Greenspan talks about the deficit
- Thread starter Fred
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That is an accurate statement of the current situation. Our goverment is designed to increase spending it rarely if ever decreases it, at best it simply sends money to a new program and cuts an old one.
It is silly to me that you hear republicans saying that dems are bad b/c if big government when both parties really want huge governments they just differ in where the money should be spent.
I too think we should pass a Balanced budget amendment, but I think it should be like many states in that it allows defecits if there is a clear indication of them being paid back in a limited amount of time, many states say one years time, but for the federal government I could say 2 that would allow for economic downturns and upturns, and the government could always try to save some money if it had to.
I also think we should change the election process so we have a runoff that way we can vote for thurd party canidates... the republicans got burned by perot, and the dems by nader to an extent, now both main parties are secure in the fact that people are too afraid to vote for someone they support b/c then the other party they dislike the most will win...
rambling
I agree wholeheartedly with Greenspan. If we want uber entitlement programs, then we should be prepared to pay uber taxes. If we want to lower the tax burden significantly, then we should be prepared for much less in government spending.
And yet he's also for making the tax cuts permanent. Ugh. Completely fiscally irresponsible. We can't have both deep cuts and increased spending. That is not good long term fiscal management.
Dubya said:
And yet he's also for making the tax cuts permanent. Ugh. Completely fiscally irresponsible. We can't have both deep cuts and increased spending. That is not good long term fiscal management.
The problem is all the unnecessary pork spending that both reps and dems love to get their grubby hands on. We really need an amendment controling how much can possibly be spent.Natoma said:
later,
epic
Natoma said:
Fiscal Irresponsibility? I swear, you're comments are completely asinine in light of what's likely to happen.
If reelected, there is a sufficient and growing conservative movement toward privatization - which could allow for what he stated and resolve the solvency problems plaguing the current system which is fiscally irrespesponcible by incurring minimum structural debt upon the government with long-term profit after 18 years or close to it. Perhaps you should do some reading.
The only thing fiscally irresponsible is your democratic friends who are still talking about throwing more money into the same broken paradigm and who have the term "lock-box" permanently added to their small vocabulary.
Joe DeFuria
Legend
Natoma said:
Um...
http://story.news.yahoo.com/news?tm...p;u=/ap/20040225/ap_on_bi_ge/greenspan_budget
Natoma said:
Do you, or do you not agree wholeheartedly with Greenspan?
Vince said:
What's "likely" to happen? Yea, like the medicare prescription drug benefit was "only" going to cost $400 Billion? Or what about the Iraq war only costing $90 Billion?
Increased spending has absolutely nothing to do with SS Vince, and more to do with our ever expanding budget, especially defense spending. Sure, discretionary non-defense spending is being held below the inflation rate in the 2005 budget, but it's nice that that only accounts for $3 Billion in savings. Quite a long ways from a $500 Billion deficit no?
And of course, this doesn't take into account the newly minted $540 Billion Prescription Drug Benefit going into effect in 2006, which has a lovely $3,000 coverage gap that everyone knows will be closed due to immense political pressure from the 75 Million baby boomers. Or the fact that the true cost of the tax cuts, roughly $1-$2 Trillion revenue loss in one year, doesn't hit until 2009-2010.
I agree that the discretionary part of the budget is a big problem, but it is incorrect to say that SS isn't a problem. It is, and if no changes are made (benefits, retirement age, taxes, etc), it will eventually bankrupt the government. The discretionary budget is a short term fiscal problem, which can be fixed by acute cuts. SS represents an increasing long term liability that is not sustainable unless it is changed.
DemoCoder said:
Are you sure about that? SS has actually generated money and helped balance the budget since it was created. It won't be for quite a while until outlays exceed expenditures. If it was actually a separate fund, and not one raided to balance the budget, it would have no problem handling the spike that is/was the baby boomers. Our working population can't continue to decline forever, then it will work as designed.
Agreed completely. Social Security needs a few fixes in order to phase it out long term, which is my preferred solution to the problem. Gradually raise the retirement age while gradually reducing payroll taxes on current workers. This will keep current and near retirees near their current level of benefits, while lowering the benefits for future workers and allowing them to do whatever they please with the money.
But this is a 20-40 year fix. The deficit problems we've got today and over the next 10-20 years must be fixed by curtailing defense spending and discretionary spending, or significantly increasing taxes. We just can't have it both ways, i.e. increasing all forms of spending and increasing tax cuts. That's simply not responsible management. No one in their right mind would run their household in that fashion, wracking up long term loan and credit debt. I simply do not understand how politicians, democrats and republicans alike, can espouse doing that in the federal space.
What we really could use is a balanced budget amendment imo.
But this is a 20-40 year fix. The deficit problems we've got today and over the next 10-20 years must be fixed by curtailing defense spending and discretionary spending, or significantly increasing taxes. We just can't have it both ways, i.e. increasing all forms of spending and increasing tax cuts. That's simply not responsible management. No one in their right mind would run their household in that fashion, wracking up long term loan and credit debt. I simply do not understand how politicians, democrats and republicans alike, can espouse doing that in the federal space.
What we really could use is a balanced budget amendment imo.
Joe DeFuria
Legend
Natoma said:
1) The tax cuts are not "deep"
2) So you support "fixing" social security, and keeping the tax cuts permanent.
Oddly, so does Bush. (Of course, your definition of "fix" may be entirely different than his.)
RussSchultz said:
The problem is not the baby boom, the problem is people living longer. Social Security is very much like a Ponzi pyramid scheme, but those only work with an increasing population base, not an inverted pyramid. Thus, the retirement age must be increased. SS can handle someone retiring at 62 and dying at 70, it can't handle everyone retiring at 62 and dying at 85. But even the retirement age adjustments won't work forever unless people get healthier as they live near retirement, and if age discrimination is taken care of of.
By 2040, Social Security will be bankrupt unless something is changed. A government program cannot substitute for a low national savings rate, no matter how high FICA is raised. Ultimately, SS is doomed, the question is how much longer it can be prolonged until it is switched to something better. Raising the retirement age by a few years and reducing benefits a little, will help to prolong it for a decade or two. If it wasn't for immigration to the US suppplementing the younger workforce, it'd probably be in worse shape. The US's relatively high birthrate among western nations (2.0 TFR) helps somewhat too, but I expect this to decline rapidly in this generation.
I favor mandatory 401k-like programs, run only by government certified brokerages, and audited by special government oversight. A portion of your "mandatory 401k" will be under your control, another portion won't be, enforcing a risk-balanced portfolio.
The problem is, what to do with current retireees. My transitional idea is that current middle and lower class families will pay half-FICA and be forced into the 401k program with the other half. Upper middle and upper class (people over $100k, like me), will have to do double duty: pay to maintain SS at our own slightly higher FICA rates, and pay our own 401k. This will certainly accelerate the demise of SS somewhat, depending on how much revenue is lost. As a gift/carrot to those making over $100k, the restrictions on portfolio risk will be relaxed giving them more freedom, since these people are more able to deal with failures and probably have more savings to fall back on anyway.
This semi-privatization also has the aspect of forcing a permanent increase in business investment, one of the primarily losers to government debt crowding-out. Hopefully having a trillion more retirement money funneled into the capital markets will stimulate more growth like it did in the 90s. (of course, probably half will go right back to the treasury in the form of treasury purchases to balance portfolios)
In the long term, the only way a rising retired elder population can be supported is to increase productivity so that fewer people need to work. There is some evidence that there is a correlation between rising productivity and investment. The US also needs to raise the national savings rate if it wants to address the trade imbalances.
I would really like to see this happen. It allows for people that were counting on it to use it while at the same time allowing those that will be cut from the program the ability to save years in advance. I have less than 3 months left of school before I will graduate and don't yet have a job. I don't even plan on factoring SS into whatever plans I make for saving for my retirement after I find one.Natoma said:
digitalwanderer
Legend
Am I the only one who thinks that Bush's plan seems a bit Underwear Gnomish?
Step 1: Cut taxes
Step 2: Increase spending
Step 3: ?
PROFIT!!!
Step 1: Cut taxes
Step 2: Increase spending
Step 3: ?
PROFIT!!!
I've always worked on the assumption that I won't get SS. A substitute teacher I had in elementary school once told me that the way he got wealthy was to save 10 cents out of every dollar, period, no ifs ands, or buts. If he got a dollar of income, regardless of source, he would immediately take 10 cents and put it away where he couldn't touch it.
I haven't exactly followed his advice, but I still save about 30% of my yearly income. Of course, our wedding, honeymoon, and house purchases set me back, but most people would be surprised how little I buy given my household income. With the exception of electronic gadgets, I spend very little else. I still drive a Honda Civic.
I haven't exactly followed his advice, but I still save about 30% of my yearly income. Of course, our wedding, honeymoon, and house purchases set me back, but most people would be surprised how little I buy given my household income. With the exception of electronic gadgets, I spend very little else. I still drive a Honda Civic.
Babel-17
Veteran
Regarding raising the age at which one can collect benefits: I see a problem here, please correct me if I'm wrong.
As most no doubt know a "black lung" fund was created so coal workers wouldn't have to work till the day they die. I have no links to data but my impression is that life expectancy varies quite a bit between other groups of workers albeit without the extreme example of coal miners.
Cliff Notes: A white woman working in a good environment will live a very significant number of years longer than say, for example, a black construction worker.
I have no answers. Social Security means different things to different people and our government has never been to eager to rigidly define its purpose and method of operation.
Not to beat a dead horse but we have millionaire retirees who will on average take more out of SS than they ever put in while we will now have, what ............. a large number of people who stand a good chance of never seeing more than a handfull of checks after a lifetime of putting in.
We've yet to define what Social Security is supposed to be imo.
As most no doubt know a "black lung" fund was created so coal workers wouldn't have to work till the day they die. I have no links to data but my impression is that life expectancy varies quite a bit between other groups of workers albeit without the extreme example of coal miners.
Cliff Notes: A white woman working in a good environment will live a very significant number of years longer than say, for example, a black construction worker.
I have no answers. Social Security means different things to different people and our government has never been to eager to rigidly define its purpose and method of operation.
Not to beat a dead horse but we have millionaire retirees who will on average take more out of SS than they ever put in while we will now have, what ............. a large number of people who stand a good chance of never seeing more than a handfull of checks after a lifetime of putting in.
We've yet to define what Social Security is supposed to be imo.
When the original actuarial analysis was done during FDR's era, the demographics and lifespan of Americans were completely different. The actuarial foundation on which SS was designed was based on flawed assumptions. Back then, it took 33 workers to support 1 retiree. Today, it takes 3 workers to support 1.
Moreover, the government has secretly raised taxes over the years by taking money from the SS Trust Fund to paper over deficits. Step #1 to social security reform would be to make it illegal for the government to use SS Trust Funds to pay for the general account, and force the government to either cut spending or raise revenues for the general account, separate from FICA revenues.
We have to act soon however. Today, the SS Fund is in surplus. That's the best time to do a switchover or reforms since there is more money than is needed (as long as the General Budget doesn't take it). If we wait until 2012 when the Trust Fund starts bleeding, it will be much more painful and difficult to do any reforms.
The major reform of course, is to get Americans out of a culture of debt into a culture of spending, and step number 1, is to get them into saving for their own retirement.
Take a look at this proposal from Peter Ferrara A Progressive Proposal for Social Security Private Accounts
This plan pays extra matching contributions to low income families, allows people to invest 5% of the 12.4% FICA in personal accounts, and most importantly, has a government backed FDIC-like guarantee that if annuities ever fall below what SS would have paid you *if it had not been reformed in the first place*, the government will provide the difference. It is modeled after similar reforms that have taken place in other countries, including Austrailian proposals. The plan has already been audited by the SS Dept's actuaries and found it sound.
I fear nothing will be done however. Social Security is a political hot potato. Neither democrats nor republicans want to touch it, and whoever does, gets villified by the other side.
Moreover, the government has secretly raised taxes over the years by taking money from the SS Trust Fund to paper over deficits. Step #1 to social security reform would be to make it illegal for the government to use SS Trust Funds to pay for the general account, and force the government to either cut spending or raise revenues for the general account, separate from FICA revenues.
We have to act soon however. Today, the SS Fund is in surplus. That's the best time to do a switchover or reforms since there is more money than is needed (as long as the General Budget doesn't take it). If we wait until 2012 when the Trust Fund starts bleeding, it will be much more painful and difficult to do any reforms.
The major reform of course, is to get Americans out of a culture of debt into a culture of spending, and step number 1, is to get them into saving for their own retirement.
Take a look at this proposal from Peter Ferrara A Progressive Proposal for Social Security Private Accounts
This plan pays extra matching contributions to low income families, allows people to invest 5% of the 12.4% FICA in personal accounts, and most importantly, has a government backed FDIC-like guarantee that if annuities ever fall below what SS would have paid you *if it had not been reformed in the first place*, the government will provide the difference. It is modeled after similar reforms that have taken place in other countries, including Austrailian proposals. The plan has already been audited by the SS Dept's actuaries and found it sound.
I fear nothing will be done however. Social Security is a political hot potato. Neither democrats nor republicans want to touch it, and whoever does, gets villified by the other side.
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