American Financial Numbers

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dshields's picture
dshields
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American Financial Numbers

It takes a few minutes to poke around in here but it is an interesting journey.  Once the numbers are compiled and placed in a graphical format they are a lot easier to understand.  It is all pretty scary.  There has to be some serious spending cuts across the board at the federal level or there is going to be a national financial emergency.  The welfare/warfare state is not working in America...

http://www.heritage.org/BudgetChartBook/contents

 

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Data says....

I went to your link and looked through the charts. There is much to comment on, but I’d thought I’d raise this specific point to see if you can help me understand why this organization is posting this stuff.

The basic premise from Heritage is that spending is the causal problem of the deficit, and revenue has nothing to do with the deficit issue (A conclusion that suspiciously benefits the underwriters and financiers of this organization). I believe that is your assertion as well. I find this notion to be unbelievable, and conclude this from Heritages’ own data:

Link to graph

Chart # 11 shows a historical chart from 1960 to today. It actually projects forward, but I’m skeptical of future projections (especially any put forth by Heritage), so let’s just limit our observations to current time (2011) back to the start point of the Heritage graph of 1960.

What do we see?

Well we see data that supports the exact opposite conclusion. In fact, we see revenue at 14.8% of GDP for 2011, which is not only the lowest revenue percentage of the entire graph, but it also happens to be the lowest revenue level since the end of World War II. Yet, the Heritage Foundation makes the following conclusion:

The main driver behind long-term deficits is government spending—not low revenues. While revenue will surpass its historical average of 18.0 percent of GDP by 2021, spending will shoot past its historical average of 20.3 percent, reaching 26.4 percent in the same year.

So despite the data showing that revenue is the lowest it’s ever been, we’re supposed to accept that this has nothing to do with the deficit? Seriously?

To turn now to the subject of spending, I see no mention of the widely acknowledged principle that much of the projected spending increases can be addressed by modification to the REVENUE side of the entitlement programs, specifically by eliminating the $106,500 cap on taxation for SSI, and by reducing Medicare costs.

DShields, I find this disingenuous to say the least. It is obvious to me, and to anyone that chooses to ignore the erroneous prompting by Heritage as to the conclusions of what these data mean, that they portray a picture precisely opposite to what is claimed. I find this tactic is used universally by right wing groups, as they hope that the intellectual (?) effort needed to draw your own conclusions will be too great for the average person to invoke, and instead they spoon feed you their opinion and hope you don’t check. Besides, it’s what you really want to hear anyway isn’t it?

So help me out here DShields, since this conclusion seems to be central to your own messaging, how do you reconcile this chart?

 

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dshields
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darbikrash
darbikrash wrote:

I went to your link and looked through the charts. There is much to comment on, but I’d thought I’d raise this specific point to see if you can help me understand why this organization is posting this stuff.

The basic premise from Heritage is that spending is the causal problem of the deficit, and revenue has nothing to do with the deficit issue (A conclusion that suspiciously benefits the underwriters and financiers of this organization). I believe that is your assertion as well. I find this notion to be unbelievable, and conclude this from Heritages’ own data:

Link to graph

Chart # 11 shows a historical chart from 1960 to today. It actually projects forward, but I’m skeptical of future projections (especially any put forth by Heritage), so let’s just limit our observations to current time (2011) back to the start point of the Heritage graph of 1960.

What do we see?

Well we see data that supports the exact opposite conclusion. In fact, we see revenue at 14.8% of GDP for 2011, which is not only the lowest revenue percentage of the entire graph, but it also happens to be the lowest revenue level since the end of World War II. Yet, the Heritage Foundation makes the following conclusion:

The main driver behind long-term deficits is government spending—not low revenues. While revenue will surpass its historical average of 18.0 percent of GDP by 2021, spending will shoot past its historical average of 20.3 percent, reaching 26.4 percent in the same year.

So despite the data showing that revenue is the lowest it’s ever been, we’re supposed to accept that this has nothing to do with the deficit? Seriously?

To turn now to the subject of spending, I see no mention of the widely acknowledged principle that much of the projected spending increases can be addressed by modification to the REVENUE side of the entitlement programs, specifically by eliminating the $106,500 cap on taxation for SSI, and by reducing Medicare costs.

DShields, I find this disingenuous to say the least. It is obvious to me, and to anyone that chooses to ignore the erroneous prompting by Heritage as to the conclusions of what these data mean, that they portray a picture precisely opposite to what is claimed. I find this tactic is used universally by right wing groups, as they hope that the intellectual (?) effort needed to draw your own conclusions will be too great for the average person to invoke, and instead they spoon feed you their opinion and hope you don’t check. Besides, it’s what you really want to hear anyway isn’t it?

So help me out here DShields, since this conclusion seems to be central to your own messaging, how do you reconcile this chart?

 

The answer is - drum roll - I agree.  I did not assert that the Heritage data was a rose garden but on the other hand I do not believe it is all a huge lie either.  It has to be run though the "reasonable" filter just like all other data.  All in all the data looked fairly solid but I also do not always agree with their conclusions.  For example, not long ago I was on that site and there was a big article on the home page saying how great free trade agreements are and how we need more of them.  I am not convinced the so called free trade agreements we are in are so great and I do not think we should enter into any more of them.  I am not a member of Heritage nor do I plan to be.

That aside, on the revenue side of the deficit equation there is another chart (number 13) that shows income tax by income sector.  I have seen this information before on other sites and this site's data appears to be consistent with my previous observations.  It shows that the top 10% of income earners, those making 114,000 dollars and up paid 70% of the income taxes in 2008.  It is probably more now as the income distribution in America is even worse now than it was in 2008.  Now I see Obama and other members of the democratic party get on TV on a regular basis and claim taxes should be raised on the rich as they do not pay their fair share.  If you believe people making 114,000 a year and up are rich then it looks to me like they are already paying more than their fair share, they pay 70%.  Even more disturbing is the bottom 50% only pay 2.7%.  This is clearly broken as a small percentage of the population should not be paying a really large majority of the taxes while half the country pays nothing and reaps great benefits from the small percentage's toil.  If we want to do something about revenue we need to do something about the half of the country that incredibly pays nothing.  If I was on a revenue hunt I would start there.

When I sit back in my chair and take off my constitutionalists hat that says that people should be treated reasonably equally (so pretty much everyone should have to pay at  least some income taxes) and to be fair, the percentage should be fairly equal across the income spectrum  that way people who make more pay more but everyone has some skin in the game.  That said, it is really hard now and I think it is going to get a lot harder over the next few years.  The bottom 50% really is not in a position to pay more taxes and the top 10% are already paying 70% of the taxes which is too much for 10% to pay.  That analysis leads me to believe that we may be topped out on the revenue side and so we need to look at the spending side for deficit control.  Plus, I have never once in my life even seen a case where increased revenue to a government resulted in a decrease in spending.  i just do not think it works that way, at least not any more.  The government, both repubs and dems (except for a few tea party people) seem to be simply unable to control spending.  There is no self discipline.  It is unreasonable.  Since we were taken off the gold standard (by a republican and shame on him) the rule has been increased government spending.  In the last decade it has really got out of hand.  Bush was a big spender and Obama makes him look like an amateur.  The answer to out of control spending is not more revenue, it is to cut spending.  I do not mean cut the increase in spending, I mean cut spending.  A good start would be to go back to 2008 spending levels.  That is only 3 years ago.  If we can not even do that then it is tick tock tick tock - the doom clock...

 

 

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darbikrash
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More to the data....

Thanks for the well thought out reply. It seems, on the surface, very sensible, But there is a problem. The problem is that the Heritage data shows that the total revenue is at the lowest point since 1960. And if you search further (elsewhere) you will see that revenue is lower than at any time since the end of WWII.

So, DShields, perhaps the correct question is where did all the money go? If the upper income levels are all taxed exorbitantly, as you claim, there where did all the revenue go, as we can clearly see from the Heritage graphs that is went somewhere. Would not reasonable people look at his rather massive drop and try to explain this, but yet we see Heritage and conservatives in general making arguments that at the individual level, we are already overtaxed. A conclusion  I would not dispute.

But having said that, it is a generous piece of dishonesty to make the conclusion that we must throw in the towel on taxation and start chopping spending.

If revenue is at historically low levels, and individual taxation is objectionably high, than where is the money, and where did it go?

I’ll tell you where it went, it is bundled in the revenue of corporations, and it is in corporations massively reduced tax payments-none of which is even remotely mentioned in the Heritage piece. This is because a major platform of conservative ideology is to reduce discussion of taxation to the individual level, more dishonesty, which is in effect a version of three card monte, the real money is in corporate revenue, not individual income.

So we have a scenario where a guy making $120k a year pays 35% federal tax, and a corporation making billions might pay zero tax. And the conservatives shield the corporations’ practice of doing this as it is part and parcel of their ideology- not to mention the source of their paychecks, and reduce the argument to a false choice of taxing the $120k/year guy more or cutting entitlement spending. In this type of argument who do you think wins?

Consider that (at FY 2009 levels) American business made enough total revenue in six months to pay the entire $14 trillion Federal deficit in one fell swoop. Six months. I’m not suggesting they should, but I am using this metric to put the issue into a perspective that you will not see on Heritage’s website.

Also consider that of the $28 trillion in FY 2009  total corporate revenue, nearly 97% of that is totally tax free, e.g. corporations pay no federal income tax on this amount. After backing out cost of good sold, US corporations had $11 trillion worth of additional deductions, if 10% of this were applied directly to the annual operating revenue, even at current spending levels we would have no deficit at all. Again I am not suggesting this, I use this to put the problem in  perspective.

So why are we talking about additional taxation on a $120k/year guy? Of course he’s not rich, and yes, he is overtaxed already, but so are the middle and lower classes who pay exorbitantly taxes, not directly in Federal tax, for gasoline, sales tax, etc, etc.

I’ve made these points in other posts before, so I won’t elaborate further, but I would conclude that the data shows very clearly the motivation is ideologically biased to cut entitlement spending, and to take the shortage off the backs of the middle class, rather than touch the scared cow of corporate income.

The conclusion that spending is the causal action of the deficit and that revenue has nothing to do with it is demonstrably false, the report in general, its conclusion, and virtually the entire website- if not the entire organization- is pure propaganda.

But the charts look great!

(Nothing personal here toward you DShields, but somebody has to say it.)

 

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xraymike79
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darbikrash wrote: ... If
darbikrash wrote:

...

If revenue is at historically low levels, and individual taxation is objectionably high, than where is the money, and where did it go?

I’ll tell you where it went, it is bundled in the revenue of corporations, and it is in corporations massively reduced tax payments-none of which is even remotely mentioned in the Heritage piece. This is because a major platform of conservative ideology is to reduce discussion of taxation to the individual level, more dishonesty, which is in effect a version of three card monte, the real money is in corporate revenue, not individual income.

So we have a scenario where a guy making $120k a year pays 35% federal tax, and a corporation making billions might pay zero tax. And the conservatives shield the corporations’ practice of doing this as it is part and parcel of their ideology- not to mention the source of their paychecks, and reduce the argument to a false choice of taxing the $120k/year guy more or cutting entitlement spending. In this type of argument who do you think wins?

Consider that (at FY 2009 levels) American business made enough total revenue in six months to pay the entire $14 trillion Federal deficit in one fell swoop. Six months. I’m not suggesting they should, but I am using this metric to put the issue into a perspective that you will not see on Heritage’s website.

Also consider that of the $28 trillion in FY 2009  total corporate revenue, nearly 97% of that is totally tax free, e.g. corporations pay no federal income tax on this amount. After backing out cost of good sold, US corporations had $11 trillion worth of additional deductions, if 10% of this were applied directly to the annual operating revenue, even at current spending levels we would have no deficit at all. Again I am not suggesting this, I use this to put the problem in  perspective.

So why are we talking about additional taxation on a $120k/year guy? Of course he’s not rich, and yes, he is overtaxed already, but so are the middle and lower classes who pay exorbitantly taxes, not directly in Federal tax, for gasoline, sales tax, etc, etc.

...

 

This is the same thinking that looks at looting in Britain as the source of moral decay while turning a blind eye to the white collar crime of Britain's "The City" and New York's Wallstreet as well as a captured and bought government.

DShields,

      This information might help you to understand your blind spot:

Here is the Matt Taibbi article referred to by Cenk Uygu in the above video:

Matt Taibbi - Corporate Tax Holiday in Debt Ceiling Deal - Where's the Uproar?

    For those who don’t know about it, tax repatriation is one of the all-time long cons and also one of the most supremely evil achievements of the Washington lobbying community, which has perhaps told more shameless lies about this one topic than about any other in modern history – which is saying a lot, considering the many absurd things that are said and done by lobbyists in our nation’s capital.

    Here’s how it works: the tax laws say that companies can avoid paying taxes as long as they keep their profits overseas. Whenever that money comes back to the U.S., the companies have to pay taxes on it.

    Think of it as a gigantic global IRA. Companies that put their profits in the offshore IRA can leave them there indefinitely with no tax consequence. Then, when they cash out, they pay the tax.

    Only there’s a catch. In 2004, the corporate lobby got together and major employers like Cisco and Apple and GE begged congress to give them a “one-time” tax holiday, arguing that they would use the savings to create jobs. Congress, shamefully, relented, and a tax holiday was declared. Now companies paid about 5 percent in taxes, instead of 35-40 percent.

    Money streamed back into America. But the companies did not use the savings to create jobs. Instead, they mostly just turned it into executive bonuses and ate the extra cash. Some of those companies promising waves of new hires have already committed to massive layoffs...

    The law that says corporations do not have to pay taxes on profits overseas is one of the reason there has been a mass exodus of jobs out of the US to overseas locations, so that not only are labor costs lower but the profits made on that labor are not taxed.

Taibbi continues...

    The madness that is the proposed tax repatriation holiday is continuing and gathering steam. More and more members of congress are coming out of the woodwork, scratching their chins in contemplative consideration as it were, pretending that they’ve just realized what a great day a corporate tax holiday would be – not that they’ve taken gazillions of dollars from the firms lobbying for it or anything.

    The latest convert seems to be Nevada Democrat Shelley Berkley. Berkley’s plan is to offer a pseudo-holiday – not the full-fledged happy-ending massage the companies wanted (i.e. a reduction from 35 percent+ to 5.25 percent) but a mere ten-point shave:

        Representative Shelley Berkley, a Nevada Democrat, is the latest lawmaker to consider legislation allowing multinational companies to send offshore profits to the U.S. at a reduced tax rate.

        Her proposal, which was confirmed yesterday by Berkley’s communications director, David Cherry, would allow companies to return profits to the U.S. at a 25 percent tax rate, 10 percentage points below the maximum statutory rate. Most companies publicly supporting a holiday, such as Duke Energy Corp., have spoken favorably of the 5.25 percent rate that is being offered by Representative Kevin Brady, a Texas Republican.

    One thing that people must understand about this tax repatriation business is that it’s a wholly bipartisan affair. It’s not solely the work of evil Republicans. This is a scheme that requires heavies in both parties to help ram the knotty, hard-to-sell legislation through. On the Democratic side, unsurprisingly, the main actor is going to be Chuck Schumer. John Kerry is also involved with this nastiness. Barbara Boxer led the 2004 effort and the failed 2009 campaign to get a holiday, and is rumored to be lurking somewhere in this business.
...

    For another brief, easy-to-understand article on the corporation welfare scam, read
"How Do Corporations Dodge Taxes".

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goes211
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Which is it?

DK,

In your first post you state

To turn now to the subject of spending, I see no mention of the widely acknowledged principle that much of the projected spending increases can be addressed by modification to the REVENUE side of the entitlement programs, specifically by eliminating the $106,500 cap on taxation for SSI, and by reducing Medicare costs.

In your other post you state

So why are we talking about additional taxation on a $120k/year guy? Of course he’s not rich, and yes, he is overtaxed already, but so are the middle and lower classes who pay exorbitantly taxes, not directly in Federal tax, for gasoline, sales tax, etc, etc.

Which is it, is he over taxed already or should the SS cap be raised so that he ( and his employer ) pay another 12% in taxes?  Aren't these two positions contradictory?

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darbikrash
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Got to go

 Indeed which is it.

Sorry, Goes211, the above $106,500 exemption has got to go. The corporation's ludicrous tax shelters-got to go. The offshoring shelter tax exempt scam- got to go.

Contradictory to some, obvious to others.

Perhaps if some of our corporate friends actually paid a tax, maybe the rest of us could get a break and reproportion this system a little more rationally

 

 

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goes211 wrote:DK,In your
goes211 wrote:

DK,

In your first post you state

To turn now to the subject of spending, I see no mention of the widely acknowledged principle that much of the projected spending increases can be addressed by modification to the REVENUE side of the entitlement programs, specifically by eliminating the $106,500 cap on taxation for SSI, and by reducing Medicare costs.

In your other post you state

So why are we talking about additional taxation on a $120k/year guy? Of course he’s not rich, and yes, he is overtaxed already, but so are the middle and lower classes who pay exorbitantly taxes, not directly in Federal tax, for gasoline, sales tax, etc, etc.

Which is it, is he over taxed already or should the SS cap be raised so that he ( and his employer ) pay another 12% in taxes?  Aren't these two positions contradictory?

He's not saying anything about a "12%" increase. The current cap on Social Security payroll taxes exempts all income above the first $106,800 each person earns. Who does this favor? - anyone whose income exceeds $106,800. So the more you make, the smaller the amount of SSI tax you are paying as a percentage of your income.  The proposed SSI taxation on the other 13K of a 120K earner won't be felt much at all, but will level the field for all earners and help fund Social Security.

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dshields
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darbikrash
darbikrash wrote:

Thanks for the well thought out reply. It seems, on the surface, very sensible, But there is a problem. The problem is that the Heritage data shows that the total revenue is at the lowest point since 1960. And if you search further (elsewhere) you will see that revenue is lower than at any time since the end of WWII.

So, DShields, perhaps the correct question is where did all the money go? If the upper income levels are all taxed exorbitantly, as you claim, there where did all the revenue go, as we can clearly see from the Heritage graphs that is went somewhere. Would not reasonable people look at his rather massive drop and try to explain this, but yet we see Heritage and conservatives in general making arguments that at the individual level, we are already overtaxed. A conclusion  I would not dispute.

But having said that, it is a generous piece of dishonesty to make the conclusion that we must throw in the towel on taxation and start chopping spending.

If revenue is at historically low levels, and individual taxation is objectionably high, than where is the money, and where did it go?

I’ll tell you where it went, it is bundled in the revenue of corporations, and it is in corporations massively reduced tax payments-none of which is even remotely mentioned in the Heritage piece. This is because a major platform of conservative ideology is to reduce discussion of taxation to the individual level, more dishonesty, which is in effect a version of three card monte, the real money is in corporate revenue, not individual income.

So we have a scenario where a guy making $120k a year pays 35% federal tax, and a corporation making billions might pay zero tax. And the conservatives shield the corporations’ practice of doing this as it is part and parcel of their ideology- not to mention the source of their paychecks, and reduce the argument to a false choice of taxing the $120k/year guy more or cutting entitlement spending. In this type of argument who do you think wins?

Consider that (at FY 2009 levels) American business made enough total revenue in six months to pay the entire $14 trillion Federal deficit in one fell swoop. Six months. I’m not suggesting they should, but I am using this metric to put the issue into a perspective that you will not see on Heritage’s website.

Also consider that of the $28 trillion in FY 2009  total corporate revenue, nearly 97% of that is totally tax free, e.g. corporations pay no federal income tax on this amount. After backing out cost of good sold, US corporations had $11 trillion worth of additional deductions, if 10% of this were applied directly to the annual operating revenue, even at current spending levels we would have no deficit at all. Again I am not suggesting this, I use this to put the problem in  perspective.

So why are we talking about additional taxation on a $120k/year guy? Of course he’s not rich, and yes, he is overtaxed already, but so are the middle and lower classes who pay exorbitantly taxes, not directly in Federal tax, for gasoline, sales tax, etc, etc.

I’ve made these points in other posts before, so I won’t elaborate further, but I would conclude that the data shows very clearly the motivation is ideologically biased to cut entitlement spending, and to take the shortage off the backs of the middle class, rather than touch the scared cow of corporate income.

The conclusion that spending is the causal action of the deficit and that revenue has nothing to do with it is demonstrably false, the report in general, its conclusion, and virtually the entire website- if not the entire organization- is pure propaganda.

But the charts look great!

(Nothing personal here toward you DShields, but somebody has to say it.)

 

LOL - you funny.  There is so much to say I don't where to start.  Let's see...

1) darbikrash - But having said that, it is a generous piece of dishonesty to make the conclusion that we must throw in the towel on taxation and start chopping spending. 

Why ?  If we can't raise personal taxes and raising corporate taxes is often a pass through (at least to some extent), then we are raising prices on ourselves.  Why would we want to do that ?  The &$%#@*& politicians made a bunch of stupid treaties resulting in millions of jobs being exported.  Plus, high taxes is not very good for establishing new businesses.  We need new business.  We need jobs.

2) darbikrash - Consider that (at FY 2009 levels) American business made enough total revenue in six months to pay the entire $14 trillion Federal deficit in one fell swoop. Six months. I’m not suggesting they should, but I am using this metric to put the issue into a perspective that you will not see on Heritage’s website.

True - you would not find that on Heritage.  Business is not some evil monster - LOL.  It is the job of business to make money so it can continue to exist and pay it's employees and pay it's debts and so on.  I sure hope the business I work for keeps making money - the more money the better.  Then they can pay me and if I work hard maybe I will get a raise and the business needs lots of money to develop and introduce new products.  The Company I work for plows vast amounts of money into new adventures and we give massive amounts of money away every year to non-profits to fund a cornucopia of charity things.  We donate many millions of USD to charity every year.  On the other hand, I am also definitely against corporate welfare.  Corporate welfare is non-sense.  Whether it be given through the tax code or just handed to them - it is a misuse of the people's hard earned money.  If the people are going to be forced to pay taxes it should at least go to something useful.

What do you have against cutting spending ?  We spend too much.  That is why there is so much debt.  If we did not spend too much we would not have all that debt.  We used to have a very solid economy.  When we were the manufacturing powerhouse of the world we could fund all kinds of cool stuff and keep budget discipline.  We are no longer that country.  We are now a welfare/warfare state.  It has to be changed.  If we raise taxes enough to balance the budget we will collapse.  We would have to double taxes to do that.  On the other hand, if I get laid off and get a job making half of what I now make I would have to cut my expensive or suffer a collapse also.  It is just the way it is.  Even a combination of tax increases and serious cutting may not be enough.  When you really look at the numbers it seems we are in an impossible situation.  The politicians have proved they can not summon the courage to cut spending.

It is starting to look like there is going to be a collapse no matter what we do.  Maybe we should start taking at look at that.  For instance, people should start being more self reliant.  If I depended on the government for my total security I would be worried right now - very worried.  Spending is going to be cut one way or another.  Either through some kind of organized process where we can try to control the result, or through some unorganized process - probably a crazy crisis - where we can not control the result.

If we are unable to come up with an organized method to cut spending then people need to understand the result of that and start taking action to protect themselves.  Stockpile food and water devices.  Acquire a method to defend ones property and females from being forcibly taken away by desperate people. There are so many black swans happening at the same time it is amazing  Everywhere you look there is truly amazing stuff going on.  Take a good look at how one might defend ones home in case of social unrest.  For instance, acquiring the materials needed for strongly boarding up the first floor windows and keeping those materials within easy reach  Get some gas cans for say 20 gallons of gas and put stabilizer in it so if your gas gets stolen or you can not purchase gas you can still have enough gas to escape from a city or situation if you need to.  Extra gas to run a generator for instance. Just look at it like car insurance.  You pay a lot of money for car insurance but you still hope you do not have a crash.

 

 

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darbikrash
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Data........

DShields, I’d say the subject of price inelasticity and corporations attempting to pass through taxation costs to consumers has been well covered on another thread. If you still don’t believe this, than recall the luxury tax debacle that was attempted some years back. A complete failure as people just refused to buy luxury goods when assesed a cost increase of 10%, which damaged companies as they sold fewer products and the government actually lost tax revenue.

To this I would add that some consideration for the hundreds of billions in cash that the multi-nationals are sitting on, as further evidence of where the money went. As to the largesse that your employer has exhibited, I believe you have said you’re a Wall Street trader, and we are well familiar with the acts of generosity from this group.

Why so eager to let corporate America off the hook for “legalized” stealing of our tax dollars and cheating the rest of us out of sufficient revenue to run a country- then immediately announcing to the world that the collective conclusion is……….that we had better cut spending as the worthless entitlement recipients have done it again?

Some may find this logic compelling – but I don’t.

Not to say that I am against spending cuts- I am not, but most certainly not under these circumstances.

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darbikrash wrote: Consider
darbikrash wrote:

Consider that (at FY 2009 levels) American business made enough total revenue in six months to pay the entire $14 trillion Federal deficit in one fell swoop. Six months. I’m not suggesting they should, but I am using this metric to put the issue into a perspective that you will not see on Heritage’s website.

That was a neat trick, making double the GDP in half a year.

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xraymike79 wrote: goes211
xraymike79 wrote:
goes211 wrote:

DK,

In your first post you state

To turn now to the subject of spending, I see no mention of the widely acknowledged principle that much of the projected spending increases can be addressed by modification to the REVENUE side of the entitlement programs, specifically by eliminating the $106,500 cap on taxation for SSI, and by reducing Medicare costs.

In your other post you state

So why are we talking about additional taxation on a $120k/year guy? Of course he’s not rich, and yes, he is overtaxed already, but so are the middle and lower classes who pay exorbitantly taxes, not directly in Federal tax, for gasoline, sales tax, etc, etc.

Which is it, is he over taxed already or should the SS cap be raised so that he ( and his employer ) pay another 12% in taxes?  Aren't these two positions contradictory?

He's not saying anything about a "12%" increase. The current cap on Social Security payroll taxes exempts all income above the first $106,800 each person earns. Who does this favor? - anyone whose income exceeds $106,800. So the more you make, the smaller the amount of SSI tax you are paying as a percentage of your income.  The proposed SSI taxation on the other 13K of a 120K earner won't be felt much at all, but will level the field for all earners and help fund Social Security.

You make an interesting point about social security taxes.  On one side I can agree with you - get rid of the cap.  I have not seen figures lately as to the exact impact of that on social security.  I am sure it is positive; it would be a big tax increase on those that make a lot of money - the evil rich people.  In general, I do not think taking the cap off saves social security.  The fundamental truth is if you have 2 people working for every one person receiving social security it does not work.  If I receive 2000 a month from social security, and many do and will, then the two people working would have to pay 1000 dollars a month each.  I don't think that works.  I do not think that is going to happen.  I think there will be a collapse before people pay 1000 dollars a month to social security.  The truth is the politicians stole all the cash from the fund and replaced it with IOU's from the treasury.  Now the economy is not robust enough to pay back the IOUs and we are all in trouble.  The Fed Res will print to purchase the Treasury instruments required to continue paying social security until that process fails.

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xraymike79
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DShields,     You are

DShields,

     You are really don't get it, do you? Trickle down economics doesn't work and hasn't worked. You're laughing by yourself. There was nothing in your rebuttal that really made sense to the facts that were laid before you.

As a matter of fact, the current political economy has made America very unstable:

John Robb explains this:

...an extreme concentration of wealth at the center of our market economy has led to a form of central planning.   The concentration of wealth is now in so few hands and is so extreme in degree, that the combined liquid financial power of all of those not in this small group is inconsequential to determining the direction of the economy.   As a result, we now have the equivalent of centralized planning in global marketplaces.  A few thousand extremely wealthy people making decisions on the allocation of our collective wealth.  The result was inevitable:  gross misallocation across all facets of the private economy. 

To see what this extreme wealth concentration looks like as a distribution, we don't have to look further than income distribution in the US (classic power law).   The liquid wealth of those on the extreme left of the curve completely outweighs the 99.5% of the population to the right (the distribution is FAR more skewed than most people even imagine -- Republican or Democrat).  This graph would also be a good way to demonstrate how decision making in a bureaucratic dictatorship in a country like the Soviet Union looked like before it collapsed.

Us-income-distribution

 

The result of central planning in the US has finally hit the wall.  The list of problems is endless. The misallocations range from the dangerous $600 trillion derivatives market to the destruction of the US middle class (by exporting jobs and the substitution of income with debt).

The end result is that our economic and political system has become very fragile.  All it will take is one extremely bad decision and the cascade of failure that follows will catch everyone off guard.

Do you think it's reasonable to do away with any sort of social safety net without extreme repurcussions?

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dshields
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xraymike79
xraymike79 wrote:

DShields,

     You are really don't get it, do you? Trickle down economics doesn't work and hasn't worked. You're laughing by yourself. There was nothing in your rebuttal that really made sense to the facts that were laid before you.

As a matter of fact, the current political economy has made America very unstable:

John Robb explains this:

...an extreme concentration of wealth at the center of our market economy has led to a form of central planning.   The concentration of wealth is now in so few hands and is so extreme in degree, that the combined liquid financial power of all of those not in this small group is inconsequential to determining the direction of the economy.   As a result, we now have the equivalent of centralized planning in global marketplaces.  A few thousand extremely wealthy people making decisions on the allocation of our collective wealth.  The result was inevitable:  gross misallocation across all facets of the private economy. 

To see what this extreme wealth concentration looks like as a distribution, we don't have to look further than income distribution in the US (classic power law).   The liquid wealth of those on the extreme left of the curve completely outweighs the 99.5% of the population to the right (the distribution is FAR more skewed than most people even imagine -- Republican or Democrat).  This graph would also be a good way to demonstrate how decision making in a bureaucratic dictatorship in a country like the Soviet Union looked like before it collapsed.

Us-income-distribution

 

The result of central planning in the US has finally hit the wall.  The list of problems is endless. The misallocations range from the dangerous $600 trillion derivatives market to the destruction of the US middle class (by exporting jobs and the substitution of income with debt).

The end result is that our economic and political system has become very fragile.  All it will take is one extremely bad decision and the cascade of failure that follows will catch everyone off guard.

Do you think it's reasonable to do away with any sort of social safety net without extreme repurcussions?

Somehow I failed to articulate my position.  I was an engineering major and I have been an engineer since 1981.  I do not have the command of the english language that some around here have.  But, this I agree with.  The income distribution is broken.  I believe that I mentioned that in my last few posts on this thread.  I agree with you to the max on the problems that come from the current income distribution.  I think the entire system is broken.  There are some hedge fund managers that make incredible amounts of money.  I am not sure what you do about that.  There are people in the entertainment industry that make incredible amounts of money.  I am not sure what you do about that either.  I do know some rich people are they are not evil.  They were smart and then they got lucky and now they are rich.  Here is one of many examples of how I think the system is broke.  Corporate executives any many cases make too much money.  The excess amount of money they make is actually taken from the share holders - the very people they are supposed to be working for.  The reason they get the money is their boards give it to them.  The people on the boards are other big shot corporate executives.  So I think it is kind of like a club.  I give you a boat load of money and you do the same for me.  So if it is the board's responsibility to set executive pay then why are the boards not removed ?  Easy answer.  Regular people usually do not vote on board members.  Most people's shares are held in funds and the fund managers do the voting.  The fund managers are also part of the club.  The entire thing is broken.  If a law was passed that required funds to send the balots to the share holders in their funds I think a lot of things would change.  There is no such law nor will there be.  It is sad.

As to the safety net question, sorry dude, it is going to get cut.  Just because you or I wish it was not going to get cut does not mean it is not going to be cut.  I will repeat, it is going to be cut.  Everything is going to be cut.  The military, social security, medicaid, medicare, section 8 housing, food stamps (SNAP), WIC, agg subsidies, the EPA, the education department, the interior department, corporate welfare, you name it, everything.  It is going to be cut because we can not pay for it.  You can not raise taxes enough to pay for it without causing an emergency so they are not going to do it.  So everything is going to get cut.  I would be so bold as to suggest you and everyone else need to place more focus on how you are going to manage your situation when the cuts come.  That is what I am doing.

The government is broken.  We are unable to practice budget discipline.  The constitution doesn't mean squat anymore.  We went off the rails.  If something does not change right quick in a big way there is going to be an emergency.  We may well be past the point of no return already.  You seem like an educated decent person.  Just because you have liberal views does not mean you are bad.  I bet if I loaned you 100 dollars you would pay it back.  You have obviously studied the current situation in great depth.  You know what is going down as well as I do, maybe better.  I would strongly suggest you start to prepare yourself and your loved ones for what is coming.  I have read many of your posts for a long time.  You know what is coming - an American and therefore a world financial disaster.

 

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black swans

I found this a very interesting article.  It is not long.  If you do nothing else you should check out the list of black swans.  It is incredible and they are all happening now.  I do not think there has ever been anything like this.  The entire fiat money central bank thing did not work.  It created a welfare/warfare state that is unsustainable.  Stir in a decent dose of corporatism to pervert the political system and you get what we have.   Check it out...

http://www.marketoracle.co.uk/Article28838.html

 

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ao
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caught in the same old trap
darbikrash wrote:

I find this tactic is used universally by right wing groups, as they hope that the intellectual (?) effort needed to draw your own conclusions will be too great for the average person to invoke, and instead they spoon feed you their opinion and hope you don’t check. Besides, it’s what you really want to hear anyway isn’t it?

Actually, left wing groups are equally adept at this tactic.  Why the necessity for the left/right polarization?

I have a huge problem with the glorification of left wing ideology (or right wing ideology for that matter).  Among other things, left wing ideology has been responsible for killing more innocent humans (both born and unborn) than any other single factor in human history ... not an ideology that I'd personally be interesting in identifying with but YMMV.

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It is contradictory
darbikrash wrote:

 Indeed which is it.

Sorry, Goes211, the above $106,500 exemption has got to go. The corporation's ludicrous tax shelters-got to go. The offshoring shelter tax exempt scam- got to go.

Contradictory to some, obvious to others.

Perhaps if some of our corporate friends actually paid a tax, maybe the rest of us could get a break and reproportion this system a little more rationally

 

I did not say anything about preserving ludicrous tax shelters or offshoring so lets not go there.  In one post you say a guy making $120K is over taxed, in another you say all incomes over $106K need a 12% tax increase.  It may be obvious but if you don't find that contradictory, I think you are the one in the minority.

Also if income limits to SS taxes are removed, will the payouts be changed?  You might find it obvious to raise Bill Gates taxes by an additional 12% but if his SS payment is also going up proportionally, it is not going to save any money.  If high earners are not going to get higher SS payments, what is the reason to keep the SS and income tax pools separated?  If payments are not proportional to taxes paid, should SS be considered a retirement program or a welfare program?  I know you love taxes but wouldn't another alternative be to admit SS is a welfare program and means test SS payments?

darbikrash wrote:

Consider that (at FY 2009 levels) American business made enough total revenue in six months to pay the entire $14 trillion Federal deficit in one fell swoop. Six months. I’m not suggesting they should, but I am using this metric to put the issue into a perspective that you will not see on Heritage’s website.

Also consider that of the $28 trillion in FY 2009  total corporate revenue, nearly 97% of that is totally tax free, e.g. corporations pay no federal income tax on this amount. After backing out cost of good sold, US corporations had $11 trillion worth of additional deductions, if 10% of this were applied directly to the annual operating revenue, even at current spending levels we would have no deficit at all. Again I am not suggesting this, I use this to put the problem in  perspective.

 

You are not suggesting they should because you know that there would be no industry left.  You have made points like this in many threads and I have yet to hear you say how much of that $28 trillion you think are actual profits.  On that $28 trillion in receipts there is currently $1.25 trillion in profits and $333 billion in taxes paid.  You are suggesting that corporations should pay an additional $1.1 trillion dollars, effectively adding and additional 3 times their current tax payments and taking over 100% of current profits.

I have no doubt that corporate profit numbers are certainly fake and manipulated but how much gross profit do you think corporations really make?

In the past you have mentioned that you are a business owner.  I realize you probably don't want to give away your anonymity but you should be at least able to tell us what industry you are in and a general rate of profit on gross revenues without giving away too much.  I really want to know because your industry must be far more profitable than any business owner I know if you can afford to pay an additional 3 times your current taxes.

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the other group helped by social security

If social security goes then the baby boomers will not be the only generation to fail.  I am talking about generation X.  As a group they paid the highest prices for housing, daycare, education, and healthcare.  If social security gets cut... in a budget crisis then generation X will be suddenly burdened with the care of their underprepared parents. 

You cannot blame the baby boomers for being underprepared- they were promised social security, they even paid into it.  Their pensions are all but bust. Their 401k's are falling rapidly again.  You expect you might lose money with a private enterprise... But the risks were worth it if indeed you could get social security.

social security is not welfare!!!

But I firmly believe that if social security goes generation X will not be able to absorb the loss...  

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darbikrash
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GDP?
Stan Robertson wrote:
darbikrash wrote:

Consider that (at FY 2009 levels) American business made enough total revenue in six months to pay the entire $14 trillion Federal deficit in one fell swoop. Six months. I’m not suggesting they should, but I am using this metric to put the issue into a perspective that you will not see on Heritage’s website.

That was a neat trick, making double the GDP in half a year.

Hi Stan,

Below is an excerpt from the IRS publication “Statistics of Income- Corporation Tax Returns” as far as I know the most recent data available. From Page 1, you can find this quote, specifically noting that total annual revenue is in excess of $28 trillion.

Link


 

 The total receipts from operations and

investments decreased from $28.8 trillion to $28.6

trillion, a decrease of 0.6 percent.  This decrease

occurred despite an increase in business receipts,

which increased by 2.07 percent from $24.2 trillion to

$24.7 trillion.  Offsetting this increase in business

receipts were large decreases in investment income.

Interest received decreased from $2.6 billion to $2.1

billion, a reduction of 17.9 percent. Likewise, net

capital gains decreased from $291.9 million to

$131.3 million, a reduction of 55.0 percent.  The

Finance and Insurance sector experienced the

largest decrease in total receipts, falling $459.1

billion, or 11.1 percent.  

 

 Overall total deductions rose from $27 trillion to

$27.7 trillion, an increase of 2.6 percent.    Cost of

goods sold, a component of total deductions, grew

from $15.5 trillion to $16.1 trillion in 2008, an

increase of 3.7 percent.

 

 Corporate pre-tax profits, also known as net

income (less deficit), decreased by 46.4 percent,

from $1.84 trillion to $984.3 billion (Figure B).  When

excluding pass-through entities from the total, pre-

tax profits decreased from $1.06 trillion to $388.7

billion, a drop of 63.4 percent.


GDP is calculated in accordance with the following formula:

As a quick reminder, the classic definition of the GDP can be summarized with the following equation:

GDP = private consumption + gross private investment + government spending + (exports − imports)

or, as it is commonly expressed in algebraic shorthand:


GDP = C + I + G + (X-M)

For the first quarter of 2011 the values for that equation (total dollars, percentage of the total GDP, and contribution to the final percentage growth number) are as follows:



GDP Components Table

 

Total GDP

=

C

+

I

+

G

+

(X-M)

Annual $ (trillions)

$15.0

=

$10.7

+

$1.9

+

$3.0

+

$-0.6

% of GDP

100.0%

=

71.0%

+

12.7%

+

20.2%

+

-3.9%

Contribution to GDP Growth %

1.29%

=

0.07%

+

0.87%

+

-0.23%

+

0.58%





 You can see that although GDP for 2011 was around $15.0 trillion, this number is not direclty related to corporate income, which was over $28 trillion in the FY referenced.

 

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darbikrash
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ao wrote: Actually, left
ao wrote:

Actually, left wing groups are equally adept at this tactic.  Why the necessity for the left/right polarization?

I have a huge problem with the glorification of left wing ideology (or right wing ideology for that matter).  Among other things, left wing ideology has been responsible for killing more innocent humans (both born and unborn) than any other single factor in human history ... not an ideology that I'd personally be interesting in identifying with but YMMV.

I’m not sure that comment is really fair.

I have made the point many times dismissing the left/right paradigm, most recently here. In discussing these specific issues with DShields, I do reference conservatives and point the finger repeatedly at conservatives because that is the ideology with which he identifies, and that is how the website he references identifies. There is no doubt that Democrats and many liberals are equally bad- or worse. The top/bottom paradigm is much more salient when describing our current culture, but this division is even more unpopular, despite being far more accurate………

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ao
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darbikrash wrote: ao
darbikrash wrote:
ao wrote:

Actually, left wing groups are equally adept at this tactic.  Why the necessity for the left/right polarization?

I have a huge problem with the glorification of left wing ideology (or right wing ideology for that matter).  Among other things, left wing ideology has been responsible for killing more innocent humans (both born and unborn) than any other single factor in human history ... not an ideology that I'd personally be interesting in identifying with but YMMV.

I’m not sure that comment is really fair.

I have made the point many times dismissing the left/right paradigm, most recently here. In discussing these specific issues with DShields, I do reference conservatives and point the finger repeatedly at conservatives because that is the ideology with which he identifies, and that is how the website he references identifies. There is no doubt that Democrats and many liberals are equally bad- or worse. The top/bottom paradigm is much more salient when describing our current culture, but this division is even more unpopular, despite being far more accurate………

I'm glad you made that clarification.  The impression I got though (and it's an impression and not quantifiable evidence since I'm not going back to tally any "yea/nay" scores) is that you seemed to lean heavily left in most of your postings.  Karl Marx isn't exactly Phyllis Schafly although I found your writing about his ideology worthy of attention.

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dshields wrote:It shows that

[quote=dshields]It shows that the top 10% of income earners, those making 114,000 dollars and up paid 70% of the income taxes in 2008.  It is probably more now as the income distribution in America is even worse now than it was in 2008.  Now I see Obama and other members of the democratic party get on TV on a regular basis and claim taxes should be raised on the rich as they do not pay their fair share.  If you believe people making 114,000 a year and up are rich then it looks to me like they are already paying more than their fair share, they pay 70%.  [/quote]

"There are three kinds of lies: lies, damned lies, and statistics."

Those making $114,000 are probably the highest taxed portion of the population. At best, it is disingenuous for those in the top .1% - 5% to hide behind the very bottom of the top 10% as representative of the whole 10% paying outrageous taxes. A more transparent presentation would be the ratio of taxes to income and capital gains of each percentage of the population. Admittedly I do not have those figures but from the huge discrepancy in income between the top .1% - 5% of the population and the rest could easily account for why the top 10% pay 70% of the taxes.

[quote=dshields]Even more disturbing is the bottom 50% only pay 2.7%.  This is clearly broken as a small percentage of the population should not be paying a really large majority of the taxes while half the country pays nothing and reaps great benefits from the small percentage's toil.  If we want to do something about revenue we need to do something about the half of the country that incredibly pays nothing.  If I was on a revenue hunt I would start there.[/quote]

What is their income and ratio of taxes to income? Would be helpful if broken down in 5% increments.

[quote=dshields]The answer to out of control spending is not more revenue, it is to cut spending.  [/quote]

No argument here. In 2008 the US Congress and President gifted 13 trillion dollars to the wealthiest of the wealthy and charged it to the taxpayers. That's 13 followed by 12 zeros dollars.

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goes211 wrote:   I did not
goes211 wrote:

 

I did not say anything about preserving ludicrous tax shelters or offshoring so lets not go there.  In one post you say a guy making $120K is over taxed, in another you say all incomes over $106K need a 12% tax increase.  It may be obvious but if you don't find that contradictory, I think you are the one in the minority.

 

Goes211, we are discussing the Heritage Foundation’s claim that spending is the entire reason for the deficit, and that revenue had nothing to do with the deficit. Despite the data that shows that current 2011 revenue is 14.8% of GDP- the lowest in many decades.

I do think that taxes on individuals, within reasonable salary ranges, are maxed out. And yes I do think the cap should be raised on SSI, which as you well know is not a tax. I’m sorry you find this confusing, but this is what happens when you talk to people who do not let ideology override common sense.

The argument you bring forward about taxation is a false argument. Despite your unwillingness to “go there” it is all about tax deductions and exemptions, tax shelters, and legalized cheating by those with the means and access to high powered attorneys and accountants to “design” their own taxation protocols.

It is not about raising the tax from 35% to 40%, that is a fool’s game. The corporations and high net worth individual simply laugh at these debates, because they create exemptions for themselves so that their effective tax rate is zero, or as near to it as they can manage- as they can exempt certain types of income from any or most taxation. Last time I checked, 100% of zero was still zero.

The revenue numbers in the Heritage graph are so low because the aforementioned groups have collectively exempted themselves from the taxation schedules that the rest of us have to comply with. It is for this reason that I object to raising taxes for the “common man” because he is playing by one set of rules while the wealthy are inventing their own. The point to this is not for me or anyone else to determine “how much profit is too much” the point is to disallow access to favoritism and bias based on access to specialized professional services, access to legislators, and access to regulators which allow the elites to continue to steal money from the rest of us, and then incredibly, try to charge us back for their excesses.

And if this is not incredible enough, it would seem there is no shortage of people perfectly content to not only allow them to continue with the ridiculous strategy, but to defend them as they do so.

There is another reason I use this example of the corporations having the ability to pay the entire  $14.5 trillion deficit with just 6 months of revenue, (and once again no, I do not suggest this) and that is primarily to illustrate scale. The scale of the problem has been well covered by the Crash Course and others, the scale of any potential solution has been trivialized by some on this board as being an impossibility, and to justify this conclusion they tediously walk us through calculations that show that no amount of taxation at the individual level could make any significant dent on the federal deficit, which is true. But disingenuously, they neglect to tell you that at the corporate level, the scale is most certainly there to do just that- then they toggle into one or more of the following defenses:

-        US Corporations are already taxed at the highest rates in the world (False)

-        Taxation is theft anyway

-        Taxation is forcible extraction and is not acceptable in a “free” country and is incompatible with liberty.

-        We should remove taxes from corporations altogether, things would be better.

-        They’ll just raise the prices to us anyway, so it just a pass through.

Until one can break through these (and other) nonsensical notions there is little hope for any kind of reform- as you cannot reform what you misunderstand.

 

 

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theringleader wrote: If
theringleader wrote:

If social security goes then the baby boomers will not be the only generation to fail.  I am talking about generation X.  As a group they paid the highest prices for housing, daycare, education, and healthcare.  If social security gets cut... in a budget crisis then generation X will be suddenly burdened with the care of their underprepared parents. 

You cannot blame the baby boomers for being underprepared- they were promised social security, they even paid into it.  Their pensions are all but bust. Their 401k's are falling rapidly again.  You expect you might lose money with a private enterprise... But the risks were worth it if indeed you could get social security.

social security is not welfare!!!

But I firmly believe that if social security goes generation X will not be able to absorb the loss...  

Good point I had not considered - the impact on generation X.

There are only four ways that I know of that SS can go.

1) Benefits are cut back to where we can actually pay them.  This would be a substantial cut in benefits.

2) Benefits are held at current levels and the Federal Reserve directly monetizes the difference between the inbound revenue stream and the true costs of paying the benefits.  The result would be you would still get your money every money but it would buy less stuff due to inflation.

3) Double SS taxes.  I do not believe the Fed Gov has the ability to double SS taxes.  They do not have the votes.  To do so would no doubt cause some kind of national emergency.

4) Some hybrid of options 1, 2, and 3.

Are there any other alternatives you can think of ?

 

 

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ao wrote: darbikrash
ao wrote:
darbikrash wrote:

I find this tactic is used universally by right wing groups, as they hope that the intellectual (?) effort needed to draw your own conclusions will be too great for the average person to invoke, and instead they spoon feed you their opinion and hope you don’t check. Besides, it’s what you really want to hear anyway isn’t it?

Actually, left wing groups are equally adept at this tactic.  Why the necessity for the left/right polarization?

I have a huge problem with the glorification of left wing ideology (or right wing ideology for that matter).  Among other things, left wing ideology has been responsible for killing more innocent humans (both born and unborn) than any other single factor in human history ... not an ideology that I'd personally be interesting in identifying with but YMMV.

The left/right thing AND the class warfare thing are both leading us to a bad place.  I pretty much gave up the left/right thing after the recent so called "budget negotiations".  That was a disaster.  Both left and right lied like dogs and then when they got a blank check for 2.4 trillion dollars then both ran like hell for the woods.  Just shameful behavior on both sides.  If anything, it looked to me like they set us up - both the left and the right.  I lost a lot of confidence when both sides decided to not cut anything and just spend an enormus amount of money we do not have over the next year and a half to get us past the 2012 elections.  That is shameful.  They should get on TV apologize to the people.

The left/right thing brings paralysis.  The class warfare thing is destructive.  It pits American against American and hides the real issues in emotionalism and envy.  I strongly disapprove of the class warfare tactic and the race tactic.  Politicians will increasing use both these tactics in the months/years to come to try to manipulate and control the population as the economic situation goes downhill and thing get more desperate.

 

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taxing the ultra rich and multi-national corporations

It is tough to tax the ultra rich and multi-national corporations.  There are a lot of things they can do to avoid high taxes.  Both groups seem willing to pay some taxes to avoid media scrutiny.  But, as you raise the tax rate above a certain level it becomes more advantageous for them to take action and develop strategies to avoid the higher rates.  It seems like it is kind of like squeezing a wet bar of soap.  If you do not squeeze too hard you can hang on to the soap.  Start to squeeze harder and it just slips away.

 

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Social Security and GenX
theringleader wrote:

If social security goes then the baby boomers will not be the only generation to fail.  I am talking about generation X.  As a group they paid the highest prices for housing, daycare, education, and healthcare.  If social security gets cut... in a budget crisis then generation X will be suddenly burdened with the care of their underprepared parents. 

You cannot blame the baby boomers for being underprepared- they were promised social security, they even paid into it.  Their pensions are all but bust. Their 401k's are falling rapidly again.  You expect you might lose money with a private enterprise... But the risks were worth it if indeed you could get social security.

social security is not welfare!!!

But I firmly believe that if social security goes generation X will not be able to absorb the loss...  

I know I'm far from alone in my generation (X) when I say that I never expected Social Security promises to be kept for my generation, and consider it little more than a Ponzi scheme in its current form.  Furthermore, more and more Gen-X'ers like myself are largely opting out of the US economic system to limit the theft and to starve this government to end other crap like corporate welfare, neverending wars, TBTF banks, attacks on our freedoms, etc.  Carry these attitudes and trends forward and combine it with the wealth and population gap between the generations, I see within the next decade SS either dying or paying out a fraction of the money (in real terms) that it does today. 

As to what happens after that to the Boomers and the X'ers and Gen Y, I'd say that depends.  The cultural expectation that we personally take care of our parents in their later years has greatly faded, so unfortunately I expect some Boomers will be left out in the cold, figuratively and literally.  Whether that happens probably depends on how they raised their kids and the example they set in how they cared for their parents in their later years.  I expect even for those families that can (or are willing to) pull together it will be hard, but they'll try to make it work.  I'm only in my mid-30's and I'm already trying to plan ahead in how we're going to help care for all our parents (who are already in retirement) when their traditional retirement savings, pensions, SS, and maybe even Medicare eventually fail to provide what they need. 

My point is that Boomers will probably be the ones hurt the most by a failure of SS.  Gen X and Y will be hurt too to be sure (everyone will be), but we have more time to prepare and many of us are already planning for a life without SS.  We will find a way to manage.  The SS money is gone and replaced with empty promises, and I really think all generations should realign expectations to a future of a minimal or no SS safety net.

- Nickbert

goes211's picture
goes211
Status: Diamond Member (Offline)
Joined: Aug 18 2008
Posts: 1114
I was only talking about SS taxes, nothing more.
darbikrash wrote:
goes211 wrote:

 I did not say anything about preserving ludicrous tax shelters or offshoring so lets not go there.  In one post you say a guy making $120K is over taxed, in another you say all incomes over $106K need a 12% tax increase.  It may be obvious but if you don't find that contradictory, I think you are the one in the minority.

 

Goes211, we are discussing the Heritage Foundation’s claim that spending is the entire reason for the deficit, and that revenue had nothing to do with the deficit. Despite the data that shows that current 2011 revenue is 14.8% of GDP- the lowest in many decades.

I do think that taxes on individuals, within reasonable salary ranges, are maxed out. And yes I do think the cap should be raised on SSI, which as you well know is not a tax. I’m sorry you find this confusing, but this is what happens when you talk to people who do not let ideology override common sense.

The argument you bring forward about taxation is a false argument. Despite your unwillingness to “go there” it is all about tax deductions and exemptions, tax shelters, and legalized cheating by those with the means and access to high powered attorneys and accountants to “design” their own taxation protocols.

But I was not discussing the larger issue with the Heritage Foundation’s claim.  I made no comment about that and I agree that 14.8% of GDP is the lowest for several decades.  I was only pointing out your seemingly contradictory statements you made about needing to raise the SSI earnings limit while at the same time saying that a person making $120K is already over taxed.  Pointing out that rasing the SSI limit will raise the taxes on the already over taxed guy making $120K by at least another $1K.

Now I think I may understand your argument is that removing caps (or eliminating tax breaks) is not the same as rasing taxes.  Normally I would agree with this and I think that Republicans that are unwilling to discuss the removal any tax loopholes should not be considered very serious. 

Where I disagree with you is specifically the SSI earnings cap is not a tax break in any traditional sense.  SSI taxes are not a traditional tax on income, they are a tax on payroll that is supposed to be used to fund that persons future SS payments.  The total amount of your payments is what determines the amount you will get back in retirement.  This is done in a slightly progressive nature in that individuals with lower lifetime average wages receive a larger benefit (as a percentage of their lifetime average wage income) than do individuals with higher lifetime average wages.  If the cap is removed, the social contract is significantly changed, and a few questions must be answered.

Will SS payments for those that are paying the higher taxes also go up?  If so then much of the solvency gain of raising the tax cap is negated.  If not then SS had really just been transformed into a welfare program, and there will be no real reason to keep its funding as a separate tax (FICA).  At that point what would be the reason for funding segregation?  Why not have the taxes added to and benefits paid out from the general fund?

 

Also you still have never answered any of my questions about the business that you own.  If I am mistaken or have you confused with someone else, and you do not own you own a business, I apologize for the misunderstanding.

frobn's picture
frobn
Status: Silver Member (Offline)
Joined: Nov 28 2010
Posts: 184
What is your theory of where

What is your theory of where we are headed? Who is going to blink first and will it be soon enough or do you thing we already have past the tipping point?

dshields's picture
dshields
Status: Platinum Member (Offline)
Joined: Oct 24 2009
Posts: 599
Eyes Wide Open
frobn wrote:

What is your theory of where we are headed? Who is going to blink first and will it be soon enough or do you thing we already have past the tipping point?

People around here will tell you that I have been one of the few optimists here for several years.  I am a constitutionalists and was hoping that the 2010 election would change things.  I kept hoping that.  But the deficit/budget debate and negotiations were a watershed moment for me.  The repubs passed cap, cut, and balance - a start to correcting our gov financial problems.  All they had to do then was simply go home to their districts and wait.  Either the dems would pass it or the cuts would have started in August anyway.  They had it sewed up.  Then something happened.  I do not know what happened.  Then this big TV circus started.  All the so called negotiations were in secret meetings.  In the end Obama got his 1.2 Trillion blank check and there were no cuts - none.  Total collapse.  Both sides pandered to their bases and then turned around and spent all the money (borrowed money) they possibly could and then ran for the hills.  It was a huge flim-flam.  We the people were lied to by the very people elected to serve us.  Shame on them and shame on us.  The out of control spending spree did not even slow down.  During the last month before the agreement the Fed Gov was raiding the Federal Employee pension plans to keep the spending going - a dirty trick.

No, I have now come to the conclusion the Fed Gov simply can no longer control spending.  Forget all the talk and watch what they do.  They lie and they spend.  The Fed Res will not allow a Treasury auction to fail.  If the world will not buy our debt then the Fed Res will move in either directly or through the Primary Dealers to purchase the debt.  The terminology for that is "monetization of the debt".  This is inflationary and will eventually lead to the total financial collapse of America.

All the events of late among with a careful analysis of the numbers leads me to believe that we are past the tipping point.  The Fed Gov is paralyzed and at this point the only answer they have is call up the Fed Res and get more money.  It is hard for my mind to comprehend.  All my life I have always believed the Fed Gov would always be there and be solvent and above all it would always do the right thing.  It turns out I was wrong.  It has taken about a year to get that through my head.  It is really depressing and I still have moments where I go back to the government will save us thinking.  But they can't.  The simple but difficult fact is the government can not save us from ourselves.

 

Dogs_In_A_Pile's picture
Dogs_In_A_Pile
Status: Martenson Brigade Member (Offline)
Joined: Jan 4 2009
Posts: 2606
Not hopeful....
dshields wrote:

No, I have now come to the conclusion the Fed Gov simply can no longer control spending.  Forget all the talk and watch what they do.  They lie and they spend.  The Fed Res will not allow a Treasury auction to fail.  If the world will not buy our debt then the Fed Res will move in either directly or through the Primary Dealers to purchase the debt.  The terminology for that is "monetization of the debt".  This is inflationary and will eventually lead to the total financial collapse of America.

All the events of late among with a careful analysis of the numbers leads me to believe that we are past the tipping point.  The Fed Gov is paralyzed and at this point the only answer they have is call up the Fed Res and get more money.  It is hard for my mind to comprehend.  All my life I have always believed the Fed Gov would always be there and be solvent and above all it would always do the right thing.  It turns out I was wrong.  It has taken about a year to get that through my head.  It is really depressing and I still have moments where I go back to the government will save us thinking.  But they can't.  The simple but difficult fact is the government can not save us from ourselves.

ds -

I wouldn't go out and rent a leaf shredder and jump in it just yet.  Monetization of the debt is about the only option the government has left and in theory it could work and the inflation could be managed.  But it is a very low probability of success given that the same clowns who got us here would still be "in charge".

I'm guessing you have several years before you need to start thinking about the leaf shredder.

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