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Old 12-07-2010, 01:29 PM   #21
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How complicated is this really. We are in debt, we have to pay it back at some point. So, we need to spend less than we bring in to account for the debt payback and then when the debt is gone responsibility would dictate we spend no more than we bring in. Actually, like any prudent person or business running a budget, we should actually spend less than we bring in and establish a rainy day fund.

Personally, I would like to see us cut spending instead of raising taxes; but, leaving the elected officials in charge of this budget is not getting us anywhere fast. We let it get to this point and at some point need to take our medicine and tighten our belts. The funny thing is I don't even think there is a plan in place to pay off our debt. What the heck is wrong with us?
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Old 12-07-2010, 01:30 PM   #22
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I guess the moral of my first post is that this tax deal, which is being touted as a big event, is really just noise that doesn't really deal with the underlying problem.
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Old 12-07-2010, 01:31 PM   #23
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....What did surprise me is that, in light of all the hype of the underfunded SS system, that they cut employer contributions by 2%. If they really wanted to give business a tax break, why hit SS? ..
Business doesn't even get a break there--only the employees get their contributions cut:

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The Social Security tax cut would apply to workers, not employers, and would drop from 6.2 percent of pay to 4.2 percent for one year.
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Old 12-07-2010, 01:43 PM   #24
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The payroll tax cut is on the employee portion, not the employer portion. And the "theory" is that it puts money in the hands of people who are very likely to spend it.
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Old 12-07-2010, 03:20 PM   #25
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I would have no problem with increased tax rates, only AFTER the government proves they are capable of handling the money already given to them. They have not, so I do not support tax increases. Why give the government more money to spend when they haven't shown any type of fiscal restraint with the money they already receive?

On a side note during this debate about raising income taxes on the population, the government has seen fit to try to decrease import taxes from 25% to 0% on trucks assembled in Korea and shipped to the US. If the government believes it needs more money and increased taxes are the only way they can get more money, then why decrease the taxes on an imported commodity?
Is it "they" or "us"? Do you think ordinary voters would cut spending if we got the chance? Suppose we had a national referendum on the budget ....
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Old 12-07-2010, 03:27 PM   #26
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I am sure the theory is because it has lowered the cost of hiring a new worker by ~2%. So if there are say 500 business planning on hiring 50 or more workers in the next few months these business will now hire 51 new workers. Meaning a creation of 500 new jobs, which will make such a big contribution to our unemployment situation.
Yeah, that will work, particularly since that 2% cost reduction is for one whole year only. They could have given businesses a tax incentive from a different bucket if this is what they really intended. (even though I realize they don't really keep the tax streams separate).
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Old 12-07-2010, 03:35 PM   #27
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My personal choice would have been not only to not extend unemployment, but to rollback the prior "emergency extensions". I would also increase the employee portion of the SS payroll contribution by 1%. I would use that money to extend the tax cuts for only those households making in excess of $250k per year. I would allow the tax cuts to expire for those below $250k.

Anything to hasten the revolution.
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Old 12-07-2010, 03:36 PM   #28
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No surprise at all to chicken out and leave the tough decisions until after another election. What did surprise me is that, in light of all the hype of the underfunded SS system, that they cut employer contributions by 2%. If they really wanted to give business a tax break, why hit SS? (unless of course because the effects of the reduced SS revenues will impact a different congress way down the road).
I'm glad to see that someone else found this puzzling. With the state that SS is currently in, why would you ever reduce the rate being paid in?

What I also find aggravating is that this decision came out in December, I wonder how many antiquated payroll systems are out there that cannot handle two different rates for employee/employer social security tax?
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Old 12-07-2010, 03:41 PM   #29
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No surprise at all to chicken out and leave the tough decisions until after another election. What did surprise me is that, in light of all the hype of the underfunded SS system, that they cut employer contributions by 2%. If they really wanted to give business a tax break, why hit SS? (unless of course because the effects of the reduced SS revenues will impact a different congress way down the road).
One group thinks a "starve the beast" attitude will lead to lower SS payouts in the future which fits their agenda. Another group thinks "higher paychecks today with greater impact on low wage earners" so it fits their agenda. They may both be right...
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Old 12-07-2010, 03:50 PM   #30
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One group thinks a "starve the beast" attitude will lead to lower SS payouts in the future which fits their agenda. Another group thinks "higher paychecks today with greater impact on low wage earners" so it fits their agenda. They may both be right...
I misread the SS tax cut It is a 1 year 2% cut of employee contributions, in other words another stimulus handout to try and get folks spending. I still disagree with giving that handout out of SS funds. I wonder if it reduces the final payout when those employees start collecting (I know it won't be much if it does but that way they could argue that it is cost neutral in the long run).
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Old 12-07-2010, 04:17 PM   #31
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I am sure the theory is because it has lowered the cost of hiring a new worker by ~2%. So if there are say 500 business planning on hiring 50 or more workers in the next few months these business will now hire 51 new workers. Meaning a creation of 500 new jobs, which will make such a big contribution to our unemployment situation.
That tax break was for employees, I believe business is gonna have to pay full tax. Gov't want workers to go spend that extra 2%. Believe most will be blowing the "gift" on filling up the gas tank. Thanks in part to the Fed relentless effort to devalue the dollar, oil prices gonna put the cabash on robust consumer spending. Business spending on equipment will likely go bonkers come Jan 1, whether hiring does is a different story.
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Old 12-07-2010, 04:39 PM   #32
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I misread the SS tax cut It is a 1 year 2% cut of employee contributions, in other words another stimulus handout to try and get folks spending. I still disagree with giving that handout out of SS funds. I wonder if it reduces the final payout when those employees start collecting (I know it won't be much if it does but that way they could argue that it is cost neutral in the long run).
Yes, it is a handout. I suspect they couldn't lower income tax brackets because they would have to make up the shortfall elsewhere, and they feel freer to use SS funds because it does not cause a deficit now.

US and UK are following much different strategies. This will be an interesting experiment if both are able to stay on their chosen path a few years.

PS: It will reduce future benefits
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Old 12-07-2010, 04:49 PM   #33
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Yes, it is a handout. I suspect they couldn't lower income tax brackets because they would have to make up the shortfall elsewhere, and they feel freer to use SS funds because it does not cause a deficit now.
It does increase the deficit because SS revenue flows into the general fund like all other taxes, and like all other taxes they're used to fund current government expenses. Less SS revenue, means less total revenue, means more borrowing, all else being equal. Both the SS "surplus" and "trust fund" are accounting fictions.
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Old 12-07-2010, 04:52 PM   #34
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How complicated is this really. We are in debt, we have to pay it back at some point.
Why do you think we have to pay it back at some point?
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Old 12-07-2010, 04:53 PM   #35
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US and UK are following much different strategies. This will be an interesting experiment if both are able to stay on their chosen path a few years.
Absolutely, and I've heard an interview with a financial guy on the BBC where he was asked why the USA is taking an almost exact opposite path to the UK to reduce the deficit and debt. The reason given was that the USA is much larger, with vastly more resources, is not yet in as deep a hole as the UK, and can probably grow their way out of the problem.

I don't know what the answer is, but I do believe that if economic brain power was translated into grains of gunpowder, then our collective members of Congress don't have enough to blow the caps off their heads.
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Old 12-07-2010, 04:57 PM   #36
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Why do you think we have to pay it back at some point?
If we don't pay our debts (ie default on US bonds) then countries will not invest in the USA and the dollar will crash ......

If you mean "why do we have to be debt free", then we don't as long as we can afford to pay the interest on the money we borrow.
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Old 12-07-2010, 05:39 PM   #37
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I don't know what the answer is, but I do believe that if economic brain power was translated into grains of gunpowder, then our collective members of Congress don't have enough to blow the caps off their heads.
Funny, and tragic, and so true.
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Old 12-07-2010, 05:48 PM   #38
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I don't know what the answer is, but I do believe that if economic brain power was translated into grains of gunpowder, then our collective members of Congress don't have enough to blow the caps off their heads.
That would explain why, now that they've run fiscal policy off the road and into a ditch, they now want to take control of monetary policy away from the Federal Reserve and run it themselves.

This would be the same Congress that believes "I must have money because I still have checks left." That's OK. The new Congress has a plan to double their money. "Fold it in half!"
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Old 12-07-2010, 05:59 PM   #39
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If you mean "why do we have to be debt free", then we don't as long as we can afford to pay the interest on the money we borrow.
What else could I possibly mean? If "we have to pay it back at some point" then at that point we would be debt free. So, if we never have to be debt free (as you point out), then we don't "have to pay it back at some point".
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Old 12-07-2010, 06:15 PM   #40
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The United States has a Social Security system that does not have enough money and a solution is we are going to treat it like the Illinois Pension system and take 120 billion from an underfunded plan? This is all so Greek to me.
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