"If you can't stand the way this place is, Take yourself to higher places!"
Break, By Three days grace
Hilliary Clinton/Tim Kaine 2016
What I'm pointing out is the separation of taxes isn't real. It's a political convenience. A federal tax is a federal tax, and it would be much simpler to stop breaking it up like we do now. I.e. instead of wasting our time with intragovernmental loans, and absurd claims like "Social Security is broke!" we could just talk about how much it costs us, how much we are willing to pay for it, and how to pay for it.
And yet, somehow neither SS nor the federal government melted down between 1970 and 1993.LBJ created the unified budget to pay for the Vietnam War and Congresses after that used the unified budget to show a lower deficit than actual.
If you've been reading my posts, you'll see I don't really have an issue with a truly unified budget. In fact, I'd say it makes more sense. There's no real need to split up tax payments for different spending.
OMG NOOOOO!!!! Not a DEFICIT!!!please tell me how running a deficit and having to borrow money to fund the deficit is a good thing?
1) It allows the government to provide services, typically those requested by voters, without raising taxes.
2) Borrowing from the trust fund, yet again, doesn't pose a problem. We might make an argument there are better uses of those funds, or cheaper ways to borrow, but there is no real reason to fear that the trust fund won't be repaid.
3) Individuals and institutions around the world have been throwing money at the US government for years, loaning money to the government at zero interest rates. Since inflation is positive, that means those people are paying the government to borrow their money. In turn, US government bonds and securities are regarded as the safest investment in the world.
4) Governments are not like individuals, who are expected to pay off a mortgage or a credit card in a specific time frame. Governments can borrow indefinitely, and roll over debt for as long as someone's willing to lend the money. Deficits only really become an issue when we can't raise enough revenue to pay the interest.
5) As noted, deficit hawks have been screeching since the early 80s. That's thirty years of predictions of doom that haven't come about. After a few decades, the FUD starts to wear a bit thin.
6) If we ran a $50 billion/yr surplus starting in 2015, it'd take the federal government over 360 years to pay off the debt. It's not happening in our lifetimes. You might wanna deal with that.
7) Last but certainly not least: Most of the states, and some cities, require balanced budgets. What does that produce? More often than not, states that can't run deficits deliberately underfund their state pensions. <Neo>Woah.</Neo>
This doesn't mean that all budget issues magically go away. What it means is that deficits and debt are mostly a pseudo-problem, unless things get so bad that we can't pay the interest. The real issue is whether we want to provide certain services, and how much we want to tax our citizens. Scare tactics about SS shortages and "Ponzi schemes" and all this other bull**** ultimately distract us from the much more basic questions.
I do understand it, which is why I know that it's not a Ponzi scheme.We are paying OUT debt service, not in. Using your funds to pay my SS is nothing more than a Ponzi scheme and something you don't understand.
Again: Instead of borrowing from the private sector, we're borrowing from the trust fund. The money is basically sitting there doing nothing. Letting it sit there, doing nothing, benefits no one.
The reason why we classify SS as having "unfunded liabilities" is because of exactly what I'm discussing -- expenditures are greater than revenues. Treating this like a horror show is not real. It's a direct result of separating out SS taxes from other types of taxes.
The way SS is set up, it's like having two jobs, and declaring that the funds from one job can only be used for the mortgage, and everything else is paid out of your second job. If your first job cuts your hours, would you default on your mortgage? No, because money is money, and income is income. You'd pay the mortgage out of both jobs.
There is no real reason to separate these taxes anymore. I don't pay a tax specifically for military, a second tax for education, a third tax for interest payments, and so on. These are mere political and accounting fictions. They're not real.
Speaking of unfunded liabilities, all those states that can't run deficits? They wind up, wait for it... underfunding their state pension fund liabilities. Who'da figured that might happen?
“Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.” John Maynard Keynes