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Spending up 9%

MTAtech said:
Interest on the National Debt: Definition, Calculation, Effect
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I've already had this discussion with him more times than i care to count. Conman wants to include a higher number for interest expense in order to justify the deficit growth during a Republican controlled federal government.
 
No matter who is president, no matter which party holds Congress, the debt is going up, up up. 10,000+ people per DAY retiring, wanting their SS and Medicare, along with all the other senior programs. Massive numbers of indigenous poor and poor immigrants stressing the system. Very low labor participation rates. The interest on the debt will continue to climb as we incur more and more debt. We are WAY past the point where a few cuts or austerity measures will make any appreciable difference. And minor tinkering is about all any president or Congressman would be willing to do. Anything REALLY big would be political suicide. So we're stuck borrowing 78 cents for every dollar we take in.

Good news is we can just keep on keepin' on, borrowing that is. We may be at 105% of GDP but Japan is well over 200%, so it looks like so long as we make the interest payments we're good to go. Yeeeeee-haaaaaw !!!!
 
Waddy said:
No matter who is president, no matter which party holds Congress, the debt is going up, up up. 10,000+ people per DAY retiring, wanting their SS and Medicare, along with all the other senior programs. Massive numbers of indigenous poor and poor immigrants stressing the system. Very low labor participation rates. The interest on the debt will continue to climb as we incur more and more debt. We are WAY past the point where a few cuts or austerity measures will make any appreciable difference. And minor tinkering is about all any president or Congressman would be willing to do. Anything REALLY big would be political suicide. So we're stuck borrowing 78 cents for every dollar we take in.

Good news is we can just keep on keepin' on, borrowing that is. We may be at 105% of GDP but Japan is well over 200%, so it looks like so long as we make the interest payments we're good to go. Yeeeeee-haaaaaw !!!!
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I think going down the same road Japan is on is a recipe for a long, steady and sure economic decline, Waddy. Just forever piling on debt means we become more and more beholden to the holders of that debt... and in our case, that means foreign governments. Eventually, we're going to reach the point where we've weakened the dollar so much that foreigners are going to stop accepting it... they're going to start demanding repayment in their currency - and then we are well and truly screwed.

I think there are politically realistic things we can do to start to turn things around. You brought up SS and Medicare and the fact that they're now running a deficit. But you know what? It's been in worse shape before... have a look at the following chart for the Social Security Trust Funds (Black is average income, Red is average spending, and Purple is the size of the reserve held at the end of each term, all as a percentage of GDP):

Social Security.jpg

Have a look at the Carter Administration figures - back then, we were running a SS deficit as well but the reserves were almost empty.... at least now we have a bit of a cushion to work with. But when Reagan came into office, he made reforming the system one of his top priorities for his first term - and look at the results. The SS deficit became a large surplus and bolstered it's solvency.

What we need to be doing something along those lines again. Take some inspiration from President's Reagan's leadership and the Greenspan Commission and pass the same kind of reform for the next 30-40 years. Keep your eye out for which Presidential candidates start making this the cornerstone of their campaigns... because I think whoever can seize this issue and make it their own will be the one to watch.
 
Waddy said:
No matter who is president, no matter which party holds Congress, the debt is going up, up up. 10,000+ people per DAY retiring, wanting their SS and Medicare, along with all the other senior programs. Massive numbers of indigenous poor and poor immigrants stressing the system. Very low labor participation rates. The interest on the debt will continue to climb as we incur more and more debt. We are WAY past the point where a few cuts or austerity measures will make any appreciable difference. And minor tinkering is about all any president or Congressman would be willing to do. Anything REALLY big would be political suicide. So we're stuck borrowing 78 cents for every dollar we take in.

Good news is we can just keep on keepin' on, borrowing that is. We may be at 105% of GDP but Japan is well over 200%, so it looks like so long as we make the interest payments we're good to go. Yeeeeee-haaaaaw !!!!
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That's okay, austerity never works anyway.

You can't save your way out of a hole. On the other hand, maybe we could be spending our money more wisely, and perhaps not listening to the tax cut crowd.
 
Hamish Howl said:
That's okay, austerity never works anyway.

You can't save your way out of a hole. On the other hand, maybe we could be spending our money more wisely, and perhaps not listening to the tax cut crowd.
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Such as? How would you spend more wisely? The biggest items are Medicare, Social Security, military and interest on the debt. 3 of those 4 will undoubtedly increase due simply to demographics.

Our real problem is that the politicians who created all those benefits knew they would be long gone by the time the bill was due. But it got them the votes they wanted. Apparently people never tire of hearing they can get something for nothing. We're just suckers for Ponzi schemes.

BTW; I kinda agree with you that tax cuts won't help. The premise is that tax cuts stimulate spending, hence growth, producing more in new tax revenue than the cost of the cuts. That won't work anymore. Old people just don't spend much, except maybe eventually on health care. What we need is for the Millennials to all get married and have a bunch of kids. But that ain't gonna happen. So there is no massive group of consumers salivating to spend that tax money as fast as they can. They are more likely to hoard it for future health care costs, or if they are younger, pay down some debt. As it is, we're pretty saturated with consumer goods already.
 
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Waddy said:
Such as? How would you spend more wisely? The biggest items are Medicare, Social Security, military and interest on the debt. 3 of those 4 will undoubtedly increase due simply to demographics.

Our real problem is that the politicians who created all those benefits knew they would be long gone by the time the bill was due. But it got them the votes they wanted. Apparently people never tire of hearing they can get something for nothing. We're just suckers for Ponzi schemes.

BTW; I kinda agree with you that tax cuts won't help. The premise is that tax cuts stimulate spending, hence growth, producing more in new tax revenue than the cost of the cuts. That won't work anymore. Old people just don't spend much, except maybe eventually on health care. What we need is for the Millennials to all get married and have a bunch of kids. But that ain't gonna happen. So there is no massive group of consumers salivating to spend that tax money as fast as they can. They are more likely to hoard it for future health care costs, or if they are younger, pay down some debt. As it is, we're pretty saturated with consumer goods already.
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Well, it's not just that. It's that right now, the top income brackets are becoming a liquidity trap. Old people don't spend much, but beyond a certain level of wealth, you *can't* spend enough.

Military spending could use some cuts. We're still trying to be the USA of 1945, which is sort of like being the France of 1918 in 1939.
 
Hamish Howl said:
Well, it's not just that. It's that right now, the top income brackets are becoming a liquidity trap. Old people don't spend much, but beyond a certain level of wealth, you *can't* spend enough.

Military spending could use some cuts. We're still trying to be the USA of 1945, which is sort of like being the France of 1918 in 1939.
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The top brackets never did "spend enough". They have never been drivers of the economy. And I could agree with you on the idea of cutting military spending, with one caveat. If we were to drastically cut military spending, we would also have to drastically reduce the mission. Get our allies to pay more and do more. THAT is a very Trump position.

But overall not enough by far. Somehow I thought you would suggest cutting the military; it's an easy target. But it won't get us there by itself. Not even close. This math problem ain't that easy, is it?
 
Waddy said:
The top brackets never did "spend enough". They have never been drivers of the economy. And I could agree with you on the idea of cutting military spending, with one caveat. If we were to drastically cut military spending, we would also have to drastically reduce the mission. Get our allies to pay more and do more. THAT is a very Trump position.

But overall not enough by far. Somehow I thought you would suggest cutting the military; it's an easy target. But it won't get us there by itself. Not even close. This math problem ain't that easy, is it?
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I am all about cutting the mission. We have a track record of building bigger monsters than we dispose of. Perhaps we could stop with this obsession with being the world's cop.

As for SSI, it's unfixable, because neither party is interested in not pillaging it. We could also remove the cap on payroll taxes, but that isn't going to happen, either.

I am sitting here thinking it's unfixable in general.
 
Hamish Howl said:
I am all about cutting the mission. We have a track record of building bigger monsters than we dispose of. Perhaps we could stop with this obsession with being the world's cop.

As for SSI, it's unfixable, because neither party is interested in not pillaging it. We could also remove the cap on payroll taxes, but that isn't going to happen, either.

I am sitting here thinking it's unfixable in general.
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I can give you and idea to help fix Social Security right off the bat.... remove the Social Security Wage Base restriction and subject all wage and salary income to the same FICA taxes. By my estimate, that alone would increase OASDI receipts by 16.5%.
 
Cordelier said:
I can give you and idea to help fix Social Security right off the bat.... remove the Social Security Wage Base restriction and subject all wage and salary income to the same FICA taxes. By my estimate, that alone would increase OASDI receipts by 16.5%.
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All we have to do is convince the better off to vote for that.
 
Cordelier said:
I can give you and idea to help fix Social Security right off the bat.... remove the Social Security Wage Base restriction and subject all wage and salary income to the same FICA taxes. By my estimate, that alone would increase OASDI receipts by 16.5%.
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Ideally, Social Security incoming revenue/outgoing payments would be equal as ALL revenue collected by government is spent each year and the so called trust funds are simply government debts for which future taxpayers will be held liable as they become made part of the public debt instead of intra-government debt.

But, I do kind of agree with your basic idea, and perhaps there should be no cap at all on Social Security and Medicare taxation.
If we were to go that route, I would eliminate the employer co-pay and increase wages 7.65%.
Looking at the 1040 tax return for 2017, I would also eliminate losses from lines 13, 14, and 18, only to show gains, and then apply Social Security and Medicare taxes to the Total Income as shown on line 22.

Those working for a salary of $1 a year, or some very small amount relative to their total remuneration by other means would then become the primary providers of revenue to fund Social Security, and the maximum benefit should be capped at the median wage of the year one begins receiving benefits, with inflation increases applied each year thereafter.

The Social Security tax, currently 12.4% and Medicare tax currently 2.9%, or a total of 15.3% might then be easily adjusted to reflect where most spending is needed for those 2 programs, more going to Medicare and less going to Social Security as ALL income would be taxed, regardless of how it was acquired.


As long as government did not add more social spending as a result of the surplus incoming revenue, I would promote something along that line.
 
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Individual said:
Ideally, Social Security incoming revenue/outgoing payments would be equal as ALL revenue collected by government is spent each year and the so called trust funds are simply government debts for which future taxpayers will be held liable as they become made part of the public debt instead of intra-government debt.

But, I do kind of agree with your basic idea, and perhaps there should be no cap at all on Social Security and Medicare taxation.
If we were to go that route, I would eliminate the employer co-pay and increase wages 7.65%.
Looking at the 1040 tax return for 2017, I would also eliminate losses from lines 13, 14, and 18, only to show gains, and then apply Social Security and Medicare taxes to the Total Income as shown on line 22.

Those working for a salary of $1 a year, or some very small amount relative to their total remuneration by other means would then become the primary providers of revenue to fund Social Security, and the maximum benefit should be capped at the median wage of the year one begins receiving benefits, with inflation increases applied each year thereafter.

The Social Security tax, currently 12.4% and Medicare tax currently 2.9%, or a total of 15.3% might then be easily adjusted to reflect where most spending is needed for those 2 programs, more going to Medicare and less going to Social Security as ALL income would be taxed, regardless of how it was acquired.


As long as government did not add more social spending as a result of the surplus incoming revenue, I would promote something along that line.
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I see where you're going there... I don't know if it'd actually work in practice, though. First off, what assurance would you have that eliminating the employer co-pay would go back into wages? Secondly, I haven't run all the numbers yet... but just ballparking it, I don't think eliminating capital losses would come anywhere near what it'd take to compensate from the co-pay elimination.

I like where you're going, though.... not so much on loss elimination (I figure if business can write off losses, then individuals should be able to as well), but I do like your ideas on tax equity. Why not tax capital gains at the same rate we tax regular income? Just because you work for your money doesn't mean you should pay a higher rate than someone who has their money working for them.
 
Cordelier said:
I see where you're going there... I don't know if it'd actually work in practice, though. First off, what assurance would you have that eliminating the employer co-pay would go back into wages? Secondly, I haven't run all the numbers yet... but just ballparking it, I don't think eliminating capital losses would come anywhere near what it'd take to compensate from the co-pay elimination.

I like where you're going, though.... not so much on loss elimination (I figure if business can write off losses, then individuals should be able to as well), but I do like your ideas on tax equity. Why not tax capital gains at the same rate we tax regular income? Just because you work for your money doesn't mean you should pay a higher rate than someone who has their money working for them.
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This issue and the proposed solutions to SS continue to show that the American people totally ignores the purpose of SS which was to be a SUPPLEMENT to one's retirement not SOLE retirement income. It also ignores as has been pointed out many times that SS funds in the Trust fund have been borrowed and replaced with IOU's that have to be funded to provide the benefits promised the American people. Funding IOU's by a gov't that is running a deficit remains a major issue as it will require the printing, borrowing, or higher taxes to fund whereas had the money not been borrowed in the first place the gov't would have the money to fund retirement supplements.

Eliminating the cap doesn't solve the problem as there is no assurance that additional funds received by the bureaucrats will be used for the purpose of paying off IOU's and not be used as they have been in the past to create more dependence by those bureaucrats. The answer is totally removing SS and Medicare from the budget and putting it exactly where it belongs in that Al Gore Lockbox untouchable by the bureaucrats until the shortfall is funded, a short fall that is trillions in unfunded liabilities.

Why is it that spending is never addressed by the Congress? Pretty simple answer as bureaucrats love to spend in the name of compassion while they just build up their power base and fund career positions. The only compassion coming from increased gov't spending is compassion to the bureaucrats who administer the programs.
 
Cordelier said:
I see where you're going there... I don't know if it'd actually work in practice, though. First off, what assurance would you have that eliminating the employer co-pay would go back into wages? Secondly, I haven't run all the numbers yet... but just ballparking it, I don't think eliminating capital losses would come anywhere near what it'd take to compensate from the co-pay elimination.
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If government were to require it be done employees should see their hourly rate increased by 7.65%.
Capital losses, or losses of any type are not income, and if any deduction is allowed for them it should be applied in determining the adjusted gross income. Social Security and Medicare taxes should be paid on all income prior to any deductions.


Cordelier said:
I like where you're going, though.... not so much on loss elimination (I figure if business can write off losses, then individuals should be able to as well), but I do like your ideas on tax equity. Why not tax capital gains at the same rate we tax regular income? Just because you work for your money doesn't mean you should pay a higher rate than someone who has their money working for them.
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It was not my intent to eliminate losses, simply to remove them from the income portion of the form. They could then be applied in the adjusted gross income portion of the form.
Short term capital gains are taxed at the same rate, perhaps THEY should be taxed at a higher rate.
 
Individual said:
If government were to require it be done employees should see their hourly rate increased by 7.65%.
Capital losses, or losses of any type are not income, and if any deduction is allowed for them it should be applied in determining the adjusted gross income. Social Security and Medicare taxes should be paid on all income prior to any deductions.




It was not my intent to eliminate losses, simply to remove them from the income portion of the form. They could then be applied in the adjusted gross income portion of the form.
Short term capital gains are taxed at the same rate, perhaps THEY should be taxed at a higher rate.
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I think you give the Federal Government powers not evident within the Constitution. They could certainly raise the the Federal minimum wage by 7.65% - but that doesn't necessarily mean it'd carry over to everyone making more than the Federal minimum... or to employees where the Federal minimum wage doesn't apply.

I don't see why Short and Long Term capital gains should be taxed any differently... or why either shouldn't be taxed at the same rate as ordinary income. Income is income, no matter how you earn it.

Let's say I was a Trust Fund baby... never worked a day in my life. Never even got a Social Security Number... why should I pay into Social Security if I'm not going to be eligible to receive benefits?
 
Cordelier said:
I think you give the Federal Government powers not evident within the Constitution. They could certainly raise the the Federal minimum wage by 7.65% - but that doesn't necessarily mean it'd carry over to everyone making more than the Federal minimum... or to employees where the Federal minimum wage doesn't apply.
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But I see nothing stopping the Federal government from applying a 15.3% tax on total income reported each year.

Cordelier said:
I don't see why Short and Long Term capital gains should be taxed any differently... or why either shouldn't be taxed at the same rate as ordinary income. Income is income, no matter how you earn it.
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Personally, I would prefer everyone be treated equally by our tax laws. All forms of income totalled, NO deductions at all, and a single tax rate applied to everyone. And government have to live within the means of the revenue it collects each year in the budget it creates, eliminating spending and government employees when necessary.

Cordelier said:
Let's say I was a Trust Fund baby... never worked a day in my life. Never even got a Social Security Number... why should I pay into Social Security if I'm not going to be eligible to receive benefits?
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A Social Security number is assigned at birth today. Why would you not be eligible to receive benefits if you have paid into it? Many people receive benefits who have not paid into it.
 
Individual said:
But I see nothing stopping the Federal government from applying a 15.3% tax on total income reported each year.
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What can I say? Wage increases are a lot easier to avoid than taxes.

Individual said:
Personally, I would prefer everyone be treated equally by our tax laws. All forms of income totalled, NO deductions at all, and a single tax rate applied to everyone. And government have to live within the means of the revenue it collects each year in the budget it creates, eliminating spending and government employees when necessary.
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The basic problem with with having a flat rate is the simple fact that the poorer you are, the greater percentage of your income you need to spend on essentials - food, clothing, shelter, etc. Without progressive taxation, then doesn't that place a proportionately higher burden on the poor?
 
Cordelier said:
What can I say? Wage increases are a lot easier to avoid than taxes.
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That happens when the supply of people needing employment exceed the needs of businesses to employ.


Cordelier said:
The basic problem with with having a flat rate is the simple fact that the poorer you are, the greater percentage of your income you need to spend on essentials - food, clothing, shelter, etc. Without progressive taxation, then doesn't that place a proportionately higher burden on the poor?
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The burden will always be greater upon the poor.
 
Individual said:
That happens when the supply of people needing employment exceed the needs of businesses to employ.
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Exactly so... so the question then becomes - what is the best way of expending the needs of business so that they need to employ more people? Supply vs. Demand.... which side to stimulate? Back at the beginning of the 20th Century we had an extreme supply-side investment-oriented economy. It built the industrial age and caused America to become an economic super-power. But it also led to an enormous underclass. The poor lived crowded into tenement housing and worked long hours for little pay. Lot of Supply, little Demand. The result was the Great Depression.

Then came the New Deal, and we turned things in the other direction... it became about the common man. More protections, higher wages and all the rest. Focus on demand and the supply will be found to meet it. The result was the consumer age of the 50's and 60's. However, by the 1970's, this, too, had played itself out.... more and more demand met less and less ability for supply to match it, and the result was stagflation.

Then came the Reagan Revolution.... we turned the needle back to the supply side again. More incentive was given to investment. Business boomed and the technological revolution re-made society. However, now we're reaching the limits of that... demand can't sustain more supply and it's taking more and more stimulus to produce even meager growth.

Demand and supply are the air and fuel of our economic engine. You need both in the right mixture for the conditions you find yourself in order to make things run efficiently. Right now we just happen to be running too rich.


Individual said:
The burden will always be greater upon the poor.
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You've got my vote for understatement of the year. So what's the answer? Do we keep'em out of sight and out of mind? Or do we do what LBJ tried to do in the 1960's? See a problem and try to hit it head-on and try to fix it?
 
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