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Old 03-23-2011, 09:19 PM   #101
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I do not want to see poor and miserable people around me. So, the talk about providing education and opportunity has come up before. Still, no matter what we do, there will always be homeless people.
Well, sure, but that's what economic segregation is for. Folks in areas of concentrated affluence don't have to see the poor. Oh, they may have them drop by one or two at a time to do the laundry or tidy up the yard, but they don't have to deal with them en masse. At least not until certain emergent leadership properties develop in the areas of concentrated poverty...

"Poverty is the parent of revolution and crime."
-- Aristotle
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Old 03-23-2011, 09:22 PM   #102
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My gut feeling is that the budget could be cut 33 pct by getting rid of waste across the board without diminishing assistance to those that truly need it.
Well that would be truly wonderful if it could be done, I don't believe that's realistic. The budget is basically

Medicare & Medicaid (23%)
Social Security (20%)
Defense (20%)
Discretionary (19%)
other mandatory + interest (18%)

The numbers are from wikipedia. I'm not sure what's in "other mandatory" but assuming that it is mandatory, even if you got rid of all discretionary spending you wouldn't hit the 33% number.

The estimates from what I've seen on fraud waste and abuse in medicaid are generally under 10%. In SS presumably the big cost is the actual payments. So 10% savings in healthcare, 0% from SS, leaves a whopping 78% reduction in Defense & Discretionary to get to 33% savings overall.
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Old 03-23-2011, 10:03 PM   #103
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The estimates from what I've seen on fraud waste and abuse in medicaid are generally under 10%. In SS presumably the big cost is the actual payments. So 10% savings in healthcare, 0% from SS, leaves a whopping 78% reduction in Defense & Discretionary to get to 33% savings overall.
I agree with your analysis, but not the estimated 10% waste figure. My gut feeling of 33% is partially based on the waste due to above average salaries of gov't workers ,excessive workforce numbers, and general operational inefficiencies. Then there's fraud and abuse on top of that.

I don't have the info on hand, but I just read that our defense spending is way out of whack compared to china. So some major cuts can be made there and still have an adequate defense.

In any case, those in charge can't even agree that the budget should be balanced let alone make the tough decisions to accomplish it.
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Old 03-23-2011, 10:09 PM   #104
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Wow, I'm glad to know that Bill Gates and Steven Jobs were really just a couple of lucky schmucks, because I was beginning to feel like an underachiever in comparison.... Pretty amazing luck, revolutionizing the PC Industry, developing new operating systems, software, hardware, licensing, distribution, service, support, building their multi-billion dollar companies into world-class leaders in their fields. Heck, practically anyone could have done what they did, with a 30-year lucky streak...
sheezz you can run amuck, instead of seeing the truth in what i posted you attack. it is obvious that you think all wealthy people do everything right. that they are better than the rest of us.

getting back to my point about gates, IBM is also partly (maybe even mostly) responsible for "revolutionizing the PC Industry" and they made a huge mistake (which was lucky for gates) by allowing gates to keep ownership of PC-DOS as they thought the hardware was the more important piece of the puzzle. gates was also lucky that IBM didnt do what apple did when it came to the hardware. IBM was very open when it came to the hardware design thus allowing anyone to build an IBM PC clone but since gates owned the OS, all the clone pc makers used his OS (otherwise they wouldnt have been true clones) and he made a ton of money (IBM got nothing from this but if they hadnt built that PC none of this would have happened for gates). gates wouldnt have made nearly as much if IBM hadnt made the mistake of letting gates own the OS and license its use on each pc. it wasnt till his company was wildly successful that microsoft "developed" windows which apple says microsoft stole from them but really both got from xerox. i never said gates was only lucky, that he didnt work hard, or that he didnt have skills. but the fact that he was lucky cant be rationally denied. and the opprotunity he capitolized on wont come again.

the point i was trying to make was that if all the wealth in this country was distributed evenly to everyone i dont think gates would have anywhere near all his wealth back in 10 years (or in any time frame for that matter) and i gave some reasons why i thought that. i had no intension of tearing down your idol. oh and BTW i never really wrote about steve jobs, only that apple got the core of their OS from xerox, which is true.
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Old 03-23-2011, 10:36 PM   #105
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sheezz you can run amuck, instead of seeing the truth in what i posted you attack. it is obvious that you think all wealthy people do everything right. that they are better than the rest of us.

getting back to my point about gates, IBM is also partly (maybe even mostly) responsible for "revolutionizing the PC Industry" and they made a huge mistake (which was lucky for gates) by allowing gates to keep ownership of PC-DOS as they thought the hardware was the more important piece of the puzzle. gates was also lucky that IBM didnt do what apple did when it came to the hardware. IBM was very open when it came to the hardware design thus allowing anyone to build an IBM PC clone but since gates owned the OS, all the clone pc makers used his OS (otherwise they wouldnt have been true clones) and he made a ton of money (IBM got nothing from this but if they hadnt built that PC none of this would have happened for gates). gates wouldnt have made nearly as much if IBM hadnt made the mistake of letting gates own the OS and license its use on each pc. it wasnt till his company was wildly successful that microsoft "developed" windows which apple says microsoft stole from them but really both got from xerox. i never said gates was only lucky, that he didnt work hard, or that he didnt have skills. but the fact that he was lucky cant be rationally denied. and the opprotunity he capitolized on wont come again.

the point i was trying to make was that if all the wealth in this country was distributed evenly to everyone i dont think gates would have anywhere near all his wealth back in 10 years (or in any time frame for that matter) and i gave some reasons why i thought that. i had no intension of tearing down your idol. oh and BTW i never really wrote about steve jobs, only that apple got the core of their OS from xerox, which is true.

So, anyone who disagrees with your posts isn't able to see "the truth?"

I do believe many wealthy people do a lot of things right, part of the reason why they are wealthy. I don't believe (nor did I ever state) they are "better than the rest of us" -maybe smarter, work harder, are more risk-tolerant, make better choices in life, are more focused, etc.- but not "better". Having money doesn't make them better, just wealthier; there is a difference.


BTW, Bill Gates isn't "my idol", but his company does offer spellcheck.
(although capitals don't necessarily have to come from a capitalist...)
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Old 03-24-2011, 12:19 AM   #106
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So, anyone who disagrees with your posts isn't able to see "the truth?"
not so and that isnt what i said (are you another one who doesnt fully read posts you comment on?). however i stated facts and you didnt acknowledge those facts as being true, you just attacked me (kinda like you did here too). it is interesting that you didnt dispute those facts, you just ignored them. you obviously arent interested in discussing the facts. so be it, you can discuss whatever you'd like, but then your posts are just opinionated BS.
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Old 03-24-2011, 09:11 AM   #107
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I agree with your analysis, but not the estimated 10% waste figure. My gut feeling of 33% is partially based on the waste due to above average salaries of gov't workers ,excessive workforce numbers, and general operational inefficiencies. Then there's fraud and abuse on top of that.
I don't think you will get to 33% in healthcare (medicaid/medicare) given that administrative costs are tiny -- around 5% of claims and generally considered less than private insurers. E.g. see Healthcare Economist Medicare’s (true) Administrative Costs

So even cutting out 100% of all admininstrative costs won't get you to 33%.

Defense spending is a different issue as it is unclear how much the U.S. could cut back. But if we are capped at 10% reductions in the other areas, you'd need a 100% reduction in defense.
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Old 03-24-2011, 11:52 AM   #108
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I agree with your analysis, but not the estimated 10% waste figure. My gut feeling of 33% is partially based on the waste due to above average salaries of gov't workers ,excessive workforce numbers, and general operational inefficiencies. Then there's fraud and abuse on top of that.

I don't have the info on hand, but I just read that our defense spending is way out of whack compared to china. So some major cuts can be made there and still have an adequate defense.

In any case, those in charge can't even agree that the budget should be balanced let alone make the tough decisions to accomplish it.
IIRC, the total wage and benefit costs for civilian federal workers is about $200 billion, or 7% of the federal budget. Even if we're spending 50% more on federal workers than we should, that's only a few percent savings. The domestic side of the federal budget is mostly about writing checks to individuals and to health care providers.

It's possible that we could dramatically reduce our notions of what we should try to accomplish in "defense". Given our ocean borders and our nuclear arsenal, I'm not sure that we need much of an army for defense. But that's a longer discussion.
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Old 03-24-2011, 12:04 PM   #109
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Wow, I'm glad to know that Bill Gates and Steven Jobs were really just a couple of lucky schmucks, because I was beginning to feel like an underachiever in comparison.... Pretty amazing luck, revolutionizing the PC Industry, developing new operating systems, software, hardware, licensing, distribution, service, support, building their multi-billion dollar companies into world-class leaders in their fields. Heck, practically anyone could have done what they did, with a 30-year lucky streak...
You seem to miss the distinction between "necessary" and "sufficient" conditions. Sure, Gates worked hard and accomplished a lot. Somebody with the same opportunities who insisted on working 32 hour weeks would have failed.

But, he also had opportunities that are extremely rare. If he had to start over, and the planets didn't align as favorably for him, he'd be a successful software designer, but we wouldn't know his name.
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Old 03-24-2011, 12:33 PM   #110
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You seem to miss the distinction between "necessary" and "sufficient" conditions. Sure, Gates worked hard and accomplished a lot. Somebody with the same opportunities who insisted on working 32 hour weeks would have failed.

But, he also had opportunities that are extremely rare. If he had to start over, and the planets didn't align as favorably for him, he'd be a successful software designer, but we wouldn't know his name.
If you and Photoguy are correct and we cannot cut expenses enough to balance the budget, then we as a country are in financial free fall unless revenues can be increased. I don't see tax increases as the answer.

This brings us back on topic. Business and upper income individuals are increasing shackled by gov't actions that are essentially redistributing wealth. But as the wealth is shifted from upper income to lower income people, the tax revenues received by the gov't becomes less since lower income people pay taxes at a lower rate, if at all. This also lessens incentive for business and upper income people to earn more, since their ROI becomes less as they earn more.

One part of the solution is to provide incentive to business. Reduce regulation, taxation, and the threat of future anti-business legislation, and businesses will grow, unemployment rate will decline, people will make more money, and the gov't tax revenues will increase.
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Old 03-24-2011, 12:45 PM   #111
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Cut 33 pct spending across the board and we balance the budget.
As someone else pointed out, an enormous portion of the budget is interest payments on outstanding debt.

How do you unilaterally chop 33% off your debt payments without defaulting and triggering an catastrophic collapse in the dollar?
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Old 03-24-2011, 01:01 PM   #112
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As someone else pointed out, an enormous portion of the budget is interest payments on outstanding debt.

How do you unilaterally chop 33% off your debt payments without defaulting and triggering an catastrophic collapse in the dollar?
The net interest represents right now about 5% of total outlays. But most of that debt is held in notes of only a few years duration. When the higher interest rates come the debt part of the budget will go up considerably and will go up quickly.

Should a Greece-like event occur where the rest of the world loses confidence in the US ability to repay, then interest rates could really skyrocket. At that time the only money available to be borrowed will come with outrageous interest rates. In that case the debt part of the budget could eclipse everything.

The days of spending $3 for every $2 of revenue will eventually end - One way or another. These trillion plus deficits just can't keep going on.

I would hope that some of the cool heads up there in the capital would be smart enough to make some changes long before something really bad happens.
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Old 03-24-2011, 01:11 PM   #113
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Interest on debt is currently 6 percent of budget according to CBO (2010). Not only is it hard to determine who is too wealthy, but also what being too poor is and what obligation does society have to redistribute this wealth. Many people I know who receive direct government assistance have cell phones and nice cable tv packages. This were things amongst others that I did not have growing up (nor did anyone) but I didn't consider myself poor. I'm sure that definition is very wide ranging. I do not want other peoples money, but those truly in need should get assistance. But to what level will always be the debate.
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Old 03-24-2011, 02:11 PM   #114
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If you and Photoguy are correct and we cannot cut expenses enough to balance the budget, then we as a country are in financial free fall unless revenues can be increased. I don't see tax increases as the answer.

This brings us back on topic. Business and upper income individuals are increasing shackled by gov't actions that are essentially redistributing wealth. But as the wealth is shifted from upper income to lower income people, the tax revenues received by the gov't becomes less since lower income people pay taxes at a lower rate, if at all. This also lessens incentive for business and upper income people to earn more, since their ROI becomes less as they earn more.

One part of the solution is to provide incentive to business. Reduce regulation, taxation, and the threat of future anti-business legislation, and businesses will grow, unemployment rate will decline, people will make more money, and the gov't tax revenues will increase.
I didn't intend to say we can't balance the budget by simply cutting expenses. I said we can't balance it by cutting federal employee costs - they make up just a small percent of the total budget. If we want to balance by cutting expenses, we need to go where the money is - and that includes SS and Medicare. AFAIK, cutting SS by 33% means making the average SS check 33% smaller.

You seem to think that the rich are getting poorer and the poor are getting richer. I've never seen any data to support that notion. Do you have a source? Each year we use some of the tax dollars collected from higher income people to support current consumption of very low income people, but that's not what you wrote.
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Old 03-24-2011, 02:17 PM   #115
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They aren't saying that it is impossible to cut expenses enough to balance the budget. They are saying it is impossible to do it in the way you described (which was backed up by your "gut feeling" that there was plenty of easy "waste" to trim).

You can balance the budget without raising taxes, but it involves some dramatic changes in what we expect to get from government. Our Defense budget would need to be slashed to what it would take to actually defend our country from attack, rather than the current "Undisputed Ruler of the World" budget we have now. We would need to reduce Social Security benefits. We would need to change Medicare/Medicaid so that they only pay for a much more basic set of health care benefits than they currently do. We would need to stop paying farm subsidies (Not a huge part of the budget, just my particular pet peeve).

Or we could do some of of the above and go back to the tax structure that we under Clinton. IMO, the best Republican president that we've had since Reagan

Contrary to the view that "business and upper income individuals are increasing shackled by gov't actions that are essentially redistributing wealth", we've been mostly cutting taxes for the wealthy for 30 years straight, with a couple of modest bumps up along the way.

The extremely wealthy in this country have never had a better deal than they currently do. They pay a 15% capital gains and dividend rate. Their marginal rate of 35% is actually lower than the self-employed guy making $100k/year (28% income plus 14% FICA).

Would it really be the end of the world to go back to a 20% rate on cap gains and dividends?

Is there a reason that we want the income earned from work to be taxed at a much higher rate than investment income?


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If you and Photoguy are correct and we cannot cut expenses enough to balance the budget, then we as a country are in financial free fall unless revenues can be increased. I don't see tax increases as the answer.

This brings us back on topic. Business and upper income individuals are increasing shackled by gov't actions that are essentially redistributing wealth. But as the wealth is shifted from upper income to lower income people, the tax revenues received by the gov't becomes less since lower income people pay taxes at a lower rate, if at all. This also lessens incentive for business and upper income people to earn more, since their ROI becomes less as they earn more.

One part of the solution is to provide incentive to business. Reduce regulation, taxation, and the threat of future anti-business legislation, and businesses will grow, unemployment rate will decline, people will make more money, and the gov't tax revenues will increase.
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Old 03-24-2011, 05:44 PM   #116
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I don't see tax increases as the answer.
Why not? Is this just a private prejudice of yours?
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Old 03-24-2011, 06:48 PM   #117
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But, he also had opportunities that are extremely rare. If he had to start over, and the planets didn't align as favorably for him, he'd be a successful software designer, but we wouldn't know his name.
Yep, the folks who brought us Microsoft, Apple, Oracle, Ebay, et.al , were all just plain lucky, and never in the history of the world will all the planets align again to ever allow anyone to duplicate their success... except of course for the next crop of dot com zillionaires from Facebook, Google, Amazon, et.al... and undoubtedly many from the next generation will do equally well. Timing may have played a part (it always does) but to say that Bill Gates would be hacking code if he hadn't stumbled into MS is unprovable speculation, and a bit of a stretch, IMO
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Old 03-24-2011, 06:54 PM   #118
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n however i stated facts and you didnt acknowledge those facts as being true..
Because I disagreed with you? Do you think that posting your opinions here on FIRE automatically validates them as facts?
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Old 03-24-2011, 07:32 PM   #119
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I think we got carried away with the question of whether a billionaire would be able to duplicate the feat that got him the big bucks the first time. I don't think we could ever settle that hypothetical question, but why are we asking that?

Let's say that Gates could again become a multi-billionaire. So, do we take the money from him again?

Or what if Gates could not do it the second time? I suspect that this would be more likely as he is old now (heck, he's a year older than I am). What does that prove? Why do we deny someone the fruit of his labor which he expended in his youthful days, which he cannot relive?

More broadly, even if someone is really, totally lucky, do we tax his income higher than someone else who has to work hard for it? Do we tax lottery and gambling income higher than earned income?

It is likely that people who just sit in cash since March 09 regard us successful investors in the stock market as simply lucky. Would they not want to "tax the heck" out of our gains, as they would view it as "windfall profits"?

And by the way, one can call just about any kind of gain a "windfall profit".
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Old 03-24-2011, 08:33 PM   #120
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n however i stated facts and you didnt acknowledge those facts as being true..
Because I disagreed with you?
...
no, because

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you didnt dispute those facts, you just ignored them. you obviously arent interested in discussing the facts. so be it, you can discuss whatever you'd like, but then your posts are just opinionated BS.

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...
Do you think that posting your opinions here on FIRE automatically validates them as facts?
nope, but atleast my opinions were based on historical facts (which i included). however again i notice you dont discuss those facts, instead you just ignorantly state that everything i said was my opinion and you continue to just attack me.
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