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View Full Version : Economics This isn't that difficult: 7 realities.


cdcox
08-07-2011, 12:51 PM
If either party got their way, it would not be in the best interests of me or most other Americans. There are certain hard realities that one side or the other isn't facing. There is a real middle ground here and to me it is the only option.

Reality 1. We have to do something about the deficit. The sooner we start planning, the easier it will be. But it flat isn't going to be easy for anyone.

Reality 2. Only three things matter in regard to deficit spending: defense, social security, and Medicare/Medicade. Everything else is in the noise. So let's focus on what matters.

Reality 3. We can't afford our recent foreign policy because it causes too much defense spending. We have to be very selective where we engage troops on the ground. In hind site, I'd not have gone into Libya (even though the real spending is trivial) or Iraq. Afganistan is doubtful. I'm not convinced we've gotten our monies worth. Could we have used intelligence, drones, and surgical strikes to put enough pressure on Bin Laden and Al-Qaeda to significantly reduce their impact on US soil? Like it or not, we need to take a step back in projecting military might overseas. We aren't rich enough to be the world's policemen. Businesses will learn to deal with the fact that the US government isn't going to protect their interests overseas and may bring jobs back to a stable business environment provided in the US.

Reality 4. More than 95% of all Americans will need some kind of "program" to provide health insurance for them beginning when they retire. The market isn't going to provide a solution here. Market value for health insurance for someone over 60 would run at least $2000 per month per person. At some point in their life, most people require a routine life-extending treatment that they would not be able to pay for out of pocket. Before Medicare/Medicade, some of the elderly had insurance through their company as part of their retirement package. That's gone. People died earlier. So to talk about dismantling M/M is not going to work in your favor.

Reality 5. The current M/M is unsustainable. Options: 1) private based insurance for the elderly with required insurance pooling with young healthy people required to participate; 2) keep the current system but reduce end of life treatment costs through rationing treatment based on the probability of it adding quality years to a person's life. In reality end of life care is going to be rationed either by the government or a private insurance company. This is an unfortunate reality. We also need to reduce treatment costs in general -- that industry is bloated, so I think there is a lot of potential for cost cutting here, but it will come with sacrifice. This is the hardest one to fix, but if we approach it rationally, I think it can be done.

Reality 6. Fix SS. This isn't very hard. We can project income and expenditures. Bring them in line so that the system is sustainable for 50 years, then make adjustments every 5 years to keep it so. It probably means some benefits reduction. Let people have choices whether they want to reduce income or delay taking their benefits.

Reality 7. As part of the deficit reduction, everyone needs to pay a bit more taxes. In retrospect, the Bush tax cuts weren't a good idea, so let's just let them expire for everyone. That tax rate isn't crippling and if it means that we are 1) addressing the budget deficit and 2) ensuring the sustainability of a critical social program that everyone needs, then for most people it is going to be a good investment.

Done. Why isn't your political party of choice dealing with these realities (neither one is coming close in my opinion)?

Direckshun
08-07-2011, 12:57 PM
My political party of choice has at least attempted to make ground in the cutting defense area, but they continually pussy out in the face of lobbyists.

My political party's base believes in a single-payer type system which would mirror those you see in other countries, where the median amount of money per person paid into the healthcare system would be dramatically lower, and the population much healthier. But the politicians atop the party once again pussy out in the face of lobbyists.

I make no excuses for the Democratic Party to be light on these issues. I'll let the conservatives around here criticize their own party.

cdcox
08-07-2011, 01:00 PM
Reality 8: we are not going to get a single-payer system.

Reality 9: we need to seek solutions that are politically feasible.

RINGLEADER
08-07-2011, 01:12 PM
It all centers on entitlements and baseline budgeting.

My plan would be to freeze spending, deficit spend the difference until our revenue growth (from GDP growth) matches the the spending levels we're "locked in" at, and then tie future spending to the previous year's revenues.

Once that is in place you will only experience deficits when there is a recession. Armed with that, increase the retirement age to 70 and create a bridge account using a 1% national sales tax for anyone over 55 (so they can still retire at 65 and have their benefits under the new structure covered). The program won't work as originally intended until you increase the age when people will receive benefits.

For everyone under 55 establish a new deduction that the employee contributes into that you can access at age 65. Ig you want to retire early you can do so.

After the "bridge" for 55 year olds expires after 15 years you use the proceeds from the 1% national sales tax to pay down the principal debt until it is retired.

cdcox
08-07-2011, 01:18 PM
For everyone under 55 establish a new deduction that the employee contributes into that you can access at age 65. Ig you want to retire early you can do so.

What is the difference between 55 and 54-and-394 days? I'm about to turn 50 and have been paying into the current system for 30 years. I'm retiring in 15 to 17 years and don't have that long to make adjustments. Fourty year-olds have a little more time, but they've been paying into the current system for 20 years. Any step change in the system treats people in the 40-to-55 demographic like they are chumps. Those that want to change the system need to make graded changes, not step changes. I won't support any step change, regardless of the age.

cdcox
08-07-2011, 01:27 PM
Ringleader -- by "freezing spending" I take it you mean freeze total dollars spent. How do you handle the increasing number of people who are retired? I don't think a 1% tax on those over 55 comes close to covering that. Are you proposing massive reductions in benefits as you cover more and more people with the same amount of money?

patteeu
08-07-2011, 01:30 PM
Reality 2. Only three things matter in regard to deficit spending: defense, social security, and Medicare/Medicade. Everything else is in the noise. So let's focus on what matters.

Why do you lump defense spending in with the "only three things" that matter? Defense spending includes a lot of little programs just like Welfare/Medicaid/Other Mandatory Spending do and it takes up about the same amount of the budget.

http://upload.wikimedia.org/wikipedia/commons/d/d4/Fy2009spendingbycategory2.png

Furthermore, Defense spending as a fraction of the budget has decreased dramatically over the past 40 years or so while entitlements have exploded. Entitlements deserve to stand alone at the top of the heap of things that matter. Defense belongs with all the other parts of the budget that are being squeezed out.*

http://www.fundmasteryblog.com/wp-content/uploads/2009/04/pgpf-willisms-4-09-federalspending68to08.gif

___________________
* These parts of the budget should be scrutinized for cuts too, but they aren't driving the problem like the entitlements are.

Donger
08-07-2011, 01:33 PM
I'm stunned that some people still want the government in charge of health care in this country.

patteeu
08-07-2011, 01:37 PM
Reality 3. We can't afford our recent foreign policy because it causes too much defense spending. We have to be very selective where we engage troops on the ground. In hind site, I'd not have gone into Libya (even though the real spending is trivial) or Iraq. Afganistan is doubtful. I'm not convinced we've gotten our monies worth. Could we have used intelligence, drones, and surgical strikes to put enough pressure on Bin Laden and Al-Qaeda to significantly reduce their impact on US soil? Like it or not, we need to take a step back in projecting military might overseas. We aren't rich enough to be the world's policemen. Businesses will learn to deal with the fact that the US government isn't going to protect their interests overseas and may bring jobs back to a stable business environment provided in the US.

I'm coming to the realization that this thread isn't really about "realities".

I agree that we should be very selective where we engage troops on the ground in full scale invasions and nation-rebuilds, but we absolutely need to and can afford to continue to project power globally. Coming off a peak of 2 full scale wars, we're still spending about the average on defense as a fraction of GDP as we've spent for the past several decades and far less than we did during the 50s and 60s. It's not defense that we can't afford (see my previous post).

http://4.bp.blogspot.com/_qve2Ds-cMvk/SQfHyKlOaWI/AAAAAAAAAhw/GXZEXD_UDp8/s400/Defense+spending+as+a+percent+of+gdp+1949+-+2009.gif

HonestChieffan
08-07-2011, 01:40 PM
If Dems and R's agree we need to get after it.....there will be no big problem right?


So....if thats the case, reckon what the impediments to cutting the 4 Tril S and P thinks we need to? And why would the dems be so opposed to cut cap and balance?

cdcox
08-07-2011, 01:49 PM
Why do you lump defense spending in with the "only three things" that matter? Defense spending includes a lot of little programs just like Welfare/Medicaid/Other Mandatory Spending do and it takes up about the same amount of the budget.


1. Your graphic shows they are the three biggest pieces of the pie.
2. We could eliminate all other government spending after interest and the big 3 and still not balance our budget.
3. Politically, to get something done you are going to have to cut programs that are favored by both parties.
4. The US spends far more on defense as a portion of their GDP than any other economically successful country. We need to re-examine the difference between spending that protects our boarders and spending that protects our "interests". Other countries do it differently. We need to take a hard look at that. Our foreign/military policy is just as unsustainable as our entitlement policy. Reality.

Mr. Kotter
08-07-2011, 01:49 PM
I'm stunned that some people still want the government in charge of health care in this country.

I'm stunned that some people still think the healthcare industry is capable of keeping care affordable for average Americans.

go bowe
08-07-2011, 01:50 PM
I'm coming to the realization that this thread isn't really about "realities".

I agree that we should be very selective where we engage troops on the ground in full scale invasions and nation-rebuilds, but we absolutely need to and can afford to continue to project power globally. Coming off a peak of 2 full scale wars, we're still spending about the average on defense as a fraction of GDP as we've spent for the past several decades and far less than we did during the 50s and 60s. It's not defense that we can't afford (see my previous post).

http://4.bp.blogspot.com/_qve2Ds-cMvk/SQfHyKlOaWI/AAAAAAAAAhw/GXZEXD_UDp8/s400/Defense+spending+as+a+percent+of+gdp+1949+-+2009.gif

i dunno...

seems like we can't afford most of what we do these days...

the "reality" is that entitlements and defense are the only places where really large cuts can be made...

defense is important, but the threats have changed since the end of the cold war and the requirements for defense spending have also changed...

we don't need new ballistic missile submarines and new fighters that are too expensive to risk flying in combat...

there are lots of things in the defense budget that are not essential for national defense in today's world and those things could make very significant dents in the deficit, just as "raising" taxes would...

to maximize deficit reduction, it will take big cuts in the big prgrams, entitlements and defense, and increases in revenues...

not just some but all of these elements are necessary...

go bowe
08-07-2011, 01:56 PM
1. Your graphic shows they are the three biggest pieces of the pie.
2. We could eliminate all other government spending after interest and the big 3 and still not balance our budget.
3. Politically, to get something done you are going to have to cut programs that are favored by both parties.
4. The US spends far more on defense as a portion of their GDP than any other economically successful country. We need to re-examine the difference between spending that protects our boarders and spending that protects our "interests". Other countries do it differently. We need to take a hard look at that. Our foreign/military policy is just as unsustainable as our entitlement policy. Reality.

yeah, that's pretty much what i was trying to say...

BucEyedPea
08-07-2011, 01:58 PM
I admit my political party of choice isn't doing it. Nor is my former political party of choice. The answer is not in either party anymore.

go bowe
08-07-2011, 02:00 PM
I'm stunned that some people still think the healthcare industry is capable of keeping care affordable for average Americans.

i'm stunned that there are so many stunned people around here...

Donger
08-07-2011, 02:03 PM
I'm stunned that some people still think the healthcare industry is capable of keeping care affordable for average Americans.

Color me jaded, but I don't have a lot of faith in my government to make ANYTHING more affordable, including healthcare. Throw in the inevitable decrease in quality and rationing of services and, yeah, I'm still stunned.

Anyway, let's not turn this thread into yet another HC debate.

Donger
08-07-2011, 02:05 PM
I've no problem with a sane reduction in the defense budget, but entitlement programs have to be addressed as well.

go bowe
08-07-2011, 02:10 PM
I've no problem with a sane reduction in the defense budget, but entitlement programs have to be addressed as well.

the entitlement programs must be addressed, and significantly restructured, i certainly agree with that...

i think the rub might be that not everyone is going to agree what constitutes a sane reduction...

Donger
08-07-2011, 02:13 PM
the entitlement programs must be addressed, and significantly restructured, i certainly agree with that...

i think the rub might be that not everyone is going to agree what constitutes a sane reduction...

10-20% would be fine.

HonestChieffan
08-07-2011, 02:24 PM
the entitlement programs must be addressed, and significantly restructured, i certainly agree with that...

i think the rub might be that not everyone is going to agree what constitutes a sane reduction...


I think you will see huge efforts to stop any cuts....each area has its factions and will politicize cuts to the extent it becomes horribly divisive. Black vs White vs Brown, Cities vs States and Urban areas, Rural vs Urban, North vs South. Then the states will wade in because in the end, cuts at Federal level will cascade to state levels who will have to decide to add taxes to maintain whatever the Feds cut or to let it fall and not pick it up.

Every cut will be looked at be each base and those wanting to cut will be demonized. The first and most obvious division will be when we hear Sharpton, Wrangle, the Congressional black caucus attack every proposal that hits what they see as their base....cities, education, food stamps, school lunch programs.....Id be willing to bet right now that they will not come forward with one cut that impacts their base but will be front and center on anything that does not.

Every constituency has to be up front willing to cut and look at their "stuff" and come up with the cuts that make the greatest sense. Ag, Education, Military...all of them, Transportation. Even ObamaCare...there can be zero sacred cows. And no one can be given a pass.

When DoD makes a proposal to eliminate a base, you will see the holy wrath of God come down on those proposals from any city/state where a base closing is proposed no matter how smart the idea is.

With no strong leader this process is even worse. And we know Obama will not get out front. He will delegate to Harry and Nancy and they will form the roadblocks.....a remake of last two-3 weeks.

cdcox
08-07-2011, 02:56 PM
I found this link on the NYT that allows you to balance the budget. Here's my plan that preserves a retirement age of 68, and is based roughly on the 7 (now 9) realities.

http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html?choices=9cxun44l

Here is another plan that pushes the retirement age to 70 and doesn't rely so heavily on taxes.

http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html?choices=97xqd80j

I could live with either of these two. Let's compile a few more options, then I'll make a poll and we will solve this damn mess once and for all. Someone come up with plans that don't rely on any taxes, preserve defense spending, or soak the rich.

go bowe
08-07-2011, 03:14 PM
I think you will see huge efforts to stop any cuts....each area has its factions and will politicize cuts to the extent it becomes horribly divisive. Black vs White vs Brown, Cities vs States and Urban areas, Rural vs Urban, North vs South. Then the states will wade in because in the end, cuts at Federal level will cascade to state levels who will have to decide to add taxes to maintain whatever the Feds cut or to let it fall and not pick it up.

Every cut will be looked at be each base and those wanting to cut will be demonized. The first and most obvious division will be when we hear Sharpton, Wrangle, the Congressional black caucus attack every proposal that hits what they see as their base....cities, education, food stamps, school lunch programs.....Id be willing to bet right now that they will not come forward with one cut that impacts their base but will be front and center on anything that does not.

Every constituency has to be up front willing to cut and look at their "stuff" and come up with the cuts that make the greatest sense. Ag, Education, Military...all of them, Transportation. Even ObamaCare...there can be zero sacred cows. And no one can be given a pass.

When DoD makes a proposal to eliminate a base, you will see the holy wrath of God come down on those proposals from any city/state where a base closing is proposed no matter how smart the idea is.

With no strong leader this process is even worse. And we know Obama will not get out front. He will delegate to Harry and Nancy and they will form the roadblocks.....a remake of last two-3 weeks.

i agree with everything you say here except the part obout, er about osama, er obama...

i don't think it would do any good for obama to be out in front of anything at this point...

it just seems to invite republican intransigence and democrat demagoguery...

but somebody needs to do something about harry and nancy...

hopefully the tea party can come up with a sane candidate for his senate seat next time...

i don't know about nancy, but you'd think the house dems would finally try someone else after so many failures...

patteeu
08-07-2011, 04:04 PM
1. Your graphic shows they are the three biggest pieces of the pie.

You can create that graphic in any number of ways. You can group all of defense together but isolate SS and Medicare from other entitlement spending to give one impression or you can group all entitlement spending together and break out defense into component chunks to give an entirely different impression. The size of these particular pie wedges is almost arbitrary and entirely meaningless as far as the problem of the deficit is concerned.

2. We could eliminate all other government spending after interest and the big 3 and still not balance our budget.

The top three factors that will determine whether or not we can balance the budget are:

1. Economic growth - We need to grow the economy to increase revenues whether taxes are increased or not.
2. Health care cost containment - We simply can't afford to provide cutting edge health care and life extension to everyone.
3. Demographic impacts on entitlements - An aging population will predictably put more strain on whatever retirement and health care systems we end up with.

3. Politically, to get something done you are going to have to cut programs that are favored by both parties.

This is the only reason that the "necessity" of cutting defense can be considered a reality. Unfortunately, we have a lot of people in our country who undervalue a strong national defense. It's easy to take something for granted when it's benefit doesn't manifest itself as a government check in the mail or a deduction on your tax bill or your doctor's bill.

4. The US spends far more on defense as a portion of their GDP than any other economically successful country. We need to re-examine the difference between spending that protects our boarders and spending that protects our "interests". Other countries do it differently. We need to take a hard look at that. Our foreign/military policy is just as unsustainable as our entitlement policy. Reality.

False. I've already shown why it's not a reality. Defense spending isn't the part of the budget that's out of control (and unsustainable). Sorry, but I don't want to define my defense budget based on what countries that can't defend themselves do.

patteeu
08-07-2011, 04:06 PM
I'm stunned that some people still think the healthcare industry is capable of keeping care affordable for average Americans.

It's not the healthcare industry's responsibility to keep healthcare affordable. The problem is that everyone thinks they're entitled to unlimited healthcare of the most advanced quality. They're not. They can't be.

patteeu
08-07-2011, 04:11 PM
I found this link on the NYT that allows you to balance the budget. Here's my plan that preserves a retirement age of 68, and is based roughly on the 7 (now 9) realities.

http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html?choices=9cxun44l

Here is another plan that pushes the retirement age to 70 and doesn't rely so heavily on taxes.

http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html?choices=97xqd80j

I could live with either of these two. Let's compile a few more options, then I'll make a poll and we will solve this damn mess once and for all. Someone come up with plans that don't rely on any taxes, preserve defense spending, or soak the rich.

FWIW, I don't mind increasing taxes, but Barack Obama and democrats are talking about doing it in exactly the wrong way. Taxing the wealthy is a more politically popular idea than taxing the poor/middle class (or alternatively, everyone), but that's where the money is at and they're the people whose productive behavior will be least modified by an increase.

RINGLEADER's idea of a flat national sales tax is far better for raising revenue AND for economic growth than hiking taxes only on the higher income segment of society. I'm not thrilled about creating a new tax on top of all our other taxes (I'd rather see comprehensive tax reform to consolidate and simplify the system, myself), but to the extent that taxes should be increased, they should be increased on the lower income segments of society at least as much as on the higher income segments.

cdcox
08-07-2011, 04:31 PM
False. I've already shown why it's not a reality. Defense spending isn't the part of the budget that's out of control (and unsustainable). Sorry, but I don't want to define my defense budget based on what countries that can't defend themselves do.

We could cut defense spending by half and still spend twice as much in real dollars as any other country. I'm not advocating we do that, but it does demonstrate that there can be cuts that won't prevent us from defending ourselves.

mlyonsd
08-07-2011, 04:36 PM
FWIW, I don't mind increasing taxes, but Barack Obama and democrats are talking about doing it in exactly the wrong way. Taxing the wealthy is a more politically popular idea than taxing the poor/middle class (or alternatively, everyone), but that's where the money is at and they're the people whose productive behavior will be least modified by an increase.

RINGLEADER's idea of a flat national sales tax is far better for raising revenue AND for economic growth than hiking taxes only on the higher income segment of society. I'm not thrilled about creating a new tax on top of all our other taxes (I'd rather see comprehensive tax reform to consolidate and simplify the system, myself), but to the extent that taxes should be increased, they should be increased on the lower income segments of society at least as much as on the higher income segments.This. I'm for raising taxes, just not the wrong way. We're eventually going to end up where it will have to happen anyway, might as well get it over with.

cdcox
08-07-2011, 04:45 PM
patteeu or mlyonsd, would one or both of you guys put up a scenario from the NYT link that reflects your preferences? I think it is helpful for people to have some concrete comprehensive plans to chose from. Let's move beyond politics, put about 5 plans on the table and see what people can live with.

The country could fix this in a week if we got the politics out of the way and just solve the problem by focusing on realistic options.

patteeu
08-07-2011, 05:06 PM
We could cut defense spending by half and still spend twice as much in real dollars as any other country. I'm not advocating we do that, but it does demonstrate that there can be cuts that won't prevent us from defending ourselves.

Your premise doesn't support your conclusion. Spending more than any other country doesn't insure that we can defend ourselves. Defining the defense budget on the basis of a threat assessment is how we insure that we can defend ourselves. DoD has proposed some significant cuts and, while I'm skeptical of the current administration when it comes to our military, I'm satisfied that those cuts are being made for the right reasons.

patteeu
08-07-2011, 05:07 PM
patteeu or mlyonsd, would one or both of you guys put up a scenario from the NYT link that reflects your preferences? I think it is helpful for people to have some concrete comprehensive plans to chose from. Let's move beyond politics, put about 5 plans on the table and see what people can live with.

The country could fix this in a week if we got the politics out of the way and just solve the problem by focusing on realistic options.

I'll try to get something done by tomorrow. I'm about to head out tonight for dinner and a movie.

cdcox
08-07-2011, 05:09 PM
I'll try to get something done by tomorrow. I'm about to head out tonight for dinner and a movie.

Thanks and enjoy.

RINGLEADER
08-07-2011, 06:28 PM
What is the difference between 55 and 54-and-394 days? I'm about to turn 50 and have been paying into the current system for 30 years. I'm retiring in 15 to 17 years and don't have that long to make adjustments. Fourty year-olds have a little more time, but they've been paying into the current system for 20 years. Any step change in the system treats people in the 40-to-55 demographic like they are chumps. Those that want to change the system need to make graded changes, not step changes. I won't support any step change, regardless of the age.

Then you'll likely end up with less than you would if the retirement age was increased, with du usher payouts of dollars that have a du usher value.

You make the point about why we will be unable to fix the problem well though...

RINGLEADER
08-07-2011, 06:33 PM
Ringleader -- by "freezing spending" I take it you mean freeze total dollars spent. How do you handle the increasing number of people who are retired? I don't think a 1% tax on those over 55 comes close to covering that. Are you proposing massive reductions in benefits as you cover more and more people with the same amount of money?

The 1% tax is a national sales tax on everyone. You use a portion of it to bridge the gap between those who planned to retire at 65 (or 67) who must now retire at 70 and use the remainder to pay down principal debt only AFTER you have available spending locked into actual revenues generated. You work your way to the present spending rate which would be achieved through economic growth in the first decade (and would need to borrow another $3.5 trillion during that 10-year period until revenues match the current levels of spending. Prospective spending then ends and you use the proceeds from the national sales tax on everyone to pay down the debt over the following 20-25 years.

RINGLEADER
08-07-2011, 06:37 PM
10-20% would be fine.

It has to be whatever it brings in the way the present system is set up. And that may require significantly more than 20%. The only way to insure it is revenue/deficit neutral is to only spend what it takes in (if you intend to do it at all).

RINGLEADER
08-07-2011, 06:47 PM
patteeu or mlyonsd, would one or both of you guys put up a scenario from the NYT link that reflects your preferences? I think it is helpful for people to have some concrete comprehensive plans to chose from. Let's move beyond politics, put about 5 plans on the table and see what people can live with.

The country could fix this in a week if we got the politics out of the way and just solve the problem by focusing on realistic options.

The Ringleader plan is:

1. Freeze all spending at current levels and deficit spend until growth matches the current spend rate.

2. Tie future spending to prior year revenues. This limits deficits only to those years where there is economic contraction.

3. Raise retirement age to 70. Create an additional pay-in (equal contribution from employer and employee) that goes to a personal retirement fund to bridge those 55 and over who elect to still retire at 65.

4. Install a 2.5% national sales tax to be applied 50/50 during the first 15 years to the entitlement bridge in number 2 and to paying down principal debt.

5. After 15 years the 2.5% is applied exclusively to payment of debt.

If you want to compromise on taxes and/or change rates up or down for political expediency that is fine (since it doesn't factor in much in the long-term), though I think current rates are ok and spending is the problem.

ON EDIT: From poking around it appears that each percent of tax on activity you would generate between $100,000,000,000 - $130,000,000,000 per year. I think to make a meaningful contribution to both entitlements and debt it would have to be 2%-3% or approximately $250,000,000,000 to $325,000,000,000 per year. Over 30 years you'd reduce the deficit by $7.5 - $10.0 trillion.

The whole key to this is eliminating the philosophy of baseline budgeting. You do that and tie future growth to actual revenues you stop the bleeding. Whether it takes 40 years or 100 years you can't start reducing the debt until you stop the increase in spending that ignores actual events.

ChiefaRoo
08-07-2011, 07:32 PM
FWIW, I don't mind increasing taxes, but Barack Obama and democrats are talking about doing it in exactly the wrong way. Taxing the wealthy is a more politically popular idea than taxing the poor/middle class (or alternatively, everyone), but that's where the money is at and they're the people whose productive behavior will be least modified by an increase.

RINGLEADER's idea of a flat national sales tax is far better for raising revenue AND for economic growth than hiking taxes only on the higher income segment of society. I'm not thrilled about creating a new tax on top of all our other taxes (I'd rather see comprehensive tax reform to consolidate and simplify the system, myself), but to the extent that taxes should be increased, they should be increased on the lower income segments of society at least as much as on the higher income segments.

I could live with properly structured tax increases. In general they should let the Bush cuts expire and then create a new structure for the super wealthy. Instead of $250k per year for couples it should be roughly double that. Further the lower class needs to go back to paying too. We can't have 1/2 of the country not paying any fed tax even if it's a small amount everyone needs to have skin in the game. Finally, they need to incentify business formation and capital risk for small and medium sized companies say up to 1,000 employees. Super national companies need to pay tax for the monies they make overseas but they too have to be incentified to create US jobs. It's a delicate balance because if the Govt. makes it too difficult then you might see American Co's leaving the US. GE, Apple etc need to have a balance between US and foreign factories.

The Govt needs to get off the neck of energy producers (and Business in general i.e. NLRB and Boeing). We need Nuke, coal, combo plants, oil drilling and refining. It should be responsibly regulated but goddammit we need it and we can create hundreds of thousands of new high wage, blue collar and white collar technical jobs in the energy sector alone.

Obama is and will continue to be a failure that we will most likely just have to live with until Nov. 2012. He's all theory and little to no reality. We've made a mistake as a people voting him in but its not too late. It however, is time to get back to what made us a prosperous and wealthy country. Business, wealth creation through risk and technological advancement. It's time we get real and realize that the people not the Govt. is the key to success. It's time to move beyond rhetoric and get our country back to work. Our Govt. can do this by re-structuring itself around a pro-private sector wealth philosophy, coupled with stable growth and streamlined regulation. A business oriented President could start all of this by executive order and his cabinet and then let the Congress catch up.

cdcox
08-07-2011, 08:21 PM
The Ringleader plan is:

1. Freeze all spending at current levels and deficit spend until growth matches the current spend rate.

2. Tie future spending to prior year revenues. This limits deficits only to those years where there is economic contraction.

3. Raise retirement age to 70. Create an additional pay-in (equal contribution from employer and employee) that goes to a personal retirement fund to bridge those 55 and over who elect to still retire at 65.

4. Install a 2.5% national sales tax to be applied 50/50 during the first 15 years to the entitlement bridge in number 2 and to paying down principal debt.

5. After 15 years the 2.5% is applied exclusively to payment of debt.

If you want to compromise on taxes and/or change rates up or down for political expediency that is fine (since it doesn't factor in much in the long-term), though I think current rates are ok and spending is the problem.

ON EDIT: From poking around it appears that each percent of tax on activity you would generate between $100,000,000,000 - $130,000,000,000 per year. I think to make a meaningful contribution to both entitlements and debt it would have to be 2%-3% or approximately $250,000,000,000 to $325,000,000,000 per year. Over 30 years you'd reduce the deficit by $7.5 - $10.0 trillion.

The whole key to this is eliminating the philosophy of baseline budgeting. You do that and tie future growth to actual revenues you stop the bleeding. Whether it takes 40 years or 100 years you can't start reducing the debt until you stop the increase in spending that ignores actual events.

So instead of making a step change and transition over 15 years, spread the change over 30. Ramp the optional retirement age from 65 to 70 in a linear fashion over 30 years. Every six days, the optional retirement age goes up a day. Much fairer and approximately the same cost.

RINGLEADER
08-07-2011, 11:07 PM
So instead of making a step change and transition over 15 years, spread the change over 30. Ramp the optional retirement age from 65 to 70 in a linear fashion over 30 years. Every six days, the optional retirement age goes up a day. Much fairer and approximately the same cost.

As long as your baseline is the prior year's revenues you're fine. You'd need to set the retirement age to make it palatable politically and have a bridge to get the votes -- but if it fixes the baseline budgeting problem then it deserves consideration.

Heck, even Lanny Davis is out today supporting the "Penny Plan" which does essentially the same thing (but applies 1% DECREASES in spending over the next 6 or 7 years to get us balanced).

RINGLEADER
08-07-2011, 11:12 PM
I could live with properly structured tax increases. In general they should let the Bush cuts expire and then create a new structure for the super wealthy. Instead of $250k per year for couples it should be roughly double that. Further the lower class needs to go back to paying too. We can't have 1/2 of the country not paying any fed tax even if it's a small amount everyone needs to have skin in the game. Finally, they need to incentify business formation and capital risk for small and medium sized companies say up to 1,000 employees. Super national companies need to pay tax for the monies they make overseas but they too have to be incentified to create US jobs. It's a delicate balance because if the Govt. makes it too difficult then you might see American Co's leaving the US. GE, Apple etc need to have a balance between US and foreign factories.

The Govt needs to get off the neck of energy producers (and Business in general i.e. NLRB and Boeing). We need Nuke, coal, combo plants, oil drilling and refining. It should be responsibly regulated but goddammit we need it and we can create hundreds of thousands of new high wage, blue collar and white collar technical jobs in the energy sector alone.

Obama is and will continue to be a failure that we will most likely just have to live with until Nov. 2012. He's all theory and little to no reality. We've made a mistake as a people voting him in but its not too late. It however, is time to get back to what made us a prosperous and wealthy country. Business, wealth creation through risk and technological advancement. It's time we get real and realize that the people not the Govt. is the key to success. It's time to move beyond rhetoric and get our country back to work. Our Govt. can do this by re-structuring itself around a pro-private sector wealth philosophy, coupled with stable growth and streamlined regulation. A business oriented President could start all of this by executive order and his cabinet and then let the Congress catch up.

It's the application of taxed and tax burdens that needs to be changed. And both sides are disingenuous. You could easily exclude business (the 'S' Chapter filers) taxpayers from a high personal rate which probably would depress hiring. But these kinds of simple answers just totally escape the politicians for all the obvious reasons.

patteeu
08-08-2011, 09:40 AM
I'll try to get something done by tomorrow. I'm about to head out tonight for dinner and a movie.

OK, here's where I ended up on the NYTimes budget game:

http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html?choices=hd2vjj58

The last item I checked was "Payroll tax: Subject some incomes above $106,000 to tax". Prior to checking it, I was in balance for the 2030 timeframe, but in 2015, I was still short by $38B.

What I really wanted to do, instead, was to eliminate the home mortgage deduction for everyone (rather than just for the wealthy) and increase the tax rate on the bottom end of the income spectrum, but that option wasn't allowed. If I had my way though, income taxes and payroll taxes would either be merged into a less progressive (preferably flat) income tax or a national sales tax and everyone would pay (i.e. no 0% tax bracket for the lowest income levels). But of course, that wasn't an option.

ROYC75
08-08-2011, 12:09 PM
Obama's New tax and Recovery plan

New 2011 1040 Easy Tax Plan

1). How much did you make ? __________

2). Send it all in !

3). Deficit will reduce and social programs will increase.


P.S. FTR, you must take on a 2nd or 3rd job next year, you must increase your wages so that we can take more to pay for your social programs.

cdcox
08-08-2011, 01:31 PM
OK, here's where I ended up on the NYTimes budget game:

http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html?choices=hd2vjj58

The last item I checked was "Payroll tax: Subject some incomes above $106,000 to tax". Prior to checking it, I was in balance for the 2030 timeframe, but in 2015, I was still short by $38B.

What I really wanted to do, instead, was to eliminate the home mortgage deduction for everyone (rather than just for the wealthy) and increase the tax rate on the bottom end of the income spectrum, but that option wasn't allowed. If I had my way though, income taxes and payroll taxes would either be merged into a less progressive (preferably flat) income tax or a national sales tax and everyone would pay (i.e. no 0% tax bracket for the lowest income levels). But of course, that wasn't an option.

There was an option for a national income tax. Did you miss that?

mlyonsd
08-08-2011, 03:10 PM
patteeu or mlyonsd, would one or both of you guys put up a scenario from the NYT link that reflects your preferences? I think it is helpful for people to have some concrete comprehensive plans to chose from. Let's move beyond politics, put about 5 plans on the table and see what people can live with.

The country could fix this in a week if we got the politics out of the way and just solve the problem by focusing on realistic options.

Busy today, but I kind of flew through it. My taxes seem a little high so I might want to rethink them.

http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html?choices=zr6k2k54

jiveturkey
08-08-2011, 03:33 PM
That's actually a pretty nice tool (better than most of the recent one's).

I actually had it solved before I got to the end so I wound up with a surplus.

http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html?choices=rzytpl50

I'd recommend putting that surplus away in a vessel I'd like to refer to as a lock box. o:-)

patteeu
08-08-2011, 04:19 PM
There was an option for a national income tax. Did you miss that?

No, I saw that, but I don't want a national sales tax in addition to our existing income and payroll taxes so I don't think it would have been fair to take credit for all the deficit reduction associated with that choice.