For our liberal friends in the tailgate...what would your "Paul Ryan Deficit Reduction" plan be?

[JMS]

I think that this would probably be a stepped approach, much like it is now proposed in Ryan's Bill. Say 55 is the cut off. It would screw those of us who are relatively close but it's the only way I see that kind of plan working.

Social security deficite over the next 70 years could be funded by repealing the Bush tax cut for 10. Any cut on the benifits folks recieve on social security through a means test is an attack on the institution as a whole as it divides taxpayers who are most important (profitable) to the system and eliminates any benifits they get from the system.... Also, just because you were a top earner in your career doesn't mean you have a cooshy retirement laid out or visa versa.

Means testing for social security is a horrable idea...

---------- Post added April-8th-2011 at 12:55 PM ----------

Social Security is one of the best funded programs this Country has ever come up with if left alone. Unfortunately, this doesn't happen. If we want to fix Social Security, I think what is needed is legislation that makes it illegal to tap into Social Security funds. This measure would also help the Government to balance the budget eventually because it would limit their ability to spend beyond their means. This is what I think should be done to save Social Security.

I disagree. Having a huge chunk of cash sitting on a federal balance sheet doing nothing is stupid. Loaning that money to the federal government which pays some modest interest on it seems perfectly reasonable..

Perhaps a compromise would be to limit what the federal governemnt could spend the social security money on... but that wouldn't really work very well it would just make things more complex, not more reasonable.

If you want to "fix" social security I would much rather tweak the retirement age than means test.

[ABQCOWBOY]

Social security deficite over the next 70 years could be funded by repealing the Bush tax cut for 10. Any cut on the benifits folks recieve on social security through a means test is an attack on the institution as a whole as it divides taxpayers who are most important (profitable) to the system and eliminates any benifits they get from the system.... Also, just because you were a top earner in your career doesn't mean you have a cooshy retirement laid out or visa versa.

Means testing for social security is a horrable idea...

You would not have to do this. All you have to do is stop taking the money that is being collected and spending it elsewhere. Eventually, not only would this problem solve itself but benefits would actually grow for each recipient.

[Teller]

SHF, you may want to throw up a conservative version of this too. Just sayin'.

[ABQCOWBOY]

Social security deficite over the next 70 years could be funded by repealing the Bush tax cut for 10. Any cut on the benifits folks recieve on social security through a means test is an attack on the institution as a whole as it divides taxpayers who are most important (profitable) to the system and eliminates any benifits they get from the system.... Also, just because you were a top earner in your career doesn't mean you have a cooshy retirement laid out or visa versa.

Means testing for social security is a horrable idea...

---------- Post added April-8th-2011 at 12:55 PM ----------

I disagree. Having a huge chunk of cash sitting on a federal balance sheet doing nothing is stupid. Loaning that money to the federal government which pays some modest interest on it seems perfectly reasonable..

Perhaps a compromise would be to limit what the federal governemnt could spend the social security money on... but that wouldn't really work very well it would just make things more complex, not more reasonable.

If you want to "fix" social security I would much rather tweak the retirement age than means test.

And this is exactly why nobody is going to do anything to fix this problem. The answer is no. It's not your money or anybodies money to spend as they see fit. That money belongs to the people who contributed to the fund. So long as you allow access to that money, you are going to be in a situation like we are now. That's unacceptable IMO.

Either cut off access to those funds or stop contribution to those funds entirely I say. Any other solution will only lead to what we have now.

[JMS]

I agree, trade agreements need to be addressed, but the fact is that we need to address one of the largest commodities that we've lost and that is workforce jobs.. we've been priced out of the market, and that needs to change. Other places have enticed our companies away, and we need to get them back.

~Bang

To build on your point, I would argue we haven't been priced out of the job market. I would ague that their hasn't been a time in American history where an American could compete head to head on a wage metric alone with a Chinese worker. Same for most of the second and third world.

What has changed is our trade policy which makes it easer to utilize the low priced labor giving their products entry into our market.

Traditionally America has always pursued balanced trade policies... That only started to change with Nixon and the Japanese automakers, but It accelerated under Clinton and it hit warp speed under Bush Jr; with the US loosing nearly 50% of all of our manufacturing and tecnical jobs under our last president to outsources, and insourcing.

[@DCGoldPants]

Close Corp Tax loopholes and create a new tax that would charge corporations for sending over a certain percentage of their work overseas and then bringing back finished products or services to the US. Basically make it cheaper to employ American's in America. That in itself would mean more money from taxes of the American employees coming in. If an American IT guy costs a company say $50 an hour and in India is $20 an hour, tax the difference. Then its worth it to keep the work here, which in my experience is better quality.

Industrial Hemp legalized and promoted to be grown with incentives to companies who use the Hemp to build their facilities near those farms around the country. Basically replace cotton.

Follow what Maryland does for the biotech industry and build more biopark type facilities for start ups to share and collab while renting affordable work space.

[ABQCOWBOY]

I think you just tax everybody at the same rate. No loop holes, just a flat tax.

[JMS]

You would not have to do this. All you have to do is stop taking the money that is being collected and spending it elsewhere. Eventually, not only would this problem solve itself but benefits would actually grow for each recipient.

No they really wouldn't... Social security ran surpluses from 1935 until what 2011 and will again 2012 to say 2014? That amounts to trillions of surplus dollars.... It's better for social security recipients to have the federal government borrow that surplus dollars the program doesn't need, and pay back to social security the principle and interest on that loan. It stretches social security dollars it doesn't reduce the fund.

It's not like the federal governemnt doesn't pay the trust fund interest. It's also not like in 2012 when the program was in deficit for the first time, the Federal government had to make that money up or start to repay the money it borrowed,, or even had to start making good on promised interest..... The federal government has been paying interest to the fund every year since they began borrowing against the trust surplus in the 1960's. The deficite in 2012 was more than made up for from the interest the US governemnt already owes and deposits into the trust every year.

[ABQCOWBOY]

No they really wouldn't... Social security ran surpluses from 1935 until what 2011 and will again 2012 to say 2014? That amounts to trillions of surplus dollars.... It's better for social security recipients to have the federal government borrow that surplus dollars the program doesn't need, and pay back to social security the principle and interest on that loan. It stretches social security dollars it doesn't reduce the fund.

It's not like the federal governemnt doesn't pay the trust fund interest. It's also not like in 2012 when the program lost money, the Federal government had to make that money up or start to repay the money it borrowed,, or even had to start making good on promised interest..... The federal government has been paying interest to the fund every year since they began borrowing against the trust surplus in the 1960's. The deficite in 2012 was more than made up for from the interest the US governemnt already owes and deposits into the trust every year.

If this were true, Social Security wouldn't be in bad shape now. It's all well and good to say that the Government should borrow and then pay back but the problem is that the payback part is left to be managed by the same folks who are using this money. You got the Fox in the Hen House here and that will never work All that ever happens is that one lawmaking body kicks the can down the road to the next and so on.. Unless you can figure out a way to fix that problem, none of that solution will ever work.

[TheLongshot]

Means testing for SS

This could be problematic. What are the "means" used to decide that? Is it going to discourage people from saving for their retirement?

Cut tax rates on corporations and offer major tax incentives for companies who maintain their operations, manufacturing, and at least 85 to 90% of their employees in the US

I don't mind reducing corporate tax rates if big corporations like GE actually pays more tax, rather than nothing.

Eliminate the thinking of how government funding is handled.. ie, if we don't spend X this year, we won't get X next year.. welll, if you didn't need X this year, you won't next year either. Get rid of waste, even if it means a short term burden while hiring new auditors and bolstering anti-fraud agencies with COMPETENT people.

While I agree with you, I'm not sure how to deal with human nature. People who manage organizations generally want to grow, not shrink, their organizations.

[Homercles82]

It's not like the federal governemnt doesn't pay the trust fund interest. It's also not like in 2012 when the program was in deficit for the first time, the Federal government had to make that money up or start to repay the money it borrowed,, or even had to start making good on promised interest..... The federal government has been paying interest to the fund every year since they began borrowing against the trust surplus in the 1960's. The deficite in 2012 was more than made up for from the interest the US governemnt already owes and deposits into the trust every year.

This post is from the future.

[Stadium-Armory]

Cut spending across the board, including entitlements, and temporarily increase taxes for corporate and individuals. If tactically possibly, use every dollar of "new tax money" towards the deficit and not roll it in to the operational budget. I agree that government might not be the most efficient use of money, and think that any new dollar sacrificed by an individual or by a corporation should go straight to the deficit.

[Bliz]

I think you just tax everybody at the same rate. No loop holes, just a flat tax.

How many different threads do we have to deal with this nonsense? Eliminate all loop holes and deductions if you want, but getting rid of tax brackets is the most sure fire way imaginable to destroy the middle class and even further burden the poor in this country, to the benefit of the richest citizens. Flat tax is not reasonable, rational, or just by any stretch of the imagination.

[Homercles82]

How many different threads do we have to deal with this nonsense? Eliminate all loop holes and deductions if you want, but getting rid of tax brackets is the most sure fire way imaginable to destroy the middle class and even further burden the poor in this country, to the benefit of the richest citizens. Flat tax is not reasonable, rational, or just by any stretch of the imagination.

How does normalizing a tax rate destroy the middle class? I really have no idea how that would work. Also, flat tax proposals I have read eliminate federal income tax on people earning less than X amount of dollars per year, which is different based on relationship status.

[JMS]

If this were true, Social Security wouldn't be in bad shape now. It's all well and good to say that the Government should borrow and then pay back but the problem is that the payback part is left to be managed by the same folks who are using this money. You got the Fox in the Hen House here and that will never work All that ever happens is that one lawmaking body kicks the can down the road to the next and so on.. Unless you can figure out a way to fix that problem, none of that solution will ever work.

http://www.ssa.gov/history/hfaq.html

Q27: Do the Social Security Trust Funds earn interest?

A: Yes they do. By law, the assets of the Social Security program must be invested in securities guaranteed as to both principal and interest. The Trust Funds hold a mix of short-term and long-term government bonds. The Trust Funds can hold both regular Treasury securities and "special obligation" securities issued only to federal trust funds. In practice, most of the securities in the Social Security Trust Funds are of the "special obligation" type. (See additional explanation from SSA's Office of the Actuary.)

The Trust Funds earn interest which is set at the average market yield on long-term Treasury securities. Interest earnings on the invested assets of the combined OASI and DI Trust Funds were $55.5 billion in calendar year 1999. This represented an effective annual interest rate of 6.9 percent.

The Trust Funds have earned interest in every year since the program began. More detailed information on the Trust Fund investments can be found in the Annual Report of the Social Security Trustees and on the Actuary's webpages concerning the Investment Transactions and Investment Holdings of the Trust Funds.

It is certainly true that the federal government borrows money from the social security trust, it doesn't pilfer that money without paying it back or paying interest on what it takes.

It's also certainly true that social securities issues are not an immediate crisis. The trust is decades away from being insolvent; and even then decades from now the deficit spending the program will experience is only a small fraction of the benefits it will be paying out at that time.

The entire issue can be further pushed back through minor tweaks to retirement age... six months or so. Lawmakers have done such tweaks to the system in every decades since the 1930's and another such tweak would further secure the system into the future.

It's all well and good to say that the Government should borrow and then pay back but the problem is that the payback part is left to be managed by the same folks who are using this money

Again that's not the case. The social security trust fund has it's own staff, own budget and is financed from it's own revenue chain. It is not dependent or associated with the US treasury which falls under the presidents authority. Rather it's got it's own charter which can only be modified by congress.

All that ever happens is that one lawmaking body kicks the can down the road to the next and so on

That's kind of the big lie, that's being spread around.... Social Security is the most successful government program ever. It's distributed more funds, kept more folks above the poverty line, and operated in a surplus nearly for it's entire existence... It's currently trillions of dollars in the black..

But because we can foresee a time decades into the future where it won't be in the black, which might require tweaking... that's justification to give up on the entire program...

fact is the GOP has made this same pitch against social security for every decade since it's inception including in the 1930's and it's never been convincing.

[Homercles82]

Average Social Security payout = $1,177/month or $14,124.

Poverty line for an individual is $10,980.

Yea, they're above poverty but let's just say their golden years, aren't very golden.

[Bliz]

How does normalizing a tax rate destroy the middle class? I really have no idea how that would work. Also, flat tax proposals I have read eliminate federal income tax on people earning less than X amount of dollars per year, which is different based on relationship status.

(borrowing liberally from my own posts in the "Eat the Rich..." thread.)

The impact of a flat tax is incredibly regressive, and unavoidably over-burdens the poorest among us, because there is a certain baseline of expenditures that everyone who wants to be sheltered, fed and clothed must spend.

It's called the decreasing marginal utility of the dollar. Whether or not $100 is a lot of money depends on how much you have. And with each additional dollar you add to your pot, the "value" of each of your preceding dollars decreases. The last $100 of income of a family living near poverty is considerably more valuable than the last $100 of income of a millionaire, so it is not at all "fair" and "equal" to tax that last $100 of income the same despite vast differences in the marginal value.

Try not to think about it in absolutes. Consider that in order to be "fair" a tax system should impose approximately the same pain on everyone. Because of the decreasing marginal utility, doing that requires higher percentages from higher income levels.

As a consequence of the decreasing marginal utility, the true impact of a flat tax is highly regressive because it imposes a disproportionately harsh burden on the poor that becomes less and less harsh as the rate of income increases.

Instead it would be much more sensible to keep income brackets, again where, just like they do now, everyone pays the same amount of taxes on the "first dollars" (e.g., first $50k of income gets taxed the same, regardless how much you make per year), and simplify the tax code by getting rid of many deductions. You can wind down the IRS bureaucracy and weed out tax cheats without the same impact on the lower classes.

Flat tax is simple. That's about the only thing it has going for it.

[Homercles82]

Thanks. So some flat tax plans are only on the first $50,000 of income regardless of total income? That makes no sense and isn't fair at all.

[Elessar78]

why just the "liberal" friends? When was the last time the gov't posted a surplus?

[ABQCOWBOY]

How many different threads do we have to deal with this nonsense? Eliminate all loop holes and deductions if you want, but getting rid of tax brackets is the most sure fire way imaginable to destroy the middle class and even further burden the poor in this country, to the benefit of the richest citizens. Flat tax is not reasonable, rational, or just by any stretch of the imagination.

I guess one more time at least.

[Bliz]

Thanks. So some flat tax plans are only on the first $50,000 of income regardless of total income? That makes no sense and isn't fair at all.

$50k was just a random number. What I mean is, our current progressive tax system, all first dollars are taxed the same. The first $20k of your income is taxed the same regardless if you make $25k, $250k, or $2.5 million a year. That's true at every number across all income ranges.

So what I'm saying is, you have tax brackets and keep that same idea.

A flat tax says everyone pays 23% (or whatever) of their salary, regardless if they make $20k per year or $2.5 million per year. And that's where my point about decresaing marginal utility comes in

[ABQCOWBOY]

http://www.ssa.gov/history/hfaq.html

It is certainly true that the federal government borrows money from the social security trust, it doesn't pilfer that money without paying it back or paying interest on what it takes.

It's also certainly true that social securities issues are not an immediate crisis. The trust is decades away from being insolvent; and even then decades from now the deficit spending the program will experience is only a small fraction of the benefits it will be paying out at that time.

The entire issue can be further pushed back through minor tweaks to retirement age... six months or so. Lawmakers have done such tweaks to the system in every decades since the 1930's and another such tweak would further secure the system into the future.

Again that's not the case. The social security trust fund has it's own staff, own budget and is financed from it's own revenue chain. It is not dependent or associated with the US treasury which falls under the presidents authority. Rather it's got it's own charter which can only be modified by congress.

That's kind of the big lie, that's being spread around.... Social Security is the most successful government program ever. It's distributed more funds, kept more folks above the poverty line, and operated in a surplus nearly for it's entire existence... It's currently trillions of dollars in the black..

But because we can foresee a time decades into the future where it won't be in the black, which might require tweaking... that's justification to give up on the entire program...

fact is the GOP has made this same pitch against social security for every decade since it's inception including in the 1930's and it's never been convincing.

If any of this were true, we would not have shortages now. I'm sorry but replacing hard tax dollars with bonds is not a solution. If anybody believe it were, both sides would not be scrambling to figure out a way to fix it.

As for your last statement, that's not accurate. According to an ABC poll taken just last month, over 80% of Americans believe that it is in trouble.

http://thehill.com/blogs/on-the-money/budget/150493-poll-large-majority-believes-social-security-headed-toward-trouble

[Predicto]

I go back to the NYtimes article with the budget proposals from the debt commission. From memmory,

A) raise SS age 4 years

hold fed workers pay level for 2 years

C) let Bush tax cuts expire.

D) cut defense spending - and defund 1 or both wars

Add in aggressive action on Medicare and you are there, pretty much.

I do not agree with means testing on Social Security. Social security is a compact for a worker funded old age safety net, not straight welfare. It has worked so well for so many years because everyone is invested in it and everyone collects from it.

This is not to say that means testing is always inappropriate. Why are you entitled to free health care just because you are old, even if you are rich as all get out? I would eliminate Medicare entirely, and expand Medicaid to the elderly who can't afford care the same as anyone else.

You need to make sure that the elderly still can get health insurance, but there are ways to do that legislatively. Taxpayers paying for every medical bill of Warren Buffet is insane.

---------- Post added April-8th-2011 at 11:24 AM ----------

If any of this were true, we would not have shortages now.

You are wrong. The only problem with Social Security is a purely demographic problem, because people are living longer and longer. It is easily fixed by adjusting the age of SS collection to reflect the real lifespans of Americans in the 21st century.

Social Security is not broken, and may well be the most efficient, most effective government program ever enacted in accomplishing its overriding goals (which was to remove the natural human fear of dying in abject poverty, removing social unrest, preserving the free enterprise system, and keeping the US from a socialist revolution).

[luckydevil]

I would love to transform ss into a welfare program for the elderly poor.

[Bang]

This could be problematic. What are the "means" used to decide that? Is it going to discourage people from saving for their retirement?

Well it would definitely require a lot more thought than I'm capable of.

I don't mind reducing corporate tax rates if big corporations like GE actually pays more tax, rather than nothing.

I agree, and the fact is that so long as there's taxes, corps are going to look for the way to pay the least.. which is fine within the law, I suppose. The prime reason we're losing jobs to overseas is we can't compete on price. The high tax rate is part of that problem.

While I agree with you, I'm not sure how to deal with human nature. People who manage organizations generally want to grow, not shrink, their organizations.

true, but i'm talking about federal agencies that should not be subjected to capitalistic growth. i'd also say that private companies contracting with the government should be as honest and as frugal with their uses of the funds as possible, lest they lose the contract and cause their business to shrink that way.

Basically, if you want government funding for a project, better be sure every penny goes where it's supposed to.

~Bang