This doesn't look good...
In the 2000 campaign, Vice President Al Gore said we should sequester the Social Security surpluses in a "lockbox" to prevent appropriators from spending them. Bush agreed in principle. But that commitment went out the window soon after the inauguration. In his first three budgets, Bush (who had the good fortune to take office at a time when the surpluses were growing rapidly) and Congress used $480 billion in excess Social Security payroll taxes to fund basic government operationsÑabout $160 billion per year!
By so doing, Washington spenders have masked the size of the deficit. For Fiscal 2004Ñwhich began in October 2003Ñif you factor out the $164 billion Social Security surplus, the on-budget deficit will be at least $639 billion, rather close to the modern peak of 6 percent of GDP. And according to its own projections (the bottom line of Table 8 represents the Social Security surplus), the administration plans to spend an additional $990 billion in such funds between now and 2008. That year, according to the Office of Management and Budget's projections, the on-budget deficit will be about $464 billion. Only by using that year's $238 billion Social Security surplus does the administration arrive at a total, unified deficit of $226 billion. And the ultimate on-budget deficit will almost certainly be worse. OMB has proven in the past few years that its projections can't be trusted.
The accounting for Social Security surpluses has always been dishonest. But in the past few years, the Bush administration has made this shady accounting a central pillar of its fiscal strategy. The unprecedented reliance on these funds hides the failure of the administration to ensure that there is some reasonable correlation between the resources it has at its disposal and the spending commitments it makes. Bush & Co. have redesigned the tax system so that collections of the progressive taxes that are supposed to fund government operationsÑlike individual income taxesÑhave plummeted. Instead, with each passing year we rely for our current needs more on the regressive payroll taxes that are supposed to fund our collective retirement.
The persistence of the administration and its credulous allies in eliding these facts is flabbergasting. Of course, for the Bush administration to give an honest accounting of the deficits, and of the role that Social Security surpluses play in keeping them down, would be to admit the fundamental bankruptcyÑno pun intendedÑof its adventuresome fiscal experiment.
The rest is at: http://slate.msn.com/id/2093707/
This is crazy! the IMF is even telling us to get a grip.
No Mr. President... our debt was not charged on a "NO HASSLES" card. The budget is a big hassle. The budget fight is going to be UGLY this year.
By so doing, Washington spenders have masked the size of the deficit. For Fiscal 2004Ñwhich began in October 2003Ñif you factor out the $164 billion Social Security surplus, the on-budget deficit will be at least $639 billion, rather close to the modern peak of 6 percent of GDP. And according to its own projections (the bottom line of Table 8 represents the Social Security surplus), the administration plans to spend an additional $990 billion in such funds between now and 2008. That year, according to the Office of Management and Budget's projections, the on-budget deficit will be about $464 billion. Only by using that year's $238 billion Social Security surplus does the administration arrive at a total, unified deficit of $226 billion. And the ultimate on-budget deficit will almost certainly be worse. OMB has proven in the past few years that its projections can't be trusted.
The accounting for Social Security surpluses has always been dishonest. But in the past few years, the Bush administration has made this shady accounting a central pillar of its fiscal strategy. The unprecedented reliance on these funds hides the failure of the administration to ensure that there is some reasonable correlation between the resources it has at its disposal and the spending commitments it makes. Bush & Co. have redesigned the tax system so that collections of the progressive taxes that are supposed to fund government operationsÑlike individual income taxesÑhave plummeted. Instead, with each passing year we rely for our current needs more on the regressive payroll taxes that are supposed to fund our collective retirement.
The persistence of the administration and its credulous allies in eliding these facts is flabbergasting. Of course, for the Bush administration to give an honest accounting of the deficits, and of the role that Social Security surpluses play in keeping them down, would be to admit the fundamental bankruptcyÑno pun intendedÑof its adventuresome fiscal experiment.
The rest is at: http://slate.msn.com/id/2093707/
This is crazy! the IMF is even telling us to get a grip.
No Mr. President... our debt was not charged on a "NO HASSLES" card. The budget is a big hassle. The budget fight is going to be UGLY this year.
Comments
Originally posted by chu_bakka
This is crazy! the IMF is even telling us to get a grip.
The IMF guys even went so far as to suggest that America might become a "third-world-country" due to it's own endemic and inept budgetary policies.
Oh wait...alternate reality moment...
In all seriousness, politics aside, this is very bad. I have faith we will pull out of this intact, fix the problems and fully recover. Constant and continuous tax cuts cannot be the only policy this country employs, however. We need some new radical ideas to get this economy moving fully. In the end, I think the last two quarters will be considered an anomally created by the The Bush Tax. Perhaps Q1 will show we're just treading water. Q3 and Q4 could crash.
Originally posted by chu_bakka
... This is crazy! the IMF is even telling us to get a grip...
The IMF was saying the basically same thing back in 1982. That said, I'm also not happy with Bush's budgets. Yes, we were in a recession and we needed ramp up spending for the military and Homeland Security. Also, as a percent of GDP the deficit isn't all that bad but that doesn't mean we shouldn't be exercizing SOME spending restraint.
If you take the money we're borrowing from SS to pay the bills...
Our Debt as a percentage of GDP is almost at 6%... which stands as the record.
The tax cuts only dug us deeper. And true economic stimulation by spending on small businesses and public works programs do more than
building better bombs.
we're borrowning to pay for what we have now... and we'll be paying for it for a long time... as will our kids.
If you wanted to end SS, the administration's policies over the last three years would be the perfect plan for laying the groundwork. I just don't understand why?
Originally posted by Towel
If you wanted to end SS, the administration's policies over the last three years would be the perfect plan for laying the groundwork. I just don't understand why?
Private investments.
He's been promoting it since the campaign.
Originally posted by Towel
IIRC, 2012 is when outlays will first exceed inflows. From then on (until the boomers all die) the SS IOU that's been building for the last 20 years will have to start being repaid out of general tax funds.
Maybe Bush has Mayan advisors telling him the world will end Dec 2012, so nobody will need SS after?
Originally posted by Towel
If you wanted to end SS, the administration's policies over the last three years would be the perfect plan for laying the groundwork. I just don't understand why?
That seems to be the prevailing theory about why Republicans run up debt: that their ultimate goal is to starve the beast, to bankrupt government in the future.
I personally think that's attributing too much to them. I think there's nothing more than vote-getting behind it. Cut taxes and people like you. No conspiracies. Just banal short-term suck-upping at the expense of future generations.
Originally posted by chu_bakka
I think you missed the point.
If you take the money we're borrowing from SS to pay the bills...
You do realize this isn't the first time we've borrowed from SS? Hint: the ONLY thing surplus SS revenue can used for is to purchase government bonds. That's the law.
Originally posted by BRussell
That seems to be the prevailing theory about why Republicans run up debt: that their ultimate goal is to starve the beast, to bankrupt government in the future.
I personally think that's attributing too much to them. I think there's nothing more than vote-getting behind it. Cut taxes and people like you. No conspiracies. Just banal short-term suck-upping at the expense of future generations.
Are you aware that Grover Norquist easily admitted "starving the beast" was one of his goals? I'm sure you are because his name is most often attributed to that idea.
Originally posted by SDW2001
Comical. Just utterly comical. That's what AO has become.
No...sad.
Originally posted by BRussell
That seems to be the prevailing theory about why Republicans run up debt: that their ultimate goal is to starve the beast, to bankrupt government in the future.
I personally think that's attributing too much to them. I think there's nothing more than vote-getting behind it. Cut taxes and people like you. No conspiracies. Just banal short-term suck-upping at the expense of future generations.
It's not taxes...it's spending. The level of taxation in the country on the whole is still unbelievably high.
Originally posted by SDW2001
It's not taxes...it's spending. The level of taxation in the country on the whole is still unbelievably high.
Tax on the lowest classes are unbelievably high, but most business owners can get away with tax write-off murder.
Originally posted by SDW2001
It's not taxes...it's spending. The level of taxation in the country on the whole is still unbelievably high.
What benchmark are you using to decide that taxes are unbelievably high? Federal income tax revenues are now at a post-WWII low (as a % of GDP). I'm not sure where to find the data exactly, but I believe the US has one of the lowest tax burdens of any industrialized country. I think Japan may be lower, and that's it.
Originally posted by bunge
Tax on the lowest classes are unbelievably high, but most business owners can get away with tax write-off murder.
Tax write off murder? That is only because certain folks like yourself consider all money changing hands to be "income" even if it hasn't earned a profit.
I buy some ground beef, buns, cheese, condiments, etc. for $100. I use them to sell $200 worth of product. In your view, you would tax the whole $200 that came into my hands because it is "income" that changed hands. The government (and proper view with regard to write offs) would allow me to write off the $100 it cost to buy the materials and pay taxes on the $100 profit.
Why is that so terrible? I'll be happy to listen as to why you think the whole $200 should be taxed. Businesses are taxed on profits after expenses. Could you imagine how expensive things would be if businesses could not write off the cost of the materials? On my rentals for example I already pay property taxes, plus income tax on all the profits. Why should I pay taxes on the money that pays the mortgage, fixes the furnace, etc?
Nick
Do we honestly need PBS in the age of satellite and cable television? Couldn't the department of education get the heave ho? How about widening the tax base? Right now the bottom 50% pay 4% of all tax revenues. That is why part of why the revenues swing so broadly. When the top stops earning, the incoming taxes are just gone since the tax base is so narrow.
Toss out some spending cuts instead of just decrying tax cuts you wannabe politicos.
Nick
Originally posted by trumptman
Tax write off murder? That is only because certain folks like yourself consider all money changing hands to be "income" even if it hasn't earned a profit.
I just don't consider the 4 cars an ex-boss owned 'company expenses' since his household could only potentially use 2 of the four in the first place. And the computers put in his home, that weren't used for business, but were tax write offs, that's not right either. And the lunches that we all eat, that he could write off even though they were simply lunches, yeah, that's bad.
It goes on and on.
How about running your own business and paying yourself a 'salary' so your business loses money and thus doesn't have to pay taxes? You pay income tax on the salary, but the business gets off scott free. No, that's not right.
And why shouldn't a business pay tax on the $200? If I spend $10,000 on hot dogs, buns and mustard to feed me and my family every year, why can't I write that off like your hypothetical business does?
Originally posted by trumptman
Why is that so terrible? I'll be happy to listen as to why you think the whole $200 should be taxed. Businesses are taxed on profits after expenses.
To be more direct: If businesses are going to get this benefit, individuals should get this benefit as well. I don't believe our government should put the interests of business ahead of individuals.