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Re: A Parting Word

Posted: 11/9/2012 4:45 PM

Re: A Parting Word 



fldore wrote: 

But regardless Im sure youll see a conservative again.  The problem is not enough people in this country understand the gravity of the economic situation we are in.  All this talk of blaming Bush is silly.  The housing crisis, which wasnt his fault, and two wars only accelerated a looming problem; it didnt create the problem.  We have fundamental structural problems with our entitlement spending but by electing Obama, we've decided to kick the can down the road another 4 years.  He isnt going to do anything to fix entitlements.  He made healthcare more expensive and the only attempt at doing anything with social security with Simpson-Bowles he decided to nix.  And that would have saved only 4 trillion over 10 years but was considered too extreme.  In 15 years 4 trillion will be a drop in the bucket.  By then our federal revenue wont be enough to cover just entitlements and interest on our debt let alone all the other federal expenditures.

I think the real problem with the 'fiscal cliff' at this point is that both sides refuse to understand the valid points of the other.  With a $4T dollar deficit and Lord only knows how much debt at this point, it seems incredibly obvious to me that the only way to come anywhere close to restoring our fiscal house to order is a combination of increased revenues and spending cuts.  Anyone who ignores either side of that is simply posturing, and not really trying to solve the problem.

The GOP (or, rather, the Tea Party) wants to attack the problem by destroying the government.  The USA is a better place for medicare and medicaid and social security and the department of education and PBS and many other things.  The desire to gut the government is misplaced and unacceptable -- especially when simultaneously arguing that the wealthy need lower taxes.

The Dems need to understand that while those programs may make the USA a better place, those programs will eventually collapse if we can't pay for them.  And a return to 70+% marginal tax rates to fund them is neither desirable nor politically feasible.  These programs need to be cut.

My opinion?  (or at least my working solution).  Eliminate the Bush tax cuts on earners over $250K.  Eliminate half of the Bush tax cuts on earners from 100k-250k.  Keep the tax cuts on those under $100K.  If the concerns about the economic recovery are too strong we can always consider postponing this a year ... but not much longer.  In any event, institute the Buffet rule and get rid of the carried interest loophole.  Simultaneously, freeze all non-military and entitlement spending for the next 5 years.  No department gets an increase in funds.  I don't know enough about the inner workings of medicare and medicaid to say what I think should be done, but something must be done to cut costs.  It will decrease the quality of service.  That will suck for the people affected.  It may be unavoidable.  THe SS age needs to go to up.  The SS payout may also need to be decreased (or frozen for several years and not given inflation increases).  This will suck.  Many elderly may need to move in with family and give up their homes at younger ages.  It will be unpopular.  There may not be a choice.  The military sequestration cuts should be put into effect.

If we do ALL of that we *might* be able to get our budget under control.  As the economy recovers, we should at some point consider a "debt reduction" tax increase, where all earners see a temporary 1% increase on taxes, with the revenue raised from this placed in some sort of restricted account like colleges have, where it can only be spent on paying our creditors.

But the Tea Partiers insisting we need to lower taxes and repealing the Bush tax cuts is unacceptable?  Ludicrous.  That's not fiscally conservative, it's fiscally irresponsible.  Anyone who says that is only interested in "balancing the budget" as a political tool.  Similarly, the Democrats that consider Medicare or SS to be a "sacred cow" are deluding themselves, and ignoring our budget problem like G.W.Bush when confronted with global warming evidence.
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  • fldore
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Posted: 11/10/2012 12:45 PM

Re: A Parting Word 



mathknapp wrote:
My opinion?  (or at least my working solution).  Eliminate the Bush tax cuts on earners over $250K.  Eliminate half of the Bush tax cuts on earners from 100k-250k.  Keep the tax cuts on those under $100K.  If the concerns about the economic recovery are too strong we can always consider postponing this a year ... but not much longer.  In any event, institute the Buffet rule and get rid of the carried interest loophole.  Simultaneously, freeze all non-military and entitlement spending for the next 5 years.  No department gets an increase in funds.  I don't know enough about the inner workings of medicare and medicaid to say what I think should be done, but something must be done to cut costs.  It will decrease the quality of service.  That will suck for the people affected.  It may be unavoidable.  THe SS age needs to go to up.  The SS payout may also need to be decreased (or frozen for several years and not given inflation increases).  This will suck.  Many elderly may need to move in with family and give up their homes at younger ages.  It will be unpopular.  There may not be a choice.  The military sequestration cuts should be put into effect.
I like the ideas but good luck with all that.  Any talk of touching social security and now you are pushing grandma off the cliff.  You cant raise the social security age because then people like Paul Krugman will cry that the people who live the longest are the one's with money and dont need it.  Its the poor elderly who die closer to 65 that really need the money.  So by raising the age you'll be hurting the people who really need it.  But you cant stop giving social security to those with money because they've spent their entire lives paying into it.  

And since its such a politically opportunistic subject, you'll always have politicians who use it to their advantage and divide the electorate.  Too many politicians who want to stay in office and do whats best for themselves will cater to their voters instead of whats best for the country.   

Social security needs to be radically overhauled.  The original purpose to help out the elderly who run out of retirement savings and are kicked out on to the street sure is great and gives you that warm and fuzzy feeling.  But its turned into this 25 year retirement fund thats completely unsustainable.  But nobody cares.
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Posted: 11/10/2012 3:56 PM

Re: A Parting Word 



fldore wrote:  

Social security needs to be radically overhauled.  The original purpose to help out the elderly who run out of retirement savings and are kicked out on to the street sure is great and gives you that warm and fuzzy feeling.  But its turned into this 25 year retirement fund thats completely unsustainable.  But nobody cares.
I agree with this.  The original intent of social security was to keep grandma and grandpa above the poverty line -- not to insure their continued standard of living for 20 years into retirement.  I realize that not all elderly are fortunate enough to have such options, but once upon a time having 3 generations of a family living in the same house was standard.  I'm not sure that we haven't lost something by ending that dynamic.
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Posted: 11/10/2012 4:32 PM

Re: A Parting Word 



mathknapp wrote: 
I agree with this.  The original intent of social security was to keep grandma and grandpa above the poverty line -- not to insure their continued standard of living for 20 years into retirement.  I realize that not all elderly are fortunate enough to have such options, but once upon a time having 3 generations of a family living in the same house was standard.  I'm not sure that we haven't lost something by ending that dynamic.
Yep totally agree.  And just think of all the money you could save on daycare too.  Not to mention some complete stranger isnt raising your kids.

But when 40% of children are now born to unwed mothers, the ideals of family seem to be disappearing from the country.  Its a shame.
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Posted: 11/11/2012 12:13 AM

Re: A Parting Word 


Great summary, math.  One additional thought; no one has mentioned the huge tax break for people making >$100k - the 6.2% (normally) that they don't pay in withholding.  Another regressive tax.  What would the viability of Social Security look like if there were no limit on the amount of earnings subject to the tax?  Or if the withholding tax were progressive even?
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Posted: 11/11/2012 11:42 AM

Re: A Parting Word 



DCDore wrote: Great summary, math.  One additional thought; no one has mentioned the huge tax break for people making >$100k - the 6.2% (normally) that they don't pay in withholding.  Another regressive tax.  What would the viability of Social Security look like if there were no limit on the amount of earnings subject to the tax?  Or if the withholding tax were progressive even?
As much as I dislike social security, if we're going to have such a system it should be funded from the general fund. In that way it would be funded by a progressive income tax system, as well as taxes on dividends, capital gains, corporate taxes etc. We should end the illusion that FDR started whereby each individual was funding his or her own retirement account, with his or her name on it, that would be tapped upon retirement.
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Posted: 11/11/2012 1:15 PM

Re: A Parting Word 


As an example, of my wife and I make $100k, our marginal, combined, tax rate would be 31.2%, but when our income increases to $110k, our marginal, combined, rate falls to 25%.
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Posted: 11/11/2012 1:45 PM

Re: A Parting Word 



DCDore wrote: Great summary, math.  One additional thought; no one has mentioned the huge tax break for people making >$100k - the 6.2% (normally) that they don't pay in withholding.  Another regressive tax.  What would the viability of Social Security look like if there were no limit on the amount of earnings subject to the tax?  Or if the withholding tax were progressive even?
I don't understand this.  Can you explain it in "Taxes for Dummies" form?
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Posted: 11/11/2012 2:10 PM

Re: A Parting Word 


Social Security taxes apply only to the first ~$100k in earnings (adjusted annually for inflation).  Thus, someone making $250K, $500k or $5mm would pay Social Security taxes on only the first $100k of income.

Therefore, if someone makes $100k, the combined marginal tax rate is 31.2% (25% FIT + 6.2% SS); of income rises to say $125k, the combined marginal tax rate is 25% (FIT only)
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Posted: 11/11/2012 3:28 PM

Re: A Parting Word 



DCDore wrote: Social Security taxes apply only to the first ~$100k in earnings (adjusted annually for inflation).  Thus, someone making $250K, $500k or $5mm would pay Social Security taxes on only the first $100k of income.

Therefore, if someone makes $100k, the combined marginal tax rate is 31.2% (25% FIT + 6.2% SS); of income rises to say $125k, the combined marginal tax rate is 25% (FIT only)
That does seem backwards.  I certainly don't see why that $100K cap couldn't be raised.

TO the extent that I understand this though, your math seems slightly oversimplified.  I guess the person's marginal tax rate goes down to 25%, though they do still pay more than a 25% rate overall.
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Posted: 11/11/2012 3:37 PM

Re: A Parting Word 


not necessarily >25% overall

10% (+6.2%) on the first $17,400 plus
15% (+6.2%) on the amount from $17,400 to $70,700 plus
25% (+6.2%) on the amount from $70,700 to $110,100 then
25% (only) from $110,100 to $142,700
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Posted: 11/12/2012 8:02 AM

Re: A Parting Word 



doreking wrote: The federal government has, and should have, virtually no role over social issues.   I view them as a distraction in election, and the federal governments role is trivial at best.

The main roles of the federal government are to provide defense, and regulate interstate commerce.   That should be what the elections are about--not birth control or gay marriage.   Even abortion should be a state by state issue--the supreme court wrongly usurped this authority from the states in roe v wade.
I agree...as shocking as this is for me to type, I agree with you doreking.

Social issues should be a state issues, not something the federal gov't decides.
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Posted: 11/12/2012 8:50 AM

RE: A Parting Word 


What I think is bizarre is that the SS income cap wasn't increased in line with inflation. I think it has only been raised once since SS was enacted. The income cap was designed (IIRC) to capture SS contributions from 90% of earned income. However, by not tying the income cap to inflation, that percentage has slowly eroded over time to where it is only, what? 75% or something now?

I personally, do not have a problem with raising the income cap on SS contributions to get it back to that 90% percentile.. That, and ending the Bush tax cuts for everyone. How's that for a tax plan from a fiscal conservative?

Now, here's the big BUT......

I would tie that in with at least a 10% spending cut (aka haircut) across all federal departments, including entitlements. But this is probably too much like the fiscal cliff (maybe even worse). I'll caucus with knapp and fldore on this one.
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Posted: 11/12/2012 9:27 AM

RE: A Parting Word 



VUGearhead wrote: I would tie that in with at least a 10% spending cut (aka haircut) across all federal departments, including entitlements. But this is probably too much like the fiscal cliff (maybe even worse). I'll caucus with knapp and fldore on this one.

Not wanting to create the "fiscal cliff" is why I called for a freeze in all spending, with no adjustments for inflation, for several years.  Though the effects are not immediate, it would hopefully produce the same long-term result without the impending feeling of panic. 

Though something like you suggest would be appropriate if the goal really is to get our budget under control.  As many have pointed out, it's tricky (to say the least) to get a budget under control while in the throes of (or slow recovery from) a recession.  Definitely tricky to balance the fiscal needs with the economic ones.
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Posted: 11/12/2012 11:02 AM

RE: A Parting Word 



VUGearhead wrote: What I think is bizarre is that the SS income cap wasn't increased in line with inflation. I think it has only been raised once since SS was enacted. The income cap was designed (IIRC) to capture SS contributions from 90% of earned income. However, by not tying the income cap to inflation, that percentage has slowly eroded over time to where it is only, what? 75% or something now?

I personally, do not have a problem with raising the income cap on SS contributions to get it back to that 90% percentile.. That, and ending the Bush tax cuts for everyone. How's that for a tax plan from a fiscal conservative?

Now, here's the big BUT......

I would tie that in with at least a 10% spending cut (aka haircut) across all federal departments, including entitlements. But this is probably too much like the fiscal cliff (maybe even worse). I'll caucus with knapp and fldore on this one.
Gear, it actually has increase a lot.  For much of my career, I have been just under/over the cap so I have kept up with it more than most.  It was only $51,300 in 1990, and is $110,100 for the current year.

I like your suggestion with some caveat that implementation be staggered in some way to not push us back into recession.  I really believe that increasing tax rates on incomes above $250k (or $500k) immediately would have limited impact.  Then, over 4-5 years, the increased tax rates could increasing impact lower incomes.  Same with spending cuts; not sure what the exact percentages need to be but something like zero cut/zero growth in current year; 2% cut each year after that until we get to 10%.  

Clearly, this is written without having the CBO determine the comparative impact.

Last edited 11/12/2012 11:03 AM by DCDore

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Posted: 11/12/2012 12:48 PM

RE: A Parting Word 



DCDore wrote:
Clearly, this is written without having the CBO determine the comparative impact.

What?  You couldn't call in a favor and get this vetted for us?  Seriously, your handle even indicates you might live in DC.  You could probably just walk it over on your lunch break... tongue
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Posted: 11/12/2012 12:55 PM

RE: A Parting Word 



mathknapp wrote:
DCDore wrote:
Clearly, this is written without having the CBO determine the comparative impact.

What?  You couldn't call in a favor and get this vetted for us?  Seriously, your handle even indicates you might live in DC.  You could probably just walk it over on your lunch break... tongue
Actually DCD are initials, but I considered calling in a favor from President Obama based on the $2500 in contributions I made.  I am sure that's enough to get me access.
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Posted: 11/12/2012 3:13 PM

Famous RINOs ... 


Richard Nixon
Dwight D. Eisenhower
Teddy Roosevelt
Abraham Lincoln

Welcome to the 2012 GOP.
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