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The Power Five => Big Ten => Topic started by: medinabuckeye1 on July 23, 2024, 06:04:31 PM
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We had a discussion about this in the "Other News" thread but I thought it was a big enough topic to deserve it's own thread.
A few items up front:
First definitions:
- Deficit is the annual amount by which Federal Expenditures exceed Revenues. Conversely a Surplus is the annual amount by which Federal Revenues exceed Expenditures but this hasn't happened in many years.
- Debt is the total amount of outstanding US Debt.
There is a bit of a "boy who cried wolf" problem here. Way back in 1992 and 1996 Perot ran on getting the deficit and debt under control and he was hardly the first to sound the alarm. In spite of that, here we sit 30 years later and we haven't fallen off the cliff yet so I think some people just assume that people sounding the alarm today are no different that Perot 30 years ago and we're fine. I disagree and I'll explain, here goes:
For decades it has been a common political game for the part out of power to point out that the current administration added more to the debt than any prior administration. The thing is, this is almost always true in part because inflation ensures that nearly every administration adds more to the debt than the one before it, from Investopedia (https://www.investopedia.com/us-national-debt-by-year-7499291):
- In Biden's three years so far 2021-2023 $6.2 Trillion was added to the Debt and if this year is anywhere close to projections, by the end of his term he will have the all time record which he will take from:
- In Trump's term $7.4 Trillion was added to the debt, this took the all-time record away from Obama's first term.
- Obama's second term was NOT a record as "only" $3.5 Trillion was added to the debt but that $3.5 Trillion was more than any prior term except:
- Obama's first term saw $6.0 Trillion added to the debt which took the record from:
- W-Bush's second term saw $2.6 Trillion added to the debt which took the record from:
- W-Bush's first term saw $1.7 Trillion added to the debt which took the record from his father's term.
- Clinton's second term saw "only" $449 Billion added to the debt.
- Clinton's first term saw "only" $1.2 Trillion added to the debt. At the time this was second highest behind only:
- Bush's term saw $1.5 Trillion added to the debt which took the record from:
- Reagan's second term saw $1.0 Trillion added to the debt which took the record from:
- Reagan's first term saw $664 Billion added to the debt which took the record from:
- Carter's term saw $288 Billion added to the debt which took the record from:
- Nixon/Ford's term saw $193 Billion added to the debt which took the all-time record from FDR's third term but it took the non-WWII record from:
- Nixon's term saw $79 Billion added to the debt which took the non-WWII record from:
- LBJ's term saw $36 Billion added to the debt which took the non-WWII record from:
- JFK/LBJ's term saw $26 Billion added to the debt which took the non-WWII record from FDR's first term (tied by Ike's first).
The three terms that were NOT all-time non-WWII records are in bold. Just to head this off at the pass, before some Democrat points out that all three were Democratic administrations be careful pointing that out because all three also had Republican Congresses.
Measuring this in dollars is a mistake because that doesn't account for scale. It is like saying that a household has $75,000 in credit card debt without saying how much income that household has. If they are living on $45k/yr then $50,000 in credit card debt is a massive amount that they'll likely never get out from under. OTOH, if this household consists of two brain surgeons who make $1M/yr each then that $75,000 in credit card debt is two paychecks, no big deal.
The same is true for the nation so a much better system is to measure both the annual deficits and the total debt as a percentage of GDP. This chart from the St. Louis Federal Reserve (https://fred.stlouisfed.org/series/GFDEGDQ188S) shows total Federal Debt as a percentage of GDP going back to 1966. Basically:
- About 40% in the late 60's
- Bottomed out at about 31% in the mid 70's and VERY early 1980's
- Steadily climbed to about 65% in the mid 1990's
- Bottomed out at about 54% right before 9/11
- Climbed steadily but slowly to about 64% right before the 2008 credit bubble
- SHOT up to about 93% in just three years
- Climbed steadily but slowly to about 107% right before COVID
- SHOT up to about 133% then drifted and has been over 120% and growing for the last few years.
IMHO, 120% debt is not sustainable in the long-term. There WILL be a correction.
This chart also from the St. Louis Federal Reserve (https://fred.stlouisfed.org/series/FYFSDFYGDP) shows the annual Surplus/(Deficit) from the last three years of Hoover's administration up through 2023. Basically:
- Surplus in 1930 (also the Depression so . . .)
- ~5% annual deficits the last few years of Hoover's administration and FDR's first as the New Deal was rolled out.
- Back to roughly balanced on the eve of WWII then
- The biggest deficits in history during WWII
- Surpluses in the late 40's.
- Close to even (<5% surpluses or deficits) most years from then through the early 1980's.
- ~5% annual deficits most years from then through the early 90's
- incrementally smaller deficits and eventually surpluses by the late 1990's and early 2000's
- Larger deficits but still only about 3% post 9/11 up until
- HUMONGOUS deficits of 8-10% in 2009, 2010, and 2011 coming off of the 2008 credit bubble
- Deficits getting back under control (~5% or less) from then through 2019
- HUMONGOUS deficits of 12-15% during and after COVID (2020, 2021)
- Deficits of 5%+ in 2022 and 2023
The 2022 and 2023 deficits were 5.4% and 6.3% of GDP respectively. IMHO, we can't sustain this.
Between 1946 (7.0%) and 2009 (9.8%) only one year had a deficit in excess of 5% of GDP (1983 at 5.9%). 2024 will be our fifth consecutive year of deficits in excess of 5% of GDP. It will also be the ninth in the last 16 (2009-2012 and 2020-2024).
The really high individual years all have explanations/justifications. I'm not saying I concur just that they exist. 1942-46 was WWII and the wind-down. 1983 we had a recession and were getting inflation under control. 2008 we were dealing with the credit bubble and spending a LOT on bailouts and stimulus. 2020 we were dealing with COVID and spending a LOT on stimulus. If these were outliers with the "normal" years returning to fiscal sanity we'd be fine. We ran ENORMOUS deficits to pay for WWII but then in the late 1940's and early 1950's we ran surpluses. That and growth got us past that. After the 5%+ deficit in 1983 deficits fell back to "normal" then shrunk and eventually flipped to surpluses. After 2008 . . . Not so much. Four consecutive years were 5%+, that is almost WWII level spending. Then COVID was the same story, the deficit hasn't been below 5% since 2019.
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The truth is that this is putting us in pretty unique historical territory.
Post-WWII, we became one of two world superpowers. Our currency (and our T-Bills) were the absolute safest investment in the entire world. It was backed by the full faith and credit of the United States Government, and the biggest, baddest, most fearsome military in the world behind it. Coupled with us becoming the economic superpower of the globe, and we were in great shape.
Well, the advantage of being the world's sole economic superpower and, after the fall of the Soviet Union, the world's sole hyperpower, is that everyone trusts you. The US Dollar became the world's reserve currency, and US T-Bills became a great way for nations with whom we had a trade deficit to keep their sovereign wealth funds invested in a safe place.
But we've now seen a couple of major differences. First is the creation of the Euro, which potentially is a stable currency that might challenge the USD. The second is the rise of China, a nation that still lags far behind us but has the demographic power to eclipse us as an economic power in the future.
All this means is that the things that made US debt "not a problem" on the world stage might be flipping to the point where US debt becomes a problem.
The world ceasing to treat the USD as its reserve currency? Bad. The world ceasing to trade oil in USD? Bad. The world ceasing to fund our government's profligate spending by buying our T-Bills? Bad.
We're the 400 lb middle-aged dude who knows we need to go on a diet and to the gym but those cookies and fast food just look SOOO damn tasty, and a Diners Drive-ins and Dives marathon is about to come on!
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Forget politics. The economics of it are going to creat a serious financial problem.
When the deficit is growing that much faster than GDP- it will not end well.
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Forget politics. The economics of it are going to creat a serious financial problem.
When the deficit is growing that much faster than GDP- it will not end well.
The politics and the economics are intertwined, and can't be separated.
A high debt:GDP ratio doesn't matter as long as the world believes we're stable and capable of dealing with it... And that they have no other options.
Which means that this is the sort of thing that has no real brake on it and everyone keeps thinking it's going to go on like that forever, until suddenly it doesn't. Which makes the collapse MUCH more severe because people let the problem get too big thinking the collapse was impossible.
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The politics and the economics are intertwined, and can't be separated.
A high debt:GDP ratio doesn't matter as long as the world believes we're stable and capable of dealing with it... And that they have no other options.
Which means that this is the sort of thing that has no real brake on it and everyone keeps thinking it's going to go on like that forever, until suddenly it doesn't. Which makes the collapse MUCH more severe because people let the problem get too big thinking the collapse was impossible.
My point about politics was: neither party can claim high ground. My point stands.
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My point about politics was: neither party can claim high ground. My point stands.
Got it. Agreed.
I suppose I was thinking more about the geopolitical ramifications, not R vs D.
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and neither party will even try to get to high ground
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and neither party will even try to get to high ground
I think you are right but ultimately that comes back on us.
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I'm on your side. Let's get 'em!
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One thing I don’t understand is why do we even run deficits almost every single year? How did the govt function for the previous ~150+ years? We’re we just a lot more fiscally conservative?
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And what specifically drove the deficit in the early trump years and the last two Biden years? Was it just them way overspending for no reason?
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yes, and yes
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One thing I don’t understand is why do we even run deficits almost every single year? How did the govt function for the previous ~150+ years? We’re we just a lot more fiscally conservative?
Federal spending prior to WWII and especially prior to the New Deal was a fraction of what it has been since.
On the question of deficits every year, I really don't see that as a problem so long as they are reasonable. From WWII up to 9/11 we ran deficits almost every year and the total debt was only a little over 50% of GDP when 9/11 happened.
Even as recently as immediately prior to the credit bubble the debt was still only about 64% of GDP. That is 24% of GDP higher than it had been 40 years prior to that. At that rate it would have taken until 2048 to get to 88% of GDP. Instead, the bipartisan responses to the credit bubble and COVID pushed it from 64% of GDP to roughly double that today.
IMHO, debt at pre-2008 levels of <64% is a major strain as it gets to the high end of that range but that is a level that is still at least theoretically recoverable and/or sustainable.
What we have done from 2008-present simply is not sustainable.
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And what specifically drove the deficit in the early trump years and the last two Biden years? Was it just them way overspending for no reason?
A LOT of it is entitlements. The oldest baby boomers first reached retirement age in the early 2010's and that enormous cohort of people born from 1946-1964 is relentlessly pushing Social Security and Medicare spending up while there a FAR less people 10, 20, and 30+ years older dying off.
Also to clarify, after the massive spending spree from 2009-2012 in response to the credit bubble, deficits in Obama's second term and through the first three years of Trump's term (2013-2019 so seven years total) were 2.4 - 4 6% of GDP per year. The low end of that range is sustainable and even the high end of that range is arguably sustainable and at a minimum it is close. The truly alarming years are 2009-2012 and 2020-present.
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https://twitter.com/byHeatherLong/status/1815756452792860962?t=nfkE_JZ2uOjecYpGQn7Mmg&s=19
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I just searched this thread. Words with "spend" appear in this thread 8x. Words with the term "tax" appears, "zero" times. If Americans cannot speak on both sides of the issue deficits will continue to be unsolvable - at least until deficits and national debt end in an existential crisis.
We had corporate tax decreases during the Trump Administration that carried forward into the current administration. I am not a fan of high taxation on the means of production. That said there is a good argument that the corporate tax rate decreases were at least somewhat excessive.
If I were running the country my secretaries of state and treasury would be negotiating corporate tax rates with some of our foreign trading partners, or partners where multinational corporate headquarters relocate to due to low corporate rates (Ireland) and add consequences for those foreign countries. We cannot compete on an unlevel playing surface. That said, this is a very small part of our national debt problem.
The U.S. has the 81st highest state and federal effective corporate income tax rate of 25.81% per Corporate Tax Rates by Country | Corporate Tax Trends | Tax Foundation (https://taxfoundation.org/data/all/global/corporate-tax-rates-by-country-2022/). We could raise a bit more corporate tax, but should not raise it by much.
We are leaking tax money by an underfunded IRS, too.
Individual income taxes are the United States' biggest income tax issue. While spending is an issue, part of what has gotten us into our present deficit and debt situations is the dramatic decrease in the top federal marginal income tax rate. From 1936 through 1980 the top marginal income tax rate was 70% or higher. Fifteen of those years the highest marginal tax rate was 90% or higher. I am a moderate. Ninety percent (90%) or higher is too high (except perhaps during WW II). Since 1981 the wealthiest Americans have paid politicians to lower the highest marginal tax rate to as low as 35%. It is now 37%. If we are to solve our debt problem that rate has to increase and the tax deductions have to decrease.
There are two sides to the ledger. We cannot solve debt issues by controlling expenditures, alone. The absence of the term "tax" appearing in this discussion should tell everyone why we run deficits. The political class as a group is placating American oligarchs for their campaign contributions.
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If I were running the country my secretaries of state and treasury would be negotiating corporate tax rates with some of our foreign trading partners, or partners where multinational corporate headquarters relocate to due to low corporate rates (Ireland) and add consequences for those foreign countries. We cannot compete on an unlevel playing surface. That said, this is a very small part of our national debt problem.
the idea that if it's a very small part, it's not worth fixing doesn't help.
hundreds of very small parts can add up to something.
and anything being done to help the issue should be done.
“Watch the pennies and the dollars will take care of themselves”
as you've all noted, there's no silver bullet, "just cut defense spending" or whatever
It needs to be across the board
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One problem with raising tax rates is that, historically, it doesn't raise much revenue. There is an optimum, somewhere, on the Laffer Curve (which has been much derided, but the curve part is true, the point of optimization is not so clear). And corporate income tax revenue is a relatively small part of the equation. To some extent, the Trump tax cuts puts us "near par" with Europe.
That said, I'd be fine with an adjustment to both rate schedules, so long as we bear in mind it won't raise a ton of revenue (but probably some). I think Republicans miss fired when they object to raising rates on folks making "over $X a year", the marginal tax rates. This is more political and optics than revenue related though. But optics helps get things passed through a divided Congress. What if they had raised rates on income over say $400 K to 40% or so? It would at least LOOK better, and not be a "tax cut for the rich" label.
As I often note, the truly rich don't care about marginal income tax rates. They generally have very modest taxable incomes, and can readily have zero if they choose.
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So, what if somehow we tax wealth in addition to income? A true "billionaire tax"? So, how much money is out there? According to this, $4.5 trillion, a tidy sum indeed. Let's assume it's legal to tax it at say 10% each year, that would obviously raise (in theory) $450 billion a year. And that looks pretty good in terms of "making a dent" in the nearly $2 trillion deficit. Europe has tried this, and most countries stopped the attempt, for obvious reasons. (And it may be unconstitutional.)
So, raising tax rates may generate more revenue, to an extent, if the economy doesn't tank as a result. But, it's clear that alone won't and can't make much of a dent. Pennies, fine with me, it's a small start. Spending is what has to be cut, and you can only cut nonmandatory spending, which the main part is for defense. But if you cut defense spending to zero, somehow, you still run a massive deficit.
The only "quasi-solution" is to raise and cut both moderately and HOPE the debt as a percent of GDP starts to drop meaningfully, and that our economy, which is massively dependent on DEBT won't collapse.
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One thing I don’t understand is why do we even run deficits almost every single year? How did the govt function for the previous ~150+ years? We’re we just a lot more fiscally conservative?
I will point out two things that I think were major turning points:
From the time Social Security was established in 1937 up until 1990 the tax rate for it was increased frequently. It was a mere 2% from 1937-1949 and by 1966 when Medicare was established, the rates for SS and Medicare were 6.9% and 0.7% respectively. There were increases more years than not from then up through 1990 when the rates got to 12.4% and 2.9% respectively. 2024 is the 35th year of those rates. Those rates were not enough to keep the programs afloat when they were established back in 1990 and they have only become MORE deficient since.
Why did Congress address this with near-annual increases from basically 1937-1990 then just completely ignore it for the past 35 years?
Back in 2003 Congress passed and President Bush signed the Medicare Prescription Drug, Improvement, and Modernization Act. Today Medicare is the third largest item in the budget at 3.1% of GDP (behind only SS at 5.0% and nondefense discretionary at 3.4%) and it is MASSIVELY underwater. Medicare was already underwater BEFORE they added the prescription drug benefit. That is the equivalent of saying "I can't afford the payments on my Chevrolet so I think I'll trade it in for a MUCH more expensive Cadillac with much higher payments, that will fix the problem."
For 2023:
- Payroll tax revenue was $1.6 Trillion
- Nearly all of this is SS and Medicare. SS is 12.4% and Medicare is 2.9% for a total of 15.3%
- 12.4% is 81% of 15.3% and 81% of $1.6 Trillion is $1.3 Trillion so SS tax revenue was approximately $1.3 Trillion
- 2.9% is 19% of 15.3% and 19% of $1.6 Trillion is $303 Billion so Medicare tax revenue was approximately $303 Billion
- SS Expenditures were $1.3 Trillion so that roughly balances with SS tax revenue.
- Medicare expenditures were $839 Billion so the portion of the deficit created by this program was roughly $536 Billion. That ALONE is roughly 1/3 of the 2023 deficit.
I don't mean this as an argument for or against Medicare having a Prescription Drug benefit. My point is simply that adding a prescription drug benefit to Medicare without addressing the MASSIVE cost of that prescription drug benefit is tantamount to voting for unicorns and ferries.
SS and Medicare together make up about 1/3 of Federal spending (2023) and the massive deficit hasn't been addressed since the 1980's when the age for SS was last raised and the current rates were established.
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I just searched this thread. Words with "spend" appear in this thread 8x. Words with the term "tax" appears, "zero" times. If Americans cannot speak on both sides of the issue deficits will continue to be unsolvable - at least until deficits and national debt end in an existential crisis.
We had corporate tax decreases during the Trump Administration that carried forward into the current administration. I am not a fan of high taxation on the means of production. That said there is a good argument that the corporate tax rate decreases were at least somewhat excessive.
If I were running the country my secretaries of state and treasury would be negotiating corporate tax rates with some of our foreign trading partners, or partners where multinational corporate headquarters relocate to due to low corporate rates (Ireland) and add consequences for those foreign countries. We cannot compete on an unlevel playing surface. That said, this is a very small part of our national debt problem.
The U.S. has the 81st highest state and federal effective corporate income tax rate of 25.81% per Corporate Tax Rates by Country | Corporate Tax Trends | Tax Foundation (https://taxfoundation.org/data/all/global/corporate-tax-rates-by-country-2022/). We could raise a bit more corporate tax, but should not raise it by much.
We are leaking tax money by an underfunded IRS, too.
Individual income taxes are the United States' biggest income tax issue. While spending is an issue, part of what has gotten us into our present deficit and debt situations is the dramatic decrease in the top federal marginal income tax rate. From 1936 through 1980 the top marginal income tax rate was 70% or higher. Fifteen of those years the highest marginal tax rate was 90% or higher. I am a moderate. Ninety percent (90%) or higher is too high (except perhaps during WW II). Since 1981 the wealthiest Americans have paid politicians to lower the highest marginal tax rate to as low as 35%. It is now 37%. If we are to solve our debt problem that rate has to increase and the tax deductions have to decrease.
There are two sides to the ledger. We cannot solve debt issues by controlling expenditures, alone. The absence of the term "tax" appearing in this discussion should tell everyone why we run deficits. The political class as a group is placating American oligarchs for their campaign contributions.
If you think we have a revenue problem rather than a spending problem then you don't understand the problem.
To the extent that we do have a revenue problem, "tax the rich" is political sloganeering not an actual solution. The fundamental problem with it is that "the rich" have the greatest ability to rearrange their financial situations in response to tax incentives.
From CBO for 2023, Federal Revenues:
- $2.2 Trillion, Individual Income Taxes
- $1.6 Trillion, Payroll Taxes (this is SS and Medicare)
- $420 Billion, Corporate Income Taxes
- $229 Billion, Other
Within your post you admitted that raising corporate rates would be "a very small part of our national debt problem". Your discussion of State and Treasury negotiating with foreign governments also acknowledges that Corporations can move so anything but a miniscule increase here isn't practical anyway. Considering that Corporate Income Taxes are <10% of Federal Revenues and <1/3 of the 2023 deficit any adjustment there is going to be a rounding error in comparison to the overall situation.
You noted that the top marginal rate was 70%+ from 1936-1980. How did that impact revenues? Here is a chart from the St. Louis Federal Reserve of Federal Revenues as a percentage of GDP (https://fred.stlouisfed.org/series/FYFRGDA188S) from 1929-2023. Highest years on record:
- 19.8%, 1945
- 19.8%, 2000
- 19.5%, 1944
- 19.0%, 2022
- 19.0%, 1998
- 19.0%, 1999
- 18.8%, 2001
- 18.7%, 1981
- 18.5%, 1982
- 18.4%, 1997
- 18.4%, 1969
- 18.1%, 1980
- 18.0%, 1952
- 18.0%, 1996
- 18.0%, 1970
- 17.9%, 1953
- 17.9%, 1954
- 17.8%, 2015
- 17.7%, 2007
- 17.7%, 1995
- 17.7%, 1979
- 17.6%, 1987
- 17.6%, 1989
The years outside of the 1936-1980 window that you cited are in bold. Note that the second highest and eight of the ten highest occurred when the top marginal rate was NOT 70%+.
Way back before WWII and before the New Deal we had a Constitutionally limited Federal Government and Federal Revenues were <5% of GDP. In 1943 Federal Revenues were 11.8% of GDP and they've never been lower than that since. For the 80 years from 1944-2023 Federal Revenues have been between a low of 13.2% of GDP in 1950 and highs (see above) of just under 20%.
Above I listed all of the years from 1929-2023 in which Federal Revenues exceeded 17.5% of GDP. Here are all the years since WWII in which Federal Revenues were less than 15% of GDP:
- 13.2%, 1950
- 14.4%, 2010
- 14.5%, 1949
- 14.5%, 2009
- 14.8%, 2011
- 14.9%, 1951
So there are two three-year dips below 15%. The first was 1949-1951 when a substantial portion of the Country favored a return to pre-war "normalcy". The second was 2009-2011 when tax rebates were used as stimulus in a Keynesian effort to prop up the economy.
Note that in 2022 Federal Revenues were 19.0% of GDP. This is the fourth-highest year ever and the second-highest post-war year. Despite that, the Federal Government ran a deficit in excess of 5% of GDP and added $2.5 Trillion to the National Debt.
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the idea that if it's a very small part, it's not worth fixing doesn't help.
hundreds of very small parts can add up to something.
and anything being done to help the issue should be done.
“Watch the pennies and the dollars will take care of themselves”
I get the sentiment and I don't totally disagree. This is a huge problem and the old saying of "How do you eat an elephant? One bite at a time." has SOME validity.
That said, Corporate Income Taxes raised $420 Billion in 2023 and that figure cannot realistically be increased in any meaningful way because an increase in the rate would encourage companies to move or restructure their finances. In that sense, arguing about the Corporate Income Tax rate when you are facing annual deficits of ~$2 Trillion and a total debt of $33+Trillion is a bit like rearranging the deck chairs on the Titanic.
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Increasing taxes on someone else is always good politics.
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Can you envision any Congress/President who really took effective action to cut spending? Even to cut the upward rate of spending would be a tall order, I think.
They MIGHT raise tax rates on this or that a bit, not enough to matter. They can't. And as we've seen, tax revenue does not follow tax rate changes much anyway.
Another thing I dislike is how "they" pitch costs (or revenue) over ten years now. "This tax cut will cost $3 trillion over ten years.". Maybe so, maybe not, but it's $300 billion a year if so, which unfortunately is chump change. And we pretty well know that tax cuts do spur economic growth, and tax increases do the reverse, so you do end up usually without much impact on revenue.
This isn't some theory, it's easily seen in charts of tax revenue versus tax rates.
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Explain marginal rate. Like when you throw out "top marginal rate was 70%", I don't quite know what that means. I kind of think it means that income above a certain level is taxed at 70%, but it seems really high no matter what.
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Can you envision any Congress/President who really took effective action to cut spending? Even to cut the upward rate of spending would be a tall order, I think.
Blaming politicians is easy but this right here is why I argue that the problem ultimately comes back to "we the people".
I first came to this realization when hearing arguments about the deficits during the Reagan (I'm included Bush the elder here) era. The typical argument:
- D "The deficit rose because Reagan cut taxes."
- R "No, the deficit rose because the Democratic HoR increased spending."
If you think about it, "we the people" chose tax-cutting Republican Presidents in three consecutive Presidential elections (1980, 1984, and 1988) but the very same "we the people" chose big spending Democratic HoR's in all six concurrent elections (1980, 1982, 1984, 1986, 1988, 1990) and Democratic Senates in half of the concurrent elections (1986, 1988, 1990).
At the end of the day "we" voted for spending without taxes and got what "we" voted for.
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Explain marginal rate. Like when you throw out "top marginal rate was 70%", I don't quite know what that means. I kind of think it means that income above a certain level is taxed at 70%, but it seems really high no matter what.
That's what it means. But when the top marginal rates were 70% or 90%, there were a LOT of deductions we don't have today.
Marginal Tax Rates for 2024
| Tax Rate | Single Filers | Married Filing Jointly | Heads of Households |
| 10% | ≤ $11,600 | ≤ $23,200 | ≤ $16,550 |
| 12% | > $11,600 | > $23,200 | > $16,550 |
| 22% | > $47,150 | > $94,300 | > $63,100 |
| 24% | > $100,525 | > $201,050 | > $100,500 |
| 32% | > $191,950 | > $383,900 | > $191,950 |
| 35% | > $243,725 | > $487,450 | > $243,700 |
| 37% | > $609,350 | > $731,200 | > $609,350 |
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(https://i.imgur.com/bz1XLvJ.png)
Here in red is the top marginal tax rate to be paid on high taxable income groups, axis on left.
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(https://i.imgur.com/tD8Ke9b.png)
This shows the impact on tax REVENUE, which is the important thing. This is "Hauser's Law" (which isn't a law, but it looks like one).
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It took decades to create the problem and it'll take more decades to fix it.
As for right now, today, it's irrelevant. It's a runaway train that doesn't affect people's daily lives. Some day it will crash into a powder keg and the U.S. will become a desperate beggar when it comes to international finance.
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It really took about one decade for this to become a critical issue, not "decades".
(https://i.imgur.com/ETV29W8.png)
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Explain marginal rate. Like when you throw out "top marginal rate was 70%", I don't quite know what that means. I kind of think it means that income above a certain level is taxed at 70%, but it seems really high no matter what.
It is the rate "at the margin" or, in other words, the rate of tax that you would pay on one dollar of additional income or the rate that you would save on one dollar in additional deductions.
Example from the chart that @Cincydawg (https://www.cfb51.com/index.php?action=profile;u=870) presented above (using single because it is presented first):
If your taxable income is less than $11,600 you pay a rate of 10%. If you find a $1 deduction, that will save you $0.10 and if you earn an extra dollar you'll pay $0.10 in tax on that extra (marginal) dollar.
If your taxable income is between $11,600 and $47,150 you pay 10% on the first $11,600 and 12% on everything in excess of $11,600 so your marginal rate is 12%.
If your taxable income is between $47,150 and $100,525 you pay:
- 10% on the first $11,600
- 12% on the taxable income between $11,600 and $47,150
- 22% on taxable income in excess of $47,150
. . .
If your taxable income is in excess of $609,350 you pay:
- 10% on the first $11,600
- 12% on the taxable income between $11,600 and $47,150
- 22% on the taxable income between $47,150 and $100,525
- 24% on the taxable income between $100,525 and 191,950
- 32% on the taxable income between $191,950 and $243,725
- 35% on the taxable income between $243,725 and $487,450
- 37% on taxable income in excess of $609,350
We talk about marginal rates because even if you have $1M in income you don't pay 37% on all of it, only on the portion in excess of $609,350. That said, the marginal rate is the relevant rate to consider when making decisions because it is the rate you would pay on additional income or save on additional deductions.
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Really?
Do you know what a trend line is, pops?
(https://i.imgur.com/Z5A8l9g.png)
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Really?
(https://i.imgur.com/F5HUtUI.png)
Yes, really.
As recently as the early 2000's Debt as a percentage of GDP was shrinking and it was stable up until the credit bubble of 2008. Stable debt isn't an urgent problem. It is something you might want to work on but it isn't crushing you.
The response to the credit bubble was a MASSIVE spending spree that pushed the debt up from <40% of GDP to over 70% of GDP. Then it leveled off a little (but was STILL growing) until COVID when an even bigger MASSIVE spending spree sent the debt to >100% of GDP. That is an urgent problem. The only time in our history that we've had debt this high is at the end of WWII and it was paid down immediately.
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Really?
Do you know what a trend line is, pops?
(https://i.imgur.com/Z5A8l9g.png)
From 2000 to 2008 not terrible. From 1996 to 2000, great. From 2016 to 2020 not terrible.
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So we'll have no debt in fewer than say...30 years?
Mkay.
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It's pretty obvious the radical rise in debt is over the last 12 years or so. Before that, it bounced around some ups, some downs, but we've had one steep up followed by a more modest up and then a very steep up. When debt is around 50% of GDP, it's "OK". Now it isn't, and it's going to get worse, though we COULD have a few years of moderate ups, and maybe even a slight down in the ratio.
Heaven help us if we hit a serious recession.
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100 years, maybe.
But we ALL have to pay more taxes, that is certain. At the same time, spending needs to not increase.
I'd be for a flat tax. Everyone making poverty level of more pays the same rate. No deductions, no loopholes. The IRS is abolished. Tax lawyers and accountants hate me.
I hate the IRS.
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Why a common recession indicator doesn't seem to be working anymore (cnbc.com) (https://www.cnbc.com/2024/07/24/why-an-indicator-that-has-foretold-almost-every-recession-doesnt-seem-to-be-working-anymore.html)
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I just searched this thread. Words with "spend" appear in this thread 8x. Words with the term "tax" appears, "zero" times. If Americans cannot speak on both sides of the issue deficits will continue to be unsolvable - at least until deficits and national debt end in an existential crisis.
Going a little deeper on this revenues vs expenditures question, here are all of the years since 1930 in which the Federal Deficit was >5% of GDP ranked. Then I've added Federal Revenue as a percentage of GDP for that year:
- 29.6%, 1943, 11.8%
- 22.2%, 1944, 19.5%
- 21.0%, 1945, 19.8%
- 14.7%, 2020, 16.0%
- 13.9%, 1942, 8.8%
- 12.1%, 2021, 17.2%
- 9.8%, 2009, 14.5%
- 8.7%, 2010, 14.4%
- 8.4%, 2011, 14.8%
- 7.0%, 1946, 17.3%
- 6.7%, 2012, 15.1%
- 6.3%, 2023, 16.2%
- 5.9%, 1983, 16.5%
- 5.8%, 1934, 4.4%
- 5.4%, 2022, 19.0%
- 5.4%, 1936, 4.7%
A couple things jump out at me:
First, most of these are in response to MAJOR calamities:
WWII, 5:
The three largest, four of the largest five, and five of the largest 10 annual deficits are either during the war (1942-1945) or severely impacted by wind-down expenditures associated with the war (1946).
The Great Depression, 2:
Two of these years involved massive spending increases related to FDR's "New Deal" which was an effort to get us out of the Great Depression (1934, 1936).
COVID, 1:
2020's massive deficit of 14.7% of GDP occurred despite fairly normal revenue at 16% of GDP and note that even if revenue had been at record high levels approaching 20% the deficit STILL would have been double-digits and higher than anything seen since WWII.
1970's/1980's Stagflation crisis:
The 1983 deficit involved tax cuts and spending increases undertaken in a successful effort to break out of the stagflation of the era.
The Credit Bubble, 3:
2009-2011 involved increased spending AND decreased revenue as a result of the credit bubble and associated responses. Revenues for 2009-2011 were relatively low historically at 14.4-14.8% of GDP but the deficits were 8.4% and greater so even "modern normal" revenues of about 17.5% of GDP would still have resulted in deficits in excess of 5% of GDP.
That leaves four years unaccounted for:
- 12.1% deficit in 2021, revenues at 17.2% of GDP. That revenue figure is pretty close to the modern average so this is an expenditure not a revenue problem.
- 6.7% deficit in 2012, revenues at 15.1% of GDP. That revenue figure is a bit light and "modern normal" revenues of around 17.5% would have pushed this deficit below 5% of GDP so this one is arguably revenue based.
- 6.3% deficit in 2023, revenues at 16.2% of GDP. Even if revenues had been a "modern normal" 17.5% the deficit STILL would have been right at 5%.
- 5.4% deficit in 2022, revenues at 19.0% of GDP. Historically that is a VERY high revenue figure so this is absolutely an expenditure rather than a revenue problem.
Our responses to the credit bubble and COVID were make it seem like those were the biggest two events since WWII and in the case of COVID, that it was on par with WWII. 2024 will be our fifth consecutive year of deficits in excess of 5% of GDP. We haven't seen that since WWII (1942-1946). We were able to recover from the humongous deficits of WWII because from 1947-1974 our budgets were more-or-less balanced with surpluses some years and deficits others but deficits never exceeding 3% of GDP.
The problem this presents is we don't have any extra room for a response to some future calamity. What are we going to do if we get into our first recession in almost 20 years or another calamity like COVID or 9/11 hits?
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We'd have to inflate our way back to some semblance of balance. The Fed would step in of course with "QE Infinity" which would dump liquiduty into the "system".
It would get ugly quickly, to the point of challenging the very basis of the country being a country.
The government "solutions" of late as you note is to dump money into the economy, vast sums creating enormous deficits. Then the Fed rides in with QE.
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100 years, maybe.
But we ALL have to pay more taxes, that is certain. At the same time, spending needs to not increase.
Exactly. 100 years of higher taxes and getting less for them.
People won't stand for that.
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Exactly. 100 years of higher taxes and getting less for them.
People won't stand for that.
If you could convince me that raising my taxes would not lead to increased spending, I'd sign up in a minute.
Of course, I happen to care about our Republic and would do anything I could to keep it.
I'm weird.
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We already pay enough in taxes. Hold them where they are and cut spending.
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If you could convince me that raising my taxes would not lead to increased spending, I'd sign up in a minute.
Of course, I happen to care about our Republic and would do anything I could to keep it.
I'm weird.
You can also afford it. Patriotism?
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If you could convince me that raising my taxes would not lead to increased spending, I'd sign up in a minute.
Of course, I happen to care about our Republic and would do anything I could to keep it.
I'm weird.
Hardly that DC cesspool is an anarchist's dream
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My point is simply that adding a prescription drug benefit to Medicare without addressing the MASSIVE cost of that prescription drug benefit is tantamount to voting for unicorns and ferries.
You write carefully, succinctly, and rarely have a typographical or spelling error when posting. I gotta tell you ... this typgraphical error brought a smile to my face, and damn near made me chuckle.
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Musta been auto-correct. :)
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We already pay enough in taxes. Hold them where they are and cut spending.
What would get cut? I can think of a lot of "pork" that could get cut, but it's not a whole lot of money compared to what we are up against.
Audits would be a good thing. I think companies are getting paid way too much for their services (I'm looking at you, defense contractors).
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so, it's not a whole lotta money
Let's cut it because it's the right thing to do and it is some money
too many think since it won't do too much, why bother
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All of us want to cut frivolous spending. It's obviously not something government can manage no matter who is in charge. I've seen this on a much much smaller scale where I worked.
A problem in dealing with defense contractors like Lockheed or Boeing is that if you really held them to account on the "F-35" and it's ilk, you'd put them out of business. They bid on some project, and may underbid, and maybe build a couple prototypes that get accepted, and then the cost turns out to be 2-3-4x.
The US spent more money on the B-29 project than the Manhattan project. And we didn't have any other bomber at the time able to lift the atomic bomb and carry it those distances.
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What would get cut? I can think of a lot of "pork" that could get cut, but it's not a whole lot of money compared to what we are up against.
Audits would be a good thing. I think companies are getting paid way too much for their services (I'm looking at you, defense contractors).
Well . . .
so, it's not a whole lotta money
Let's cut it because it's the right thing to do and it is some money
too many think since it won't do too much, why bother
Like I said before, I get the sentiment and you have to start somewhere but you can't fill a multi-Trillion dollar hole with a few Billion here and there.
Here is a CBO site that shows 2023 Expenditures and Revenues (https://www.cbo.gov/publication/59727). I think it is helpful to view them as a percentage of GDP so here are outlays:
- 5.0% Social Security
- 3.4% Nondefense discretionary
- 3.1% Medicare
- 3.0% Defense
- 2.4% Net Interest
- 2.3% Medicaid
- 1.9% Other
- 1.7% Income Security Programs
- 22.7% Total (note, the above totals 22.8%, the 0.1% difference is due to rounding. Which brings up a good point, 0.1% of GDP is literally BILLIONS of dollars and in this context that is a mere rounding difference).
Revenues:
- 8.1% Individual Income Taxes
- 6.0% Payroll Taxes
- 1.6% Corporate Income Taxes
- 0.8% Other
- 16.5% Total
Total Revenues are 16.5% of GDP which is historically close to but maybe a hair below the postwar normal. The record is 19.8% achieved in both 1945 and 2000. In 1944 Federal Revenues were 19.5% and they haven't exceeded 19% in any other year. Based on that, I would submit that roughly 19% is close to a hard cap on the amount that the Federal Government can realistically collect. Thus, no more than 2.5% of GDP can come from increased revenues.
The deficit for 2023 was a staggering 6.2% of GDP. What makes that really troubling is that we had that enormous deficit on pretty solid revenues and without any major calamity to explain it. It isn't like 1942-1946 when the large deficits were explained by our involvement in and spending for WWII. It isn't even like 2009-2011 when the deficits were based on stimulatory spending and tax cuts in response to the credit bubble nor even 2020-2022 when the deficits were based on stimulatory spending in response to COVID.
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Well . . .Like I said before, I get the sentiment and you have to start somewhere but you can't fill a multi-Trillion dollar hole with a few Billion here and there.
I understand.
That doesn't excuse the fact that if it's wasteful, it needs to be cut.
It helps the mindset.
Certainly does in my personal life with money management
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Gotta start somewhere.
And I'm not suggesting that the cuts will be "painless." Deep cuts will be painful, and will almost certainly stall the economy in the short term.
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I guess I would need to take a deep dive into what our discretionary spending actually goes to.
3.4% of GDP seems very high.
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I agree of course with "starting somewhere", fine. What politicians do is claim to cut $X "somewhere" when massive spending is going on elsewhere they didn't cut.
And I agree "we" are responsible in this form of government, which I've come to see as the core of the problem.
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I agree of course with "starting somewhere", fine. What politicians do is claim to cut $X "somewhere" when massive spending is going on elsewhere they didn't cut.
This is a major problem. The numbers are so staggeringly large that even a MINISCULE cut sounds massive. Then, to make it sound even bigger, the Politicians will assess the cut over 10 years. So lets say they make a 10% cut to a $120 Billion program. Ok, that is a $12 Billion cut and over 10 years that is a $120 Billion cut. Then the politicians will announce to great fanfare that they've cut $120 Billion from the budget over ten years.
Here is the thing: 2023 expenditures were $6.1 Trillion. $10 Billion is 0.16% of 6.1 Trillion. That is the equivalent of a guy with $100k in annual earnings/expenditures announcing that he has cut $3.15 per week from his spending.
The hole we are in is currently $1.7 Trillion per year so when a Politician announces a $120 Billion cut over 10 years remember that we need 169 more of those with no increases anywhere to balance this. I want to be clear that I'm not against making $10 Billion cuts, it is just that I understand that while they may be a good start, they aren't individually material.
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I'm all for cutting 0.16% instead of adding 2%
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Meanwhile, "they" brag about cutting $X which is fine, and then they are increasing something else by $X times 10.
Then there is the Code of Federal Regulations out there which grows and grows and grows, and in many cases is uninterpretable anyway.
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I guess I would need to take a deep dive into what our discretionary spending actually goes to.
3.4% of GDP seems very high.
I'm not saying that it IS NOT high but the Federal Government also does a whole lot of things that many people aren't even aware of and that most people wouldn't immediately think of but that are things the vast majority of us wouldn't want to have cut.
If we did take that "deep dive" we'd find allocations for everything from Meat Inspectors at the FDA making sure we don't get sick to Coasties* ready to save your ass if you get drunk and crash your boat into a reef. Then there are bridge inspectors, the people who keep lighthouses and other navigational aids functioning not only for pleasure-boaters like you but also for the intercoastal and Great Lakes freighters that bring things to us. You'd find that there were a gazillion functions that each have built-in constituencies and that some of us might think of as critical while others think of them as a complete waste. There are people keeping National Parks and Monuments open, people doing crash tests of automobiles, you name it, they are doing it.
*Coasties:
OT little story. My wife is a social worker and she dragged me along to a presentation of a suicide prevention movie. The focus of this particular movie was on one particular guy who literally jumped off the Golden Gate Bridge and realized as he did it that he didn't actually want to die. He somehow survived. The Coasties who rescued him were in the movie and they were . . . interesting. You could tell how jaded they were. Obviously most Coasties sign up for exciting rescues or maybe drug interdiction and these guys had been assigned to San Francisco Bay where it appeared that one of their main functions was to fish suicides out of the Bay. They didn't come right out and say it, but the way they were talking you could almost hear them:
Dispatch: We need you go head over to the GG Bridge.
Coastie: In transit, what is the issue?
Dispatch: Yeah, you gotta look for a guy.
Coastie: We have to fish another suicide out of the bay?
The Coastie's didn't quite admit this but you could tell from the between-the-lines that they saw this mission as "body recovery" not "rescue" then they said they were shocked that the guy was breathing.
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The BEST we can aspire to is for GDP growth to be faster than debt growth, and that alone will be difficult. Meanwhile, Social Security's Trust Fund will run dry in about a decade. That is somewhat off budget in a sense, but the longer "we" wait to fix it, the more painful will be any fix. Medicare is not in good shape either.
And one problem with fixing such things is any proposal is easily demonized by the other side. So, no politician wants to step into it and touch the third rail.
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Meanwhile, Social Security's Trust Fund will run dry in about a decade. That is somewhat off budget in a sense, but the longer "we" wait to fix it, the more painful will be any fix.
The problem is now.
The only thing that changes when the "trust fund" runs dry is that then the current law says that current benefits can no longer be paid. But right the current shortfall is being paid by deficit spending.
The way that we're "redeeming" the trust fund is by converting trust fund debt into general debt.
I gotta hand it to the people that created the SSTF... They've snookered a LOT of smart people like you into thinking the problem is off someday in the future when it runs out.
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It does exchange the Trust Fund for general debt. And the problem is NOW, and was 20 years ago. Obama claimed he could fix it easily, but didn't even try.
It's just one more rather massive issue our political structure makes nearly impossible to address. I can't conceive of a nonpainful remedy. Sure, you could add FICA to incomes over $400,000, but I don't think that really fixes it. And thus far, you get out in proportion to what you pay in, broadly speaking. That "fix" would mean they pay more in and get nothing for it.
I will get back what I put into it in about 5-6 years, not adjusted for inflation. Maybe it's ten years adjusted, maybe 15.
I'd look into raising the current tax on higher SS benefits for higher income earners.
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The problem is now.
The only thing that changes when the "trust fund" runs dry is that then the current law says that current benefits can no longer be paid. But right the current shortfall is being paid by deficit spending.
The way that we're "redeeming" the trust fund is by converting trust fund debt into general debt.
I gotta hand it to the people that created the SSTF... They've snookered a LOT of smart people like you into thinking the problem is off someday in the future when it runs out.
I'm glad you pointed this out because it has been a pet peeve of mine for years. People talk about the Trust Fund as if it was invested in something but it isn't, it is all IOU's drawn on the Federal Government so it is the equivalent of me telling you that I have $100 in my right pocket when in reality what I have in my right pocket is $50 and a note that says that my left pocket owes my right pocket another $50.
It does exchange the Trust Fund for general debt. And the problem is NOW, and was 20 years ago. Obama claimed he could fix it easily, but didn't even try.
It's just one more rather massive issue our political structure makes nearly impossible to address. I can't conceive of a nonpainful remedy. Sure, you could add FICA to incomes over $400,000, but I don't think that really fixes it. And thus far, you get out in proportion to what you pay in, broadly speaking. That "fix" would mean they pay more in and get nothing for it.
I will get back what I put into it in about 5-6 years, not adjusted for inflation. Maybe it's ten years adjusted, maybe 15.
I'd look into raising the current tax on higher SS benefits for higher income earners.
Current cap on SS tax is $168,600 per year. There is no cap on Medicare and apparently people with very high earned income pay more.
I was going to say that Medicare is in much worse shape than SS but when I looked at the most recent Trustee report they claim that it isn't. Eventually I figured out that this is due to a neat accounting trick. Approximately 40% of Medicare benefits are paid from General Government Revenues and NOT from Medicare taxes nor the Medicare "trust fund" (which doesn't actually exist, see @betarhoalphadelta (https://www.cfb51.com/index.php?action=profile;u=19) 's point above).
Then there is a requirement that the Trustees issue a warning if the percentage of Medicare benefits paid from GG revenue is projected to exceed 45% within five years. They've been issuing the warning for a few years now and the 45% threshold is projected to be hit in 2027.
As of 2023 SS and Medicare costs are about 6% and 3% of GDP respectively but according to the Trustee report they are projected to get to about 6% EACH in ~20 years.
Measured as a percentage of covered payroll:
Social Security (Includes both OASI and DI - those are acronyms for Old Age and Survivor Income and Disability Income):
- 14.71% of covered payroll as of 2024 - increases every year until
- 18.60% of covered payroll projected in 2080 - then decreases to
- 18.12% of covered payroll projected in 2098
Medicare:
- 3.3% of covered payroll in 2024 - increases every year to
- 4.5% of covered payroll in 2045 - then the rate of increase slows but continues to grow to
- 4.69% of covered payroll in 2080
The current taxes are:
- 12.4% for SS - split 50/50 between employer and employee for those employed by others
- 2.90% for Medicare - split 50/50 between employer and employee for those employed by others
- 15.3% Total
Total Expenditures as a percentage of covered payroll range from:
- 18.01% for 2024 (14.71+3.3)
- 23.1% for 2080 (18.6+4.5)
So the current combined tax of 15.3% is low by somewhere between 5-8% (NOT 5-8% of the 15.3% but 5-8% on top of the 15.3 which would be an increase of 33-52%)
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I'd look into raising the current tax on higher SS benefits for higher income earners.
That raises a major philosophical and ideological question:
Is SS a Pension and Disability program or is it a welfare program?
It has ALWAYS been sold as a Pension and Disability Program. It likely would never have passed in the first place as a welfare program.
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It has ALWAYS been sold as a Pension and Disability Program. It likely would never have passed in the first place as a welfare program.
FWIW:
My view is that in reality it is both and my solution would work from that basis.
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That raises a major philosophical and ideological question:
Is SS a Pension and Disability program or is it a welfare program?
It has ALWAYS been sold as a Pension and Disability Program. It likely would never have passed in the first place as a welfare program.
Both.
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Both.
I agree:
FWIW:
My view is that in reality it is both and my solution would work from that basis.
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Is SS a Pension and Disability program or is it a welfare program?
Both.
As Tom Colicchio often says on Top Chef, when you try to do a dish "two ways", what you often present is something that's worse than if you just tried to do it one way, and do it right.
And that's what we've got.
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What about Cincy chili two ways?
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What about Cincy chili two ways?
I could make jokes about that being all the wrong way from the start, but I've never had Cincy chili, so I'll not go down that road. I think Cincy chili one way is just a dry plate of spaghetti, right? Not palatable.
Especially since I'm sure you probably understand what I'm talking about and know that a Cincy chili "# way" is a completely different thing.
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https://www.culinaryhill.com/cincinnati-chili/
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it's okay to never know a single detail about Cincinnati Greek spaghetti sauce and the various toppings they add to it.
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Are you experienced?
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it's okay to never know a single detail about Cincinnati Greek spaghetti sauce and the various toppings they add to it.
You appear knowledgeable.
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Yeah I've had it.
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If I sell annuities, I take in payments obviously, and then invest them. If I invest them in T Bills, they still have value, right? On maturity, I get my money plus some interest.
The SSTF is something akin to an annuity, they take in money and invest it in special Treasuries, and when they mature, they get the money plus interest.
I may be missing something, I think the SSTF is a real thing, with real value, that when it runs out becomes a serious problem.
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If I sell annuities, I take in payments obviously, and then invest them. If I invest them in T Bills, they still have value, right? On maturity, I get my money plus some interest.
The SSTF is something akin to an annuity, they take in money and invest it in special Treasuries, and when they mature, they get the money plus interest.
I may be missing something, I think the SSTF is a real thing, with real value, that when it runs out becomes a serious problem.
The difference is that you and the Federal Government are two separate entities so if you see me an annuity and invest the money you get from me into T-Bills those are an actual investment that you have made in a distinct entity that owes the money back to you with interest.
The Federal Government and the Federal Government are NOT separate entities, they are one and the same so the relevant comparison is this:
- @Cincydawg (https://www.cfb51.com/index.php?action=profile;u=870) sells an annuity to @medinabuckeye1 (https://www.cfb51.com/index.php?action=profile;u=1547)
- Cincy creates a file folder in which he places the money he got from Medinabuckeye , he labels this folder "MBAnnuity Trust Fund"
- Cincy decides he wants a boat as big or bigger than @847badgerfan (https://www.cfb51.com/index.php?action=profile;u=5) so he takes $500,000 out of the "MBAnnuity Trust Fund" and replaces it with a note that says "Cincy owes $500,000 to this file folder".
- Cincy decides he wants a car cooler than @Honestbuckeye (https://www.cfb51.com/index.php?action=profile;u=37) so he takes another $500,000 out of the "MBAnnuity Trust Fund" and replaces it with another note that says "Cincy owes $500,000 to this file folder."
When annuity distributions exceed annuity revenues Cincy can't pay those with the notes.
If you STILL want to count the imaginary trust fund ok. There are two different reported debt figures. One is right around 100% of GDP currently and the other is substantially higher, around 125% of GDP IIRC. If you look close, the first is "publicly held debt" and the second is "total debt". AFIAK the difference is the debt held by the various Trust Funds*.
*There are at least four:
- OASI Trust Fund is for the portion of SS dedicated to Old Age and Survivor Income
- DI Trust Fund is for the portion of SS dedicated to Disability Income
- HI Trust Fund is for the portion of Medicare not tied in with purchased plans
- SMI Trust Fund is for the portion of Medicare tied in with purchased plans.
#1 is in major trouble and even if you treat the "trust fund" as legitimate, it will be exhausted in the next ~10 years.
#2 is fine so long as you treat the "trust fund" as legitimate.
#3 is in some trouble but that is only true if you assume that Medicare Expenditures beyond the ability of this fund to pay will continue to be paid from other Governmental revenues. If not then this one is a catastrophe.
#4 is statutorily fine. Rates are set to be self-sustaining.
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I still don't get it. The SSTF has been redeeming Treasuries for decades and paying out the monies as benefits. The money going in is "real", and the money coming out is "real", just as with an annuity.
And I think it also real that when the SSTF runs dry, SS payments will have to be cut to about 75%, UNLESS Congress does something. Maybe it doesn't matter and is just linguistics.
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I still don't get it. The SSTF has been redeeming Treasuries for decades and paying out the monies as benefits. The money going in is "real", and the money coming out is "real", just as with an annuity.
And I think it also real that when the SSTF runs dry, SS payments will have to be cut to about 75%, UNLESS Congress does something. Maybe it doesn't matter and is just linguistics.
The SSTF is "real" but it's not "meaningful".
Think about it this way.
My wife and I split up some of our household bills/payments. One that is very seasonal, and seems to be in a secular increase due to rising costs generally here in CA over time, is electrical. It can be $100 in the dead of winter and $400+ in the summer due to AC, and it seems to get worse every year.
So let's say that my wife contributes in our household for the electrical bill. She doesn't like that lumpy cost when it gets crazy expensive in the summer, so let's say that instead of paying the actual amount every month, she'll just give me $150/month for electrical and anything that isn't used goes into the Household Electrical Trust Fund (HETF). That way when the bill is below $150, we've got growing assets, that we can use to draw on during those few super hot summer months when we're running the AC a bunch.
Well, it would be silly for us to just put that money in a savings account or under a mattress, right? It should probably be in an interest-bearing account! So I offer her a deal... I'll sell her Brad's Bonds that will be held in the HETF and not only will I pay them back when needed, they'll be earning 5% interest. I'm such a swell guy!
And so, every month that she gives me more than the electric bill costs, I give her a Brad's Bond for the difference. I then take the money she gave me and spend it on beer. It's gone. Because I'm a profligate spender and can't let it sit in my pocket, much like our federal government.
And since that money is already spent, when we get to summer months and I need to redeem those Brad's Bonds to her, I use cash advances from my credit card to come up with the money. Because where else am I going to get it? I didn't get a second job.
So this keeps going. And every year when the payments from her are larger than the bill, I only apply as much of that excess as I need to pay the minimum payment on the credit card, not to draw down the balance, and spend the rest on beer. So my credit card balance just keeps growing and growing, but from her perspective everything is "fine" because as far as she can see, I keep redeeming the Brad's Bonds.
In this case, our HETF would absolutely be real, but would you say that this was prudent financial planning? Would you say that our household finances are in good shape? Would you say that each time she needs to draw down the HETF and redeem a Brad's Bond, she should be happy about it because although she's getting paid 5% interest, the money is coming from a credit card that "we" as a household will eventually need to pay off at much higher interest?
That's the SSTF. Yes, it's real. It's a real tool that serves to obfuscate the problem and make Americans think that the problem isn't a big deal until the day the SSTF runs out.
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I really like @betarhoalphadelta (https://www.cfb51.com/index.php?action=profile;u=19) 's explanation and I literally laughed out loud at both "HETF" and "Brad's Bonds".
Here is another way to explain it:
I mentioned upthread that the HI Trust Fund (Medicare) is sorta ok because the Federal Government has been paying a portion of Medicare costs out of General Federal Revenues for many years and their projections assume that this will continue.
Imagine instead that years ago when Medicare got into major trouble the Federal Government simply combined the OASI, DI, HI, and SMI Trust Funds and paid the excess Medicare expenditures out of the Trust Fund assets that had been built up in the OASI Trust Fund. Then imagine that this larger combined Trust fund had just run out of money today.
We'd be in EXACTLY the same situation we are in now. The Federal Government would still owe exactly the same amount to outside bondholders. This "public debt" figure is ~100% of GDP.
The only difference would be that there wouldn't be a trust fund but who cares? The amount that the federal government needs to borrow from the public is the amount by which TOTAL Federal Expenditures exceed TOTAL Federal Revenues.
Same as for Brad and his wife. They are ONE entity financially and the amount that they need to borrow is the amount by which their TOTAL expenditures exceed their TOTAL revenues.
Everything else is semantics.
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Exactly. Let's say that today, Congress wrote a bill doing the following and the President signs it:
- Immediately dissolves the SSTF and defaults on it. Zero. Gone. Bye bye.
- Enacts that benefit cuts will not be tied to the elimination of the SSTF and benefits will proceed to be paid according to normal schedules in perpetuity.
I'd argue, and I know @medinabuckeye1 (https://www.cfb51.com/index.php?action=profile;u=1547) would argue, that from the standpoint of the federal budget, that absolutely zero has materially changed.
Trillions of dollars of T-Bills in the SSTF, instantly gone, and not a damn thing changes.
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Imagine SS had been set up to be privately operated, say Prudential ran the program, and took in FICA taxes and invested in Treasuries. Would that be any different?
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Going a little deeper on this revenues vs expenditures question, here are all of the years since 1930 in which the Federal Deficit was >5% of GDP ranked. Then I've added Federal Revenue as a percentage of GDP for that year:
- 29.6%, 1943, 11.8%
- 22.2%, 1944, 19.5%
- 21.0%, 1945, 19.8%
- 14.7%, 2020, 16.0%
- 13.9%, 1942, 8.8%
- 12.1%, 2021, 17.2%
- 9.8%, 2009, 14.5%
- 8.7%, 2010, 14.4%
- 8.4%, 2011, 14.8%
- 7.0%, 1946, 17.3%
- 6.7%, 2012, 15.1%
- 6.3%, 2023, 16.2%
- 5.9%, 1983, 16.5%
- 5.8%, 1934, 4.4%
- 5.4%, 2022, 19.0%
- 5.4%, 1936, 4.7%
Way upthread @OrangeAfroMan (https://www.cfb51.com/index.php?action=profile;u=58) tried to suggest that this problem has taken decades to create. Also, @Gigem (https://www.cfb51.com/index.php?action=profile;u=1706) asked about causes of deficits more recently.
I think I've come up with a better way to answer these questions. The list above is the 16 years from 1929-2023 in which the Federal Deficit was >5% of GDP but lets do some analysis:
First lets take out the WWII years because even though none of us were in a position to decide then and you might personally disagree, "we" as a country clearly felt that it was "worth it" to fight the war. Then you are left with:
- 14.7%, 2020, 16.0%
- 12.1%, 2021, 17.2%
- 9.8%, 2009, 14.5%
- 8.7%, 2010, 14.4%
- 8.4%, 2011, 14.8%
- 6.7%, 2012, 15.1%
- 6.3%, 2023, 16.2%
- 5.9%, 1983, 16.5%
- 5.8%, 1934, 4.4%
- 5.4%, 2022, 19.0%
- 5.4%, 1936, 4.7%
Next lets eliminate ONE year each for some major issues addressed by our Country, specifically (chronological):
- Take out the 5.8% deficit in 1934 to address the Great Depression
- Take out the 5.9% deficit in 1983 to address the stagflation crisis of the 70's/80's
- Take out the 9.8% deficit in 2009 to address the credit bubble collapse
- Take out the 14.7% deficit in 2020 to address COVID
Before I move on, note that this suggests that the credit bubble and COVID were BIGGER than the Great Depression. Also note that the size of the deficit absorbed to deal with the crisis keeps growing. Back in the 1930's it was 5.8%. In ~50 years it only grew to 5.9% but then in ~25 years it nearly doubled to 9.8% then in ~12 years it grew by half-again to 14.7%. This suggests either than the Great Depression was less of a big deal than Stagflation, Credit Bubble, or COVID. That is silly.
That leaves us with:
- 12.1%, 2021, 17.2%
- 8.7%, 2010, 14.4%
- 8.4%, 2011, 14.8%
- 6.7%, 2012, 15.1%
- 6.3%, 2023, 16.2%
- 5.4%, 2022, 19.0%
- 5.4%, 1936, 4.7%
We are left with seven years of "unexplained" deficits in excess of 5% of GDP. One was during the Great Depression. The other six were:
- The last three years (2021-2023), and
- Six of the last fourteen years (2010-2012 and 2021-2023).
Depending on your source the 2024 and 2025 deficits are projected at different exact amounts but I don't see anybody projecting <5% of GDP. If we run deficits >5% of GDP in both 2024 and 2025 then those will add to the above list and we'll move to eight of the last 16 years with deficits >5% of GDP.
This is absolutely a modern and very recent phenomenon. It started with the response to the credit bubble collapse which was to shovel money into the economy then cooled off for a few years (2013-2019) then heated right back up with COVID and the shoveling has continued ever since.
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Imagine SS had been set up to be privately operated, say Prudential ran the program, and took in FICA taxes and invested in Treasuries. Would that be any different?
It depends: In your hypothetical was Prudential REQUIRED to buy non-tradable Treasuries? If so then no, no different. If not, then yes, very different.
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Yes, if Prudential could only invest in specific Treasuries.
Some insurance plans have to invest in US Treasuries, if not 100%, nearly so. Pensions of course often have a percentage requirement.
I bought a US Treasury recently. Will I get my money back? It's a 3 monther.
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Imagine SS had been set up to be privately operated, say Prudential ran the program, and took in FICA taxes and invested in Treasuries. Would that be any different?
No.
You're letting the way they defined this color your thinking, CD. Take a step back for a second.
The money used to generate the SSTF was already spent. Right now all it holds are promises to pay it back. Not dollar bills. Not gold bars. Just promises.
There are only two ways to pay back those promises. Higher taxes on American taxpayers, or higher national debt.
Yes, it will be paid back. The United States Government honors its promises. But on whose back will those payments come from? Mine, as a current taxpayer, is whose back, and my kids, who are future taxpayers, with the additional debt it's creating.
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I still don't get it, but maybe it doesn't matter at all.
I figure if I chose to invest my retirement entirely in Treasuries, I'd get it back when they mature, in cash, or credit to my account on the computer. That's really all I care about.
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I still don't get it, but maybe it doesn't matter at all.
I figure if I chose to invest my retirement entirely in Treasuries, I'd get it back when they mature, in cash, or credit to my account on the computer. That's really all I care about.
Why invest in Treasuries at all? Why don't you just lend it to your wife to cover her spending, and she can pay you back on whatever date the loans come do?
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I like to get some interest. I don't see any difference for me if I invest in T bills or CDs or corporates, aside some a small security angle. Some annuity or insurance plan that invests my premiums similarly would be the same, to me.
My wife does fine on her own.
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I like to get some interest. I don't see any difference for me if I invest in T bills or CDs or corporates, aside some a small security angle. Some annuity or insurance plan that invests my premiums similarly would be the same, to me.
My wife does fine on her own.
Oh, I'm not saying you'd loan it to her for free, of course. You deserve some interest.
And I'm sure she does fine on her own, and I'm sure she has excellent credit. That's why she'd be an excellent borrower! But maybe she wants a little extra walking-around money, ya know.
I mean, the fact that you have shared finances and that you're a single economic unit living under one roof shouldn't make lending to your wife in exchange for interest any different than if you invested in Treasuries, or CD's, or corporate bonds, right?
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I guess I view the SSTF and the Federal government as separate entities, not at all like me and my wife.
Anyway, I'm slow to understand these things. Thanks for trying.
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I guess I view the SSTF and the Federal government as separate entities, not at all like me and my wife.
Anyway, I'm slow to understand these things. Thanks for trying.
Exactly. And that's the point. You wouldn't lend your wife money just so she can spend it today, with the promise that she'll pay it back in a few years, because you know you're one shared economic unit and you should make spending decisions together, because you'll eventually have to pay it back together.
If you invest in Treasuries, you are relying on someone outside your household to pay it back when it comes due. That might be me (higher taxes as an income earner). That might be some insurance company who buys the replacement T-Bill when yours comes due. But ultimately, you're relying on "someone else" to pay it back.
In this case, the federal government loaned the money to the federal government and now the federal government has to pay back the federal government. And the only way to do that is with new taxes or new debt. Which materially negatively affect Americans, who are the people who fund the federal government. We're all in the same household on this one.
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Exactly. And that's the point. You wouldn't lend your wife money just so she can spend it today, with the promise that she'll pay it back in a few years, because you know you're one shared economic unit and you should make spending decisions together, because you'll eventually have to pay it back together.
If you invest in Treasuries, you are relying on someone outside your household to pay it back when it comes due. That might be me (higher taxes as an income earner). That might be some insurance company who buys the replacement T-Bill when yours comes due. But ultimately, you're relying on "someone else" to pay it back.
In this case, the federal government loaned the money to the federal government and now the federal government has to pay back the federal government. And the only way to do that is with new taxes or new debt. Which materially negatively affect Americans, who are the people who fund the federal government. We're all in the same household on this one.
This is the key distinction and, as an accountant, I should have thought of this explanation earlier.
@Cincydawg (https://www.cfb51.com/index.php?action=profile;u=870) when you get annual reports from the companies you own stock in the Financial Statements (FS) are usually "Consolidated Financial Statements" because most of the large companies are conglomerations of multiple subsidiaries.
We accountants do combining worksheets but it is NOT as simple as adding up the lines. Some things are, but inter-subsidiary transactions are eliminated from the consolidated FS because when viewing the whole thing, there is no transaction there.
Example:
Back when GE owned a whole bunch of stuff lets say that GE Finance had $120 Million in cash and GE Aerospace had $10 Million in cash. When GE's accountants created the Consolidated Financial Statements for GE, they would list that as $130 Million in cash because the two just get added together. Now lets say that GE Aerospace needs money so GE Finance loans $100 Million to GE Aerospace. Now:
GE Finance
- $20 Million in Cash
- $100 Million in Loan Receivable Asset (the $100 Million that they loaned to GE Aerospace)
GE Aerospace
- $110 Million in Cash
- $100 Million in Loan Payable Liability (the $100 Million that they borrowed by GE Finance)
GE's Consolidated Financial Statements would show:
- $130 Million in Cash
- NOTHING for the loan because when you view GE as a complete unit (including GE Finance and GE Aerospace) there is NO loan receivable nor payable.
Much simpler example:
If Brad's wife pays $150/mo for electric but the electric bill is only $100/mo, at the end of the year she has overpaid by $600 so Brad owes $600 to Brad's wife. For simplicity lets say that the two of them have no other assets and no other liabilities. If I did individual FS for the two of them:
- Brad's wife has a $600 asset of "Brad Bonds" and a net worth of $600.
- Brad has a $600 liability of Brad Bonds and a net worth of -$600.
Then if I did a combined FS for Brad AND his wife it would be a blank sheet of paper. They have NOTHING and owe NOTHING.
It is the same thing here. The Federal Government is ONE entity made up of a whole bunch of components but when you create a consolidated FS, it is only ONE entity. The T-bills held by the various trust funds are neither assets nor liabilities. They get eliminated because they are inter-subsidiary.
I hope that makes more sense.
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Anyway, I'm slow to understand these things. Thanks for trying.
Hey, with enough work I got you to understand the EV battery charging speed thing :57:
Pretty sure @medinabuckeye1 (https://www.cfb51.com/index.php?action=profile;u=1547) and I can get you through this one.
And if not, hopefully at least some OTHER folks here have not had their eyes glaze over and we get through to them, which is still a positive.
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Ah yes, the long and torturous EV charging at speed discussion. I remember it well. :)
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Ah yes, the long and torturous EV charging at speed discussion. I remember it well. :)
I didn't read this, but a few months back a buddy got a cheap EV for a trip and was not informed of all that rigamarole. It was ... a problem.
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What if when SS was started, they by law could only invest in AAA corporate bonds? Would that change anything?
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My EV notion was for each car to have two battery packs that could charge independently. I had a strong feeling this was wrong, but somehow couldn't quite get it, for overly long.
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What if when SS was started, they by law could only invest in AAA corporate bonds? Would that change anything?
Yes, that completely changes things.
In that case the asset would be bonds payable by another entity, the Corporate issuers.
If that had been the case all along, and nothing else changed:
The SSTF would currently hold a bunch of Corporate Bonds and the National Debt held by the public would be higher by the same amount.
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Yes, the debt HELD BY THE PUBLIC would be higher (unless the Fed was forced to be more aggressive), and the overall debt would be .... the same.
The debt held by the Fed is ... bizarre, to me.
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Yes, the debt HELD BY THE PUBLIC would be higher (unless the Fed was forced to be more aggressive), and the overall debt would be .... the same.
The debt held by the Fed is ... bizarre, to me.
The relevant figure is the debt held by the public. Debt held by the Fed and Debt held by the SSTF is irrelevant because they are divisions of the Federal Government that need to be combined for FS reporting purposes.
So if the SSTF had Corporate Bonds then the Debt held by the public would be higher but there would also be an offsetting Corporate Bonds held by the SSTF entry.
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Office Space: I'm Gonna Have to Disagree With You There (youtube.com) (https://www.youtube.com/watch?v=J34UzHo4G5w)
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Office Space: I'm Gonna Have to Disagree With You There (youtube.com) (https://www.youtube.com/watch?v=J34UzHo4G5w)
I don't understand the basis because I don't see anything in my post that is opinion.
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To me, the critical parameter is overall debt. I still view the SSTF and the Fed as separate entities. I'm probably wrong.
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What if when SS was started, they by law could only invest in AAA corporate bonds? Would that change anything?
Yes, completely different. The corporations would be on the hook for repaying the SSTF, not American taxpayers or increasing US debt.
Likewise, if they invested it in foreign debt. It would be foreign taxpayers or foreign governments that have to repay it, not American taxpayers or increasing US debt. Which is why some foreign sovereign wealth funds invest in T-Bills--because it's AMERICANS on the hook for repayment, not their own citizens/companies.
Or if they invested it in index funds. They would then have assets in the form of stocks that they could sell to draw down the SSTF, meaning that the buyers of those stocks, pay, not American taxpayers or by increasing US Debt.
Or if they bought a bunch of gold bullion and could sell it off to draw down the SSTF. That would not be repaid by American taxpayers or increasing US debt.
All of these completely and totally change the entire situation.
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To me, the critical parameter is overall debt. I still view the SSTF and the Fed as separate entities. I'm probably wrong.
Here I disagree because they are one and the same from the perspective of who is on the hook for their liabilities:
Yes, completely different. The corporations would be on the hook for repaying the SSTF, not American taxpayers or increasing US debt.
Likewise, if they invested it in foreign debt. It would be foreign taxpayers or foreign governments that have to repay it, not American taxpayers or increasing US debt. Which is why some foreign sovereign wealth funds invest in T-Bills--because it's AMERICANS on the hook for repayment, not their own citizens/companies.
Or if they invested it in index funds. They would then have assets in the form of stocks that they could sell to draw down the SSTF, meaning that the buyers of those stocks, pay, not American taxpayers or by increasing US Debt.
Or if they bought a bunch of gold bullion and could sell it off to draw down the SSTF. That would not be repaid by American taxpayers or increasing US debt.
All of these completely and totally change the entire situation.
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To me, the critical parameter is overall debt. I still view the SSTF and the Fed as separate entities. I'm probably wrong.
EXCEPT that the SSTF allowed Congress to hide its overspending as long as the SSTF was increasing. It meant that money coming in via FICA taxes wasn't actually being put into paying Social Security benefits, but was being put into the SSTF--and then immediately spent by Congress.
If we had a better understanding of how that spending would ACTUALLY impact the national debt, one might think there would be at least some level of pushback on letting spending grow so quickly. Maybe not, but at least it would be honest.
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It seems to me this is about accounting and how things are enumerated, not reality. That's why I look at total debt, not "debt held by the public". And of course if nothing is done with the SSTF, that contribution will disappear by 2035 or so, so we'd be back to zero, except the Fed.
If the Fed hypothetically assumed ALL the public debt, they could zero it out, but in my view, the total debt would still exist and be horrible. It's not as if that would make everything kosher.
My GUESS is at some point, the Fed will somewhat quietly have to assume more and more of the debt because lenders will become more and more worried and the T bills won't be viewed as the safest investment in the world. Then we could experience really serious inflation of course, which would increase interest rates, which would contribute to really really serious inflation ...
The unfettered ability to "print money" is scary, to me.
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@Cincydawg (https://www.cfb51.com/index.php?action=profile;u=870) Ok, I'm not entirely sure what you're even talking about there...
Let me ask you something I asked upthread. Let's say Congress passes a bill that does two things:
- Completely eliminates / wipes out / defaults on the SSTF debt.
- Enacts that the benefit cuts that were supposed to come in a decade+ when the SSTF runs out will no longer happen. Benefits will continue to be paid out as normal despite no SSTF.
What do you think happens in that case? What is the impact on the federal budget? Anything of substance? Or do we basically just do the exact same thing we're doing now, but SSTF no longer exists.
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I don't really follow the hypothetical, so I don't know.
I guess my real question is why does any of this really matter? I look at the total debt picture myself. That's the amount that ostensibly has to be paid back at some point (by borrowing more these days).
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it doesn't really matter SS is going to continue to be paid out
folks of the age to draw SS and those close to drawing age are the folks that actually vote
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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My point and I think @betarhoalphadelta (https://www.cfb51.com/index.php?action=profile;u=19) '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.
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.
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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.
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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.
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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.
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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
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Not sure what term limits will solve, when every Congressperson just votes party line anyway...
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Not sure what term limits will solve, when every Congressperson just votes party line anyway...
They have to in order to keep their jobs. If they break with the party, the power players cut them out of campaign cash and primary them.
There are really very few "players" in both chambers. Maybe 3-4 per "side" and even that may be high. Everyone else falls in line for the most part.
We need more Sinemas and Manchins.
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One thing about our income tax is that it is quite progressive, more so than in most Euro countries.
And the thing about FICA taxes is they are quite REGRESSIVE, a flat tax on low to moderate incomes. And if you're self employed ...
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Not sure what term limits will solve, when every Congressperson just votes party line anyway...
I do not think there is a practical way to solve this but the problem isn't the money-brokers cited below:
They have to in order to keep their jobs. If they break with the party, the power players cut them out of campaign cash and primary them.
The problem isn't the power players cutting their cash, the problem is the other thing that @847badgerfan (https://www.cfb51.com/index.php?action=profile;u=5) mentioned, primaries. Specifically, the problem is extremely low turnout in primaries.
I'll give an example that isn't exact but it isn't all that far off:
Suppose that ~15% of the electorate believes that Abortion should be legal up until the umbilical cord is cut and also encouraged and paid for at government expense. We'll call them pro-choice radicals and they all vote in the Democratic Primaries.
Then suppose that another ~15% of the electorate believes that the morning after pill should be banned and birth control tightly regulated. We'll call them pro-life radicals and they all vote in the Republican Primaries.
So 70% of us have opinions on Abortion that fall between these two extremes. One would think that elected officials would reflect something nearer the middle but it doesn't work that way and the reason is the extremely low turnout in primary elections.
If we had 100% turnout in the primaries then pro-choice radicals would only make up 30% of the Democratic electorate and the pro-life radicals would only make up 30% of the Republican electorate so candidates with more moderate positions could and would win some elections. Instead, turnout in primaries is very low so the 15% of the electorate that are pro-choice radicals more-or-less control Democratic primaries while the 155 of the electorate that are pro-life radicals more-or-less control Republican primaries. Then we get to the general election, the other 70% show up, and their only choices are two radicals.
The only thing I can think of that would materially improve this situation would be to make voting in the primary* a precondition for voting in the general election but that would NEVER gain popular support and even if it did I don't know that it would help much.
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I can argue, I think, that candidates were better when they were chosen by the Party Insiders, and not by primaries. The took out any "one trick ponies" and stuck with experienced known pols, and some third parties.
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One thing about our income tax is that it is quite progressive, more so than in most Euro countries.
And the thing about FICA taxes is they are quite REGRESSIVE, a flat tax on low to moderate incomes. And if you're self employed ...
But that's the thing with FICA taxes, or at least Social Security. That was the design. The design was that your benefits would be tied to your contribution level, and that since benefits were capped at a maximum, contributions should be also. If this is a "retirement" program and not just welfare for old folks, why should I be taxed on my full income rather than the capped income when I won't get any higher benefits for it?
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Yes, that was/is the intent. Some here have softly proposed just adding it to the income tax gig and doing away with FICA. Then it would clearly be a government expense.
I'd guess income tax rates would need to go up an additional 10% or so, from 30% to 40% etc.
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Yes, that was/is the intent. Some here have softly proposed just adding it to the income tax gig and doing away with FICA. Then it would clearly be a government expense.
I'd guess income tax rates would need to go up an additional 10% or so, from 30% to 40% etc.
>10%. The thing most people don't think about with the payroll tax is the employer portion. Which is again, just a way that Congress chose to hide the price of the system. "You don't pay it, your employer does!" Yeah, well it's part of the cost of employing someone, and if the employer didn't have to pay that I could negotiate for higher wages. So the current rate is 12.4% on all income up to the cap.
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Yes, that was/is the intent. Some here have softly proposed just adding it to the income tax gig and doing away with FICA. Then it would clearly be a government expense.
I'd guess income tax rates would need to go up an additional 10% or so, from 30% to 40% etc.
It would be a LOT more than that.
SS and Medicare are a combined 15.3% but you couldn't just swap 15.3% of payroll taxes for 15.3% of income taxes because payroll taxes generate a lot more revenue.
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>10%. The thing most people don't think about with the payroll tax is the employer portion. Which is again, just a way that Congress chose to hide the price of the system. "You don't pay it, your employer does!" Yeah, well it's part of the cost of employing someone, and if the employer didn't have to pay that I could negotiate for higher wages. So the current rate is 12.4% on all income up to the cap.
15.3% if you include Medicare so:
- 15.3% up to $168k (I think, didn't look it up but it is close to that), then
- 2.9% above the cap
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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.
My term limits would be very generous. 3 terms as senator, which I think would capture a good amount of them (18 years), 10 terms for congressional representatives (20 years). All I'm really wanting to weed out are the 30-45 year people like Pelosi, Biden, Shelby (Alabama), and the rest of the geriatric bunch. I'm trying to remember the name of the senator from Georgia or somewhere very southern that was in there a long, long time and was really racist. Byrd maybe? The reality of it is that 75 years of age is the max I want anybody serving in congress.
But you make a very good point.
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It would be a LOT more than that.
SS and Medicare are a combined 15.3% but you couldn't just swap 15.3% of payroll taxes for 15.3% of income taxes because payroll taxes generate a lot more revenue.
Yes, but income taxes would apply to every income level, so it would remove the cap. I'm assuming that would be $$$$.
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Yes, but income taxes would apply to every income level, so it would remove the cap. I'm assuming that would be $$$$.
I haven't done a significant analysis (obv), but as medina points out by making it part of income taxes you'll actually collect a LOT less than 10% if you just raise income taxes across the board by 10% from everyone under the cap. Because their AGI will be lower than their actual income, so their tax rate will be based on a smaller amount of income than the current payroll tax.
Whether a 10% rise for the income brackets above the cap is enough to make up for that, I don't really know. But as you often point out, the wealthier you are the more you can structure things to avoid taxation (even without being uber-wealthy), and raising the top marginal rate by 10% will give taxpayers even more incentive to do that to avoid it. Laffer curve and all.
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It's tough to shelter earned income from salary.
Anyway, it does sound like it would be a hit somehow even if net revenue stayed the same.
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It's tough to shelter earned income from salary.
Anyway, it does sound like it would be a hit somehow even if net revenue stayed the same.
It is tough to shelter income from salary, I'd agree. However I think at the higher ends of the income scale you have a lot more flexibility to itemize deductions and minimize your AGI. For many who are small business owners there end up being a lot of deductions and other ways to keep your reported income low even if your lifestyle is higher, etc.
Maybe 10% is enough. Maybe it's not. I'm just saying without a LOT more analysis we shouldn't really assume the validity of any particular number.
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would youse smart fellas hurry up and resolve this Fed Debt and Deficit issue already
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would youse smart fellas hurry up and resolve this Fed Debt and Deficit issue already
There really is no practicable solution. The best situation would be to get our debt:GDP ratio back under one, which probably is not going to happen either.
IF we really cut spending and raised taxes sufficiently, the economy would collapse, and revenue would tank. We're addicted to debt.
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I've been thinking about this thread since it was first posted. I probably should go back and re-read the previous 11 pages, but one question that has bugged me is what conditions led to the small period of time in the late 90's that led to a surplus? I can remember at the time the gov't had ran deficits from the 60's until the 90's, and then the Republican Party took power in like '94 and had their contract with America, and then we had a gov't shutdown, and then not long after we had surpluses. I do remember welfare reform and shrinking of the military at that time, but as we've stated the # 1 cause of the debts and deficits are entitlements.
Were the entitlements of the era much smaller than they are today? And if so, was the federal government able to just cut discretionary spending and get things under control?
Or was it a mixture of the economy being supercharged, bringing in more taxes, at the same time the gov't made modest cuts and these factors combined to create the surplus? I do remember that after W got elected, it didn't take long at all to start running deficits again. Blame 9/11 or the GWT (Global War on Terror), but it seems like we hit GO and never looked back.
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I've been thinking about this thread since it was first posted. I probably should go back and re-read the previous 11 pages, but one question that has bugged me is what conditions led to the small period of time in the late 90's that led to a surplus? I can remember at the time the gov't had ran deficits from the 60's until the 90's, and then the Republican Party took power in like '94 and had their contract with America, and then we had a gov't shutdown, and then not long after we had surpluses. I do remember welfare reform and shrinking of the military at that time, but as we've stated the # 1 cause of the debts and deficits are entitlements.
Were the entitlements of the era much smaller than they are today? And if so, was the federal government able to just cut discretionary spending and get things under control?
Or was it a mixture of the economy being supercharged, bringing in more taxes, at the same time the gov't made modest cuts and these factors combined to create the surplus? I do remember that after W got elected, it didn't take long at all to start running deficits again. Blame 9/11 or the GWT (Global War on Terror), but it seems like we hit GO and never looked back.
Basically if you want to boil things down to be incredibly lacking nuance and make it simpler than anything ever truly is, it's probably three things:
- The economy was absolutely supercharged. If you look at the Fed data (https://fred.stlouisfed.org/series/FYFRGDA188S), from the early 90s to 2000 the federal tax revenue as a percentage of GDP went from about 17% to 20%. ~20% ties the highest in history, which was in the 1940s. (Possibly fact-check me--maybe it's happened in the distant past during wartime but I don't think so...) This was driven by the computing/internet boom IMHO more than anything else.
- Republicans were in control of Congress while a Democrat was in the White House. They wouldn't authorizing the spending of a dime that Clinton could take credit for, so this reined in spending. There's actually some academic research that this combo (Rs control Congress and D in the WH) is actually the lowest-spending combination. Much lower than R+R, D+D, as you might expect, but even lower than D-Congress+R-WH. It seems that the Democrats are willing to spend money even when an R is in the WH, probably because they know gov't programs last forever so they're getting what they want. This coupled with rapid economic expansion led to federal spending as a percentage of GDP dropping over that same early 1990s to 2000 period (http://Republicans were in control of Congress while a Democrat was in the White House. They wouldn't authorizing the spending of a dime that Clinton could take credit for, so this reined in spending. There's actually some academic research that this combo (Rs control Congress and D in the WH) is actually the lowest-spending combination. Much lower than R+R, D+D, as you might expect, but even lower than D-Congress+R-WH. It seems that the Democrats are willing to spend money even when an R is in the WH, probably because they know gov't programs last forever so they're getting what they want.).
- Yes, entitlements were different. In the early 80s they pushed for Social Security tax increases because they saw the structural issues with entitlements and wanted to build up the "trust fund". Social security taxes were lower in 1980 and gradually increased to reach their current rate in 1990. This led to excess money coming into the federal government, and as I've said many times over this thread, that money was lent to the general fund so Congress didn't have to raise new federal debt to cover their spending. If you look at the trust fund (https://crsreports.congress.gov/product/pdf/R/R47040/2) (see below graph) you'll see where some of that money to generate that surplus came from--it was social security tax receipts, NOT just income / corporate tax receipts.
(https://i.imgur.com/PAdegoV.png)
So yeah, massive economic growth, gridlock in government, and a bunch of excess taxes that weren't needed for current entitlement benefits due to demographics. That's how we got a surplus.
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I've been thinking about this thread since it was first posted. I probably should go back and re-read the previous 11 pages, but one question that has bugged me is what conditions led to the small period of time in the late 90's that led to a surplus? I can remember at the time the gov't had ran deficits from the 60's until the 90's, and then the Republican Party took power in like '94 and had their contract with America, and then we had a gov't shutdown, and then not long after we had surpluses. I do remember welfare reform and shrinking of the military at that time, but as we've stated the # 1 cause of the debts and deficits are entitlements.
Were the entitlements of the era much smaller than they are today? And if so, was the federal government able to just cut discretionary spending and get things under control?
Or was it a mixture of the economy being supercharged, bringing in more taxes, at the same time the gov't made modest cuts and these factors combined to create the surplus? I do remember that after W got elected, it didn't take long at all to start running deficits again. Blame 9/11 or the GWT (Global War on Terror), but it seems like we hit GO and never looked back.
It was a whole lot of things and you hit on most of the big ones.
The biggest:
Were the entitlements of the era much smaller than they are today?
Yes.
The baby boom is considered 1946-1964. In 1990 those folks were 26-44. They were all in or entering their prime earning years. 30 years later in 2020 they were all 56-74. They were all in or entering retirement.
The retirees of 1990 were mostly people born in the mid-1920's and prior. Here is a site I found (https://www.infoplease.com/us/population/live-births-and-birth-rates-year#google_vignette) (just googled, so not vouching for it but looks ok, maybe). US births for the years shown from 1910-1945 are all around 2.5 to a little under 3M. It started really climbing after WWII and peaked at 4.3M in 1957. It stayed above 4M through 1964 (last year of the aforementioned Baby Boom) then started dropping. I personally was born in the trough of the baby-bust. Annual births in 1973-1975 were <3.2M, the only such post-war years.
People tend to be at peak earnings at around 30-50. Before that people are generally getting into position and after that people start winding down and retiring. Also note that people over 50 tend to be less likely to seek out increases because they have less time left to collect the rewards.
When you look at the economy, a lot of the mystery can be answered simply by asking "who is 30-50". In 1990 the 30-50 year olds were born from 1940-1960 so that covers most of the baby boom. Then in the mid-1990's the people entering that cohort started to be the less numerous children of the mid-1960's while the people exiting that cohort were the VERY numerous children of the mid-1940's. The last baby-boomer exited that cohort in 2014.
Entitlements are up because:
- There are a LOT more retirees for at least two reasons: I, people are living longer; II, more people were born 60-90 years ago (1934-1964) than were born 60-90 years prior to 1990 (1900-1930).
- Healthcare costs (much of it borne by Medicare and Medicaid) have been rising faster than overall prices for decades.
- The Medicare Rx benefit was added in 2006.
On the defense side of things, IIRC, postwar defense spending peaked during Korea (1950-1953), Vietnam (mostly 1964-1972 with some minor involvement before and after those dates) and the Reagan-era buildup (1981-1989). Then the Berlin Wall came down and defense spending dropped for a while before 9/11 sent it back up. The mid-1990's was after the Wall came down and before the Towers came down so defense spending was comparatively low.
Politically, when R's took Congress (both houses) in the 1994 elections then Clinton held the WH you had a situation where they were fighting and not wanting each other to get credit for any major new initiatives so basically not much happened and as it turns out, that is cheap.
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I do want to highlight one more thing here. I've already said it, but I want to make it more explicit:
Q. What is one of the reasons that we had a government surplus during the late 1990s?
A. Because Congress was spending the money in the Social Security Trust Fund for things that weren't Social Security.
I'm not going to say something like they were "raiding" the SSTF. They weren't. They were actually spending the money in exactly the way that the SSTF was legislatively set up to be used.
But it had two negative effects on the American public:
- Because we were running a surplus, it made them think that current income/corporate/other tax collections were sufficient to fund the government's spending. They weren't. It was relying on a separate tax stream--Social Security taxes--to fund current spending. So what we THOUGHT was paying for the spending and generating a surplus was actually insufficient to do so. We were spending more than our income/corporate/other taxes could support, but it was "hidden" due to the SSTF monies.
- It gave the public the belief that we were forward-thinking and protecting Social Security for the future, by putting that money in the SSTF. But since that money was being immediately spent and replaced by treasury bills, it meant that all we were doing was kicking the can down the road to be picked up by future taxpayers / future debt.
It was genius... And deceptive as fck.
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https://thehill.com/homenews/campaign/4884701-trump-salt-deduction-cap/
Jeesh.
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https://thehill.com/homenews/campaign/4884701-trump-salt-deduction-cap/
Jeesh.
I don't like that one bit. Leave it in place.
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I don't like that one bit. Leave it in place.
Same here.
The article states that in high tax blue states the government does a lot for their citizens. Ok, but in lower tax red states the people are left to do those things themselves and they don't get to deduct private expenditures so why should people in high tax states be able to deduct payments for the same services?
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Exactly.
SALT coming hurt us badly when we lived in Illinois. Now it doesn't matter at all to us. No state income tax and our property tax bill just went DOWN to $3,200.
Our property taxes alone were $15,000 and I'm not sure what the hell WE got from that.
Then we each were paying 5 percent state income tax in our prime earning years. I'm not sure what the hell WE got from that.
Not to mention a 10.5 percent sales tax.
F Illinois and the rest of those states. People vote for that shit, and they can live with it.
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Exactly.
SALT coming hurt us badly when we lived in Illinois. Now it doesn't matter at all to us. No state income tax and our property tax bill just went DOWN to $3,200.
Our property taxes alone were $15,000 and I'm not sure what the hell WE got from that.
Then we each were paying 5 percent state income tax in our prime earning years. I'm not sure what the hell WE got from that.
Not to mention a 10.5 percent sales tax.
F Illinois and the rest of those states. People vote for that shit, and they can live with it.
Thus the beauty of Federalism.
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Yet many of those blue states are funding red states. https://worldpopulationreview.com/state-rankings/donor-states
California, in fact, is the state that gets back the 7th-lowest percentage of federal dollars compared to what our state gives to DC. We get back, as a state, only 65 cents on the dollar in benefits compared to what we actually pay. Illinois is even worse at only 60 cents. And you criticize us.
I'd rather you just say thank you, and be on your way.
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thank you
percentages be damned
states like North & South Dakota don't get much
Fly over states
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Yet many of those blue states are funding red states. https://worldpopulationreview.com/state-rankings/donor-states
California, in fact, is the state that gets back the 7th-lowest percentage of federal dollars compared to what our state gives to DC. We get back, as a state, only 65 cents on the dollar in benefits compared to what we actually pay. Illinois is even worse at only 60 cents. And you criticize us.
I'd rather you just say thank you, and be on your way.
You choose to live there. Federalism applies to you, too. Move if you don't like it.
But I'll be generous and say, "Thanks for the loot, keep it coming. U-S-A! U-S-A!"
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The flip flop is on both sides.
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Yet many of those blue states are funding red states. https://worldpopulationreview.com/state-rankings/donor-states
California, in fact, is the state that gets back the 7th-lowest percentage of federal dollars compared to what our state gives to DC. We get back, as a state, only 65 cents on the dollar in benefits compared to what we actually pay. Illinois is even worse at only 60 cents. And you criticize us.
I'd rather you just say thank you, and be on your way.
You could pretend to be me and simply GTFO.
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I'd rather you just say thank you, and be on your way.
Great Points and astute observations, thank you Col. Nathan R. Jessep
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You want the truth?
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would youse smart fellas hurry up and resolve this Fed Debt and Deficit issue already
F Illinois and the rest of those states. People vote for that shit, and they can live with it.
It gave the public the belief that we were forward-thinking and protecting Social Security for the future, by putting that money in the SSTF. But since that money was being immediately spent and replaced by treasury bills, it meant that all we were doing was kicking the can down the road to be picked up by future taxpayers / future debt.
It was genius... And deceptive as fck.
Politically, when R's took Congress (both houses) in the 1994 elections then Clinton held the WH you had a situation where they were fighting and not wanting each other to get credit for any major new initiatives so basically not much happened and as it turns out, that is cheap.
I do remember welfare reform and shrinking of the military at that time, but as we've stated the # 1 cause of the debts and deficits are entitlements. Were the entitlements of the era much smaller than they are today? And if so, was the federal government able to just cut discretionary spending and get things under control?
Or was it a mixture of the economy being supercharged, bringing in more taxes, at the same time the gov't made modest cuts and these factors combined to create the surplus? I do remember that after W got elected, it didn't take long at all to start running deficits again. Blame 9/11 or the GWT (Global War on Terror), but it seems like we hit GO and never looked back.
See I do not understand all of this I do understand the illicit government grifting starts by seemingly bending me over every April like Ned Beatty in Deliverance. How they spin, disperse, shuffle all of this in their parlor tricks and confidence games is unfathomable to anyone in the middle class who has had to live within their means, earn their own way and work into their 60's. It appears their political skills are to deceive vulnerable believers taking to the tune of hundreds of millions/billions of dollars. How these stewards of our savings siphon all this off to the reprobates in the defense industry, umbrellas for government employees and the beneficences at the border that neither earned, needed or deserved this haul is not only unrepresentative but in fact deviant
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Wasteful?
https://twitter.com/BrendanCarrFCC/status/1836435062994121053?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1836435062994121053%7Ctwgr%5E%7Ctwcon%5Es1_&ref_url= (https://twitter.com/BrendanCarrFCC/status/1836435062994121053?ref_src=twsrc^tfw|twcamp^tweetembed|twterm^1836435062994121053|twgr^|twcon^s1_&ref_url=)
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Bead Program
I'm hoping to make some money - next year
so many strings attached that many service providers are not willing to take the money
and yes, it takes years for this stuff to trickle down to the states to be distributed
it's because the Fed government knows nothing about what they are doing
they have good intentions but, .......... they are ignorant and don't know who to trust with the money
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Bead Program
I'm hoping to make some money - next year
so many strings attached that many service providers are not willing to take the money
and yes, it takes years for this stuff to trickle down to the states to be distributed
it's because the Fed government knows nothing about what they are doing
they have good intentions but, .......... they are ignorant and don't know who to trust with the money
If you open it up and actually read the letter from the Senators, it will shed some light on the how and why.
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If you open it up and actually read the letter from the Senators, it will shed some light on the how and why.
Feels made up. Which given the timing, probably is.
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I understand
Fed has been pushing for broadband builds for years
they could have followed past programs that have evolved over time and work decently. ACAM and NOFA
They decided to go a completely different route with agencies that have zero experience and no good way to get things done
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Feels made up. Which given the timing, probably is.
It's real. I checked it out before I posted it.
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I see no reason to expect Congress to cut spending for obvious reasons. I also see little hope higher tax rates will generate much additional revenue.
Ergo, the period of massive Federal deficits will continue year after year, until it can't. At best, economic growth will start to reduce debt as a percent of GDP a bit, maybe even under unity, BUT a recession will massively change that possibility to being horrible.
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It's real. I checked it out before I posted it.
I mean their reasoning, which after looking into it a bit, seems like mostly fluff.
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Either folks have been hooked up and this is false, or they haven't.
What Did 'Broadband Czar' Harris Do With the $40 Billion Appropriated for Internet? (townhall.com) (https://townhall.com/tipsheet/saraharnold/2024/09/18/broadband-czar-harris-accused-of-mismanaging-federal-initiatives-n2644993)
This is a right wing "news" item on this. Maybe they have yet to spend any money. Maybe some folks were hooked up. I don't know.
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https://twitter.com/elonmusk/status/1837313606532190351?s=61
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All the talk is fine and dandy, but I personally like checking to see if anyone has a realistic "plan" anywhere, and nobody does.
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seems all the big problems are too big to be solved
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the money hasn't hooked anyone up yet
nothing released in Iowa, Nebraska, South Dakota, North Dakota, Minnesooota, Wisconsin, Montana, Colorado, or KAnsas yet
not sure about all other states, but...........
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seems all the big problems are too big to be solved
They could in theory be solved, or at least "addressed" in some fashion, but not without way way way more pain than the voters would tolerate. So, we get nice sounding verbiage instead.
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very poor leadership by politicians
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Nearly all politicians want first to be reelected. That means saying things that attract voters, and avoiding things that do the reverse. "We" elect'em. They all promise something glorious if only we reelected them, and disaster if their opponent wins.
It's an inherent System flaw.
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selfishness is very poor leadership
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If some real leader ran against a real politician, he'd lose almost without exception.
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I'm not certain of that
perhaps I'm just hopeful
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"Politician" shouldn't be a career. It should be a temporary duty from your career. It's not complicated.
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"Politician" shouldn't be a career. It should be a temporary duty from your career. It's not complicated.
Well, I might disagree. If you're responsible for making the laws that govern the lives of 340M people, it would actually make a lot of sense for that to be a viable career. That we should really have hardcore experts in that job.
Of course, we don't have experts. We have politicians. So we're still screwed.
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You can be a paid intern/protege under your predecessor before you serve your time, for a year or however long is deemed appropriate.
We could have knowledgeable people before they're tabbed for gov't service, if we made it a priority.
If if if.
The need/want to be re-elected IS a gigantic problem. Simply removing that would automatically help with things. Also, lawmakers' lives are largely literally sitting in a cubicle across from the Capitol building working the phone for constant donations. It would eliminate the need for that and they could actually focus on lawmaking.
Looking for ways to change things for the better is more productive than 'nuh-uh-ing' everything. I'm very guilty of that one. But when it comes to the government and simple, sound, logical improvements, I don't find it difficult at all.
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I find hand waving about how things SHOULD BE to be nonproductive.
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Right. Just keep things how they are. Great way to improve them.
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But when it comes to the government and simple, sound, logical improvements, I don't find it difficult at all.
Because you refuse to admit that most things are FAR more complicated than you believe them to be...
There is always a well-known solution to every human problem—neat, plausible, and wrong. - H.L. Mencken
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Because you refuse to admit that most things are FAR more complicated than you believe them to be...
There is always a well-known solution to every human problem—neat, plausible, and wrong. - H.L. Mencken
A new idea that needs to be fleshed out > a demonstrably broken system
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A new idea that needs to be fleshed out > a demonstrably broken system
That's cool. Flesh it out, then.
You want a government run by [unelected?] technocrats who are only there a short time, then replaced by new ones when they go back to their day jobs.
Fine. Tell us how we select them, and why? Tell us how your idea will be better.
You're talking about a massive restructuring of our entire government. You're gonna have to bring it. Not just complain that we don't immediately agree.
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I don't need anyone to agree to find it a good idea. It's a good idea whether you agree or not.
Nor do I have to flesh it out, because I'm a random a-hole on an online message board. I'm nobody, just like you.
Identifying who and when a citizen is tabbed for service, there may be prerequisites...or not. It may be voluntary...or not. Perhaps people could specify which sector they'd prefer to serve in.
It's true that there's a ton of different little things that would have to be decided, but that's not a good reason to automatically dismiss a big idea.
Maybe no term limits is like Sam Howell, QB, UNC. And maybe my idea is Drake Maye. Or maybe it's an anonymous bum nobody. But this isn't really the place where that will be revealed and I don't desire to spend the time figuring out which it is, because I'm well aware of my irrelevance.
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Amazing silliness and immaturity.
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moveon.org
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Right. Just keep things how they are. Great way to improve them.
I think everyone here would appreciate real ideas and improvements, but "People should be smarter" and "Things should change in politics" are simply childish notions. Yeah, it'd be nice if that happened, but there clearly are reasons why they won't. You ignore a lot of hard realities and just say "Things should be different.".
OK then.
We should be emitting less CO2. Is that a plan? Is that some practicable solution to a problem? No, it's an aspiration, a wish, something devoid of any serious thought or consideration. WHY do humans emit a lot of CO2? What can be done practicably to limit that? Wishing? Setting some goal with no enablement?
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How State and Local Government Employees are Covered by Social Security and Medicare (ssa.gov) (https://www.ssa.gov/pubs/EN-05-10051.pdf)
At one time, Social Security didn’t include any of these employees. Over the years, the law changed. Most employees have Social Security protection, because their states have special agreements with us called “Section 218 agreements.” Congress passed a law in July 1991 extending Social Security on a mandatory basis to most state and local employees. These are employees not covered by an agreement or a Social Security equivalent public pension system.
My dad worked for the state / federal government in the Department of Agriculture his entire working career. He paid into a pension plan instead of Social Security which was not even offered until a couple of years before he retired (after 30+ years) so he figured it was not even worth doing so stuck with his pension which actually was really great - my mom didn't work long enough to get SS, so they lived on his pension and when he died, she got half of the pension monthly and had a bunch of annuities which for her was enough as their home was paid for. She was able to keep her BC/BS insurance which in addition to Medicare paid for her care in the nursing home she eventually went to. There was enough left over for each of us four kids to get a pretty nice cash inheritance (which my sister and I pooled together and bought our mobile home). Still, we both live on SS alone and we still have a couple of years before my hubby can get it early. Just wish we were all better at retirement planning so it's a paycheck to paycheck deal for us with no room for emergencies. Yay! What an adventure. Scared to think of what is going to happen with our SS at this point.
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I’m cautiously optimistic that some of the people trying to help the government will be able to shore up SS. I’m also fully cognizant that there will be some short term pain and consequences, but something has to be done.
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I’m cautiously optimistic that some of the people trying to help the government will be able to shore up SS. I’m also fully cognizant that there will be some short term pain and consequences, but something has to be done.
I remember reading your thread when you first started it, but then I didn't keep up with it, so yesterday I caught up on the whole thing. I have a random thought or two, but to start with your quoted post here, I lean more pessimistic in general and I tend to side with Cincy here. I have major doubts that this will ever get fixed because the politician who tries will get ousted with record speed. This country has already voted itself into managed decline, and my confidence is high we'll vote it off a cliff too. The public won't put up with short-term pain and will keep whistling past the graveyard, blindly believing that the Piper never has to be paid, until it all irreparably hits the fan.
Another big topic for a while was SS's solvency where @betarhoalphadelta (https://www.cfb51.com/index.php?action=profile;u=19) and CD were discussing what's being done with funds paid into SS. I won't pretend to know what happens to it--that's not something I've ever learned about or paid attention to--but they seemed to agree about it going into bonds. Just going off of what they were talking about, brad seemed to make the better point there.....it looks like a case of double-spending where the government is trying to show the same tax dollars (debits) under two different expenditures (credits). It's accounting BSery, and I don't see how anything good comes from it long term.
The other thing that caught my attention was some comments you (Gigem) made--I think it was you--about wages and cost of living. How income in the low $100k's isn't that much anymore. I was glad to hear you say it because I've been scratching my head over exactly that for a while now. My cost-of-living mental index is still stuck in 2005, it seems, because what my wife and I make jointly affords us a pretty modest life according to what I think our income ought to afford us. Granted, our budget includes a lot of stashing away into a savings account I keep separated with a spreadsheet for upcoming expenses. I know a lot of people don't do that, and if we didn't do it, we'd be able to loosen the belt considerably on discretionary spending. But I don't know how else to run my life......I only save for things that I know are coming, so that they don't wipe us out on the months when they finally show up. Most every recurring annual expense (or any length of cycle) I save precisely for, and a lot of other things I estimate (pretty well, I have to say). Things like new tires.....I know about how many miles we drive each week, how many miles we can expect to get out of our tires, and what tires cost, so I divide that out into monthly savings contributions in a high-interest savings account, and when it comes time to buy new tires, it's not a meteor strike on the budget. We don't really feel it. So again, I know a lot of people don't do that, and we'd be able to "do more stuff and afford more things" if we didn't do it, but I just don't understand what people do if they don't save and then an irregular budget-buster hits them. Like, I know the damn dryer is gonna break again and I'm gonna have to call Sears to come fix it. I know stuff is gonna break or need repairing around the house or the yard. I know Christmas is coming. And I know about how much we're likely to spend on that stuff, and how often, so I just spread it out over "payments" in the form of monthly savings, so we're not crushed or putting stuff on credit cards when the time comes. That's a nice peace of mind to have, but it has left me bumfuzzled more than once, that we make what I've always thought was pretty decent money for our area, but it doesn't seem like we keep up with the Jones', so to speak.
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Another big topic for a while was SS's solvency where @betarhoalphadelta (https://www.cfb51.com/index.php?action=profile;u=19) and CD were discussing what's being done with funds paid into SS. I won't pretend to know what happens to it--that's not something I've ever learned about or paid attention to--but they seemed to agree about it going into bonds. Just going off of what they were talking about, brad seemed to make the better point there.....it looks like a case of double-spending where the government is trying to show the same tax dollars (debits) under two different expenditures (credits). It's accounting BSery, and I don't see how anything good comes from it long term.
I'm not going to get into the politics of it, but here's how the social security trust fund (SSTF) works:
- When Social Security is in surplus, i.e. the payroll tax brings in more money than they need to pay into benefits, the SSA buys treasury bonds and deposits them in the SSTF. The money used to buy those bonds goes into the general fund and is then spent by whatever Congress spends money on. Essentially because the general fund is ALWAYS in deficit, it offsets what would ordinarily require the treasury to sell debt to the public to finance that spending.
- When Social Security is in deficit, i.e. the payroll tax is too small to cover benefits, the SSA redeems those treasury bonds from the SSTF for cash. Since the government is ALWAYS in deficit, that money can't just come from the general fund. The Treasury sells debt to the public to finance paying back the debt to the SSA.
None of that is political. It's just fact.
Social Security is currently in deficit. Which means that a portion of what we're paying to retirees/beneficiaries is not being paid by our social security payroll taxes, but it being financed by new government debt. Because the surplus "savings" in the past were already spent. The T-Bills in the SSTF are just promises that we'll find a way [by selling new debt to the public] to fund the program.
The only meaning behind the SSTF is that by law, when it is exhausted (currently projected ~2035), the SSA is demanded to restrict benefits to be equal to their payroll tax income. But right now they're ALREADY paying out more money than they're taking in, so you can (and I do) argue that the system is not exactly "shored up".
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The only meaning behind the SSTF is that by law, when it is exhausted (currently projected ~2035), the SSA is demanded to restrict benefits to be equal to their payroll tax income. But right now they're ALREADY paying out more money than they're taking in, so you can (and I do) argue that the system is not exactly "shored up".
When the Japanese surrendered at the end of WWII, Emperor Hirohito broadcast a message to his people explaining the surrender. Within that message he said that "The War situation has developed not entirely to Japan's advantage".
Your comment that "the (SS) system is not exactly 'shored up'" rivals Hirohito's for greatest understatement of all time.
I think that understanding what is coming in and what is going out is important. The inflows are SS and Medicare Taxes. These are:
- 6.2% SS Tax charged to Employees
- 6.2% SS Tax charged to Employers
- 1.45% Medicare Tax charged to Employees
- 1.45% Medicare Tax charged to Employers
- 15.3% total tax on wages
In both cases, self-employed individuals pay both halves. There is a cap on SS Taxes which is $176,100 for 2025. Income beyond that is NOT taxed for SS purposes but the cap does NOT apply to Medicare Taxes.
IMHO, the distinction between SS and Medicare is silly. The money is in one giant system so breaking them out separately serves only as a legal fiction. From an accounting standpoint, they are one and the same.
Outflows are in four main categories:
- Old Age Medical Benefits - This is the Medicare portion.
- Disability - This is the least considered of the outflows since most of us will never receive anything from this. More on disability later.
- Old Age Minimum Pension - This is basically a welfare program as it has no relation to earnings.
- Old Age Pension - This portion of the old age pension is loosely based on the amount that you paid in. Ie, if you earn around the cap of $176,100 you'll get a larger pension than if you earn a fraction of that, say $35,000.
Disability:
I pointed out earlier that when my wife as an addiction counselor for the County Health Department, nearly all of her clients were on SS Disability and their disability WAS their addiction. Someone, I think it was @Gigem (https://www.cfb51.com/index.php?action=profile;u=1706) said that he had heard of that and that around his location those are called "Crazy checks". Same thing here, my wife's clients all called those, "crazy checks".
I hope this isn't getting too political but IMHO, this is tantamount to fraud. If Trump/Musk really want to trim Government fraud, waste, and abuse, they should tackle SS Disability.
I also think that this would be a massive win politically. How many voters actually think that SS should pay people to sit around and get high?
Trying to keep my own ideology out of it, one of the problems that SS has encountered ever since it was established is that there has always been disagreement and conflict over what exactly it is. Is it an insurance/pension system or is it a welfare system. The reality is that it is a little bit of both. When they established it in the 1930's they immediately started paying out benefits which suggests that it is a welfare program rather than an insurance/pension system because insurance/pension systems only pay out to people who paid in. OTOH, there is a relationship between what you pay in and what you receive so that suggests that it is an insurance/pension system. On the other, other hand, the charge for Medicare is a flat percentage of your earnings which suggests welfare program because an insurance system would need to charge per person.
I came to the conclusion a long time ago that the reality is that SS/Medicare are both a welfare program and an insurance/pension system.
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In both cases, self-employed individuals pay both halves.
I've always agreed with the argument that W-2 employees also pay both halves. The money an employer pays to the government for that is money he's not paying you, and otherwise could be/would be. The fact that the government is taking it from you before it ever makes it to a category that we consider "deductions" is irrelevant. It's money that would otherwise be part of fair compensation for labor.
- Disability - This is the least considered of the outflows since most of us will never receive anything from this. More on disability later.
I detailed this here several years ago, I'm pretty sure, so I won't do it extensively again here. But back around 2012 I checked on getting disability and Medicaid. That was my crash-course introduction to the way the system worked, and it made me beyond sad and frustrated. I'll keep it short since I already ranted about it back then, but the bottom line was once they had me, they weren't interested in letting me go. I wanted help to get past medical problems with the goal of re-entering the workforce. They wanted me to permanently alter the course of my life, with a bent towards holding my hand out, on the dole. Because I wouldn't make that decision and also because I had been financially responsible prior to that, I was eligible for Jack Squat amount of help. The head of the local SS office actually told me she admired my attitude, but "the system just wasn't set up for people like me."
And that's not even getting into her comments that if I weren't Caucasian, I probably would've been able to get some help anyway. In my case--and I'm talking about my ethnicity--she said I'd need to blow out my savings account either through sheer waste (or, I realized, I could ultimately retain the money via fraud, which I was not willing to commit). So yeah.....I got no help from disability or Medicaid, when I felt like I was exactly the kind of person it should be set up to help.
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I'm already at the point (just turned 50), that my only real goal left in life is to save enough to retire.
My wife is really thrilled when I nitpick every one of her nonsensical purchases with the statement --- "You know that I'd like to retire one day, right?"
She's actually not too bad on the "DAF" expenditures, though the 2 new grandkids has exacerbated the poor decision making.
Another of her favorite jgvol quips: "We aren't the parents."
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I've always agreed with the argument that W-2 employees also pay both halves. The money an employer pays to the government for that is money he's not paying you, and otherwise could be/would be. The fact that the government is taking it from you before it ever makes it to a category that we consider "deductions" is irrelevant. It's money that would otherwise be part of fair compensation for labor.
Oh I definitely agree. Your employer doesn't care what you GET, they care what you COST. Conversely, you don't care what you COST, you care what you GET.
I detailed this here several years ago, I'm pretty sure, so I won't do it extensively again here. But back around 2012 I checked on getting disability and Medicaid. That was my crash-course introduction to the way the system worked, and it made me beyond sad and frustrated. I'll keep it short since I already ranted about it back then, but the bottom line was once they had me, they weren't interested in letting me go. I wanted help to get past medical problems with the goal of re-entering the workforce. They wanted me to permanently alter the course of my life, with a bent towards holding my hand out, on the dole. Because I wouldn't make that decision and also because I had been financially responsible prior to that, I was eligible for Jack Squat amount of help. The head of the local SS office actually told me she admired my attitude, but "the system just wasn't set up for people like me."
And that's not even getting into her comments that if I weren't Caucasian, I probably would've been able to get some help anyway. In my case--and I'm talking about my ethnicity--she said I'd need to blow out my savings account either through sheer waste (or, I realized, I could ultimately retain the money via fraud, which I was not willing to commit). So yeah.....I got no help from disability or Medicaid, when I felt like I was exactly the kind of person it should be set up to help.
I haven't dealt with SS but I've spent years dealing with BWC and JFS (Unemployment). My experience has led me to the belief that somewhere in the bylaws of both organizations there are instruction that:
- In the case of completely legitimate claims, this organization will scream, kick, yell, drag our feet, and generally impede the claim to the extent possible, and
- In the case of ridiculous, bogus, or fraudulent claims, this organization will do everything possible to get the claim paid as quickly as possible.
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I detailed this here several years ago, I'm pretty sure, so I won't do it extensively again here. But back around 2012 I checked on getting disability and Medicaid. That was my crash-course introduction to the way the system worked, and it made me beyond sad and frustrated. I'll keep it short since I already ranted about it back then, but the bottom line was once they had me, they weren't interested in letting me go. I wanted help to get past medical problems with the goal of re-entering the workforce. They wanted me to permanently alter the course of my life, with a bent towards holding my hand out, on the dole. Because I wouldn't make that decision and also because I had been financially responsible prior to that, I was eligible for Jack Squat amount of help. The head of the local SS office actually told me she admired my attitude, but "the system just wasn't set up for people like me."
And that's not even getting into her comments that if I weren't Caucasian, I probably would've been able to get some help anyway. In my case--and I'm talking about my ethnicity--she said I'd need to blow out my savings account either through sheer waste (or, I realized, I could ultimately retain the money via fraud, which I was not willing to commit). So yeah.....I got no help from disability or Medicaid, when I felt like I was exactly the kind of person it should be set up to help.
I share a very similar, almost verbatim experience, after a devastating leg break in 2009. I was recently divorced, and already almost financially wiped out --- and had recently started a new job a month prior.
My insurance was cancelled, checking and savings wiped, and had to move in with my mother at 34 years old. I didn't move from a recliner for 6 months, and had to learn to walk again.
No help for me from the system ( i was told exactly the same as you) --- I was too productive a member of society. I only needed a little help to get me thorough -- NOPE, don't qualify. I asked --- If I don't, then who does? I would have thought i was the poster boy for temporary relief. 18 years paid in, how bout a couple months of a hand up?
Because I couldn't get assistance, I forged a doctor's waiver to return to work, and turned it in to the HR dept at work. I drove left footed for a couple months, throwing my right leg with giant cast/walking boot, over the center console, and risked everyone in Memphis's life, because the system rejected me. I did what I had to do to earn a living.
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I've always agreed with the argument that W-2 employees also pay both halves. The money an employer pays to the government for that is money he's not paying you, and otherwise could be/would be. The fact that the government is taking it from you before it ever makes it to a category that we consider "deductions" is irrelevant. It's money that would otherwise be part of fair compensation for labor.
you have a different opinion of employers than most of us.
Just because an employer COULD pay the employee the money that otherwise would be going to the government certainly doesn't mean that the employer wouldn't keep it to spend on something other than wages/compensation
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I detailed this here several years ago, I'm pretty sure, so I won't do it extensively again here. But back around 2012 I checked on getting disability and Medicaid. That was my crash-course introduction to the way the system worked, and it made me beyond sad and frustrated. I'll keep it short since I already ranted about it back then, but the bottom line was once they had me, they weren't interested in letting me go. I wanted help to get past medical problems with the goal of re-entering the workforce. They wanted me to permanently alter the course of my life, with a bent towards holding my hand out, on the dole. Because I wouldn't make that decision and also because I had been financially responsible prior to that, I was eligible for Jack Squat amount of help. The head of the local SS office actually told me she admired my attitude, but "the system just wasn't set up for people like me."
And that's not even getting into her comments that if I weren't Caucasian, I probably would've been able to get some help anyway. In my case--and I'm talking about my ethnicity--she said I'd need to blow out my savings account either through sheer waste (or, I realized, I could ultimately retain the money via fraud, which I was not willing to commit). So yeah.....I got no help from disability or Medicaid, when I felt like I was exactly the kind of person it should be set up to help.
I have a disturbing story regarding my daughter being "encouraged" to sign up for Medicaid. After she showed them the insurance card of my company that she was fully covered.
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I'm already at the point (just turned 50), that my only real goal left in life is to save enough to retire.
My wife is really thrilled when I nitpick every one of her nonsensical purchases with the statement --- "You know that I'd like to retire one day, right?"
She's actually not too bad on the "DAF" expenditures, though the 2 new grandkids has exacerbated the poor decision making.
Another of her favorite jgvol quips: "We aren't the parents."
1975 or 1974? I'm 1975.
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(https://i.imgur.com/XXQdjif.png)
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you have a different opinion of employers than most of us.
Just because an employer COULD pay the employee the money that otherwise would be going to the government certainly doesn't mean that the employer wouldn't keep it to spend on something other than wages/compensation
Most of you know I run a business as well as my regular 40. I make payroll out every week, I see what my employees cost me, their wages and what I have to pay for SS and Medicare. I only care about what they cost me, and anytime I think about giving somebody a raise, I very well consider the overall cost when I factor in that 6.2% and 1.4% of SS and MC.
FWIW, most of my guys are rather low paid, like $13-15 per hour. Wanna take a guess at how much I spend in payroll every week, OT included? I have 4 full time employees. It's by far my number one expense, other than COGS.
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I have a disturbing story regarding my daughter being "encouraged" to sign up for Medicaid.
Do we get to hear it?
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I remember reading your thread when you first started it, but then I didn't keep up with it, so yesterday I caught up on the whole thing. I have a random thought or two, but to start with your quoted post here, I lean more pessimistic in general and I tend to side with Cincy here. I have major doubts that this will ever get fixed because the politician who tries will get ousted with record speed. This country has already voted itself into managed decline, and my confidence is high we'll vote it off a cliff too. The public won't put up with short-term pain and will keep whistling past the graveyard, blindly believing that the Piper never has to be paid, until it all irreparably hits the fan.
Another big topic for a while was SS's solvency where @betarhoalphadelta (https://www.cfb51.com/index.php?action=profile;u=19) and CD were discussing what's being done with funds paid into SS. I won't pretend to know what happens to it--that's not something I've ever learned about or paid attention to--but they seemed to agree about it going into bonds. Just going off of what they were talking about, brad seemed to make the better point there.....it looks like a case of double-spending where the government is trying to show the same tax dollars (debits) under two different expenditures (credits). It's accounting BSery, and I don't see how anything good comes from it long term.
The other thing that caught my attention was some comments you (Gigem) made--I think it was you--about wages and cost of living. How income in the low $100k's isn't that much anymore. I was glad to hear you say it because I've been scratching my head over exactly that for a while now. My cost-of-living mental index is still stuck in 2005, it seems, because what my wife and I make jointly affords us a pretty modest life according to what I think our income ought to afford us. Granted, our budget includes a lot of stashing away into a savings account I keep separated with a spreadsheet for upcoming expenses. I know a lot of people don't do that, and if we didn't do it, we'd be able to loosen the belt considerably on discretionary spending. But I don't know how else to run my life......I only save for things that I know are coming, so that they don't wipe us out on the months when they finally show up. Most every recurring annual expense (or any length of cycle) I save precisely for, and a lot of other things I estimate (pretty well, I have to say). Things like new tires.....I know about how many miles we drive each week, how many miles we can expect to get out of our tires, and what tires cost, so I divide that out into monthly savings contributions in a high-interest savings account, and when it comes time to buy new tires, it's not a meteor strike on the budget. We don't really feel it. So again, I know a lot of people don't do that, and we'd be able to "do more stuff and afford more things" if we didn't do it, but I just don't understand what people do if they don't save and then an irregular budget-buster hits them. Like, I know the damn dryer is gonna break again and I'm gonna have to call Sears to come fix it. I know stuff is gonna break or need repairing around the house or the yard. I know Christmas is coming. And I know about how much we're likely to spend on that stuff, and how often, so I just spread it out over "payments" in the form of monthly savings, so we're not crushed or putting stuff on credit cards when the time comes. That's a nice peace of mind to have, but it has left me bumfuzzled more than once, that we make what I've always thought was pretty decent money for our area, but it doesn't seem like we keep up with the Jones', so to speak.
The only person that I know of that has actually put their money where their mouth is is DJT and Elon Musk. Dozens of politicians over that time have held hearing after hearing, political rally's, everything under the sun except to DO SOMETHING.
Elon has said that the database is full of errors and outright fraud. Do you believe him? I don't know, he seems to be so unhinged at times I wonder if he's just gone plain nuts. He claims they have started marking deceased anybody over 120 years old. He didn't say that they were still getting a check, he just said that they were marked as deceased. Yes, I'm aware that he might not be telling the whole truth because some people claim that the way the database works doesn't necessarily mean that somebody is actually over 120, but whatever. Next they're making people check in with the SSA and verify they are who they say they are. I'm very interested in where we end up with SS after a year or two with regards to expenditures. I personally feel like the whole system is being massively defrauded, and probably a lot of unintentional waste.
Recently I read that he's trying to re-do the SSA database QFH, which many people have derided as impossible. They say it's written in COBOL (I actually know some of this code because we used it in our company and lots of system still run on it). I think that if the only human alive that has successfully landed a rocket the size of a large building says he can do it he probably can. Will there be problems? Abso-fuckin-lutely. But in my view, we have to do this now or it will just get worse by the year. No future politician will have the balls to do it either.
I'm a frequent user of X (twitter), and although Elon's behavior on there has at times been straight weird, he says over and over that the USA is bankrupt, the debt is out of control, we have to do something. It's like he's the only person who gets it.
Next he's trying to verify that the people that are getting SS are who they say they are.
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I've typed it out here a couple times. I dislike typing.
Maybe I can find it to copy&paste!
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1975 or 1974? I'm 1975.
12/27/74
Barely made it.
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The only person that I know of that has actually put their money where their mouth is is DJT and Elon Musk. Dozens of politicians over that time have held hearing after hearing, political rally's, everything under the sun except to DO SOMETHING.
Elon has said that the database is full of errors and outright fraud. Do you believe him? I don't know, he seems to be so unhinged at times I wonder if he's just gone plain nuts. He claims they have started marking deceased anybody over 120 years old. He didn't say that they were still getting a check, he just said that they were marked as deceased. Yes, I'm aware that he might not be telling the whole truth because some people claim that the way the database works doesn't necessarily mean that somebody is actually over 120, but whatever. Next they're making people check in with the SSA and verify they are who they say they are. I'm very interested in where we end up with SS after a year or two with regards to expenditures. I personally feel like the whole system is being massively defrauded, and probably a lot of unintentional waste.
Recently I read that he's trying to re-do the SSA database QFH, which many people have derided as impossible. They say it's written in COBOL (I actually know some of this code because we used it in our company and lots of system still run on it). I think that if the only human alive that has successfully landed a rocket the size of a large building says he can do it he probably can. Will there be problems? Abso-fuckin-lutely. But in my view, we have to do this now or it will just get worse by the year. No future politician will have the balls to do it either.
I'm a frequent user of X (twitter), and although Elon's behavior on there has at times been straight weird, he says over and over that the USA is bankrupt, the debt is out of control, we have to do something. It's like he's the only person who gets it.
Next he's trying to verify that the people that are getting SS are who they say they are.
I could be wrong about this and I admit I've done no hard math. But assuming Elon/DOGE shored up everything with SS they intend to, I'm dubious that the expenditures of SS/Medicare/Medicaid combined could be reduced enough to help the country's debt situation. There would have to be massive cuts to the entitlement programs just to balance the budget. Paying down the debt? That's even more cuts.
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Do we get to hear it?
the short version is that some mental health service or prescription wasn't covered by my health insurance. the folks there "helped" her fill out the forms and successfully put her on Medicaid. This was over ten years ago. She's still on it.
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12/27/74
Barely made it.
You are old, not like @Gigem (https://www.cfb51.com/index.php?action=profile;u=1706) and I, born in 1975. LoL.
We (born in 70-75) came along at the trough of the baby bust. Births in the US bottomed out in the mid-1970's.
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I could be wrong about this and I admit I've done no hard math. But assuming Elon/DOGE shored up everything with SS they intend to, I'm dubious that the expenditures of SS/Medicare/Medicaid combined could be reduced enough to help the country's debt situation. There would have to be massive cuts to the entitlement programs just to balance the budget. Paying down the debt? That's even more cuts.
I think you are right.
Federal Expenditures are so incredibly massive that cutting a few Billion here and there doesn't amount to enough to even move the needle.
I think that if you did away with all the actual fraud (things like people collecting for deceased relatives) AND all of the stuff that I consider fraudulent (addicts getting 'crazy checks') it still probably wouldn't get the system anywhere close to balanced.
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I wonder what it would take for the dollar to no longer be the world's reserve currency. There seems to be disagreement about the likelihood or even possibility of that. IMO, anything is at least possible.
I don't think the average person understands what that would mean in our current situation. I understand it better than most, and I don't know that I fully understand it either. To Gigem's original point, the answer to "What am I working for?" becomes "Nothing."
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I wonder what it would take for the dollar to no longer be the world's reserve currency. There seems to be disagreement about the likelihood or even possibility of that. IMO, anything is at least possible.
To paraphrase Winston Churchill, I think the Dollar is the world's reserve currency because it is the worst reserve currency except all the others.
At the end of the day there has to be a "world's reserve currency" and for the last century or so the US Dollar has been better than the others. It continues to be.
I agree that it is possible that it will cease to be and that would be bad for our standard of living but I also think it is very unlikely that it would change overnight. More likely, I think, is that it can and probably will change slowly so it will not be some sudden catastrophe.
If you were, lets say, a well off person living in some third-world country. "Well off" here means enough cash to live the rest of your life but not Musk/Buffet level wealth. Assuming that you don't altogether trust your home government, where would you put your cash? For all of America's problems, I'd still put mine in Dollars though I might hedge my bets with some EU and Asian stocks mixed in.
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I could be wrong about this and I admit I've done no hard math. But assuming Elon/DOGE shored up everything with SS they intend to, I'm dubious that the expenditures of SS/Medicare/Medicaid combined could be reduced enough to help the country's debt situation. There would have to be massive cuts to the entitlement programs just to balance the budget. Paying down the debt? That's even more cuts.
I don't know Mike. But you have to start somewhere, and do SOMETHING. We know exactly what it looks like to do NOTHING.
Cut the outright waste and fraud like people that are clearly dead, or people that are suspected dead. That's #1. Then cut the people who are getting what medina and I call crazy checks. Fearless just gave an example of somebody he knows getting Medicare that maybe didn't deserve it or maybe doesn't still need it, I'm not sure where they are with it.
The main thing I keep coming back to is that at one time the programs were in fact solvent and working. What changed in the last 10-20-30-40 years? Life expectancy? Sure, that has went up, but I refuse to believe that alone is the primary driver.
We've said it over and over. You can cut all government discretionary spending and it's only like 20-30% of the total expenditures. SS and Medicare are the number one costs by far. In my mind the whole organization is out of control (talking about .gov). No accountability whatsoever, and nobody seems concerned in the least.
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I think you are right.
Federal Expenditures are so incredibly massive that cutting a few Billion here and there doesn't amount to enough to even move the needle.
I think that if you did away with all the actual fraud (things like people collecting for deceased relatives) AND all of the stuff that I consider fraudulent (addicts getting 'crazy checks') it still probably wouldn't get the system anywhere close to balanced.
You've got to start somewhere. Low hanging fruit first obviously. You cut and then cut some more. Eventually you will find out what you really need versus what is fluff.
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I think you are right.
Federal Expenditures are so incredibly massive that cutting a few Billion here and there doesn't amount to enough to even move the needle.
I think that if you did away with all the actual fraud (things like people collecting for deceased relatives) AND all of the stuff that I consider fraudulent (addicts getting 'crazy checks') it still probably wouldn't get the system anywhere close to balanced.
It WOULD make me feel better though.
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Again, I go back to the budget from just a few years ago, maybe when Obama was in office. The deficits back then were in the hundred billion dollar range (medina knows more than I do). Before that, Bush II, he started with a surplus, but 9-11 changed that in a hurry. Sometimes I think all those guys (Cheney and others) were secretly glad because it gave them a huge opportunity to overspend, all in the name of War on Terror.
I think it was towards the end of Obama's 2nd term when shit really started going haywire. Deficits started to hit $1 trillion and more. 2008-2012, they had the financial crisis as cover, but what really happened from 2012 to 2016?
Trump as far as I'm concerned is as full of shit as anybody about this because he really ran the deficits up in his first term. Sure, you had COVID in 2020 that drove some stuff, but he never really cared about it before then either.
So I ask, if entitlements are the largest expenditure of the federal budget what really happened from about 1999-present day? Boomers aging out en masse, retiring and getting in SS and Medicare, or what else happened?
What if Elon and DJT just focused on getting us back to the mid 2000's level of spending/deficit? Does anybody here think that it's not possible?
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I don't know Mike. But you have to start somewhere, and do SOMETHING. We know exactly what it looks like to do NOTHING.
Cut the outright waste and fraud like people that are clearly dead, or people that are suspected dead. That's #1. Then cut the people who are getting what medina and I call crazy checks. Fearless just gave an example of somebody he knows getting Medicare that maybe didn't deserve it or maybe doesn't still need it, I'm not sure where they are with it.
The main thing I keep coming back to is that at one time the programs were in fact solvent and working. What changed in the last 10-20-30-40 years? Life expectancy? Sure, that has went up, but I refuse to believe that alone is the primary driver.
We've said it over and over. You can cut all government discretionary spending and it's only like 20-30% of the total expenditures. SS and Medicare are the number one costs by far. In my mind the whole organization is out of control (talking about .gov). No accountability whatsoever, and nobody seems concerned in the least.
Well, I'd say a pretty healthy percentage of us here are concerned about it, for whatever kind of sample we represent. And I agree with you, doing something is better than doing nothing, even if it's pissing in the wind.
As for what's changed over the last 40 years.....that's probably a wide range of factors. You mentioned life expectancy. I can tell you from having recently worked in the medical field that our elderly population are becoming increasingly less healthy (actually, all demographics are). Add those two things together, and Medicare is strained much more than it used to be. It costs way more, for longer, to keep old people insured. Then factor in things like people below some version of the poverty line, illegal aliens, and decreasing states of health for the other age ranges....add those things together and Medicaid is strained much more than it used to be. Now factor in what inflation has done to the dollar over that time, coupled with poor financial planning and/or rotten luck or unfortunate circumstances by a significant portion of the aging population, and you get increased necessity for SS, or monthly help to get by in your later years. Way more than used to be necessary. And the family demographics have shifted dramatically, in addition to the younger generations not being as flexible in the help they are able to give to their own aging parents, which exacerbates the issue.
Put more simply, people need more money than they used to need, particularly in retirement, and their planning for meeting that challenge themselves has gotten worse and worse.
IMO, there is no quick or easy fix. We're talking about a societal overhaul which would have to take place over a long period of time. I applaud you if you have faith that people can collectively endure short-term pain and turn away from the easy, addictive hand of the all-providing government. I think human nature is weak, and people largely do whatever is easiest and least painful in the moment, and they'll vote out any politician who moves to cut entitlements. Even Trump explicitly campaigned on, and continues to reiterate, that he will not touch the Big 3 Entitlements. (Obviously, getting rid of fraud is a different issue than cutting benefits.)
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I don't want to derail your thread, but while we're kinda on the topic.....
I haven't heard much about cracking down on fraudulent Medicare claims. That's a different animal than fraudulent benefits. I'm talking about what legit doctors, clinics, and hospitals do....unnecessary testing, treatments, prescriptions, etc. It's a huge, huge deal....a monumental waste. There is technically a branch within Medicare whose job is to combat that, but as far as I can tell they're not very good at it.
My wife insists that the amount of bogus crap that gets ordered and charged to Medicare simply because "they can" is enormous. Doctors, imaging centers, clinics, etc. have ways of making money off everything that's done, and they have impure incentives to pad the appropriate treatments. She left one clinic she worked for because the doctor who owned the place was so rampant with his needless Medicare charges that she feared for her license if anyone ever cracked down on the clinic while she was there. (She may not be liable, but the investigation would be a stink on her license that nobody wants to go through. That kind of thing can finish you, even if you're innocent.) My job, in part, was to get insurance approvals for testing. If you have, say, Blue Cross or Cigna insurance, or something, I had to submit documentation to those companies demonstrating the necessity of a test or procedure. If a patient has Medicare, that stuff is all rubber-stamped. No documentation, no questions, no nothing. You can probably already see the problem there once you combine that with a financial incentive to push inappropriate things through.
Granted, there is a ditch on the other side of that road. I have no love for insurance companies that have invented stupid and impossible hoops to jump through so they can deny more claims. And I'm not saying that there are no reasons for why Medicare has wound up operating the way it operates. But I am saying a crap-ton of fraudulent money is paid out to shady health care providers, on the taxpayer dime.
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Again, I go back to the budget from just a few years ago, maybe when Obama was in office. The deficits back then were in the hundred billion dollar range (medina knows more than I do). Before that, Bush II, he started with a surplus, but 9-11 changed that in a hurry. Sometimes I think all those guys (Cheney and others) were secretly glad because it gave them a huge opportunity to overspend, all in the name of War on Terror.
I think it was towards the end of Obama's 2nd term when shit really started going haywire. Deficits started to hit $1 trillion and more. 2008-2012, they had the financial crisis as cover, but what really happened from 2012 to 2016?
Trump as far as I'm concerned is as full of shit as anybody about this because he really ran the deficits up in his first term. Sure, you had COVID in 2020 that drove some stuff, but he never really cared about it before then either.
So I ask, if entitlements are the largest expenditure of the federal budget what really happened from about 1999-present day? Boomers aging out en masse, retiring and getting in SS and Medicare, or what else happened?
What if Elon and DJT just focused on getting us back to the mid 2000's level of spending/deficit? Does anybody here think that it's not possible?
A few thoughts:
First, I think you really have to denominate both the deficit (annual shorfall) and the debt (cumulative) in % of GDP terms. Dollars make it impossible to compare over time. As an example, nearly all Presidents have added more to the debt than any predecessor (Clinton is a notable exception and before any pro-D's get political with that, the R's controlled Congress for the last six years that he was in office).
Percentage of GDP is the best measure, IMHO, because it is a decent measure of ability to pay. Ie, if Elon Musk owes $1 Billion to a bank somewhere well, he just got $1 Trillion from Warren Buffet for Tesla so that isn't a big deal. If I owed $1 Billion to someone well, they aren't getting that money because @medinabuckeye1 (https://www.cfb51.com/index.php?action=profile;u=1547) is absolutely unable to repay a loan that large.
It really started to get unsustainable when the massive expenditures to prop up the economy (Keynesian Economics) in the credit bubble crash in 2008 didn't completely go away. Here is a good chart (https://fred.stlouisfed.org/graph/fredgraph.png?g=1FRWm&height=490).
They only go back to the mid 1960's but the debt as a percentage of GDP was MUCH higher during and shortly after WWII then got paid down and was about 30-40% of GDP from sometime prior to the mid-1960's up until it surpassed that mark in the mid-1980's. It peaked at around 65% of GDP in early 1995 then dropped back down to around 55% at the time of 9/11. Post 9/11 the Government spent a lot of cash on stimulus and the military so it started to rise but not that the rise was VERY gradual and debt was still less than 64% of GDP when the Credit Bubble Crash and Recession hit in 2008. Then it soared quickly to around 100% in about four years. Then it was relatively stable, "only" growing from about 100% in late 2012 to about 107% right before COVID hit but then it shot up to where we are now, at about 120%.
It is pretty clear that Debt in the range of about 60% of GDP or less IS sustainable. We were at or close to 60% for almost 30 years from roughly 1990 to the 2008 crash. Now, less than 20 years later we are at double that. IMHO, debt of 120% of GDP is not sustainable.
The Baby Boomers retiring is a major factor. The Baby boom is defined as 1946-1964. I've noted before that you and I were born at the trough of the baby-bust. Here is a good chart for that (https://www.cdc.gov/nchs/data-visualization/natality-trends/index.htm). Quickly:
- There were about 3M births per year in the 1920's
- That dropped in the 1930's both due to industrialization (less farmers) and due to the depression (less money)
- The number of births per year got back to around 3M (like it had been in the 20's) in 1943-1945 then
- The number of births per year skyrocketed post-WWII. It was 3.4M in 1946 which was WAY over the prior record and peaked at 4.3M in 1957. 1964 (last year of Baby Boom) was the last year over 4M until 1989 but note that the population was vastly higher in 1989.
- The trough of the baby bust is 1973-1976 at <3.2M births per year. This is barely over the levels seen half a century earlier in the 1920's with a MUCH smaller population.
SS eligibility is at 65-67. The oldest baby boomers (born in 1946) became eligible when they turned 65 in 2011 and the last of them (born in 1964) will become eligible when they turn 67 in 2031.
The really stupid and annoying part of this is that this problem should have been abundantly obvious by 1976.
The last major reduction to SS payments was the 1983 law that raised the age from 65 to 67. This change as phased in, the age goes up two months for each birth year from 1938-1960. The rather obvious problem here is that the phase in took so long that life expectancy outpaced it.
The other problem is that nothing has been done to improve the situation since 1990. The current SS tax rate of 12.4% (split between employer and employee for employed individuals) has been in effect since 1990. Look at the rate historically (https://www.ssa.gov/oact/progdata/oasdiRates.html):
- 1% 1937-1949
- 1.5% 1950-1953
- 2% 1954-1956
- 2.25% 1957-1958
- 2.5% 1959
- 3% 1960-1961
- 3.125% 1962
- 3.625% 1963-1965
- 3.85% 1966
- 3.9% 1967
- 3.8% 1968 - Not sure if that is a typo or why they reduced it
- 4.2% 1969-1970
- 4.6% 1971-1972
- 4.85% 1973
- 4.95% 1974-1977
- 5.05% 1978
- 5.08% 1979-1980
- 5.35% 1981
- 5.4% 1982-1983
- 5.7% 1984-1987
- 6.06% 1988-1989
- 6.2% 1990-2025
The rate hasn't been increased in 35 years. Look, 35 years prior to 1990 was 1955 when the rate was 2% so in the 35 years from 1955-1990 the rate more than tripled and in the 35 years since it hasn't increased at all.
Something appears to have happened in our Governmental system. SS was always a looming disaster but for the first ~50 years of it's existence Congress increased the rate every year or every few years to stave off the catastrophe. Then after the last increase they just stopped doing that. I can't tell you why.
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Trump as far as I'm concerned is as full of shit as anybody about this because he really ran the deficits up in his first term. Sure, you had COVID in 2020 that drove some stuff, but he never really cared about it before then either.
I'm totally guessing here, but I have a suspicion that Trump subscribes to Modern Monetary Theory, or at least he did in his first term. Whether or not he would've called it that, I don't know, but he definitely seems to have been (or be) on board with its tenets.
At least I've wondered about it. I'm not bashing conservatives who voted for him, but I have always insisted he was in no way a fiscal conservative, not in his first term anyway.
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The main thing I keep coming back to is that at one time the programs were in fact solvent and working. What changed in the last 10-20-30-40 years? Life expectancy? Sure, that has went up, but I refuse to believe that alone is the primary driver.
Simple. Look at the ratio of workers to beneficiaries.
(https://i.imgur.com/UzDj8B0.png)
That's it.
It's not just life expectancy at age 65 (extending) over time. It's also birth rate (declining) over time. It's also all cause mortality over time (https://www.ncbi.nlm.nih.gov/books/NBK571924/), meaning more people reach age 65 than used to.
It all means that there are fewer workers per retiree than in the past, which means that because SS is a pay-as-you-go program, the only way to make it financially sustainable is to raise taxes (BOOO!!!) or to reduce benefits (BOOO!!!).
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They only go back to the mid 1960's but the debt as a percentage of GDP was MUCH higher during and shortly after WWII then got paid down and was about 30-40% of GDP from sometime prior to the mid-1960's up until it surpassed that mark in the mid-1980's.
I should clarify this. Without looking it up, I don't think the debt was actually paid down after WWII, at least not substantially. Instead, the debt as a percentage of GDP was "grown down" because the dollar-denominated debt didn't grow much or maybe shrank slightly but the overall economy grew rapidly so the debt as a percentage of GDP shrunk not because the numerator was reduced in any meaningful way but because the denominator grew.
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Simple. Look at the ratio of workers to beneficiaries.
That's it.
It's not just life expectancy at age 65 (extending) over time. It's also birth rate (declining) over time. It's also all cause mortality over time (https://www.ncbi.nlm.nih.gov/books/NBK571924/), meaning more people reach age 65 than used to.
It all means that there are fewer workers per retiree than in the past, which means that because SS is a pay-as-you-go program, the only way to make it financially sustainable is to raise taxes (BOOO!!!) or to reduce benefits (BOOO!!!).
I meant to add that to my list of reasons above. Derpity-derp derp derp.
Within that declining birth rate, there's also a higher % of the available population who is checking out of the workforce for one reason or another. Which exacerbates your underlying point about the number of workers within the worker/beneficiary ratio.
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I meant to add that to my list of reasons above. Derpity-derp derp derp.
Within that declining birth rate, there's also a higher % of the available population who is checking out of the workforce for one reason or another. Which exacerbates your underlying point about the number of workers within the worker/beneficiary ratio.
Yeah the gig economy where a lot of the pay is direct person-to-person and untaxed, isn't helping the underlying problem.
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At least I've wondered about it. I'm not bashing conservatives who voted for him, but I have always insisted he was in no way a fiscal conservative, not in his first term anyway.
A couple things:
First, I think we (all of us generally) have a tendency to overstate the President's influence on spending. I'm not saying that he has none but the lawsuits seeking to compel Trump to spend money that was appropriated by Congress illustrate that this simply isn't a decision that a President can make on his own.
Second, I see so many political posts (from both sides) that run with this. Democrats typically blame Reagan and Supply Side Economics to which my answer is that the HoR was controlled by Democrats for the entirety of Reagan's tenure and Constitutionally spending measures can ONLY originate in the HoR so to try to hold Reagan solely accountable for spending under his watch is disingenuous at best. Additionally, debt as a percentage of GDP was a little over 30% when Reagan took office in 1981 and a little under 50% when he left office in 1989 and both of those are sustainable.
Then I've seen similar claims from the left that "Clinton balanced the budget", well . . . The debt was a little under 63% of GDP when Clinton was elected in Q4, 1992 and when he took office in Q1, 1993. It continued it's gradual rise and peaked at 65.31% in Q2, 1995 THEN began a slow decline that bottomed out at just over 54% immediately prior to 9/11. Giving Clinton 100% of the credit for debt reduction that didn't start until AFTER the Republicans took over congress in the 1994 election is again, disingenuous at best.
Even after that, the debt "only" grew from just over 54% immediately prior to 9/11 to around 64% right before the 2008 credit bubble crash and recession. It wasn't until then that the debt just got completely out of hand. It spiked to over 73% in Bush's last quarter in office and over 77% in Obama's first. By the end of 2010 it had risen to over 90% then Republicans won the 2010 mid-term elections but unlike 1994-2000 when we had a Democratic President and a Republican Congress, the Debt continued to rise. By the last quarter of Obama's tenure (Q4, 2016) it was up to almost 105% of GDP.
Getting to your comment about Trump here well, when he took over (Q1 2017) the debt was just under 103% of GDP and in the first quarter of 2020 (immediately prior to COVID) it had "only" grown to just under 107%. That certainly isn't good but 1% annual growth isn't awful either, at least by comparison. In Obama's tenure it grew by about 28% (77% to 105%) in eight years which is 3.5% per year. Not that I'm blaming that entirely on Obama because I'm not. He shouldn't get 100% blame for the increase any more than Clinton should get 100% credit for the decrease.
As I see it, the problem is twofold:
First, every time some calamity comes along we spend a boatload of cash based on Keynesian principles to prop up the economy. The two most recent are the 2008 crash and COVID in 2020:
- Debt as a percentage of GDP rose from ~64% of GDP in Q2, 2008 to ~88% of GDP two years later in Q2, 2010
- Debt as a percentage of GDP rose from ~107% of GDP in Q1, 2020 to ~120% of GDP two years later in Q1, 2022
Those two rapid increases cover the bulk of the increase since the debt was last what I would consider sustainable right before the credit bubble crash. From then to now it grew from ~64% to ~122%, an increase of 58%. 24% of that was credit bubble and 13% was COVID. Cumulatively that is 37%.
The second problem is that Milton Keynes himself suggested that governmental expenditures rise in downturns to stimulate the economy and fall in booms. The second half of that simply hasn't happened at all. The debt shot up for the credit bubble but never got reduced once things got going again and continued to drift upward until COVID then shot up again. Post-COVID it did drop from a high of ~133% but only to a low of ~116% and it has been drifting higher since then.
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Simple. Look at the ratio of workers to beneficiaries.
[img width=500 height=367.997]https://i.imgur.com/UzDj8B0.png[/img]
That's it.
It's not just life expectancy at age 65 (extending) over time. It's also birth rate (declining) over time. It's also all cause mortality over time (https://www.ncbi.nlm.nih.gov/books/NBK571924/), meaning more people reach age 65 than used to.
It all means that there are fewer workers per retiree than in the past, which means that because SS is a pay-as-you-go program, the only way to make it financially sustainable is to raise taxes (BOOO!!!) or to reduce benefits (BOOO!!!).
Ok, but all of that was true (or at least similar) from the 1930's to the 1980's and back then Congress acted on it. The raised the age (not enough to fix the problem but they did SOMETHING) in 1983 and, as I showed above, there were regular increases in the SS Tax rate all the way from the 1930's to 1990 but then . . . NOTHING.
Why did Congresses and Presidents make changes to at least try to deal with the problem for decades then all of a sudden they just stopped.
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Ok, but all of that was true (or at least similar) from the 1930's to the 1980's and back then Congress acted on it. The raised the age (not enough to fix the problem but they did SOMETHING) in 1983 and, as I showed above, there were regular increases in the SS Tax rate all the way from the 1930's to 1990 but then . . . NOTHING.
Why did Congresses and Presidents make changes to at least try to deal with the problem for decades then all of a sudden they just stopped.
You're smart, MB. It's very simple.
The value of the SSTF has been growing, EVERY year, from 1983 to 2020 (https://www.ssa.gov/oact/STATS/table4a3.html). Even including the dot com bubble bursting and the Great Recession. For every one of those years, Congress has been able to spend the SSTF surplus. Only since 2020 has that piggy bank been closed and suddenly started complaining it needs to be paid back. And so now it's a crisis because they can no longer raid the piggy bank.
BTW back in the run-up to the 2000 election, there was a big debate over whether something should have been done. Remember the "Lock Box"?
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You're smart, MB. It's very simple.
The value of the SSTF has been growing, EVERY year, from 1983 to 2020 (https://www.ssa.gov/oact/STATS/table4a3.html). Even including the dot com bubble bursting and the Great Recession. For every one of those years, Congress has been able to spend the SSTF surplus. Only since 2020 has that piggy bank been closed and suddenly started complaining it needs to be paid back. And so now it's a crisis because they can no longer raid the piggy bank.
BTW back in the run-up to the 2000 election, there was a big debate over whether something should have been done. Remember the "Lock Box"?
I remember the lock box very well.
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You're smart, MB. It's very simple.
The value of the SSTF has been growing, EVERY year, from 1983 to 2020 (https://www.ssa.gov/oact/STATS/table4a3.html). Even including the dot com bubble bursting and the Great Recession. For every one of those years, Congress has been able to spend the SSTF surplus. Only since 2020 has that piggy bank been closed and suddenly started complaining it needs to be paid back. And so now it's a crisis because they can no longer raid the piggy bank.
BTW back in the run-up to the 2000 election, there was a big debate over whether something should have been done. Remember the "Lock Box"?
Ok, but the "Lock Box" was always a complete fiction. The SSTF is in a "Lock Box", invested in Treasury Bills!
You and I both know what that means: The SS Surplus was blown spent wisely by successive Congresses and Administrations on buying votes and paying off lobbyists other Governmental functions and Congresses/Presidents/the Federal Government simply deposited IOU's into the SSTF "Lock Box".
Functionally, the tax isn't high enough to sustain the benefits. In Ohio the general (catchall for public employees not covered elsewhere) Public Sector Pension is OPERS. The Rate for OPERS is 24% (14% employer, 10% employee). That is for both Pension and what we accountants call OPEB which stands for Other Post Employment Benefit and means "retiree healthcare". Thus, the comparison here would be to SS+Medicare or 15.3% not just SS at 12.4%.
OPERS has an advantage vis-a-vis SS/Medicare because the healthcare for Ohio's Public Sector retirees is mostly covered by Medicare. OPERS only provides:
- Bridge coverage, ie coverage from retirement to Medicare eligibility for those Public Sector employees able to retire before Medicare eligibility, and
- A Medicare supplement for Medicare-eligible retirees.
Conversely, SS+Medicare have an advantage over OPERS because OPERS only collects on employees while they are public sector employees. SS+Medicare collect on people from their first day flipping burgers at McDonalds at age 14 to their last day passing out Carts at WalMart at age 75 so it is a much wider net.
My guess (and this is purely a guess because the information necessary to actually run the calculations simply isn't publicly available is that the SS+Medicare tax rate probably needs to be around 20% to keep the system afloat long-term. Obviously you can also lower that "necessary rate" by either decreasing benefits or increasing the age of retirement or you can increase it by increasing benefits or decreasing the age.
Actual video of the SS Lock Box.
https://youtu.be/2oIKaP3Hzes?si=vj2UKHaNxV6_LiSA
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Since the other thread kinda blew up, I thought it was best to resurrect this old one.
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Okay, you missed what I was trying to convey... Stop focusing on the SSTF *or* the "lock box" for a moment. Let's just focus on this:
Functionally, the tax isn't high enough to sustain the benefits.
You asked why nobody was doing anything about the problem. And the reason nobody was doing anything about the problem is that the tax WAS high enough to pay the benefits all the way up until 2020. The program has only gone into deficit since 2021.
The problem is that the demographics have flipped and the program is now in deficit, and that the deficit is projected to get bigger and bigger every year. So going forward (2021+), the tax isn't high enough to pay the benefit.
But raising the tax at any time before 2020 would have done absolutely nothing of import. It would have made value of the SSTF grow faster, but that money was being spent elsewhere. Thus, it would have just meant that the payroll tax surplus would have subsidized the general fund to an even larger extent than it already was.
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Since the other thread kinda blew up, I thought it was best to resurrect this old one.
Yeah, sorry we hijacked your thread.
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Since the other thread kinda blew up, I thought it was best to resurrect this old one.
Now split/merged, so we can continue that discussion [or not] in here.
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We talk a lot about checks and balances within the government. I think this system has worked out well for the last 250ish years. However, one thing that bothers me is that we do not appear to have any checks and balances on the budget for the government, and what it spends. It's been bounced around here and other forums that the "people" will vote in whoever gives them the most until it escalates until the country is bankrupt. This appears to be happening at all levels. We can argue all day long about SS and Medicare and all the other social programs, but it's plainly obvious that it's a large part responsible for bankrupting the country (or driving towards insolvency) on all levels. Talk of cutting any of the entitlement programs is treated as hearsay, verboten, because every politician knows it will be the end of them. So we just kick the can further down the road every year.
The other part that I think really bugs me is that even when the funds are solvent, as was pointed out they were from the 1990's until 2020, the other parts of the government will actually raid the accounts, with nothing more than IOU's to pay them back.
What kind of reasonable checks and balances could be placed on the finances and spending of the US Government that would actually be successful? Something like the debt can not be more than XX% of GDP? Or maybe even a balanced budget amendment. I tend to favor something like a balanced budget amendment, because it truly forces the government to live within it's means, and if something is really super important they will have to either raise taxes or cut spending somewhere else. We are actually required to have a balanced budget here in Texas, and the state has a surplus that is rather large (several tens of billions last I checked).
Milton Friedman has often said don't look at what government taxes, look at what it spends, because that is what it's truly taxing. The other part of me asks if we're truly funding the government at a reasonable level to support what we're asking it and expecting it to support. Do we have enough money to fund roads and infrastructure, policing, national defense, social programs, security, and everything in between down to the post office?
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I don't want to derail your thread, but while we're kinda on the topic.....
I haven't heard much about cracking down on fraudulent Medicare claims. That's a different animal than fraudulent benefits. I'm talking about what legit doctors, clinics, and hospitals do....unnecessary testing, treatments, prescriptions, etc. It's a huge, huge deal....a monumental waste. There is technically a branch within Medicare whose job is to combat that, but as far as I can tell they're not very good at it.
My wife insists that the amount of bogus crap that gets ordered and charged to Medicare simply because "they can" is enormous. Doctors, imaging centers, clinics, etc. have ways of making money off everything that's done, and they have impure incentives to pad the appropriate treatments. She left one clinic she worked for because the doctor who owned the place was so rampant with his needless Medicare charges that she feared for her license if anyone ever cracked down on the clinic while she was there. (She may not be liable, but the investigation would be a stink on her license that nobody wants to go through. That kind of thing can finish you, even if you're innocent.) My job, in part, was to get insurance approvals for testing. If you have, say, Blue Cross or Cigna insurance, or something, I had to submit documentation to those companies demonstrating the necessity of a test or procedure. If a patient has Medicare, that stuff is all rubber-stamped. No documentation, no questions, no nothing. You can probably already see the problem there once you combine that with a financial incentive to push inappropriate things through.
Granted, there is a ditch on the other side of that road. I have no love for insurance companies that have invented stupid and impossible hoops to jump through so they can deny more claims. And I'm not saying that there are no reasons for why Medicare has wound up operating the way it operates. But I am saying a crap-ton of fraudulent money is paid out to shady health care providers, on the taxpayer dime.
Just from going with my mom, I can FEEL this effect. Obviously she's in her late 70's now, with a host of medical issues that go along with old age. AFIB and elevated blood pressure being #1, but nothing too serious. I go with her to the Dr frequently. What I've noticed is how often they want to just run her in, look at her for 5 minutes, and then schedule the next appt for like 30 days later or 90 days or whatever. Now, for all I know, all of this is just very necessary and protocol, but that's not how it feels. I've often asked if we can just follow-up with telehealth or something similar because they're not really checking much, mostly just BP and asking questions. May not seem like a big deal but most of her doctors are in the medical center in Houston, it takes about an hour to drive there, pay to park, and about an hour back. It can eat up the whole day quick.
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Okay, you missed what I was trying to convey... Stop focusing on the SSTF *or* the "lock box" for a moment. Let's just focus on this:
You asked why nobody was doing anything about the problem. And the reason nobody was doing anything about the problem is that the tax WAS high enough to pay the benefits all the way up until 2020. The program has only gone into deficit since 2021.
The problem is that the demographics have flipped and the program is now in deficit, and that the deficit is projected to get bigger and bigger every year. So going forward (2021+), the tax isn't high enough to pay the benefit.
But raising the tax at any time before 2020 would have done absolutely nothing of import. It would have made value of the SSTF grow faster, but that money was being spent elsewhere. Thus, it would have just meant that the payroll tax surplus would have subsidized the general fund to an even larger extent than it already was.
Yes, and no.
Sure the general fund was running deficits and the SS surplus was used to finance those deficits but if the SS tax had been higher (assuming no change in General Fund spending) the overall deficits would have been smaller and the overall debt today would be smaller.
Functionally, the total debt is the problem and, as always, it needs to be assessed in terms of percentage of GDP. If SS/Medicare taxes had been higher increased between 1990 and 2025 then there would be less overall total federal debt.
That, of course, is water under the bridge because nobody can go back in time and change it. I just want to point it out because the demographic problem wasn't a shock in 2020. Simply looking at this chart (https://www.cdc.gov/nchs/data-visualization/natality-trends/index.htm)anytime after the mid-1970's would have told you that births dropped sharply from baby-boom highs of >4M/yr from 1954-1964 to lows of <3.2M/yr from 1973-1976.
https://youtu.be/bYOn3-PhA9c?si=q4mrs7IiseWRpuDL
If you watch the clip above, the lookout calls in "Iceberg right ahead" and then there is frantic action on the bridge and in the engine rooms as the crew desperately struggles to avoid a collision and save their ship. In this situation, the chart above is the equivalent of the lookout's warning but there has been no frantic action. Everyone just seems to have shrugged their shoulders.
You have an issue of net change in workforce which is something like people turning 22 minus people turning 65. Another part of the problem here that we haven't discussed much is "extended adolescence". Something like four-fifths of HS Graduates go to college but only a little over one-third of the workforce has a degree so a humongous group (~80%-~35%=~45%) are simply wasting a year or two or more. They also aren't paying SS/Medicare taxes during those wasted years.
Another issue is "Maximum earnings". Typically people hit maximum earnings at roughly 35-50. Before that they are getting into position and after that they are winding down. This is a statistical thing, there are obviously exceptions but for a large group, 35-50 will be max earnings.
In 1999 the last of the baby-boomers (born in 1964) turned 35 while the first (born in 1946) were only barely over 50 so basically the entire baby-boom was at maximum earnings.
Side note:
There is a LOT of political arguing over the cause of the late-1990's budget surpluses with Democrats crediting Democratic President Clinton (1993-2000) and Republicans crediting the Republican takeover of Congress in 1994. I would submit here that demographics were probably the biggest factor. In the late 1990's basically the entire baby-boom was at or near maximum earnings:
- The oldest baby-boomers (born in 1946) turned 35 in 1981
- The youngest baby-boomers (born in 1964) turned 35 1999
- The oldest baby-boomers turned 50 in 1996
- The youngest baby-boomers turned 50 in 2014
So back to the underlying issue. Total debt is now around 120% of GDP. IMHO that isn't sustainable. Annual deficits are around 5% of GDP. That would probably be sustainable IF we didn't already have 120% Debt but it is enough to grow rather than shrink the debt so it isn't sustainable either.
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Just from going with my mom, I can FEEL this effect. Obviously she's in her late 70's now, with a host of medical issues that go along with old age. AFIB and elevated blood pressure being #1, but nothing too serious. I go with her to the Dr frequently. What I've noticed is how often they want to just run her in, look at her for 5 minutes, and then schedule the next appt for like 30 days later or 90 days or whatever. Now, for all I know, all of this is just very necessary and protocol, but that's not how it feels. I've often asked if we can just follow-up with telehealth or something similar because they're not really checking much, mostly just BP and asking questions. May not seem like a big deal but most of her doctors are in the medical center in Houston, it takes about an hour to drive there, pay to park, and about an hour back. It can eat up the whole day quick.
I've done a LOT of this with my dad and mom. All I can tell you is to enjoy the time with them because the sand is running out.
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What kind of reasonable checks and balances could be placed on the finances and spending of the US Government that would actually be successful? Something like the debt can not be more than XX% of GDP? Or maybe even a balanced budget amendment. I tend to favor something like a balanced budget amendment, because it truly forces the government to live within it's means, and if something is really super important they will have to either raise taxes or cut spending somewhere else. We are actually required to have a balanced budget here in Texas, and the state has a surplus that is rather large (several tens of billions last I checked).
Most state Constitutions mandate balanced budgets not only for the State but also it's political subdivisions.
Curious side note, these restrictions were largely a product of the canal era. The Erie Canal which I've mentioned a few times in the history thread was unbelievably successful and paid for itself in just a few years for the State of New York. Other States naturally tried to copy that example and there was an explosion of Canal Building all across the United States. What canal proponents failed to notice was that the first public steam railroad started operations in 1825, the same year that the Erie Canal opened. Canals were immensely important and very lucrative . . . until Railroads replaced them and that happened in just a few years. Several states very nearly went bankrupt due to overspending on Canals that were obsolete before they even opened. In Ohio, for example, they built a canal from Toledo (Lake Erie) to Cincinnati (Ohio River). But for Railroads, this would have been an enormously successful economic endeavor but the Railroads put it out of business before it was completed. Seriously, they were still constructing the unfinished canal at one end even AFTER the other end had been closed.
I work in local Government and we are subject to Ohio's Constitutional limitation on debt. There is voted and unvoted debt and both are limited constitutionally to a function of property values. Additionally, Ohio Governments cannot borrow operationally (there is a limited exception for cash flow purposes). We can only borrow to purchase capital assets and the term of the borrowing has to be shorter than the reasonably life expectancy of the assets purchased. Ie, you can't issue 30 year bonds for cars.
Applying this to the US Government would be incredibly complex. For one thing the Federal Government can simply print money so how would you prevent future Congresses/Administrations from using that as a work-around for any Constitutional debt limitation?
Secondly, you would HAVE TO have at least a temporary ability to go over for calamities (like WWII). You could probably do that with some kind of super-majority required in Congress but it isn't easy and you'd end up with some hold out getting a massive windfall of Federal Spending in his/her district.
Third, it definitely need to be based on percentage of GDP but there is a bit of a problem there. GDP changes. The big spikes in Debt as a percentage of GDP in 2008-2009 and in 2020 were partially because debt increased but they were also because GDP shrunk.
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Milton Friedman has often said don't look at what government taxes, look at what it spends, because that is what it's truly taxing. The other part of me asks if we're truly funding the government at a reasonable level to support what we're asking it and expecting it to support. Do we have enough money to fund roads and infrastructure, policing, national defense, social programs, security, and everything in between down to the post office?
My impression is that infrastructure spending is woefully inadequate to maintain let alone expand our infrastructure.
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Yes, and no.
Sure the general fund was running deficits and the SS surplus was used to finance those deficits but if the SS tax had been higher (assuming no change in General Fund spending) the overall deficits would have been smaller and the overall debt today would be smaller.
Sorry. I thought we were discussing entitlements. Social Security is ostensibly a program intended to be funded by the payroll tax. You asked why nobody for the past ~40 years has done anything to fix the system since the last major change in 1983.
My answer--which I think is valid--is that the payroll tax was fully funding the payment of Social Security benefits up until 2020. Therefore raising the tax prior to that point would not have done anything for Social Security.
If you're asking why nobody has done anything since? Well, probably because they want to create a false deadline of when the SSTF is getting closer to exhaustion, because they don't want the political pain of doing it now. I think we'd both agree that's just going to cause more pain, and that the payroll tax--the funding source of the program--should be aligned with the benefits the program is paying out.
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Now, if your question is... Why did nobody raise payroll taxes earlier to continue the lie that those payroll taxes are only 'intended to be paying for Social Security' and actually make it subsidize the general fund even more so Congress could lie about how much the total debt/deficit is?
To that, I have no answer.
My opinion in general is that if you have a program that is very specific, and you have a taxation scheme that exists for the purpose of funding that program... Funds should be used for that program, and not something else. I.e. if you have a gas excise tax to fund transportation projects, the revenues of that excise tax should largely fund... transportation projects. If you have a payroll tax which exists to fund Social Security, that tax should largely fund... Social Security.
So my question back to you is: "Why would you expect them to raise the payroll tax prior to 2020, when Social Security benefits were still being FULLY funded by the payroll tax, instead of raising income taxes, or corporate taxes, or any other government revenue source, to be used for general fund expenditures?"
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We need checks and balances for government spending. Period.
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Sorry. I thought we were discussing entitlements. Social Security is ostensibly a program intended to be funded by the payroll tax. You asked why nobody for the past ~40 years has done anything to fix the system since the last major change in 1983.
My answer--which I think is valid--is that the payroll tax was fully funding the payment of Social Security benefits up until 2020. Therefore raising the tax prior to that point would not have done anything for Social Security.
If you're asking why nobody has done anything since? Well, probably because they want to create a false deadline of when the SSTF is getting closer to exhaustion, because they don't want the political pain of doing it now. I think we'd both agree that's just going to cause more pain, and that the payroll tax--the funding source of the program--should be aligned with the benefits the program is paying out.
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Now, if your question is... Why did nobody raise payroll taxes earlier to continue the lie that those payroll taxes are only 'intended to be paying for Social Security' and actually make it subsidize the general fund even more so Congress could lie about how much the total debt/deficit is?
To that, I have no answer.
My opinion in general is that if you have a program that is very specific, and you have a taxation scheme that exists for the purpose of funding that program... Funds should be used for that program, and not something else. I.e. if you have a gas excise tax to fund transportation projects, the revenues of that excise tax should largely fund... transportation projects. If you have a payroll tax which exists to fund Social Security, that tax should largely fund... Social Security.
So my question back to you is: "Why would you expect them to raise the payroll tax prior to 2020, when Social Security benefits were still being FULLY funded by the payroll tax, instead of raising income taxes, or corporate taxes, or any other government revenue source, to be used for general fund expenditures?"
I get where you are coming from on taxes for a specific purpose being used for that purpose but . . . Based on your prior comments, I'm fairly certain that you agree with this:
Money is fungible and the Federal Government exists as a single unit. Therefore, whether a tax is a payroll tax ostensibly to fund SS Benefits or a Gas Excise Tax ostensibly to fund transportation projects or an Income Tax on either Corporations or Individuals ostensibly to fund General Government Operations the money all goes into the Federal Government "pot". Similarly, whether an expenditure is a SS Check or a payment to @847badgerfan (https://www.cfb51.com/index.php?action=profile;u=5) 's Civil Engineering Conglomerate to build a bridge or payroll for Congress the money all comes out of the Federal Government "pot".
Based on that, I agree conceptually that SS Taxes should be in a "Lock Box" to only be used for SS Expenditures, Gas Excise Taxes should be in a "Lock Box" to only be used for transportation projects, and Income Tax should be available for general operations, as a practical matter it makes no difference. The Federal Government collects a certain amount, spends a certain amount, and the difference is a surplus if positive or a deficit if negative.
Had they collected additional SS Taxes for the last 40 years the deficits would have been smaller and the debt today would be smaller.
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Had they collected additional SS Taxes for the last 40 years the deficits would have been smaller and the debt today would be smaller.
Or they'd have used the extra "hidden" revenue stream from a higher payroll tax into the general fund as justification to further lower income taxes and still gotten us into the same shit we have today, while patting themselves on the back about what a great position Social Security is in because the SSTF balance is so large!
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Had they collected additional SS Taxes for the last 40 years the deficits would have been smaller and the debt today would be smaller.
OR:
Had they collected additional SS Taxes for the last 40 years they would have spent more and the deficits today would be exactly the same and the debt today would be exactly the same. Or worse.
In the realm of counterfactuals, you'll never get me to give benefit of the doubt to the government or its spending habits.
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OR:
Had they collected additional SS Taxes for the last 40 years they would have spent more and the deficits today would be exactly the same and the debt today would be exactly the same. Or worse.
In the realm of counterfactuals, you'll never get me to give benefit of the doubt to the government or its spending habits.
100%
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Had the SST got in the market in 1965 it would have a $13T surplus today.
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Risky scheme!!!
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The gov't, just like large corporations, rely on the ignorance of the masses to do whatever the hell it wants. Just big piles of money laying around and being moved around, just to do whatever gets them elected again.
At least the gov't sometimes does it to benefit the masses. Sometimes.
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Had the SST got in the market in 1965 it would have a $13T surplus today.
On the surface this seems appealing. But I’ve often wondered about any negative consequences. Kinda like how you’ll see some headline about some asteroid having enough precious metal to be worth $20 quadrillion or whatever. They fail to take into account supply and demand. The instant you bring that sucker home the supply increases dramatically and the price would go down.
All that guaranteed money in the market, probably more than the private sector has invested would artificially influence the market.