Serious Time
 

David Brooks - The report from the chairmen lists some of the best ways to raise revenue and cut spending. But it comes with no enactment strategy. In this climate, asking politicians to end the mortgage deduction and tax employer health care plans and raise capital gains taxes and cut benefits for affluent seniors is like asking them to jump on a buzzing sack full of live grenades. They won’t do it.

Now we will get serious or collapse. Barring an unbelievable economic surge from a great scientific or technical leap, the free-ride is coming to an end. No more wars of choice without taxes to pay for them, no more hare-brained schemes from the left, we are exposed. We won't have the money for infrastructure. We can no longer afford to be a military force for world stability. We haven't done the supposed easy things like means testing social security let alone dump the mortgage interest deduction, the unacknowledged black hole in the housing crisis. Taxing employer health plans would hurt like hell but ask the Greeks what it is like to have all your greatness behind you.

There seems to be some sort of consensus that the only path for SocSec is to keep separate from the federal budget.
I believe political progress could be made if that were truly the case and no book-keeping shenanigans were involved.

Then raising the retirement age in stages AND removing the existing cap on income
would be acceptable because it would spread the pain to everyone.

On the other hand, reducing Medicare reimbursements is just a hidden way of passing additional costs on
to the elderly because they will be billed for the bigger gap in payments to hospitals and physicians.

In the long run, I suspect it will take a requirement that physicians and hospitals "accept Medicare",
meaning they can't charge Medicare/Medicaid patients more than the patient's Medicare and private insurance level allows.
This used to be the case when patients had no other liquid resources,
but with the new Medicare rules and bankruptcy laws it just is not happening anymore.
Now, when a patient is admitted to hospitals for something serious, the finance office immediately begins
looking for the family's assets and is ready to put a lien on the patient's home.

Medicare would be in good shape if they hadn't stolen all the money to fund other projects, without raising the taxes to cover those projects.

I've seen a lot of Administrations, and Congresses in my lifetime. The one thing that has been consistent, is they're purpose in life is to spend money, our money, and in numbers that have always boggled my little pea brain.

But let's face it, they are a necessary evil. Any attempt to stop, or even slow them from spending money, while talked about ad infinitum, has always come to naught. So to my mind, the best we can do is try to get them to spend the money doing good for the citizens. If you can't stop the dog from digging, try to keep him in the area you want cultivated.

I don't think I'm being defeatist, just realistic, because every time I tried being idealistic I got my ass reamed. Example, I voted for both Nixon and Bush... once. Being realistic is trying to get the politicians to direct the inevitable pork, to benefit their constituents, and not the corporate coffers that have become the political powerhouses.

What has happened to the Soc Sec funds (being transferred into the federal operating budget)
may be the biggest "dirty little secret" of politics... both Democrats and Republicans subscribed to it.

It was handled much the same way businesses moved funds out of
their own employee's pension funds into the company's operating budget.
The then company went belly-up and the feds had to take over the pension plans.

So many Soc Sec IOU's were spread into all federal agencies the debts probably can not be paid off when they come due.
Instead, we'll have a "blue ribbon commission" to recommend "forgiveness" of all those debts to the Soc Sec system,
and we start over with true pay-as-you-go financing.

In Parliament of Whores, P.J O'Rourke described the situation with social security. He's more than half satirical, but I think he has these facts, at least, correct.

Soc Sec takes some money in, pays some money out. If there is surplus (which there has usually been ... up until now) the only "investment" they are allowed to make is to buy US treasury bonds. A brief reflection on the insane gambles of the Savings and Loans crisis will make clear why no one trust bureaucrats with money.

Problem is, when they lend money to the treasury, the only thing the treasury can do is spend it. They're not allowed to invest it either.

Then in the future (which is now here), when soc sec runs into the red, they call up the feds and say, pay some back please. The feds can only shrug, say "we've spent it" and either raise taxes on everyone else, or cut or delay soc sec payments.

US style social security seems to be either disguised and poorly managed taxation, or a giant ponzi scheme.

Is this how it looks to you guys?

It is a ponzi scheme

Yeah, that is all it is.

I've paid in for 20 years. I'd be OK with them scrapping the entire system now and losing those 20 years of payments. I'm not OK with them asking me to continue to pay into it, and then taking it from me just as I'm ready to retire. I get the feeling that's where we are heading though.

I doubt it. If they decide to scrap it, I'll bet they say anyone born after X date in the future, won't be included in SS. I doubt like hell they'll exclude anyone that's paid in, even for a year.
Boeing did this in the last local contract, anyone hired after the beginning of this contract is not included in the pension system. Those people get a much higher company matching to their 401k, instead.

The entire world economy is a Ponzi scheme.

with a planned phase out in 5 years...

Griff's OP was also concerned about the federal budget.
The NY Times now has a way for everyone to decide how to balance the budget...

When I read "Serious Time", I thought this thread would be about prison. I am not disappointed.

The NY Times put together a quick game. Solve the deficit by 2030. It's pretty easy to do if you cap Medicare growth.

No.

Wanna bet ? See me in 6 years ;)

You're on, How about $1,000.

Back to the Soc Sec deficit... here is a short version of the Committee's recommendations (as part of an NY Times "opinion" piece)

Bolding is mine.
I personally would not trust the Republican Co-Chairman of this Committee,
so I started out as very sceptic over any report he might support,
but seeing this short version of the components makes me think there might be something to it, after all !



Safer Social Security
By PETER ORSZAG
Published: November 14, 2010

The proposal put forward last week has four main elements.

Seems like some good ideas... <shrug>

side note/ At first I read this as the deficit, not just the Soc Sec deficit.
I was wondering where Orzag ended up.

So the money doesn't follow the mouth. :eyebrow:

Is there something specific about Simpson or is it the (R) after his name? He's done some good work, I've always seen him as a voice for reasonableness in his party.

That does seem to be the big one. With that it is a piece of cake.

Almost sounds like we need some kind of healthcare reform or something...

Hmmm... you'd think so but nobody ever mentions it.

Here's a heartwarming film called "Money as Debt" it's about the ponzi scheme that is banking.

I do remember Simpson from his time in the Senate (the 80's),
as being derogatory towards working/poor people.
But here he is as Co-Chair of this current Deficit Commission
and this article from Sept 5th is even in support of Simpson !

Above, I tried to say that this Draft Report's recommendations on Soc Sec seemed appropriate
and were surprising to me, despite Simpson's history.

This is not Medicare and it certainly is not deficit reduction.
We will have to wait to see what develops in those areas.

Social security is just another purchaser of Treasury bonds. They will get paid back. They are projected to run out of bonds in 27 years, and even then they're projected to be able to cover 80% of their obligations out of year-by-year income. Social Security is fine, for the forseeable future (which is less than 27 years). It would be OK to do some of Orszag's tweaks, to fill in that last 20%, but that will not help the deficit appreciably. And I see no need to do much with Social Security until the bonds run out, as they were only intended to be a temporary stopgap for the Boomers. Once they run out, it should go back to paying year by year, using tweaks like those described.