We can cut the deficit without touching Social Security.

[jtown1123]

Christian Science Monitor
Cut America's debt, but spare Social Security
Congress can cut the budget without hurting Social Security, Medicare, and other social insurance programs.

By David R. Francis / December 28, 2010

America is whipping itself into a frenzy because of debt. Listen to the chairmen of President Obama's bipartisan fiscal commission and other deficit-cutters and you're likely to hear an "underlying moral tone," as economist John Irons puts it. The debt-cutters say Americans need to:

•Face up to hard times.

•Punish themselves.

•"Purge the soul of the evil deficit-spirit," says Mr. Irons, research and policy director at the Economic Policy Institute (EPI), a liberal think tank in Washington.

It's not that more budget discipline isn't needed. A MacArthur Foundation poll finds that more than 70 percent of midterm voters say it is "very important" that Congress take steps to reduce the national debt. Another 24 percent say it is "somewhat important."

But does it have to be so punitive? Irons is one author of a new "budget blueprint for economic recovery and fiscal responsibility" that would spare low-income and moderate-income families from the "drastic cuts" and some other austerity measures in the chairmen's plan.

"We strongly oppose the idea that America's fiscal challenges should be solved by cutting longstanding social insurance programs < Social Security, Medicare, Medicaid, etc.> that have brought security and prosperity to millions of Americans," says the 84-page "blueprint" drafted by the EPI, Demos, and the Century Foundation. These programs "have proven to be effective mechanisms for limiting widespread catastrophic hardship" during the Great Recession.

Nevertheless, the plan forecasts a balanced budget by 2018, where federal income matches federal outgo, excluding interest on the federal debt.

One way the plan does that is by taxing the rich more sternly than at present. "Millionaires can afford to bear some of the burden of deficit reduction," says Irons. Income inequality has grown for three decades.

For example: Capital gains and dividends would be taxed the same as regular income at a marginal rate as high as 39.6 percent, instead of today's 15 percent. Millionaires would also pay a Social Security tax of 5.4 percent on most income. (At present, only $106,800 of income is subject to the payroll tax.) Their heirs would be subject to a tax on estates exceeding $2 million. The $1 trillion in annual tax breaks – various credits, preferences, and deductions like the one for interest on mortgages – would be trimmed down for the rich.

Many members of Congress are rich themselves or beneficiaries of campaign donations and clout of the well-to-do. So taxing the rich isn't popular in Congress. It kills jobs, conservatives claim.

Irons says he's "under no illusion" that Washington will pick up this blueprint and pass it in bulk. But he hopes some of the plan's specific suggestions for boosting revenue will catch on.

Another obstacle to this liberal plan is that it would boost the size of government. By 2020, federal revenues would equal 21.7 percent of gross domestic product, the nation's output of goods and services. Over the past five decades, it has averaged 18.2 percent of GDP. One major reason: Uncle Sam will pick up more health-care costs.

The 2020 federal deficit would be "manageable," the plan maintains. Even though federal debt held by the public would grow from 66 percent today to 83 percent of GDP, Irons maintains the United States won't suffer the fate of Ireland because the US remains "the safest place in the world to put your money" and deficits will be under control.

http://www.csmonitor.com/Commentary/David-R.-Francis/2010/1228/Cut-America-s-debt-but-spare-Social-Security

[FreakinDJ]

1. Just Way Too much Common Sense

[Donnachaidh]

2. kick and Rec! n/t

[Historic NY]

3. Yes in a word its a setup they are trying to put one over on us...

Social Security is funded by payroll taxes, the government borrows our money (Trust Fund) for other things but never returns it. Increasing the cap beyond $106,800.00 will bring in more cash. More cash will help close up the gap.


http://www.socialsecurity.gov/OACT/ProgData/fundFAQ.html

[flamin lib]

4. We've been cutting taxes since JFK reduced the top rate from

70% to 50%.

Insanity is doing the same thing over and over and expecting different results.

[xchrom]

5. Recommend

[PoliticAverse]

6. Tax increases politically possible?

Are tax increases a political possibility in the near future (until the next congressional election) ?

[Hawkeye-X]

8. people have to take the bite, and get the damn taxes increased

big time for the rich. Capital gain taxes need to be tripled, at least.

And banning Americans from offshoring their money or jobs.

[jtown1123]

10. We could just raise the tax cap entirely. People who make more than

$106,800 pay FICA taxes only up to that point. Polls show also that people would be willing to pay slightly higher taxes to ensure Social Security's solvency. I believe there is a figure out there that people would only have to pay a few more dollars a month ( a fraction of a percent increase). Also, CBO figures show worst case of scenario with meager growth it's quite possible the upcoming shortfall will be even smaller than expected.

[Zebedeo]

7. "excluding interest on the federal debt"??

How is that a balanced budget? Former U.S. Comptroller General David Walker has predicted that within 12 years, interest on the federal debt will be the largest item in the federal budget.

And aggressively raising tax rates is a simplistic and unrealistic proposal that will not solve the problem. It will have the effect of decreasing the generation of income by penalizing it. This effect will be magnified throughout the economy, because as people make less money, they will spend less money, which will cause other people to make less money, and will cause many people to lose their jobs, which will mean they have less money, and so on and so on.

The problem with the federal budget is not that tax rates are too low. The problem is that spending is absolutely out of control.

[Hawkeye-X]

9. Fuck your DLC bullshit

Go away!

[jtown1123]

11. David Walker is a played out corporatist hack who work for billionaire Pete Peterson.

Pete Peterson has spent a billion dollars creating the false meme that Social Security is broke. Not the sort of person I would take seriously.

[lumberjack_jeff]

20. Top tax rates between 37% and 90% grow the economy.

Below that, the economy stagnates.

The most useful spending for the economy is direct hiring by the federal government.

[Zebedeo]

21. Federal spending is now at an all time high

How much more "direct hiring by the federal government" would you propose? How will you pay for it?

[lumberjack_jeff]

24. Interest on the debt is not "direct hiring"

Money paid to Halliburton and Blackwater is not "direct hiring".

Maybe you didn't get the point of the post. I'd pay for it by raising the tax on the top 2% of income earners to 50%.

[Zebedeo]

35. Why not 99.9%?

You do recognize, I hope, that raising the rates will discourage economic activity by penalizing the generation of income. Imagine a rate of 99.9% for top earners. You think that will triple revenues from what they are now? If not, why not? It's triple the rate, so it should bring in triple the revenue, right??

[lumberjack_jeff]

36. No, I don't recognize it because it's demonstrably not true.

A high tax on the CEO's income does not discourage him from hiring on behalf of his company. Quite the reverse, in fact. A CEO faced with the choice of growing his business by hiring people or paying himself a bonus is more likely to choose the former if he knows he'd pay most of that bonus in tax.

That's the lesson of the first three postwar decades. People do what the tax code encourages, and the current tax code encourages families to hoard great wealth.

[Zebedeo]

40. Then why not a 200% tax on high earners?

That would REALLY incentivize them to keep their income low. They would make sure it was $0.00 every year. And to accomplish that, they would just keep hiring more employees until there was no profit left in the business. Yeah, right. :eyes:

What would really happen with increased tax rates on the "rich" is that doctors, dentists, lawyers, accountants, real estate agents, and thousands of other self-employed professionals would cut back on their work so that they come in under the penalty threshold.

[lumberjack_jeff]

42. I triple-dog dare you!

So the downside is that rich realtors will cut back on their hours? The horrors!

[hfojvt]

37. you think those CEOs at the top and bond traders are 'generating' income

myself, I think it is more like they steal the income that the rest of us generate through our labor. A much higher tax rate might not increase revenue that much, but it would probably discourage theft. Why steal it from the workers if the government "of the people" is just gonna take it right back?

[neverforget]

41. Into the1950s it was 90% and one of the most prosperous times in the USA

http://www.taxfoundation.org/publications/show/151.html

[Zebedeo]

44. and virtually no one paid such rates

because they only applied to those making $200,000/yr. or more in 1950s dollars (millions in 2010 dollars) and there were numerous exemptions, deductions and loopholes, such that it was all just an exercise in sheltering income so as not to get hit with the punitive tax rates.

[neverforget]

45. Kinda like today except with much lower rates

[theophilus]

12. There are relativelyl simple fixes for most of our problems. It would

take SHARED sacrifice and sometimes thinking outside the box....nothing Americans haven't done in the past. However, we can't get our "leaders" to even consider such. They must really not WANT to fix these problems because the problems mostly impact the lower 90 percent. This is the criminal fact of our current "government", imo.

[blindpig]

13. Cut the Pentagon budget by 50%...

for a start.

That would address some serious problems, the budget, oil use and attendant pollution, global war-mongering.

That of course will never happen as long as capitalist rule our society.

[Starckers]

16. No

Every time we cut the defense budget, we have gotten into
deadly and expensive wars.  We went ot sleep before WW's one
and two.

from the Congressional Budget Office. We can eliminate the
deficit .. and do it relatively quickly ... WITHOUT cutting
spending or raising taxes. Three scenarios:
1. If we cap federal spending at current levels and extend the
Bush tax cuts the budget will be balanced by 2016.
2. If we limit increases in government spending to a rate of 1
percent above inflation and population growth the budget will
balance by 2017.
3. If we limit increases in government spending to a rate of 2
percent above inflation and population growth the budget
balances by 2020.

[blindpig]

19. Horseshit

The US was well on the way to 'arming' up before being involved in either of those wars. It is industrial capacity and population which dictates the winners in conventional warfare. The Japanese and Germans were fools to mess with the US.

The best defense of the American people is to stop fucking over the rest of the world. Maintaining the most powerful military in history serves no purpose other than empire.

[Starckers]

26. BS

You are reading what? Our army was very small and production was not on a war footing at the time of Pearl Harbor.

[blindpig]

29. A little local history...

http://www.schistory.net/campcroft/history.html

Numerous training bases for the Army were designated in December of 1940 and in operation by March of 1941. Numerous capital ships were in the quays, modern aircraft on the drawing boards, war industries were already in gear aiding the British.

This excuse for militarism falls flat on it's face.

[Starckers]

30. Cut the BS

Define "Numerous." There are "Numerous" bits of info all over the net, here is one:

Thirty-seven Army divisions were in some state of training, but only one was fully trained, equipped, and deployable by January 1942. Army planners of the time estimated that victory would require an Army of nearly 9 million men, organized into 215 combat divisions, estimates that proved accurate regarding overall manpower but too ambitious for the 90 divisions that eventually were established and supported on far-flung battlefields.

Besides we only had 4 large aircraft carriers. Our Battleships were obsolete. Started building some destroyers for Britain. Our army was the 14th largest in the world. The Japanese were certainly not afraid of what we had.

[blindpig]

32. This is what they had to fear...

Like I same, industry is the bottom line. If they couldn't beat the US in a year they were doomed. And there was no way that they could.

[Sherman A1]

39. Precisely

and the Japanese at least understood that point very well. Their objective was to drive the US out of the area they wanted to control making retaking the area to costly, not to invade which even they understood to be impossible.

[Sherman A1]

31. We currently spend as much as the rest of the world combined

on defense & wars. Equating cutting the defense budget today with the 1930's really doesn't make a great deal of sense in my opinion.

[Sherman A1]

14. K&R

:kick:

[Starckers]

15. 3 ways to balance budget, without raising taxes, and still increasing spending

It can be done.  The rich will move out of the country if you
go after them.

From the Congressional Budget Office. We can eliminate the
deficit, and do it relatively quickly, WITHOUT cutting
spending or raising taxes. Three scenarios:
If we cap federal spending at current levels and extend the
Bush tax cuts the budget will be balanced by 2016.
If we limit increases in government spending to a rate of 1
percent above inflation and population growth the budget will
balance by 2017.
If we limit increases in government spending to a rate of 2
percent above inflation and population growth the budget
balances by 2020.

[neverforget]

33. Oh noes! The rich will move! Whatever will we do without those patriotic

tax payers? :eyes:

[Little Star]

38. How will we get by without those jobs they off shore????

Oh yeah, we'll get by the same way we are now. :think:

[TommyO]

17. Please limit citations from outside articles to four paragraphs, or less

From our posting guidelines:

Do not post entire copyrighted articles. If you wish to reference an article, provide a brief excerpt and include a link to the original source. Generally, excerpts should not exceed three or four paragraphs.

[jtown1123]

23. Sorry about that. Thanks.

[lumberjack_jeff]

18. They are unrelated.

This is analogous to saying that we can eat healthier without kicking our dog.

Social Security is the bank doing the lending. Their relationship to the deficit is that of lender. I suppose there's a perverted way of looking at the issue that you can lower your debt by setting fire to the bank.

[Edweird]

22. But you can't destroy social security without touching it.

There you have it.

[lumberjack_jeff]

25. Raising the retirement age to 120 wouldn't change the deficit.

All it does is create a bank (e.g. low to middle income workers) that never expect repayment.

[kentuck]

27. I thought they were borrowing from the SS fund to decrease the deficit??

Since we owe it to ourselves, it was not added to the deficit.

[GeorgeGist]

28. Holy Cow, Batman ...

Social Security has nothing to do with the deficit.

[bullwinkle428]

34. Christian Science Monitor? What a loony bunch of professional leftists!

As if we really need to use :sarcasm:!

[truedelphi]

43. It has to be punitive simply because the Upper One Percent control the House,

The Senate and The Oval Office, and they usually get what they want.

The fact that the deficit discussions were not brought up while the truly expensive tax cuts for the rich were continued says it all.

And fie on the deficit. Anyone who has ever contributed to Social Security, with the tax laws forcing us to make those payments, deserve to have every red penny we have spend handed back to us. It was money given for a reason, and to not deny it to us is THEFT, pure and simple.