP today to about 16% of GDP 25 years from now… (by comparison, spending on ALL of the federal government’s programs, exluding interest on debt, has average 18.5% of GDP over the past 40 years.) To put US fiscal policy on a sustainable path, lawmakers would have to substantially reduce the growth in outlays for those programs, or match the growth with [cuts in other programs] or [increse taxes].”
please think your way carefully through what they are saying. an expected increase in costs for our old age should lead us to cut the programs through which we pay for those costs. or of cours the impossible cuts in other programs, or the dreaded tax increases (that is actually paying for what we need).
but look at the way the details are obscured. the “major mandatory health care programs” include programs other than Medicare, but are lumped in here to increase the scare factor about Medicare. All of these programs together, including Social Security, are currently 10% of GDP and are expected to go up to 16% of GDP. a rise of about 6%. to pay for living longer and getting more expensive health care.
we have become so stupid, we think paying a sixth of our income for the last 25% of our lives is an intolerable burden. so we join the hysteria to cut our “taxes” while just hoping something will come along to pay our bills. forgetting that the “tax” is the way we pay our own bill. and the tax is the best way to do it because it “insures” that the bill will get paid whatever happens to inflation or our own fortunes.
now note, if ALL government programs have cost 18%, and 10% was “health care plus social security” the government costs have been about 8% of GDP., and if “health care plus social security” go to 16%, then, if “government costs [less interest] stay the same, “ALL government costs” will rise to 24%… but of that 24%, 16% will go directly back to you to pay for your expenses in retirement. Actually it’s hard to parse out from CBO how much of that 16% goes to retirement, and how much goes to other mandatory health care spending.
I haven’t got to the part where they talk about how much the rise in “interest costs”to pay for the recent wars and stimuluses will be. but i bet it will be somewhere near the increase in the cost of Social Security.
my point here is that if you read this and think about it, the hysteria should vanish. your costs may increase, and you may pay those costs by a “tax.” but the increase is not huge, and you will get your money back when you need it most.
but from the point of view of CBO you should really panic about “huge tax increases” and cut your throat to save yourself the cost of living.
Spencer said: “Of course this leaves up with the most realistic scenario probably being somewhere in the middle — maybe the best case alternative to assume if you are trying to make a realistic estimate of the scope of the problem.” From a conservative’s view point the middle is NOT the most likely scenario. There is actually little historical evidence that this would happen, given democrats keep control of the Congress. SCHIP and the Healthcare Bill jump to the top of the pile of legislation and regulation changes that indicate that the most likely scenario is much closer if not greater than the worst case scenario.
Another thing this budget projection shows is the utter lack of impact in cutting healthcare costs from the Healthcare Bill.
Conservative BS meters have been pegged since the campaign, and if they could be re-calculated, would still be pegged. If you are a Dem/liberal this release should be absolutely embarrassing.
CBO says
“Budget projections grow increasingly uncertain as they extend farther into the future…However, because considerable interest exists in the longer-term outlook, figures showing projections through 2080 are presented…
You see, we prefer to base policy changes on “increasingly uncertain” projections. After all, it would be hard to justify cutting Social Security based upon what we know about today, or can reasonable predict over the near future. I am sure the people in 2080 will be grateful to us for thinking of them.
ah, turns out that interest currently is 1% of GDP, and expected to rise to 4%. not sure how much it would rise if we actually paid for the retirement and medical insurance we are going to need. actually, i am sure. it would not rise at all, unless we keep refinancing the current debt, which was created by unfunded wars.
but i’ll note in passing that 1% of GDP is not a huge burden, and suggests that a tax raise of anything more than 1% of GDP could actually pay down the debt.
It seems to me that CBO goes on to present an even bleaker picture of the future… not because there is anything remotely inevitible about it, but merely to increase the hysteria associated with tthe reasonable projections.
And they continue to fail to recognize that a ‘tax increase” would in the first place just be people paying for what they are going to need… social security and medicare… at a price they can afford, and in the second place be something on the order of ONE PERCENT to start to pay down the existing debt. These are not huge increases, and no more crippling to the economy than they were when Clinton enacted them (since rescinded by Bush).
these changes would require NO significant adjustment. So the “time to adjust” that CBO has in mind, is the time it would take the poor people to adjust to cat food in retirement, and of course medical care only to those who have managed to pay”what the traffic will bear” insurance premiums their whole lives, without missing a payment, or, of course, getting an expensive disease.
Humans should be outraged!!
The health care bill was savaged in the senate, the 40 thieves in the senate intended that it do nothing to rein in their plundering Health-care industry cabal (HIC).
Yes, the senate’s PAC cash spreading HIC will get their share of plunder.
But will it come from the militarist war profiteers’ 8%, the other 7% GDP for discretionalry corporate welfare or the outlays of 5.6% of GDP for SS largely paid for with the $2T surplus?
I am sure conservatives will be outraged that their corporate welfare and war mongering might be cut to pay for keeping Grandpa eating a better brand of cat food.
Conservative BS meters, indeed!
ilsm will not change
ILSM, you forgot the key line, it was all Bush’s fault! How long before even you Obama die hards admit that the Obama administration owns it. You can not even admit that any of it sticks to him.
My over riding impressions of the Healthcare legislation was the sheer ineptitude of its implementation, and the utter lack of political considerations.
CoRev since practically nothing of HCR has been “implemented” as yet (with various High Risk plans just kicking in now with the impeding start of the States FYs) and since polling shows that individual components are popular and that the combined package is creeping over 50% approval as people actually grasp that those components are in there that your objection is flawed on both counts.
As to the ‘Bush owns it’, the data are what they are, the policies that are bearing their deadly fruit today (lax regulation of everything, tax cuts as panacea) were in fact put in place by Bush (with an assist from certain Clinto-Rubinistas in 1999 to be sure). Certainly commenters on this blog were not shy in blaming the 2001 recession on Clinton (just as they credited everything that went right under Clinton to Reagan). Lag effects were your friends back in the day.
Yes Obama deserves some blame. For listening to idiots who insisted on scaling back the stimulus and skewing it towards ineffective tax cuts, that is for listening to people with opinions like CoRev’s.
Since Obama neglected to court martial Mc Chrystal I find him to be as you say. Like Reagan, Clinton, and W Guilty of all wrongs in the US.
Obama let Mc Chrystal retire at 55 with about $150K per year and Tricare. And McC will run 7 miles each AM and not get enough sleep. Maybe his percent service connected disability will be 75.
A lot more than buffpilot and I receive. And I at least am smart (I think buff, too) enough not to say seditious things about senior civilian officials.
That does not change my perspective, nor does it affect my utter contempt for Obama leaving the war profiteers out of deficit reduction (even Reagan cut military waste with Gramm Rudman)
That which seems to impact the conservative BS meter is no long evident in Obama.
Your BS meter is pegged by imperilling the war monger’s profit and corporate welfare troughs.
Nothing Obama seems to be looking to do.
Obama has no issue with the conservatives’ corporate masters pillaging the poor.
My perspective is that conservatives have become the panderers to corporate power and any attempt at lessening that corporate pillaging machine is something that spikes the conservative BS metter.
Obama has not been there lately.
ilsm will not change
There are other solutions to: “over the long term, the budget outlook is daunting.”
They include growing the productive side of the economy, eliminating foolish tax breaks and incentives (like reinstating oil drill royalties, and the ending the craziness of mortgage tax deductions). A few tariffs for energy to pay for the oil wars.
A lot of cuts in the war machine because it is not needed and diverts investment away from productivity.
Cuts in the rest of the discretionary budget or increased users’ fees to pay for discretionary spending.
Generally, since Reagan growth has been enemic making the statement possible: “over the long term, the budget outlook is daunting.”
If Moynihan knew it would turn out like this would he have gone along with the SSTF surpluses which did nothing to make the productivity growth which could render an economy which would pay back the Trust Fund?
I am sure Greenspan expected it to go this way, indeed he orchestrated some of it in 2000.
ilsm will not change
Does it seem to anyone else that the bounce in revenues the CBO projects for the next few years is unrealistic? Even should an economic recovery occur, and the possibility of a double-dip seems very real, we would be hopelessly optimistic to assume growth to be faster than before the crisis. Alternatively, a tax increase sufficient to bump up revenue so quickly could easily stall any recovery… even the alternative fiscal scenario seems a little optimistic to me.
Now just a couple of days ago Cov Rev was taking the position that this long run budget position should not have been taken into consideration when evaluating the Bush tax cuts. As long as the republicans take such positons I completely fail to understand why we should take anything they say seriously.
ilsm
all of that may be true. but the point to take home is that social security is you paying for your own retirement. it has nothing to do with the rest of the budget, however foolish or wise that budget may be.
as for Moynihan… i think he did see what was coming and wanted out of the “surplus.” put the surplus into something beyond congress’ reach. i did not understand what he was saying at the time. still not sure i am understanding HIM. but the fact is that the Trust Fund really doens’t matter all that much. The date it is ‘broke’ doesn’t matter at all. And the “budget deficits” have nothing at all to do with Social Security.
it is a distraction to worry about all these other things when they are trying to get you to forget that Social Security is just you paying for your own basic retirement, and for the health insurance you are likely to need.
A properly targeted tax increase will never stall the economy. And we are far on the low tax side of the Laffer curve peak.
If there was ever a time for the “tax and spend” Democrats to live up to their reputation, this is it.
There is no need to ever have an SS crisis. Just take the ceiling off the wages subject to the payroll tax.
I know Coberly will object, but I was just at the SS office last week, and they call the payroll tax a tax. As it rightly should be. Rightly or wrongly, the trust find is not a separate entitity, and gets raided with impunity.
Cheers!
JzB
The Trust Fund has never been raided, not by Johnson, not by Reagan and not by Bush. The belief that it has is the result of accepting deliberately false framing by the enemies of Social Security. If you accept the principle that Special Treasuries are in fact based on Full Faith and Credit then there never has been and never will be a raid on the Trust Funds.
If
If
Jazz
and here is Coberly’s objection.
SS is a “tax.” But it’s a tax you get your money back with interest. Try that with your income tax.
What a thing is called… even by the people who collect it… is not as important as what it does. And Social Security does NOT fund the government. It pays for your own retirement. Fairly directly. Your benefit is pegged to your contribution. There is an insurance provision whereby if you die or get disabled or don’t make enough money to retire on after a lifetime of working, you will collect a little more than the guy whose luck is better. But that is exactly what insurance is for.
Legally the Trust Fund IS a separate entity. And it doesn’t get raided. It gets lent. That’s what you do with “surplus” money until you need to use it. The bad guys are trying to convince you it has been stolen so you won’t mind when they steal it.
Bruce said: “CoRev since practically nothing of HCR has been “implemented” as yet (with various High Risk plans just kicking in now with the impeding start of the States FYs) and since polling shows that individual components are popular and that the combined package is creeping over 50% approval as people actually grasp that those components are in there that your objection is flawed on both counts. ”
That is not the point. The CBO projections show healthcare going up indefinitely. No HC impact is apparent, except maybe increasing costs.
I’ll take your poll numbers and await Nov. If there is no radical change in Congressional makeup then I’ll eat crow, but I doubt there will many conservatives crow hunting.
ilsm,
At the risk of setting you off again I will first agree with you about disparaging senior officials – not a good idea, and tell you a little story.
Way, way back in 1988 I went to SOS – Squadron Officer School. Basically the first professional military education course for Captains. During that time we were given a lecture by a reserve lawyer from the Pentagon. It was very illuminating.
He basically spent an hour explaining life in the real world vs. what we were told was how it operated. He said there were three groups of officers and the law was very differently applied depending on which group you fell in.
Group 1: All enlisted, and all officers below the rank of full colonel: Regulations and the law applied like iron, and would come down hard on anyone who deviated from the rules. Expect jail time or forced separation for even small offenses.
Group 2: Colonel – Regulations were advisory and could be bent more or less at will as long as nothing broke or someone died. Mistakes, no matter how grievous, would at worst lead to a quick retirement or to being shuffled out of the command tracks. If you were a golden boy, minor infractions that would get a Captain booted would be ignored.
Group 3: Generals – regulations can be modified at whim or ignored as necessary. Only major offenses that become public and embarrass the service could possibly get you in any real trouble. Most offenses would lead to retirement at the current rank.(see McCrystal) Minor stuff (like assault for example) that did not go public would be ignored.
The reserve colonel then went on to describe how three cases of rape were handled. The Group 1 guy – 10 years at Leavenworth, dishonorable discharge, Group 2 guy, transferred across the country and retired in place the next week. Group 3 guy – Announced retirement and left the service 6 months later. But didn’t get a retirement party…
In the last two cases the victim was very pointedly told to keep her mouth shut and not talk to the press. And they did.
Note: (I’ve personally seen this play out myself with people in all three groups over adultery (illegal in the military) and in the bottom two groups over mis-allocation of funds.)
The reserve colonel finished his speech and Q&A (which was heated from us captains and he ran long) by mentioning that the process works the same in the government, large corporations, and life in general. Very cynical but he said it all in a very matter-of-fact tone of voice. Like a math teacher explaining 2 + 2 = 4. It was eye opening for us 20 somethings.
I have found very little in the last 22 years that lays doubt on anything he said.
He was never invited back to speak ever again and his presentation to the SSS guys that afternoon was canceled.
Islam will change
Bruce,
“For listening to idiots who insisted on scaling back the stimulus and skewing it towards ineffective tax cuts, that is for listening to people with opinions like CoRev’s.”
Only 40% has been spent, and only 10% was designed for infrastructure spending, and infrastructure is exactly how it was sold to the American people. We are 18 months in and we see no targeted recovery spending……and they haven’t even spent all of it?
Your calling Corev credibility questionable?……It’s time for you and Obama to stand next to each other in front of the mirror and start pointing fingers.
FOOD FIGHT!
Bruce also said: “As to the ‘Bush owns it’, the data are what they are, the policies that are bearing their deadly fruit today (lax regulation of everything, tax cuts as panacea) were in fact put in place by Bush (with an assist from certain Clinto-Rubinistas in 1999 to be sure).”
Take alook at thre CBO charts you have in the article. They show exactly what I have been saying. Bush was on a path to balance the budget by controlling spending. Note revenue flattening as a percentage during the mid part of his term. Two miore years before the bubble burst, and his budgets would have been at or very, very near balance. Don’t make me break out that tired old chart again.
Morover, if you really believe that Obama’s budget is on a track to being balanced, then you need another shot of fairy dust because that’s what it takes for that belief.
How many times are we going to hear that the stimulus was too small and we need more, another, bigger, better, more?
Bruce,
JzB makes my point. You have a long row to hoe when even people on your side don’t get it and think the payroll tax is just another revenue stream for general fund…
Islam will change
Alexander, Bush tax cuts sunsetting.
JzB, said: “There is no need to ever have an SS crisis. Just take the ceiling off the wages subject to the payroll tax.” Who says there is a SS crisis. An entitlement crisis, yes. SS is just one of the entitlement programs, but one that is reasonably well funded, unlike the other two biggies..
CoRev,
NO ONE believes, including Obama, that he will have a balanced budget even if he makes two terms. His lowest deficit year, by Obama’s numbers, will be higher than Bush’s highest except for 2008.
There is not enough fairy dust in the world to get there. But luckily we have the reserve currency….
Islam will change
Coberly,
“But it’s a tax you get your money back with interest.”
There is only a possiblity for you to get your money back with interest. How long would you have to live till you got your money back with interest, especially if you are in the top end contributors?….longer than you and I are going to live, and longer than 99.9% of the poplulation is going to live.
Your better off sticking to your “It’s insurance”…talking point.
“It pays for your own retirement”
It mostly certainly does not. The money I pay goes to fund the people who are retired now. If it truley funded my own retirement, then I would have access to all the money and be able to spend as much of it I wanted when I wanted. But since the ROI for me is nothing compared to someone who only payed for 15 years, it is “insurance” in fantasy land, and wealth redistribution in reality.
“guy whose luck is better.”
Preparing for your own retirement without the aid of S.S. is not luck. The idea that only some are lucky, and some are victims of the system is a lie. Choices have consequences, the people who chose not to worry about it, is their problem not mine, and that is exactly why I support the second amendment.
It is important to have a social saftey, and that is why I am not an enemy of S.S., and also believe we need to keep it alive, but all the bleeding heart B.S. about “Look How great the Social Security System is, and society would collapse without it,” is laughable and I believe to be a lie. This is the United States of America and we could do much better, but since we have to legislate to the lowest common denominator, and try to make everybody believe they are a victim results in us being stuck with it….not something to be proud of by any means Coberly!
And Buff, don’t you dare bring up your old chart. Of course you now have a new set. 🙂
The original $1.2 tn stimulus was much more weighted to infrastructure. Every compromise away from that figure and that balance was done to accommodate Blue Dogs, Republicans and the Conservadems and Republican ‘Moderates’, roughly in that order. Your side demanded the bull be castrated and then complained that you ended up with a steer.
Yo
Bruce, below I provide some info from the Congressman Ryan’s site. Note the Elmendorf quote re: health care and Ryan’s comment. ““Rising health costs will put tremendous pressure on the federal budget during the next few decades and beyond.
In CBO’s judgment, the health legislation enacted earlier this year does not substantially diminish that pressure.” “
Also look at Ryan’s analysis of Elmendor’s testimony re: unsustainable. “- The long-term budget outlook continues to worsen with each passing year Congress fails to act. Debt held by the public will eclipse the size of the entire US economy by the year 2023.
– Under CBO’s economic models, Americans’ living standards (real GDP per capita) begin to deteriorate in 2015, and the model breaks down completely in 2027 due to the crushing levels of debt. CBO cannot compute how an economy can function with such high levels of government borrowing to finance deficits, crowding out ever-increasing sectors of the private economy. “Unsustainable” is an understatement.
From here: http://www.wispolitics.com/index.iml?Article=201665
“Two more years before the bubble burst”
CoRev you could say the same thing about Enron or Madoff. Only if you absolve Bush of all responsibility for a culture that had SEC lawyers spending all their time watching porn and MMS regulators screwing and snorting come with oil company representatives does that make sense at all. Lax regulation and excessive worship of markets led Bush/Cheney to lead us to an economic catastrophe, arguing that if the scams hadn’t come unglued for two more years that the perps would have got away free is not compelling.
If my grandma had wheels she ould have been a bus.
CoRev
the health care plan is not Social Security. I tend to agree with you that it is a bad plan and was politically bungled.
but with people like Boehner lying through their teeth, I am beginning to think obama looks good.
Buff
i can confirm that happens in civilian life also.
Jimi
the numbers are easy enough to read if you can read numbers. the only way you can NOT get your money back is to die without dependents. this works because pay as you go “with wage indexing” automatically provides enough “interest” to equal inflation plus the general rise in wages. the tax rates and benefit rates are calculated so the system pays for itself… that means you get your money back, with an increase paid for by the rise in the economy.
jimi, there is no mystery to this. you need to do the arithmetic. or at least read the Trustees Report rather more carefully than they want you to.
having “your own money” to play with would almost guarantee you would die poor. that guy with only fifteen years in will get a lot lower pension than you will, and if his “roi” is higher, it’s not so much higher that it’s a worthwhile game for anyone to play. consider… if you put in a thousand dollars and take out 2 thousand dollars, then your roi is about 3% over 30 years (doing this off the top of my head. you can check, but if you do it right you’ll see that i’m not far off. but for purposes of this example it doesnt matter, because) say the guy who only paid in for 15 years puts in a hundred dollars and takes out 300 dollars. His ROI is higher than yours, but his take home is a lot lower. Percents don’tmean everything. in fact they are usually stumbling blocks for people who can’t think too good.
The people who lost their retirements with the last stockmarket crash would probably disagree with you about the role of luck. Haven’t heard many of them resorting to second amendment solutions.
you won’t find me advocating that people feel sorry for themselves. but yes, if you are going to run a country, or a farm, or an army, you’d damn well better plan for the lowest common denominator.
as a matter of fact, while i have lost friends here by yelling at those liberals who do preach a kind of victim mentality, the victim mentality that really makes me sick is the “poor rich. taxed so hard they cannot stand. let my people go.”
Co Rev
yes. and in case i forgot to tell Jazzbo… taking the ceiling off the wages subject to the tax is neither necessary nor wise. you end up turning social security into welfare by taxing those who would have no reasonable expectation of getting their money back, or justifying it as a reasonable cost of insurance.
and we know what happens to welfare.
Bruce, I know it’s annoying to have some different interpretations of the reality than what you are used to getting from your sources, but there are at least two sides to every issue.
You can continue the Dem propaganda, but the reality is happening. In an townhall meeting today, Obama said:
Obama: Stimulus law worked; selling job didn’t
How? the best he could muster was it kept us from a depressions. That’s the bill that still has only spent 40% of its total.
Wasn’t it the TARP that kept the financial industry from going under?
As a percentage of GDP? Buff you are on an Econ site, we know the difference between nominal and real.
Given Ryan’s dishonesty about the effects of his proposed tax cuts on revenues I should pay attention to his analysis why?
Particularly since you present it in such incoherent form?
CoRev
is that CBO or ryan saying that real living standards begin to deteriorate in 2015. i certainly don’t see it in the numbers.
coberly,
First rule of war: know the enemy. That includes intentions, strategy, operations and tactics.
If you only worry tactics, you lose.
The enemy, I have been in their clubs, conflates SS as responsible for entitlements, and SS surpluses are first source of cash for all entitlements.
That is basic strategy: conflate SS and entitlements as one and the same bog watering the disenfranchised masses of lower classes. If you use the Dutch strategy of reclaiming land.
Attacking SS is a tactic like building a dike.
You must realize it is a war of the few rich pillaging 15% of the economy with impunity built on militarist usurpation and corporate welfare aganist the many enjoying a tiny bit of succor from entitlements.
They can ignore that a few get rich off the war machine paid for by a small apology for broad hurt of the masses because deficits need controlled.
Any of the control make any sense is not an issue.
ilsm will not change
buff,
Been family engaged.
I agree. Oops.
Sea story follows.
Long before you were in SOS, I shared Q room on deployment with a AF reserve JAG.
Interesting fellow.
In the group was a reserve tanker pilot who happened to be a judge in the district my JAG practiced in.
The judge held this poor young JAG captive at the O club with some of the better lawyer jokes which I still use.
Do you suppose thyeelet reserve JAGs talk to the current crop…….?
ilsm will not change
Late 70’s I took a grad course in Economic History, made me a Marxist.
One talk on FICA. The I is insurance.
The Trust Fund the actuarial back up for paying out claims.
The hazard insured: growing old and not being able to work. Evolved to mean 65 for men in the 1960’s and 62 for women, as the defining condition for being too old to work.
The insurable interest: prevent poverty in persons too old to work.
It has worked marvelously.
Now has the trust fund been invested…………………?
So the economy can pay it back?
They destroyed the economy to starve the FICA beast.
ilsm will not change
Jimi,
Here is one place I agree with the original idea of FDR and coberly. We need SS or something that is the equivelent. We (collectively as a country) are rich enough to afford some form of insurance to prevent the elderly and disabled from starving in the streets. We use SS. But if SS was killed today we would re-invent it tommorrow. I agree with you that saving for retirment doesn’t take a lot of brains. But sometime we seem to have even smart people who can’t find that level of brain power. Look at Madoff’s investors. Some of those guys who lost 10 of millions were some of the smartest, most sophisticated investors around. And they got fleeced. Enron, where people against all sound invetment advice, had their entire life savings wrapped up in Enron stock and then lost it all. I have little sympathey for these folks, but we still need a net to keep a floor under even the stupid, the conned, and yes sometimes the unlucky.
We can argue all day about the best way to do so. But the ‘how’ should be seperate from the question of ‘if’ we put the net under people.
I have no interest in living in India…
Islam will chnage
rdan,
How about an open thread?
ilsm
i fogot what i said that you are answering here. but i agree that SS is being attacked by “the few rich.”
what drives me crazy is that “the few rich” are completely ignorant. they are hurting themselves. the fact is that only a few of them are liars. the rest are just stupid beyond belief.
and unfortunately they appear to be joined by certain liberal “policy experts” who are saying “raise the cap” “use the estate tax” or… and this is funny… “invest the trust fund in the stock market.”
if these experts knew the first thing about Social Security they would know what is wrong with theise “ideas.” But being “liberals” all they can think of is some way to get more money to “the poor”, save the poor from having the indignity of paying for it themselves, and of course to roll on their backs and ask the rich man to do it to them again.
ILSM said: “Now has the trust fund been invested…………………?
So the economy can pay it back? “
The enormity of the ignorance of those questions is breath taking. Expecially so for a comment on this blog.
Yes!! They were invested in THE SAFEST investment class in the world. US Treasuries. Investing in anything less adds a level of risk that is unneeded.
Yes!!! When those treasuries are redeemed they will almost surely be sold as transferable treasuries. Those are paid for by ours and other foreign economies.
Yes, you are a Marxist! Oh, and ignorant of the real (Bruces’s – Big Boy) world.
Thanks Buff
but the “how” matters. and the idea of Social Security is that the “poor” (that is, the workers) can put aside their own money for their own retirement in a plan that insures that money against various losses, including mostly inflation and market losses, which the ordinary worker has no control over, and personal losses like death, disability, or just not making/saving enough money over a lifetime to have enough for a basic retirement.
no one is going to fail to make enough money just so he can get a better “return on investment” from Social Security… it just isn’t worth it to make yourself desperately poor on purpose in order to make an extra 2% on your “investment.”
Much as nobody believes me, if you know how Social Security works, you will understand why I get so angry at those who, knowing nothing and never having thought for two seconds, have a “better plan.”
please note, the “poor” do not get a contribution from “the rich.” what they get is an insurance payment derived from the premiums of everyone, most of whom do not end up “poor”. this is no different from the insurance payment you get from your accident insurance or your fire insurance.
but as long as you think of Social Security as an “investment plan” or worse “welfare” you will completely fail to understand that it is INSURANCE. and even smart people sometimes need to collect on their insurance. that’s why they pay for it.
you could manage it as a welfare program and just say that it was “social insurance,” the rich implicitly paying for it as insurance against the possibility that one day they would need it themselves.
but by breaking the direct link between peoples own contribution and their ultimate benefit, you do two things, both bad”
you set up the program for political attack by “the rich’ (that is, the ordinary taxpayer now) who always want to cut “welfare” for the “lazy and foolish,” not to say unproductive and undeserving.
and you create a psychology of living on handouts in the working class. better that the workers should pay their own way. and see that they are paying their own way.
it fills me with anguish that the “liberal defenders of Social Security” don’t even understand that.
and the not so liberal haters of social security don’t even understand why you’d want any kind of a safety net at all, even one the workers pay for themselves.
Bruce,
Who cares? The idea was that Obama would balance the budget. Not a chance, even using his own numbers.
And all his numbers assume the economy starts growing and we don’t have a ‘lost decade’ like Japan….
Islam will change