What Do Federal Taxes Pay For?
A very nice chart from the Center on Budget and Policy Priorities:
A European made the point to me a few weeks ago that even though the political constituency for the enormous defense budget is huge, the Pentagon (and defense-related programs in the Department of Energy) doesn’t really provide a service people use. If we did something crazy like resolved to limited defense spending to twice the combined budget of Russia and China and reallocated the money to other priorities people would probably feel, on an intuitive level, that they were getting more “bang” for their tax “buck.”
The other related point is that a ton of tax money is going to health care, and a very large proportion of health care spending is waste—either medically useless or counterproductive—and this would look even bigger if we could see implicit tax subsidies.
47 Responses to “What Do Federal Taxes Pay For?”
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April 15th, 2009 at 11:13 am
No doubt about it. Conservatives lose ALL crediblity when the ignore defense spending. Unfortunately, Democrats aren’t much help either, because they see the military as a job program, which it is.
April 15th, 2009 at 11:18 am
If by “very large proportion” you mean 30%, you’d be correct. But “very large proportion” sounds an awful like a number higher than 50%, of which there are no health care policy experts that would agree with you.
April 15th, 2009 at 11:22 am
Assuming Obama gets two terms, I think a realistic goal would be to try to get defense spending down to about 3% of GDP by the end of his Administration, which in FY2008 would have amounted to a reduction of about $200 billion, or a little under 1/3 less than what we spent. I know that isn’t as ambitious as many would like–including me–but it has the virtue of being possible.
By the way, if you hypothetically eliminated the compounding interest on the debts we accumulated under the last three Republican Presidents, you would go a very long way toward eliminating the structural deficits in Obama’s budget. Just saying.
April 15th, 2009 at 11:57 am
The beauty of this is, starting next year Social Security starts eating everything else. One way or another, a ton of defense and social welfare spending are going to reduced. Either directly by responsible politicians (*cough*), or indirectly after the epic fail of an actual default on the debt, or an implicit one via inflation.
We can’t afford the number of defense commitments we’ve made, and we can’t afford the social security and medicare commitments we’ve made either.
April 15th, 2009 at 11:59 am
Apr 15, 11:02 AM EDT
Anti-tax protestors turn out for dreaded April 15
LOUISVILLE, Ky. (AP) — Protesters around the country are gearing up to rally against tax day with “tea parties.”
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Above is the lead to a current AP story. The headline says April 15th is “dreaded”. Dreaded by who? Maybe those few people that are responsible for holding back their own taxes and don’t do it, now finding themsleves short on April 15th. But don’t the vast majority of people have their taxes automatically withheld? Who wakes up on April 15th scrambling to cover the cost of a federal or state tax filing? I’ve worked for 35 years and can count on one hand the few instances I didn’t get at least a small refund. I don’t know anyone in a pickle for not having had enough federal or state taxes withheld by their employer. Small business owners and independent contractors often are responsible for quarterly filings, further reducing the pool of people dreading April 15th. Someone illuminate me as to how dreaded today is, by how many people, and are those doing the dreading often in that frame of mind through their own negligence? April 15th is dreaded? Gimme a break.
LOUISVILLE, Ky. (AP) — Protesters around the country are gearing up to rally against tax day with “tea parties.”
April 15th, 2009 at 12:04 pm
Too bad mind-boggling military spending does not translate into better national security, or even the ability to win wars. For that, you need a commander-in-chief with good judgment and some understanding of strategy.
April 15th, 2009 at 12:05 pm
The headline says April 15th is “dreaded”. Dreaded by who?
My guess would be that the same people who are out protesting a tax increase on a bracket they’ll never reach in their lives might be the same one who dread the 15th because they don’t have the foresight to do their taxes beforehand.
The beauty of this is, starting next year Social Security starts eating everything else.
Once again, James, your lack of knowledge is staggering. Social Security is actually fairly well-funded and can easily be paid for for the foreseeable future simply by bumping up the income cap for paying into it (which I believe is 93k). It’s Medicare that is going to start eating everything else and is entirely unsustainable. Which is kind of the point behind really wanting to get health care reform done.
April 15th, 2009 at 12:13 pm
Adam correctly points out that James is being highly misleading by lumping together Social Security and Medicare. The actuarial gap in Social Security is a relatively minor issue for the foreseeable future and can easily be addressed by minor tweaks.
James is also being highly misleading in treating the Medicare issue as a government spending issue. The real issue is that health care spending in general, regardless of funding, is growing at an unsustainable rate. In that sense, it doesn’t matter if the government doesn’t spend a dime on health care in the future: if we don’t find ways to control health care spending itself, our economy won’t survive.
By the way, there is a proven solution to the problem of controlling health care spending. James doesn’t like it, however, because it doesn’t fit with his preconceived thesis about government spending. Again, though, it isn’t government spending per se which is the problem.
April 15th, 2009 at 12:24 pm
Look here – it actually went red for 1 month already, February of this year.
The red date had been around 2017/2018 – the current downturn has reduced tax payments and driven some older workers to start collecting earlier than anticipated. Thus, Social Security starts pulling from the general fund in the 2010/2011 neighborhood rather than in the 2017/2018 neighborhood. That will drive the deficit up as well – we use surpluses from Social Security to offset things now (and have for many years).
Social Security not only isn’t “well funded”, in GAAP terms its liabilities are enormous. Never mind that though; the reality is, the system goes into deficit much sooner than people thought it would.
The money quote:
As I said, it starts to eat the rest of the budget next year. Now, that can be addressed – you can up the payroll tax (great idea during a recession, and sure to be popular as well), or you can push the retirement age back (again, sure to be popular)… the feasible political options are actually quite limited, without regard to what ideology you bring to the table.
I expect a bi-partisan commmission to be appointed as a way to dodge responsibility, but I seriously doubt that anything reasonable will come out of it.
April 15th, 2009 at 12:25 pm
If we did something crazy like resolved to limited defense spending to twice the combined budget of Russia and China
The graph you have in that previous post understates Chinese military spending (that can be compared directly to the US) by anywhere between 25 to 50 % depending on whose PPP, PLA enterprise, and ‘off the books’ #’s one uses; otoh it understates US spending by at least 100 billion, so it all washes out.
And sure, I’m on board with cutting DoD bloat, but you didn’t seem to mind wasteful spending earlier this week.
April 15th, 2009 at 12:30 pm
Since some of the interest on the debt is being paid to cover the cost of past military spending wouldn’t it be more accurate to include it (and veterans benefits) in the “Defense and Security” slice?
April 15th, 2009 at 12:33 pm
but you didn’t seem to mind wasteful spending earlier this week.
…and if the bloat in the military budget was a short-term stimulus measure that would fade out over the course of the next year or two while the economy recovers from the deepest recession in three generations, Matt probably wouldn’t mind that, either.
April 15th, 2009 at 12:38 pm
James “Slaughter the Iraqis, it will be fun and profitable” Robertson is lying. First because he doesn’t even bother to mention Medicare (which is a problem) and second because the propagandist he points to is selling a “solution” that is to take money out of the system in order to “shore it up.” Only a total fucking moron, or a Republican (not that anyone can tell the difference) would buy such an idiotic plan.
April 15th, 2009 at 12:47 pm
I believe this to be true, but I’d love to see some good data. Maybe send a secret decoder ring message request to Ezra – I’m sure he’s got some good stuff on this.
I’d also like to see a head-to-head WWF smackdown between healthcare and defense as to which has a higher proportion of useless and/or counterproductive spending. I bet defense wins.
April 15th, 2009 at 12:48 pm
Imagine if the moronic “fend for yourself” plan proposed by the idiot Mr. Robertson links to had been implemented. His propagandist insinuates that the Obama team is tanking the ecomony on purpose, but even before Obama took office the market was tanking. Now, not just 401k plans would be a disaster, but also the Social “Security” monies would have evaporated.
But please, listen to James “we don’t kill enough brown people” Robertson’s advice. After all, if we had, we would have McCain of the 100 years in Iraq and the guys who gave us Enron in charge.
April 15th, 2009 at 1:38 pm
I wasn’t actually advocating any particular solution to the social security problem, merely pointing out that
– it’s here now
– it’s prepared to eat the budget
I don’t have a magic wand I can wave to fix the problem, but unlike the people here, I’m not going to chant “la la la” and pretend it’s not real.
As to Iraq, as I’ve said more than once – once we went in, any precipitous leave-taking was going to be a bad idea. The mistake was made back in 1991; once we decided to both go to war with Iraq and leave Hussein in power, we created a problem for ourselves. Post Gulf War I, there weren’t many good options left on the table. But heck – it’s a whole lot easier to toss “racist” charges than to actually give the problem some thought.
In retrospect, we should have left well enough alone in 1991. What was Hussein going to do, drink his oil? No, he’d have to sell it. He would have been checked on one side by the Saudis, on the other by Iran. We didn’t take that route, so we got to play “keep Hussein at bay” for over 10 years before finally deciding to take the 1991 war to its logical conclusion.
Personally, I’d prefer to have the US go back to having the foreign policy we had prior to 1913 – i.e., one where we didn’t go overseas looking for dragons to slay. That would mean no more Iraqs, but – it would also mean leaving regions like Darfur alone. It would mean letting the South Koreans defend themselves, and letting the Indians and Pakistanis do whetever they liked in Kashmir.
There are as many nation builders on the left as there are on the right; the difference is in what triggers the nation building impulse. I’d just as soon go with “none of the above” on nation building, thanks.
April 15th, 2009 at 1:51 pm
Right, we will have to increase the payroll tax or decrease benefits (e.g., phase in a higher retirement age), or do a little of both, to close the actuarial gap in Social Security. But we don’t have to do much of either, and we can do less of either if we do both.
By the way, even if Social Security starts drawing from the Trust Fund during the current recession, that doesn’t mean we have to immediately raise payroll taxes or cut benefits–rather, we can just fund those payments from ordinary borrowing. Again, that isn’t a long term solution, but we can certainly delay taking on the long term solution until after we are past the current economic crisis.
April 15th, 2009 at 2:04 pm
If we did something crazy like resolved to limited defense spending to twice the combined budget of Russia and China
That wouldn’t exactly be “crazy.” Just very bad policy.
April 15th, 2009 at 2:16 pm
By the way, if you hypothetically eliminated the compounding interest on the debts we accumulated under the last three Republican Presidents, you would go a very long way toward eliminating the structural deficits in Obama’s budget. Just saying.
Ha ha ha ha ha! The CBO estimates that under Obama’s budget, the national debt will increase from 40.8% of GDP last year to 82.4% of GDP by 2019.
April 15th, 2009 at 2:17 pm
Not-as-stupid is insane.
April 15th, 2009 at 2:19 pm
James continues his support for the brutalization of the Iraqis by lying about the whole issue. While the US overreacted in 1991, it did not give George W. Bush carte blanche to slaughter Iraqis for the entertainment of sociopaths like our Mr. Robertson. The fallacy of sunk costs comes to mind, also, basic human decency. Neither of which seem to be in James “once we start killing, best to kill them all” Robertson’s idea list.
As for his idiocy on Social Security, it is not going to “eat the budget” by running a deficit while times are bad. It is doing exactly what any counter-cyclical program is intended to do – running surplusses when things are good, running deficits when things are bad. What is amazing is that this bloodthirsty moron appears to be sanctioning three decades of borrowing from the working class, but is appalled by the notion that the beneficiaries of that low interest loan (the high income filers who pay the bulk of income taxes) might finally be called to account for their massive debt. And, by pointing to a wild-eyed conspiracy theorist on underwear media, he certainly is promoting that link and, by implication, the solutions of that nutcase.
April 15th, 2009 at 2:20 pm
Welcome back Mixner. You’re still a total fucking moron with the manners of an unhousebroken puppy.
April 15th, 2009 at 3:17 pm
The military does things that in other countries are done by the civilian government. For one thing, they sponsor academic area studies associations.
Isn’t Voice of America (a revolving door to NPR) a semi-military sponsored organization — if you count the various national and international security organizations as branches of defense. The problem with these is that there is no civilian oversight to speak of over their budgets. It’s a permanent emergency.
Even interstate highways and responses to climate change have to be talked about as aspects of national defense in order to get funded.
April 15th, 2009 at 3:23 pm
DTM – there is no “trust fund” – there’s a pile of IOUs. My point is that the deficit (both annually and aggregate) is growing, so there’s not a lot of room to increase debt – sooner or later, the people we rely on to buy that debt will have second and third thoughts.
As to increasing payroll taxes and/or moving the retirement age up – good luck. Your own side of the aisle is in massive denial over this, and will resist such steps every step of the way.
And to the guy who thinks there’s no issue with Social Security – this isn’t about a cyclical deficit in the account, it’s about the problem we knew would hit no later than 2018 coming sooner. As currently structured, Social Security will be permanently in debt (increasing for decades).
The left’s take on this issue can be summarized thusly: “No one told me there would be math”
April 15th, 2009 at 3:42 pm
The problem with the “right” is that no one told them that borrowing money from the working class to give tax breaks to the rich would someday require that the rich pay back some of the money. That’s why liars like James “no one told me mass murder was wrong” Robertson claim “There is no trust fund.” They assume that claiming this is the same as fact. It’s how they manage to claim that a small shortfall in Social Security revenue in one month demonstrates that “Social Security is going to eat the whole budget.”
For the math challenged, like our resident sociopath, there is no cure. They aren’t smart enough to realize that the assumptions on which the projections are based are so conservative (in all cases) as to imply a very bleak outlook for the economy as a whole.
Until the trust fund is exhausted the only problem is that Social Security is going to require the beneficiaries of three decades of undertaxation to pay back their loan. Once it is, we will have set a level of taxation on those freeloaders that will allow us to reverse the flow. In a just world, we don’t really need to worry about this until Social Security has been subsidized for as long as it subsidized the General Fund.
Also, note the subtle lie that our favorite genocidal maniac inserted by blaming the unification of the budget on LBJ – he leaves out the fact that the massive tax increase that created the trust fund was done under Ronald Wilson “it’s not a tax increase if it happens to the working class” Reagan. And that it was Reagan’s inability to do math that started blowing big holes in the national budget.
I guess it isn’t really the left that has a problem with math. But then we rely on facts, history, and rational thinking to solve problems – not wishful thinking and murder.
April 15th, 2009 at 3:56 pm
This kind of goes beyond tax cuts. The problems with social security have to do with demographics. In any pay as you go scheme, as the ratio of payers to payees approaches 1-1, you run into problems. Social Security is a pay as you go scheme; there is no trust fund. Pension plans – if they are fully funded – deal with this problem through the “magic” of compound interest (assuming that no one decides to piss the fund away in risky investments). Social Security has no backing fund; it’s completely pay as you go.
The math simply doesn’t work unless you have a constantly growing supply of younger workers (i.e., a high birth and/or immigration rate).
In any event, higher income taxes twenty years ago would have made no difference. The Social Security surpluses were spent, and – had their been higher tax revenues for any reason, they still would have been spent. By law, they could not be saved. What Reagan, or Bush (either one), or Clinton did or did not do with income taxes has nothing to do with Social Security.
April 15th, 2009 at 4:09 pm
“If we did something crazy like resolved to limited defense spending to twice the combined budget of Russia and China and reallocated the money to other priorities people would probably feel, on an intuitive level, that they were getting more “bang” for their tax ‘buck.’”
Some people would. Other people see film of a B-52 strike lighting up a jungle or a ridgeline or an army sitting half-naked in the Iraq desert and bawl “hallejulah! You see that right there? That’s were I want my tax dollars to go!”
April 15th, 2009 at 4:28 pm
DTM – there is no “trust fund” – there’s a pile of IOUs.
Also known as bonds. Anyway, to summarize a complex subject, the Social Security Trust Fund is “real” to the extent it increases national savings. Whether it does that or not is a matter of choice on our part.
My point is that the deficit (both annually and aggregate) is growing, so there’s not a lot of room to increase debt – sooner or later, the people we rely on to buy that debt will have second and third thoughts.
Actually, there is plenty of room to increase taxes, which means we have the room to service a lot more debt, which is why no one is actually worried yet about buying U.S. debt.
As to increasing payroll taxes and/or moving the retirement age up – good luck. Your own side of the aisle is in massive denial over this, and will resist such steps every step of the way.
First, I don’t have a side of the aisle–I am an independent. Second, as always, this will take a bipartisan approach such that no party is able to point the finger at the other. That may be possible as soon as we get a sane Republican Party, or a replacement second party. So, the sooner that happens, the better.
April 15th, 2009 at 5:00 pm
There’s no real room for tax increases in real terms. Why?
1) Obama, the most progressive candidate elected since Johnson, felt it necessary to run on a tax cutting platform. What do you think that says about the political space for increaess?
2) The rich already pay about 70% of all income taxes – you’re getting very close to diminishing returns territory there. The only place to find serious money is in the middle, and I don’t see much political room for going there
Then there’s the exploding debt, which is already starting to make the buyers of said debt nervous. If we keep going down the “spend like drunken sailors” path, those buyers will start sitting on their hands.
April 15th, 2009 at 5:06 pm
James is simply lying for effect. The effect is to gut the promise made by his side (he is most certainly a partisan) that the increased taxes would be used to pay for Social Security. This nonsense about how it is entirely pay as you go is 100% bullshit. This is bullshit because of the change made by Reagan, Greenspan, and O’Neil. That change created a trust fund to mitigate the problems of a long-term shortfall created by the baby-boom.
All of which is well known to the people who supply idiots like Robertson with their talking points. That Robertson doesn’t know this is quite likely. Parrots don’t really understand the words they say either.
So, now that we’ve dismissed the myth of “no trust fund” let’s talk about the 1:1 ratio. This isn’t going to happen. It isn’t a realistic scenario, and it is based on another nonsensical talking point from the moron brigade: when Social Security started there were 35 workers for each recipient. Which is true, but stupid. As much as he talks about math, Robertson the Bloody knows surprisingly little of it. The problem he posits for Social Security (no continuing influx of new workers) is a disaster for capitalism too. Social Security is no more a Ponzi scheme than is the United States. In the event that the United States has a stagnant, aging, population, then Social Security’s failure is the least of our worries.
Now, sure, there would have been a shortfall in Social Security without Reagan’s tax hike. And, if Social Security were purely pay as you go, that would have been a problem. Those who generate Robertson’s idiotic talking points want it both ways. They want to claim it is pay as you go, when it might need to borrow money, but they don’t propose refunding all the overages at any time.
What could have been done? Well, keeping Social Security on a pay as you go basis would have required more modest changes than implemented by Reagan and would still be less today since even Robertson’s talking points don’t posit a deficit for two more years. But that would have done nothing to cover Reagan’s profligacy and wouldn’t have allowed nearly so much spending on murderous toys to entertain sociopaths.
But it is too late for that. What we do now is exhaust the trust fund. Once we go back to prosperity (since there is plenty of trust fund to last for a couple of decades, the likelihood is that we will see prosperity before it is exhausted), then we look at the projections again. This is exactly the sort of counter-cyclical behavior we need to have now.
What we don’t do is take the word of genocidal lunatics and start crying that Social Security is eating the budget. That would be stupid.
April 15th, 2009 at 5:07 pm
James the Parrot now claims that the rich are paying too much in taxes. Of course he leaves out just how much of the income they actually consume, not to mention the wealth. Honestly James, are you that fucking stupid? Do you think we are? The rich in this nation are in no way overtaxed.
April 15th, 2009 at 5:10 pm
It’s also odd how James the Republican didn’t mind spending hundreds of billions when the objective was the slaughter of Iraqis. Now that money is being spent to shore up the holes caused by decades of Republican incompetence and malice, suddenly spending money is a terrible, terrible thing.
April 15th, 2009 at 5:36 pm
Sigh. There’s no “trust fund”, unless you call an electronic stack of IOUs a “trust fund”. Social Security is entirely pay as you go. If you read back you’ll find that I’m fairly ambivalent about the Iraq war; I just figured that once we pulled the trigger in 2003, we were in a “we broke it, we bought it” scenario.
You can yell that it’s not “pay as you go” all you like, but it is what it is. Instead of sitting in denial, you could educate yourself. Start with Google.
April 15th, 2009 at 6:24 pm
To think that the people who will be paying back the IOUs in the “trust fund” were largely the people who spent the FICA revenues over the past several decades requires one to be a moron. Social Security, as it was structured, was always a tool for intergenerational theft. People elected hacks who collected FICA taxes, spent the tax collections tc purchase votes with retirement benefits, and then a bunch of other stuff, and then placed IOUs in a “trust fund” which are supposed to be paid by the dumb saps who were too young (especially those yet to be born) to elect the hacks. It was pretty much a bipartisan effort after the Democrats got the ball rolling.
To head off the predictable rant, advocating enslaving Iraqis to supply you with oil doesn’t put you in a morally defensible position.
April 15th, 2009 at 7:23 pm
Not-as-stupid is very insane.
April 15th, 2009 at 8:08 pm
What do you think that says about the political space for increaess?
If the alternative is defaulting on our debt, I guarantee you the politics will change.
The rich already pay about 70% of all income taxes – you’re getting very close to diminishing returns territory there. The only place to find serious money is in the middle, and I don’t see much political room for going there
First, again, the politics changes if the alternative is default. Second, you are quoting the wrong number: it doesn’t matter what percentage of taxes the rich are paying, it matters what percentage of their income they are paying. Third, there is a lot of “serious money” above the middle but below the top.
Then there’s the exploding debt, which is already starting to make the buyers of said debt nervous.
Nonsense. Some people grumble, but then still buy our debt.
There’s no “trust fund”, unless you call an electronic stack of IOUs a “trust fund”.
First, again, those “IOUs” are also known as bonds.
Second, again, from an economic perspective the Trust Fund is real if those bonds increase the national savings rate, which is a matter of choice. In other words, whether the Trust Fund really exists isn’t a matter of description, it is a matter of policy.
April 15th, 2009 at 8:11 pm
Not-as-stupid-as-James:
Give it up, dude. James, lately joined here by numbskull Will Allen, is just not going to see it. I don’t know why such people’s brains become impenetrable to facts and reason once they’re ideology has them convinced otherwise, but they do.
Small comfort, I’m sure, but rest assured that most of us reading here on Matt’s little typo-ridden blog thing understand the situation vis-a-vis Social Security as you do. And not because we’re blinded by some partisan bullshit, but because we know how to investigate rival claims about a topic (like “Social Security — In Crisis?”) and come to logical conclusions.
My favorite part? Where the morons go on about “worthless IOUs” (recall chief fuckhead Bush did this himself in ‘05). Like all those other Treasury Bonds (yeah, the SS treasuries are not traded on the open market; so fucking what?). These un-American assholes just don’t like that “full faith and credit” clause when it comes to Social Security. Too fucking bad.
James and Will Allen and the like are just useful idiots (witting or not, does it matter?) for the rightwing power-wielders. You are not going to change them.
But best of all — we win.
April 15th, 2009 at 8:16 pm
One of those karmic things, probably. Or maybe Matt’s contagious:
they’re ideology = their ideology
April 15th, 2009 at 8:16 pm
Will Allen,
But what makes that scheme “a tool for intergenerational theft” is the way the excess revenues are used.
Basically, if when Social Security lends $X to the government, then the government increases spending by $X, then in economic terms the Trust Fund becomes a fiction.
But if instead when Social Security lends $X to the government, then the government doesn’t increase spending by $X, then in economic terms the Trust Fund is real.
So again, this is a choice, or in other words, a matter of policy.
April 15th, 2009 at 8:22 pm
The IOUs are a promise to pay in future revenues. If those revenues don’t exist (which they are unlikely to at any feasible rate of taxation), then they represent either the selling of more debt (assuming you can find buyers), or printing more money.
DTM, I agree that so far, there’s only grumbling about the debt. However, a decade or so ago, there wasn’t even grumbling – I think we’ll see more than grumbling sooner than another decade. The Chinese have already stopped buying long term US debt and gone to short term only. That’s not a sign that they have confidence.
The other problem, DTM, is that the “lending” of “trust fund” money is:
- an accounting hack
- about to end, as Social Security starts needing money from the general fund in 2011, as opposed to paying surpluses into it.
April 15th, 2009 at 9:01 pm
The sort of person who doesn’t grasp that defaulting on U.S. debt instruments that are auctioned and traded openly would cause interest rates paid on future instruments auctioned by the U.S. to skyrocket, whereas defaulting on the instruments in the Social Security trust fund would cause rates in future open auctions to plummet, or at least stay close to zero, and why that difference matters, isn’t in a good position to criticize the intelligence of others.
DTM, I’ll ignore for now the problematic nature of the SS surplus being invested in hard assets, and instead just note that a person who has any expectation that politicians, who face elections regularly, will consistently resist the temptation to use any and all available funds, with which to buy votes, is really too naive for words.
Sooner or later, there will come a day when enough youngish people will start to ask why and how it has been determined that the primary function of our national government is to tend to the material well being of the age demographic with the highest median net worth, without any regard whatsoever to the geezers’ ability to tend to themselves. I’ll cut some slack to anybody who would actually eat cat food without their monthly stipend, or anyone who was put into a situation where they got shot at on the behalf of the United States, but the rest of ‘em are a bunch of mooches.
The sooner we get to a guaranteed income policy which has no differentiation for age, the better. As to health care, the biggest impediment to meaningful reform is the political fact that there is no better place on earth, in terms of minimal health care rationing, to be a non-poor 75 five year old obese person with diabetes, a heart condition, and a arthritic hip, than the United States. Those are the people our 536 criminals on The Potomac pay attention to.
April 15th, 2009 at 9:25 pm
The IOUs are a promise to pay in future revenues. If those revenues don’t exist (which they are unlikely to at any feasible rate of taxation), then they represent either the selling of more debt (assuming you can find buyers), or printing more money.
Again, figure out what happens if you don’t use any surplus from Social Security to increase spending. I’ll even give you a hint: debt is a variable.
DTM, I’ll ignore for now the problematic nature of the SS surplus being invested in hard assets, and instead just note that a person who has any expectation that politicians, who face elections regularly, will consistently resist the temptation to use any and all available funds, with which to buy votes, is really too naive for words.
You are asking the wrong question. Of course any surplus will be used in some way–it has to be–but it doesn’t have to be used to increase spending, and instead can be used to increase saving. And if your argument is that politicians always act to increase spending and not saving, then your argument is wrong.
For example, many post-WWII Presidents presided over decreases in the national debt as a percentage of GDP, which is a form of preference for savings over maximum spending. In fact, there are only three post-WWII exceptions: Reagan, Bush, and the second Bush.
So if you want to argue that modern Republican Presidents can’t be expected to increase savings, then I might agree. But with other politicians, your mileage may very.
April 15th, 2009 at 10:56 pm
Well, then we are just eventually back to borrowing to pay people who are retired, and prefer to get checks from the government without regard to their ability to take care of themselves. True enough, if you haven’t borrowed a ton before that day comes, the borrowing is easier, but that doesn’t obviate the fact that borrowing money to pay people to be non-productive, without regard to whether they need the borrowed money, or are still able to be productive, is not optimal policy. Unless you are the golf playing, cruise taking, geezer mooch dipping your beak in the paycheck of some yet to be born future burger flipper at McDonalds, of course. Generational theft pure and simple; you and I are just talking about which generation is the patsy, and how big a patsy they are, although I admit that the second question is not trivial.
As to a President’s party and debt as a percentage of GDP, it gets really, really tiresome to see assertions that employ sample sizes, that would these days get laughed out of a lot of barroom bull sessions about baseball players, employed as “proof” in economic discussions. As one small example, d’ya’ think that the fact that the initial cost projections, for a certain government program initiated in the mid 60s, that starts with a capital “M”, were off by about 1000% by 1980, might have had some impact on debt as a percentage of GDP in the 1980s? I won’t get into the fact that the surpluses of the ’90s came as a complete shock to the Clinton Administration. Robert Rubin has gone on to prove that it is indeed better to be lucky than good.
Mind you, I’m not really endorsing any President’s economic policies. I was calling for rather larger increases in eligibility ages for SS back when Reagan, Greenspan, and O’Neil brokered their deal, and have been advocasting using a huge gasoline tax to cover the externalities of being inevitably neck deep in the politics of the Persian Gulf for a couple of decades. You see how influential I am.
April 15th, 2009 at 11:07 pm
DTM, to put it another way: Borrowing money to sink Japanese aircraft carriers near Midway Island in 1942 was certainly outstanding borrowing. Borrowing money this year and next to stave off soup lines, or to put pressure on the Soviet Empire in 1982, is/was likely good borrowing. Borrowing money to pay people to be nonproductive without regard to their need or ability is likely not good borrowing.
April 16th, 2009 at 1:44 am
I guess this thread is dead now, but for future archeologists of the great social security “crisis” of the early 21st century: some of us can do math:
http://www.cbo.gov/ftpdocs/96xx/doc9649/MainText.3.1.shtml
The problem:
Figure 1
Figure 2
But measured by individual benefits, you have:
Figure 9
So how to we fix it?
“In CBO’s projections, Social Security’s 75-year summarized outlays under the scheduled benefits scenario come to 5.45 percent of GDP, and summarized revenues equal 5.07 percent, resulting in a summarized deficit of 0.38 percent of GDP—or, when calculated as a share of taxable payroll, 1.06 percent (see Table 2). In other words, CBO projects that if payroll tax rates were increased immediately and permanently by 1.06 percentage points—from the current rate of 12.40 percent to 13.46 percent—then at the end of 2082, the trust fund balance would equal projected outlays for 2083.”
April 16th, 2009 at 10:14 pm
How are you. Preserving health by too severe a rule is a worrisome malady.
I am from Colombia and know bad English, give please true I wrote the following sentence: “We have detected that you do not have javascript enabled.”
Thanks 8-). Mary.
April 18th, 2009 at 11:42 pm
Social Security 21%
Safety Net programs 11%
Medicare, medicaid, SCHIP 20%
That means 52% of the budget is wasted.
All of these should be eliminated.