The Myth of Social Security Insolvency

From http://news.yahoo.com/s/ap/20100901/ap_on_bi_ge/us_obama_economist_1

Obama's economists disagree with you.

 

Which means absolutely nothing in the context of an entitlement program like SS.

President Bush told the truth. There is no social Security Trust Fund. His simple declaration sent government cockroaches scurrying for their next available lie to feed to the gullible.

 

I do not propose any tax hikes except that I believe all election campaigns who make more than $150,000.00 should be taxed at the Corporate tax rate.

First, if we reduced revenue back to FY 2002 levels, we would have balanced the budget. I would freeze all spending at current levels immediately then begin strategic reductions. If you want to increase one area, you must cut another while rolling back down to the 2002 levels. Taxes are not the issue either. If we cut the corporate tax to 0%, we would only increase our deficit by $100 Billion (less than 10% of our current deficit). Thus, the issue is not cutting taxes or raising taxes, the issue is cutting spending (personally, I think if we cut the corporate tax rate to 0%, we would actually increase revenue, but for the sake of this argument, we will leave it at its current rate). Raising taxes will not balance the budget. My plan would take several years and comes from collaboration from groups like the Brookings Institute (liberal) and the Cato Institute (conservative). I have also added some of my own thoughts.

1. I would cut public subsidies to commercial activities (conservative estimates that this would save $137.5 Billion a year).
2. Returning many functions back to the states. This would make programs more effective and less costly. Estimates say we can save $123 Billion a year).
3. Reduce wasteful spending. The conservative CBO numbers are $7 Billion in savings.
4. $58.4 Billion reduction in non-military Discretionary spending (As studied by the liberal Brookings Institute).
5. Reduction in entitlement spending by $74 Billion per year. One part is by not linking the consumer price index to social security increases as those are not accurate numbers (per the CBO) and linking it to the Bureau of Labor Statistics which will reduce spending by $17 Billion by 2014. Save $16 Billion through the reduction of the subsidy for medicare insurance. As well, not included in my stats, I would eliminate the Bush era prescription drug program and Obama Care.
6. Make a Statute of limitations on all spending programs.
7. I would reduce the military spending by truly getting out of Iraq and Afghanistan (and most other places) and bringing our troops home. There estimates on how much that would save us, so I am not quite sure as this is a difficult finance mess
8. I would begin rolling back all other spending to 2002 levels.
9. Finally, I would also allow tax payers to be able to designate up to 10% of their income tax payments to paying down the debt.
10. In my second phase, I would eliminate departments not contained in the Constitution.

Most estimate if we just did #5, we can be balanced within 10 years. With the cuts alone (not including the military cuts), the liberal Brookings Institute estimated a balanced budget by 2014, they also included some tax increases via non-payroll means totaling about $74 Billion. I do not propose any new taxes except the one listed above. As well, the estimates do not include #10 as this is a second phase.

 

Define "rich." And while you're at it, identify how many people qualify as "rich," so that we can statistically predict whether raising their taxes will have an actual impact.

I'm not good with economics, but "deficit neutral" seems to me to be a bad goal. Everything we do, as a government, should be with the intended goal of reducing deficit, with the ultimate goal of being a surplus.

BTW: Feel free to further clarify your reduction of the military. We currently have a requirement to reduce the military budget by $10B; while retaining the same missions, operations, and daily requirements, not to mention impending additions to those missions, operations, and daily requirements. What's the optimum mix of personnel/resources to mission accomplishment?

 

Dan Mitchell had a good interview here. I thought it was appropriate for this discussion.

 

Paul,

I am not for lifting the cap, but doing away with social security. I agree, we should keep the promises we have made. However, we need to do away with future promises while we still have time.

Why do we need to raise Capital Gains taxes? How much do you think it should raise. Obama has proposed a 5% increase in the Capitol Gains but according to elasticity and other studies, the result would only increase revenue from Capitol Gains by 0.04% and the effective reduction in the GDP estimates that such an increase in Capitol Gains could cause a net loss in revenue.

I, therefore, would be against raising Capitol Gain Taxes by 5% to gain (maximum) 0.04% in Capitol Gains Revenues. BTW, increasing Capitol Gains will not decrease the deficit nor would increasing SS cap. To keep ss solvent you have to create jobs, not increase taxes.

Rather, I again say I would eliminate the corporate tax rate of 35%. The net effect on the Government's income is less than 10% of our current deficit but estimates have it that it could significantly reduce unemployment far beyond anything we have yet to do. We would make the money back in personal taxes many fold.

 

As noted, you can take all the money for the wars out of the equation (and I am against the wars) and we still have a major problem.

As well, you can reduce the Corporate tax to 0% and you are only infusing less then 10% increase in the deficit.

The statistics do not show tax cuts nor the wars are causing the problems. Spending is causing the problems. You need to reduce spending dramatically. You can do all the tax increases you have mentioned and more and you will not have balanced the budget.

 

BTW, I have considered it highly immoral that if someone cannot balance their budget (an immoral position) that they can ignore their spending and force people to pay more. Rather, morally, I find that those who cannot live within their means should never be trusted with more money. Rather, as I do with my children, if you can't be trusted with what I give you then I should trust you with even less until you can learn responsibility.

 

I have a question for all you guru's

What do you suppose is gonna happen if one day-----all of that money we've been borrowing from China----whats gonna happen when the day comes that China is gonna call in their loans

I know----they will send all of their "Repo Ray"'s over here and will start repossession proceedings

 

In other words - IOU's

The general fund borrowed the money that taxpayers put into social security to spend on other things - lots of other things - not just the wars in Iraq and Afghanistan. This has been going on for years and years -it's nothing new.

The only way that the government is going to pay off those IOU's is with more taxes.

So Paul3144, how much more are you willing to pay in taxes to pay back the IOU's to the social security fund?

I calculate my tax burden - Federal, State and Social Security to be - 40%

And that is before sales tax and the other taxes and fees that get thrown in for renewing my driver's license etc.

Isn't 40% high enough?

 

Abolish the Department of Education
Abolish the Department of the Interior
Gut the Department of HHS to the most basic level of regulation
Abolish the Department of Homeland Security, and force a coordination of our intelligence and security resources.
Abolish the Department of Energy
Phase out Medicare
Impose a 5% pay reduction across the board in 2010 for all federal employees in 2011; 10% in 2012. End automatic raises.
Cut congressional pay by 25% in 2011; 25% more in 2012. End perks such as free haircuts, travel perks, and the like.
Gut the Department of Labor to the most basic regulatory level.
Abolish the Internal Revenue Service and enact the FairTax.
Allow a private supplemental option to Social Security.
End garbage giveaways like free government-funded cell phones.

Then...don't raise taxes; tax cuts or at least freezes will encourage investing and risk. Tax increases in this economy would be a monumentally stupid idea.


And that was about 5 minutes of thinking, with no notice. Imagine what some real brainstorming could do...

Never gonna happen, though. Too many folks addicted to the crack cocaine of Other People's Money.

 

Does that mean we have to return all of our Wal-mart purchases?


Just kidding.

God bless.

 

You people? :laugh:

That's like having a supposedly rich relative die and leave you a trust fund with nothing in it but debts to pay.

Your admission that it has been spent belies your contention that the money is there.

The only way the government can pay back the money it has stolen from Social security is to borrow to do so. That's akin to an individual using one credit card to pay the other. The eventual result is always impaired credit or bankruptcy. It's just a matter of time.

The other way to pay it is to raise taxes. Since the government spent the taxes that were paid in to fund the program, they will have to tax all of us again to pay backe the debt, doubling the cost of the Social Security program.

So stop whining about how the money was spent. Democrats and Republicans alike are equally responsible. And stop fooling yourself about the Fund that is only full of IOUs that can't be paid.

The fact is the money is gone and the bill is coming due.

 

>One economic scholar I read noted, "no one who knows accounting and finance can dispute that unless something dramatically changes, we will be unable to pay the interest on our debt by 2040."

Don't worry, WW3 will take care of THAT problem. There is at least one important war every 100 years.

The SS money has ALWAYS been replaced with Treasury notes and spent on current budget needs. None of you like it but no one has proposed an alternative. Should you left pocket be saving money while your right pocket is borrowing money? Doesn't compute!

You all want the SS funds invested/ IN WHAT? General Motors stock?

CHINA CAN'T "CALL IN" LOANS. China buys Treasury notes. The notes have a redemption date. China can sell the notes on the open market or wait until the redemption date. China CAN quit buying more US Treasury paper.

Ultimately, US money can ONLY be spent in the US. When the Chinese redeem their paper, they get US money, not Chinese money.

You "balanced budget" nuts . . . answer me this: Does a family who is making house payments have a balanced budget?

 

Agree that there is no SS fund. Neither is there a US Army fund but that hasn't stopped the US from starting wars all over the world.

>The only long-term way to get the deficit under control is to cut spending and raise taxes on the rich.

OK, please define "rich." Should ANY person who's income comes from working for hourly wages be classified as rich?