A $2,641 Per Household Tax Increase

[tripods68]

and No Entitlement Reforms.

The Senate Budget: A $2,641 Per Household Tax Increase and No Entitlement Reforms

The Senate Democrats, writing their first budget resolution since winning control in Congress in 2006, have produced a budget blueprint that:
[*]Raises taxes by 900 billion over five years and projected $3.3 trillion over ten years;[*]Translate into a tax increase of $2,641 per household annually over the next decade;[*]Includes 22 reserve funds that could be used to raise taxes by hundres of billions more;[*]Increases discretionary spending by nearly 9 percent in FY 2008 and does not terminate a single program;[*]Completely ignores the impending tsunami of Social Security, Medicare, and Medicaid costs;[*]Creates rules that bias the budget toward tax increases; and[*]Employes the same gimmicks that Congress criticized the President for using in his budget proposal.

The House budget resolution projects nearly the same 2008-2012 tax revenue as the Senate would increase discretionary spending by an additional $69 billion.

If this was my household budget, I would have declared BK many times over. Why do we let the government continue doing this? How can we overcome irrational decision-making?

[LuxLiving]

At my local level people keep INCESSANTLY voting tax increases and putting fools back into office. Reverse that trend and you might begin to turn the tide.

[sweeps]

Heritage Foundation is about as right-wing as it gets. The article's bias should be taken into consideration.

Also I would argue Bush has lowered taxes below what our budget can handle. If there has been any irrational decision-making, it's come from him. He should have cut spending if he wanted to lower taxes.

So, while I'm not at all excited about "raising taxes" (or is it rolling back the tax cuts?), it is actually more fiscally responsible than our current situation. If no one wants to cut programs, the only other option is to raise taxes.

[tripods68]

wrong post.

[pearlieq]

Originally Posted by sweeps

Heritage Foundation is about as right-wing as it gets. The article's bias should be taken into consideration.

I would tend to agree. They make the Newsmax folks look like bleeding hearts.

I would be much more amenable to discussions about tax rates, entitilements, etc. if less of my money was going to Halliburton. It's not that I'm blind to the problem, I'm just skeptical of finger-pointing when there's this big, expensive elephant in the room.

[maat55]

I'm for lowering taxes and spending. Both gives the free market more power. It's probably too late, but we need for a balance budget to be law. If you don't have it you don't spend it. We have that in Tulsa. The only problem with balance budgets is getting the stupid government to prioritize infrastructure over pork.

[GrimJack]

tripods68 -- I am sort of surprised that you are aghast that Democrats are suggesting that the Bush tax cuts should expire. The whole tax cut argument was based on the fact that the tax cuts should expire (that was how Bush and Repubs were able to convince anyone that we could do it and keep the budget balanced). Then Bush decided to attack Iraq - this has cost us over $507 billion dollars so far -- it looks to be about 2 billion per week now.

Are you suggesting that we leave this for your kids/grandkids? Did you complain about all the Repub spending? They took a trillion dollar surplus and turned it into a deficit -- I did not hear you complaining about the tax cuts during the Repub fiasco.

Face it -- the tax burden should and will be carried by the generation that produced the debt.

And if all you free market advocates would just get out there and remove all the tax breaks for corporations and bail-outs for failing s&l-s, banks - and my favorite initials BS., then start cutting farm subsidies (we still sub tobacco farms for X's sake) -- I guess a good date to regress to would be sometime before Teddy Roosevelt - back when the robber barons ruled (read The Jungle) -- ACK!, I've climbed up on my anti-ayn rand horse again -- sorry, I get carried away.

I ain't necessarily a Democrat but I am a capital 'L' Liberal (but that probably does not surprise anyone).

[jIM_Ohio]

I think Bush's tax cuts were well intended. 9/11 just changed things well beyond his control.

I think less spending on welfare and unemployment make more sense than raising taxes.

[tripods68]

I'm not against the Bush Tax cut. I think the tax cut is serving well for most household and corporations. What I'm against is the projection of raising our taxes without changing entitlements (social security, medicare, etc) and subsidizing many government programs when benefits only the few.

[GrimJack]

Originally Posted by tripods68

I'm not against the Bush Tax cut. I think the tax cut is serving well for most household and corporations. What I'm against is the projection of raising our taxes without changing entitlements (social security, medicare, etc) and subsidizing many government programs when benefits only the few.

Social security is not an entitlement! If you have a chance to look closely at your pay stub, you will see that you are paying into the SS program. When you retire, you get that money back. Social Security has been rolled into the general fund since the late '60s and there is still more money coming into the 'system' than going out. It is projected that in 2016 there will be as much money going out to retirees as coming but the 'system' will still owe SS what it borrowed (since the '60s'). The repayment of this 'loan' will take SS well into the 2050's.

Since the war and its related expenses, the tax cuts have been a drag on the economy. Why do you think the Canadian dollar is now worth more than the the US dollar? The world economy is in USDollars with the value of the US dollar so low, the cost of items has to be raised so that the value of the item can be reflected in the cheap US$. The US$ will be cheap as long as we borrow billions from the future to pay for the war now. (I will not go into the politics of the war here). There is also the problem of lowered interest rate; if foreign investors can't get a good return on their investments, they will put it elsewhere which will be a further drag on our economy.

I realize this is an oversimplification but I am sure no one really wants a deeper look into how this sausage is made.

[Troyrb]

Originally Posted by sweeps

Heritage Foundation is about as right-wing as it gets. The article's bias should be taken into consideration.

I would also agree. I wouldn't believe any story that comes from this group. All you have to do is look at the story's they write on there website and you can see the slant.

[tripods68]

Originally Posted by GrimJack

Social security is not an entitlement!

I'm not too confident that I'll ever see what I put into social security ever since it scheduled to bankrupt the System by 2041. Social Security is nothing like 401K. When I put my money into, it is "my money" and it goes into my account with my name on it. In the Social Security system, the money you pay into the system gets immediately paid back out to the people who are currently getting Social Security checks. In contrast, like 401K its self-directed retirement investment vehicle. With Social Security you don't have any control of what put in period. Furthermore Social Security System has just too many "hand in the cookie jar" with individuals never even paid into the system. That's entitlements. Why because Congress said so. You can call it whatever you like it really doesn't matter to me one way or the other. Don't depend on this system unless you are closer to the qualifying retirement age. If you are, consider yourself lucky cause I'm paying for your retirement checks.

[GrimJack]

Well, actually the money you put in does not go right out to a current recipient. Currently, Social Security is running a $150 billion surplus each year (factored as constant 1999 dollars - meaning that inflation has been taken into account) - this surplus takes into account the fact that 'baby boomers' begin retiring this year. The only "hand in the cookie jar" individuals who have access to SS are survivors of people who did pay into the system. In 1983, it was realized that SS would have a problem with the 'baby boom' retirement so the payroll tax was increased; that was 25 years ago. If you are really worried about receiving anything from SS, why not advocate for an increase in the payroll tax? Actually rather than increase the payroll tax, it would be much cheaper to raise the payroll limit above the $97,000 limit (which by the way is a max of $6,045 per year)

The Social Security system is one of the greatest successes in US history.

Social Security reduces the proportion of elderly people living in poverty from nearly one in two to fewer than one in eight, according to a new study released today of Census data. The study found that in 1997, nearly half of all elderly people — 47.6 percent — had incomes below the poverty line before receipt of Social Security benefits. After receiving Social Security benefits, only 11.9 percent remained poor.

As a result, the study said, Social Security raised out of poverty more than one in every three elderly Americans. The program lifted 11.4 million elderly people above the poverty line.

Without Social Security, the study found, 15.3 million elderly had incomes below the poverty line. After Social Security, only 3.8 million elderly did. Three-fourths of those elderly people who would have been poor without Social Security were lifted from poverty by it.

The study, "Social Security and Poverty Among the Elderly," found Social Security's effects in shrinking poverty to be most striking among elderly women. Seven million of the 11.4 million elderly people whom Social Security lifted from poverty in 1997 — more than 60 percent — were women.

To summarize:
Social Security is running a surplus.
When the baby boomers discovered there might be problems with the system when they retired, they raised payroll deductions to pay for it.

If you want Social Security to be around when you retire - fight for it not against it.

[jIM_Ohio]

SS is nothing more than a wealth transfer system (and social insurance). Most workers pay 3.5% of their salary into this (and your employer pays another 3.5%). Self employed people pay 7% of salary into this.

401k deferrals and similar deductions do not reduce the SS/FICA contribution.

The questions (big picture) would be
a) what would you do if the 3.5% was given to YOU and not to the government
b) is their value in having a "safety net" to provide income for people which would be otherwise destitute?

I personally would love a 3.5% raise. I could invest this more and turn it into much more than the income stream SS comes out to be.

SS behaves more like an annuity that anything else. The primary issue though is an annuity gives a higher return. If you look at your SS contributions, then plug the "expected SS income" into an annuity calculator, you will see yourself getting an annuity with a 3.5% return.

But remember that you actually put in 7%, so the question remains, where is the other 3.5% going now, and can they fix this system?

My simple solution would be to lower the "salary cap"- currently any income over 93k is not subject to SS tax. I suggest lowering this based on 401k contributions or similar- meaning if I contribute X% to 401k, then decrease the cap by y%. To point where if savings rate is 20%, the 3.5% fica is NOT withdrawn from paycheck (employer still contributes), and the SS benefit for that person is reduced.

FYI- more than likely this person would have SS taxed at 50%, so their expected benefit from system would be quite low. My general attitude is to give the government less, and have the government provide less to people with less to begin with.

There is nothing in the constitution which suggests all people must get the same medical care, live at same locations or get everything they want.

[Like2Plan]

Originally Posted by jIM_Ohio

SS is nothing more than a wealth transfer system (and social insurance). Most workers pay 3.5% of their salary into this (and your employer pays another 3.5%). Self employed people pay 7% of salary into this.

401k deferrals and similar deductions do not reduce the SS/FICA contribution.

The questions (big picture) would be
a) what would you do if the 3.5% was given to YOU and not to the government
b) is their value in having a "safety net" to provide income for people which would be otherwise destitute?

I personally would love a 3.5% raise. I could invest this more and turn it into much more than the income stream SS comes out to be.

SS behaves more like an annuity that anything else. The primary issue though is an annuity gives a higher return. If you look at your SS contributions, then plug the "expected SS income" into an annuity calculator, you will see yourself getting an annuity with a 3.5% return.

But remember that you actually put in 7%, so the question remains, where is the other 3.5% going now, and can they fix this system?

My simple solution would be to lower the "salary cap"- currently any income over 93k is not subject to SS tax. I suggest lowering this based on 401k contributions or similar- meaning if I contribute X% to 401k, then decrease the cap by y%. To point where if savings rate is 20%, the 3.5% fica is NOT withdrawn from paycheck (employer still contributes), and the SS benefit for that person is reduced.

FYI- more than likely this person would have SS taxed at 50%, so their expected benefit from system would be quite low. My general attitude is to give the government less, and have the government provide less to people with less to begin with.

There is nothing in the constitution which suggests all people must get the same medical care, live at same locations or get everything they want.

Jim,
I believe that is actually 6.2% for individuals and 6.2% for employers (each). Added to that is 1.45% each for medicare.

Social Security & Medicare Tax Rates -Rate for employees and employers, each

[syracusa]

Originally Posted by jIM_Ohio

There is nothing in the constitution which suggests all people must get the same medical care, live at same locations or get everything they want.

The psychology lying beneath such doctrine is certainly scary. SS is not devised for "everyone to live at the same location or to get everything they want". How ridiculous, mysanthropic, exagerated and obtuse.
God Forbid should we prevent suffering or struggle for other people. The more God Forsaken are out there, the more self-righteous and VALID, us, "little good savers"/"great people", we can feel.

If I knew that I have to pay taxes so that undeserving people can be spoilt and live in luxury while I make sacrifices - then I would have a major problem with it. (And I do - I am already doing this for major corporate bail-outs). But to even suggest that it is OK for some people to completely collapse under misfortune (including NOT receiving the medical care when they are in need), it is downright animalic and disgusting. Where the Heck did you people get such nasty bias - it is OK to save fat cats from their own nasty greedy mistakes but it is not OK to give a God Forsaken medical care when they drown in misfortune?
Honestly, I hate people like this! With a passsion!!!!!!!!!!!!!!!!!!

[tripods68]

Originally Posted by GrimJack

Well, actually the money you put in does not go right out to a current recipient. Currently, Social Security is running a $150 billion surplus each year

I don't doubt social security help fights poverty and helps our older society overall. It's interesting you mentioned about SS running into surplus each year. When the baby boomers peaks retirement age (around 60-78 Million) by 2022 it will start running deficit and fully dissolved by 2041. In fact beginning 2019 when the outlays for social security are projected to exceed revenues that's when problems really begins. That's just one problem. The "real" back breaker for the US economy is rising health care cost "medicare" alone which is projected to consume 40 percent of our GDP by 2060 based on CBO - The Long Term Budget Outlook published in 2007. Those ratios are not sustainable long term.

Originally Posted by GrimJack

If you want Social Security to be around when you retire - fight for it not against it.

I'm not totally against it, but the System must be overhauled for "real" permanent solutions not put bandages around the injury.

[sweeps]

Social Security won't "dissolve" in 2041 (or whatever the date). If it runs out of reserves, it would only be able to pay out what is coming in from tax revenues. So that might, for example, mean a 50% cut in benefits.

Also I would say be wary of projections that go out some 30-odd years. Economists that make even 5- and 10- year projections are typically way off.

Social security is not perfect, but it's unclear what could be done to it to make it "perfect". Completely getting rid of it is realistically not an option. Plus I would say there are much bigger issues to deal with in the short-term.

[tripods68]

I trust no one except CBO. CBO uses "real data" to support their numbers and analysis. Their primary purpose is to serve congressional agency charged with reviewing congressional budgets and other legislative intitiatives with budgetary implications. You can get better numbers than CBO produces IMO unless you start reading reports from self-interest lobbying groups. Not a chance!

The bottom line, CBO projections are updated on annual basis or every other year to maintain certain level of confidence which often reflects in its' President's own annual budgets.

This topic is obviously highly political. CBO knows, to "touch" entitlements is political suicides. So we don't hear enough about this topics at the forefront pages of every newspapers because congressional seats at stake. I also think there just too many people put their heads in the sand and ignores what's ahead and thats when the real "**** happens". (no pun intended). Y' know what i'm sayin'

[noppenbd]

Chris Farrell of Marketplace Money made an interesting point about SS. The current SS rate is 12.4% per employee (half paid by employer if not self-employed). Raising that by 1.70% (.85% for employed individuals) to a total of 14.1% would keep the system solvent for 75 years. Much of this is due to immigrants who pay into the system but never collect on it...so we are not talking about a huge hit to the average worker.

However, Medicare is the big elephant in the room that no one wants to talk about.

APM's Marketplace: My Two Cents: Thank You, Immigrants