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"Red Ink": A frank conversation on the federal debt
Old 09-07-2012, 10:49 AM   #1
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"Red Ink": A frank conversation on the federal debt

Interesting article that I haven't seen here (apologies if I missed it), though some/many here probably read it already. I'm not hoping to debate policy here at all, just some interesting objective information for perspective. https://personal.vanguard.com/us/ins...red-ink-092012

A few excerpts:
Quote:
I don't think the typical taxpayer understands the federal budget for two reasons. One is, it's really enormous. Four hundred million dollars every hour is a lot of money. The second reason they don't understand it is because a lot of the political rhetoric is designed to make it less clear rather than more clear. When you look at the surveys of the public, you find out that they think we spend way more on foreign aid and food stamps than we really do. A lot of people who are on Medicare and Social Security don't think they're on a government program. One Cornell poll found that 40% of the people on those programs said they weren't receiving any government benefits. So people are pretty misinformed, and I think that may influence the way they vote.

We're paying a lot of interest on the federal debt, and that's money we give to other people. Used to be we paid it to other Americans; now we're paying it to other people and the rest of the world.

Basically, we have to decide what we're going to do about taxes. Are we going to raise them, and if so, how much and on whom? If we get health care, defense, and revenue settled, the rest is actually pretty easy.
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Old 09-07-2012, 10:57 AM   #2
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A lot of people who are on Medicare and Social Security don't think they're on a government program. One Cornell poll found that 40% of the people on those programs said they weren't receiving any government benefits. So people are pretty misinformed, and I think that may influence the way they vote.
"Keep the government out of my Medicare!"

Seriously, though, I think the problem is simple: Everyone knows that we need to eliminate the deficit, but only if *other* people pay higher taxes and none of my favorite spending programs are cut. Other than that, yeah, we totally support eliminating the deficit!

Everyone supports budgetary sanity in principle. They just don't want to share in the sacrifices that have to be made. Let other people sacrifice and leave me alone. And that is one of the main reasons we keep kicking the can on the budget -- we all point at each other saying, "I'll support it if YOU take the big hit".
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Old 09-07-2012, 11:14 AM   #3
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I disagree! I don't think the government needs to spend money on many of the earmarks that they do.

Such as the "drinking habits of Chinese Prostitutes" Or giving money to Bruce Springsteen and Scottie Pippen for their so called farms. Or giving 6.4 Billion to Black and Indian farmers and on and on and on.
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Old 09-07-2012, 11:30 AM   #4
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"I don't think the typical taxpayer understands the federal budget for two reasons. One is, it's really enormous. Four hundred million dollars every hour is a lot of money. The second reason they don't understand it is because a lot of the political rhetoric is designed to make it less clear rather than more clear."

Amen
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Old 09-07-2012, 11:32 AM   #5
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Originally Posted by 73ss454 View Post
I disagree! I don't think the government needs to spend money on many of the earmarks that they do.

Such as the "drinking habits of Chinese Prostitutes" Or giving money to Bruce Springsteen and Scottie Pippen for their so called farms. Or giving 6.4 Billion to Black and Indian farmers and on and on and on.
This is actually illustrative of the point I made above. We support budget cuts as long as they aren't ones that affect *me*. As soon as someone wants to touch a part of the budget we care about personally, we scream bloody murder. Those who support tax increases are likely to do so as long as "other people" (defined as those who earn one dollar more than me?) pay them all.

Collectively, we refuse to accept that we personally have to "take a hit" through higher taxes or reduced spending on things we care about. And thus we kick the can, just ensuring that the next time we start talking about a "fix" it will be even more painful.
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Old 09-07-2012, 11:59 AM   #6
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Everyone supports budgetary sanity in principle
Everyone, except for politicians who tell their constituencies, not from your pocket.
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Old 09-07-2012, 01:36 PM   #7
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A friend and I were talking about this and I sent her the link for the Stabilize (not get rid of) the Debt simulator.

Budget Simulator | Committee for a Responsible Federal Budget

Once she starts, I will start pointing out things. She has a mortgage. She works for a non-profit funded by tax deductable donations. She has family members who farm or are in the military or collect social security and so on. I am treating this as a teachable moment.
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Old 09-07-2012, 01:59 PM   #8
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Quote:
I don't think the typical taxpayer understands the federal budget for two reasons. One is, it's really enormous. Four hundred million dollars every hour is a lot of money.
Quote:
Originally Posted by 73ss454 View Post
I disagree! I don't think the government needs to spend money on many of the earmarks that they do.

Such as the "drinking habits of Chinese Prostitutes" Or giving money to Bruce Springsteen and Scottie Pippen for their so called farms. Or giving 6.4 Billion to Black and Indian farmers and on and on and on.

I think I agree with you on the earmarks issue, but I also think you've just proved the author's point. If you eliminated all the "wasteful" spending you have illustrated here over the last year, how close does it come to cutting a trillion dollar / year deficit spending?
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Old 09-07-2012, 02:10 PM   #9
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Quote:
Originally Posted by 73ss454 View Post
I disagree! I don't think the government needs to spend money on many of the earmarks that they do.

Such as the "drinking habits of Chinese Prostitutes" Or giving money to Bruce Springsteen and Scottie Pippen for their so called farms. Or giving 6.4 Billion to Black and Indian farmers and on and on and on.
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Originally Posted by Alan View Post
I think I agree with you on the earmarks issue, but I also think you've just proved the author's point. If you eliminated all the "wasteful" spending you have illustrated here over the last year, how close does it come to cutting a trillion dollar / year deficit spending?
Quote:
(CNSNews.com) - Whether you use the Office of Management and Budget’s earmark*numbers or Citizens Against Government Waste’s earmark*numbers, eliminating 100 percent of earmarks in fiscal 2010 would have cut the federal budget by less than one-half of one percent.
Eliminating 100 Percent of Earmarks Cuts Federal Spending Less Than 0.5 Percent | cnsnews.com
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Old 09-07-2012, 03:01 PM   #10
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Old 09-07-2012, 04:53 PM   #11
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As a member of the Concord Coalition since 1995, I have learned a lot about federal budgeting and the national debt. I helped run a "Debtbusters" and a "Just Generations" group activity back in the late 1990s.

As for the book, I saw Wessel on C-Span a few weeks ago talking at a DC-area bookstore about it. It is high up on my must-read list.
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Old 09-07-2012, 05:46 PM   #12
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Thanks, Midpack, good article.

- I do wish there were a way to help put the big figures in perspective for voters. The 2011 "1.3 trillion dollar deficit" means almost nothing to me. If we say "$11,000 per household" that gives it quite a bit more relevance, but still we don't know how much each of us is likely to be responisible for. Same with all spending programs.

- Taxes: The "good" news is our tax laws and regs are a disaster. The accompanying regulatory burden, drag on the economy caused by the market and capital distortions, etc means that, in theory, we can fix things and put a lot more money into federal government coffers before we start impacting the productive parts of the economy. In this respect it's similar to our health care situation: We already spend so much on the present wasteful and dysfunctional "system" that there are enough resources in play to let us make progress without spending more. Now--how to get folks to go along with lower rates and fewer deductions/exemptions/special treatment.
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Old 09-07-2012, 06:41 PM   #13
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I believe fiscal policy has taken a back seat to monetary policy. Just look at the reaction to today's job report. " Well, here comes Q3! "
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Old 09-07-2012, 06:51 PM   #14
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It really is no joke; sounds just like an AARP ad.

Just as people will condemn "government workers" and extol military in same breath.

Then there are the people who actually think NASA is a private corporation.

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Originally Posted by ziggy29 View Post
"Keep the government out of my Medicare!"

Seriously, though...
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Old 09-07-2012, 07:40 PM   #15
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There's a lot of doom and gloom on this topic but I personally don't feel it is "unsolvable". Simply letting the bush tax cuts expire for everyone cuts the deficit in half. In my short working career (about 10 years) I've been both above and way below the 250k limit. Paying a few more percent in taxes isn't going to significantly change my quality of life in any way.

Add in some modest reduction to Defense, Medicare/Medicaid, and SS with the pain spread out among everybody (young/old, rich/poor) and I think we can get there.


FYI, In addition to the budget simulator link posted above, I like the NY times version:

Budget Puzzle: You Fix the Budget - Interactive Feature - NYTimes.com

It expresses the impact of various taxes/changes with respect to the deficit (instead of the overall debt) so I think it's a little easier to see visually.
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Old 09-07-2012, 08:14 PM   #16
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Quote:
Originally Posted by ziggy29 View Post
We support budget cuts as long as they aren't ones that affect *me*. As soon as someone wants to touch a part of the budget we care about personally, we scream bloody murder. Those who support tax increases are likely to do so as long as "other people" (defined as those who earn one dollar more than me?) pay them all.

Collectively, we refuse to accept that we personally have to "take a hit" through higher taxes or reduced spending on things we care about. And thus we kick the can, just ensuring that the next time we start talking about a "fix" it will be even more painful.
SS, Medicare and such have been around for a long time and I have paid in and expect to get back.

New earmarks like the ones I mentioned are new spending for which we don't have the money. Why can't you get this straight in your head. Explain to me why I should give up one dime of my SS or Medicare to support the earmarks I mentioned above. I'd love to hear why the drinking habits of Chinese Prostitutes are important to us.
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Old 09-07-2012, 08:16 PM   #17
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I think I agree with you on the earmarks issue, but I also think you've just proved the author's point. If you eliminated all the "wasteful" spending you have illustrated here over the last year, how close does it come to cutting a trillion dollar / year deficit spending?
Not close, but should we just continue to toss our money in the toilet. When the government stops doing that I'll be willing to give something up also. Till then not a dime.
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Old 09-07-2012, 08:35 PM   #18
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I'd love to hear why the drinking habits of Chinese Prostitutes are important to us.
Is understanding the transmission of HIV important you? HIV drugs are extremely expensive and can be on the order of ~$1000/month/patient. According to

http://www.kff.org/hivaids/upload/7172_04.pdf

total federal and state Medicaid spending on HIV in 2008 totaled $7.5 billion.

If you go to the university site and look at the news article about the grant:

Prognosis E-News

You'll see a much better rationale for the study (the link between alcohol abuse and HIV). Medicaid patients come from the poorest rungs of society and have much higher rate of problems with drugs abuse / HIV / etc. While the study population is in China, I'm pretty sure that they will learn stuff that will also apply domestically.

The grants from US organizations like NSF, NIH, are peer reviewed and extremely competitive to win. The people who review these grants and make recommendations as to which research should be funded try their best to do a good job. While the reviewers are not perfect, they are not going to fund research that is pointless.
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Old 09-07-2012, 08:54 PM   #19
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SS, Medicare and such have been around for a long time and I have paid in and expect to get back.
+1. I didn't have a choice on SS & MC, I had to pay in for my entire working life. So a "forced" Government program. Too late for plan B now.

If the program does not work you either raise premiums or cut services just as is being proposed.
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Old 09-07-2012, 09:11 PM   #20
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SS, Medicare and such have been around for a long time and I have paid in and expect to get back.
You may expect that, but the Supreme Court ruled over 50 years ago that you have no legal right to receive Social Security just because you paid into it. See Fleming v. Nestor, 363 U.S. 603 (1960) FindLaw | Cases and Codes

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"The Social Security system may be accurately described as a form of social insurance, enacted pursuant to Congress' power to "spend money in aid of the `general welfare,'" Helvering v. Davis, supra, at 640, whereby persons gainfully employed, and those who employ them, are taxed to permit the payment of benefits to the retired and disabled, and their dependents. Plainly the expectation is that many members of the present productive work force will in turn become beneficiaries rather than supporters of the program. But each worker's benefits, though flowing from the contributions he made to the national economy while actively employed, are not dependent on the degree to which he was called upon to support the system by taxation. It is apparent that the noncontractual interest of an employee covered by the Act cannot be soundly analogized to that of the holder of an annuity, whose right to benefits is bottomed on his contractual premium payments."
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