Can Anything Cure the Ailing American Economy?

[nathanm]

Borrowing money to pay off your debt holders is the definition of unsustainable... we call that a ponzi scheme. If any private company ran their defined benefit plan in the manner that the Federal government runs SS they would be thrown in the clink. Repectfully Nathan, when benefits paid begin to exceed revenues funding the plan then the end is assured. I'll agree with yoru assessment of life expectancy but even small changes can have huge impacts and as such, cannot be ignored when faced with the reality we have today. Raise the full benefit retirement age at a minimum. Raise or uncap the income limitation to assure solvency.

If it takes the printing press to pay the benefits then the money is worhtless anyway.

Fixing the economy will push debt repayment to the SS trust fund for 10-20 years. Long enough to fix the real budget problems. Not that I'm against removing the cap on SS tax, which would in and of itself assure that more money is being brought in than paid out for the near enough future we have to care about.

Don't most defined benefit plans invest in securities..like treasuries? The same thing Social Security invests in? If the Government defaults on Treasuries, we'll have much bigger problems than Social Security. It will make the last panic look like child's play.

Adjustments need to be made, but not right this second. It can wait, if we get the economy back under control. Bernanke is only just now talking like he's going to take the necessary steps. It is precisely that lack of action that is imperiling Social Security.

Edited to add: Research turns up the following:

Some options, such as those that would apply the payroll tax rate to all earnings ... would more than eliminate Social Security's actuarial deficit.

http://cboblog.cbo.gov/?p=1142

Sounds good. Let's do that. Problem solved. Now can we work on the economy?

[we vs us]

There is no way to balance the budget "right frickin now" and you are correct that forcing it would cause a massively deflationary debt liquidation cycle. Here is the thing in my mind, we need to have more revenue, that is inescapable, but, from the perspective of someone that is going to be source of this additional revenue then I want a show of faith that we can be more responsible with what we do with that revenue. it isn't just revenue or spending cuts, it has to be both. I am willing to accept that I am going to have less disposable income if we can just take a reasonable look at the expenditures of the government and take out what most any person would deem to be ridiculous. In other words, show some frickin progress. Both sides of the aisle are right, and both sides of the aisle are wrong. can we please have an adult discussion about an issue that each and every one of us has to deal with in out personal lives.

By the way, raising the retirement age to 70 doesn't do a damn thing to the deficit because SS isn't in the deficit. What it is though is unsustainable in its current form. We have tied benefits to the CPI forever but have not tied the age to receive benefits to extended life expectancies. We should. I'd even support removing the cap on income for FICA tax to assure myself that if I live long enough that I will get a return on my investment.Absent the willingness to do one, or both, of these steps wil require a "means test" of some sort in which case those that were responsible enough to not lean on SS as their only retirement income will not get any SS.

"Right frickin' now" is what the Republicans are demanding.  As far as I can tell, that's emerged as the leading plank in their November election strategy.  I'm seeing more and more GOPers demanding zero new federal spending until we balance the budget, and when (not if) they take control of the lower house, they'll make sure that happens.  

That's simply not the beginning of an adult discussion.  Whether it's an honest policy prescription (hence my question) or it's there to ride populist brouhaha into office, I don't see how it's laying the groundwork for good faith anything.  

BTW, I agree with 90% of your comment, just don't see any place on the horizon where that necessary discussion begins.

[bokworker]

No Federal spending or no growth in Federal spending? I agreed that the right is being just as obstinant in this "debate". It irks me to no end to see the republican party try to recast itself as the party of fiscal conservatism while it also irks me to see the democrats state that their spending programs will work. The point is you cannot achieve any progress by demanding only more revenue or just spending cuts. It is going to take both sides of the equation working towards the middle and very strong leadership to convince the public that the price we are paying today is neccasary and ultimately way less than if we do nothing. Historically gridlock in Washington has been good. I don't think the math of the situation we are in now will allow gridlock to be a positive. Both sides need to quit pandering and make some hard choices.

Here's a few ideas in addition to the one on SS mentioned earlier...

1-Make the war about oil. I don't care what you call it but we should have a tariff of $5 to 10/barrell on Iraqi oil unitl we get our money back.

2-Enable the line item veto. we have more crap tied to spending and budget bills than is defensible by anyone. Both parties have been loathe to do this because they don't want it when the other party is in power and as a result you end up with earmarks out the wazoo.

3-Simplify the revenue collection process (i.e. the tax code). Huge amounts of money are spent every year in an effort to avoid taxes and special interest groups get paid handsomely to get specific exemptions put in our tax code (which is what now, 10,000 pages?) and we end up with a tax collection process that is too complex for anyone to know. Wouldn't a tax code with minmal deductions and lower cost allow the tax rates to be set at levels that people spend a mountain of money to end up at anyway. Even the housing mortgage interest deduction should be on the table. Anyone else want to defend a tax policy that led people, among many other things, to lever an asset as much as possible to lower their tax bill? If the tax collection process were simplified then rates could be lowered and not cost the government any revenue. And just because I don't get a deduction on my housing doesn't mean I am going to live in a hovel. I still want a nice place with good schools and in a simplified tax code I might just have more after tax money in my pocket so heck, I might live in a nicer place.

4- attack and solve SS and Medicaire. As pointed out earlier the SS fix is easy..just do it. Medicare and the new heath care plan will only work if we ration healthcare. I am not talking death panels but if we are hell bent on giving every person access to every medical procedure then we are bankrupt. At some point a persons age has to be limiting factor on the procedures for which we as tax-payers are willing to pay. Harsh? in some senses...but absolutely neccasary for the good of all. There should be no limitation on what someone can pay for privately.


There are 4 ideas.... when can we start?

[GG]

No Federal spending or no growth in Federal spending? I agreed that the right is being just as obstinant in this "debate". It irks me to no end to see the republican party try to recast itself as the party of fiscal conservatism while it also irks me to see the democrats state that their spending programs will work. The point is you cannot achieve any progress by demanding only more revenue or just spending cuts. It is going to take both sides of the equation working towards the middle and very strong leadership to convince the public that the price we are paying today is neccasary and ultimately way less than if we do nothing. Historically gridlock in Washington has been good. I don't think the math of the situation we are in now will allow gridlock to be a positive. Both sides need to quit pandering and make some hard choices.

Here's a few ideas in addition to the one on SS mentioned earlier...

1-Make the war about oil. I don't care what you call it but we should have a tariff of $5 to 10/barrell on Iraqi oil unitl we get our money back.

2-Enable the line item veto. we have more crap tied to spending and budget bills than is defensible by anyone. Both parties have been loathe to do this because they don't want it when the other party is in power and as a result you end up with earmarks out the wazoo.

3-Simplify the revenue collection process (i.e. the tax code). Huge amounts of money are spent every year in an effort to avoid taxes and special interest groups get paid handsomely to get specific exemptions put in our tax code (which is what now, 10,000 pages?) and we end up with a tax collection process that is too complex for anyone to know. Wouldn't a tax code with minmal deductions and lower cost allow the tax rates to be set at levels that people spend a mountain of money to end up at anyway. Even the housing mortgage interest deduction should be on the table. Anyone else want to defend a tax policy that led people, among many other things, to lever an asset as much as possible to lower their tax bill? If the tax collection process were simplified then rates could be lowered and not cost the government any revenue. And just because I don't get a deduction on my housing doesn't mean I am going to live in a hovel. I still want a nice place with good schools and in a simplified tax code I might just have more after tax money in my pocket so heck, I might live in a nicer place.

4- attack and solve SS and Medicaire. As pointed out earlier the SS fix is easy..just do it. Medicare and the new heath care plan will only work if we ration healthcare. I am not talking death panels but if we are hell bent on giving every person access to every medical procedure then we are bankrupt. At some point a persons age has to be limiting factor on the procedures for which we as tax-payers are willing to pay. Harsh? in some senses...but absolutely neccasary for the good of all. There should be no limitation on what someone can pay for privately.


There are 4 ideas.... when can we start?

Now I could get behind something like this.   

[Gaspar]

No Federal spending or no growth in Federal spending? I agreed that the right is being just as obstinant in this "debate". It irks me to no end to see the republican party try to recast itself as the party of fiscal conservatism while it also irks me to see the democrats state that their spending programs will work. The point is you cannot achieve any progress by demanding only more revenue or just spending cuts. It is going to take both sides of the equation working towards the middle and very strong leadership to convince the public that the price we are paying today is neccasary and ultimately way less than if we do nothing. Historically gridlock in Washington has been good. I don't think the math of the situation we are in now will allow gridlock to be a positive. Both sides need to quit pandering and make some hard choices.

Here's a few ideas in addition to the one on SS mentioned earlier...

1-Make the war about oil. I don't care what you call it but we should have a tariff of $5 to 10/barrell on Iraqi oil unitl we get our money back.

2-Enable the line item veto. we have more crap tied to spending and budget bills than is defensible by anyone. Both parties have been loathe to do this because they don't want it when the other party is in power and as a result you end up with earmarks out the wazoo.

3-Simplify the revenue collection process (i.e. the tax code). Huge amounts of money are spent every year in an effort to avoid taxes and special interest groups get paid handsomely to get specific exemptions put in our tax code (which is what now, 10,000 pages?) and we end up with a tax collection process that is too complex for anyone to know. Wouldn't a tax code with minmal deductions and lower cost allow the tax rates to be set at levels that people spend a mountain of money to end up at anyway. Even the housing mortgage interest deduction should be on the table. Anyone else want to defend a tax policy that led people, among many other things, to lever an asset as much as possible to lower their tax bill? If the tax collection process were simplified then rates could be lowered and not cost the government any revenue. And just because I don't get a deduction on my housing doesn't mean I am going to live in a hovel. I still want a nice place with good schools and in a simplified tax code I might just have more after tax money in my pocket so heck, I might live in a nicer place.

4- attack and solve SS and Medicaire. As pointed out earlier the SS fix is easy..just do it. Medicare and the new heath care plan will only work if we ration healthcare. I am not talking death panels but if we are hell bent on giving every person access to every medical procedure then we are bankrupt. At some point a persons age has to be limiting factor on the procedures for which we as tax-payers are willing to pay. Harsh? in some senses...but absolutely neccasary for the good of all. There should be no limitation on what someone can pay for privately.


There are 4 ideas.... when can we start?

Not a bad start. Most of what needs to take place needs to be in the realm of perception.  When businesses view the government as limiting or adversarial, they exhibit more caution than we like.