Now, it's possible that if this bill failed, we'd get a saner revamp of our healtcare system, but I don't see any evidence that might happen. This bill was just about the least that one could do which had a chance to impact things.
Finally, they're real treasury bonds, and like all treasury bonds, the money that they're purchased with is used by the government when they're purchased. That's hardly some sort of nefarious scheme; it's how all bonds work. They get paid back, with interest, over time. Now, since we control the SS administration, we could presumably give the bonds to the treasury or some such, but it'd still be a transfer of real assets. Of course, that'd be the blatent theft of trillions of dollars that were expressly paid by workers into the program, so I guess that it's important that said workers are properly misinformed so they don't notice.
The people don't understand the ObamaCare plan - not entirely sure I do either, as it's a bit of a Frankenstein plan, rather than best plan which we couldn't get, not because of "Socialism", but because the major Healthcare companies have the GOP (and some Dems) so buttoned up in their pockets that the best plan of all could never get passed (the plan which cuts them largely out of the loop.)
Both houses of Congress were Democratic when the bill was passed. The GOP had absolutely nothing to do with any compromises. QED
The entire watered-down bill was a result of a year long attempt at good-faith negotiation with republicans. That, of course, was a repeated exercise in futility where the republicans would demand concessions, get said concessions and then move the goal posts. All the while, they used their media mouth-pieces to scare and misinform the public about the bill ("death panels, anyone?") to drive down it's public support.. Once it became apparent that republicans were negotiating in bad-faith, the bill had to further be hacked up to be able to be passed under reconcilliation, which was required to get past the de-facto 60 vote requirement that republican abuse of the filibuster created. So, I think that it's fair to say that the GOP had more than a little to do with the compromised bill.
Imagine if you will, there was no Social Security in the United States and any administration trying to get that system through today, with the way big business interests have so many politicians on a gilt leash. It'd be horrible and the only people really benefiting (besides lawyers, who seem to find a way to prosper from anything) would be businesses, not the people it was meant to serve.)
Yes... imagine if we didn't have a program in which all the revenue is thrown into the general fund instead of actually being saved for future shortfalls. That would be horrible.
Buying treasury bonds doesn't count as saving? Should they just stuff the Social Security surplus under the world's largest mattress?
And just who pays for the interest on those Treasury bonds? Why, the rest of the government, funded by taxes and borrowing. Money is fungible. As I said before, if we charged the tax but didn't provide the benefit, the government would have a much rosier financial picture.
Sure, if we just steal the money (they're real treasury bonds) or default on our debts it'd make things better in terms of held debt, but it'd be wrong to do so. Sure money is fungible, but SS income doesn't go into the general fund. The SS administration invests any surpluses in treasury bonds, like many pensions, since they're the safest investment around. The bonds fund government deficits, just like all bonds, but that they're held by the SS administration doesn't make them somehow unreal.
Consider the case of the hypothetical state of Columbia. Columbia decides to introduce a lottery to pay for improvements to public education. Of course, if the lottery earns less than the amount normally spent on public education, it merely replaces the dollars previously allotted from the general fund while freeing up those dollars to be spent elsewhere. Let us assume that the crack legislative team that wrote this included a special provision that - should the expenses of public education be lower than the money raised - the money must be saved, by buying state bonds. Money is saved for a long rainy day, for decades. Finally, the day arrives that the expenses are greater than the tax collected. Now where does the money come from to pay those expenses? Well, the public school system redeems some bonds. Where does the money come to pay off the bonds? From the rest of the state government, which has to collect it in taxes, borrow it from elsewhere, or cut it from the funding of other programs - or cut education until it starts to provide surpluses again. Borrowing money from yourself is a neat trick that sovereign states can get away with longer than anyone else, and it was critical to get people to support SS, but the program has always been supported on current revenues, and when it can no longer depend on those, it will start to take money from the rest of government.
What you seem to be missing is that the deficit that the bonds are sold to pay for exists regardless of whether the education department (in your example) or Social Security (in the actual case) buys some of them. So, if SS weren't buying bonds, they'd have just been sold to other investors. If you're creating a hypothetical where the bonds were issued simply to soak up a surplus, then it's nothing similar to SS, where the debt would be the same regardless but just held in other places.
The actual numbers are less than half of that: Additional income, sales, and property taxes are assessed at the state and local levels. In the most recent year, overall tax revenue as a percentage of GDP was 26.9 percent. That's from the liberal Heritage foundation ranking page for the US ( http://www.heritage.org/index/Country/UnitedStates )
There is something wrong with your link. But let's say that number is right for the federal government. Add in state spending, which obviously differs by state, but let's say New York. In 2010 New York state spending was $283 B with a state GDP of $1114 B, which means state taxes had to be about 25% to cover the spending. (New York seems to be pretty typical, e.g. Alaska 36%, Mississippi 28%, New Jersey 21%, Oklahoma 21%, Oregon 26%, etc.) For New York, 26.9% and 25% is 51.9%. Alaska would be 62.9%. Admittedly it looks like the typical state is in the neighborhood of 50% and I claimed 60%, but it's hardly "less than half of that" and there do exist states with total taxation in excess of 60% of state GDP between state and federal taxes.
Nope, the 26.9% is inclusive of state and local taxes. Federal taxes last year were about 15% of GDP (they're usually closer to 18% or so:
http://blogs.reuters.com/felix-salmon/2010/12/06/chart-of-the-day-u-s-taxes/
Even the Scandinavian countries, which have the highest tax rates in the industrialized world aren't as high as what you're asserting for the US. Our effective tax rate is lower than it's been in decades, and is quite low for a modern industrialized country.
Taking a 10% deficit as the baseline also massively overstates the structural problem. Yes, the past 2 years have had those ~10% deficits, but unless you're predicting that the economic slump that we're just now starting to recover from will go on in perpetuity, or get worse, it's not a reasonable baseline.
The 10% deficits are the current reality. Unless your point is to just continue to run those kind of deficits today and for the next few years and then try to pay for them with tax increases five or ten years from now?
Um, yes. First, as the economy recovers, tax receipts increase and social spending for the impacted citizens will drop significantly, both which will significantly improve the deficit. Increasing taxes or decreasing spending when the economy is sucking wind is a recipe for making things worse (which actually serves to make deficits worse and costs more in the long term due to the extra damage to the economy and workforce).
Moreover, there are differences between today and recent history. Right now debt as a percent of GDP is higher than it has been since the end of WWII, and unless we make significant cuts today it's going to get worse before it gets better. It's already about twice what it was when Regan took office. The only reason the interest isn't a present catastrophe is that interest rates are so low, and if the economy starts to recover then interest rates go back up and servicing the debt is going to seriously cut into the tax windfall that economic growth might otherwise produce.
Add to that the baby boomers retiring and removing their productive capacity (and income tax payments) while at the same time putting severe stress on social security and medicare as they start collecting rather than paying in.
Well, again, Social Security has nothing to do with the deficit, so in terms of a discussion about deficits, it's irrelevant. In terms of interest rates, sure, if rates increase it makes interest payments go up. That being said, that only becomes a problem if we either can't pay for it, or we're so politically dysfunctional that we won't. Japan has a much higher debt to GDP ratio (more than twice ours) and their interest rates are around 1%, so it's not a given that we're near some sort of tipping point. If republicans keep pushing for us to default on some or all of our debt though, we'll see how high rates can go I suppose.
Finally, Social Security is a dedicated funding stream and it can't contribute to the deficit by law. You could cancel the program tomorrow and it'd not change the actual deficit one bit (the reported "unified budget" deficit/surplus numbers are misleading since they include SS income, but that has nothing to do with the actual accounting).
This is just accounting shenanigans. If there was a cut in social security or medicare then the tax money currently going to those programs could be spent in reducing the deficit. The fact that you would, as a matter of accounting, end up reducing the social security tax and raising the general income tax by an equivalent amount in order to bring it about changes nothing about the actual impact of the change: Money distributed in social security checks is money that isn't, and could be, spent covering the deficit.
Um, again, No. Social Security has dedicated funding. You and your employer pay into it as a separate line item, and that money can't be "re-purposed", and the surpluses that were deliberately built up over the past 2 decades to cover the baby boom bulge are real money, invested in real treasury bonds (they're actually in filing cabinets in West Virginia, IIRC).
You could increase taxes.
Let's think about that for a minute. Right now, between federal, state and local taxes, governments in the US collect about 60% of GDP as tax revenue.
Bullpucky. The actual numbers are less than half of that: Additional income, sales, and property taxes are assessed at the state and local levels. In the most recent year, overall tax revenue as a percentage of GDP was 26.9 percent. That's from the liberal Heritage foundation ranking page for the US ( http://www.heritage.org/index/Country/UnitedStates )
For the last couple of years the federal deficit has been a little over 10% of GDP. So if you want to balance the budget by raising taxes, you have to raise the 60% to 70%.
Taking a 10% deficit as the baseline also massively overstates the structural problem. Yes, the past 2 years have had those ~10% deficits, but unless you're predicting that the economic slump that we're just now starting to recover from will go on in perpetuity, or get worse, it's not a reasonable baseline. In recent history, we average something more akin to 2-3% (though reagan did manage average something around 4% for a good chunk of his cutting and spending spree)
So, given realistic numbers, the structural deficit that we're facing is certainly something that could be addressed by targeted tax increases if that's what we chose to do.
Finally, Social Security is a dedicated funding stream and it can't contribute to the deficit by law. You could cancel the program tomorrow and it'd not change the actual deficit one bit (the reported "unified budget" deficit/surplus numbers are misleading since they include SS income, but that has nothing to do with the actual accounting).
The use of money is all the advantage there is to having money. -- B. Franklin
