Tuesday, May 17, 2011

Tax Rates (%) X Tax Base = Tax Revenue ($)

An endless source of confusion seems to exist regarding the frequently used term "raising taxes" (e.g., do a Google search for "raising taxes on the rich" and you'll find almost 3 million results), which usually refers to a proposal to raise tax rates in an attempt to raise tax revenues.  Not so fast.  It doesn't always work that way, and frequently works in reverse - higher tax rates result in lower, not higher, tax revenue collected.  Here's the relevant formula:

TAX RATE (%) X THE TAX BASE = TAX REVENUE ($)

One explanation for the confusion is that the word "tax" appears in all three relevant terms in the equation, so it's easy to conflate the terms "raising taxes," "raising tax rates" and "raising tax revenues."  What we know for sure is that higher tax rates create disincentives for the activity being taxed (income, capital gain, consumption), which will cause the "tax base" to shrink.  Depending on how much the tax base shrinks in response to higher tax rates, tax revenue could increase, decrease or stay the same.  

Any discussion about "raising or lowering taxes" is always incomplete without considering how changes in "tax rates" will affect the "tax base," which then determines how the amount of tax revenue actually collected with change.  

Thomas Sowell addresses this issue masterfully in his column today, here are some excerpts:

"History has shown repeatedly, under administrations of both political parties, that there is no automatic correlation between tax rates and tax revenues.

When the tax rate on the highest incomes was 73 percent in 1921, that brought in less tax revenue than after the tax rate was cut to 24 percent in 1925. Why? Because high tax rates that people don't actually pay do not bring in as much hard cash as lower tax rates that they do pay. That's not rocket science.

Time and again, at both state and federal levels, in the country and in other countries, tax rates and tax revenue have moved in opposite directions many times. After Maryland raised its tax rates on people making a million dollars a year, there were fewer such people living in Maryland-- and less tax revenue was collected from them.

There is no automatic correlation between the direction in which tax rates move and the direction in which tax revenues move. Nor is this a new discovery."

179 Comments:

At 5/17/2011 9:14 AM, Blogger Ironman said...

Want to see the relationship in action? Consider the final chart in this post, which shows the "Zero Deficit Line". This straight line almost perfectly paces total federal tax revenue per household ("tax revenue") against median household income ("the tax base") for the period since 1967, which is the starting point for the data because that's the first year for which median household income began being reported.

Note that the maximum income tax rate has ranged from a low of 28% (1988) to a high of 77% (1969), while payroll taxes have steadily increased from a combined employer and employee rate of 6.4% to 15.3% of income over all that period of time.

 
At 5/17/2011 9:32 AM, Blogger Che is dead said...

In the first five months of Fiscal 2006, through February, overall revenue continued to surge, growing at an overall rate of 10.3%, or an $81 billion increase from the year ago period, to $871 billion. That builds on the astonishing 15%, or $274 billion, revenue increase for all of 2005, which various fiscal wisemen assured us would fall off dramatically. Apparently not.

This year's double-digit increase is roughly triple the rate of inflation, reflecting strong gains in business profits and individual wages and bonuses -- both signs of a vibrant underlying economy. Corporate income taxes are up 30% so far this year, while individual income tax payments have climbed by 10.3% through February.

... the revenue data are further proof of the success of the Bush tax cuts of 2003. The fastest way to stop this revenue windfall, and blow an even larger hole in the deficit, would be to fail to extend the 15% tax rate on capital gains and dividends through 2010, thus assuring a huge tax increase after 2008.

The Wall Street Journal, 2006

 
At 5/17/2011 9:52 AM, OpenID mdb said...

One thing people always forget about, the tax base is determined by tax brackets. The very high taxes of the past, hit a much higher tax bracket (and therefore a smaller tax pool). Politicians don't just mess with the rates, brackets are also changed and with all the deductions and such to change AGI, it is much harder for people to see and is therefore ignored. Any discussion of higher taxes should include a discussion of the brackets, this will also help people better understand their benefit/penalty.

 
At 5/17/2011 10:38 AM, Blogger juandos said...

Well as Dr. Sowell notes the problem isn't a tax revenue problem but a spending problem: "President Barack Obama's constant talk about "millionaires and billionaires" needing to pay higher taxes would be a bad joke, if the consequences were not so serious. Even if the income tax rate were raised to 100 percent on millionaires and billionaires, it would still not cover the trillions of dollars the government is spending"...

 
At 5/17/2011 11:20 AM, Blogger Audacity17 said...

…to create wealth will increase the national income and that a large proportion of any increase in the national income will accrue to an Exchequer, amongst whose largest outgoings is the payment of incomes to those who are unemployed and whose receipts are a proportion of the incomes of those who are occupied…
Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget. For to take the opposite view today is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more—and who, when at last his account is balanced with nought on both sides, is still found righteously declaring that it would have been the act of a gambler to reduce the price when you were already making a loss.

Krugman hero, John Maynard Keynes

 
At 5/17/2011 11:30 AM, Blogger Benjamin said...

"Don't tax you; don't tax me; tax that man behind that tree."

--Senator Russell Long

 
At 5/17/2011 11:36 AM, Blogger Larry G said...

well.. what's the truth?

were the tax rates HIGHER under Clinton but the revenues were ALSO Higher?

Right now, taxes are lower than they have been in 50 years - but so are revenues.....

true?

 
At 5/17/2011 11:57 AM, Blogger Jason said...

Larry G: Bubbles are good for high tax revenue.

 
At 5/17/2011 12:04 PM, Blogger Rich B said...

Larry-

Not true - receipts (in constant dollars) peaked in FY 2000, but were higher in FY2006 and FY2007.

 
At 5/17/2011 12:13 PM, Blogger Larry G said...

anyone got a handy list of tax rates verses revenues for say 1990 to Present - in comparative dollars?

my understanding is that right now we have the lowest tax rates in 50+ years - and we also have the lowest revenues in 50 years.

if you cut taxes... and it results in less revenues - and a structural deficit... as opposed to increased revenues that balance the budget - how do you fix that if no one who says to cut - actually does provide a list of cuts sufficient to balance the budget?

or turn this around...

if we INCREASE Taxes and Revenues don't go up and we end up with a deficit.

When has that happened?

Under Clinton, taxes were increased, revenues went up and we got a surplus.

right?

 
At 5/17/2011 1:04 PM, Blogger morganovich said...

larry-

you have to take the dot.com bubble out of that.

it created outlandish gains and tax revenues.

when that bubble burst, tax receipts dropped like a rock.

this happens after any stock market crash as people have losses to use as offsets for several years.

http://politicalcalculations.blogspot.com/2009/12/hausers-law.html

as you can see, the huge drop in tax rates from 70-30 did not reduce revenues as a % of GDP.

the tax hike under clinton is ambiguous as it coincided with a once in a generation boom from .com.

note that taxes were already dropping like a stone before tax rates were cut.

simply put, taxes as % of GDP tend to revert to a mean regardless of tax rates.

they drop in recessions and recoveries and increase during booms, but they come back to center again.

this seem to imply that we cannot increase the government's slice of the pie in any durable fashion and therefore ought to focus on maximizing the SIZE of the pie if we would close deficits.

we also need to cut spending.

the US federal budget is 25% of GDP.

and that's a nonsense number. it's just cash accounting and fails to account for all the liabilities the US is running up.

if the federal government used GAAP accounting (as every major corporation must) then its deficit exceeds $9tn. just the deficit is over 60% of GDP.

you cannot possibly close that gap with taxes, only by cutting the entitlements whose unfunded liabilities are not included in CBO numbers.


this is a bit shrill, but his numbers are correct.
http://www.kitco.com/ind/Dougherty/jan222010.html

 
At 5/17/2011 1:07 PM, Blogger Rich B said...

Larry -

Here are tax rates from the start of the Income Tax-

http://www.taxfoundation.org/publications/show/151.html

Here are historical budget numbers -

http://www.gpoaccess.gov/usbudget/fy11/pdf/hist.pdf

Knock yourself out.

 
At 5/17/2011 1:09 PM, Blogger morganovich said...

ps.

larry-

there was never a budget surplus under clinton.

that was an accounting gimmick.

http://activerain.com/blogsview/855368/the-clinton-budget-surplus-fact-or-fiction-

us debt went up ever signle year of the clinton administration.

he came close to balance in 2000 due to the one time tailwind from the .com bubble, but his claims of "surplus" are false, even using governmental accounting. (under GAAP his deficits were huge) he just took external debt and replaced it with intergovernmental debt which is the equivalent of paying off you loan to the bank with a loan from your boss and claiming yo0u are debt free.

 
At 5/17/2011 1:36 PM, Blogger Audacity17 said...

This is the best link for the Clinton "suplus".

http://www.craigsteiner.us/articles/16

 
At 5/17/2011 2:26 PM, Blogger Larry G said...

thanks...guys!

yes...

the DEFICIT is the ANNUAL shortfall

and the DEBT is the ACCUMULATION of prior annual deficits.

My understanding is that Clinton had an annual surplus but still about 5 trillion in debt (which I not sure if he had at the beginning).

I also see that there is no definitive correlation between tax rates and revenues either because as was sited... "you have to take into account [name your economic offset].

I have still yet to see 1.5 trillion in cuts from our CURRENT deficit.

Anyone got a list that adds up to 1.5 trillion?

 
At 5/17/2011 2:31 PM, Blogger Larry G said...

" Knock yourself out"

shoot.. I would have thought by now the supply-side folks would have such a chart to remove all doubt that cutting taxes generates more tax revenues.

no?

 
At 5/17/2011 2:52 PM, Blogger Rich B said...

Larry-

Top tax rate in 1980 - 70%; receipts in constant (2000) dollars - 1,029 BN.
Top tax rate in 1989 - 28% - receipts in constant (2000) dollars - 1,299 BN. Annual increase, 2.6%.

Even if you adjust for income taxes only (47% of total receipts in 1980, 45% in 1989), increase is still 2.1% per year.


Want more? Find it yourself.

 
At 5/17/2011 3:04 PM, Blogger Larry G said...

tax data from 1980 an 1989?

all I'm asking for - is for the folks who believe that lower taxes generate higher tax revenues to provide a simple chart to that effect.

and to explain why there are clearly years where lower taxes do not - like right now.

there has to be more to it than just the tax rate.

If it were that simple, it would be a no-brainer economic policy but obviously we have right now a 1.5 trillion structural deficit even though our taxes are the lowest in 50 years.

so the basic premise is not working right now and really not since 2001, right?

let's assume that we DO HAVE a spending "problem".

try as I might.. I cannot find 1.5 trillion worth of cuts in the current budget without essentially zeroing Medicare/MedicAid AND the military.

so that's not going to work.

And Paul Ryan's plan does not balance until 2040.

so how do we balance the budget with tax cuts and budget cuts?

I just don't see how to do it.

 
At 5/17/2011 3:49 PM, Blogger Terry Westley said...

For many, raising taxes on the rich is an ideological goal, not an attempt to raise tax revenues.

 
At 5/17/2011 3:53 PM, Blogger Junkyard_hawg1985 said...

Larry G, below is a math study I did on the effect of tax rates on a simple activity like goat herding. This format won't let me post the simple shart that shows a peak in revenue around a 28% tax rate (or more accurately spending level):

Goat Economics – Why the Laffer Curve is No Joke

Goat herding is one of the world’s oldest economic professions because goats are excellent at reproduction and easy to feed and raise. A female goat will on average birth around 2 kids per year. Simple math would suggest that if you start with 2 goats, you can double your herd each year. Thus in 10 years you will be quite wealthy with over 1000 goats (210 = 1024).

It turns out that goat herding is a little more complicated than that. First, the normal life expectancy of a goat is around 10 years so you will lose about 10% of a herd to old age annually. Additionally, while goats may birth two kids per year, the viability rate is around 75% so each female goat will only net an average of 1.5 new goats per year. Still, if you do the calculations, starting with 10 female goats you will have around 1496 female goats after 10 years.

Since raising goats is a rather simple economic activity, it is easy to model the impact of taxation on goat farming. Assuming the government comes and takes various numbers of the new goats (income) each year in goat taxes, one can easily calculate the impact of the size of the herd, and ultimately how much total revenue the government would receive over 10 years at various tax rates. It turns out that the optimum tax rate is in the 20-30% range to maximize total 10 year revenue.

The reason the tax revenue drops above a 30% tax rate is simple. If the government takes more new goats in taxes, the goat farmer has fewer goats to breed the following year. The smaller herd produces fewer new goats to tax each subsequent year. As a farmer, it also greatly reduced the size of the herd (wealth). Below is the cumulative ten year tax revenue when starting with 10 female goats, the tax collected in year 10 and the herd size after ten years:

Table 1. Tax Revenues and Herd Size (number of female goats) at Various Tax Rates

Tax Rate (%) 10 Yr Tax Revenues Year 10 Revenues Year 10 Herd Size

0 0 0 1496
10 122 45 939
20 170 58 577
30 178 55 345
40 164 45 201
50 141 33 114
60 117 23 62
70 94 15 32
80 76 9 16
90 60 5 8

 
At 5/17/2011 3:53 PM, Blogger Junkyard_hawg1985 said...

Part 2:

For goat farming, the chart above clearly shows that tax rates above 30% makes both the goat herder and the government poorer. In fact, long term revenues (year 10 revenues) are better around a 20% tax rate. This type of revenue curve is exactly what Arthur Laffer would predict with the Laffer Curve. Laffer stated that there are two known revenue points for tax rates. At a 0% tax rate, tax revenue is zero; and at a 100% tax rate, the tax revenue is zero. Somewhere in between these two limits, there is a maximum revenue point for taxation. In the case of raising goats, at a 90% tax rate the herd gets smaller over time. In this example, the goat farmer would have a barbeque in year 1 instead of wasting his time raising goats and the government would in actuality get zero revenue at a 90% tax rate.

It is also worth noting the wealth effect in this example. For a tax rate of 30% vs. 20%, the extra revenue is 7 goats over 10 years for the government, but the size of the herd shrinks by 232 goats for the goat farmer. In this example, there is a definite multiplier effect for additional government spending. Government spending destroys wealth at a multiple of what it collects from the farmer.

For a goat farmer, government is necessary and does play a very worthwhile role. The government prevents foreign armies from invading and taking the goats (national defense), other people from stealing the goats (justice), or someone from running the goat farmer off the land he uses to raise goats (protect property rights).

If you look at current government spending, there is room for improvement to boost economic growth. Total government spending (Federal, state, and local) for 2009 was around 45% of GDP. In the example with goat farming, it does not matter whether the government is getting this money through taxing new goats (income tax), borrowing goats from the herd (deficit spending), or stealing the goats at night (monetizing debt). The fact remains that for this example, they are eating 45% of the new goats. This destroys wealth and lowers future tax revenues.

As much as I hate to say it, when I see our president and Congress raising taxes and spending more to stimulate the economy, it really gets my goat.

 
At 5/17/2011 4:02 PM, Blogger Larry G said...

goats?

 
At 5/17/2011 4:04 PM, Blogger Junkyard_hawg1985 said...

Yes Goats. They are a previous form of money - see biblical story of Judah and Tamar.

 
At 5/17/2011 4:28 PM, Blogger Larry G said...

Lord!

 
At 5/17/2011 4:42 PM, Blogger Larry G said...

"Assuming the government comes and takes various numbers of the new goats (income) each year in goat taxes, one can easily calculate the impact of the size of the herd,"

the larger economy does not work that way.

There are multiple goat herders... as many and more than there are buyers for the goats and what they produce.

so many, in fact, the govt decided they needed to put restrictions on how many goats (tobacco, dairy, corn, etc) people would produce INSTEAD of using higher taxes to tamp down the over production.

Take alcohol, cigarettes, illegal drugs, gambling, etc, etc, etc,... how come higher taxes don't stop that activity?

Your concept is simple - minded... guy...

I buy the essence of what you are saying but the bigger economy is more complex than that.

not to mention the fact that tax evasion ... the "hiding" of your goats when the taxman commeth.. is rampant also.

goats might be limited by nature's reproductive and longevity laws but a whole lot of other economic endeavors are not so limited... ask the wall street guys or the speculators...

but if your premise was actually true - you could show me a simple chart of tax rates and tax revenues... and I could pick any year and use that chart to predict the revenues - and we cannot do that.

goats? uh huh....

by creative...

 
At 5/17/2011 5:39 PM, Blogger Methinks said...

Right now, taxes are lower than they have been in 50 years - but so are revenues.....

What Jason said, but also the top marginal tax rate was reduced to 28% as part of the Tax Reform Act of 1986. We're at 35% today.

 
At 5/17/2011 5:48 PM, Blogger Methinks said...

and to explain why there are clearly years where lower taxes do not - like right now.

So many reasons.

1.) We all know the tax rates are temporary and we're not going to make long term investments when we know taxes will be jacked up wildly in 2013 (when the Bush tax RATE cuts expire and the Obamacare taxes kick in).

2,) Even though tax rates are low, the tax burden isn't. The tax burden is otherwise known as the exploding national debt and people smart enough to make money are also smart enough to figure out who is going to be tapped to pay for it.

3.) Regime uncertainty. Regulation is expanding like crazy. It's virtually impossible to predict which business will be killed off next, making it impossible to plan. I face it as a broker dealer. Just ask Morganovich what fresh hell Frank Dodd has delivered to him.

4.) Tightening of lending standards and unwillingness of banks to lend. At the same time as the central bank has been running the printing presses, it has tightened lending standards for member banks. That means that the banks aren't lending. And why bother making risky loans when they can borrow at 0% to 25bps, buy treasuries and make a nice, risk free profit on the spread?

I'm sure there are other reasons.

 
At 5/17/2011 5:52 PM, Blogger Larry G said...

http://www.usatoday.com/money/perfi/taxes/2010-05-10-taxes_N.htm

thoughts?

 
At 5/17/2011 6:05 PM, Blogger Larry G said...

http://www.ntu.org/tax-basics/history-of-federal-individual-1.html


Historical Income Tax Rates & Brackets


Historical Income Tax Rates & Brackets
Tax Rates 1

Bottom bracket Top bracket

Calendar Year Rate (percent)
Taxable Income Up to Rate (percent)
Taxable Income over Rate (percent)


1986 8 11 2,270 50 171,580
1987 8 11 3,000 38.5 90,000
2001 8 15 45,200 39.1 297,350
2002 8 10 12,000 38.6 307,050
200311 8 10 14,000 35.0 311,950
2004 8 10 14,300 35.0 319,100
2005 8 10 14,600 35.0 326,450
2006 8 10 15,100 35.0 336,550
2007 8 10 15,650 35.0 349,700
2008 8 10 16,050 35.0 357,700

 
At 5/17/2011 6:15 PM, Blogger Hydra said...

Lets set the rate at zero and get infinite revenue.

 
At 5/17/2011 6:21 PM, Blogger Hydra said...

The goat argument is flawed because the effective tax rate is much higher than stated. What you have here is a tax on gross revenue, not net income.

28% of net income for a goat farmer is probably only a tiny fraction of a goat.

 
At 5/17/2011 6:26 PM, Blogger Audacity17 said...

For those of you still arguing this.. read it again. This is John Maynard Keynes, hero of Krugman, founder of "demand side" economics, advisor to Roosevelt.

"Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget. For to take the opposite view today is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more—and who, when at last his account is balanced with nought on both sides, is still found righteously declaring that it would have been the act of a gambler to reduce the price when you were already making a loss."

 
At 5/17/2011 6:44 PM, Blogger Larry G said...

I'm not so much interested in words, people's opinions and "theories" as much as I am in actual historical performance with respect to tax rates.

there's got to be a chart ... given the number of folks who insist this is the truth.

right?

 
At 5/17/2011 7:32 PM, Blogger Rufus II said...

Larry, in 2000 GDP was 9,764,800,000,000.00 GDP 2000

Tax Collections were 2,025,038,000,000.00 in 2000. Tax Collections

That comes out to collections equalling 20.7% of GDP.

I'll look up Bush, later, but even with his "housing boom" he didn't come close to 20.7%.

 
At 5/17/2011 7:38 PM, Blogger PeakTrader said...

Wikipedia:

In June 1937, the Roosevelt administration cut spending and increased taxation in an attempt to balance the federal budget.

The American economy then took a sharp downturn, lasting for 13 months through most of 1938.

Industrial production fell almost 30 per cent within a few months and production of durable goods fell even faster. Unemployment jumped from 14.3% in 1937 to 19.0% in 1938...Manufacturing output fell by 37% from the 1937 peak and was back to 1934 levels.

 
At 5/17/2011 7:40 PM, Blogger Larry G said...

nice anecdotal... but how about a chart from say 1940 til 2010 showing tax rate vs revenues?

 
At 5/17/2011 7:44 PM, Blogger PeakTrader said...

How to prevent a double dip or a slow U-shaped recovery:

1. Cut government spending.
2. Cut taxes.
3. Deregulate (e.g. energy, health care, education, etc.).

Federal spending has increased by over $1 trillion and federal revenue has decreased, since 2007:

Federal spending 2007: $2.73 trillion.
Federal revenue 2007: $2.57 trillion.
Budget deficit 2007: $161 billion.

Federal spending 2011: $3.82 trillion.
Federal revenue 2011: $2.17 trillion
Budget deficit 2011: $1.65 trillion.

(2011 estimates)

 
At 5/17/2011 7:45 PM, Blogger Rufus II said...

In 2006 tax collections were 2,406,681,000,000.00.

GDP was 14,657,800,000,000.00

for a percentage of 16.4%.

 
At 5/17/2011 7:51 PM, Blogger Rufus II said...

Oops, my mistake. 2006 GDP was 13,201,820,000,000.00.

 
At 5/17/2011 7:54 PM, Blogger Rufus II said...

For 18.2% of GDP.

 
At 5/17/2011 7:56 PM, Blogger Methinks said...

So, Larry, you want to draw conclusions by yanking out one variable from an economy with a great many variables and attribute everything that happens to that one variable.

Not only is that not scientific, but the word "stupid" keeps springing to mind.

What if, Lar, we dropped the top marginal tax rate to 15%, but passed a law making profits illegal. What do you suppose would happen to tax revenue then, eh?

It's virtually impossible to measure the effects of, say, regime uncertainty. But, our inability to measure it doesn't mean it doesn't exist. Add in the Fed's enthusiastic aiding of bubbles, and the question becomes that much more complicated.

Theoretically, if I take 100% of the next dollar you make, you won't be willing to work for that dollar. That seems like pretty sound theory to me, but if you're willing, I have a job for you. Theory also tells us that at a tax rate of 90%, fewer people will be willing to work for the marginal dollar than at an 80% tax rate, a 70% tax rate, a 60% tax rate, etc. At some point, the tax rate will be low enough that the overwhelming majority of people are not disincentivized to earn the next (marginal) dollar.


What's that rate? That's an empirical question.

Economics is complicated. It is interesting that no matter what the tax rate is, the collection rate as a percentage of GDP is constant. It seems you have a choice - either you accept a lower tax rate and a higher GDP or you accept a higher tax rate and (because of the incentive effect) a lower GDP.

Cherry picking data points and pointing out that they deviate from expected and then rejecting a discussion of the reasons for this is just dumb.

 
At 5/17/2011 8:06 PM, Blogger Rufus II said...

2,567,671,000,000.00 was revenue for 2007.

GDP was 13,840,000,000,000.00

For a number of 18.5%.

 
At 5/17/2011 8:09 PM, Blogger Rufus II said...

So, in Bush's two best years he collected 18.2 and 18.5%

Clinton, with a 39% top rate collected 20.7 in 2000.

Now, while we're here, let's look up 1999. Be right back.

 
At 5/17/2011 8:10 PM, Blogger Larry G said...

"So, Larry, you want to draw conclusions by yanking out one variable from an economy with a great many variables and attribute everything that happens to that one variable.

Not only is that not scientific, but the word "stupid" keeps springing to mind."

I'm suggesting that if one is making the claim that they provide something more than their beliefs. a nice chart would do but you choose how you want to show it.

but I don't buy blather.


"What if, Lar, we dropped the top marginal tax rate to 15%, but passed a law making profits illegal. What do you suppose would happen to tax revenue then, eh?"

I don't know or care because again.. we're dealing in conjecture and beliefs but I'd be opposed to any restrictions what-so-ever on profits and, in fact, I do not think businesses that create jobs should be taxed at all.

"It's virtually impossible to measure the effects of, say, regime uncertainty. But, our inability to measure it doesn't mean it doesn't exist. Add in the Fed's enthusiastic aiding of bubbles, and the question becomes that much more complicated."

setting budget policy that way doesn't seem particularly smart unless you have a solid Plan B if your theory does not work.

"Theoretically, if I take 100% of the next dollar you make, you won't be willing to work for that dollar. That seems like pretty sound theory to me, but if you're willing, I have a job for you. Theory also tells us that at a tax rate of 90%, fewer people will be willing to work for the marginal dollar than at an 80% tax rate, a 70% tax rate, a 60% tax rate, etc. At some point, the tax rate will be low enough that the overwhelming majority of people are not disincentivized to earn the next (marginal) dollar.


What's that rate? That's an empirical question."

and wasting time...and bandwidth.

"Economics is complicated. It is interesting that no matter what the tax rate is, the collection rate as a percentage of GDP is constant. It seems you have a choice - either you accept a lower tax rate and a higher GDP or you accept a higher tax rate and (because of the incentive effect) a lower GDP.

Cherry picking data points and pointing out that they deviate from expected and then rejecting a discussion of the reasons for this is just dumb."

setting economic policy on unproven theories with the excuse that they are too complicated to prove.. and then having no Plan B if your theory fails is dumb too, eh?

I'm all for supply-side as long as we have a Plan B....

but the current approach is for dunderheads

Even David Stockton says that.

http://www.nytimes.com/2010/08/01/opinion/01stockman.html?adxnnl=1&ref=opinion&adxnnlx=1305680968-tQU2gbp56WlSJSZLqANLIQ

 
At 5/17/2011 8:12 PM, Blogger PeakTrader said...

The Obama Growth Discount
APRIL 15, 2011

If we had matched the 1982 recovery rate, today annual per-capita income would be $4,154 higher than before the recession—that's an extra $16,600 for a family of four—and some 15.7 million more Americans would have jobs.

Some apologists suggest that the current recovery is so weak because the recession was so deep. But the totality of our experience in the postwar period is exactly the opposite—the bigger the bust, the bigger the boom that follows.

The Output Gap
January 19, 2011
Paul Krugman

"...there will be a $2.9 trillion gap between what the economy could produce and what it will actually produce (over four years; 2008-2009-2010-2011, based on real output)."

My comment: We still need pro-growth policies that will reduce the unemployment rate faster.

So, the economy can expand faster to raise tax revenues, and lower unemployment benefits, which will help shrink budget deficits.

 
At 5/17/2011 8:16 PM, Blogger Larry G said...

" Through the 1984 election, the old guard earnestly tried to control the deficit, rolling back about 40 percent of the original Reagan tax cuts. But when, in the following years, the Federal Reserve chairman, Paul Volcker, finally crushed inflation, enabling a solid economic rebound, the new tax-cutters not only claimed victory for their supply-side strategy but hooked Republicans for good on the delusion that the economy will outgrow the deficit if plied with enough tax cuts."

" By fiscal year 2009, the tax-cutters had reduced federal revenues to 15 percent of gross domestic product, lower than they had been since the 1940s."

http://goo.gl/fSSqF

David Stockton, July 31, 2010 NYT

 
At 5/17/2011 8:17 PM, Blogger Rufus II said...

Revenues for 1999 were 1,827,285,000,000.00

GDP was 9,216,200,000,000.00

Give a 19.8% GDP to Collections ratio.

 
At 5/17/2011 8:23 PM, Blogger PeakTrader said...

In the late '90s, higher tax rates were more than offset by:

The "peace dividend" (after we won the Cold War), $10 oil, and other low commodity prices, the Baby-Boomers reaching their peak productive years, a structural bull market (from 1982-00), the height of the Information Revolution, the Workfare bill, a GOP House and Senate that didn't restrict economic growth, etc..

 
At 5/17/2011 8:24 PM, Blogger Rufus II said...

So, to review the bidding. Bubba Clinton had a 39% top tax rate. In his final two years he collected 20.7, and 19.8% of GDP.


Dubya had a 35% top rate. His two best years yielded 18.2 and 18.5%

Looks like cutting from 39% to 35% was Not a Revenue Maximizing Strategy.

 
At 5/17/2011 8:33 PM, Blogger Larry G said...

good job Rufus!

thank you.

3....2.....1... here they come!

 
At 5/17/2011 8:49 PM, Blogger PeakTrader said...

And "In his final two years he collected 20.7, and 19.8% of GDP."

Then we had the Clinton recession.

Fortunately, Greenspan's accommodative monetary policy and Bush's expansionary fiscal policy (i.e. tax cuts) prevented a deeper recession.

 
At 5/17/2011 8:56 PM, Blogger Rufus II said...

Brings up an interesting question. How are we doing, NOW?

Le's look.

1,309,439,000,000.00 are the Revenues through April.

Let's figure YTD GDP at 7/12 of 14.5 T (I'm assuming that's fairly close.) About 8.46 T.

15.4%

I don' thin' we're ezzackly "Overtaxed" at the present. :)

 
At 5/17/2011 8:58 PM, Blogger Rufus II said...

The Clinton Recession was, actually, pretty shallow. That Bush Recession, on the other hand, has been a doozy.

 
At 5/17/2011 9:02 PM, Blogger Larry G said...

well. now we know why the supply siders won't do that chart, eh?

 
At 5/17/2011 9:23 PM, Blogger Rufus II said...

Thing is, Larry, I tend toward the "supply" side, myself. However, you have to apply a certain amount of common sense.

It's obvious some (quite a lot) spending has to be cut. The Middle East, and Afghanistan are draining us dry. The Pres really needs to call in all of his Dept Heads, and say, "Okay, each of you are going to have to lose 10%.)

Those extended unemployment benefits could probablly be worked with, a bit. There are a few reasonable things that could be done with Soc Sec.

But, Taxes are going to Have to be a part of any real solution. Our Corporate Tax Regime is a Total Mess. Cap Gains, and Dividend taxes are going to have to be raised a bit. And, all but the very poorest are going to have to see a little nip around the edges.

Will the 'producers' quit producing if their tax rate increases 3, or 4%? I never would have; I doubt the present ones will either. Ah, enough. I've riled the natives enough. Now, I'm going to go watch TV, while the storm passes. :)

 
At 5/17/2011 9:38 PM, Blogger Larry G said...

Rufus - I too believe in supply side - with a Plan B backup as opposed to the "it's gotta work or else" school of thought.

David Stockton makes the same point in his Op Ed.

" More fundamentally, Mr. McConnell’s stand puts the lie to the Republican pretense that its new monetarist and supply-side doctrines are rooted in its traditional financial philosophy. Republicans used to believe that prosperity depended upon the regular balancing of accounts — in government, in international trade, on the ledgers of central banks and in the financial affairs of private households and businesses, too. But the new catechism, as practiced by Republican policymakers for decades now, has amounted to little more than money printing and deficit finance — vulgar Keynesianism robed in the ideological vestments of the prosperous classes.

This approach has not simply made a mockery of traditional party ideals. It has also led to the serial financial bubbles and Wall Street depredations that have crippled our economy."

the problem with the "supply side or "bust" approach is if you end up with a deficit then what do you do?

Well, the Republicans run.....

as far and as fast as they can from the deficit...

oh they shout "cut, cut, cut" but they don't have a list of cuts sufficient to get rid of the deficit.

So then they do what Paul Ryan did... bail on the entitlements and employ even more supply-side cuts to take care of the rest of the deficit

Ryan's "plan" reaches balance in 2040 and assumes a 3% unemployment rate to get there.

used to be the Republicans were real fiscal conservatives.

The goal was a balanced budget.

Now.. the goal seems to be tax cuts and spending cuts but the list of spending cuts sufficient to balance are AWOL. missing in action...

not even Ryan provides a list of cuts but instead plays the supply-side game...

that's ... irresponsible fiscal policy.

it's unconscionable fiscal policy

in fact, calling it fiscal policy is a joke.

 
At 5/17/2011 9:58 PM, Blogger Rufus II said...

Well written, well argued.



My work here is done. :)

 
At 5/18/2011 12:00 AM, Blogger Methinks said...

Budget planning? Business taxes. WTF?

I see, Larry. You just don't have any idea what's going on and you are an economic illiterate with no desire to fix that flaw.

Sorry to have taxed your small intellect.

 
At 5/18/2011 2:19 AM, Blogger PeakTrader said...

If every economic period was the same, you could make the same generalization.

However, each economic period is different. There are major and minor "structural breaks."

Also, it should be noted, the stock market bubble from 1995-00, where the market reached spectacular new highs, raised tax revenues substantially from capital gains and the Alternative Minimum Tax, which were not sustainable.

 
At 5/18/2011 3:45 AM, Blogger Ron H. said...

"let's assume that we DO HAVE a spending "problem"."

LMAO - You are being cute, right?

Is there actually some doubt in your mind? With the 2011 deficit estimated at $1.645 tn based on estimated revenues of $2.173 tn and outlays of $3.818 tn, what do YOU think? What would you do if your budget was nearly twice your income?

Here is one plan to cut the budget.

 
At 5/18/2011 3:48 AM, Blogger Ron H. said...

"I just don't see how to do it."

No surprise there.

 
At 5/18/2011 4:06 AM, Blogger Ron H. said...

"I buy the essence of what you are saying but the bigger economy is more complex than that."

Actually, Larry, as is usual with you, you don't appear to have the slightest clue what he's saying, as indicated by the nonsense you responded with.

Keep it simple. Read the comments carefully, and follow the accumulations of goats. The chart isn't formatted as well as it could be, but it's all there.

Try again. Don't add anything, and don't speculate on what the goats are used for. In this example, none are spent. They are all kept and used to produce more goats.

Everyone realizes the real world is more complicated than that, but the same principal applies as to income, tax rates, accumulated wealth, and government tax revenue.

 
At 5/18/2011 4:17 AM, Blogger Ron H. said...

"The goat argument is flawed because the effective tax rate is much higher than stated. What you have here is a tax on gross revenue, not net income."

Don't start that ignorant crap again. You showed how clueless you are on this subject, and how poor your math and logical thinking skills are, almost a year ago. I see nothing has improved for you. Please don't waste anyone's time again.

 
At 5/18/2011 5:04 AM, Blogger Ron H. said...

"there's got to be a chart ... given the number of folks who insist this is the truth."

From "Political Calculations" blog:

Hauser's Law

Click on the chart to enlarge.

 
At 5/18/2011 5:35 AM, Blogger Larry G said...

" "I just don't see how to do it."

No surprise there. "

do you have the list of cuts?

does anyone?

" Here is one plan to cut the budget. "

does it total to 1.5 trillion or is it more right-wing blather that does nothing but pollute the air?

hint: it's the latter.

we have the lowest taxes and lowest tax revenues in 50 years.

At the same time - we've gotten involved in two wars and passed a new drug benefit program that adds to that deficit.

The tax cut idiots don't want to pay for the wars.

They keep insisting that we can pay for the wars (but not entitlements) by cutting taxes more.

David Stockton - the original Ronald Reagan Supply-sider has called folks like you total idiots for not understanding that the primary responsibility of any fiscal conservative is to BALANCE THE BUDGET - FIRST and then play supply-side economics.

But you guys are bass ackwards.

ya'll want to play supply-side but then run and hide when it creates a deficit...

and refuse to pay for what you put in the budget - the two wars and other budget-increasing expenditures.

it's totally irresponsible and ya'll sound like second graders demanding things be done your way but thing refusing to take any responsibility for the outcomes.

budget illiteracy?

ha ha ha

anyone who continues to insist that taxes are too high at the same time we spend more than we can pay for

AND they refuse to show their cuts SUFFICIENT TO BALANCE the budget - there's budget "illiteracy" going on alright - but you don't recognize the source of it - your own dunderhead ideological blather

 
At 5/18/2011 9:05 AM, Blogger morganovich said...

"Looks like cutting from 39% to 35% was Not a Revenue Maximizing Strategy."

that's a very disingenuous claim.

clinton benefited from the .com boom and the cast tax revenue created by the biggest equity bubble since ww2.

take out that and he did not better.

note that dropping tax revs from 70% to 30% did NOT result in a drop in % of gdp.

 
At 5/18/2011 9:58 AM, Blogger morganovich said...

This comment has been removed by the author.

 
At 5/18/2011 10:03 AM, Blogger morganovich said...

larry-

i fear it is you who are bass ackwards.

there is NO POSSIBLE WAY to balance the budget through tax increases.

the GAAP budget deficit is over 50% of GDP. you can pretend that the government cash accounting nonsense is meaningful, but that will not make it so. they are just kicking the can down the road racking up unfunded liabilities that will have to be paid in coming years.

there is NO tax rate that would pay for them.

cutting them is literally the only possible option.

means test social security. raise the benefits age to 70 or 75. ultimately, transition it to individual accounts.

take medicare and medicaid and make them into HSA style cash grants (that can be use to buy insurance). this is the ONLY way to rein in the costs, which are exploding. imagine how food stamps would work if instead of having a dollar value, it was a credit card with an unlimited balance that let you eat anywhere you want and you'll see why the medi system CANNOT continue as it has.

if we cut defense, SS, and Medi in half, we are most of the way to closing the gap on a cash basis. if we change the structure of medi and ss to prevent the coming explosion in costs, we can bring GAAP costs into line.

but nothing else can possibly work.

US aggreagte houshold income is a bit under $6 trillion a year. disposable income is maybe $4tn. business makes maybe $1.5tn.

how do you get $7tn in taxes to close the from 5tn in overall disposable income (corporations need to reinvest)?

150% tax rates?

hell, how could you even close our reported cash deficit of 1.5tn?

that would require taking 30% of US disposable and corporate income IN ADDITION to the taxes we already pay. you're talking about a flat tax rate of 50% on every bit of income in the US with NO tax shelters of any kind. realistically, that would mean something more like an 80% top tax bracket. that would devastate the US economy. it would also cause vast capital flight as the wealthy took their money and left. if 10% of the top 1% of taxpayers leave, that's a 4% of GDP budget deficit.

wake up and smell what you're shoveling larry.

the math just doesn't work.

there is no way to tax ourselves out of this hole.

 
At 5/18/2011 10:15 AM, Blogger Larry G said...

ss and Medicare part A are NOT funded from Income Taxes and cutting them will do NOTHING for the CURRENT budget deficit.

Medicare part B and MedicAid are about 400 billion of the budget.

You have a 1.5 TRILLION structural deficit and I'yet to see ANYONE with a list of cuts that total to 1.5 trillion.

where is that list?

Even Ronald Reagan'supply-side budget guru - the original supply-sider says this.

youse guys are living in a dream world.

Taxes and tax revenues are the lowest in 50 years as well as the smallest percent of GDP.

When you insist on supply-side economics and won't produce the 1.5 trillion in cuts - you lose all credibility.

you're basically into theories and you run away from the realities.

 
At 5/18/2011 10:19 AM, Blogger Junkyard_hawg1985 said...

"I buy the essence of what you are saying but the bigger economy is more complex than that." - Larry G

Of course the real economy is more complex than that. The real economy is a collection of thousands of economic activities that all have their separate tax rate vs. revenue curves. When you combine all of these curves, you get an overall curve. My math skills are not good enough to tell you exactly where the combination of thousands of economic activities provide a revenue peak. With the goat example - one economic activity - it was between 20-30%.

This example provides one of the big problems that I hear being made on this thread - people are looking at top tax rates as the overall tax rate. In the goat example, if you charged half of the goat herders a 10% tax and the other half had a tax rate of 50%, you would not get as much revenue as if you charged all goat herders a 30% tax. In the same way, the comparison between the best Clinton years and the best Bush years have the same problem. While Bush cut the top tax rate from 39.6% to 35%, he also cut the bottom tax rate from 15% to 10%. Looking at the goat curves, this does not help overall tax collection as the amount collected on the low end has a real effect on tax collections.

 
At 5/18/2011 10:32 AM, Blogger juandos said...

rufus says: "I don' thin' we're ezzackly "Overtaxed" at the present. :)"...

Well rufus old son, no one is stopping you from paying more if you think its worth it...

Gifts to the United States Government

Citizens who wish to make a general donation to the U.S. government may send contributions to a specific account called "Gifts to the United States." This account was established in 1843 to accept gifts, such as bequests, from individuals wishing to express their patriotism to the United States...

Gifts to the United States
U.S. Department of the Treasury
Credit Accounting Branch
3700 East-West Highway, Room 622D
Hyattsville, MD 20782

Knock yourself out lad!

 
At 5/18/2011 10:35 AM, Blogger juandos said...

"hoot.. I would have thought by now the supply-side folks would have such a chart to remove all doubt that cutting taxes generates more tax revenues"...

Well Larry G you might find this bit from the Heritage Foundation both educational and entertaining: Ten Myths About the Bush Tax Cuts

Published on January 29, 2007 by Brian Riedl

 
At 5/18/2011 10:38 AM, Blogger Larry G said...

Year Revenues %GDP outlay diff
1989 5,399.5 18.4 21.2 -2.8
1990 5,734.5 18.0 21.9 -3.9
1991 5,930.5 17.8 22.3 -4.5
1992 6,242.0 17.5 22.1 -4.7
1993 6,587.3 17.5 21.4 -3.9
1994 6,976.6 18.0 21.0 -2.9
1995 7,341.1 18.4 20.6 -2.2
1996 7,718.3 18.8 20.2 -1.4
1997 8,211.7 19.2 19.5 -0.3
1998 8,663.0 19.9 19.1 0.8
1999 9,208.4 19.8 18.5 1.4
2000 9,821.0 20.6 18.2 2.4
2001 10,225. 19.5 18.2 1.3
2002 10,543. 17.6 19.1 -1.5
2003 10,979. 16.2 19.7 -3.4
2004 11,685. 16.1 19.6 -3.5
2005 12,445. 17.3 19.9 -2.6
2006 13,224. 18.2 20.1 -1.9
2007 13,891. 18.5 19.6 -1.2
2008 14,394. 17.5 20.7 -3.2
2009 14,097. 14.9 25.0 -10.0
2010 14,508. 14.9 23.8 -8.9
2011 est 15,079 14.4 25.3 -10.9

http://www.whitehouse.gov/omb/budget/Historicals/

Table 1.2—Summary of Receipts, Outlays, and Surpluses or Deficits (-) as Percentages of GDP: 1930–2016

 
At 5/18/2011 10:40 AM, Blogger Larry G said...

Year Revenues %GDP

1989 5,399.5 18.4
1990 5,734.5 18.0

2007 13,891. 18.5
2008 14,394. 17.5
2009 14,097. 14.9
2010 14,508. 14.9
2011 est 15,079 14.4

 
At 5/18/2011 11:16 AM, Blogger juandos said...

'http://www.whitehouse.gov/omb/budget/Hi'...

LMAO!

The Myth of the Clinton Surplus

by Craig Steiner

 
At 5/18/2011 11:30 AM, Blogger Larry G said...

so I post credible data that shows the facts and you LMAO and then turn around and post clearly biased misinformation?

you guys are a stitch.

up is down, down is up... govt stats are lies... and info from whackos is the truth.

 
At 5/18/2011 11:33 AM, Blogger morganovich said...

"ss and Medicare part A are NOT funded from Income Taxes and cutting them will do NOTHING for the CURRENT budget deficit."

what color is the sky on your world larry?

SS is in deficit. so is medicare. these are projected to get worse from now until forever.

and that's just on a cash basis. on a GAAP basis, they are running deficits equivalent to 30% of GDP.

THAT is going to have to be paid for with something.

entitlements are already 50-60% of the budget depending on what you count as an entitlement. SS + medi is 45% right there. are you telling me that half of federal taxes collected are FICA? BS.

the CBO estimates that entitlements will be 12% of GDP by 2021. do the math. personal and corporate disposable and free cash flow are about 35% of GDP you could push that number to 50% if you include ALL income. so you will need to take something between 25-36% of ALL income in 2021 just to pay entitlements. FICA ain't gonna cover that. the entire tax base of the US as it exists wont cover that. if you doubled the US tax base to 37% of GDP, you could not cover that combined with interest on the debt, and you would crush the economy if you tried it..

they are already drawing from the general fund, but they will consume ALL if it in short order.

medicare alone if projected to be 966bn a year by 2018.

that's

 
At 5/18/2011 11:40 AM, Blogger morganovich said...

ps-

i have given you the list of cuts:

SS 50% - means test and increase the age from 65 to 70 or 75.

going from 65-75 alone would cut the cost in half. when SS was put in place 65 was the average life expectancy. the average recipient got 0 years of benefits. now they get 21. cut it to 11-16 and index it to life expectancy.

add means testing to that, and you might be able to cut it by 70-75%.

ultimately, move it to individual accounts and get the government out of this business entirely.

medi 50% cuts and hard limits on spending. this needs to be handled on a cash basis like food stamps, not an all you can eat buffet at the restaurant of your choice.

defense - 50% cuts

that right there would balance the budget.

then, get rid of all tax breaks and subsidies for special interests. no more farm subsidies, ethanol, greentech nonsense, no mortgage interest tax deduction, all of it.

now you are in surplus.

you have not increased income or corporate taxes. (though lowering corp taxes would likely increase revenue by removing incentives to offshore)

that wasn't so hard, was it?

 
At 5/18/2011 11:50 AM, Blogger morganovich said...

larry-

and what is it you think those % numbers show?

they are very stable.

clinton raised taxes in 1992 and nothing meaningful happened.

then, we had the dot.com boom a once in a generation situation. that upped revenues. then, it burst. revenues dropped. you see the same pattern (with a smaller upside amplitude as real estate booms do not generate tax revenues the way that equity ones do) and then a similar drop in revenues as losses were absorbed and carried forward.

go back and look at the data since WW2. there is NO meaningful r squared between tax rates and taxes as % of government revenue.

tax rates dropped consistently from 1965-1990 and tax receipts were incredibly stable.

tax cuts or increases only have effects for maybe 3 years, then the economy tax base adjusts.

hauser's law is called a law for a reason. like gravity, you can pretend it doesn't apply, but the results will be disastrous.

 
At 5/18/2011 12:01 PM, Blogger Larry G said...

"SS is in deficit. so is medicare. these are projected to get worse from now until forever."

SS and Medicare part A are funded from FICA taxes and are not in overall deficit because they have built up a 2 trillion surplus over the years.

They ARE GOING TO BE - NOT in deficit but will have to pay out reduced benefits if no reforms but FICA will continue to generate over a trillion dollars a year to fund SS/PartA.

"and that's just on a cash basis. on a GAAP basis, they are running deficits equivalent to 30% of GDP."

that's horse manure

"THAT is going to have to be paid for with something."

they are paid for with FICA taxes ... got it?

"entitlements are already 50-60% of the budget depending on what you count as an entitlement. SS + medi is 45% right there. are you telling me that half of federal taxes collected are FICA? BS."

FICA is a SEPARATE TAX from the Income Tax. If you work dude, go look at your pay stub and you will see THREE BOXES. One for income tax, one for FICA SS and one for FICA Medicare (part A).

You are also wrong on entitlements. no surprise there.

The two larger entitlements are Medicare Part B and MedicAid.

They are about $500 billion of the budget.

"the CBO estimates that entitlements will be 12% of GDP by 2021."

it's important to know what the entitlements are and what funds them.

The CBO also says that by 2021, 40% of our GDP will be health care including private healthcare.

FICA ain't gonna cover that.

3/4 of workers pay MORE in FICA taxes than income taxes.

what happens to FICA/SS/Medicare part A if no reforms is that benefits will be reduced to about 75% of original schedule.

FICA will continue to generate more than a trillion dollars a year in funding.

"the entire tax base of the US as it exists wont cover that."

Again - you have to understand the two funding streams - FICA and Income Tax... how much each side generates - and what they are spent for.

When you subtract FICA / SS / Medicare Part A (what they call "off" budget) from the overall budget you are left with:

General Govt
Military
MedicAid
Medicare Part B

Income taxes generate about 2.1 trillion but the 4 categories above spend 3.6 trillion.

pick your cuts.

Even if you ZEROED MedicAid an Medicare part B - you still have more than a trillion dollar debt.

The military is 800 billion +/-.

You could ZERO the ENTIRE military PLUS MedicAID/Medicare part B and you'd STILL not balance the budget.

I keep asking for the list of cuts sufficient to add up to 1.5 trillion and no one provides it.

and the reason why is that there is no way to get there by cuts alone.

David Stockton - the Reagan-era supply-side guru says the same thing.




if you doubled the US tax base to 37% of GDP, you could not cover that combined with interest on the debt, and you would crush the economy if you tried it..

they are already drawing from the general fund, but they will consume ALL if it in short order.

medicare alone if projected to be 966bn a year by 2018.

 
At 5/18/2011 12:03 PM, Blogger Larry G said...

"and what is it you think those % numbers show?"

they show that revenues right now are the lowest as a percent of GDP than they've been for decades.

 
At 5/18/2011 12:11 PM, Blogger Larry G said...

Here's a Primer:

Social Security - $761 billion
Medicare - $468 billion
Medicaid - $269 billion

"Medicare is two parts - A & B - A is funded from FICA like SS is.

Part B is funded from premiums and income tax (about 1/2 subsidized from income taxes).

" How Is Social Security Funded?:

Social Security is funded through payroll taxes. Through 2017, Social Security collects more in tax revenues than it pays out in benefits because there are 3.3 younger workers for every beneficiary. This created a surplus in the Social Security Trust Fund."

How Is Medicare Funded?:

Unlike Social Security, Medicare payroll taxes and premiums cover only 57% of current benefits. The remaining 43% is financed from general revenues. Because of rising health care costs, general revenues would have to pay for 62% of Medicare costs by 2030. As with Social Security, the tax base is insufficient to pay for this.

Medicare has two sections:

The Medicare Part A Hospital Insurance program, which ...

collects enough payroll taxes to pay current benefits.


Medicare Part B, the Supplementary Medical Insurance program, and Part D, the new drug benefit, which is covered by premium payments and general tax revenues.

so SS and Medicare Part A are paid for through more than a trillion in FICA Taxes and although they are GOING TO BE in trouble, they are not the cause of the CURRENT DEFICIT.

Whereas Medicare Part B and MediAID ARE....

to the tune of about $500 billion - which is about 1/4 of current revenues from income taxes.

http://useconomy.about.com/od/fiscalpolicy/p/Mandatory.htm

 
At 5/18/2011 12:24 PM, Blogger morganovich said...

"they show that revenues right now are the lowest as a percent of GDP than they've been for decades."

and after the largest bust and destruction of personal wealth since the great depression and with u-6 at it's highest levels in a generation, you find this surprising?

taxes collected as a % of GDP were going up after the tax cuts until the bust in 2008.

you seem to be mistaking a near depression for tax policy changes.

less profit and more losses to write off = less taxes as a % of GDP.

also: look at where all the profits have come from. corporate profits ex financial institutions declined in q4. financial gains may be recognized as profits under GAAP, but they are not taxable until you sell.

 
At 5/18/2011 12:25 PM, Blogger Junkyard_hawg1985 said...

Larry G. Here is the 2011 Junkyard Hawg Style:

Dept. of Defense: $714B
Dept. of Justice: $31B
Dept. of State: $18B
Dept. of Teasury: $18B
Interest: $250B
Veterans Dept.: $123B
Civil Eng: $6B
Dept of Commerce: $6B
Dept of Interior: $13B
Social Security: $791B
Medicare: $489B
All others: $105B
Total Expenses: $2567B
Total Revenue: $2567B

Note: This budget eliminates all farm supports, all foreign aid, all "negative income tax" (i.e. refundable tax credits when income tax not paid), Dept of Education, most highway funds for 2011, Amtrack, PBS, CPC, NEH, NEA, small business admin, etc.

For longer term stability, raise the Social security retirement age and medicare age.

 
At 5/18/2011 12:25 PM, Blogger juandos said...

"so I post credible data that shows the facts and you LMAO and then turn around and post clearly biased misinformation?"...

Something from the White House (any WH for that matter) is credible?!?!?

Whereas reporting from a conservative who uses government info (as the links showed) is biased?!?!

What world do you live in sir?

 
At 5/18/2011 12:35 PM, Blogger Audacity17 said...

What matters is the EFFECTIVE rate on the populace. Hauser has shown the tax receipts as a percentage of GDP are about 20%...but remember the Bush cuts eliminated and lowered tax rates for middle and lower income citizens, so it doesn't surprise me if Bush's last years collected less revenue than Clinton. The Laffer curve does NOT predict revenues always go up when you cut rates, only if they are above optimal. Many conservatives and other lovers of small government often confuse the idea.

 
At 5/18/2011 12:38 PM, Blogger morganovich said...

larry-

your "primer" is so full of factual distortions and flat out lies it's difficult to know where to start.

let's take it from the top:

"Social Security - $761 billion
Medicare - $468 billion
Medicaid - $269 billion

"Medicare is two parts - A & B - A is funded from FICA like SS is."

so, we pile this all together and we get what, $1.5tn?

and that's just on a cash basis.

$1.5tn was the ENTIRE FEDERAL REVENUES for last year.

are you claiming that 100% of federal revenues are from FICA?

well, you're wrong. social insurance tax collections in 2010 were $865bn which means there was,even just on a cash basis, a $633bn shortfall using the expense numbers your yourself provided. that means that 42% of those programs were paid for by something else.

so much for your claims about balancing.

do you even bother to check these numbers before you opine so inaccurately and vehemently?

given you apparent inability to do math, it does not surprise me that you also disbelieve the GAAP figures.

here, these come straight from the US treasury.

http://soundofcannons.blogspot.com/2011/03/true-us-debt-exceeds-world-gdp-by-14.html

go look at the increase in NPV of entitlements yourself.

 
At 5/18/2011 1:23 PM, Blogger morganovich said...

this:

"Social Security is funded through payroll taxes. Through 2017, Social Security collects more in tax revenues than it pays out in benefits because there are 3.3 younger workers for every beneficiary. This created a surplus in the Social Security Trust Fund."

is just a flat out fiction.

social security is in cash deficit this year and projected to stay that way indefinitely.

"Excluding interest, surpluses for Social Security become deficits of $45 billion in 2011 and $547 billion over the 2012–2021 period,” the CBO reported"

and what pays that interest? income taxes.

2. there is no "trust fund". the money has already been spent by the rest of the government. SS is a pile of IOU's. the only way they can be paid back is out of the general fund. guess what funds that?

and this is just the cash accounting. the unfunded future liabilities are piling up to the tune of $3bn last year (22% of GDP). and that's JUST the unfunded ones.

but even on a cash basis, you're going to see SS + medi double by 2020.

they will be $3tn .

if the economy grows 3%/year from now to then, SS + medi will be 17% of GDP. that's 87% of average tax revenues since ww2. (19.5%)

it's roughly 35% of all US income.

that implies we will need a 35% tax with no deductions whatsoever just to pay entitlements. add in debt, and you are at 20% of GDP and 40% of income before you spend military dollar 1, provide any welfare, or any other discretionary spending. add that in, and you are looking at a 50%+ effective tax rate on every $ of us income.

gee, i wonder if that would destroy the economy...?

 
At 5/18/2011 1:35 PM, Blogger Larry G said...

" What world do you live in sir?"

I live in the one where the Office of Management and Budget post the actual data not just thi year but all the way back -as they have done since stats have been cut.

your world? not there, right?

 
At 5/18/2011 1:38 PM, Blogger Junkyard_hawg1985 said...

Larry G,

Here is my 2011 balanced budget:

Dept of Defense: $714B
Dept of Interior: $13B
Dept of Justice: $31B
Dept of Commerce: $9B
Dept of State: $18B
Dept of Treasury $18B
Civil Eng: $6B
Veterans Dept: $123B
Interest on Debt: $250B
Social Security: $791B
Medicare: $489B
All others: $105B
Total: $2567B
Revenue: $2567B

This budget eliminates 100% of the department of Education, CPB, NEA, NEH, Fannie Mae, Freddie Mac, foreign aid, rural development, marketing programs, commodity credit corp, farm loans, Rural Utilities service, rural housing service, guarenteed loan commitments, DOE Loan dispersements, DOE science funding, FEMA, Department of Housing and Urban Development, Amtrack, TARP, flood insurance, EPA, NASA, NSF, SBA, corp for national and community service.

For 2012, we would be raising both the social security and medicare retirement ages.

 
At 5/18/2011 1:38 PM, Blogger Larry G said...

" Larry G. Here is the 2011 Junkyard Hawg Style:

Dept. of Defense: $714B
Dept. of Justice: $31B
Dept. of State: $18B
Dept. of Teasury: $18B
Interest: $250B
Veterans Dept.: $123B
Civil Eng: $6B
Dept of Commerce: $6B
Dept of Interior: $13B
Social Security: $791B
Medicare: $489B
All others: $105B
Total Expenses: $2567B
Total Revenue: $2567B"

good job! so what are the cuts?

 
At 5/18/2011 1:48 PM, Blogger Junkyard_hawg1985 said...

Larry,

Read my post again. I show a list where we cut 100% of the spending (defund it). Since we have only $105B after the list of specif spending, it means we have drastic cuts in food stamps and Medicaid as well.

 
At 5/18/2011 1:57 PM, Blogger Larry G said...

" your "primer" is so full of factual distortions and flat out lies it's difficult to know where to start.

let's take it from the top:


"Social Security - $761 billion
Medicare - $468 billion
Medicaid - $269 billion

"Medicare is two parts - A & B - A is funded from FICA like SS is."

so, we pile this all together and we get what, $1.5tn?

you can pile it together but you'd be commingling the funding sources thus not dealing with the realities of the income tax funded parts.

"and that's just on a cash basis."

you "cash basis" is grade A horse manure.

Annuities and insurance - public and private are based on annual revenues and payouts - adjusted by actuarials.


"$1.5tn was the ENTIRE FEDERAL REVENUES for last year."

non FICA - correct, with FICA + Medicare Part B premiums - 2.1 trillion.

"are you claiming that 100% of federal revenues are from FICA?"

about a trillion from FICA and 1.5 trillion from non-FICA.

breaks out this way:

FICA SS + DI = 780
FICA Med partA = 215
Med part B premiums = 60
--------
1050

http://www.ssa.gov/OACT/TRSUM/index.html

"well, you're wrong. social insurance tax collections in 2010 were $865bn which means there was,even just on a cash basis, a $633bn shortfall using the expense numbers your yourself provided. that means that 42% of those programs were paid for by something else."

Medicare Part B consumes $205 billion in income taxes (same reference as above - scroll own to tables that says Sources)

"so much for your claims about balancing."

what I said was that on the FICA side about a trillion a year will continue to come in and even in no changes are made - it will pay out SS and Part A at about 75% or original schedule.

These are OFF Budget an separate from the income tax side of the budget - and other entitlements.

"do you even bother to check these numbers before you opine so inaccurately and vehemently?"

well.. I give my sources... and those sources are credible.

The Whitehouse Gov site references OMB tables that are in EXCEL so they must converted them to HTML so they can be viewed in the browser but they give the source and you can go download and verify.

"given you apparent inability to do math, it does not surprise me that you also disbelieve the GAAP figures."

Does Private Insurance and annuities and 401(k)s and other retirement plans use GAAP/Cash accounting?

 
At 5/18/2011 2:03 PM, Blogger Ron H. said...

"SS and Medicare part A are funded from FICA taxes and are not in overall deficit because they have built up a 2 trillion surplus over the years."

You really are a bonehead, aren't you. Where is that $2 trillion? Can you find it? No, I didn't think so. It's been borrowed, and replaced with a box of IOUs by the Treasury. The Treasury will have to pay it back. Where does Treasury get money, Larry? It will have to start redeeming IOUs now, Larry, as FICA doesn't cover SS benefits any more, and never will again unless Fica taxes are raised, or IOUs are redeemed. So, current workers will pay either through FICA or income taxes.

Some of the phony Clinton "surplus" was borrowed from the SS trust fund. It's payback time. No accounting tricks will work anymore. The cookie jar is empty.


"They ARE GOING TO BE - NOT in deficit but will have to pay out reduced benefits if no reforms but FICA will continue to generate over a trillion dollars a year to fund SS/PartA."

See what I wrote abave. Get your head out of your ass, Larry. $1 trillion a year isn't enough anymore. Something must change.

"and that's just on a cash basis. on a GAAP basis, they are running deficits equivalent to 30% of GDP."

"that's horse manure"

It is? How so? Explain why it's horse manure.

You really need to learn some economics, perhaps basic math, and get a clue, Larry.

 
At 5/18/2011 2:05 PM, Blogger Ron H. said...

"they are paid for with FICA taxes ... got it? "

It's not enough anymore. Look again.

 
At 5/18/2011 2:06 PM, Blogger Larry G said...

" "Social Security is funded through payroll taxes. Through 2017, Social Security collects more in tax revenues than it pays out in benefits because there are 3.3 younger workers for every beneficiary. This created a surplus in the Social Security Trust Fund."

is just a flat out fiction."

KEY DATES FOR THE TRUST FUNDS
OASI
First year outgo exceeds income excluding interesta 2017

http://www.ssa.gov/OACT/TRSUM/index.html

" social security is in cash deficit this year and projected to stay that way indefinitely."

mainly because of the 2% FICA rebates but yes...from now on it will start to have deficits.

but that proves my point that RIGHT NOW - it is NOT part of the EXISTING/CURRENT deficit.

" "Excluding interest, surpluses for Social Security become deficits of $45 billion in 2011 and $547 billion over the 2012–2021 period,” the CBO reported"

and what pays that interest? income taxes."

they have a 2.1 trillion surplus in the trust fund account.

" 2. there is no "trust fund". the money has already been spent by the rest of the government. SS is a pile of IOU's. the only way they can be paid back is out of the general fund. guess what funds that?"

no more or less that the treasury notes that I and others including China own.

the primary point about SS is that you do NOT have to make up any shortfalls from the income tax.

If you just do nothing, it will continue to pay at 75% because it will continue to pull in about a trillion a year.

It can stand on it's own.

Straight-forward changes like pushing the retirement age, removing the 106K income cap and means testing benefits can keep it solvent for more than 100 years

BOTH Deficit Commissions outline how to do this.

But doing this won't fix the other side of the budget that IS in a 1.5 trillion deficit and adding to a 14 trillion debt.

It's THAT SIDE of the budget that has to be delt with and about 40% of that side is due to heath care costs - Medicare Part B, MedicAid, Tricare, and the Govt employees health care.

ALL of these are going up.

The SecDef Clark has said "Tricare is eating us alive an taking away from our mission".

 
At 5/18/2011 2:14 PM, Blogger Larry G said...

@ Junkyard_hawg1985"

re: Medicare...

I'd push Medicare Parts B, C, and D under FICA and then have

SS, Medicare Parts A,B,C,D all under FICA - and then BALANCE them with a combination of FICA increases, means-testing, higher co-pays and accelerated premiums.

I'd consider in lieu of increasing FICA Taxes - a national consumption tax on luxury items and fast food, sugar drinks, etc.

Do the same to cigarettes... tax them and put the money on health care.

MedicAid is the one we don't know what to do with.

MedicAid pays for the indigent with more than 50% elderly and frail and unable to pay for nursing homes.

Another 30-40% of MedicAid is kids...economically disadvantaged who would not receive health care without MedicAid and SCHIPS.

MedicAid is not available to everyone.

If you are of working age and have no job and no disabilities, you do not qualify.

but I digress...

how should we pay for that entitlement?

coming out of FICA does not make any sense and would have the potential to damage FICA/SS/Medicare.

Indigent people can't pay for it (obviously).

so how do we pay for it - and more importantly - how do we get the primary care costs under control?

 
At 5/18/2011 2:18 PM, Blogger Ron H. said...

"Social Security is funded through payroll taxes. Through 2017, Social Security collects more in tax revenues than it pays out in benefits because there are 3.3 younger workers for every beneficiary. This created a surplus in the Social Security Trust Fund."

Knock, Knock, Larry, get your head out of there. I don't know where you got this but it's just not true. There are no assets in the trust fund. It is all "Special bonds", IOUs from Treasury (read taxpayers).

 
At 5/18/2011 2:22 PM, Blogger Ron H. said...

"3/4 of workers pay MORE in FICA taxes than income taxes."

That should scare you. What does that say about future deficits?

 
At 5/18/2011 2:29 PM, Blogger Larry G said...

Status of the Social Security and Medicare Programs
A SUMMARY OF THE 2011 ANNUAL REPORTS
Social Security and Medicare Boards of Trustees

A MESSAGE TO THE PUBLIC:

http://www.ssa.gov/OACT/TRSUM/index.html

take a minute Dude and read it.... you know more than you do know if you do.

 
At 5/18/2011 2:31 PM, Blogger Ron H. said...

"This budget eliminates 100% of the department of Education, CPB, NEA, NEH, Fannie Mae, Freddie Mac, foreign aid, rural development, marketing programs, commodity credit corp, farm loans, Rural Utilities service, rural housing service, guarenteed loan commitments, DOE Loan dispersements, DOE science funding, FEMA, Department of Housing and Urban Development, Amtrack, TARP, flood insurance, EPA, NASA, NSF, SBA, corp for national and community service."

*like*

 
At 5/18/2011 2:41 PM, Blogger Larry G said...

I'm not opposed to the list but I need to see how much each agency costs and a total amount saved.

none of the ones on your list appear to be the "biggies".... so how much does your list total up to?

 
At 5/18/2011 2:43 PM, Blogger morganovich said...

"you can pile it together but you'd be commingling the funding sources thus not dealing with the realities of the income tax funded parts."

that is just a weak dodge.

even on a funding source basis, they run a deficit. show me how 865bn in taxes spread to cover even what they are supposed to?

show me how entitlement spending of 100% of revenues is payable no matter what you do, especially as it's going to double.

your whole distinction of "income tax funded parts" is irrelevant.

it's all coming from taxes. who cares what they are?

further, all the IOU's in the trust funds are income tax funded as well, so while you can argue that actuarial, SS is spending it's trust fund, it's really getting cash flow from taxes and debt.

can you seriously believe that there is any way to fund the current entitlement trajectory?

 
At 5/18/2011 2:44 PM, Blogger Ron H. said...

"you can pile it together but you'd be commingling the funding sources thus not dealing with the realities of the income tax funded parts."

That is just silly. Commingling? do you know what the word means? morganovich can't "commingle" government funds.

Those 3 numbers "commingled" into one number, is equal to the sum of the three separate numbers. They are all paid for with money taken from individuals. They don't have more money left in their pockets when you look at those numbers separately. Learn some basic math.

 
At 5/18/2011 2:45 PM, Blogger morganovich said...

"Annuities and insurance - public and private are based on annual revenues and payouts - adjusted by actuarials."

right, but in the case of a private company using GAAP, increase in future liabilities are expense and count toward a deficit. under governement accounting, this is not so.

go look up the NPV of the entitlement funds. i gave you a link.

show me where that expense shows up in the deficit numbers.

you can't, because it doesn't.

you seem not to understand that the government uses a different accounting standard than the private world. if a private company tried to use it, they would be jailed.

 
At 5/18/2011 2:55 PM, Blogger morganovich said...

"so how do we pay for it - and more importantly - how do we get the primary care costs under control?"

easy. we turn it into a cash grant like foodstamps. no more all you can eat at the ritz carlton buffet.

you are thinking about this the wrong way.

the question is not "how can we pay for this entitlement" the question is "what can we afford to buy these people with X amount of dollars".

the astounding thing is that if healthcare were all cash pay, it would be MUCH cheaper.

the reason it goes up in price so aggressively is that people have no incentive to shop for price.

imagine buying a car that way. if you had "car insurance" so that if you wreck you car, you get a new one of your choice, imagine how things would go. you'd go to a certified car dealer, and talk about what you wanted and he'd say, you need a ferrari. neither of you would ever mention price.

what do you think car insurance would cost?

what do you think would happen to the price of cars?

our health insurance system is broken because it has no price signal.

costs of cash pay procedures (botox, lasik, plastic surgery, whatever) have actually been dropping for decades as is common in a technology business.

the reason the rest of medicine fails to follow suit is that our insurance system is broken.

you docs says well, it's a 1/1000 chance but we could do a test for $2000. if you are uninsured, you almost certainly say no, but with insurance, sure, bring it on.

you get the $5000 MRI at the hospital instead of paying $1000 across town at a walk in imaging center. (and yes, the price discrepancy is that large).

the current system is not fixable. no money will be enough. the only thing that will work is to break the chain of bad incentives by going to a cash system.

 
At 5/18/2011 2:57 PM, Blogger Ron H. said...

"you "cash basis" is grade A horse manure. "

I think I see PART of your problem. You don't understand accounting, and GAAP accounting isn't something you've ever heard of. Your ignorance and lack of education is showing here, Larry.

morganovich is being patient with you, as he understands how unprepared you are to discuss issues on an econ blog, but you should realize that he's eating your lunch.

Maybe you should just admit you don't have any idea what you're talking about, before you embarrass yourself further.

 
At 5/18/2011 3:01 PM, Blogger Larry G said...

re: commingling

there's a big difference between FICA and Income Tax.

FICA is a fixed percentage with no exemptions, no write-offs.

There is no way to reduce your tax liability with FICA.

That's why it can be operated ACTUARIALLY.

In fact, you could not operate it without that provision.

FICA does not fund anything else.

The money cannot be appropriated for any other purpose without a change in the law.

The income tax on the other hand can and is changed...all the time. The tax code changes...there are ways to avoid paying income tax... and on a revenue basis it is essentially unrestricted.

The problem we have is that when we talk about budget we forget what 'off budget" really means.

and what it really means is that FICA is a dedicated tax that is only spent on FICA SS and FICA Medicare but you lose that context when looking the overall Federal budget where, for instance it shows 800 billion for SS - but it is not explained that NONE of that 800 billion comes from the Fed Tax.

So it misleads people and essentially leads to budget illiteracy.

The average person in the US has no clue what the difference between Medicare Part A and B is - on a funding basis.

Many people actually thing Medicare and MedicAid are the same thing and all of them are funded by income taxes.

In terms o "accounting", I'd urge you to read the SS Trustees Report which is entitled as an "Actuarial Publication" and it covers the issue pretty thoroughly.

SS is an insurance program because it provides you with benefits if you become disabled and it provides your family with benefits if you die

It also is an annuity - not a pension plan and the difference is that an annuity pays you each year as long as you live even if you pull out more than you paid it and it can do that because on the other hand if you die before you collect any benefits - you do't get the money back.

that's the way insurance and annuities work.

No insurance companies has a fund sufficient to pay all future benefits.

They have enough to pay this years benefits and a reserve fund and the depend on this years premiums to build a pay-out fund for the next year.

They call that model "pay as you go" and each year - you do an actuarial analysis to determine if you need to increase premiums or reduce benefits or some combination so as to balance the pay-out with the premium revenues.

ALL Insurance works this way.

If you buy a life annuity - they'll not have ALL of the money they'l owe you in the future in an account.

They'll have an investment fund that they'll operate in a way to generate enough revenues to pay you each year.

but they won't have a fund that has all they'll owe you in the future.

Medicare works the same way.

So do private insurance companies.

 
At 5/18/2011 3:03 PM, Blogger Larry G said...

" easy. we turn it into a cash grant like foodstamps. no more all you can eat at the ritz carlton buffet.

you are thinking about this the wrong way."

is that the way private insurance will control costs?

 
At 5/18/2011 3:05 PM, Blogger Larry G said...

" "you "cash basis" is grade A horse manure. "

I think I see PART of your problem. You don't understand accounting, and GAAP accounting isn't something you've ever heard of. Your ignorance and lack of education is showing here, Larry.

morganovich is being patient with you, as he understands how unprepared you are to discuss issues on an econ blog, but you should realize that he's eating your lunch.

Maybe you should just admit you don't have any idea what you're talking about, before you embarrass yourself further. "


ha ha ha.. youse guys don't know your butt from a hole in the ground... you're blowing smoke... yakking about stuff you have no clue about.

and that's because you spend most of your time at these whacko sites instead at ones that contain the facts.

I note that neither of you seem to be aware of the Trustee's Report which is the bible for SS and Medicare fiscal policy.

ya'll are clueless.

 
At 5/18/2011 3:07 PM, Blogger Larry G said...

neither of you boys apparently knew that Medicare has two parts and one side funded from FICA an the other from Income Taxes.

If you do not now where the funding from these entitlements actually comes from - how can you have an informed opinion about the issue?

 
At 5/18/2011 3:10 PM, Blogger Larry G said...

You boys make the "don't confuse me with the facts" folks - look GOOD by comparison.

Ya'll ideas of "facts" are what you choose to believe or parrot from whacko blogs sites (that you reference freqently) .... and of course.. the sites who actually have the facts - they're of course engaging in a massive conspiracy to fool everyone, right?

Lord!

 
At 5/18/2011 3:14 PM, Blogger Junkyard_hawg1985 said...

"none of the ones on your list appear to be the "biggies".... so how much does your list total up to?"

Here are some of the numbers:

Department of Education: $71.5B CPB, NEA, NEH, Fannie Mae, Freddie Mac,
foreign aid $32B
rural development $2.6B
marketing programs $2.1B
commodity credit corp $12.7B
farm loans $1.7B
Rural Utilities service $10.8B rural housing service $4.1B guarenteed loan commitments $23.9B
FEMA $7.3B
Department of Housing and Urban Development: $47.5B
Amtrack $2.8B
TARP/GSE: $16.1B
flood insurance,
EPA $10B
NASA $19B
NSF $6.8B
SBA $1.2B ($23.9B liability)
corp for national and community service $1.4B
Refundable tax credits with no tax liability: $59.4B
Cut to highway funds: $36B
Department of Labor: $116.7B

 
At 5/18/2011 3:32 PM, Blogger Larry G said...

re: the "list"... doesn't look like it tallies up to 1.5 trillion in cuts..no?

 
At 5/18/2011 4:11 PM, Blogger Junkyard_hawg1985 said...

Larry, those were 100% defunds. There are significant parts of other departments that can be significantly cut as well. This includes biggies like Medicaid, food stamp and other "anti-poverty" programs.

By the way, my strong preference would be to do these cuts over a three to five year period. This would be similar to the cut in government spending between 1944 and 1951. In that case, government spending as a percent of GDP plummetted. While overall GDP barely increased from 1944-1951, private sector per capita GDP increased by 90%. During this time, the standard of living soared.

 
At 5/18/2011 4:16 PM, Blogger Larry G said...

@junkyard...

I was looking at THIS LIST:


Department of Education: $71.5B CPB, NEA, NEH, Fannie Mae, Freddie Mac,
foreign aid $32B
rural development $2.6B
marketing programs $2.1B
commodity credit corp $12.7B
farm loans $1.7B
Rural Utilities service $10.8B rural housing service $4.1B guarenteed loan commitments $23.9B
FEMA $7.3B
Department of Housing and Urban Development: $47.5B
Amtrack $2.8B
TARP/GSE: $16.1B
flood insurance,
EPA $10B
NASA $19B
NSF $6.8B
SBA $1.2B ($23.9B liability)
corp for national and community service $1.4B
Refundable tax credits with no tax liability: $59.4B
Cut to highway funds: $36B
Department of Labor: $116.7B

and did not see the military nor MedicAid/Medicare Part B ....

did I miss it?

 
At 5/18/2011 4:20 PM, Blogger Larry G said...

@junkyard - have you seen this:

Budget Puzzle: You Fix the Budget

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

 
At 5/18/2011 5:20 PM, Blogger Ron H. said...

Do you even read your own references? This is from your "bible", on the first page.

"Social Security expenditures exceeded the program’s non-interest income in 2010 for the first time since 1983. The $49 billion deficit last year (excluding interest income) and $46 billion projected deficit in 2011 are in large part due to the weakened economy and to downward income adjustments that correct for excess payroll tax revenue credited to the trust funds in earlier years. This deficit is expected to shrink to about $20 billion for years 2012-2014 as the economy strengthens. After 2014, cash deficits are expected to grow rapidly as the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers. Through 2022, the annual cash deficits will be made up by redeeming trust fund assets from the General Fund of the Treasury. Because these redemptions will be less than interest earnings, trust fund balances will continue to grow. After 2022, trust fund assets will be redeemed in amounts that exceed interest earnings until trust fund reserves are exhausted in 2036, one year earlier than was projected last year. Thereafter, tax income would be sufficient to pay only about three-quarters of scheduled benefits through 2085."

Do you see DEFICITS for every year from 2010 until the end of time? Not long ago, the first year of deficits was projected to be 2016. The fund reached that point 6 years early. It doesn't speak very highly of the estimators, does it.

Do you understand that "redeeming trust fund assets" means money from the treasury, which will come from tax revenue from you and me, or money that's borrowed, so our grankids can pay for it. Another option is to reduce payments to beneficiaries by inflating the money supply.

When your pay stub indicates that $800 has been removed from your pay in the form of taxes, it's not important that some is called FICA and some is called FIT. Those dollars are just as gone.

 
At 5/18/2011 5:33 PM, Blogger morganovich said...

"Ya'll ideas of "facts" are what you choose to believe or parrot from whacko blogs sites (that you reference freqently) .... and of course.. the sites who actually have the facts - they're of course engaging in a massive conspiracy to fool everyone, right?"

says the guy who cannot respond to the simple fact that current entitlement spending exceeds federal revenue in it's entirety and things there is a social security "trust fund" and cannot do the basic math with the federal figures to see through the clinton "budget surplus" lie.

so tell me this oh keeper of the flame of truth:

without reform, what do you think entitlement spending will be in 2020 and 2030 and how can it be paid for.

you are the one proposing tax hikes, but i don't think you understand that there is no tax hike that can cover their expansion.

you have not presented any useful facts at all. the ones you have contradict your own arguments.

i and others have showed you piles of data taken straigh from the CBO, treasury, etc.

did you read the footnotes on the charts?

if you think the numbers are wrong, show us why, but these rattle headed appeals to "having the data" when you do not and "conspiracy theory" because you are too lazy or mentally deficient to understand the arguments are not going to get you anywhere.

 
At 5/18/2011 5:39 PM, Blogger morganovich said...

"is that the way private insurance will control costs?"

now you are just being willfully stupid.

did you even read what i wrote?

private payment (like in cash pay procedures) controls cost.

it is the structure of our insurance that is causing the cost spiral.

which part of "cash grant" do you find confusing?

if you want to turn healthcare inflation into deflation, there's an easy way to do it.

no more low deductible plans.

you can put whatever you want into a HSA.

you pay cash for your first $5000 in healthcare every year.

then "insurance" kicks in.

this will cause people to price shop. that will keep prices low. no amount of insurance can control price. only users facing costs can do that.

our current health care insurance is not insurance at all. it's an entitlement. car insurance doesn't pay for gas or changing the belts. home insurance doesn't pay for remodeling the kitchen.

the reason health insurance is so out of control is that it is not allowed to act like insurance.

 
At 5/18/2011 5:44 PM, Blogger Ron H. said...

"The problem we have is that when we talk about budget we forget what 'off budget" really means."

No, Larry, WE don't forget what it means, YOU may forget, if you ever knew what it means in the first place.

"The money cannot be appropriated for any other purpose without a change in the law."

It can if it's "borrowed", and IOUs left in its place.

"So it misleads people and essentially leads to budget illiteracy."

boy, I'll say. Take a look look in the mirror to see the poster child of budget illiteracy.

"The average person in the US has no clue what the difference between Medicare Part A and B is - on a funding basis.

Many people actually thing Medicare and MedicAid are the same thing and all of them are funded by income taxes.
"

You should give people a little more credit. Not everyone is as ignorant as you are. You just made that last nonsense up, right?

 
At 5/18/2011 5:48 PM, Blogger Ron H. said...

"neither of you boys apparently knew that Medicare has two parts and one side funded from FICA an the other from Income Taxes.

If you do not now where the funding from these entitlements actually comes from - how can you have an informed opinion about the issue?
"

That's one of the biggest strawmen I've ever seen! Good work, Larry.

Why would you assume that anyone didn't know how Medicare is funded? Keep in mind that not everyone is as poorly educated as you seem to be.

How old are you, anyway? I'm guessing 16. Is that close?

 
At 5/18/2011 5:50 PM, Blogger morganovich said...

BTW larry-

what about my list:

50% cut social secuirty - easily achieved by moving the age to 70 (25% and means testing, another 25%)

-380bn

50% cut medical entitlements. increase the age for medicare 5-10 years (25-50% cut) move medicaid to cash grants etc.

-370 bn

cut defense spending by 50%.

-344bn.

that's 1.1tn in cuts.

then cut every subsidy, tax credit (including mortgage tax deduction), etc and bingo, balanced budget.

BTW -

If you do not now where the funding from these entitlements actually comes from - how can you have an informed opinion about the issue?

this is just stupid. who cares what funds them? you are making this ridiculous distinction like it somehow matters if its' tax A or tax B. it doesn't. at the end of the day, it's still $1 out of my wallet.

what you are missing is that to keep these out of control entitlements, we'll be paying 35% of ALL US INCOME for them in 10-15 years.

i don't care if it's income tax, fica tax, or heffalump tax, it's still totally unaffordable. that implies at least a 50% OVERALL TAX RATE. that would sink us.

 
At 5/18/2011 5:50 PM, Blogger morganovich said...

BTW larry-

what about my list:

50% cut social secuirty - easily achieved by moving the age to 70 (25% and means testing, another 25%)

-380bn

50% cut medical entitlements. increase the age for medicare 5-10 years (25-50% cut) move medicaid to cash grants etc.

-370 bn

cut defense spending by 50%.

-344bn.

that's 1.1tn in cuts.

then cut every subsidy, tax credit (including mortgage tax deduction), etc and bingo, balanced budget.

BTW -

If you do not now where the funding from these entitlements actually comes from - how can you have an informed opinion about the issue?

this is just stupid. who cares what funds them? you are making this ridiculous distinction like it somehow matters if its' tax A or tax B. it doesn't. at the end of the day, it's still $1 out of my wallet.

what you are missing is that to keep these out of control entitlements, we'll be paying 35% of ALL US INCOME for them in 10-15 years.

i don't care if it's income tax, fica tax, or heffalump tax, it's still totally unaffordable. that implies at least a 50% OVERALL TAX RATE. that would sink us.

 
At 5/18/2011 6:13 PM, Blogger morganovich said...

oh, and FWIW, you clearly have no idea how GAAP accounting works or that the US government does not use it. they have their own version called GAAP for federal entities. try usint it at a private company and see how quickly you get the cell next to bernie madoff.

this comes straight from the treasury:

"most U.S. Government revenues are recognized on a ‘modified cash’ basis, or when they become measurable." modified cash has NOTHING to do with how private gaap works.

go look at the statement yourself:

http://www.fms.treas.gov/fr/09frusg/09frusg.pdf

net operating loss was $1.253tn. add to that the increase in unfunded social insurance liabilities (as an NPV).

pg 19, statement of social insurance. liabilities increase from 49,135 in 2008 to 52,145 in 2009. that is just over $3tn dollars in unfunded liability at NPV.

thus, we get a private GAAP deficit of $4.3tn. running up debts is still losing money even if you do not have to pay them today.

the unfunded growth of social insurance liabilities alone was 22% of GDP.

that itself is more tax revenue that the US has EVER taken in regardless of tax rate.

so, now are you going to call the treasury a bunch of "blogger wing nuts"?

checkmate pallie.

nowhere to go from here.

 
At 5/18/2011 7:44 PM, Blogger Larry G said...

"Social Security expenditures exceeded the program’s non-interest income in 2010 for the

first time since 1983.

Do you see DEFICITS for every year from 2010 until the end of time?

no.

The first thing to realize is that the FICA/SS idea has "worked" and worked well for more than 60 years and periodic adjustment have been made...to keep it solvent before now.

"Do you understand that "redeeming trust fund assets" means money from the treasury, which will come from tax revenue from you and me, or money that's borrowed, so our grankids can pay for it. Another option is to reduce payments to beneficiaries by inflating the money supply."

this is money paid into FICA by people - taken from their paychecks. Are you in favor of taking that away from them?

"When your pay stub indicates that $800 has been removed from your pay in the form of taxes, it's not important that some is called FICA and some is called FIT. Those dollars are just as gone. "

They are no more "gone" that the treasuries that I own or the ones that the Chinese own but 2.1 trillion is small potatoes anyhow. It amounts to about 2 years worth of SS.

 
At 5/18/2011 7:47 PM, Blogger Larry G said...

" says the guy who cannot respond to the simple fact that current entitlement spending exceeds federal revenue in it's entirety and things there is a social security "trust fund" and cannot do the basic math with the federal figures to see through the clinton "budget surplus" lie."

says the guy who gave YOU the link to the correct info so you'd stop blathering wild and dumb misrepresentations that you parrot from sites that don't have the facts.

" without reform, what do you think entitlement spending will be in 2020 and 2030 and how can it be paid for.

you are the one proposing tax hikes, but i don't think you understand that there is no tax hike that can cover their expansion.

you have not presented any useful facts at all. the ones you have contradict your own arguments."

have you taken the time to read the reform proposals in both deficit commission reports?

I have.

Do you need those links also?
i and others have showed you piles of data taken straigh from the CBO, treasury, etc.

did you read the footnotes on the charts?

if you think the numbers are wrong, show us why, but these rattle headed appeals to "having the data" when you do not and "conspiracy theory" because you are too lazy or mentally deficient to understand the arguments are not going to get you anywhere."

the vast majority of what you have supplied is whack sites slid and dice of CBO data to fit their dishonest narratives so that folks like you can then tout them as "facts".

"

 
At 5/18/2011 7:49 PM, Blogger Larry G said...

re: "how insurance works and should work".

I thought you were in favor of the free market.

The "free market" is doing insurance the way it wants.

do you want to force them to change to do it another way?

Would you use the big bad nasty govt to force them?

 
At 5/18/2011 7:54 PM, Blogger Larry G said...

" "The money cannot be appropriated for any other purpose without a change in the law."

It can if it's "borrowed", and IOUs left in its place."

we're talking about a 2 trillion lockbox from a program that takes in and spends a trillion a year.

the primary thing the lockbox does is that when there are periodic deficits from recessions, it's used to cover the gap.

that small amount has no impact on the longer term reforms that need to be done

" "The average person in the US has no clue what the difference between Medicare Part A and B is - on a funding basis.

Many people actually thing Medicare and MedicAid are the same thing and all of them are funded by income taxes."

You should give people a little more credit. Not everyone is as ignorant as you are. You just made that last nonsense up, right? "

People don't know and I strongly suspect you did not know and the problem is if you don't know - your opinions are not "informed".

Major decisions have to be made about entitlements but the average person does not understand what the actual sources of funding for the entitlements really is and so they believe the lies and misinformation that are spread and take it as fact - when it's clearly not.

One little read of the Trustee report will tell one the truth but how many read it?

how many know it exists and has the actual facts in it?

 
At 5/18/2011 7:56 PM, Blogger Larry G said...

" "neither of you boys apparently knew that Medicare has two parts and one side funded from FICA an the other from Income Taxes.

If you do not now where the funding from these entitlements actually comes from - how can you have an informed opinion about the issue?"

That's one of the biggest strawmen I've ever seen! Good work, Larry.

Why would you assume that anyone didn't know how Medicare is funded? Keep in mind that not everyone is as poorly educated as you seem to be.

How old are you, anyway? I'm guessing 16. Is that close? "

I do not assume. I listen closely to what you say and from that I know that you were ignorant of the facts.

If you knew the facts, you would have been the one to reference the Trustee Report an other credible sites that provide the facts ... instead of the whacko sites that misrepresent them.

 
At 5/18/2011 8:14 PM, Blogger Larry G said...

" what about my list:

50% cut social secuirty - easily achieved by moving the age to 70 (25% and means testing, another 25%)"

You ARE ignorant guy.

cutting SS will not save one penny on the CURRENT DEFICIT because for 60+ years SS has not been in deficit until now.

" If you do not now where the funding from these entitlements actually comes from - how can you have an informed opinion about the issue?

this is just stupid. who cares what funds them?"

It's more than WHAT funds them.

It's HOW. The FICA is a fixed tax that does not vary and everyone has to pay into it - no exceptions.

You cannot use deductions and expenses to write it off.

There are no loopholes or credits.

That's on the revenue side.

On the expenditure side - the money cannot be spent for any other purpose than SS and Medicare part A.

It cannot be "diverted" to other things like the income tax can.

It's important to know how Medicare Part A, Medicare Part B, MedicAID .. AND SCHIPS AND TRICARE are funded because you start talking about what to do about the budget, the deficit, the debt.

What's killing the budget is health care costs that cascade through both Medicares, MedicAid, Tricare, and Schips - as well as private health care which consumes 16% of our GDP right now and will consume more than 30% of it in a decade.

Our health care system - both private and public is out of control.

There is no doubt that entitlements that provide health care will have to change but it is a mistake to assume that SS cannot be fairly easily fixed.

Look at both Deficit Commission reports to see the fairly straight forward changes that can be made to SS to keep it solvent for another 100 years.

Medicare will be tougher but it's doable if you require higher premiums, higher co-pays, and tougher benefits qualifications.

Rationing if you will.

But you're going to see the same approach with private insurance also.

the primary difference is that the govt plans will cover you no matter what whereas the private plans will not and will continue to jettison people with pre-existing conditions and/or newly-emergent conditions that are expensive.

I note that you did advocate cutting the military...good.. you recognize they're out of control also.

In terms of taxes - we are among the lowest tax nations in the world.

Many others pay higher taxes.

I'm not advocating that but I'm pointing out that all the gloom and doom that you spout about our economy getting 'wrecked' from higher taxes is more theater an rhetoric than reality.

Even Reagan was forced to raise taxes after it became clear that he had cut too much.

 
At 5/18/2011 8:21 PM, Blogger Larry G said...

re: GAAP

here's some info for you dude

http://en.wikipedia.org/wiki/Generally_Accepted_Accounting_Principles_(United_States)

Did the thought occur as to what entity or entities REQUIREs GAAP accounting?

http://www.fasab.gov/projectsgaap.html

you're blathering again - this time about GAAP and it's easy to find the whacko sites in GOOGLE...

just use GAAP with Govt and all the whacko sites pop up...

 
At 5/18/2011 10:02 PM, Blogger Ron H. said...

"Do you see DEFICITS for every year from 2010 until the end of time?

no.
"

How about until 2036 when the IOUs run out? Did you read and understand your own reference? If you're going to point to interest payments, you may want to consider that that money comes from the general fund, just like the rest of the shortfall will.

"The first thing to realize is that the FICA/SS idea has "worked" and worked well for more than 60 years and periodic adjustment have been made...to keep it solvent before now."

All Ponzi schemes work well until you run out of new suckers, which has now happened with SS.

"They are no more "gone" that the treasuries that I own or the ones that the Chinese own..."

You understand that SS Trust Fund bonds aren't the same as regular treasuries, right? They will be redeemed by either selling more bonds to you and the Chinese, a lien on future earnings, or taking more money from taxpayers.



"...but 2.1 trillion is small potatoes anyhow."

I'm beginning to understand why this country is in such serious trouble.

 
At 5/18/2011 10:08 PM, Blogger Ron H. said...

This comment has been removed by the author.

 
At 5/18/2011 10:15 PM, Blogger Ron H. said...

"this is money paid into FICA by people - taken from their paychecks. Are you in favor of taking that away from them?"

It's already been taken from them by Treasury, and spent on other things. Now Treasury will have to replace it as it's needed using taxpayer's money.

And, "taken" is certainly the right word. They didn't have a choice. Shouldn't people be able to plan their own and retirement without having money taken from them by force?

 
At 5/18/2011 10:51 PM, Blogger Ron H. said...

I'll try this again:

"How old are you, anyway? I'm guessing 16. Is that close?"

Come on, Larry boy, tell me. is it 14?

"I do not assume. I listen closely to what you say and from that I know that you were ignorant of the facts."

That's funny, Larry, It is obvious your comprehension of what I have written is really low. And aren't you the guy who pointed to the trustee's report but don't understand what it says?

"If you knew the facts, you would have been the one to reference the Trustee Report an other credible sites that provide the facts

It's pointless to give you references, as you either can't or won't read them, or you don't understand what you read, and I'm not going to waste my time with it. We have nothing serious to discuss, Larry boy, as you are missing too much education, and don't seem interested in correcting that problem.

"...instead of the whacko sites that misrepresent them.

Which sites would those be? I don't think I've cited any for you. How would you know they are whacko sites? do you just know one when you see one? What would be their motive for misrepresenting "the facts"?

 
At 5/19/2011 6:32 AM, Blogger Larry G said...

" "Do you see DEFICITS for every year from 2010 until the end of time?

no."

How about until 2036 when the IOUs run out? Did you read and understand your own reference? If you're going to point to interest payments, you may want to consider that that money comes from the general fund, just like the rest of the shortfall will. "

let me ask you fool. do you understand the changes that have been made for the 60+ years the program has removed solvent including increases in the FICA Tax and changes in benefits?

Do you think FICA and SS have never previously been adjusted to deal with issue that affected it's solvency?

Do you think private insurance is a "ponzi scheme" if they increase premiums or reduce benefits?

as far as age is concerned... do you know how old David Stockton is ?

Ron - do you know there are more than a dozen other trust funds that also own treasury notes?

Age? Guy... you are ignorant of SS and Medicare until informed of it and I know the facts and you're asking about age?

hmmmmm


whacko sites.... yup

I know the narrative.... like "ponzi scheme" and "ss is bankrupt" and GAPP...

you'd dare not provide the links but you are parroting them - and at the same time do not spend near as much time at the sites that do have the facts.. heck you don't even know where the data is or can be found unless the whacko sites tells you.

I think we done my man.

 
At 5/19/2011 7:12 AM, Blogger VangelV said...

were the tax rates HIGHER under Clinton but the revenues were ALSO Higher?

Clinton was the beneficiary of an expensive Fed that created a huge bubble in equities and provided a huge amount of taxable capital gains. He was also the beneficiary of an accounting scam that allowed the government to use excess SS contributions for general spending. The fact is that during one of the greatest bubbles in US history Clinton still added $400 billion to the US debt.

Other presidents have been much worse. The last president to have a prudent fiscal policy was in office in the 1920s, which explains why the US has become such a basket case.

 
At 5/19/2011 7:51 AM, Blogger Larry G said...

" were the tax rates HIGHER under Clinton but the revenues were ALSO Higher?

Clinton was the beneficiary of an expensive Fed that created a huge bubble in equities and provided a huge amount of taxable capital gains. He was also the beneficiary of an accounting scam that allowed the government to use excess SS contributions for general spending. The fact is that during one of the greatest bubbles in US history Clinton still added $400 billion to the US debt.

Other presidents have been much worse. The last president to have a prudent fiscal policy was in office in the 1920s, which explains why the US has become such a basket case."

just looking at the historical data with respect to revenues as a percent of GDP, outlays and deficits/surpluses...

how can one selectively pick any year and then proceed to give reasons as to why the data on the historical summary is wrong or a lie?

OBM maintains a ton of data and summary charts and the data is standardized in terms of metrics.

what I'm hearing is that the historical data is wrong and the implication to me is that if the data about the Clinton years is wrong or a lie then what about the other years?

At some point - what is it that one does believe?

and more to the point - if one wants to provide a persuasive case for supply-side economics and the approach is to show the years that it "worked" and then to make excuses for the years it did not or claim the year of that historical data is wrong...

it doesn't look like an objective analysis...

I'd be all for the supply-side - provided

1. we know why it does no work sometimes

2. we have a Plan B for the times it does not work.

the years it does not "work", we get deficits - and those deficits don't get fixed.

They become structural - as if providing an explanation for them is the only thing that need be done.

We now have a 1.5 trillion structural deficit and a 14 trillion debt...

.. and not one politician who advocates cuts - has provided a list of cuts sufficient to zero the deficit (much less buy down the debt)...

.. and at the same time the insist on more supply-side economics as the antidote...

and again.. with no Plan B if it does not work and continues to create deficits.

That's the frustration.

It used to be that Republicans focused on WHAT IT WOULD TAKE to maintain a balance - no excuses with respect to the techniques....

ultimately .. the proof in the pudding was not about theories but outcomes.

Now it seems to me that everything rides on the theory...and the outcomes don't matter....

As I said.

I have YET to see ANY plan that takes us to balance....

Mr. Ryan's "plan" doesn't get there until 2040... essentially replies on supply-side theories to get there which includes a projected 3% unemployment rate

... and NO ...Plan B at all..

either his plan "works" or else.

 
At 5/19/2011 10:41 AM, Blogger morganovich said...

larry-

are you really this stupid?

the whole point is that GAAP is different for the federal government than it is for corporations.

only for federal entities is "modified cash" accounting considered gaap.

there appears to be no way to get you to understand this.

are you seriously convinced that the government uses the same accounting as businesses?

i note that you have ZERO to say about the increase in NPV of social insurance programs.

that's because it proves you are wrong.

so, you try to shift the debate.

nice try larry

 
At 5/19/2011 10:45 AM, Blogger morganovich said...

"The "free market" is doing insurance the way it wants."

wow. ok. you really are this stupid. i assumed you just lived in a fantasy land, but it's obviously something much more sever that is wrong with you and your ability to reason and assess reality.

insurance is a free market? you have to be kidding. seriously, try to name for me even one product offering that has more government regulation, stipulation, and interference than health insurance and health care.

you have got to be kidding me.

the kind of insurance i proposed is ILLEGAL in most states. obama is trying to make it illegal everywhere.

if you think health insurance is a "free market" that i'd hate to see what you consider regulation.

hell, even the airlines are less regulated than health insurers.

 
At 5/19/2011 10:46 AM, Blogger Larry G said...

I'll continue POLITE debate on the issues if you will.

Otherwise, we're done.

got it? you choose..

 
At 5/19/2011 10:52 AM, Blogger Larry G said...

last chance....

" insurance is a free market? you have to be kidding. seriously, try to name for me even one product offering that has more government regulation, stipulation, and interference than health insurance and health care."

then why are you defending our system compared to other industrialized countries approaches?

Do you think our CURRENT SYSTEM is going to become a more free market than now?

Can you name a single country that has a more free market system that is less expensive and has better outcomes?

I'm not sure exactly what you're defending and advocating for here.

again - keep it polite or we're done.

 
At 5/19/2011 2:11 PM, Blogger Junkyard_hawg1985 said...

"Can you name a single country that has a more free market system that is less expensive and has better outcomes?"

Yes. Singapore.

Singapore Life Expectancy: 80
United States Life Expectancy: 78
Singapore Health Spending: 3.4% of GDP
US Health Spending: 15% of GDP
Singapore Gov. Spending: 34% of total Healthcare
US Gov Spending: 46% of total Healthcare Spending

 
At 5/19/2011 2:24 PM, Blogger Larry G said...

original question:

" Can you name a single country that has a more free market system that is less expensive and has better outcomes?"

Facts about the Singapore Health System:


" Singapore has a universal healthcare system where government ensures affordability, largely through compulsory savings and price controls, while the private sector provides most care. Overall spending on healthcare amounts to only 3% of annual GDP. Of that, 66% comes from private sources.[2] Singapore currently has the lowest infant mortality rate in the world (equaled only by Iceland) and among the highest life expectancies from birth, according to the World Health Organization.[3] Singapore has "one of the most successful healthcare systems in the world, in terms of both efficiency in financing and the results achieved in community health outcomes," according to an analysis by global consulting firm Watson Wyatt.[4] Singapore's system uses a combination of compulsory savings from payroll deductions (funded by both employers and workers) a nationalized catastrophic health insurance plan, and government subsidies, as well as "actively regulating the supply and prices of healthcare services in the country" to keep costs in check; the specific features have been described as potentially a "very difficult system to replicate in many other countries." Many Singaporeans also have supplemental private health insurance (often provided by employers) for services not covered by the government's programs."

free market?

 
At 5/19/2011 3:04 PM, Blogger Junkyard_hawg1985 said...

Larry,

You didn't ask for a free market system, you asked for one more free market than ours. Our government spends more than twice as much on healthcare as the total spending in Singapore of which is 2/3 privately funded.

There are a couple of features of the system that would be very useful for us to follow:

1) Their Medishare payment is compulsory and is the equivalent of a health savings account (HSA). When people go to the hospital, a large portion must come out of their Medishare account. As a result, people treat medical care more like they are spending their own money; because they are. I've seen far too many Medicaid users use expensive treatment (i.e. emergency room for child's earache) when lower cost is available. This would be less likely to happen in Singapore as the person has some skin in the game.
2) The legal system is different in Singapore. There are no contingency fees for lawsuits. As a result, fewer fivilous lawsuits are filed as the plantiff may be stuck with a high legal bill after the trial.
3) Singapore is a free market economy (Ranked #2) whereas the United States is a mostly free economy (Ranked #9).

 
At 5/19/2011 3:16 PM, Blogger Larry G said...

Larry,

"You didn't ask for a free market system, you asked for one more free market than ours. Our government spends more than twice as much on healthcare as the total spending in Singapore of which is 2/3 privately funded."

Fair enough. So let me ask this.

in what way is Singapore MORE free market?

"There are a couple of features of the system that would be very useful for us to follow:

1) Their Medishare payment is compulsory"

would you consider this an "individual mandate" similar to our FICA/Medicare?

"2) The legal system is different in Singapore. There are no contingency fees for lawsuits. As a result, fewer fivilous lawsuits are filed as the plantiff may be stuck with a high legal bill after the trial."

I note that Doctors in our own VA system are exempt from lawsuits.

"3) Singapore is a free market economy (Ranked #2) whereas the United States is a mostly free economy (Ranked #9)."

It does not sound very "free market" on the health care part.

It sounds very govt proscriptive.

don't you think that Universal Coverage via individual mandate is ...by definition - govt-imposed and not free-market?

but if you support an approach like Singapore... good to go...

I'm not sure that those folks who consider themselves Libertarians or even Republicans would agree...

 
At 5/19/2011 3:16 PM, Blogger Larry G said...

Larry,

"You didn't ask for a free market system, you asked for one more free market than ours. Our government spends more than twice as much on healthcare as the total spending in Singapore of which is 2/3 privately funded."

Fair enough. So let me ask this.

in what way is Singapore MORE free market?

"There are a couple of features of the system that would be very useful for us to follow:

1) Their Medishare payment is compulsory"

would you consider this an "individual mandate" similar to our FICA/Medicare?

"2) The legal system is different in Singapore. There are no contingency fees for lawsuits. As a result, fewer fivilous lawsuits are filed as the plantiff may be stuck with a high legal bill after the trial."

I note that Doctors in our own VA system are exempt from lawsuits.

"3) Singapore is a free market economy (Ranked #2) whereas the United States is a mostly free economy (Ranked #9)."

It does not sound very "free market" on the health care part.

It sounds very govt proscriptive.

don't you think that Universal Coverage via individual mandate is ...by definition - govt-imposed and not free-market?

but if you support an approach like Singapore... good to go...

I'm not sure that those folks who consider themselves Libertarians or even Republicans would agree...

 
At 5/19/2011 4:09 PM, Blogger VangelV said...

what I'm hearing is that the historical data is wrong and the implication to me is that if the data about the Clinton years is wrong or a lie then what about the other years?

While the inflation adjustments may be wrong I am not suggesting that the debt reporting is wrong. All I am pointing out is that if the biggest bubbles in history, which provided record revenue hauls, could not make a dent in the debt the US is in huge trouble.

We now have a 1.5 trillion structural deficit and a 14 trillion debt...

.. and not one politician who advocates cuts - has provided a list of cuts sufficient to zero the deficit (much less buy down the debt)...


I disagree. Rand Paul has had a nice start and is not close to completing the list of all of his proposed cuts. Ron Paul has gone further and called for a cut that would reduce spending to the Clinton era levels. Those cuts would bring the budget into surplus and would generate a way to pay down the debt. There are also proposals for Medicare and SS but the pro-big-government politicians in both parties have resisted.

 
At 5/19/2011 4:25 PM, Blogger Larry G said...

The dimensions of the budget and the deficit are muddled.

Social Security and Medicare Part A are funded from FICA and not Income Taxes and as such have almost nothing to do with the current 1.5 trillion deficit.

And while SS and Medicare Part A must change in the future - to head off deficits .

...right now they are not part of the 1.5 trillion deficit.

So the idea that "fixing" SS and Medicare will be what is necessary to "fix" the deficit is wrong-headed and what it serves to do is to divert attention from what actually does have to be done to deal with the 1.5 trillion deficit.

Not fixing SS/Medicare Part A right now will EVENTUALLY add even more deficit problems to the 1.5 trillion deficit but nothing we do to SS/Medicare right now will fix what the deficit problems are - right now.

Medicare Part B and MedicAid ARE PART of the income tax side of the budget and consume about 500 billion of the budget.

The deficit is 1.5 trillion - 3 times as much.

Even if you zeroed out both programs, you'd STILL have a trillion dollar deficit.

so.... my question here is

do we agree with respect to the basic facts with respect to FICA/SS/Medicare part A and their relationship to the CURRENT DEFICIT?

 
At 5/19/2011 6:01 PM, Blogger Ron H. said...

"Fair enough. So let me ask this.

in what way is Singapore MORE free market?
"

You are being obtuse again, Larry, you need to admit that Junk answered your question correctly. You did ask for MORE free market, not free market. You can't just wiggle out of these things so easily.

"There are a couple of features of the system that would be very useful for us to follow:

1) Their Medishare payment is compulsory"

would you consider this an "individual mandate" similar to our FICA/Medicare?
"

You are confusing compulsory with individual mandate. They are not the same. FICA is not an "individual mandate. It is compulsory for those earning W2 wages. Please don't ask me to define that for you. Look it up yourself if need be, and please don't respond to it unless you're sure you understand what I'm explaining to you.

The "more free market" part, is that this money that you are forced to pay, is spent by you, not by some government agency. You can help control prices by shopping.

"2) The legal system is different in Singapore. There are no contingency fees for lawsuits. As a result, fewer fivilous lawsuits are filed as the plantiff may be stuck with a high legal bill after the trial."

I note that Doctors in our own VA system are exempt from lawsuits.
"

Do you see that your response has no bearing on the comment you are responding to?

Protection from lawsuits isn't free market.

A patient in Singapore can sue, but he had better have a strong case, or he will end up with a big legal bill.

How can you not get these clear concepts?

morganovich is right. You really ARE this stupid.

 
At 5/19/2011 8:00 PM, Blogger Junkyard_hawg1985 said...

1) Their Medishare payment is compulsory"

would you consider this an "individual mandate" similar to our FICA/Medicare?

No I would not. In a Medishare account, the money is yours, much like an HSA. If you spend too much this year, you may not have enough next year. Also, if you spend your balance, the next medical bills come out of your pocket. People in Singapore have on average balances over $10,000 each. They treat it like it is their own money much like an HSA. This is not like FICA/Medicare at all. Not even close. It is like the Chilean retirement system.

 
At 5/19/2011 8:02 PM, Blogger Junkyard_hawg1985 said...

"2) The legal system is different in Singapore. There are no contingency fees for lawsuits. As a result, fewer fivilous lawsuits are filed as the plantiff may be stuck with a high legal bill after the trial."

I note that Doctors in our own VA system are exempt from lawsuits."

Let's extend that coverage to all doctors, not just the government doctors. If the government does this for cost control, would costs drop in all medical care if we did the same in the private sector?

 
At 5/19/2011 8:25 PM, Blogger Larry G said...

I was reading up on it a little bit since until you mentioned it.. I was not aware:

" Overview of the Singapore health system
The Singapore health system is based on a combination of government subsidies (through taxation) and individual responsibility.

Medisave is a subset of the mandatory Government pension scheme (the Central Provident Fund or CPF) to which a total of 33 per cent of wages is contributed (comprising 13 per cent employer contributions and 20 per cent employee contributions) to individual accounts to fund retirement and health related expenditure. Of the 33 per cent contribution, around 6 per cent to 8 per cent (depending on age) is credited to the employee’s Medisave account."

http://www.watsonwyatt.com/europe/pubs/healthcare/render2.asp?ID=13850

WOW! 20% of their pay is take for payroll taxes!
....

"What can be learned from the Singapore health care system?

The key to Singapore’s efficient health care system is in its emphasis on the individual to make a significant contribution towards their own healthcare costs."

okay so without quibbling too much over the differences between an individual mandate and compulsory payments - both collected via payroll taxes.....

my view is that is the right way to do it... because they will get health care at the primary care level which is going to catch disease earlier, prevent premature deaths, and be cheaper.

but if they exhaust their individual savings accounts, the govt will then step in and help out, right?

Maybe I misunderstand what is meant by "free market".

My view is that the govt is not involved at all in health care in a true free market.

The Singapore system seems to me to have a heavy govt influence - as much or more than us.

I do not see the folks in this country who are opposed to the individual mandate as being any more receptive to a compulsory 20% payroll tax.

wrong?

 
At 5/19/2011 8:27 PM, Blogger Larry G said...

" Let's extend that coverage to all doctors, not just the government doctors. If the government does this for cost control, would costs drop in all medical care if we did the same in the private sector? "

I'm a little concerned about protections for patients but if this is one of the compromises to more/better/near universal coverage... I'd accept it.

I'd set up community health centers - and provide guaranteed medical school in return for 4 years at the community clinics - and you cannot be sued.

 
At 5/20/2011 8:34 AM, Blogger VangelV said...

And while SS and Medicare Part A must change in the future - to head off deficits .

...right now they are not part of the 1.5 trillion deficit.


Correct. As has been pointed out over and over on this site GAAP are not followed properly and the government's increase in unfunded liabilities are being ignored.

So the idea that "fixing" SS and Medicare will be what is necessary to "fix" the deficit is wrong-headed and what it serves to do is to divert attention from what actually does have to be done to deal with the 1.5 trillion deficit.

You are very confused. Unfunded liabilities and the official deficits are a form of deferred taxation and both are a big problem for future taxpayers. The official deficit pales in comparison to the increase in unfunded liabilities just as the total debt pales in comparison to the accrued unfunded liabilities. You need to think about reeducating yourself on these matters because you seem to be missing some very important facts.

 
At 5/20/2011 8:45 AM, Blogger VangelV said...

Medicare Part B and MedicAid ARE PART of the income tax side of the budget and consume about 500 billion of the budget.

The deficit is 1.5 trillion - 3 times as much.


The 2009 Social Security and Medicare Trustees Reports was showing that the unfunded liability for the two programs was around $107 trillion. At the time the total debt was around $11 trillion. I don't know about you but a proper comparison shows that the unfunded liability problem is much bigger than the debt problem.

Even if you zeroed out both programs, you'd STILL have a trillion dollar deficit.

But you would still have more than $110 trillion in unfunded liabilities, which is still much larger than the $14 trillion debt.

so.... my question here is

do we agree with respect to the basic facts with respect to FICA/SS/Medicare part A and their relationship to the CURRENT DEFICIT?


You obviously have trouble with some simple accounting and basic math. The unfunded liabilities are around ten times larger than the debt. The annual increases in unfunded liabilities are higher than the budget deficits. Try looking again.

 
At 5/20/2011 9:36 AM, Blogger Larry G said...

It's a question of two different problems .

Fixing SS & Medicare Part A won't fix the other problem of the CURRENT Defict.

SS and Medicare Part A, if not addressed soon, will ADD to the CURRENT Deficit but fixing them won't affect the CURRENT Deficit.

If you look at both Deficit Commission Reports, you will see that SS is handled SEPARATELY.

The implications that we must fix SS to fix the CURRENT deficit are wrong.

They are two separate issues and we have to do BOTH but SS has only recently gone in to deficit and still has a number of years to go to get a more permanent fix.

The important question to ask is this.

If we do not fix social security and we will have to supplement the FICA revenues with Income Tax revenues, how much will that be?

It won't be that much early on because even if we did nothing, SS would continue to take in a trillion a year and still be able to pay out at a 75% rate with NO additional taxes from the income tax.

All of this is in the Trustee report.

http://www.ssa.gov/oact/trsum/index.html

and here:

http://www.cbo.gov/budget/factsheets/2010b/OASDI-TrustFunds.pdf


but this is why I ask ....do we agree on the facts of the budget, deficit, FICA, SS, etc because if we don't agree on the basic facts, we have no chance of agreeing on what the changes need to be.

Okay... so what things that I say are facts with respect to FICA and SS and the deficits do you not agree with.

If you can tell me, I can provide the specific references that I got them from.

 
At 5/20/2011 10:56 AM, Blogger VangelV said...

If we do not fix social security and we will have to supplement the FICA revenues with Income Tax revenues, how much will that be?

You still don't get it. To fund SS and Medicare properly you have to eliminate the more than $110 trillion in unfunded liabilities. If you used all of the income tax revenues for that purpose you still can't make the the system solvent. The unfunded liabilities are a huge problem that you are ignoring.

 
At 5/20/2011 1:56 PM, Blogger Larry G said...

Guy - the "unfunded" liabilities that you speak of are based on what and are they not in the future?

take a look at this chart:

http://en.wikipedia.org/wiki/File:U.S._Federal_Receipts_-_FY_2007.png

notice that the total receipts are 2.162 billion.

now notice that in the lower left it says 40% 865 billion Social Security.

that's FICA Revenues...to pay for ss and have for 60+ years with most of those years in surplus.

now look at what is left

2,162 trillion = 865 billion =

1,297 trillion.

That's the total Federal Budget funded from income, corporate and other taxes.

that amount is LESS than the 1.5 annual structural deficit.

That's the problem before you even get to the Social Security issues.

What ever you do to SS, it won't have hardly any effect on the 1.5 structural deficit.

All I'm trying to do here is to see if we agree on the basic budget numbers....

once we agree on that.. I'll debate you on the unfunded liabilities part of SS.

but do we agree on the basic facts of the budget?

 
At 5/20/2011 3:54 PM, Blogger VangelV said...

Guy - the "unfunded" liabilities that you speak of are based on what and are they not in the future?

You still don't get it. To be able to meet the future liabilities that have been promised you need to have invested around $115 trillion today. That is how deep the hole is. Now even if you use every single penny of the tax receipts to fund those liabilities you are still looking at an impossible situation.

Now you could go and look at lower estimates for the unfunded liabilities and use those. But either way, even if all of the tax revenues could be used to fund liabilities you are still looking at several decades of funding. That won't work.

The bottom line is that there is no way to make the math work. If you want to get rid of the debt and unfunded liabilities one way to make them go away is to inflate. Which is why we are seeing the activities that the Fed and Treasury have taken.

 
At 5/20/2011 6:39 PM, Blogger Ron H. said...

"You still don't get it. To be able to meet the future liabilities that have been promised you need to have invested around $115 trillion today. That is how deep the hole is"

Our friend doesn't understand what "unfunded" means. He thinks it just means amounts due in the future, instead of amounts above and beyond those covered by any projected revenue.

He persists in pointing to FICA and saying "See this $865 billion? THAT will cover it."

Here's a great video that explains the problem. It is short, simple, accurate, AND pleasant to watch.

 
At 5/21/2011 4:47 AM, Blogger Larry G said...

we understand unfunded liabilities but the deal was for you to AGREE first on what the dimensions of the CURRENT DEBT is, IN ADDITION to the SS/Medicare unfunded liability issue.

We have a CURRENT DEBT of 1.5 Trillion and a CURRENT DEFICIT of 14 trillion that have little to do with the unfunded liabilities o SS/Medicare RIGHT NOW.

I'm asking if you acknowledge this and once you do - we can discuss:

1. - how to deal with the CURRENT DEBT

2. - how to deal with the unfunded liability.

In other words BOTH are issues no just one.

agree?

 
At 5/21/2011 7:04 AM, Blogger VangelV said...

we understand unfunded liabilities but the deal was for you to AGREE first on what the dimensions of the CURRENT DEBT is, IN ADDITION to the SS/Medicare unfunded liability issue.

Again you are confused. Nobody here was disagreeing with the fact that there is a $14 trillion debt problem. What they pointed out was that there is a much bigger problem that has been ignored because it is off book and unreported.

 
At 5/21/2011 7:07 AM, Blogger VangelV said...

I'm asking if you acknowledge this and once you do - we can discuss:

1. - how to deal with the CURRENT DEBT

2. - how to deal with the unfunded liability.


As has been pointed out, the math does not work. Eventually the federal government will have to default one way or another. And stiffing foreign creditors will not do much because they own less than half the outstanding debt. The big problem is the unfunded liabilities. If nothing is done on that front the Ponzi schemes that are SS and Medicare will end and there will be another revolution within the United States.

 
At 5/21/2011 7:12 AM, Blogger Larry G said...

" Again you are confused. Nobody here was disagreeing with the fact that there is a $14 trillion debt problem. What they pointed out was that there is a much bigger problem that has been ignored because it is off book and unreported. "

that's simply not true.

take a look at this CBO projection:

http://www.cbo.gov/budget/factsheets/2010b/OASDI-TrustFunds.pdf

it shows the SHORTFALLLs for Social Security to be 20-30 billion a year until 2020.

Clearly this is a minor part of the 1.5 trillion structural deficit

yes the anti-folks like you are saying that the SS is "bigger".

It's not.

It's important and it needs to be fixed but RIGHT NOW, the FAR BIGGER PROBLEM is the 1.5 trillion structural deficit that has virtually nothing to do with Social Security.

The "anti" people are misrepresenting the facts of the issue by misrepresenting the truth about what the bigger issue is - right now.

 
At 5/21/2011 7:14 AM, Blogger Larry G said...

" 1. - how to deal with the CURRENT DEBT

2. - how to deal with the unfunded liability.

As has been pointed out, the math does not work. Eventually the federal government will have to default one way or another. And stiffing foreign creditors will not do much because they own less than half the outstanding debt. The big problem is the unfunded liabilities. If nothing is done on that front the Ponzi schemes that are SS and Medicare will end and there will be another revolution within the United States. "

Nope.

You are EVADING here.

I've agreed to include and address the SS issue if you were admit that there is a second issue - the 1.5 trillion structural deficit.

and you are refusing to admit this and instead what to pretend that the sole issue is SS.

 
At 5/21/2011 7:53 AM, Blogger VangelV said...

it shows the SHORTFALLLs for Social Security to be 20-30 billion a year until 2020.

Clearly this is a minor part of the 1.5 trillion structural deficit

yes the anti-folks like you are saying that the SS is "bigger".

It's not.


First of all, the SS problems are minor in comparison to Medicare. But that is not the problem. What you don't understand is that by some accounts you need to set aside $115 trillion TODAY to ensure solvency of the two programs. How much would you have to set aside to pay for the federal debt? Well, $14 trillion would pay it all off. It would take a lot less to pay the interest and slowly reduce it to zero over time. But there is no way to do the same with the unfunded liabilities because the math does not work. The fact that you refuse to see that little bit of reality shows that you do not really care about the facts and that yours is a political rather than a rational position.

 
At 5/21/2011 8:00 AM, Blogger VangelV said...

It's important and it needs to be fixed but RIGHT NOW, the FAR BIGGER PROBLEM is the 1.5 trillion structural deficit that has virtually nothing to do with Social Security.

The "anti" people are misrepresenting the facts of the issue by misrepresenting the truth about what the bigger issue is - right now.


The deficits are not hard to fix. All you need to do is to stop a lot of the spending. Why is the US taxpayer destroying buildings and roads in Iraq and Afghanistan only to pay to rebuild them again? Why is the government of Egypt getting $2 billion a year in aid? Why should the US government fund both sides of the Israel/Arab conflict? Why are there troops in Germany, Korea, and Okinawa? Why does the government waste billions each year in the failed war on drugs? Why does it subsidize wasteful solar, wind, and ethanol programs? Why is it paying $160 million per plane for the new JSF fighter? Why does it cover the hundreds of billions in losses for Fannie and Freddie? Why does it waste billions on the CIA? Why does it use the EPA to reduce American productivity? Why can't it be the same size as it was under the Carter Administration?

It is not a deficit problem. It is a problem of willpower and rationality.

 
At 5/21/2011 8:02 AM, Blogger VangelV said...

I've agreed to include and address the SS issue if you were admit that there is a second issue - the 1.5 trillion structural deficit.

Who has ever claimed that it was not a problem? But as I pointed out, the solution is very simple. Stop spending so much and live within your means.

 
At 5/21/2011 8:11 AM, Blogger Larry G said...

" First of all, the SS problems are minor in comparison to Medicare."

that's the facts, we agree.

and it's health care costs for ALL programs public and private that are escalating fast.

"But that is not the problem. What you don't understand is that by some accounts you need to set aside $115 trillion TODAY to ensure solvency of the two programs."

I DO UNDERSTAND.

When SS was first created, the FICA was 1%.

Over the years, the Trustees have annually issued a report about the long term solvency and all along, changes have been made to keep it solvent.

"How much would you have to set aside to pay for the federal debt? Well, $14 trillion would pay it all off. It would take a lot less to pay the interest and slowly reduce it to zero over time. But there is no way to do the same with the unfunded liabilities because the math does not work."

Bull Hockey.

each problem needs to have specific actions.

Changes have been made to SS over it's 60 years history to keep it solvent.

they'll do it again.

they point out that ONE OPTION is to bump the FICA by 2% which would make the program solvent for a long time.

but even if they did not - you'd STILL have the 1.5 trillion annual structural deficit and the growing 14 trillion debt.

" The fact that you refuse to see that little bit of reality shows that you do not really care about the facts and that yours is a political rather than a rational position."

I AM dealing with the FACTS.

Social Security is NOT THE REASON for the current deficit and debt and fixing it will not fix the ongoing deficits an debts.

NOT Fixing SS WILL... ADD to the structural deficits but as has been demonstrated ... over the 60+ year history of SS/Medicare MANY changes have been made in response to the ANNUAL Trustees Report when it showed unfunded liabilities into the future.

For many years, over time, the trustee reports have identified longer-term solvency issues - and DOZENS of changes have been made in response to keep it solvent.

You can see a list of those changes.. over the years...

BOTH deficit commissions identify a half dozen different options to... adjust SS to keep it Solvent.

NONE OF THIS HAS ANYTHING AT ALL to do with the CURRENT 1.5 trillion deficit that if you don't do anything about it will be much more damaging to the longer term solvency of the country - no matter what we do about Social Security.

It's just a flat out LIE to say that SS is the bigger problem right now OR that it's solvency issues cannot be solved.

You tell me how you are going to fix the 1.5 trillion structural deficit to keep it from being :

15.5 in 2012
17.0 in 2013
19.5 in 2014
.
..
.

where is your solution to that?

 
At 5/21/2011 8:14 AM, Blogger Larry G said...

" The deficits are not hard to fix. All you need to do is to stop a lot of the spending."


uh huh..

so WHERE ARE THE CUTS?

" t is not a deficit problem. It is a problem of willpower and rationality. "

First and foremost... It IS a problem if you do not have a list of cuts to balance the budget and as I showed you yesterday - the 1.5 structural deficit is BIGGER than the entire revenue base for the budget.

You would have to totally ZERO out BOTH the military AND the non-Social Security part of Medicare to balance the budget.

 
At 5/21/2011 8:20 AM, Blogger Larry G said...

" I've agreed to include and address the SS issue if you were admit that there is a second issue - the 1.5 trillion structural deficit.

Who has ever claimed that it was not a problem? But as I pointed out, the solution is very simple. Stop spending so much and live within your means. "

by claiming SS is a bigger, more serious, more intractable problem.

It's not.

There are at least a dozen options for bringing SS back to solvency.

Where are the specific options for getting rid of the 1.5 trillion deficit?

why focus on SS which has specific identifiable options and not on the 1.5 trillion of which I have yet to see a single list of cuts sufficient to wipe out the 1.5 trillion ....

ANNUAL.... Deficit...

next year the 14 trillion will be 15.5 trillion...and the next year...etc...

and yet you say that SS is THE problem.

I provided you the CBO chart that said...without fixes... SS will ADD ABOUT 30 billion a year to the debt.

and yes.. if you don't do the fixes...over 10 years.. it would be 300 billion.. and over 70 years trillions...

but in that same time frame if you don't address the structural deficit, what happens?

in Ten years... an unfixed SS program will add 300 million to the debt but if the CURRENT deficit is not fixed, in ten years is will be 30 trillion dollars - 10 times the SS "problem".

 
At 5/21/2011 8:21 AM, Blogger Larry G said...

"It is not a deficit problem. It is a problem of willpower and rationality. "

and why is this not the SAME EXACT problem with SS?

 
At 5/21/2011 5:19 PM, Blogger Ron H. said...

"We have a CURRENT DEBT of 1.5 Trillion and a CURRENT DEFICIT of 14 trillion..."

You have this backwards, Larry, How can you disagree with people if you don't understand these two?

 
At 5/21/2011 5:34 PM, Blogger Ron H. said...

"The "anti" people are misrepresenting the facts of the issue by misrepresenting the truth about what the bigger issue is - right now."

No it is the "failure to understand unfunded" people who are misrepresenting the truth, along with the "failure to understand that there is no trust fund" people. In some cases, they are one and the same.

 
At 5/21/2011 5:45 PM, Blogger Ron H. said...

"You tell me how you are going to fix the 1.5 trillion structural deficit to keep it from being :

15.5 in 2012
17.0 in 2013
19.5 in 2014
"

You are confusing deficit with debt. There's no possible way to have a meaningful discussion of this subject as long as you continue to do that.

 
At 5/21/2011 6:10 PM, Blogger Ron H. said...

"uh huh..

so WHERE ARE THE CUTS?
"

This is exactly where you started, Larry. This is a perfect example of you not reading and comprehending what others have said, and dismissing what they say out of hand.

You have been given several suggestions, but your repeated question includes no acknowledgment of them. What is the point of trying to educate you, Larry, when it doesn't appear to make the slightest difference?

 
At 5/21/2011 6:19 PM, Blogger Larry G said...

" "We have a CURRENT DEBT of 1.5 Trillion and a CURRENT DEFICIT of 14 trillion..."

You have this backwards, Larry, How can you disagree with people if you don't understand these two? "

If I got it backwards one time out of about 2 dozen posts...

my bad...

if you, on the other hand, read all those previous posts that got it right and then focus on one that did not...

what does that say about YOU!

ESPECIALLY when I have been pointing out to you the DIMENSIONS of the CURRENT Deficit and Debt compared to the CURRENT Social Security deficit and debt.

of which you insist .... that the SS is the bigger, more of an immediate threat (that must be dealt with first)....

and that that other pesky 1.5/14.5 trillion is just a matter of dealing with it.

but no.. "dealing" similarly with the SS issue is not the same .

I do not think EITHER of them are going to be solved that easily but we have a series of well defined options for SS that keep it solvent for the next 100 years.

HERE:

http://www.ssa.gov/oact/solvency/index.html

and yet you continue to insist that the 1.5/14.5 trillion problem is essentially caused by SS which is simply not the truth.

They are SEPARATE ISSUES and by far the bigger immediate threat if the deficit and the debt - not SS.

admit it. man up.

 

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