U.S. Debt discussion

[Calgaryborn]

Originally Posted by afc wimbledon

The problem with both sides is neither really want to admit to the US voter that the country is screwed, the Tea Party isn't going to want to close down 2/3rds of the US military, cancel all new weapons programmes, let S Korea fend for itself, withdraw from the middle east, close down homeland security, abandon Isreal to the arabs and fire most of its border guards. Nor can they survive when the average american realises that paying they will have to somehow cover their parents medical etc, basic services they take for granted will start to break down or disappear.

I was thinking they would start by raising the Social Security benfits age to 68. They might add a means test as well. Then eliminate Bush's added coverage to medicare. I'd go through all the government agencies and downsize where they overlap a State agency doing the same job. The Evironmental Protection Agency is an example of the Fed overreaching. They should be down sized with a smaller mandate which consists of overseeing only Federal lands and waters. Perhaps the Federal Government needs to look at wage and pension cuts for federal employees as well. This has already been done at the State level.

[Flames Fan, Ph.D.]

Originally Posted by Calgaryborn

I was thinking they would start by raising the Social Security benfits age to 68. They might add a means test as well.

So you're for taxation that reduces the incentive to make more income huh?

Because if you means test, you're basically telling people that if they make more income in their lives, then the government will charge them more for their medical care. So this is a disincentive to invest / make more money, just like "higher taxes" is a disincentive to invest / make more money*.



* there's a hat tip due here, but i'll divulge it later.

[Slava]

I've come to the conclusion that the tea party and their supporters are just delusional. Purely anecdotally they had some guy on QR77 yesterday who took the position that the US was staring into the abyss. Consumer confidence was terrible, yada, yada, yada. At the end of the interview I flipped stations and caught the business report. First comment was that consumer confidence surprised to the upside and the housing market has leveled out.

Couple that with reading some of the posters here who think Obamacare has caused every single issue the country faces and that the stock markets might somehow react positively to there being no deal next week and its pretty clear which side knows nothing about money and economics.

[afc wimbledon]

Originally Posted by Calgaryborn

I was thinking they would start by raising the Social Security benfits age to 68. They might add a means test as well. Then eliminate Bush's added coverage to medicare. I'd go through all the government agencies and downsize where they overlap a State agency doing the same job. The Evironmental Protection Agency is an example of the Fed overreaching. They should be down sized with a smaller mandate which consists of overseeing only Federal lands and waters. Perhaps the Federal Government needs to look at wage and pension cuts for federal employees as well. This has already been done at the State level.

You can do all of this and you still need to gut the military, close homeland security, end the war on drugs etc.

On top of this wage and pension cuts to federal employees will negatively affect the US economy on a huge scale, from an economic point of view tax increases for the rich is far less damaging.

[Calgaryborn]

Originally Posted by Flames Fan, Ph.D.

Why would cutting entitlements help the stock market????

You do realize that those entitlements, like social security, contribute to GDP. When they cut people's Medicare / Medicaid, it's not that they're going to spend out of pocket... they're just going to defer the visit / procedure / buy less drugs. That means Kaiser, Pfizer and the local general practitioner all take a hit, thereby reducing their income and reducing their taxes paid.

All of the above results in less revenues to corporations, and the government taking in less taxes. In effect, back to recession.

Also, why would any US citizen want their country to mandatorily run a balanced budget??? They're the country with the best credit rating in the world, so they're supposed to forgo making any type of national investment that would require them to draw a line of credit? Can you name any successful company that doesn't leverage its balance sheet?


I really have to shake my head at what you're writing.

I'm actually not sold on a constitutional amendment for a balanced budget myself. If nothing else in times of war or a national emergency borrowing money is appropriate. What I think the US citizens want right now is some of that debt paid down and a government with more self control in regards to spending.

[afc wimbledon]

Originally Posted by Calgaryborn

I'm actually not sold on a constitutional amendment for a balanced budget myself. If nothing else in times of war or a national emergency borrowing money is appropriate. What I think the US citizens want right now is some of that debt paid down and a government with more self control in regards to spending.

No one is talking about paying down the debt, that is decades away.

[Calgaryborn]

Originally Posted by afc wimbledon

You can do all of this and you still need to gut the military, close homeland security, end the war on drugs etc.

You mean to balance the books today? I don't think they need to be balanced today. I just think they need to make some changes today rather then make empty promises for ten years down the road.

I think they should take this opportunity to fixed some major problems that need fixing. After they have shed all they can they then should work on providing a better environment for business. Open up some areas for oil drilling. Deregulate and where regulation is warranted stream line the process. America needs to get back to full employment. Those tax dollars and the movement of goods is what will balance the budget.

[Calgaryborn]

Originally Posted by afc wimbledon

No one is talking about paying down the debt, that is decades away.

No but people want a workable plan to get there.

[afc wimbledon]

Originally Posted by Calgaryborn

You mean to balance the books today? I don't think they need to be balanced today. I just think they need to make some changes today rather then make empty promises for ten years down the road.

I think they should take this opportunity to fixed some major problems that need fixing. After they have shed all they can they then should work on providing a better environment for business. Open up some areas for oil drilling. Deregulate and where regulation is warranted stream line the process. America needs to get back to full employment. Those tax dollars and the movement of goods is what will balance the budget.

The last thing that brings full employment is major cut backs by goverement, in fact all of the things the Tea Party proposes, reducing social security medicare rolling back federal income and pensions will add to the recession and reduce employment.

[afc wimbledon]

Originally Posted by Calgaryborn

No but people want a workable plan to get there.

No, they want a magic wand that will fix all their problems. They think that blaming the black dude will do it.

[SebC]

Originally Posted by mikey_the_redneck

The Fed (fractional reserve banking) needs to be nationalized or shut down and the Glass–Steagall Act reinstated.

The US got into this mess, in part, because its leaders prefer to score short term political point over maintaining the overall financial health of the country. If they do that with the budget, what makes you think they'd be any better at managing monetary policy with a long-term view?

And did you just suggest shutting down fractional banking? Yeah, the economy would be awesome with about 90%* of its money supply wiped out overnight. I can't emphasize enough how stupid that would be.

*Not exact, but about right.

[seattleflamer]

Originally Posted by Calgaryborn

So do you believe that whoever wins the election will tackle the entitlement problem? History says they are more likely to spend more money.

Niether Reid or Boehner call instruct the next congress on how to act. Well they can't short of a constitutional amendment. That is the problem with both plans.

What I'm saying is tackling an issue like SS or Medicare reform needs be handled separately from a simple technical budget manoevre.

You're right there is no political will from either party to tackle entitlement since it is not politically expedient. SS is actually an easier fix than medicare.

[Weiser Wonder]

Sorry if this has been covered, but I feel like it needs to be made absolutely clear. Entitlement programs are called that because the American taxpayer has been paying into this programs, and is entitled to getting their money back in their old age. Everyone who mentions cutting SS and medicare should remember that.

Furthermore, SS is a solvent program running a surplus. Obviously, reality is that the government has spent the money in other places, so something needs to be done about SS. However, it's not true that SS caused the current spending problem.

It's also worthwhile to remember it's terribly shortsighted to cut entitlement programs. Taking away safety nets increases instability for the average consumer, which leads to a worse economy. The economy and long term future of the United States is better secured by providing for its own. The days when a first world country can do without caring for its old, poor, and sick are over, for both practical and moral reasons.

[Jedi Ninja]

Originally Posted by Weiser Wonder

Sorry if this has been covered, but I feel like it needs to be made absolutely clear. Entitlement programs are called that because the American taxpayer has been paying into this programs, and is entitled to getting their money back in their old age. Everyone who mentions cutting SS and medicare should remember that.

Furthermore, SS is a solvent program running a surplus. Obviously, reality is that the government has spent the money in other places, so something needs to be done about SS. However, it's not true that SS caused the current spending problem.

It's also worthwhile to remember it's terribly shortsighted to cut entitlement programs. Taking away safety nets increases instability for the average consumer, which leads to a worse economy. The economy and long term future of the United States is better secured by providing for its own. The days when a first world country can do without caring for its old, poor, and sick are over, for both practical and moral reasons.

You have just hilighted the biggest problem with these programs. People believe that they've paid their fair share and are entitled to get full benefits back. In fact, the money they have paid in is not sufficient to cover the benefits that they're hoping to get back at retirement. People have not paid their fair share. The program is able to function only because there has, up until now, been more people paying into the programs than claiming. As that balance shifts, the program will not have enough money.

[Cowboy89]

Originally Posted by Weiser Wonder

It's also worthwhile to remember it's terribly shortsighted to cut entitlement programs. Taking away safety nets increases instability for the average consumer, which leads to a worse economy. The economy and long term future of the United States is better secured by providing for its own. The days when a first world country can do without caring for its old, poor, and sick are over, for both practical and moral reasons.

The days when a first world country has the financial means to care for its old, poor, and sick in the traditional sense are over, for fiscal and demographic reasons. Social security and medicare was all fine and dandy when there was numerous workers per retiree. Demographically this has changed and will continue to change for the negative. Bottomline this was a ponzi scheme. CPP is a ponzi scheme in Canada. Europe and Japan are utterly crumbling under the weight of their aging populations and lavish social programs. The jig is up, and discussions about what the US can afford and how it can be distributed is now.

[yads]

Originally Posted by Cowboy89

The days when a first world country has the financial means to care for its old, poor, and sick in the traditional sense are over, for fiscal and demographic reasons. Social security and medicare was all fine and dandy when there was numerous workers per retiree. Demographically this has changed and will continue to change for the negative. Bottomline this was a ponzi scheme. CPP is a ponzi scheme in Canada. Europe and Japan are utterly crumbling under the weight of their aging populations and lavish social programs. The jig is up, and discussions about what the US can afford and how it can be distributed is now.

Last I checked the US still has a positive population growth rate. A ponzi scheme is one where the number of people that are needed to support the previous generation grows geometrically. All of these entitlement programs need is to replace the outgoing generation.

[Cowboy89]

Originally Posted by yads

Last I checked the US still has a positive population growth rate. A ponzi scheme is one where the number of people that are needed to support the previous generation grows geometrically. All of these entitlement programs need is to replace the outgoing generation.

The issue isn't net overall population, but rather the distribution of said net overall population. There is actually going to be less people in the workforce to pay for an increasing population of people outside of the work force. Hence that generation doesn't get fully replaced all the while the government has been spending its days the past few years lopping on more entitlements.

[Jedi Ninja]

Originally Posted by yads

Last I checked the US still has a positive population growth rate. A ponzi scheme is one where the number of people that are needed to support the previous generation grows geometrically. All of these entitlement programs need is to replace the outgoing generation.

The program is in an actuarial deficit, this is a fact.

[yads]

Originally Posted by Cowboy89

The issue isn't net overall population, but rather the distribution of said net overall population. There is actually going to be less people in the workforce to pay for an increasing population of people outside of the work force. Hence that generation doesn't get fully replaced all the while the government has been spending its days the past few years lopping on more entitlements.

Sure I agree with you that would be the case if the population wasn't growing. Or are you trying to say that most of that growth is from immigrants that are past working age? That said a ponzi scheme is by definition doomed to fail. We're not talking about a scheme where each worker needs to be replaced by 2 workers. So in the event where your ageing population is supported by less people, either taxes must be increased or benefits must be decreased. The government of Canada is starting down that path with the changes to CPP.

Originally Posted by Jedi Ninja

The program is in an actuarial deficit, this is a fact.

Which program?

[Tinordi]

Originally Posted by Cowboy89

The days when a first world country has the financial means to care for its old, poor, and sick in the traditional sense are over, for fiscal and demographic reasons. Social security and medicare was all fine and dandy when there was numerous workers per retiree. Demographically this has changed and will continue to change for the negative. Bottomline this was a ponzi scheme. CPP is a ponzi scheme in Canada. Europe and Japan are utterly crumbling under the weight of their aging populations and lavish social programs. The jig is up, and discussions about what the US can afford and how it can be distributed is now.

That only applies if you project today onto tomorrow. Canada for example has many different policy tools to use to address this issue, most notably immigration. We can ramp immigration up to make up for the relative decline of workers.

Further, it isn't a fait-accompli that more retirees and less workers means financial ruin. If you are producing more value added and making that up in increased tax revenue then you can make it up that way. That's a tall order though.