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ItsCalledSoccer
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April 11th, 2011 at 10:10:26 AM permalink
One of the hottest political topics is the budget deal that will take us through the end of the current FY 2011 (Oct 10 - Sep 11). I think the eventual CR cut about $35 billion from the remaining FY. The next FY budget is yet to come, it will be VERY interesting.

Anyway, the question asks, how much cutting do YOU think is enough for the upcoming FY 2012 budget? For some perspective ...

According to the 1040 instructions for the 2010 tax year (due this Friday!), the FY09 (Oct 08 - Sep 09) deficit was $1.413 trillion. This amounts to:

* $3.87 billion per day in deficit
* $4,558 per person per year (assumes population of 310 million), or, if your 2010 tax bill was $5,000, you only paid in enough to cover your share of deficit spending, and not for any programs or reduction (and not all 310 million pay taxes, so it's even less)

In other words, the spending cuts in the CR compromise through the end of the current FY amounts to approximately 10 days of spending.

Also in other words, if $1 trillion is cut from the FY 2012 budget, we will STILL be accumulating $413 billion in deficit (at 2009 levels), or ...

* $1.13 billion per day in deficit
* $1,332 per person per year

In other words, the spending cuts in the CR compromise amounts to approximately one month of spending.
thecesspit
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April 11th, 2011 at 10:20:38 AM permalink
The question is, I guess, goes back to a debate I had with AZDuffman... what is the "right" level of long term debt to aim for?

I think we came to a figure of around 1-2% per annum overspend was reasonable to maintain a debt load of 20-35% of GDP. As percentages of GDP and spending, what are the numbers being talked about above?
"Then you can admire the real gambler, who has neither eaten, slept, thought nor lived, he has so smarted under the scourge of his martingale, so suffered on the rack of his desire for a coup at trente-et-quarante" - Honore de Balzac, 1829
ItsCalledSoccer
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April 11th, 2011 at 10:48:29 AM permalink
Quote: thecesspit

The question is, I guess, goes back to a debate I had with AZDuffman... what is the "right" level of long term debt to aim for?

I think we came to a figure of around 1-2% per annum overspend was reasonable to maintain a debt load of 20-35% of GDP. As percentages of GDP and spending, what are the numbers being talked about above?



I don't think the questions are applicable to sovereign governments in the same way that they are to businesses, but in answer to them ...

2009 GDP (to be consistent with the 1040 instructions) was about $14.1 trillion. The 2009 total outlays were $3.52 trillion, or about 25% of GDP. Total revenues were about $2.11 trillion, or about 15% of GDP, meaning, in 2009, about 10% of GDP was borrowed.

The percentage of spending that represents is $1.41 trillion divided by $3.52 trillion = about 40% of total spending is borrowed.

Debt was about $12.9 trillion in FY09. So debt load in 2009 was $12.9 trillion divided by $14.1 trillion, or about 91%. A debt load of 20-35% would be much better, but does not appear to address spending (at least directly).

I don't think the questions are applicable because business is focused on a rate of equity return (how much return you get when you invest in something). Obviously, as debt rises, the potential for equity return increases ... but it's riskier, so the return (sort of) aligns with the risk.

State governments can act like this to some extent, but I don't think a sovereign federal government should. Mostly, because a debt holder can call in debt at any time (for the most part). Should a sovereign government not be able to pay that debt, it defaults and its sovereignty is put at risk. Not that it will go away, but it gets put in the hands of debtors much more than it otherwise would.

I also don't think government should be interested in equity rates of return, but in stability, strength, and defense. I think the preamble to the Constitution contemplates this when it says "PROVIDE for the common defense," which is clearly not a money-making proposition.

(Note: it also says "PROMOTE the general welfare." I think there is a world of difference in the common reading of PROMOTE v. PROVIDE, and I think a critical mistake was made when the government (under FDR) began PROVIDING for the general welfare, a clear overreach.)

Anyway, I don't understand the premise that any overspending on a consistent, permanent basis makes sense. If you overspend 1% - 2% per year (as opposed to 40% in 2009), don't you still end up with a lot of debt and our current situation (although it would take a lot longer to get there)?
AZDuffman
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April 11th, 2011 at 12:21:08 PM permalink
Quote: ItsCalledSoccer

Anyway, I don't understand the premise that any overspending on a consistent, permanent basis makes sense. If you overspend 1% - 2% per year (as opposed to 40% in 2009), don't you still end up with a lot of debt and our current situation (although it would take a lot longer to get there)?



Not to rehash the discussion from last month, but the Federal Government is not a business nor an individual. The reasons for controlled Federal Debt:

1. There must be a liquid and active market for the debt as even in good times, short-term borrowing is needed. Most federal receipts come Jan-Apr.
2. Many markets are based on the rate of the 30 year T-Bond, such as mortgages,
3. Debt stabilizes governments. You do not invade or revolt against someone who owes you money
4. Budgets in surplus lead to depressions/recessions
All animals are equal, but some are more equal than others
thecesspit
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April 11th, 2011 at 1:24:32 PM permalink
Quote: ItsCalledSoccer

Anyway, I don't understand the premise that any overspending on a consistent, permanent basis makes sense. If you overspend 1% - 2% per year (as opposed to 40% in 2009), don't you still end up with a lot of debt and our current situation (although it would take a lot longer to get there)?



I thought so too, but if the over spend is less than the difference between inflation and the rate of growth, you reach a steady state of total debt. The ratio of total debt to GDP balances at (roughly) : overspend/(growth - inflation) (expressed as a percentage).

So if you have a $100 tax take, a growth rate of 5%, inflation at 1% and overspend 2% of your tax take, your national debt sits around 50% of GDP. (As I recall)

AZ's argument is that you need some liquidity in your debt markets to encourage lending for the times you do need debt. And running 0 debt mean that the government at some point is running at a profit (tax take higher than expenditure), which also bring up question of running the government with the wrong objective.

So really, saying "oh my, we have a $1 trillion debt" is meaningless without some sort of scale, just as reports that "BigCompany made $1 Trillion in revenue". Without an idea of costs for that revenue, it needs perspective.
"Then you can admire the real gambler, who has neither eaten, slept, thought nor lived, he has so smarted under the scourge of his martingale, so suffered on the rack of his desire for a coup at trente-et-quarante" - Honore de Balzac, 1829
thecesspit
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April 11th, 2011 at 1:25:43 PM permalink
Quote: AZDuffman

Not to rehash the discussion from last month, but the Federal Government is not a business nor an individual. The reasons for controlled Federal Debt:

1. There must be a liquid and active market for the debt as even in good times, short-term borrowing is needed. Most federal receipts come Jan-Apr.
2. Many markets are based on the rate of the 30 year T-Bond, such as mortgages,
3. Debt stabilizes governments. You do not invade or revolt against someone who owes you money
4. Budgets in surplus lead to depressions/recessions



I'm not convinced about Number 4 (in the short term). I do agree mostly on 1-3 as we discussed last month (and very elucidating it was).
"Then you can admire the real gambler, who has neither eaten, slept, thought nor lived, he has so smarted under the scourge of his martingale, so suffered on the rack of his desire for a coup at trente-et-quarante" - Honore de Balzac, 1829
PapaChubby
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April 11th, 2011 at 1:27:07 PM permalink
I need to clarify some of your assertions. The 2009 deficit was $1.4 trillion as you say, but total government spending was $3.5 trillion.

So the $35 billion in cuts equates to 10 days of OVERspending. It's like they balance the budget for 10 days, and continue to overspend at the current rate the other 355 days of the year.

The $35 billion only amounts to about 3 days of actual spending. A 1% cut in total expenditures.

I'm appalled by the talking heads who try to incite panic over these cuts. "Schools will close! Children will starve! Old people will die! Your food and drugs will be tainted!" Surely we can cut 1% of the waste and inefficiency from government spending without so much wailing. I'd hope that 10% would be readily achievable.
AZDuffman
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April 11th, 2011 at 1:55:22 PM permalink
Quote: thecesspit

I'm not convinced about Number 4 (in the short term). I do agree mostly on 1-3 as we discussed last month (and very elucidating it was).



I don't quite get why but am going by history. I'll leave it up to someone with a degree in economics to explain the details if there is one around.

Yes, was a good discussion.
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RonC
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April 11th, 2011 at 3:35:10 PM permalink
Quote: PapaChubby

I'm appalled by the talking heads who try to incite panic over these cuts. "Schools will close! Children will starve! Old people will die! Your food and drugs will be tainted!" Surely we can cut 1% of the waste and inefficiency from government spending without so much wailing. I'd hope that 10% would be readily achievable.



I don't know what the "right" number is but most entities can cut 10% from their budget just by getting rid of excesses. They talked about how Medicaid cuts would keep sick children from being helped but what they don't talk about is the reimbursements for transportation that are way out of line with actual costs...one cabbie here in Houston got over $1000 for a single run (about $100 worth in "real" price) for a Medicaid patient because he was paid for each passenger. If we can find those kind of issues and get rid of them, the program saves a bunch of money and still helps those who need help.

We have two parties that are more concerned about protecting a certain constituency without regard to the excesses in either one...Republicans seem to want to protect the rich and don't seem the least bit concerned about corporate bigwigs making gazillions of dollars by leading their companies into bankruptcy and Democrats seem to want nothing cut from social programs, etc. in spite of the obvious excesses. Those of us in the middle may fall in line with one line of thinking or the other, but we're really getting beaten down by both of them...
AZDuffman
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April 11th, 2011 at 4:03:24 PM permalink
Quote: RonC

I don't know what the "right" number is but most entities can cut 10% from their budget just by getting rid of excesses. They talked about how Medicaid cuts would keep sick children from being helped but what they don't talk about is the reimbursements for transportation that are way out of line with actual costs...one cabbie here in Houston got over $1000 for a single run (about $100 worth in "real" price) for a Medicaid patient because he was paid for each passenger. If we can find those kind of issues and get rid of them, the program saves a bunch of money and still helps those who need help.



Market driven is the way to do this. Give a voucher and then each citizen has a vested interest in finding the best transportation/care/whatever option. Just like the thread a few months back asking if people would pay $1,000 or more for a test to go from 98% certain to certain no cancer. Those whose insurance paid said, "Sure." Those who did not were a little better taking such a small risk.
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boymimbo
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April 11th, 2011 at 8:00:37 PM permalink
The Federal Government's outlays have grown from 1.789 trillion in 2000 to 3.456 trillion in 2010. (In 2007, it was 2.728 trillion so you can't blame Obama for all of this).... so a 93.2 percent growth in Federal Government outlays in 10 years. Revenue grew from 2.025 trillion to 2.163 trillion (2007 it was 2.568 trillion) in the same period. All figures in 2005 dollars. Source is taxpolicycenter.org.

YOU CAN BLAME OBAMA for not taking drastic measures when he took over.

So I would agree that the Federal Government has gotten WAY too big. Bring spending down to 2.5 trillion. Increase taxes to match. Continue shrinking government and bring taxes down. You need surpluses to pay down some of the massive debt and the only way to do that is to balance the budget, bring the government down in size and increase GDP through financial policy and growth. That means massive layoffs in the government and cutting back on social programs, including medicare. Increase the FICA tax and increase the limits. Increase Social Security tax (why the government cut 2 percent (17 percent of revenue) this year from Social Security tax this year is unfathomable) and increase the limits. More tax brackets on the rich (get rid of the Bush tax cuts). End the stimulus. Rework ObamaCare. Remove red tape from business so that they can operate.

No one will be happy. But when you've been living on the government teat and reaping the benefits of a free government credit card, the party has to end.
----- You want the truth! You can't handle the truth!
Wizard
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April 11th, 2011 at 10:15:20 PM permalink
Personally, I advocate a pay as you go system. On an annual basis, government spending for that year will be estimated, and all federal taxes will be adjusted to match that spending. For example, if we would need to increase taxes by 25% to pay for what the budget, then whatever you would normally pay in taxes, multiply it by 1.25. Like the Maryland "piggyback" tax. Some adjustments could be made to smooth out the usual ups and down of the economy.
"For with much wisdom comes much sorrow." -- Ecclesiastes 1:18 (NIV)
RonC
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April 12th, 2011 at 12:13:13 AM permalink
Quote: Wizard

Personally, I advocate a pay as you go system. On an annual basis, government spending for that year will be estimated, and all federal taxes will be adjusted to match that spending. For example, if we would need to increase taxes by 25% to pay for what the budget, then whatever you would normally pay in taxes, multiply it by 1.25. Like the Maryland "piggyback" tax. Some adjustments could be made to smooth out the usual ups and down of the economy.



That kind of plan would make the politicians accountable for the budget. So many of the numbers they provide us with are fairy tales before they even hit reality. We'll spend $1 trillion for a net savings over 15 years of $10 trillion...yeah, that is if everyone's budget projections happen just as their assumptions show they will. Does that happen? The numbers are all "cooked" and they know it. They can't even spell honesty in most cases...
AZDuffman
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April 12th, 2011 at 5:07:51 AM permalink
Quote: Wizard

Personally, I advocate a pay as you go system. On an annual basis, government spending for that year will be estimated, and all federal taxes will be adjusted to match that spending. For example, if we would need to increase taxes by 25% to pay for what the budget, then whatever you would normally pay in taxes, multiply it by 1.25. Like the Maryland "piggyback" tax. Some adjustments could be made to smooth out the usual ups and down of the economy.



To make that work we would need to get rid of the progressive tax system and have a flat tax for everybody at the same rate. If this system were in use right not the top earners would be paying over 50% in Federal Income Tax alone and the bottom 50% would still be paying virtually nothing. A downward spiral in the economy would follow.
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ItsCalledSoccer
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April 12th, 2011 at 6:33:03 AM permalink
Quote: RonC

That kind of plan would make the politicians accountable for the budget. So many of the numbers they provide us with are fairy tales before they even hit reality. We'll spend $1 trillion for a net savings over 15 years of $10 trillion...yeah, that is if everyone's budget projections happen just as their assumptions show they will. Does that happen? The numbers are all "cooked" and they know it. They can't even spell honesty in most cases...



One of the biggest local political topics here in Texas is the debate to legalize casino gambling. One of the points that the proponents use is that it will increase tax revenues to the state that are now being lost to neighboring states like Louisiana, Oklahoma, and New Mexico. The prevailing opinion assigned to the opponents talk more about the morality and crime associated with gambling.

I have no doubt that it would increase revenues, and I have no doubt that it would cause an increase in crime (as there would be with the introduction of any new industry).

Personally, I oppose it. Not on moral grounds, though. I oppose it because it's just another step in the "piggification" of government. I think this is the major reason for opposition ... although you wouldn't know it from reading newspapers. They put the Texas version of Terry Jones out there as the main opinion against, and it's just not true.

Texas is run about as good as any state out there, and that bears out in the state economy's relatively excellent performance and the in-migration that, among other things, gave the state four new congressional seats in 2012. So, if there's any state whose government can be "trusted" (however far you extend that trust), it would be Texas.

But I'm not in favor of giving it more money to spend. Government can't keep searching for new sources of revenues, especially in Texas's case where it's doing pretty damn good with what it already gets. Increasing government tempts it to overreach - see also the federal government. Texas is doing just fine, and the states that depend heavily on casino gambling aren't (excluding Nevada, which is not doing well, but gambling is embedded in its history, so it gets an exception in my mind).

So whatever gambling is the answer for, it doesn't appear to the answer to gaining revenues that make a state a better place.
ItsCalledSoccer
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April 12th, 2011 at 6:44:10 AM permalink
Quote: boymimbo

The Federal Government's outlays have grown from 1.789 trillion in 2000 to 3.456 trillion in 2010. (In 2007, it was 2.728 trillion so you can't blame Obama for all of this).... so a 93.2 percent growth in Federal Government outlays in 10 years. Revenue grew from 2.025 trillion to 2.163 trillion (2007 it was 2.568 trillion) in the same period. All figures in 2005 dollars. Source is taxpolicycenter.org.

YOU CAN BLAME OBAMA for not taking drastic measures when he took over.

So I would agree that the Federal Government has gotten WAY too big. Bring spending down to 2.5 trillion. Increase taxes to match. Continue shrinking government and bring taxes down. You need surpluses to pay down some of the massive debt and the only way to do that is to balance the budget, bring the government down in size and increase GDP through financial policy and growth. That means massive layoffs in the government and cutting back on social programs, including medicare. Increase the FICA tax and increase the limits. Increase Social Security tax (why the government cut 2 percent (17 percent of revenue) this year from Social Security tax this year is unfathomable) and increase the limits. More tax brackets on the rich (get rid of the Bush tax cuts). End the stimulus. Rework ObamaCare. Remove red tape from business so that they can operate.

No one will be happy. But when you've been living on the government teat and reaping the benefits of a free government credit card, the party has to end.



I think there's little doubt that all this spending is attributable to both parties. But the first place you should look is the composition of the House of Representatives, which is where spending bills MUST originate. So, when you cite 2007, you're citing a Democratic House, which is most greatly to blame.

Presidents have influence in the debate, and veto power. But vetoing a budget is not something a President wants to get in the habit of doing. (Obama does it to his peril, but given his lack of leadership in the most recent budget debate, I would not assume he would take any greater role in the upcoming one and will sign what hits his desk.) I think the Republican congress tried to give the President (then Clinton) line-item veto power in the 90s, but the senate Democratic minority wouldn't debate it.

Now, in the 109th congress, you had spending and squirrelly practices to a degree never seen before in American history ... a congress with Democrat supermajorities and a Democrat president. The result? Democrats lost the House in a historic defeat.

So ... Democrats 1) are in power when the spending frenzy begins; 2) won't give the President line-item veto authority, even when the President was a Democrat; and 3) preside over historic increases in federal spending. It would appear that, until Democrats change their collective attitude towards spending, they cannot be trusted with control of the House.

(Yes, Republicans aren't innocent. But they are not the main perpetrators, either.)
AZDuffman
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April 12th, 2011 at 7:09:29 AM permalink
Quote: ItsCalledSoccer

Presidents have influence in the debate, and veto power. But vetoing a budget is not something a President wants to get in the habit of doing. (Obama does it to his peril, but given his lack of leadership in the most recent budget debate, I would not assume he would take any greater role in the upcoming one and will sign what hits his desk.) I think the Republican congress tried to give the President (then Clinton) line-item veto power in the 90s, but the senate Democratic minority wouldn't debate it.



Republicans had control of both houses 1994-2006 and did in fact give Clinton the line-item veto. He used it once then it was overturned by the Supreme Court. No idea who brought the suit, probably some liberal group upset w/spending cuts.
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Wizard
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April 12th, 2011 at 7:43:08 AM permalink
Quote: AZDuffman

A downward spiral in the economy would follow.



That will happen eventually no matter what we do. The longer it takes for us to wake up and live within our means the worse it will be.
"For with much wisdom comes much sorrow." -- Ecclesiastes 1:18 (NIV)
kenarman
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April 12th, 2011 at 8:09:47 AM permalink
Quote: Wizard

That will happen eventually no matter what we do. The longer it takes for us to wake up and live within our means the worse it will be.



I have to agree with you Wiz. I think the US has reached a tipping point that has not been noticed and/or accepted by the majority of the population and is in a very serious financial position. Given that I am Canadian which most regular of members know I expect to get some pretty strong reaction for the following statement which I will revive from the 70's. "Americans need to start acting less like Romans and more like Italians."
Be careful when you follow the masses, the M is sometimes silent.
SFB
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April 12th, 2011 at 8:26:10 AM permalink
Its already spiralling.

And will get worse.

It was stupid to cut the Social Security tax 2 per cent.

Your gonna have to raise taxes. Then you have to cut some spending.

Pentagon>> 300 billion a year.
Medicare>>60 billion a year
Social Security>>> 200 billion a year
The rest of the federal budget>>>> 100 Billion

Increase taxes about 400 billion a year.

That closes your structual deficit.

And LEAVE IT THERE. You would be paying down the debt at the rate of 100-150 billion a year within five years.

Also, interest rates are about to climb. When the rate that the federal government is paying for thier debt climbs past 4%, all of our rates get into 7% plus. The servicing the debt number will swallow the budget as well. However, IF the US Government gets to positive cash flow on an annual basis, then interest rates WILL decline.

It took 150 years to get to 14 trillion in federal debt. It can take 100 years to "get rid of it" You will NEVER get rid of it. But you CAN get it to 50-60% of GDP in 20 years.

And that's a sustainable budget.

SFB
Wizard
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April 12th, 2011 at 8:28:19 AM permalink
Quote: kenarman

"Americans need to start acting less like Romans and more like Italians."



I agree.
"For with much wisdom comes much sorrow." -- Ecclesiastes 1:18 (NIV)
AZDuffman
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April 12th, 2011 at 8:34:09 AM permalink
Quote: SFB


Increase taxes about 400 billion a year.

That closes your structual deficit.

And LEAVE IT THERE. You would be paying down the debt at the rate of 100-150 billion a year within five years.



So, YOU (and not just "the rich") are willing to come up with $1350 per year. And the same for each and every kid you might have? Beccause that is what it is going to take per person. I find people wanting tax increases usually want either the rich or corporations to somehow pay.

I can't take that kind of pay cut. Cut spending. Only. 24% of GDP us a spending problem, not a revenue problem.
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RonDiaz
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April 12th, 2011 at 9:08:07 AM permalink
Quote: AZDuffman

So, YOU (and not just "the rich") are willing to come up with $1350 per year. And the same for each and every kid you might have? Beccause that is what it is going to take per person. I find people wanting tax increases usually want either the rich or corporations to somehow pay.

I can't take that kind of pay cut. Cut spending. Only. 24% of GDP us a spending problem, not a revenue problem.



I will take a $3600 a year pay cut as part of the Scott Walker slashfest of 2011. And assuredly I make less than most of you folk. If it can be argued I deserved and can absorb a $3600 a year pay cut, $1350 should be no thang.
AZDuffman
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April 12th, 2011 at 9:56:57 AM permalink
Quote: RonDiaz

I will take a $3600 a year pay cut as part of the Scott Walker slashfest of 2011. And assuredly I make less than most of you folk. If it can be argued I deserved and can absorb a $3600 a year pay cut, $1350 should be no thang.



I don't know about you, but I can't afford $1350 a year. And I'm sure those with kids can't afford many times that. We have a spending problem, not a revenue problem. We are spending 25% more in relation to GDP than just a few years ago. But everytime a reasonable cut is proposed someone on the left accuses republicans of killing women, children, or seniros.
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rdw4potus
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April 12th, 2011 at 10:06:27 AM permalink
Quote: AZDuffman

I don't quite get why but am going by history. I'll leave it up to someone with a degree in economics to explain the details if there is one around.



I think the answer is easier than you think. Surpluses are the result of government over collection. The government spends less efficiently than individuals. Efficient spending grows the economy and helps avoid/mitigate financial downturns. So those downturns are more likely to occur when the wrong entity is holding the excess wealth.
"So as the clock ticked and the day passed, opportunity met preparation, and luck happened." - Maurice Clarett
AZDuffman
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April 12th, 2011 at 10:11:41 AM permalink
Quote: rdw4potus

I think the answer is easier than you think. Surpluses are the result of government over collection. The government spends less efficiently than individuals. Efficient spending grows the economy and helps avoid/mitigate financial downturns. So those downturns are more likely to occur when the wrong entity is holding the excess wealth.



Good, but holding the wealth and not spending it is the thing. If spending stays constant why does the decrease in net debt cause the recession/depression? As wealth is returned via paid off bonds you would think the economy would do better as spending and investment is redirected from government spending to something more efficient for the economy. (ie: almost any other spending/investment)
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ItsCalledSoccer
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April 12th, 2011 at 10:13:43 AM permalink
Quote: SFB

Its already spiralling.

And will get worse.

It was stupid to cut the Social Security tax 2 per cent.

Your gonna have to raise taxes. Then you have to cut some spending.

Pentagon>> 300 billion a year.
Medicare>>60 billion a year
Social Security>>> 200 billion a year
The rest of the federal budget>>>> 100 Billion


Increase taxes about 400 billion a year.

That closes your structual deficit.

And LEAVE IT THERE. You would be paying down the debt at the rate of 100-150 billion a year within five years.

Also, interest rates are about to climb. When the rate that the federal government is paying for thier debt climbs past 4%, all of our rates get into 7% plus. The servicing the debt number will swallow the budget as well. However, IF the US Government gets to positive cash flow on an annual basis, then interest rates WILL decline.

It took 150 years to get to 14 trillion in federal debt. It can take 100 years to "get rid of it" You will NEVER get rid of it. But you CAN get it to 50-60% of GDP in 20 years.

And that's a sustainable budget.

SFB



While I'm for cutting waste, and there's little doubt that there's some waste in the Pentagon, it never made sense to me to over-cut defense at the expense of social programs. Two main reasons.

First, the practical. According to that same page in the 1040 instructions, national defense, veterans, and foreign affairs make up 22% of the outlays, or about $773 billion. A cut of $300 billion (39%) would ABSOLUTELY DECIMATE our ability to defend ourselves. There is waste there, but there is not nearly 40% waste.

OTOH, social security, medicare, and other retirement makes up 34% of the outlays, or about $1.2 trillion. A cut of $260 billion (22%) doesn't decimate it, but it would, basically, amount to "stealing" from those who have contributed their whole lives.

BUT ... social programs and physical, human, and community development make up about 36% of outlays, or about $1.3 trillion. Cutting $100 billion (8%) is a veritable drop in the bucket. There is waste in this area, and it is a HELLUVA lot more than 8% worth. I think this is the section to start in, and the one to make the most cuts. If I had to assign a percentage, I would put it at about 75% waste, meaning, if I were King of the Budget, I would cut this section by 75%.

(The remaining outlays go to law enforcement and general government (2%) and interest on the debt (5%).)

And, AZDuffman's question is legitimate ... are YOU, not some ethereal rich guy, but YOU, SFB, willing to pay the extra few thousand in raised taxes? And that assumes higher tax rate = greater revenue, which has historically been a false assumption. I always thought you could answer that question for someone by checking out their tax return. Do you already contribute the extra few thousand? No? Then why do you want others to do it for you? That's upside-down thinking.

(NB: It is interesting that some of the loudest advocates of social programs have the lowest pct. contribution to charity. Obama, Biden, and Pelosi were all around 0.5% - 1.0% before taking power. Obama went up to something like 15%, which is terrific, but Biden and Pelosi are still around 1%.)

Second, the theoretical. The Constitution is a shell, protecting what's inside. The people inside are protected only insofar as the shell is defended from the outside. If the shell breaks, nobody's protected. Thus, there is a HUGE interest in protecting it, with (to a limit) money being no object.

(NB2: You can't defend the shell from the inside. That's why, to me, it makes sense to not worry about protections afforded inside when it comes to protecting the thing. In other words, trying terrorists at all, rather than just killing them, is more than we *should* do. Constitutional trials within the shell are not applicable to people trying to break it.)
SFB
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April 12th, 2011 at 10:15:45 AM permalink
Quote: AZDuffman

I don't know about you, but I can't afford $1350 a year. And I'm sure those with kids can't afford many times that. We have a spending problem, not a revenue problem. We are spending 25% more in relation to GDP than just a few years ago. But everytime a reasonable cut is proposed someone on the left accuses republicans of killing women, children, or seniros.



AZ:

If you can't afford that, then your not paying much taxes anyway.

What's the line? "Don't tax you, Don't tax me, tax that guy behind the tree?" There are no more trees left.

HOW they get the $400b is for them to figure out. They have been FIGURING for years, and that is why we are were we are at. They DO NOT want to cut, and they DO NOT want to tax. Both Dems and Repubs. And you end up with 1/3 less revenue for what you want to spend.

You can't have 50% of folks not pay, and then have the other 50% of folks pay the rest of income taxes. And maybe you adjust the corporate tax, and SS taxes, and Medicare taxes, and then see what is happening.

It can't happen overnight, but its got to happen. It is unsustainable otherwise.

SFB
AZDuffman
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April 12th, 2011 at 10:24:49 AM permalink
Quote: SFB

AZ:

If you can't afford that, then your not paying much taxes anyway.

What's the line? "Don't tax you, Don't tax me, tax that guy behind the tree?" There are no more trees left.

HOW they get the $400b is for them to figure out. They have been FIGURING for years, and that is why we are were we are at. They DO NOT want to cut, and they DO NOT want to tax. Both Dems and Repubs. And you end up with 1/3 less revenue for what you want to spend.

You can't have 50% of folks not pay, and then have the other 50% of folks pay the rest of income taxes. And maybe you adjust the corporate tax, and SS taxes, and Medicare taxes, and then see what is happening.



What we have now is the top 50% paying 96% of the income taxes.

But you have not answered the question that two people have now asked.

Since you do not seem to want spending cuts, how much more do YOU (not the rich guy across town) want to pay in addition next year?


As for me, I want spending cut. Why I should be asked to pay more to fund NPR, Planned Parenthood, research into mating habits of butterflies, and all other kinds of nonsense is beyond me. This governmnet can't even keep the space program (a rare good government program) going. Sheeese.
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rdw4potus
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April 12th, 2011 at 10:37:54 AM permalink
Quote: AZDuffman

Good, but holding the wealth and not spending it is the thing. If spending stays constant why does the decrease in net debt cause the recession/depression? As wealth is returned via paid off bonds you would think the economy would do better as spending and investment is redirected from government spending to something more efficient for the economy. (ie: almost any other spending/investment)



I think the increased likelihood/severity of a recession is exactly because spending stays constant. If the government didn't have the excess money, spending would have increased slightly. Since a recession is defined as 3 consecutive quarters of negative growth, that's slightly more likely to occur as a result of the inefficiency.
"So as the clock ticked and the day passed, opportunity met preparation, and luck happened." - Maurice Clarett
rdw4potus
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April 12th, 2011 at 10:40:04 AM permalink
Quote: AZDuffman


As for me, I want spending cut. Why I should be asked to pay more to fund NPR, Planned Parenthood, research into mating habits of butterflies, and all other kinds of nonsense is beyond me. This governmnet can't even keep the space program (a rare good government program) going. Sheeese.



Just out of curiosity: What makes the space program a better investment than the butterfly mating research?
"So as the clock ticked and the day passed, opportunity met preparation, and luck happened." - Maurice Clarett
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April 12th, 2011 at 10:40:50 AM permalink
Soccer:

This line:
Quote: Soccer

First, the practical. According to that same page in the 1040 instructions, national defense, veterans, and foreign affairs make up 22% of the outlays, or about $773 billion. A cut of $300 billion (39%) would ABSOLUTELY DECIMATE our ability to defend ourselves. There is waste there, but there is not nearly 40% waste.



Ok, make it 200b. We SPEND alot more on defense than we get. And contrary to what you might beleive, I am a hawk in many respects. But you gotta spend that which you HAVE. And we don't have it. There is no free lunch.

You then mention:
Quote: Soccer

OTOH, social security, medicare, and other retirement makes up 34% of the outlays, or about $1.2 trillion. A cut of $260 billion (22%) doesn't decimate it, but it would, basically, amount to "stealing" from those who have contributed their whole lives.



Yes, they have contributed. And the vast majority have been paid out what they contributed. And it IS a social contract. We work to fund those not working. We can't keep that promise that was made when 12-14 people were working to everyone who was going to collect, (SS in the 1950-60's), to the almost 5 to 1 now, and 3 to 1 in about ten years. Medicare was only supposed to cost 5b a year in the 60's. A small price.... It will grow to over $100b a year, plus its growing at 7-8% a year.

In 1983, they changed the retirement age to 67 from 65 on me. You too, maybe. They will change it on my son, to probably 69 or 70. And Medicare will start at 66, or 67. Or they might put a cap on it. You can just allow that spending to GO, GO, GO.

Then you mention the other programs of the government
Quote: Soccer

BUT ... social programs and physical, human, and community development make up about 36% of outlays, or about $1.3 trillion. Cutting $100 billion (8%) is a veritable drop in the bucket. There is waste in this area, and it is a HELLUVA lot more than 8% worth. I think this is the section to start in, and the one to make the most cuts. If I had to assign a percentage, I would put it at about 75% waste, meaning, if I were King of the Budget, I would cut this section by 75%.



If only there was 75% waste. I think the President ought to be allowed to shoot at random any two federal employees every year. That would clean some things up too. However, Which federal programs would you cut that equal that 75%? I mean, you just took the page from the 1040 Booklet, which does not detail all the programs, But go done the list and zero out that which you feel is unnecessary. I think you will be hard pressed to get to that number. It seems real easy in the thoretical, but real hard when you get to the ground.

And AZ is right. I would prefer if you or he paid the tax, and not me. If I was King of Tax, I would exempt all CPA's everywhere, from ever paying tax. But I am not in charge.

I don't care WHAT the Federal Government decides to charge for taxes. I just want them to charge a rate that will allow them to cover what they want to spend. Not missing the mark by 1/3, If they decided to zero out all the social programs, I am fine with that. Make the DECISION. And then GET THERE.

What the Government decides to charge for taxes you, AZ, me and the Wiz, will pay. Of that I have NO doubt. IF ithe tax is calc'ed out to $1,350 more, you will pay it, just like I would. I may not be happy, I may not be able to go to Vegas, but thats what the form says. So, you pay it. Otherwise, if you don't want to pay that, you have to make a decision. Stay, go, cheat, or whatever.

SFB
AZDuffman
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April 12th, 2011 at 10:44:50 AM permalink
Quote: rdw4potus

Just out of curiosity: What makes the space program a better investment than the butterfly mating research?



The thousands of tech breakthrus and practical products that the space program has delivered. Dollar for dollar the space program is about the most effective program ever.
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SFB
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April 12th, 2011 at 10:44:55 AM permalink
Quote: AZDuffman

What we have now is the top 50% paying 96% of the income taxes.

But you have not answered the question that two people have now asked.

Since you do not seem to want spending cuts, how much more do YOU (not the rich guy across town) want to pay in addition next year?


As for me, I want spending cut. Why I should be asked to pay more to fund NPR, Planned Parenthood, research into mating habits of butterflies, and all other kinds of nonsense is beyond me. This governmnet can't even keep the space program (a rare good government program) going. Sheeese.



AZ:

I guess you missed this part of my post:

Quote: SFB

Then you have to cut some spending.

Pentagon>> 300 billion a year.
Medicare>>60 billion a year
Social Security>>> 200 billion a year
The rest of the federal budget>>>> 100 Billion



SFB
rdw4potus
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April 12th, 2011 at 10:45:58 AM permalink
Quote: AZDuffman

So, YOU (and not just "the rich") are willing to come up with $1350 per year.



I don't pay the same amount in taxes as the rich do now, why would my share of the increase be the same as theirs? Doesn't it make more sense to apply some sort of progression to your theoretical per-capita tax increase?
"So as the clock ticked and the day passed, opportunity met preparation, and luck happened." - Maurice Clarett
SFB
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April 12th, 2011 at 10:48:36 AM permalink
AZ:

The Republicans had the House, and the Senate, and even President for 4 years, and they still didn't cut these programs.

They are NOT interested in cutting them. Only using them for political leverage.

You give me Planned Parenthood, and NPR, and I will give you your rockets...Deal?

That is how it works.

SFB
rdw4potus
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April 12th, 2011 at 10:50:39 AM permalink
Quote: AZDuffman

The thousands of tech breakthrus and practical products that the space program has delivered. Dollar for dollar the space program is about the most effective program ever.



Thousands of practical products? Name 10. Actually, here. I'll list medical breakthroughs that have come as a result of government-funded terrestrial plant and animal studies, you list practical products that have achieved commercial success as a result of the space program, and we'll see which list is longer.
"So as the clock ticked and the day passed, opportunity met preparation, and luck happened." - Maurice Clarett
AZDuffman
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April 12th, 2011 at 10:51:27 AM permalink
Quote: rdw4potus

I don't pay the same amount in taxes as the rich do now, why would my share of the increase be the same as theirs? Doesn't it make more sense to apply some sort of progression to your theoretical per-capita tax increase?



No, it does not make more sense. The system is already highly progressive. The bottom 50% are paying almost nothing. They need to help at least as much as those paying 40%+ of their income. When the load gets more even then there will be fewer people voting for politicians promising "free health care."

Taxes are due this week, are you going to make a "Gift to the Treasury" on your 1040 of $1350?
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RonDiaz
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April 12th, 2011 at 10:52:51 AM permalink
Quote: AZDuffman

This governmnet can't even keep the space program (a rare good government program) going. Sheeese.



Well we agree there, I wish they would spend more money on the space program and less money on bombs.
thecesspit
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April 12th, 2011 at 11:05:15 AM permalink
Quote: RonDiaz

Well we agree there, I wish they would spend more money on the space program and less money on bombs.



It's not my government, but general spending on science (be it space program or mating habits of butterflies) is (to me) a good way for the government to spend money, as a well funded R&D sector that allows blue-skies research helps produce new and interesting products and services in the long term, and keeps a high-tech industry going. The US isn't going to be able to compete on cheap labour/mass-produce industry (and nor does it... it's industrial base is based on higher quality, limited edition, high precision stuff).

It's bit unfair to compare a large wide-ranging program (space) with a single instance of a biology program (mating of butterflies). The latter might be part of a long term investigation of the life cycles of insects, which in turn could be(*) useful research on pollination of plants... which is kinda important for agriculture.

(*) Could be is all you can often tell about open-ended research. Some ends up being interesting but not useful, some ends up being useful but not interesting. The latter should then get taken up by private industry to turn into products and services. Private Industry tends to be less willing to fund generic scientific research (once it gets into the more specific, sure, such funding occurs). And you need trained scientists available who've cut their teeth on more open research to help generate a useful Science and Technology base in a country.
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AZDuffman
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April 12th, 2011 at 11:06:22 AM permalink
Quote: rdw4potus

Thousands of practical products? Name 10. Actually, here. I'll list medical breakthroughs that have come as a result of government-funded terrestrial plant and animal studies, you list practical products that have achieved commercial success as a result of the space program, and we'll see which list is longer.



1. MRIs
2. Flame retardant clothing
3. Cordless tools
4. Solar Power from calculators on up
5. Freeze Drying and improved food preservation
6. Halogen headlights
7. Improved UV sunglasses
8. Laser "scanners" at the store
9. LEDs
10. Numerous weight saving technologies


Thousands more are out there!

www.look-to-the-skies.com/space_program_spinoffs.htm
www.sti.nasa.gov/tto/
www.thespaceplace.com/nasa/spinoffs.html
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AZDuffman
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April 12th, 2011 at 11:08:30 AM permalink
Quote: RonDiaz

Well we agree there, I wish they would spend more money on the space program and less money on bombs.



As many breakthrus that have come from NASA there are probably even more from military research.
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rdw4potus
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April 12th, 2011 at 11:28:53 AM permalink
Quote: AZDuffman

No, it does not make more sense. The system is already highly progressive. The bottom 50% are paying almost nothing. They need to help at least as much as those paying 40%+ of their income. When the load gets more even then there will be fewer people voting for politicians promising "free health care."

Taxes are due this week, are you going to make a "Gift to the Treasury" on your 1040 of $1350?



I'm more of a tactician than a partisan, so I'll just point out that the bottom 50% have almost nothing to pay. They also are heavy users of the programs that the GOP wants to drastically cut. You'd better hope they forget to vote, or your party is going to position itself out of what should be a pretty easy victory in 18 months.
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SFB
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April 12th, 2011 at 11:58:29 AM permalink
Quote: AZDuffman

No, it does not make more sense. The system is already highly progressive. The bottom 50% are paying almost nothing. They need to help at least as much as those paying 40%+ of their income. When the load gets more even then there will be fewer people voting for politicians promising "free health care."

Taxes are due this week, are you going to make a "Gift to the Treasury" on your 1040 of $1350?



Hey AZ, my "Gift to the Treasury" will be $14,000 this week.

What say you? What is your refund?

SFB
AZDuffman
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April 12th, 2011 at 12:16:18 PM permalink
Quote: SFB

Hey AZ, my "Gift to the Treasury" will be $14,000 this week.

What say you? What is your refund?

SFB



So you are saying you paid $14,000 over and above your tax due? (See "Gift to the Treasury" on your tax form.)

My refund is not as important as the tax I pay. A refund merely means you overpaid during the year.
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AZDuffman
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April 12th, 2011 at 12:20:11 PM permalink
Quote: rdw4potus

I'm more of a tactician than a partisan, so I'll just point out that the bottom 50% have almost nothing to pay. They also are heavy users of the programs that the GOP wants to drastically cut. You'd better hope they forget to vote, or your party is going to position itself out of what should be a pretty easy victory in 18 months.



Kind of hard to believe they have "almost nothing to pay" when most still own cars, houses, etc. Certainly they can meet the minimum 10% bracket we have in this country. Heavy users of government programs tend to vote democrat no matter what.
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rdw4potus
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April 12th, 2011 at 1:04:47 PM permalink
Quote: AZDuffman

Kind of hard to believe they have "almost nothing to pay" when most still own cars, houses, etc. Certainly they can meet the minimum 10% bracket we have in this country. Heavy users of government programs tend to vote democrat no matter what.



67% of American workers are homeowners. I doubt that most of the bottom 50% are homeowners, since that'd push a pretty large percentage of non-homeowners up the income ladder. Also, please note the huge difference between Rob Singer's '09 'Vette and my '99 Impala.

Edit: In honor of John Kyl, I feel like I should say that I don't intend my statement to be actually true. I don't drive a '99 Impala.
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April 12th, 2011 at 2:01:23 PM permalink
Quote: AZDuffman

So you are saying you paid $14,000 over and above your tax due? (See "Gift to the Treasury" on your tax form.)

My refund is not as important as the tax I pay. A refund merely means you overpaid during the year.



AZ:

I pay what I am required to pay. This year, that $14k. Why would I pay more? If it happened to be $15,350, I would pay that.

The government does have a spending problem.

I detailed, 660b in cuts, and 400b in taxes to cover the trillion dollar deficit.

You have proposed getting rid of NPR and Planned Parenthood. That knocks about 20b from the annual federal budget.

But you wanted to spend that on NASA....

So, what can you propose that makes sense?

The government CAN cut the $660b. And NOT raise taxes. And we still have a $400b annual deficit. Which is only slighty better than the Bush years.

That just put off off the arrival of "USA as Greece" for 4-5 years.

To paraphase: "The federal deficit wasn't built in a day, but neither did it get here without a lot of people putting thier head in the sand..."

SFB
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April 12th, 2011 at 4:13:03 PM permalink
Quote: SFB

AZ:


The government does have a spending problem.


So, what can you propose that makes sense?

SFB



First I would indeed get rid of the items I said, minimal savings but savings. I like the idea of moving discretionary spending back to 2008 or even 2006 levels. Otherwise an across the board cut. Let the cabinent secrataries figure out how to implement them by layoff or whatever. Turn Medicare into a defined contribution voucher system where people can use the same health providers as governmnet employees. But bottom line is vaious department heads of the government need to learn they are going to be told, "You were hired to work within a budget, figure it out" same as when revenue in a business goes down.
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ItsCalledSoccer
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April 12th, 2011 at 5:28:19 PM permalink
Quote: SFB

Soccer:

This line:

Ok, make it 200b. We SPEND alot more on defense than we get. And contrary to what you might beleive, I am a hawk in many respects. But you gotta spend that which you HAVE. And we don't have it. There is no free lunch.



I've re-read my post and I don't think any sane reading would glean an opinion on whether or not you're a hawk. Also, I disagree that we spend more than we get on defense. It's hard to measure that, but the fact is ... we're still free, and the Constitution still stands. So, so far, so good.

I also think that you are boxing yourself in when you say that you have to spend what you have. While it's true that resources are finite, there are plenty of resources to fund defense to the tune of $773 billion. The problem isn't inadequate resources, it's where we are spending the resources we have. I would strongly state that money spent on defense is much better used than money spent on a Nevada cowboy poetry festival.

Quote: SFB

You then mention:

Yes, they have contributed. And the vast majority have been paid out what they contributed. And it IS a social contract. We work to fund those not working. We can't keep that promise that was made when 12-14 people were working to everyone who was going to collect, (SS in the 1950-60's), to the almost 5 to 1 now, and 3 to 1 in about ten years. Medicare was only supposed to cost 5b a year in the 60's. A small price.... It will grow to over $100b a year, plus its growing at 7-8% a year.

In 1983, they changed the retirement age to 67 from 65 on me. You too, maybe. They will change it on my son, to probably 69 or 70. And Medicare will start at 66, or 67. Or they might put a cap on it. You can just allow that spending to GO, GO, GO.



It is very far from reality to state that the vast majority ... or any majority at all ... has been paid out. Baby boomers - who have paid in their whole lives - are just now hitting the system ... a payout of essentially zero. Compounding the problem is that these trust funds have been raided for "other programs of the government," meaning, we'll have to finance any periodic deficit with more borrowing. Nice.

Quote: SFB

Then you mention the other programs of the government

If only there was 75% waste. I think the President ought to be allowed to shoot at random any two federal employees every year. That would clean some things up too. However, Which federal programs would you cut that equal that 75%? I mean, you just took the page from the 1040 Booklet, which does not detail all the programs, But go done the list and zero out that which you feel is unnecessary. I think you will be hard pressed to get to that number. It seems real easy in the thoretical, but real hard when you get to the ground.

And AZ is right. I would prefer if you or he paid the tax, and not me. If I was King of Tax, I would exempt all CPA's everywhere, from ever paying tax. But I am not in charge.

I don't care WHAT the Federal Government decides to charge for taxes. I just want them to charge a rate that will allow them to cover what they want to spend. Not missing the mark by 1/3, If they decided to zero out all the social programs, I am fine with that. Make the DECISION. And then GET THERE.

What the Government decides to charge for taxes you, AZ, me and the Wiz, will pay. Of that I have NO doubt. IF ithe tax is calc'ed out to $1,350 more, you will pay it, just like I would. I may not be happy, I may not be able to go to Vegas, but thats what the form says. So, you pay it. Otherwise, if you don't want to pay that, you have to make a decision. Stay, go, cheat, or whatever.

SFB



Which federal programs would I cut to reach 75%? I think a better way to answer would be to say what I would consider keeping: space program, housing, and renewable energy research. Everything else - from cowboy poetry to abortion funding to student loans to PBS to nonrenewable energy - goes private. Those programs that can survive in the private marketplace will survive, and they will be run more efficiently.

I don't know where those cuts would land me, but I think it's a terrific place to start.
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