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bucheon bum
Joined: 16 Jan 2003
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 Posted: Wed Nov 10, 2010 1:18 pm Post subject: Deficit Panel Comes Up With Sensible Ideas that Will Die |
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Article
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| The leaders of President Barack Obama's bipartisan deficit commission launched a daring assault on mushrooming federal deficits on Wednesday, proposing reducing annual cost-of-living increases for Social Security, gradually raising the retirement age to 69 and taking aim at popular tax breaks such as the mortgage interest deduction. |
Good ideas but no way they'd be passed by Congress. Political suicide.
At least the panel chairs are aware of that:
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The two were among the first to acknowledge their plan's unpopularity � and to suggest it would be a nonstarter in Congress.
"We'll both be in a witness protection program when this is all over, so look us up," Simpson quipped to reporters. Bowles said: "We're not asking anybody to vote for this plan. This is a starting point." |
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Building the needed support of 14 of its 18 members will be difficult. Cuts to Social Security and Medicare are making some liberals on the panel recoil. And conservative Republicans are having difficulty with the options suggested for raising taxes. The plan also calls for cuts in farm subsidies, foreign aid and the Pentagon's budget.
"This is not a proposal I could support," said panel member Rep. Jan Schakowsky, D-Ill. "On Medicare and Social Security in particular, there are proposals that I could not support." |
Hey Rep. Schakowsky, what the hell are you doing on the panel then?? Those are the two programs that are putting us in the hole! Well, those and "defense" of course.
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Other proposals by Bowles and Simpson include:
_Increasing the gas tax by 15 cents a gallon to fund transportation programs.
_A three-year freeze in the pay of most federal employees and a 10 percent cut in the federal work force.
_Eliminating all congressional pet projects, known as earmarks.
Their plan also calls for a major overhaul of both the individual income tax and the corporate tax systems with the idea of lowering overall tax rates, simplifying the Tax Code and broadening the taxpayer base.
For individuals and families, the proposal would eliminate a host of popular tax credits and deductions, including the child tax credit and the mortgage interest deduction. However, it would significantly reduce income tax rates. The top rate would drop from 35 percent to 23 percent. |
Ok, why would we reduce the top rate to 23%? That I don't support. The rest of it? Sure. Assuming I'm not the 10% of the workforce that's cut.  Actually I think they'd be able to do that just by implementing a hiring freeze for a couple years.
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| Even with the dramatic proposals, the Bowles-Simpson plan would leave deficits of about $300 billion in 2015, the year by which Obama tasked the group with balancing the federal budget, except for interest payments on a national debt that now stands at $13.7 trillion. If the changes to Social Security are dropped, the deficit would be about $400 billion in 2015. |
Doesn't really matter since this is dead on arrival. Hopefully a couple of the better ideas will be implemented at least. |
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Fox
Joined: 04 Mar 2009
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| Posted: Wed Nov 10, 2010 3:30 pm Post subject: |
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I'm not comfortable with the deficit commission's talk about Social Security. Social Security does not currently add to the deficit, nor will it ever; it's funded through taxes entirely its own. This commission should be focusing on its mandate: reducing the deficit. Social Security's benefits should be reduced only if and when incoming Social Security Payroll Tax revenue can't afford to pay benefits at the current level and the Social Security Trust Fund has been depleted.
This talk about Social Security is pure political maneuvering; just another attempt to get the American Public to accept the idea of reducing our fairly meager social benefits. This war against the middle and lower classes needs to stop. If anything, Social Security should be enhances rather than diminishes. Changing the Social Security Payroll Tax from a regressive one to a progressive one would be a start. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Wed Nov 10, 2010 4:32 pm Post subject: |
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| Fox wrote: |
| I'm not comfortable with the deficit commission's talk about Social Security. Social Security does not currently add to the deficit, nor will it ever; it's funded through taxes entirely its own. |
Its relevant. The Social Security system is already in a deficit.
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| According to the CBO report from which that article is drawn, the deficit will persist until around 2014, at which point it will go temporarily back into surplus before returning permanently to the red in 2018. This is a small but permanent deterioration of the program's finances--the people who have retired early will pay no more FICA taxes, and they'll have less in the way of taxable Social Security benefits. |
| Fox wrote: |
| Changing the Social Security Payroll Tax from a regressive one to a progressive one would be a start. |
Did you read the article? They recommended means testing Social Security. They're not trying to abolish social programs, they're trying to save what's left! |
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Fox
Joined: 04 Mar 2009
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| Posted: Wed Nov 10, 2010 4:45 pm Post subject: |
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| Kuros wrote: |
| Fox wrote: |
| I'm not comfortable with the deficit commission's talk about Social Security. Social Security does not currently add to the deficit, nor will it ever; it's funded through taxes entirely its own. |
Its relevant. The Social Security system is already in a deficit. |
The Social Security System having a deficit year is different than it contributing to the national budget deficit. Completely different. Social Security is still running net positive. It's projected for future issues, but those issues can and should be solved in a fashion that puts the well being of our elders and disadvantaged first.
| Kuros wrote: |
| Quote: |
| According to the CBO report from which that article is drawn, the deficit will persist until around 2014, at which point it will go temporarily back into surplus before returning permanently to the red in 2018. This is a small but permanent deterioration of the program's finances--the people who have retired early will pay no more FICA taxes, and they'll have less in the way of taxable Social Security benefits. |
| Fox wrote: |
| Changing the Social Security Payroll Tax from a regressive one to a progressive one would be a start. |
Did you read the article? They recommended means testing Social Security. They're not trying to abolish social programs, they're trying to save what's left! |
Anyone genuinely interested in "saving" Social Security would recommend increasing the amount paid in rather than cuts in benefits received. Cut down payout too much -- either in terms of forcing people to wait ever longer, or giving them increasingly trivial amounts of money each month -- and you're effectively killing the system in spirit. Social Security needs to be a meaningful income supplement to be effective. These guys are trying to "save" Social Security in the same way privatizers are.
Social Security doesn't need their brand of saving. What Social Security needs is a continued commitment to the well being of our society's elders and disadvantaged. That can't be achieved through decreasing benefits and pushing back the retirement age. It just can't.
This entire anti-entitlement philosophy is a means to a very particular end: maximizing the amount of capital that ends up in the hands of a very particular segment of society. How much does the rich/poor gap need to swell before moderates will stand up to this kind of thing? We aren't going to reduce our income disparity by destroying entitlement programs and lowering the taxes of the upper class even further. |
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TheUrbanMyth
Joined: 28 Jan 2003
Location: Retired
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| Posted: Wed Nov 10, 2010 4:50 pm Post subject: |
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| Fox wrote: |
| I'm not comfortable with the deficit commission's talk about Social Security. Social Security does not currently add to the deficit, nor will it ever; it's funded through taxes entirely its own. . |
http://www.washingtontimes.com/news/2010/mar/16/social-security-ious-stashed-away-in-wva/
This year it is expected to pay out 29 billion dollars more in benefits than it collects in taxes. That's simply not sustainable in the long run. In fact it is expected to run dry by 2037. And unless vast amounts of retirees die each and every year those payouts will only increase as more and more people retire.
So while you are correct that it does not currently add to the deficit...changes will have to be made in order to keep it going longer. Currently the law forbids it to borrow...but this could be one of said changes.
| Kuros wrote: |
| It's relevant. The Social Security system is already in a deficit. |
Isn't it currently $2.5 trillion to the good? Sure those are IOUs...but they are backed by the federal government, no? |
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Fox
Joined: 04 Mar 2009
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| Posted: Wed Nov 10, 2010 4:58 pm Post subject: |
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| TheUrbanMyth wrote: |
So while you are correct that it does not currently add to the deficit...changes will have to be made in order to keep it going longer. Currently the law forbids it to borrow...but this could be one of said changes. |
Yes, sooner or later something will have to change. My stance is that those changes should be raising contribution payments in order to ensure reasonable benefits can continue to be payed out, rather than diminishing said payments into a triviality. This is achievable first by removing the cap on the amount of income used in figuring Social Security contributions, and then working from there. Because of Social Security's current surplus, we have time to work out the exact math.
"Saving" Social Security by reducing payments and pushing back the age at which you begin to receive it isn't saving it at all. It's doing exactly what certain parties want us to do: bringing the program a step closer to its actual death. "Weaning" Americans off of it, so to speak. Where have we heard that before?
And I also strongly suspect "means testing" to be a red herring, much like tort reform in the health care debate. Yes some small amount of savings (compared to the total volume of revenue Social Security deals in) might be realized through it, but it won't be meaningful on its own, and it has the potential to do more harm than good if the system by which means are tested isn't perfect, as it stands the possibility of disqualifying individuals who actually do need the assistance. I'm not intrinsically opposed to means testing, but I'm wary of it, and certainly don't see it as an important part of "saving" Social Security. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Wed Nov 10, 2010 5:28 pm Post subject: |
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| RE: social security, an easy change is to means test it and apply the tax to incomes above 102k. I'm glad to see that the private accounts idea isn't being considered. Imagine if Bush had done that just before the big crash. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Wed Nov 10, 2010 7:04 pm Post subject: |
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| TUM wrote: |
Kuros wrote:
It's relevant. The Social Security system is already in a deficit.
Isn't it currently $2.5 trillion to the good? Sure those are IOUs...but they are backed by the federal government, no? |
A deficit here means that outflow is greater than inflow. So, yes, you have a $2.5 trillion reserve, but once the deficit hits, it starts to dwindle. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Wed Nov 10, 2010 7:52 pm Post subject: |
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Fox, I found this in your email inbox.
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BREAKING: The "bipartisan" deficit reduction commission -- appointed by President Obama, and led by millionaires like right-wing former Senator Alan Simpson -- just made their ideas public. And they are ridiculous.
They recommend cutting Social Security benefits and raising the retirement age to 69.
We need to respond fast to make sure this goes nowhere. House Progressive Caucus Chair Raul Grijalva (who we just helped re-elect) has boldly organized over 100 of his colleagues to fight this proposal.
We need to show they have grassroots support. Can you join over 27,000 others in being a "citizen signer" of Grijalva's letter? Click here -- then share with others.
There are plenty of other ways to reduce the deficit. Just today, Talking Points Memo reported on a poll we commissioned asking voters their preference:
* 43% say raise taxes on the wealthy
* 22% say cut the huge military budget
* Only 12% say cut Social Security
Yet this "bipartisan" commission of millionaires recommends exactly the opposite of what the public wants.
Help progressives in Congress send a strong, immediate message: Cutting Social Security is simply not an option. Click to be a "citizen signer" of Grijalva's letter -- then share this email with others.
Thanks for being a bold progressive. |
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Fox
Joined: 04 Mar 2009
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| Posted: Wed Nov 10, 2010 8:24 pm Post subject: |
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I've never seen that, and I don't like what I see. The problem with cutting Social Security to "reduce the deficit" is not that the public doesn't want it. The problem is that it's not only socially harmful, but it's also unnecessary, and to top it all off, it won't even reduce the deficit.
The deficit commission talking about the "need" to cut Social Security is pure political propaganda, meant to prime the public for future attempts to cut it. Social Security doesn't interact with the budget deficit; it's self-funding through its own payroll tax, and it does not and cannot borrow from other sources. The commission has no place discussing this topic. |
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Madigan
Joined: 15 Oct 2010
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| Posted: Wed Nov 10, 2010 9:13 pm Post subject: |
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wrt to the deficit commision...
The first place to place the fiscal scalpel is with the DoD. I have long felt that Foreign OCUNUS soldiers should be repatriated. Getting US troops out of the Middle East, Persia, Europe, NE Asia among other places would easily halve the annual DoD budget.
Although, so far as Social Security and Medicare are concerned, it would be very wise to reform those programs. Current and soon to be beneficiaries should not be denied their benefits. It�s their money and they have earned it. Still, for younger workers such as myself, change will be needed. If we are going to have this program, then the cap for FICA taxes will have to be lifted ($106,000 seems way too low). However, I don�t know how I feel about �means-testing.� I am open to it, but I think more study is needed. If we are going to have means-testing for benefits, then I feel that at least part of our FICA taxes (about 25% to 30%) should be invested somewhere else as an option though not an obligation. I�m still thinking through this so I don�t know all of the answers. However, I really don�t trust any of our politicians. Therefore, I feel that if I can opt into a private account, at least partially, the better. Again, opting part of our FICA taxes into a private account should be an option and not an obligation. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Wed Nov 10, 2010 9:31 pm Post subject: |
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| Fox wrote: |
The deficit commission talking about the "need" to cut Social Security is pure political propaganda, meant to prime the public for future attempts to cut it. Social Security doesn't interact with the budget deficit; it's self-funding through its own payroll tax, and it does not and cannot borrow from other sources. The commission has no place discussing this topic. |
Fox, you're right that Social Security is self-funding, but its experiencing a shortfall, and will start to experience a shortfall. Reacting to that, and having people retire later in life, is a reasonable way to secure Social Security benefits. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Wed Nov 10, 2010 9:36 pm Post subject: |
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This was also in my email inbox.
http://crfb.org/document/crfb-reacts-draft-fiscal-commission-proposal
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The Co-Chairs' proposal would cut the deficit to 2.2 percent of GDP by 2015, bring debt down to 60 percent by 2024, and balance the budget by 2037 - saving nearly $4 trillion this decade alone.
"It is truly a remarkable plan," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. "This plan does it all - allows time for the economy to strengthen, brings down future deficits and debt, protects the most disadvantaged, makes government more effective and efficient, and promotes economic growth and competiveness."
"In a period when there has been little good news on the deficit and debt front, this is truly a most encouraging sign. If this Co-Chair plan is meant to be the starting point, I'd say it would be a pretty terrific ending point," added MacGuineas.
Included in the draft plan are cuts to both defense and non-defense discretionary spending, health care spending, and other mandatory programs. The proposal restores Social Security's solvency over the long-term. On the tax side, the plan presents three options for reform - two of which would consolidate the income tax code into three rates, lower corporate rates, and modify or repeal many tax expenditures. The third option would leave tax reform to Congressional committees, but with a trigger to ensure changes would be enacted by 2013.
"It's great to see debate among the fiscal commission's members now centering on a bold proposal that addresses each area of the budget," MacGuineas said. "While certainly not everyone will agree with each and every recommendation, the proposal certainly would fix our fiscal problems and truly reflects a balanced compromise across party lines."
The proposal identifies roughly $1 trillion in additional revenue, about $2.2 trillion in spending reductions, and about $700 billion in interest savings over ten years. The proposal gradually phases in changes to protect the fragile economic recovery and would protect truly vulnerable populations, while also strengthening elements of the safety net. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Fri Nov 12, 2010 11:22 am Post subject: |
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Arguments for why the Fiscal Commission should tackle Social Security.
Benefits do grow through social security COLAs, so social security is not a perfectly self-sustaining savings account.
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The letter addresses many points that have been raised by opponents of making changes to Social Security. The Academy basically lumps such arguments into two categories: one challenging the view that raising the retirement age is a de facto benefit cut, and one addressing many "specific concerns" over an increased retirement age (such as people in physically demanding jobs and unequal distributional effects of gains in life expectancy).
First, they combat the "benefit cut" view specifically. They point out that for all the years that the retirement age remained fixed (and even after adjustments included in 1983 legislation), retirees have been getting a de facto benefit increase, since they will spend more years collecting benefits in the system than previous generations. This increase comes on top of the fact that initial benefits grow with wage inflation and retirees have (for the most part) recevied annual COLAs.
In addition, the Academy says that raising the retirement age creates a "signaling effect" that people should work longer and delay retirement. They explain it below:
For example, if the retirement age is raised by one year, and a worker retires a year later, the worker�s annual benefit is approximately the same as if he or she retired a year earlier and the retirement age had not been raised. The combination of the change in retirement age and the change in behavior leaves the retiree with approximately the same degree of retirement security as without those changes. That is the intended effect, which is very different from a direct cut in the benefit formula.
Basically, raising the retirement age--and specifically indexing it to life expectancy--reduces the "benefit increase" associated with longer life expectancy, rather than actually cutting benefits. And even with an increase in the retirement age, benefits would still be growing as they always do. |
The Budget Commission is trying to adjust social security so the benefits stay constant. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Mon Nov 15, 2010 11:44 am Post subject: |
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Has anyone read the Deficit Commission?
Go to p. 24 in the .pdf (http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/CoChair_Draft.pdf).
The draft proposal is in red. It would eliminate all tax expenditures except the Child Credit and EITC, lower the marginal rates, and reinstate capital gains and dividends as ordinary income. |
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