There Are 87 Billion Reasons to Revisit Those Tax Cuts, Mr. President

[BOBDN]

The effect of the Bush administration's irresponsible economic policy on the US.

"Show U.S. the Money" - The Washington Post

"The president's request last week for another $87 billion for the occupation in Iraq is chump change in the context of what has been given away in the Bush tax cuts. It comes to about 5 percent of the cost of the president's tax cuts over 10 years. In the mountain of U.S. borrowing, it amounts to a hill of beans. It will add only a little more than 2 percent to the national debt.

Yet the request, which could push the federal budget deficit to more than $500 billion during the next fiscal year, should make people stop and wonder whether President Bush's 2001 and 2002 tax cuts significantly compromised America's ability to respond vigorously to problems at home and abroad in the future. Bush's two swift and deep cuts changed the tenor of American politics, probably for the next decade. Instead of debating about whether or how to shore up Social Security, invest in our cities, expand prescription drug coverage and back up our military might abroad with reconstruction and aid packages, we will lapse back into the politics of relative scarcity, dominated by haggling over cuts in government spending and a game of chicken over who proposes tax increases."

[...]

"The situation is even worse than it looks, because the government is raiding Social Security surpluses. Social Security isn't being treated as a lock box. It's a cookie jar. Without using extra Social Security tax revenues, the government would run a deficit of $600 billion or more next year. "In the last two and a half years, our nation has acted decisively to confront great challenges," Bush said in Florida. "I came to this office to solve problems, instead of passing them on to future presidents and future generations." But on the fiscal front, bequeathing problems to future generations is exactly what Bush is doing."

The last quote is for the P&N Social Security lynch mob that insists SS is doomed as a ponzi scheme which can't remain solvent. Notice the figures used? A $100 billion SS surplus is being used to keep the deficit "down" to $500 billion.

Ridiculous.

We're running a $100 billion SURPLUS in SS this year! Why, if those SS surpluses were used for SS there would be NO PROBLEM at all!

Amazing.

But there is much more in the article to consider. I'd suggest you read it all.

 

[CADsortaGUY]

<sigh>
Yes SS is currently running a surplus. Again, if you look just a few short years down the road, it will be running HUGE deficits because of the BBs. Even if ALL the money was actually in the "trust fund" instead of IOUs it would still go bankrupt. Now until you understand that the SS entitlement in it's current form will fail - you will remain ignorant.

But AGAIN - since you seem to think funding our efforts in Iraq are just "political games" - I suggest you be this critical of ALL Federal spending and make sure we have accountability measures written in to ALL of them.

CkG

 

[BOBDN]

Originally posted by: CADkindaGUY
<sigh>
Yes SS is currently running a surplus. Again, if you look just a few short years down the road, it will be running HUGE deficits because of the BBs. Even if ALL the money was actually in the "trust fund" instead of IOUs it would still go bankrupt. Now until you understand that the SS entitlement in it's current form will fail - you will remain ignorant.

But AGAIN - since you seem to think funding our efforts in Iraq are just "political games" - I suggest you be this critical of ALL Federal spending and make sure we have accountability measures written in to ALL of them.

CkG

If the SS surplus had been used over the years for SS the system would be solvent for the next half century until the BBs are all gone.

The two major assaults on SS were conducted by Reagan/Bush and Bush via their outrageous deficits.

Stop blaming the SS system for the actions of Republican administrations which undermine it. The Republican Party has been anti-SS since President Roosevelt began the system.

 

[Corn]

BOBDN, one wonders, are you paid to be a slappy for the Democrats? Really.....either that or you have an unhealthy obsession with Bush. Where do you find the time for all this "research", reading, posting, supposed family time, and maintain gainful employment?

Either you've got too much time on your hands, or this is your "job".....seek help, or get a "real" job.

 

[CADsortaGUY]

Originally posted by: BOBDN

Originally posted by: CADkindaGUY
<sigh>
Yes SS is currently running a surplus. Again, if you look just a few short years down the road, it will be running HUGE deficits because of the BBs. Even if ALL the money was actually in the "trust fund" instead of IOUs it would still go bankrupt. Now until you understand that the SS entitlement in it's current form will fail - you will remain ignorant.

But AGAIN - since you seem to think funding our efforts in Iraq are just "political games" - I suggest you be this critical of ALL Federal spending and make sure we have accountability measures written in to ALL of them.

CkG

If the SS surplus had been used over the years for SS the system would be solvent for the next half century until the BBs are all gone.

The two major assaults on SS were conducted by Reagan/Bush and Bush via their outrageous deficits.

Stop blaming the SS system for the actions of Republican administrations which undermine it. The Republican Party has been anti-SS since President Roosevelt began the system.

More unfounded partisan spew.

Did you read what I posted? EVEN IF ALL THE IOUs WERE PUT BACK IN THE "TRUST FUND" - IT WOULDN'T BE SOLVENT AND WOULD BECOME BANKRUPT! There is no arguing with that. Now if we were to change the system in some way - maybe it would be more solvent but as it sits NOW it IS going to fail. It has nothing to do with being Democrat or Republican - it has to do with the entitlement being structured badly.

fix it or ditch it

CkG

 

[Hayabusa Rider]

Originally posted by: CADkindaGUY

Originally posted by: BOBDN

Originally posted by: CADkindaGUY
<sigh>
Yes SS is currently running a surplus. Again, if you look just a few short years down the road, it will be running HUGE deficits because of the BBs. Even if ALL the money was actually in the "trust fund" instead of IOUs it would still go bankrupt. Now until you understand that the SS entitlement in it's current form will fail - you will remain ignorant.

But AGAIN - since you seem to think funding our efforts in Iraq are just "political games" - I suggest you be this critical of ALL Federal spending and make sure we have accountability measures written in to ALL of them.

CkG

If the SS surplus had been used over the years for SS the system would be solvent for the next half century until the BBs are all gone.

The two major assaults on SS were conducted by Reagan/Bush and Bush via their outrageous deficits.

Stop blaming the SS system for the actions of Republican administrations which undermine it. The Republican Party has been anti-SS since President Roosevelt began the system.

More unfounded partisan spew.

Did you read what I posted? EVEN IF ALL THE IOUs WERE PUT BACK IN THE "TRUST FUND" - IT WOULDN'T BE SOLVENT AND WOULD BECOME BANKRUPT! There is no arguing with that. Now if we were to change the system in some way - maybe it would be more solvent but as it sits NOW it IS going to fail. It has nothing to do with being Democrat or Republican - it has to do with the entitlement being structured badly.

fix it or ditch it

CkG

SS-It needs to be fixed.
We shouldnt be in a position of having to spend hundreds of billions on Iraq.

Not mutually exclusive

 

[ChicagoMaroon]

Anyone who thinks they're not paying enough in taxes and oppose the Bush tax cuts, here's the address of the U.S. Treasury

United States Treasury
1500 Pennsylvania Avenue NW
Washington, D.C. 20220

They will gladly accept a check in refund to the government of your Bush tax cuts. Of course I don't expect anyone to do this, the Democrats only want to spend Other People's Money.

I, for one, am looking forward to the "politics of relative scarcity". We can jettison all these useless and wasteful social programs.

 

[SuperTool]

Originally posted by: ChicagoMaroon
Anyone who thinks they're not paying enough in taxes and oppose the Bush tax cuts, here's the address of the U.S. Treasury

United States Treasury
1500 Pennsylvania Avenue NW
Washington, D.C. 20220

They will gladly accept a check in refund to the government of your Bush tax cuts. Of course I don't expect anyone to do this, the Democrats only want to spend Other People's Money.

I, for one, am looking forward to the "politics of relative scarcity". We can jettison all these useless and wasteful social programs.

If that would make me exempt from paying interest on Bush's deficit spending, I would send in my tax cut today.
And all you naive conservatives who think they can just jettison social program or get rid of SS, you need to stop dreaming and realize that baby boomers will surely demand their SS checks, and they'll have the political power to get them. So instead of dreaming that all these commitments will go away, you need to deal with reality and prepare for what will happen down the road.

 

[XZeroII]

So when are you going to do something other than post on a discussion board? When are you going to do something to fix this situation instead of crying about it every day?

 

[CADsortaGUY]

Originally posted by: SuperTool
So instead of dreaming that all these commitments will go away, you need to deal with reality and prepare for what will happen down the road.

Exactly my sentiments on the funding for Iraq.



CkG

 

[Rockhound]

Originally posted by: WinstonSmith

Originally posted by: CADkindaGUY

Originally posted by: BOBDN

Originally posted by: CADkindaGUY
<sigh>
Yes SS is currently running a surplus. Again, if you look just a few short years down the road, it will be running HUGE deficits because of the BBs. Even if ALL the money was actually in the "trust fund" instead of IOUs it would still go bankrupt. Now until you understand that the SS entitlement in it's current form will fail - you will remain ignorant.

But AGAIN - since you seem to think funding our efforts in Iraq are just "political games" - I suggest you be this critical of ALL Federal spending and make sure we have accountability measures written in to ALL of them.

CkG

If the SS surplus had been used over the years for SS the system would be solvent for the next half century until the BBs are all gone.

The two major assaults on SS were conducted by Reagan/Bush and Bush via their outrageous deficits.

Stop blaming the SS system for the actions of Republican administrations which undermine it. The Republican Party has been anti-SS since President Roosevelt began the system.

More unfounded partisan spew.

Did you read what I posted? EVEN IF ALL THE IOUs WERE PUT BACK IN THE "TRUST FUND" - IT WOULDN'T BE SOLVENT AND WOULD BECOME BANKRUPT! There is no arguing with that. Now if we were to change the system in some way - maybe it would be more solvent but as it sits NOW it IS going to fail. It has nothing to do with being Democrat or Republican - it has to do with the entitlement being structured badly.

fix it or ditch it

CkG

SS-It needs to be fixed.
We shouldnt be in a position of having to spend hundreds of billions on Iraq.

Not mutually exclusive

Then the same goes for the prescription drug plan, education, etc. etc. We haven't yet spent hundreds of billions in Iraq and the SS has needed fixing for how long now? Take Iraq out of the picture and you still have the same problem with SS. Only you don't seem to acknowledge the amount of money being spent or going to be spent on the drug plan - estimates running from 400-800 billion and education also hundreds of billions. So there are your "hundreds of billions", not in Iraq.

 

[ChicagoMaroon]

Originally posted by: SuperTool

Originally posted by: ChicagoMaroon
Anyone who thinks they're not paying enough in taxes and oppose the Bush tax cuts, here's the address of the U.S. Treasury

United States Treasury
1500 Pennsylvania Avenue NW
Washington, D.C. 20220

They will gladly accept a check in refund to the government of your Bush tax cuts. Of course I don't expect anyone to do this, the Democrats only want to spend Other People's Money.

I, for one, am looking forward to the "politics of relative scarcity". We can jettison all these useless and wasteful social programs.

If that would make me exempt from paying interest on Bush's deficit spending, I would send in my tax cut today.
And all you naive conservatives who think they can just jettison social program or get rid of SS, you need to stop dreaming and realize that baby boomers will surely demand their SS checks, and they'll have the political power to get them. So instead of dreaming that all these commitments will go away, you need to deal with reality and prepare for what will happen down the road.

Okay, send your tax cut to me and I'll pay your share of the interest on the deficit. In fact, I'll do that for anyone who wants it because the government has a lower cost of capital than any one less in the world. Really, PM me, I'll do it.

SS is not going away, but there's thousands of other social programs that are ripe for the chopping block. Seems to me Bush's plan (or at least it's the hope of limited government conservatives like me) is to force Congress into cutting useless programs to balance the budget by running deficits.

 

[glenn1]

If you're so serious about the budget deficit, you give up the bottomless pit entitlement programs, and we'll give up the tax cut. Otherwise we'll just take it as given that you just want more money to waste on "your" pet priorities and less for "ours." There's no way anyone's going to take you serious while bitching about deficits, at the same time pushing for bullsh!t like multi-hundred billion dollar a year prescription drug coverage and "investment" in our cities. "Investment" in our cities? WTF? The metropolitan areas are black holes for money. I'd rather see the money given to other countries than places like SF who waste it on buying credit card machines for homeless people.

 

[Vic]

Originally posted by: glenn1
If you're so serious about the budget deficit, you give up the bottomless pit entitlement programs, and we'll give up the tax cut. Otherwise we'll just take it as given that you just want more money to waste on "your" pet priorities and less for "ours." There's no way anyone's going to take you serious while bitching about deficits, at the same time pushing for bullsh!t like multi-hundred billion dollar a year prescription drug coverage and "investment" in our cities. "Investment" in our cities? WTF? The metropolitan areas are black holes for money. I'd rather see the money given to other countries than places like SF who waste it on buying credit card machines for homeless people.

Exactly. That's what I hate about liberals. They use the deficit as an excuse, when they really could care less about it. All they really want to do is raise taxes more and more so they can pay for more and more of their bullsh!t programs. Programs that, I might add, do little to actually help the poor and do everything to give more corrupt bureaucrats jobs and their networked corporate buddies more money (our money!).

Cut taxes and cut spending. End this sh!t. Pharmaceutical corporations do not need subsidies. We need do not need more paper-pushing bureaucrats. Our cities should pay for themselves and would be able to do so if it weren't for the fact that federal taxes are so high. And Iraq can go to hell. Neither Iraqis nor the military complex need anymore of our money.

Thank you, rant over.

 

[ElFenix]

the SS money has to go into IOUs... if you actually took it out of the economy you would fvck it all up.

 

[Stanman]

$87 billion for the occupation in Iraq is chump change compared to the money we spent in Vietnam which per month was 24 times as much as we are spending in Iraq. It just sounds like a lot when you say "$87 billion" The money we are spending for this war is .05% of the economy, it's nothing. If it was $870 billion, it would be worth every penny of it. We have all the terrorists from all over the world flocking to Iraq in a last dicth effort to keep it from becoming a stable country, which makes it a convienent place for US to kill them.

 

[charrison]

Originally posted by: Vic

Originally posted by: glenn1
If you're so serious about the budget deficit, you give up the bottomless pit entitlement programs, and we'll give up the tax cut. Otherwise we'll just take it as given that you just want more money to waste on "your" pet priorities and less for "ours." There's no way anyone's going to take you serious while bitching about deficits, at the same time pushing for bullsh!t like multi-hundred billion dollar a year prescription drug coverage and "investment" in our cities. "Investment" in our cities? WTF? The metropolitan areas are black holes for money. I'd rather see the money given to other countries than places like SF who waste it on buying credit card machines for homeless people.

Exactly. That's what I hate about liberals. They use the deficit as an excuse, when they really could care less about it. All they really want to do is raise taxes more and more so they can pay for more and more of their bullsh!t programs. Programs that, I might add, do little to actually help the poor and do everything to give more corrupt bureaucrats jobs and their networked corporate buddies more money (our money!).

Cut taxes and cut spending. End this sh!t. Pharmaceutical corporations do not need subsidies. We need do not need more paper-pushing bureaucrats. Our cities should pay for themselves and would be able to do so if it weren't for the fact that federal taxes are so high. And Iraq can go to hell. Neither Iraqis nor the military complex need anymore of our money.

Thank you, rant over.

 

[LunarRay]

If you consider that SS Trust receives 12.4% of every dollar paid to employees and self employed folks up the the current maximum you'd see that all the out of work folks and those employed who at least earned to the current SS maximum but are now earning substantially less are affecting the Trust balance in a big way.
The fact that it is a trust holding IOU's is to do with the earnings on those IOU's. For the longest time the trust earned 0% interest. Recalculate the trust balance based on the compound effect of earnings at the RFR of TBills which would be the vehicle that instead of IOU's the trust would hold and consider the impact of the unemployed non contribution and you'll see that the fund is way solvent through when most BBers will be gone and be ready for you'll younguns .

I suggested to My Congressman a law that allocated 15.3% (SS and MED) of the former pay for any unemployed when the Unemployment rate exceeds 5.2%. I got back a "Pretty good idea" letter. I think Government can insure with prudent fiscal policy that the Unemployed rate ought to always be below 5.2% and the Trusts should be made whole accordingly

 

[glenn1]

Recalculate the trust balance based on the compound effect of earnings at the RFR of TBills which would be the vehicle that instead of IOU's the trust would hold and consider the impact of the unemployed non contribution and you'll see that the fund is way solvent through when most BBers will be gone and be ready for you'll younguns.

I'm not sure you're entirely clear on the entire concept of debt instruments. In the simplest possible terms, Treasury debt instruments (bonds, bills, and notes) are also IOU's from the government. That they carry a coupon rate is immaterial when the "owner" of the debt is the debt issuer, you can't pay yourself interest.

To put it another way, think of it in terms of your own personal finances. Can you borrow money from yourself? Can I spend $20, and write myself an IOU saying, "when i turn 65, i'll pay myself $20." That's what the government is essentially doing now with current payroll tax inflows and the SS "trust fund." Your idea would be like spending that same $20, and instead writing myself an IOU that says "when i turn 65, i'll pay myself $20. Plus interest."

The only way your idea would work would be to invest in assets which the return was being paid by a different entity, either corporate bonds, equities, whatever. And personally, i'm not all too keen on the idea of the government owning a few trillion dollars in investment assets. Do you really want the federal government owning huge amounts of publicly traded stock or corporate debt? No conflicts of interest could possibly arise from that scenario, right?

 

[LunarRay]

Originally posted by: glenn1

Recalculate the trust balance based on the compound effect of earnings at the RFR of TBills which would be the vehicle that instead of IOU's the trust would hold and consider the impact of the unemployed non contribution and you'll see that the fund is way solvent through when most BBers will be gone and be ready for you'll younguns.

I'm not sure you're entirely clear on the entire concept of debt instruments. In the simplest possible terms, Treasury debt instruments (bonds, bills, and notes) are also IOU's from the government. That they carry a coupon rate is immaterial when the "owner" of the debt is the debt issuer, you can't pay yourself interest.

Lets just say that I understand government accounting, investment vehicles and the rest. But, for the sake of clarification, I didn't say the Trust needed to hold the instruments like, say, the open market committee of the FRB. The SS trust does hold interest bearing notes, and the Dr. balance (surplus) should be interest bearing (as it is now) from the beginning of its existence and at the RFR of TBills. I know that the SS Trust sits on the BS and IS of the Mother Government and its Surplus is offset by 'owed to trust' on the General Fund.
A Trust is generally defined as a Fiduciary vehicle whos assets are to be kept separate in the first place. So the SS Trust is not a Trust in deed but in name (IMO). If it were a true Trust it would have its own Assets and could own TBills or anything else AND I sign the checks. SS can be set up as a normal real live Trust and handled accordingly.

To put it another way, think of it in terms of your own personal finances. Can you borrow money from yourself? Can I spend $20, and write myself an IOU saying, "when i turn 65, i'll pay myself $20." That's what the government is essentially doing now with current payroll tax inflows and the SS "trust fund." Your idea would be like spending that same $20, and instead writing myself an IOU that says "when i turn 65, i'll pay myself $20. Plus interest."

Sure you can. It nets to zero but, if you wish to track your actual cost of something you can and should. For instance; A trust account to build a house. You put in X$ and incure the expense of building. The account is in a money market fund until you need the $. One day you go to Vegas and oops lose your personal funds and borrow some from the trust by cashing a MM check at Harrah's. Your trust lost the interest on the funds you drew out so you should make the trust whole by paying interest for the use of the trust's money.

The only way your idea would work would be to invest in assets which the return was being paid by a different entity, either corporate bonds, equities, whatever. And personally, i'm not all too keen on the idea of the government owning a few trillion dollars in investment assets. Do you really want the federal government owning huge amounts of publicly traded stock or corporate debt? No conflicts of interest could possibly arise from that scenario, right?

If you invest in anything for SS Trust assuming you make it a true trust which it is not (IMO), it should be Risk Free hence my RFR of the TBill or other Federal Vehicle.

edit..The SS Trust Fund Surplus

The Social Security Trust Fund is growing because the inflow from FICA taxes and interest credits exceeds the outflow from SS beneft payments. The Trust Fund buys non-negotiable Treasury bonds with that surplus. Those bonds will be redeemed as necessary when FICA taxes no longer cover the SS benefit payments. Short-term balances of the Trust Fund are held by the Treasury from which all SS benefits are paid.

The Treasury does not accumulate a surplus in the general fund. It holds only what it needs to cover its near-term obligations. That means the excess FICA taxes are spent by the Treasury as fast as they are received. Of course the Treasury incurs an obligation to the Trust Fund, as represented by the special interest-earning bonds it issues to the Fund.





CBO's take on the trust fund fiasco (my words)

Budget Surplus link ... interesting.. I think

 

[glenn1]

You put in X$

That's the whole point. Neither the government nor the initial payees of social security never put in any capital at the beginning. That's what's causing the whole mess now. You can run the calculations with any presumed RFR you want to choose, the whole damn thing is just a pass-through account anyway. If you're thinking slapping a RFR rate onto the mess that it will provide IRR high enough to keep us out of trouble you're fooling yourself, because there have never been any assets allowed to accrue in the SS trust fund to generate an IRR. You're trying to discount assets which DO NOT EXIST.

 

[LunarRay]

Originally posted by: glenn1

You put in X$

That's the whole point. Neither the government nor the initial payees of social security never put in any capital at the beginning. That's what's causing the whole mess now. You can run the calculations with any presumed RFR you want to choose, the whole damn thing is just a pass-through account anyway. If you're thinking slapping a RFR rate onto the mess that it will provide IRR high enough to keep us out of trouble you're fooling yourself, because there have never been any assets allowed to accrue in the SS trust fund to generate an IRR. You're trying to discount assets which DO NOT EXIST.

Well, the point I'm trying to make is: At some point in time more money came in then went out related to SS. (forget Medicare for this) from that point in time until today there has been a surplus (I believe) Now while currently the SS trust does hold special issue interest bearing vehicles (SIIBV) there was a time it did not and did not get any income from its surplus (no real assets, just accounting) I suggest we calculate that amount and add it to the surplus (issue more SIIBV's) Then pass a law to fund (issue more SIIBV's) to account for the non collection of funds related to unemployed folks when the rate exceeds 5.2%.
The PV of funds needed to meet the future needs of retiring folks (or other disabled or whatever) at an unknown rate for an unknown period for an unknow amount given that each of the dynamics changes is not doable, is it. But, you can using actuary folks and birth rate figures and expected inflows from some estimated work force and payroll and then calculate a figure whose accuracy will be consistent with every other estimate out of Washington.
I suggest do the math I wanted above and then end the system based on the scenario I mentioned in other threads awhile back.

 

[LunarRay]

Updated December 11, 2002
All securities held by the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) Trust Funds are issued by the Federal government. Almost all of these securities are special issues--securities issued only to the trust funds. Those securities available to the public are called public, or marketable, issues.
Interest rates Special-issue investments bear interest rates determined by a formula. The current formula sets the rate applicable in a given month to the average market yield on marketable interest-bearing securities of the Federal government which are not due or callable until after 4 years from the date the rate is determined. This formula became effective with the October 1960 rate. The rate is determined on the last business day of the month preceding the month of issue. Tables of such monthly interest rates provide rates back to 1937--the beginning of the Social Security program.
Frequency of interest payments Interest on special-issue investments is paid semi-annually, at the end of June and the end of December. Because the trust funds hold no cash, investments are redeemed each month to pay for benefits and administrative expenses. When investments are redeemed, interest is paid. The amount of interest paid is used to offset the amount of investment redemptions.
Effective interest rates Although new investments for each trust fund carry the same interest rate, amounts of income and outgo differ between funds, resulting in a different investment portfolio for each trust fund. Interest earned on investments during a calendar year is divided by the average level of investments during the year to provide an "effective" interest rate. A table of such effective rates provides rates back to 1940 by trust fund.
link to the source... the SS place