The SSTF issue was anticicpated even before the great recession. The following quotes are from 2006.
“Since the mid-80s, the annual payroll taxes collected for Social Security have outpaced benefits paid. This is what is known as the Social Security surplus. Importantly, the annual surplus has grown larger every year. But that is about to change. This year the government will collect $78 billion more in Social Security taxes than we will pay in benefits. The surplus is expected to expand to $88 billion in 2006, $99 billion in 2007 and so on, peaking at $116 billion in 2011. At that point, the surplus begins to diminish for the first time, falling to $113 billion in 2012, $106 billion in 2013 and so on down to $85 billion in 2015 and accelerating downward every year thereafter. This is significant because every dollar collected in payroll taxes is spent, including the surplus. So in 2011, when budget writers are looking at the fiscal year 2012 budget, they can count on less Social Security dollars to pad other spending, and the rest of the budget will begin to feel the pinch.”
Corrective action has been fought for years, but how much longer can SS remain so? It is/was/will be an example of how to budget programs, but it can not be separated from the remainder of the not so well managed budget.
Dan, I assume you mean Government employess pensions, and not those for the Personnel Managment agency. They are no more pure deficit than SSTF payments. The current FERS program is a hybrid Defined Contributions, defined benefits (mostly SS), and partially funded from general funds.
The older CSRS is a defined benefits plan that was partially funded by 7% employee contributions and, as originated, to be matched by annual funds. Since it started in surplus the Congress started a tradition of not funding the match, since it was an accounting exercise. Matching funds wolud just be placed in to the CSRSTF and then spent anyway. (Any of this sound familiar?)
Robert J Samuelson’s latest opinion piece explains why SS can not be removed from the overall budget.
“Recall that Social Security, Medicare and Medicaid, the main programs for the elderly, exceed 40 percent of federal spending. Exempting them from cuts – as polls indicate many Americans prefer – would ordain massive deficits, huge tax increases or draconian reductions in other programs. That’s a disastrous formula for the future. … Contrary to the Obama administration’s posture, Social Security does affect our larger budget problem. Annual benefits already exceed payroll taxes. The gap will grow. The trust fund holds Treasury bonds; when these are redeemed, the needed cash can be raised only by borrowing, taxing or cutting other programs. The connection bet’ween Social Security and the rest of the budget is brutally direct. The arcane accounting of the trust fund obscures what’s happening. Just as important, how we treat Social Security will affect how we treat Medicare and, to a lesser extent, Medicaid.” (My emphasis.)
BTW, that 20% SS portion of the overall budget is significantg. In FY60 it made up only ~2.7%, but due to changing demographics and huge payment expansions, it has grown to this amount.
Umm. Rdan–I sure do hope that OPM’s pension system (which is paid for in part by employee contributions and in FERS FICA contributions to the SS part of the total package) just escapes notice. It’s actually not a very big piece of the pie. Right, CoRev? And, my goodness, but a nice OPM annuity check based on a high three at GS-15 pay is sure a nice comfy sum. Even a GS-13 in high cost earnings areas yields a fair amount of retirement pay. I sure do hope nobody notices, don’t you Rev? heh heh NancyO
What Samuelson is arguing is that if the Federal Government is going to pay its debt, it is going to have to find the money. Therefore the Federal Government should not pay its debt.
In other words, if I owe you money, I should just shoot you.
Samuelson says Social Security and Medicare and Medicaid exceed forty percent of the budget.
This is like complaining that your groceries and rent and medical care exceed forty percent of your household budget cutting badly into your sportscar budget.
we are supposed to be alarmed that paying for submarines for the war on terror almost costs less than paying for groceries and housing and medical care for one third of the adult population… people who have paid for their own groceries and housing and medical in their old age by paying their taxes when they were young enough to be still working.
so lets cut their groceries and housing and medical care so we can spend ALL of our money on shiny new submarines. And where will the elederly get their groceries and housing and medical care… well that’s not OUR problem. after all we aren’t old yet.
meanwhile by slipping Social Security… which pays for itself DIRECTLY… in with Medicare and Medicaid, whose costs MAY go up.. Samuelson is lying. Look, look he says… see those three guys. Two of them are robbers. Lets kill all three of them.
brutally direct. you gotta love the language. when you don’t have a case, sound tough. we gotta make sacrifices. lets sacrifice that old lady there. sure it’s brutal, but if we don’t appease the gods we won’t have any money next year.
and CoRev just smiles and nods. he loves it when they talk tough.
First of all who gives a shit about Samuelson’s opinions? Next, that lumps two totally seperate programs into one ball, SS vs health care services for the poor and the older folks. And most striking of all, that 40% is about equal to the low estimates of the military/defense spending portions of the budget. So why not just stop wasting money on war and armaments?
On top of which Social Security is self funded and that includes the TF which is a legal debt owed by the Treasury to the Social Security program. If you don’t think that is true, then why is Treasury writing checks to the TF account?
Co, You are so full of bullshit. No, I don’t want you to sacrifice your pension. You are entitled to it in the very same manner that all of the participants in the Social Security program are entitled to theirs. Why can’t you see that? Why is it so problematic to you that military spending be cut back and high income taxation be restored to prior to 2000 levels? It can’t be any clearer that the two biggest expenses to the government during the past decade have been tax cuts and military adventure. How do you simply gloss over those facts? You can’t be taken seriously because you continue to refer to ass holes for validation of your own narrow point of view.
“…but what ever happens, happens.” That’s not even a serious retort. You must be running out of ideological crap.
“As we and others have noted before, the Comptroller of Maryland has reported that the number of “millionaire” returns tumbled sharply between 2007 and 2008, a 30% drop in filers and 22% drop in declared income. Rather than income taxes from this group rising by $106 million, they fell by $257 million. The recession is certainly a contributor: everyone is earning less. But the Comptroller did an interesting additional analysis: how many people filed as millionaires before the tax increase, then did not file at all the following year? The Wall Street Journal explains the findings:
One-in-eight millionaires who filed a Maryland tax return in 2007 filed no return in 2008. Some died, but the others presumably changed their state of residence. (Hint to the class warfare crowd: A lot of rich people have two homes.)” (My emphasis)
CoRev is absolutely right. It’s about time we recovered the disastrous revenue lost from W’s unfair and unwise tax cuts. Taxes have to go up enough so that the SSTF can remain intact as promised by Ronald Reagan.
Monday, March 7th, 2011 at 1:51 pm Four Observations about the Federal Budget
I spoke this morning to the Economic Policy Conference of the National Association for Business Economics. My talk was structured around four observations about the federal budget: First, if current policies are continued, the gap between spending and revenues will remain very large even after we return to normal economic conditions.
If current laws remain unchanged, as we assume for CBO’s baseline projections, budget deficits would drop markedly over the next few years as a share of output. Still, debt held by the public would reach 77 percent of gross domestic product (GDP) in 2021. However, that projection understates the budget deficits that would occur if many policies currently in place were continued, rather than allowed to expire as scheduled under current law. Suppose instead that: the higher 2011 exemption amount for the alternative minimum tax was extended and, along with the AMT tax brackets, was indexed for inflation; the other major provisions in December’s tax legislation that affected individual income taxes and estate and gift taxes were extended, rather than allowed to expire in January 2013; and that Medicare’s payment rates for physicians’ services were held constant, rather than dropping sharply as scheduled under current law. Then, debt held by the public in 2021 would rise to almost 100 percent of GDP, the highest level since 1946. Second, fiscal policy cannot be put on a sustainable path just by eliminating waste and inefficiency; the policy changes that are needed will significantly affect popular programs or people’s tax payments or both.
One way to see this point is to realize that combined outlays for just a handful of large federal programs will exceed total revenues in the second half of the coming decade, assuming the continuation of the policies mentioned above. Specifically, under that assumption, CBO projects that outlays for Social Security, Medicare, Medicaid, other health programs, defense, and net interest will pass total revenues by 2016 and not look back.
Note also that outlays for that handful of programs will exceed 18 percent of GDP by 2016 and reach 20 percent of GDP by 2021. Some proposals would cap federal spending at 18 percent or 20 percent of GDP. That is possible, but it would require cuts in at least one of these major programs even if everything else the government did was eliminated, not just cut sharply.
Third, policymakers face difficult tradeoffs in deciding how quickly to implement policy changes that would reduce future budget deficits.
On the one hand, reducing deficits only gradually would lead to higher government debt, which would have several negative consequences (for more information, see CBO’s analyses of the risk of a fiscal crisis and of the economic effects of waiting to resolve the fiscal imbalance). In particular, rising debt: Reduces the amount of U.S. savings devoted to productive capital investment. Requires greater federal spending on interest payments. Gives policymakers less flexibility to respond to unexpected problems. Increases the likelihood of a fiscal crisis during which investors would lose confidence in the government’s ability to manage its budget and the government would lose its ability to borrow at affordable rates.
On the other hand, implementing major budgetary changes gradually would have some advantages: Possibly helps older […]
I spoke this morning to the Economic Policy Conference of the National Association for Business Economics. My talk was structured around four observations about the federal budget:
First, if current policies are continued, the gap between spending and revenues will remain very large even after we return to normal economic conditions.
If current laws remain unchanged, as we assume for CBO’s baseline projections, budget deficits would drop markedly over the next few years as a share of output. Still, debt held by the public would reach 77 percent of gross domestic product (GDP) in 2021. However, that projection understates the budget deficits that would occur if many policies currently in place were continued, rather than allowed to expire as scheduled under current law. Suppose instead that: the higher 2011 exemption amount for the alternative minimum tax was extended and, along with the AMT tax brackets, was indexed for inflation; the other major provisions in December’s tax legislation that affected individual income taxes and estate and gift taxes were extended, rather than allowed to expire in January 2013; and that Medicare’s payment rates for physicians’ services were held constant, rather than dropping sharply as scheduled under current law. Then, debt held by the public in 2021 would rise to almost 100 percent of GDP, the highest level since 1946.
Second, fiscal policy cannot be put on a sustainable path just by eliminating waste and inefficiency; the policy changes that are needed will significantly affect popular programs or people’s tax payments or both.
One way to see this point is to realize that combined outlays for just a handful of large federal programs will exceed total revenues in the second half of the coming decade, assuming the continuation of the policies mentioned above. Specifically, under that assumption, CBO projects that outlays for Social Security, Medicare, Medicaid, other health programs, defense, and net interest will pass total revenues by 2016 and not look back.
Note also that outlays for that handful of programs will exceed 18 percent of GDP by 2016 and reach 20 percent of GDP by 2021. Some proposals would cap federal spending at 18 percent or 20 percent of GDP. That is possible, but it would require cuts in at least one of these major programs even if everything else the government did was eliminated, not just cut sharply.
Third, policymakers face difficult tradeoffs in deciding how quickly to implement policy changes that would reduce future budget deficits.
On the one hand, reducing deficits only gradually would lead to higher government debt, which would have several negative consequences (for more information, see CBO’s analyses of the risk of a fiscal crisis and of the economic effects of waiting to resolve the fiscal imbalance). In particular, rising debt:
– Reduces the amount of U.S. savings devoted to productive capital investment. – Requires greater federal spending on interest payments. – Gives policymakers less flexibility to respond to unexpected problems. – Increases the likelihood of a fiscal crisis during which investors would lose confidence in the government’s ability to manage its budget and the government would lose its ability to borrow at affordable rates.
On the other hand, implementing major budgetary changes gradually would have some advantages:
– Possibly helps older generations by deferring the increases in […]
MG, we are coming closer to tone of thos tipping points that moves us into uncontrollable deficit territory. One of those tipping points is clearly identified in your Budget Projections reference.
With this: ” …But as other countries’ experiences show, it is also possible that investors would lose confidence abruptly and interest rates on government debt would rise sharply. The exact point at which such a crisis might occur for the United States is unknown, in part because the ratio of federal debt to GDP is climbing into unfamiliar territory and in part because the risk of a crisis is influenced by a number of other factors, including the government’s long-term budget outlook, its near-term borrowing needs, and the health of the economy. When fiscal crises do occur, they often happen during an economic downturn, which amplifies the difficulties of adjusting fiscal policy in response. If the United States encountered a fiscal crisis, the abrupt rise in interest rates would reflect investors’ fears that the government would renege on the terms of its existing debt or that it would increase the supply of money to finance its activities or pay creditors and thereby boost inflation. To restore investors’ confidence, policymakers would probably need to enact spending cuts or tax increases more drastic and painful than those that would have been necessary had the adjustments come sooner.”
I Have seen some estimates that it could happen as early as 2015.
MG, we are coming closer to one of those tipping points that moves us into uncontrollable deficit territory. One of those tipping points is clearly identified in your Budget Projections reference.
With this: ” …But as other countries’ experiences show, it is also possible that investors would lose confidence abruptly and interest rates on government debt would rise sharply. The exact point at which such a crisis might occur for the United States is unknown, in part because the ratio of federal debt to GDP is climbing into unfamiliar territory and in part because the risk of a crisis is influenced by a number of other factors, including the government’s long-term budget outlook, its near-term borrowing needs, and the health of the economy. When fiscal crises do occur, they often happen during an economic downturn, which amplifies the difficulties of adjusting fiscal policy in response. If the United States encountered a fiscal crisis, the abrupt rise in interest rates would reflect investors’ fears that the government would renege on the terms of its existing debt or that it would increase the supply of money to finance its activities or pay creditors and thereby boost inflation. To restore investors’ confidence, policymakers would probably need to enact spending cuts or tax increases more drastic and painful than those that would have been necessary had the adjustments come sooner.”
I Have seen some estimates that it could happen as early as 2015.
A coup0-l;e of key points: Several commission members pointed to the testimony of University of Maryland economist Carmen Reinhart in late May as particularly compelling. Reinhart and her co-author, Harvard economist Kenneth Rogoff, analyzed more than 200 years of data on 44 countries and found that “growth deteriorates markedly” when total government debt exceeds 90 percent of the economy. Total U.S. government debt exceeded 90 percent of gross domestic product last year.”
And
“”We are there. We’re not approaching it,” Crapo said in an interview. “You used to hear politicians say we can’t keep piling this debt on our children and grandchildren. Well, it’s not our children and grandchildren we’re talking about alone anymore. It’s everyone in America today. We do not have any time left for gridlock.””
Cut military/defense spending in half and the budget will be 30%-50% to the better. Restore the tax rates on high income wealth and restore capital gains and dividend interest to pre-Bush levels and the budget will be another 10%-20% to the better. What’s the big problem? A balanced budget is only a problem if the balancing is only on the backs of the working/middle class and the poor. That’s why there’s so much argument back and forth. The wealthiest Americans don’t like supporting their government that does so much to help them build their wealth and to keep it safe. The wealthiest Americans don’t appreciate the efforts made by their government on behalf of their great wealth. They control an effective publicity aparatus that portrays the world as the opposite of what it actually is. It’s something like Carroll’s trip for Alice through the looking glass. Every thing they enjoy they claim not to and everything that is good for others is not ggod for them. Very curios. Be a patriot. Pay your taxes and oppose war.
Jack, I make a point of not responding on your comments, but this one is like so many others just wrong. You said: “Cut military/defense spending in half and the budget will be 30%-50% to the better. ” To the casual observer, that may make sense, but whne we3 apply real numbers to you solution, it does not. Defense makes up 20% of the over all budget of ~$3.7T (2012). So you are saying that cutting defense 1/2 $370B = $1.1T (~30%) to $1.8T(~50%) of the budget to the better?
Jack, I make a point of not responding on your comments, but this one is like so many others just wrong. You said: “Cut military/defense spending in half and the budget will be 30%-50% to the better. ” To the casual observer, that may make sense, but when we apply real numbers to your solution, it makes no sense. Defense makes up 20% of the over all budget of ~$3.7T (2012). So you are saying that cutting defense 1/2 $370B = $1.1T (~30%) to $1.8T(~50%) of the budget to the better?
CoRev, You think that your precise numbers taken from some chart of table represents military.defense spending whle others argue convincingly that total military/defense spending is approx. $1.2 trillion. That’s most of the deficit. How much of the deficit do yu want to cut? Apply that %age to the $1.2 trillion and your off to a good start. Then get serious in regards to taxes and the deficit is dwindling as we speak. You like splitting hairs when you don’t like the gist of the conversation. I don’t take the precision of our national bean counters at their word and still the deficit will be falling fast as a result of my two simple suggestions.
I’ll ask you again, for the third or fourth time, what have you got against cutting military spending, especially the war spending. And why do you continue to avoid the issue of tax and the wealthy Americans?
This budget BS is going no where fast given that some people can’t acknowledge the two gorillas in the budget room unless they’re social programs spending. We’ve been around the budget deficit block so many times that I’m getting dizzy thinking about the money wasted on war spending and tax holidays for the wealthiest Americans. Worse yet, we all know that Social Security isn’t running a deficit, but SS benefits are being offered up for sacrifice rather than a sane military budget and fair share taxation. This is nuts.
Another example of nuts, or as Orwell had said newspeak, is Buffpilot’s response to a question I posed in response to his comment about Islam and western liberal democracy. The question was a bit out of place on the thread concerning unions and collective bargaining so I’m bringing it over to this Open Thread. Buff’s reply deserves consideration, I think. First the comment from Buff that prompted my question:
“ts a very long story, for years now. Basically its my contention that Islam, as practiced today in the Islamic world, is incompatible with western liberal democracy. Nothing has changed to make me believe that is not true, on the contrary Islam has continued to prove itself even less compatible with western liberal democracy as the years go by. The tag line is the affirmation that Islam will change to become compatible.”
My question to Buff:
Buff BTW, I’ve been curious to ask, which religion in its more extreme/devout/orthodox form is compatible with western liberal democracy? And while we’re addressing devotion to an ideology, which political party in the US is compatible with western liberal democracy? And how is it that you would describe/define western liberal democracy? Is ours that kind of democracy in which extreme religious convictions are said to trump laws governing the freedom to follow one’s preferred sexual orientation or obtain legal medical services pertaining to family planning or pregnancy termination?
All extreme religious practioners step on the toes of those who do not follow their dogmatic ideologies. If we live in a western liberal democracy its about time that those who love their god put that god back in their hearts. I’m a bit tired of seeing their god worn on their shirt sleeves. And Buff’s interesting reply. And keep Orwell’s concept of newspeak in mind. Jack, “Any reply would bery long and derail the thread well away from the topic at hand. Islam is not currently compatible with western liberal democracy as its practiced throughout the muslim world. I expect it to change to become compatible, but I doubt it will happen without considerable bloodshed.
As for the rest, I would say the R party is more compatible than the D party in the US. The D party regularly fights against freedom of speech, religion and against the rights of citizens to provide for their self-defense. The openly espouse open racism and preferences based on sex, race, and gender. The D’s beleve in group or collective over individual rights in general. YMMV. But both parties easy conform to western liberal traditions. (As do both the Catholic and Protetant churches in the US). You can always find the radicals in every organization though…
I know you might find it unbelievable, but, get ready for this…….NOT EVERYONE BELIEVES AS YOU DO.
In fact, only 21% of people describe themselves as “liberal,” while 40% describe themselves as “conservative” and 35% describes themselves as “moderate.” So people who don’t share your views outnumber you 4:1. If scroll down to those who self describe “very liberal,” as I would describe you, you will find only 5%.
Sammy Read the damn comment first before you go off on your idiotic liberal vs conservative rant. For example, “The D party regularly fights against freedom of speech, religion and against the rights of citizens to provide for their self-defense. The openly espouse open racism and preferences based on sex, race, and gender” What has that statement to do with a liberal vs conservative dichotomy? Forget for the moment that Buff presents the idea as a relative assessment regarding Rs and Ds, as he calls them. “…regularly fights against freedom of speech and religion..”? “…openly espouses racism..”? Is that the real world? I suppose that if we look hard enough we will find people who identify themselves as Ds and harbor those sentiments. Buff presents it as “the D party” as an institution.
What have your percentages of liberals, conservatives and moderates got to do with Buff’s depiction of Democratic ideology as being against freedom of speech and religion or self defense for that matter? Is Buff, or maybe you, trying to say that Ds are really not liberal in their social and political beliefs? Or is it that conservatives actually hold more liberal beliefs than do the liberals who usually describe themselves as Ds? Do you not see the self contradictions in that statement and your own? We’re not talking social or political ideologies now. This is simply a matter of logical argument.
Wow buff. Very stark terms and if an accurate description of a portion of the population must be part of what drives ‘saving America’ fervor and draws lines in the sand that are still amorphous to my perceptions. Can you make a clear list, knowing that any one individual may not believe every item?
Sammy,
Perceptions of political viewpoints and moral viewpoints often are more fluid for a population as a whole than can be captured in a poll. I took Jack’s statement as an emotional incredulity…what I find interesting is, for instance, even the ‘slightly left of center’ description of 2003 versus 2011 instructive.
The phrase that catches my eye is tipping point. 2015?
“…policymakers would probably need to enact spending cuts or tax increases more drastic and painful than those that would have been necessary had the adjustments come sooner.” The tipping point concern eliminates SS from the equation, but even so there is no discussion of health care inflation.
Tax increases in the overall debate on the deficit have been politically marginalized, but best I can tell from MG’s links tax increases are one half of the equation in theoretical terms if not in actual dollars. To avoid the issue in the CBO terms means you can’t claim legitamacy for particular solutions from the spending side only. Claim it for yourself but not CBO.
A better descriptor for the 1,2T is national security spending, which needs a look as well.
The CBO reports say we are in uncharted territory, the WAPO offers 90% as a firm percentage in I assume macro terms. It still does not affirm your particular choices of no tax increases (?), which go far to bring that % down significantly, nor does the current legislation coming from the House address much of the overall budget.
The SSTF issue was anticicpated even before the great recession. The following quotes are from 2006.
“Since the mid-80s, the annual payroll taxes collected for Social Security have
outpaced benefits paid. This is what is known as the Social Security surplus. Importantly,
the annual surplus has grown larger every year. But that is about to change.
This year the government will collect $78 billion more in Social Security taxes
than we will pay in benefits. The surplus is expected to expand to $88 billion in 2006,
$99 billion in 2007 and so on, peaking at $116 billion in 2011. At that point, the surplus
begins to diminish for the first time, falling to $113 billion in 2012, $106 billion in 2013
and so on down to $85 billion in 2015 and accelerating downward every year thereafter.
This is significant because every dollar collected in payroll taxes is spent,
including the surplus. So in 2011, when budget writers are looking at the fiscal year 2012
budget, they can count on less Social Security dollars to pad other spending, and the rest
of the budget will begin to feel the pinch.”
From here: http://budget.senate.gov/republican/pressarchive/2005/2005-03-07OpEdRollCall.pdf
Corrective action has been fought for years, but how much longer can SS remain so? It is/was/will be an example of how to budget programs, but it can not be separated from the remainder of the not so well managed budget.
Why not? I fail to see the case for such? Why not start with OPM pensions which are pure deficit?
Dan, I assume you mean Government employess pensions, and not those for the Personnel Managment agency. They are no more pure deficit than SSTF payments. The current FERS program is a hybrid Defined Contributions, defined benefits (mostly SS), and partially funded from general funds.
The older CSRS is a defined benefits plan that was partially funded by 7% employee contributions and, as originated, to be matched by annual funds. Since it started in surplus the Congress started a tradition of not funding the match, since it was an accounting exercise. Matching funds wolud just be placed in to the CSRSTF and then spent anyway. (Any of this sound familiar?)
So far from pure deficit!
Robert J Samuelson’s latest opinion piece explains why SS can not be removed from the overall budget.
“Recall that Social Security, Medicare and Medicaid, the main programs for the elderly, exceed 40 percent of federal spending. Exempting them from cuts – as polls indicate many Americans prefer – would ordain massive deficits, huge tax increases or draconian reductions in other programs. That’s a disastrous formula for the future.
…
Contrary to the Obama administration’s posture, Social Security does affect our larger budget problem. Annual benefits already exceed payroll taxes. The gap will grow. The trust fund holds Treasury bonds; when these are redeemed, the needed cash can be raised only by borrowing, taxing or cutting other programs. The connection bet’ween Social Security and the rest of the budget is brutally direct. The arcane accounting of the trust fund obscures what’s happening. Just as important, how we treat Social Security will affect how we treat Medicare and, to a lesser extent, Medicaid.” (My emphasis.)
From here: http://www.washingtonpost.com/wp-dyn/content/article/2011/03/06/AR2011030602926.html
BTW, that 20% SS portion of the overall budget is significantg. In FY60 it made up only ~2.7%, but due to changing demographics and huge payment expansions, it has grown to this amount.
Umm. Rdan–I sure do hope that OPM’s pension system (which is paid for in part by employee contributions and in FERS FICA contributions to the SS part of the total package) just escapes notice. It’s actually not a very big piece of the pie. Right, CoRev? And, my goodness, but a nice OPM annuity check based on a high three at GS-15 pay is sure a nice comfy sum. Even a GS-13 in high cost earnings areas yields a fair amount of retirement pay. I sure do hope nobody notices, don’t you Rev? heh heh NancyO
Interesting.
NanO, dunno about you, but what ever happens, happens.
yes, coREv, it was anticipated.
that’s what we have been fighting about for ten or twenty years. might explain why we understand it better than you do.
and better than the liar who can go from “well managed program” to “needs to be fixed to bail out the not so well managed programs.”
CoRev
Samuelson is a known liar. Exempting SS from cuts would not lead to ANY deficits.
It is truly pathetic that there are people in the world who can read these lies and be fooled by them.
What Samuelson is arguing is that if the Federal Government is going to pay its debt, it is going to have to find the money. Therefore the Federal Government should not pay its debt.
In other words, if I owe you money, I should just shoot you.
This is Samuelson’s morality. And CoRev likes it.
Samuelson says Social Security and Medicare and Medicaid exceed forty percent of the budget.
This is like complaining that your groceries and rent and medical care exceed forty percent of your household budget cutting badly into your sportscar budget.
we are supposed to be alarmed that paying for submarines for the war on terror almost costs less than paying for groceries and housing and medical care for one third of the adult population… people who have paid for their own groceries and housing and medical in their old age by paying their taxes when they were young enough to be still working.
so lets cut their groceries and housing and medical care so we can spend ALL of our money on shiny new submarines. And where will the elederly get their groceries and housing and medical care… well that’s not OUR problem. after all we aren’t old yet.
meanwhile by slipping Social Security… which pays for itself DIRECTLY… in with Medicare and Medicaid, whose costs MAY go up.. Samuelson is lying. Look, look he says… see those three guys. Two of them are robbers. Lets kill all three of them.
brutally direct. you gotta love the language. when you don’t have a case, sound tough. we gotta make sacrifices. lets sacrifice that old lady there. sure it’s brutal, but if we don’t appease the gods we won’t have any money next year.
and CoRev just smiles and nods. he loves it when they talk tough.
First of all who gives a shit about Samuelson’s opinions? Next, that lumps two totally seperate programs into one ball, SS vs health care services for the poor and the older folks. And most striking of all, that 40% is about equal to the low estimates of the military/defense spending portions of the budget. So why not just stop wasting money on war and armaments?
On top of which Social Security is self funded and that includes the TF which is a legal debt owed by the Treasury to the Social Security program. If you don’t think that is true, then why is Treasury writing checks to the TF account?
Co,
You are so full of bullshit. No, I don’t want you to sacrifice your pension. You are entitled to it in the very same manner that all of the participants in the Social Security program are entitled to theirs. Why can’t you see that? Why is it so problematic to you that military spending be cut back and high income taxation be restored to prior to 2000 levels? It can’t be any clearer that the two biggest expenses to the government during the past decade have been tax cuts and military adventure. How do you simply gloss over those facts? You can’t be taken seriously because you continue to refer to ass holes for validation of your own narrow point of view.
“…but what ever happens, happens.” That’s not even a serious retort. You must be running out of ideological crap.
I found this quite fascinating.
Will the tea party espouse Dior?
http://www.nytimes.com/2011/03/07/opinion/07Garelick.html?_r=1&ref=opinion
I received this article in email today.
Maryland’s Millionaires Missing After Income Tax Hike
http://www.taxfoundation.org/blog/show/25986.html
“As we and others have noted before, the Comptroller of Maryland has reported that the number of “millionaire” returns tumbled sharply between 2007 and 2008, a 30% drop in filers and 22% drop in declared income. Rather than income taxes from this group rising by $106 million, they fell by $257 million.
The recession is certainly a contributor: everyone is earning less. But the Comptroller did an interesting additional analysis: how many people filed as millionaires before the tax increase, then did not file at all the following year? The Wall Street Journal explains the findings:
One-in-eight millionaires who filed a Maryland tax return in 2007 filed no return in 2008. Some died, but the others presumably changed their state of residence. (Hint to the class warfare crowd: A lot of rich people have two homes.)” (My emphasis)
I’ll add another note going around the Blogs. Obama’s debt for last month alone was greater than Bush’s 2007 debt for the year.
And you guys continue to think its sustainable?
Islam will change
CoRev,
SS outlays are about equal to the corporate welfare going through the DoD.
CoRev is absolutely right. It’s about time we recovered the disastrous revenue lost from W’s unfair and unwise tax cuts. Taxes have to go up enough so that the SSTF can remain intact as promised by Ronald Reagan.
Update from the CBO Director
Monday, March 7th, 2011 at 1:51 pm
Four Observations about the Federal Budget
I spoke this morning to the Economic Policy Conference of the National Association for Business Economics. My talk was structured around four observations about the federal budget:
First, if current policies are continued, the gap between spending and revenues will remain very large even after we return to normal economic conditions.
If current laws remain unchanged, as we assume for CBO’s baseline projections, budget deficits would drop markedly over the next few years as a share of output. Still, debt held by the public would reach 77 percent of gross domestic product (GDP) in 2021. However, that projection understates the budget deficits that would occur if many policies currently in place were continued, rather than allowed to expire as scheduled under current law. Suppose instead that: the higher 2011 exemption amount for the alternative minimum tax was extended and, along with the AMT tax brackets, was indexed for inflation; the other major provisions in December’s tax legislation that affected individual income taxes and estate and gift taxes were extended, rather than allowed to expire in January 2013; and that Medicare’s payment rates for physicians’ services were held constant, rather than dropping sharply as scheduled under current law. Then, debt held by the public in 2021 would rise to almost 100 percent of GDP, the highest level since 1946.
Second, fiscal policy cannot be put on a sustainable path just by eliminating waste and inefficiency; the policy changes that are needed will significantly affect popular programs or people’s tax payments or both.
One way to see this point is to realize that combined outlays for just a handful of large federal programs will exceed total revenues in the second half of the coming decade, assuming the continuation of the policies mentioned above. Specifically, under that assumption, CBO projects that outlays for Social Security, Medicare, Medicaid, other health programs, defense, and net interest will pass total revenues by 2016 and not look back.
Note also that outlays for that handful of programs will exceed 18 percent of GDP by 2016 and reach 20 percent of GDP by 2021. Some proposals would cap federal spending at 18 percent or 20 percent of GDP. That is possible, but it would require cuts in at least one of these major programs even if everything else the government did was eliminated, not just cut sharply.
Third, policymakers face difficult tradeoffs in deciding how quickly to implement policy changes that would reduce future budget deficits.
On the one hand, reducing deficits only gradually would lead to higher government debt, which would have several negative consequences (for more information, see CBO’s analyses of the risk of a fiscal crisis and of the economic effects of waiting to resolve the fiscal imbalance). In particular, rising debt:
Reduces the amount of U.S. savings devoted to productive capital investment. Requires greater federal spending on interest payments. Gives policymakers less flexibility to respond to unexpected problems. Increases the likelihood of a fiscal crisis during which investors would lose confidence in the government’s ability to manage its budget and the government would lose its ability to borrow at affordable rates.
On the other hand, implementing major budgetary changes gradually would have some advantages:
Possibly helps older […]
FEDERAL BUDGET REALITY CHECK
Update from the CBO Director
Monday, March 7th, 2011 at 1:51 pm
Four Observations about the Federal Budget
I spoke this morning to the Economic Policy Conference of the National Association for Business Economics. My talk was structured around four observations about the federal budget:
First, if current policies are continued, the gap between spending and revenues will remain very large even after we return to normal economic conditions.
If current laws remain unchanged, as we assume for CBO’s baseline projections, budget deficits would drop markedly over the next few years as a share of output. Still, debt held by the public would reach 77 percent of gross domestic product (GDP) in 2021. However, that projection understates the budget deficits that would occur if many policies currently in place were continued, rather than allowed to expire as scheduled under current law. Suppose instead that: the higher 2011 exemption amount for the alternative minimum tax was extended and, along with the AMT tax brackets, was indexed for inflation; the other major provisions in December’s tax legislation that affected individual income taxes and estate and gift taxes were extended, rather than allowed to expire in January 2013; and that Medicare’s payment rates for physicians’ services were held constant, rather than dropping sharply as scheduled under current law. Then, debt held by the public in 2021 would rise to almost 100 percent of GDP, the highest level since 1946.
Second, fiscal policy cannot be put on a sustainable path just by eliminating waste and inefficiency; the policy changes that are needed will significantly affect popular programs or people’s tax payments or both.
One way to see this point is to realize that combined outlays for just a handful of large federal programs will exceed total revenues in the second half of the coming decade, assuming the continuation of the policies mentioned above. Specifically, under that assumption, CBO projects that outlays for Social Security, Medicare, Medicaid, other health programs, defense, and net interest will pass total revenues by 2016 and not look back.
Note also that outlays for that handful of programs will exceed 18 percent of GDP by 2016 and reach 20 percent of GDP by 2021. Some proposals would cap federal spending at 18 percent or 20 percent of GDP. That is possible, but it would require cuts in at least one of these major programs even if everything else the government did was eliminated, not just cut sharply.
Third, policymakers face difficult tradeoffs in deciding how quickly to implement policy changes that would reduce future budget deficits.
On the one hand, reducing deficits only gradually would lead to higher government debt, which would have several negative consequences (for more information, see CBO’s analyses of the risk of a fiscal crisis and of the economic effects of waiting to resolve the fiscal imbalance). In particular, rising debt:
– Reduces the amount of U.S. savings devoted to productive capital investment.
– Requires greater federal spending on interest payments.
– Gives policymakers less flexibility to respond to unexpected problems.
– Increases the likelihood of a fiscal crisis during which investors would lose confidence in the government’s ability to manage its budget and the government would lose its ability to borrow at affordable rates.
On the other hand, implementing major budgetary changes gradually would have some advantages:
– Possibly helps older generations by deferring the increases in […]
MG, we are coming closer to tone of thos tipping points that moves us into uncontrollable deficit territory. One of those tipping points is clearly identified in your Budget Projections reference.
With this: ” …But as other countries’ experiences show, it is also possible that investors would lose confidence abruptly and interest rates on government debt would rise sharply. The exact point at which such a crisis might occur for the United States is unknown, in part because the ratio of federal debt to GDP is climbing into unfamiliar territory and in part because the risk of a crisis is influenced by a number of other factors, including the government’s long-term budget outlook, its near-term borrowing needs, and the health of the economy. When fiscal crises do occur, they often happen during an economic downturn, which amplifies the difficulties of adjusting fiscal policy in response.
If the United States encountered a fiscal crisis, the abrupt rise in interest rates would reflect investors’ fears that the government would renege on the terms of its existing debt or that it would increase the supply of money to finance its activities or pay creditors and thereby boost inflation. To restore investors’ confidence, policymakers would probably need to enact spending cuts or tax increases more drastic and painful than those that would have been necessary had the adjustments come sooner.”
I Have seen some estimates that it could happen as early as 2015.
MG, we are coming closer to one of those tipping points that moves us into uncontrollable deficit territory. One of those tipping points is clearly identified in your Budget Projections reference.
With this: ” …But as other countries’ experiences show, it is also possible that investors would lose confidence abruptly and interest rates on government debt would rise sharply. The exact point at which such a crisis might occur for the United States is unknown, in part because the ratio of federal debt to GDP is climbing into unfamiliar territory and in part because the risk of a crisis is influenced by a number of other factors, including the government’s long-term budget outlook, its near-term borrowing needs, and the health of the economy. When fiscal crises do occur, they often happen during an economic downturn, which amplifies the difficulties of adjusting fiscal policy in response.
If the United States encountered a fiscal crisis, the abrupt rise in interest rates would reflect investors’ fears that the government would renege on the terms of its existing debt or that it would increase the supply of money to finance its activities or pay creditors and thereby boost inflation. To restore investors’ confidence, policymakers would probably need to enact spending cuts or tax increases more drastic and painful than those that would have been necessary had the adjustments come sooner.”
I Have seen some estimates that it could happen as early as 2015.
In addition to MG’s CBO reference we have this WaPo article. It’s a somewhat long read, but great background explaining ehy the movement to cut the deficit is gaining bipartisan support. Here: http://www.washingtonpost.com/wp-dyn/content/article/2011/03/07/AR2011030704873.html?hpid=topnews
A coup0-l;e of key points: Several commission members pointed to the testimony of University of Maryland economist Carmen Reinhart in late May as particularly compelling. Reinhart and her co-author, Harvard economist Kenneth Rogoff, analyzed more than 200 years of data on 44 countries and found that “growth deteriorates markedly” when total government debt exceeds 90 percent of the economy. Total U.S. government debt exceeded 90 percent of gross domestic product last year.”
And
“”We are there. We’re not approaching it,” Crapo said in an interview. “You used to hear politicians say we can’t keep piling this debt on our children and grandchildren. Well, it’s not our children and grandchildren we’re talking about alone anymore. It’s everyone in America today. We do not have any time left for gridlock.””
Cut military/defense spending in half and the budget will be 30%-50% to the better. Restore the tax rates on high income wealth and restore capital gains and dividend interest to pre-Bush levels and the budget will be another 10%-20% to the better. What’s the big problem? A balanced budget is only a problem if the balancing is only on the backs of the working/middle class and the poor. That’s why there’s so much argument back and forth. The wealthiest Americans don’t like supporting their government that does so much to help them build their wealth and to keep it safe. The wealthiest Americans don’t appreciate the efforts made by their government on behalf of their great wealth. They control an effective publicity aparatus that portrays the world as the opposite of what it actually is. It’s something like Carroll’s trip for Alice through the looking glass. Every thing they enjoy they claim not to and everything that is good for others is not ggod for them. Very curios. Be a patriot. Pay your taxes and oppose war.
Jack, I make a point of not responding on your comments, but this one is like so many others just wrong. You said: “Cut military/defense spending in half and the budget will be 30%-50% to the better. ” To the casual observer, that may make sense, but whne we3 apply real numbers to you solution, it does not. Defense makes up 20% of the over all budget of ~$3.7T (2012). So you are saying that cutting defense 1/2 $370B = $1.1T (~30%) to $1.8T(~50%) of the budget to the better?
NOPE!!!!! Try again.
Jack, I make a point of not responding on your comments, but this one is like so many others just wrong. You said: “Cut military/defense spending in half and the budget will be 30%-50% to the better. ” To the casual observer, that may make sense, but when we apply real numbers to your solution, it makes no sense. Defense makes up 20% of the over all budget of ~$3.7T (2012). So you are saying that cutting defense 1/2 $370B = $1.1T (~30%) to $1.8T(~50%) of the budget to the better?
NOPE!!!!! Try again.
CoRev,
You think that your precise numbers taken from some chart of table represents military.defense spending whle others argue convincingly that total military/defense spending is approx. $1.2 trillion. That’s most of the deficit. How much of the deficit do yu want to cut? Apply that %age to the $1.2 trillion and your off to a good start. Then get serious in regards to taxes and the deficit is dwindling as we speak. You like splitting hairs when you don’t like the gist of the conversation. I don’t take the precision of our national bean counters at their word and still the deficit will be falling fast as a result of my two simple suggestions.
I’ll ask you again, for the third or fourth time, what have you got against cutting military spending, especially the war spending. And why do you continue to avoid the issue of tax and the wealthy Americans?
This budget BS is going no where fast given that some people can’t acknowledge the two gorillas in the budget room unless they’re social programs spending. We’ve been around the budget deficit block so many times that I’m getting dizzy thinking about the money wasted on war spending and tax holidays for the wealthiest Americans. Worse yet, we all know that Social Security isn’t running a deficit, but SS benefits are being offered up for sacrifice rather than a sane military budget and fair share taxation. This is nuts.
Another example of nuts, or as Orwell had said newspeak, is Buffpilot’s response to a question I posed in response to his comment about Islam and western liberal democracy. The question was a bit out of place on the thread concerning unions and collective bargaining so I’m bringing it over to this Open Thread. Buff’s reply deserves consideration, I think. First the comment from Buff that prompted my question:
“ts a very long story, for years now. Basically its my contention that Islam, as practiced today in the Islamic world, is incompatible with western liberal democracy. Nothing has changed to make me believe that is not true, on the contrary Islam has continued to prove itself even less compatible with western liberal democracy as the years go by. The tag line is the affirmation that Islam will change to become compatible.”
My question to Buff:
Buff
BTW, I’ve been curious to ask, which religion in its more extreme/devout/orthodox form is compatible with western liberal democracy? And while we’re addressing devotion to an ideology, which political party in the US is compatible with western liberal democracy? And how is it that you would describe/define western liberal democracy? Is ours that kind of democracy in which extreme religious convictions are said to trump laws governing the freedom to follow one’s preferred sexual orientation or obtain legal medical services pertaining to family planning or pregnancy termination?
All extreme religious practioners step on the toes of those who do not follow their dogmatic ideologies. If we live in a western liberal democracy its about time that those who love their god put that god back in their hearts. I’m a bit tired of seeing their god worn on their shirt sleeves.
And Buff’s interesting reply. And keep Orwell’s concept of newspeak in mind.
Jack,
“Any reply would bery long and derail the thread well away from the topic at hand. Islam is not currently compatible with western liberal democracy as its practiced throughout the muslim world. I expect it to change to become compatible, but I doubt it will happen without considerable bloodshed.
As for the rest, I would say the R party is more compatible than the D party in the US. The D party regularly fights against freedom of speech, religion and against the rights of citizens to provide for their self-defense. The openly espouse open racism and preferences based on sex, race, and gender. The D’s beleve in group or collective over individual rights in general. YMMV. But both parties easy conform to western liberal traditions. (As do both the Catholic and Protetant churches in the US). You can always find the radicals in every organization though…
As for […]
Jack,
Are we walking on the same Earth?
I know you might find it unbelievable, but, get ready for this…….NOT EVERYONE BELIEVES AS YOU DO.
In fact, only 21% of people describe themselves as “liberal,” while 40% describe themselves as “conservative” and 35% describes themselves as “moderate.” So people who don’t share your views outnumber you 4:1. If scroll down to those who self describe “very liberal,” as I would describe you, you will find only 5%.
http://www.gallup.com/poll/124958/conservatives-finish-2009-no-1-ideological-group.aspx
So your views are in the minority 19:1. It is you that is on “another planet.”
Sammy
Read the damn comment first before you go off on your idiotic liberal vs conservative rant. For example, “The D party regularly fights against freedom of speech, religion and against the rights of citizens to provide for their self-defense. The openly espouse open racism and preferences based on sex, race, and gender” What has that statement to do with a liberal vs conservative dichotomy? Forget for the moment that Buff presents the idea as a relative assessment regarding Rs and Ds, as he calls them. “…regularly fights against freedom of speech and religion..”? “…openly espouses racism..”? Is that the real world? I suppose that if we look hard enough we will find people who identify themselves as Ds and harbor those sentiments. Buff presents it as “the D party” as an institution.
What have your percentages of liberals, conservatives and moderates got to do with Buff’s depiction of Democratic ideology as being against freedom of speech and religion or self defense for that matter? Is Buff, or maybe you, trying to say that Ds are really not liberal in their social and political beliefs? Or is it that conservatives actually hold more liberal beliefs than do the liberals who usually describe themselves as Ds? Do you not see the self contradictions in that statement and your own? We’re not talking social or political ideologies now. This is simply a matter of logical argument.
Wow buff. Very stark terms and if an accurate description of a portion of the population must be part of what drives ‘saving America’ fervor and draws lines in the sand that are still amorphous to my perceptions. Can you make a clear list, knowing that any one individual may not believe every item?
Sammy,
Perceptions of political viewpoints and moral viewpoints often are more fluid for a population as a whole than can be captured in a poll. I took Jack’s statement as an emotional incredulity…what I find interesting is, for instance, even the ‘slightly left of center’ description of 2003 versus 2011 instructive.
The phrase that catches my eye is tipping point. 2015?
“…policymakers would probably need to enact spending cuts or tax increases more drastic and painful than those that would have been necessary had the adjustments come sooner.”
The tipping point concern eliminates SS from the equation, but even so there is no discussion of health care inflation.
Tax increases in the overall debate on the deficit have been politically marginalized, but best I can tell from MG’s links tax increases are one half of the equation in theoretical terms if not in actual dollars. To avoid the issue in the CBO terms means you can’t claim legitamacy for particular solutions from the spending side only. Claim it for yourself but not CBO.
A better descriptor for the 1,2T is national security spending, which needs a look as well.
The CBO reports say we are in uncharted territory, the WAPO offers 90% as a firm percentage in I assume macro terms. It still does not affirm your particular choices of no tax increases (?), which go far to bring that % down significantly, nor does the current legislation coming from the House address much of the overall budget.
National security spending is about 1 trillion/year…a tidy sum.