Fiscal Cliff – where are the cuts?

[meg]

Sure a higher wage is always the ideal, joB. And when your costs are exceeding your income by just a smidge, you may, at first, seek to bring home a higher income.

Problem is, it’s no smidge. Our costs have become super high compared to income, so that now we are only able to pay the interest on our national credit card debt. And exponentially more costs being added and charged each month to our credit card, raising the total amount of debt (our kids) owe. So at this point it’s absolute insanity to spend more on our credit card, with a bizarre perception that we will increase our income by doing that.

Maybe in the 1950s… when the debt was low…maybe at that point there was a good return on GDP for govt. spending.?

At this point the answer is essentially no return. For every dollar ($1) of incremental debt the US gets 8 cents in additional GDP, down from $4.61 in 1952.

That’s one way how austerity works. When your debt is low, when govt. is less needy not hungry for firehose-like streams of revenue to fund itself, then many business-starts don’t need vast amounts of capital to get themselves going and to stay afloat. And more people, people with less money, see themselves able to start their dreams and make a business, and hire.

Bankruptcy is another way too. Let the govt. go bankrupt when debts hugely exceed revenue. Then, you can start again.

Austerity, tho, can sometimes be easier on citizens than bankrupty — the earlier it is undertaken. Otherwise, for the little kids growing up today, you’re handing them the future “Mother-of-all-Austerities”. And they didn’t even get to eat Their piece of Cake.

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[JoB]

Meg..

you can spout theory all day..

or you can go look at where governments have been able to turn their economies around in the past couple of decades.

I don’t know of a single austerity package success story buried in all of the success stories..

and there are success stories.

there are also plenty of austerity stories…

they just don’t turnout as well for the people who live through them.

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[redblack]

meg: for one thing, the debt was not low in the 1950’s. debt was 100% of GDP coming out of WW2. that’s the reason the marginal tax rates were so high: up to 91% in income over $1,000,000. GDP was rising, and taxes were high. and you know what? we paid that debt down pretty quickly. and the result was not soviet bread lines and people living off the government dole if they didn’t feel like working. in fact, it was just the opposite: the 1950’s through the 1970’s was the largest peace-time expansion of economic growth in american history.

and today, the federal budget is at its lowest share of GDP since reagan was in office, around 1984, at which time government spending was taking off, marginal tax rates were being slashed, and the national debt was on its way to being three times what it had been for over 200 years.

but i’m not sure i’m going to be able to engage in rational conversation with you, though, because you’re starting point is a talking point: that spending is out of control. the facts do not bear this out.

you also don’t seem to understand just how much poverty has exploded in america.

and i’d like to see how wall street feels about your feelings on austerity. those job creators and captains of industry would be in the shithouse right now if it hadn’t been for the generosity of the federal government.

and as far as how many taxes those a-holes pay, they have it far easier than the poor children in this country, and they expect – and get – far more from government.

so please. don’t talk about entitlement in america unless and until you understand exactly who the entitled class is and why it is our deficits and debt are so high. it ain’t welfare and food stamps that broke us.

and before you say it, obamacare isn’t an entitlement and it doesn’t actually insure anyone. no one. nadie. and no one is getting free health care because of it.

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[wakeflood]

Agree R/B. People also tend to forget that there were high tariffs on imported goods that supported a “build it here” economy. Once those “free traders” got sway, they happily tore down the tariffs and started shipping our jobs offshore to unregulated, poorly paid, environmentally unconcerned countries so we could have $2.99 tshirts and $499 laptops.

This was a choice, it didn’t have to happen. Now try putting that genie back in the bottle. Germany looks at this policy and laughs.

I wish I could find a testimony given to Congress a few years ago about the difference between “Globalization” and “Internationalization”. Internationalization allows for asymmetrical trade that doesn’t flush all protections away like Globalization does. We’re in a full-blown race to the bottom.

I’ll post if I find it.

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[redblack]

hooper: regarding your ridiculous idea to raise the retirement age to 72, you realize that the average american life expectancy is only 78, right?

so work for 50+ years, retire, and then promptly die – if you’re lucky – so we can reduce the payouts to social security and medicare.

what a bleak and miserable idea, and one completely anathema to the american spirit.

if you don’t mind, i’d rather enjoy my sunset years a little longer. but somehow i think you do mind.

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[miws]

What I really want to post, would certainly get deleted.

Out of respect for WSB, I’ll post this instead:

Mike

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[skeeter]

Redblack I think you’re getting a little too worked up about Hooper. Neither he, nor the government, nor the Social Security Administration, can tell you when to retire. You retire whenever you want to and are able to afford to. Many, many people retire before they begin to receive social security benefits.

Delaying benefit date is a perfectly valid proposal for shoring up social security. It’s either that or raise the tax rate or decrease the benefit amount. Personally I’d prefer to defer benefits in order to keep the rate low during my working years.

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[waynster]

Raising the ss age does not help those who should retire yes in some respect it might save a buck or 2 Reagan did it in the 80’s thinking we live longer so there for we don’t need to get out of the work force early…. sad thing is some body’s just can’t then those who do or have to get penalized for doing so is it fair no….soon you will have be 75 then 80 so on and so on in order to collect full ss and you know that day will be a sad day for hard working Americans why we will die on the job rather then enjoying what’s left in life you are supposed to enjoy…..

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[JoB]

increasing the retirement age is false savings because increasing retirement ages increases disability rates…

think about it, it simply makes sense.. if you push a body physically past retirement years the chances of a disabling injury increase…

but what you most of you don’t know is just how likely you are to become disabled for a significant amount of time before you retire…

http://www.disabilitycanhappen.org/chances_disability/disability_stats.asp

there is a wealth of information in here.

i know hoop and skeeter will focus on the line that states smokers are more likely to become disabled…

but that isn’t the only thing in the report worth noting.

the odds of disability happening to you are far higher than you think

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[skeeter]

okay – I’m hearing no increased retirement age. But where does that leave us? Either increased social taxes or decreased benefits.

I’m still thinking that as people live longer we also need to work longer.

Interesting stats on disability though, JoB. Thank you for posting.

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[skeeter]

BTW – I miss Kootch a LOT. I bet he’d have some interesting contributions to this discussion.

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[wakeflood]

Skeeter, you need Kootch to help you decide what to think? ;-)

As a pragmatic progressive, I suspect some modifications will need to be made to compensate for the fact that we have a huge demographic bump to deal with. I’m at the very, very end of the baby boomer bump and I’d be silly to expect that something won’t need to happen to make it pencil by the time I get to official retirement.

I’m in favor of means-testing but I know that has huge hurdles. (It’s supposed to help those who need it most as a supplement so if you’re already doing very well – and I’d be happy to be in that class, we’ll see – then I’m good with getting less so them’s that are scraping by get a little more.) I’m also in favor of NO CAP on wages eligible to pay in. I’m not sure why there ever was a cap to be honest.

The short answer is, I just want it to be there for my kids and theirs and both the paying in and paying out needs to be as fair and progressive as we can make it.

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[dobro]

Please retire the phony right wing talking point that “since we all live longer now we have to cut benefits”. I’m not going to explain it all here but read this link if you wish to understand why it’s another load of “sounds reasonable” but, when investigated, useless BS.

http://digbysblog.blogspot.com/2012/11/tell-uncle-charlie-hes-not-going-to.html

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[redblack]

skeeter: hooper isn’t the only one who believes that tripe. i’m getting worked up over the notion, not the poster.

and, look. a lot of us have retirement accounts working for us, but there are tens of millions of people who don’t. it might be their own fault; it might be bad luck; it might be disability. who knows? it’s none of my business.

but what is my business is national policy that says that those without private retirement investments have to work past an age that is safe or comfortable for them. or us. for them, social security – an earned benefit – should be available to them if and when they need it, so that they don’t simply drop dead on the job because they can’t afford to eat without a paycheck or assistance.

cost savings are one thing; empathy and understanding in setting policy is completely different.

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[HMC Rich]

Hold on a minute. Social Security should not be the sole source of income for retirees (but it is for many). With pensions going away and now talk of 401k’s getting raided by the government, it is not only the older generations who are worried.

I too am at the very end of the baby boom spectrum. It is perfectly reasonable to raise the age for full benefit collection. That is not to say that accommodations shouldn’t be made for people who want to retire earlier. Already we can retire at 62 at a reduced benefit. No reason not to keep it in place.

But we are living longer.

The answers aren’t easy but the baby boomers are not willing to budge on this issue. They have paid into the system all of their lives and expect, rightly so, to be given full benefits in their retirement. But if they were honest, they would promote some changes to help the system.

I am all for raising the retirement age with full benefits to 66 by next year, 67 two years after that, 68 three years after that, 69 four years after that, and 70 five years after that starting with people born after 1960.

You see Obamacare will be so good at preventative measures, people will be more healthy in their latter years. cough, cough.

You wanted government mandated healthcare, now we have to own it. We had all better hope it works.

People with disabilities need to be covered. I get that, want that. I believe the seniors deserve that coverage. I am not certain the ACA will view it the same way. I am certain that Social Security will go broke.

That is why we need to geniuses in DC to start thinking about the future and get rid of some of the national debt and budget deficits.

It’s going to get ugly folks.

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[JanS]

the only reason these things are called “entitlements” is because we paid into them, so we are entitled to get something back…it ain’t a free handout. I want to see the likes of McConnell, Boehner, Cantor, Ryan give up their FREE (Paid for by us) bennies first…put their money where their mouth is (I was actually thinking about another body part, but this is a family oriented forum).

Does anyone even bother to read about social security specifically, and whether it will go broke any time soon or not?

http://blogs.reuters.com/david-cay-johnston/2012/05/04/social-security-is-not-going-broke/

http://articles.latimes.com/2012/apr/24/business/la-fi-mo-money-minute-20120424

https://www.commondreams.org/view/2012/05/05

of course, people don’t read about it…they listen to the right wing pundits, Ryan, Cantor, etc, tell them it’s going to go broke soon, they believe everything they hear…why bother to dig deep into fact…when you can yell about the sky falling…

disgusting…just scare tactics so they can get their political way. Yes..perhaps we need to make adjustments…but , seriously, people. start reading…and stop listening to those who simply want their way…

I’m more concerned about how the GOP now wants to affect my medicare, when they said months ago that they wouldn’t change anything for those (of us) already receiving..what liars !!!!!!!!!

http://www.wboc.com/story/20252351/gop-fiscal-cliff-plan-echoes-failed-budget-talks

http://www.freep.com/article/20121204/NEWS07/312040037/GOP-s-new-fiscal-cliff-plan-targets-Medicare

another read: http://www.nasi.org/learn/longterm/medicare

or http://www.nasi.org/learn/socialsecurity

just look around that website and educate yourself.

and there’s this ( from back when Bush was still prez): http://money.cnn.com/pf/features/popups/socsec_straight/content.3.html

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[redblack]

rich: what’s this about 401(k)’s being “raided by the government?”

as far as i can tell, the only ones raiding retirements and pension trusts are wall street bankers.

then there’s your repeated statement that people are living longer…

http://www.census.gov/compendia/statab/2012/tables/12s0104.pdf

not that much longer. 76 for white men, 72 for black men. think those lower numbers might have something to do with physical labor, rich? hooper? it’s not like the average person will draw on social security for more than 10 or 15 years after he or she retires.

your plan makes it more likely that they’ll drop dead on the job before they receive a single social security check.

and regarding how ugly it will get, it’s actually going to get better. just wait. the deficits will flatten as the economy returns to normalcy and consumer confidence grows and people start buying things and employers start hiring and more people return to work and start paying income taxes.

however, in order for us to start paying down the debt – as opposed to merely servicing it – republicans need to get a grip on reality: tax rates will also need to rise.

democrats are offering targeted cuts to the budget, but they are not willing to start gutting the big three (what you call entitlements.)

but republicans need to come just a liiiitle bit farther on the top marginal tax rate. hell, even rich people agree.

let’s look at the bloated defense and contracting budget first. i mean, it’s not like we don’t have enough guns and tanks and bombs and jets. we still have more of that crap than the rest of the world combined – including china. and we’ve learned that you can’t fight terrorism with a standing army or a carrier group. time to look at reductions, especially as we start drawing down in afghanistan.

really, the only thing that concerns me about simpson-bowles being enacted and tax rates returning to normal levels on 1/1/13 is that social security and medicare will take haircuts at a time when people are relying more heavily on those checks because of the bad economy.

those checks never bounce, by the way. read jan’s links.

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[wakeflood]

And let’s not forget that the whole “401k” was a concoction by Wall Street sold to the congress as a great way to allow “personal control” over your retirement funds. Hey, pick your OWN funds (from the few handful we offer you) and you control your $ future!!

‘Cept this was purely a ploy to A)Eliminate guaranteed pension returns. and B)Get more management fees for the hungry brokerage firms that were stuck dealing with a handful of pension fund managers who were, by nature, CONSERVATIVE in their job to manage those funds.

So now they have the fees from churning AND lots of folks who don’t really know what the hell they’re doing with their plans and end up in a less secure place than they would have otherwise.

Notice how many of the few remaining (mostly raided) pension funds are underfunded (at best) and are now left to the Pension Guarantee fund (guess who funds that?) to try and bail out for pennies on the dollar. Nice one/two punch against the economic future of the middle class.

The fleecing of the sheep is nearly complete.

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[skeeter]

Social security is going broke. It’s flush with cash now, but numbers don’t lie. It’s a mathematic certainty that it will be inadequately funded in my lifetime. It will be unable to pay out the promised benefits before I reach retirement age.

That’s why we need to fix it now, not 15 years from now. The sooner you make corrections, the less costly those corrections will be.

If you know your roof has a 20 year life, you don’t wait until year 19 to save for a new one.

http://www.dailyfinance.com/2011/04/15/social-security-isnt-broke-but-we-still-ought-to-fix-it/

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[redblack]

agree that it needs to be tweaked, skeeter. but the model is sound if adjusted for inflation.

to simplify the argument, there are two – and only two – fixes. do we tweak the revenue side (and stop congress from borrowing against the trust fund), or do we gut the benefit payments?

it’s not like the payroll tax is breaking anyone’s back, but the lack of COLA is. how much further do you want to reduce benefits?

and you have to admit, skeeter, that there are huge private interests that have been seeking to destroy social security since its inception. to an extent, they have been successful in speeding along its insolvency. i mean, it’s not like social security is “going broke” on its own.

it turns out that al gore was right… on more than one score.

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[wakeflood]

Take the cap off payroll tax deduction max and you’re at least half way there. What is it now, around $100k/yr.?

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[JoB]

our current payroll tax holiday isn’t doing social security any favors…

unless..

it actually stimulates the economy and creates jobs

which it seems to be doing…

let’s not forget that the drivers behind the need for current austerity programs are the same folks who are paying record lows in income taxes and offshoring our jobs.

hmmm.. i wonder what a return to sustainable tax rates and an end to policies that favor corporations who hire overseas would do to the demographics of social security sustainability

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[DBP]

Where’s blooper?

I would really like to know what this guy is doing personally about the national debt.

I mean . . . other than living in a cave.

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[skeeter]

Redblack you are correct. Social security isn’t “going broke” as my post said. My bad. It is facing a funding problem. The promised expenditures will exceed available funds in x number of years. (The x changes all the time but it will happen.) And I basically agree with you that the correction will either be increased revenues (taxes) or decreased benefits.

I feel like I’m sometimes mischaracterized on these forums. I’ve said it before and I’ll say it again. I am a fan of social security. I think a mandatory safety net is in the best interest of our nation. George W Bush promised that he would address long-term social security solvency in his second term. That never happened. His second term was a disaster. So now we’ve waited another 4+ years. I hope that president Obama and Congress can somehow come to an agreement in the next two or so years. The longer we wait the more painful it will be.

Now the payroll tax holiday JoB brought up is interesting. For the past two years, the social security rate that employees paid has dropped from 6.2% to 4.2%. Everything I’ve read said that the jury was still out on whether that boosted the economy/jobs or not. Did we get a big “bang for our buck?” I don’t know. I’ll admit that my family has certainly benefited. With my wife and I both working full time, we each paid a lot less social security tax so our take home pay has increased. We’ve used the extra money to fund our daughter’s college 529 plan. I guess some people save that extra money and some spend it.

I’m curious if the cut will be extended for 2013. I put the odds at 30/70 in favor of it not being extended. What do other folks think?

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[wakeflood]

The Obama admin has proposed keeping it in place for at least the short term.

Which raises one of the most basic questions I don’t see being discussed publicly about the “fiscal cliff” and that’s the concept of using recovery triggers to phase out the still needed gov’t support of the private sector.

It’s not rocket science. You stimulate now (INFRASTRUCTURE PLEASE!!!) and you time the pull back of those supports to accepted rates of private sector recovery – namely employment rate, etc.

You don’t need antibiotics forever.

Oh yeah, I forgot the austerity fetishists and the confidence fairies don’t really care about the recovery. They’re just using the opportunity to tear down the safety net.

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[Author]

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