Author
Topic: Federal Debt and Deficit
(Read 11587 times)

Cincydawg · « **Reply #112 on:** July 27, 2024, 09:50:14 AM »

Yes, I expect Congress finally to do something, probably fund the shortfall by borrowing more. It was "fixable", and predictable, with modest pain 20 years ago. With each year nothing is done it gets more painful. The most apparently painless fix is to fund it by borrowing from other folks.

The chances that they let the payments get cut by 25% or so are minimal to zero.

betarhoalphadelta · « **Reply #113 on:** July 27, 2024, 10:39:55 AM »

Quote from: Cincydawg on July 27, 2024, 09:41:41 AM

I guess my real question is why does any of this really matter?

Because of optics / politics. That's all.

Why it matters is that there is a view in the body politic that social security is fine until the SSTF runs out.

When you call something a "trust fund", normal people have a concept of what that means, and that it's a good thing. In this case it is largely a meaningless thing, but politicians have convinced a huge number of people that it's something significant.

They want to kick the can down the road, and the voters because of the SSTF aren't holding their feet to the fire to fix it now. Because they've been snookered into believing that all is fine until the SSTF runs out.

Cincydawg · « **Reply #114 on:** July 27, 2024, 11:01:44 AM »

I've seen a LOT of worrying about the Trust Fund, it's just that no politician wants to touch it or compromise on how to fix it.

Democrats want to raise taxes on higher income individuals. Republicans want to delay entry (which does little to help really). OK, do both, if that remedies the issue for a few more decades.

Gigem · « **Reply #115 on:** July 29, 2024, 01:17:31 PM »

Quote from: Cincydawg on July 27, 2024, 09:50:14 AM

Yes, I expect Congress finally to do something, probably fund the shortfall by borrowing more. It was "fixable", and predictable, with modest pain 20 years ago. With each year nothing is done it gets more painful. The most apparently painless fix is to fund it by borrowing from other folks.

The chances that they let the payments get cut by 25% or so are minimal to zero.

What could they have done 20 years ago? Adjust the retirement age? Adjust the taxes? I've heard this often, but nobody ever really elaborates.

This in my mind is why we should have term limits, there are so many things that could probably get passed if congress was really doing more for the long term future of the country as a whole, rather than their own short term goals. IE, getting re-elected in either 2 years or 6.

Cincydawg · « **Reply #116 on:** July 29, 2024, 01:19:41 PM »

Anything done 20 years ago could have been smaller than any fix now obviously. They COULD have raised the FICA tax rate some, for example, and raised the "retirement age" some, I don't know how much, but it would be triple that today, and the retirement age thing would not have any impact by 2035. In 2004, it would have.

Gigem · « **Reply #117 on:** July 29, 2024, 01:27:57 PM »

Quote from: Cincydawg on July 29, 2024, 01:19:41 PM

Anything done 20 years ago could have been smaller than any fix now obviously. They COULD have raised the FICA tax rate some, for example, and raised the "retirement age" some, I don't know how much, but it would be triple that today, and the retirement age thing would not have any impact by 2035. In 2004, it would have.

But, I thought we already decided that the SS Trust fund is just a mirage anyway. Wouldn't the gov't had just ended up spending the overage?

So, if they raised the FICA taxes 20+ years ago, or raised the age, it would both increase the amount of taxes paid in, and saved money by sending out less benefits. But then, the money would be in gov't coffers, and they would have already spent it, and maybe even spent much more, because no matter how much is in there they will spend more.

Cincydawg · « **Reply #118 on:** July 29, 2024, 01:33:57 PM »

My "plan" would have put more money into the SSTF back when, so its accounting slated to run out in 2035 would not run out for many more years.

betarhoalphadelta · « **Reply #119 on:** July 29, 2024, 01:55:42 PM »

Quote from: Cincydawg on July 29, 2024, 01:33:57 PM

My "plan" would have put more money into the SSTF back when, so its accounting slated to run out in 2035 would not run out for many more years.

The SSTF doesn't matter. Raising taxes or increasing the retirement age are the only ways out unless we just want to borrow forever. But the SSTF can be ignored bc it's tax increases or changing the retirement age that materially affect the financial situation, not the SSTF.

medinabuckeye1 · « **Reply #120 on:** July 29, 2024, 02:39:38 PM »

My point and I think @betarhoalphadelta 's also is that the SSTF is irrelevant because SS and Medicare expenditures are one type of Federal Expenditure and FICA taxes are one type of Federal Revenue.

That said, if the age had been increased and/or the tax increased 20 years ago even with no other changes, overall Federal spending would have been lower and/or overall Federal revenue would have been higher. Thus, less debt would have been issues so we would be relatively in a better situation now.

Quote from: betarhoalphadelta on July 29, 2024, 01:55:42 PM

The SSTF doesn't matter. Raising taxes or increasing the retirement age are the only ways out unless we just want to borrow forever. But the SSTF can be ignored bc it's tax increases or changing the retirement age that materially affect the financial situation, not the SSTF.

Yep, it is pretty simple really. You can only fix this by either:

Raising revenue (ie, higher SS taxes and/or eliminating the cap), or
Decreasing expenditures (ie, higher retirement age or lower benefits), or
Some combination of #1 and #2.

That is it. There aren't any magic pills.

betarhoalphadelta · « **Reply #121 on:** July 29, 2024, 04:07:30 PM »

Quote from: medinabuckeye1 on July 29, 2024, 02:39:38 PM

really. You can only fix this by either:
Raising revenue (ie, higher SS taxes and/or eliminating the cap), or
Decreasing expenditures (ie, higher retirement age or lower benefits), or
Some combination of #1 and #2.
That is it. There aren't any magic pills.

I do want to highlight something about point #1.

I said you have to raise taxes. I didn't say you have to raise SS taxes. You could fund those benefits from increased income taxes (of which SS taxes are just one type) or via increased corporate income taxes, or increased tariffs, or increased excise taxes on gasoline. The only reason anyone cares about it being SS/FICA taxes is that we have created a link between those taxes and the benefits. We could sever that link tomorrow with zero meaningful difference other than optics.

The question isn't about how SS/FICA taxes are or are not enough to fund Social Security benefits. The question isn't about when the SSTF runs out.

The question is that SS expenditures keep growing every year, and we're going to have to pay for it with increased taxes "somehow", or we're going to have to change the benefit structure to reduce how much it costs. And that we're going to have to figure this out NOW, not in a decade+ when the SSTF runs out. Because the SSTF can only be repaid via additional taxes or additional debt owned by the public. So every SSTF bond that is paid back creates a pain point elsewhere in the system.

medinabuckeye1 · « **Reply #122 on:** July 29, 2024, 04:46:41 PM »

Quote from: betarhoalphadelta on July 29, 2024, 04:07:30 PM

I do want to highlight something about point #1.

I said you have to raise taxes. I didn't say you have to raise SS taxes. You could fund those benefits from increased income taxes (of which SS taxes are just one type) or via increased corporate income taxes, or increased tariffs, or increased excise taxes on gasoline. The only reason anyone cares about it being SS/FICA taxes is that we have created a link between those taxes and the benefits. We could sever that link tomorrow with zero meaningful difference other than optics.

The question isn't about how SS/FICA taxes are or are not enough to fund Social Security benefits. The question isn't about when the SSTF runs out.

The question is that SS expenditures keep growing every year, and we're going to have to pay for it with increased taxes "somehow", or we're going to have to change the benefit structure to reduce how much it costs. And that we're going to have to figure this out NOW, not in a decade+ when the SSTF runs out. Because the SSTF can only be repaid via additional taxes or additional debt owned by the public. So every SSTF bond that is paid back creates a pain point elsewhere in the system.

I 100% agree.

SS/FICA taxes are just one type of federal revenue.

SS/Medicare expenditures are just one type of federal expenditure.

We could abolish SS/FICA taxes and still solve it some other way. The only link is optics.

That said, SS/FICA taxes are a rare situation where the Laffer curve has only a SEVERELY limited impact. It is a straight up % of payroll and the vast majority of individuals have no realistic options to reduce their SS/FICA earnings without actually reducing their income/wealth so they are pretty much paying whatever the rate is.

With income taxes and especially corporate income taxes the people and entities that pay them have significant abilities to manipulate their income or move it offshore so there is a much more substantial Laffer Curve impact.

medinabuckeye1 · « **Reply #123 on:** July 30, 2024, 09:52:38 AM »

Quote from: Gigem on July 29, 2024, 01:17:31 PM

This in my mind is why we should have term limits, there are so many things that could probably get passed if congress was really doing more for the long term future of the country as a whole, rather than their own short term goals. IE, getting re-elected in either 2 years or 6.

I wanted to respond to this the other day and forgot so I'm returning to it.

Term limits are a terrible idea that sounds appealing but this is perhaps the worst argument for them that I have ever seen put forward.

Your argument is that if Members of Congress absolutely KNEW without a doubt that they would NOT be in Congress 20 years from now to deal with the consequences of their decisions today for some reason they would be MORE forward thinking. That logic is completely inverted.

A 40-50 year old Congressional Representative today knows that he/she *MIGHT* still be in Congress in their 60's 20 years from now so they have at least SOME reason to think about the long-term.

Terms limits reduce the power of the voters. If the voters make stupid decisions that is on us but taking power away from us doesn't give us more power it gives us less and that gap is filled in by bureaucrats, lobbyists, and the parties.

On term limits generally:
Please know that if you say you are in favor of term limits, what you are saying is that you want the bureaucrats and lobbyists to have MORE power. That is the unavoidable reality of term limits. We adopted them in Ohio for State legislators and now our State Legislature thinks of NOTHING but the short-term because they KNOW they won't be around in the long-term anyway so who cares. The bureaucrats and lobbyists run the show because they are the only ones with staying power and institutional knowledge.

MrNubbz · « **Reply #124 on:** July 30, 2024, 10:27:34 AM »

Quote from: medinabuckeye1 on July 30, 2024, 09:52:38 AM

Your argument is that if Members of Congress absolutely KNEW without a doubt that they would NOT be in Congress 20 years from now to deal with the consequences of their decisions today for some reason they would be MORE forward thinking. That logic is completely inverted.

JMO but back in the day shaming them for inappropriate/shady performance was a thing. Today I really don't think most either care or fear reprisals - MOST.Richard Pryor was right when discussing the Justice System. "There's Justice - "Just Us" - that includes many more now

betarhoalphadelta · « **Reply #125 on:** July 30, 2024, 10:40:49 AM »

Not sure what term limits will solve, when every Congressperson just votes party line anyway...

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Topic: Federal Debt and Deficit

Cincydawg

Re: Federal Debt and Deficit

betarhoalphadelta

Re: Federal Debt and Deficit

Cincydawg

Re: Federal Debt and Deficit

Gigem

Re: Federal Debt and Deficit

Cincydawg

Re: Federal Debt and Deficit

Gigem

Re: Federal Debt and Deficit

Cincydawg

Re: Federal Debt and Deficit

betarhoalphadelta

Re: Federal Debt and Deficit

medinabuckeye1

Re: Federal Debt and Deficit

betarhoalphadelta

Re: Federal Debt and Deficit

medinabuckeye1

Re: Federal Debt and Deficit

medinabuckeye1

Re: Federal Debt and Deficit

MrNubbz

Re: Federal Debt and Deficit

betarhoalphadelta

Re: Federal Debt and Deficit