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CBO Report: We have three options, only one is viable – A different plan to consider?

Bruce Krasting's picture





 

This piece runs on a bit and gets wonkish toward the end. Sorry on both counts. BK

The Congressional Budget Office may have done the country a big favor. It put into blunt words what choices we face. In the report dated July 19th CBO had this to say:

I) Raise federal revenues significantly above their average share of GDP;

 

II) Make considerable changes to the sorts of federal benefits we provide for older Americans;

 

III) Substantially reduce the role of the rest of the federal government—that
is, defense (the largest single piece), Food Stamps, unemployment
compensation, other income security programs, veterans’ benefits,
federal civilian and military retirement benefits, transportation,
health research, education and training, and other programs—in our
economy and society.



‘I’ is necessary and it’s going to happen. While this may sound
easy it is not. Increased taxes from workers are just a drag on the
economy. If there must be new taxes, the money raised has to support more than just the rapidly growing aging population. The country is in desperate need of new investments (energy, infrastructure, education); it would be a mistake to channel more scarce financial resources to one segment of the population.

‘III” is also going to happen. Cut backs in defense are critical. The other programs in the “rest of the government” will also be part of the mix. But let’s get real about this.
The US can’t cut these programs by an amount that would move the
needle. Do we really want to eliminate a substantial portion of the
defense budget? It’s true that the US can no longer afford its huge
bases in Asia and Europe. And we certainly can’t afford to go off to
wars that last ten years. We don’t need a huge standing Army. There can
be cuts in the Navy’s carrier fleets. The Air Force doesn’t need new
combat fighters. But it would be the dumbest mistake we ever made to degrade the military so they could not react if and when needed.

So that leaves ‘II’. The baby boomers are the real problem. This chart from the CBO says it all:

Note that of the significant components in the budget there is the
assumption that they all remain about the same as a percentage of GDP
for the next ten years. The exceptions are Social Security and Medicare.
These two programs gobble up a greater and greater share of the pie.
It's simply not possible to change the direction of the deficit in the
USA unless spending for the older population is reduced.

There is no plan from any side of the budget debate that is addressing this simple reality. I have a plan. It goes like this:

Objectives:


-Decrease the number of those covered by Medicare by 20% (now and in the future).

-Maintain existing revenues sources for Medicare at their current (and projected future) levels.

-Provide a major economic stimulus to the health care industry.

It is very tempting to say that a means test is the mechanism to achieve these objectives. IMHO it's necessary that well off seniors have to take a sizable hit.
That may sound like an easy solution, but it is not. The tax codes only
address income, so there is no effective “means test” measuring system.
There would have to be an “asset test”; this is something that does not
exist and would be very unpopular. (Note: If one had $10mm in
the bank it would be very easy to make $500k a year tax free. This very
wealthy person would not be hit with a means test based on income.)

Probably the most significant factor against a means test is that it is
confiscation. While the results may be considered fair by a broad
segment of the population the fact is that this is stealing. I think the courts would not look favorably toward this type of approach. A means test is a very tough political sell.

So the question are:  

How do we steal old rich people’s money?  

How do we do it in a way that actually has some fairness (to all) attached to it? 

And can we do it in a manner that would also act as a broad economic stimulus?

I think it might be possible to achieve these things. Rather than confiscate rich old people's money I want to sell that group something they desperately want. I want to sell them what they want at a very high price.

If those rich older folks don’t want to buy what I want
to offer them, there will be a price to pay. Those with significant
resources will have two choices in my plan. Either they can sign up for
what I’m offering or they have to pay a tax on the SS and Medicare
benefits they receive.

Here is a brief description of the new health care plan that I would offer to high net worth seniors. I call this the Gold Plan. Assume a 65 year old got this in the mail from Uncle Sam:

Your government is offering you a new health plan called the Gold Plan. Here are the features you will like:

-It will cost you nothing out of pocket to get this insurance.

-It will provide the best possible care with no deductions or co-pays.

-You can go to any Dr. you like, whenever you want.

-Your prescriptions are covered at no cost to you.

-There is no part A,B,C or any of that. No paper work at all. You get a Gold card and everything is covered.

-This is the same level of coverage that a President would get.

-This is lifetime coverage, regardless of health outcome. It will never cost a dime out of pocket to get.

That sounds good doesn’t it?

Medicare has an out of pocket monthly cost of $500 (including
supplemental). There are co-pays, tons of forms and deductibles for
prescriptions. Not all doctors or treatments are covered. Medicare is
not cheap and it does not provide for the best level of care. Therefore
if someone 65 got that letter in the mail they would whoop for joy.

What does the new health insurance actually cost? 100% of ones monthly social security check. Sign that payment away and you have a Gold Plan.

Very quick numbers:

*The average cost per Medicare beneficiary is $11,000 per year. (Medicare annual report)

*The average SS check for high life time earners is $1,800 per month or
$21,600 a year. (A range of monthly SS income from $1,400-2,200+ would
be accepted as full payment. This is a progressive feature of the Gold
Plan.)

The math on this looks good from the government’s perspective. A
beneficiary would be "paying" $22k per year. That is more than double
the average cost of a Medicare beneficiary. A portion (approximately
$3,000) would go back to Medicare. The balance of $19,000 a year is
available to cover the benefits under the Gold Plan.

This is the "carrot" part of the plan. There has to be a "stick" to get one's attention. The stick would be a new tax. Those
that are high lifetime earners would be subject to a new tax on their
SS benefits (a flat tax of about 15%) if they don't go for the Gold.
There would be two doors to choose. Yes, either door is costly. But at
least one door has something valuable on the other side.


On the economics: Assuming a 20% participation rate, the Gold
Plan initial revenue pool would be ~$190 billion a year and rise with
annual COLA + 750,000 new enrollees every year (increasing by $20b or
10% PA). The objective would be for the Gold Plan to breakeven. This is a bailout of Medicare. That would be the "prize".

This would also be a huge boost to the medical industry.
In my example Medicare expenditures would go down by $140 billion (20%)
while Gold Plan medical expenditures would rise to ~$200 billion. The
net gain of +$50 billion (and growing) would be very supportive of the
health care industry. I am not a fan of Big Pharma or Big (private)
Hospital, but if you want to create jobs in America, health care is the place to do it. If you think that CAT, CSCO, INTL, GM are going to create the jobs we need, think again. Healthcare is the only growth industry the country has got.

Yes, this is a "backdoor" means test. I'm sorry, but something like a means test has to happen.

Note: If you’ve read me before on this topic you know I am apposed to an economic plan that entails a huge inter generational wealth transfer. Unfortunately, that is the plan we are currently following. My thinking is that we need a different plan. A plan that shifts the burden (substantially) to the generation where the problems reside. The foregoing was my effort to turn the arrow in a different direction.

 


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Fri, 07/22/2011 - 12:18 | Link to Comment b_thunder
b_thunder's picture

Since your plan advertiseds to cover all doctors and all procedures, hwo woudl you prevent doctors from OVERCHARGING the GoldCard benefit holders?   Since gov't is paying for any procedure performed by any doctor, what's stoppign the "doctors" from colluding with "patients" who have GoldCard and charge 2X for the same procedures, and then split the difference?

 

 

Fri, 07/22/2011 - 10:37 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Bruce, you miss many aspects of the federal budget that others have been so kind to point out.  I would also add that healthcare just recived a big stimulus in the ARRA stimulus bill.  billions went to drug discovery and development as well as healthcare in general.

Ask yourself one question, what good is having a drug for every ailment, if there isn't enough food and energy available to people (via monetary collapse or otherwise) so they can live a healthy lifestyle via diet and excercise?  It is all about control and power, especially with respect to controlling all resources.

Fri, 07/22/2011 - 10:15 | Link to Comment Dburn
Dburn's picture

A few points
1. The last industry I want to stimulate is the Health Care industry. Why would we want to stimulate a industry that is considered a liability by employers. The greed of the industry knows no end. We are number 1 on the list of highest cost health care as we spend twice as much as the next country per person. 

I visited Caterpillar last week. The amount of US manufacturing and exports they do put them near the top exporter. Manufacturing is where stimulus could be worthwhile.

2. Extended UI benefits: There should be a carrot and a stick here also. The only real way to increase tax revenue is getting people retrained. So instead of checking off a few jobs they say they interviewed for,  use existing quality online training resources. Each course has a test. There would be a timeline to past the test. You only get benefits if one passes the tests. This can all be done by the private sector. The Govt could buy in huge bulk from online providers and cut UI benefits by 10% to cover the retraining or better yet slap a duty on all outsourced work product including intellectual.

3. Discrimination of the unemployed would have to stop. Period. There are way too many ads for jobs out there that state "Unemployed need not apply". If a person is retrained, and is hired , the company gets the first year salary as a tax credit if they discriminate against the unemployed by stealing employees from other companies while tossing unemployed resumes in the dumpster,  then an audit would include a tax debit, as in the salary they pay to the people they hired starting after the law was eliminated would be added to their tax bill and mandatory just like payroll tax.

Yes it would be hard to do, but the only way out of this problem is to retrain the unemployed for jobs that are available which ultimately increases revenues, decreases outflows and has a multiplier effect to boot.

Fri, 07/22/2011 - 09:44 | Link to Comment Loan Gunman
Loan Gunman's picture

I'm a member of the target demographic group.  I'd go for it except

one little detail...we all know they would CHANGE THE RULES

LATER!  After they had us all sucked in.  Sort of like, "It's

called Social Security.  You pay in for forty five years and it

will be put in this fund and then you'll get your money back

when you're old and no one will hire you anymore."

 

Fri, 07/22/2011 - 09:35 | Link to Comment slackrabbit
slackrabbit's picture

Tuesday is soylent green day;-)

Fri, 07/22/2011 - 09:20 | Link to Comment Watauga
Watauga's picture

HOPE millions CHANGE their votes in 2012.

(1) Cut all federal government--ALL federal government--by 50% over next 20 years.  This calls for ultimate ELIMINATION of Social Security, Medicare, Medicaid, ObamaCare, welfare, HHS, Dept of Agriculture, Dept of Education, DHS, and so forth.  DOD remains, but unless attacked, we do not fight wars.  This will allow the U.S. to DEFEND the freaking BORDERS while still cutting defense spending.  State Dept also cut.  CIA spending and Spec Ops spending increased.  Most of what we need to do militarily can be done via Spec Ops and air power.  Kill terrorists where they live without any political show (ala Obama's "I 'got' bin Laden" bullshit).

(2) CUT taxes across the board.  Flat tax on individual income of no more than 10%.  Eliminate forever the notion that the federal government can lawfully STEAL money from someone once he dies.  Capital gains cuts and corporate tax cuts by 50%.  ENCOURAGE business and industry.

(3) Throw out the U.S. Code.  Let States enforce State laws.  Federal Government law enforcement role reduced by about 90%.

(4) Federal Govt regulation reduced by about 90%, including all the bullshit environmental regulations.

(5) Empower States iaw the Tenth Amendment.

It is really quite simple and easy to do if we read the Constitution and abide by it.  Better yet, throw it out and REVERT TO THE ARTICLES OF CONFEDERATION.

Fri, 07/22/2011 - 08:45 | Link to Comment DOT
DOT's picture

Social Security is Welfare.

 

FICA is a Tax.

 

The money is GONE.

 

This is what real democracy looks like; the middle class voting themselves benefits and borrowing from the future generations.  Rule by a spoiled mob.

 

Means Test this program.

Fri, 07/22/2011 - 08:17 | Link to Comment thewhitelion
thewhitelion's picture

"Do we really want to eliminate a substantial portion of the defense budget?"

YES!

"But it would be the dumbest mistake we ever made to degrade the military so they could not react if and when needed."

Tell you what.  When the Chinese land in Cape May, I'n in.  Until then, spare me the "needed" bullshit.

Fri, 07/22/2011 - 10:47 | Link to Comment Dburn
Dburn's picture

+100
Defense expenses prior to WW11 were not nearly as high as a percentage of govt spending as they are now. Lets also consider the nature of defense spending. Program Managers don' get high visibility unless they are in charge of  big multi-year defense systems through congress. That's why we keep making weapons and transport for prior wars at a huge multiple of the cost of the original. Congress is just as guilty as the Executive branch. No congressman wants to be in office if a base is closed in his or her district or manufacturing jobs are lost if a defense project is cancelled. Many times congress approves purchases of things the military didn't ask or want. Simply because the product is made in their district. Many times the military is goaded into committing to weapons systems they don't need . especially the navy, to get a Seanator that has helped them in the past have "good news" to take home during an election cycle. The most egregious single example I can think of the thousands that are made was the Navy caving in on a 3 Billion dollar Aegis Destroyer for Sen. Susan Collins because it was built by Maine shipyards.

They have a few tough choices but Defense for some reason is off limits by both parties even though it's 25% of the budget. It's also notable that many of the basic designs from WW11, Korea and Vietnam are still used. eg. The 50 Caliber Machine Gun. The 7.62 M-60 through-M-249 is all based on the MG-42s the Germans used. The B-52 that was invented in the 50s has a projected life span of another 40 years.

We have been borrowing money for years to pay for the defense of other countries who don't bother to spend much because why should they? All these countries need to be sent large invoices. Then we can at least have the most effective in-house collection agency in the world. When they balk , have a flight of B-52s go right over the govt buildings.

Pay or die.

Finally , thanks to 10 years of warfare that has shown the world the best way to stop a military as strong as ours is to spend a few hundred grand placing IEDs and another few hundred grand on suicide bombers and shooters. We respond by building a new cumbersome weapon system that will be delivered way after that conflict is over. The only thing that should not be cut is the pay of the special ops groups and the  benefits of wounded and disabled veterans.

Does anyone know the favorite ploy of higher paid officers including Admirals and Generals ? Fly into a war zone ( safely) for one day on one of the 90 executive Lear Jets the military maintains and they don't pay taxes on any of their salaries for the whole month plus they get $250 for limousine fare back to the safety of some obscure Defense area that no one cares about , needs or wants but maybe congress does.

I could go on, but the waste and the fraud in the MIC is far more than in any of the social programs we have.

 

Fri, 07/22/2011 - 10:40 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Well done sir!  Exactly, I am in, and so are my sons when the hostilities on American soil begin.  Until then, how about we actually invest in our own for a change?

Fri, 07/22/2011 - 08:04 | Link to Comment i-dog
i-dog's picture

Stop fucking around with the deck chairs!!!

Fri, 07/22/2011 - 06:25 | Link to Comment Raymond K Hassel
Raymond K Hassel's picture

Didn't see it brought up earlier, but I may have missed it; to some extent Medicare is already means tested, has been for about 5 years. The monthly premium that comes out of you SS benefit is a function of income. There are about 4 tiers with the top tier paying 4x the bottom tier. Don't need an asset test because tax exempt income has to be reported on the 1040 and it's currently part of the calc to determine the monthly premium. All that really needs to be done is to crank up the rates. I know quite a few seniors who would not be opposed......SO LONG AS Washington wasn't taking it to blow on more BS

Fri, 07/22/2011 - 02:16 | Link to Comment gwar5
gwar5's picture

High medical costs are the result of government interference

Medical costs are astronomically high because it's a political problem not an economic one, despite boomer demographics. You have to actually get into the weeds and approach it from that level to avoid the lazy conclusion that Logan's Run (euthanasia) for seniors is an option -- even if Bruce didn't say it out loud. We are not there yet.

Don't believe? Consider plastic surgery where the government is not involved since health insurance doesn't cover cosmetic procedures, hence, this specialty operates closer to free market principles. Not surprisingly, costs for procedures goes down dramatically and quality simultaneously goes up over time, just as you'd expect. This is also a specialty where real innovations occur such as in minimally invasive procedures that drive down costs even further.  Moreover, these guys often do the surgery in their own office surgical suites -- eliminating the need for hospital staff, procedures, facility fees, etc., etc. which can double or triple the total costs of having something done.

Of course, none of this cost cutting and innovation is possible if the government is paying the tab. If a doctor doesn't mend a broken bone in the prescribed manner, in a prescribed setting, with the approved materials, then the doctor will not be reimbursed for any of it. And the doctor still must then waste resources fighting the government for months over every penny of reimbursement. This is madness and has to stop. I can go to Costa Rica and get good health care by America doctors at 1/3 the cost, and can get cheap prescription meds by just walking into a pharmacy without wasting time and money for the doctor visit just to obtain the written prescription. But not in the USA. 

 

Other fixes, besides getting the government out of the way:

1. stop giving free health care to 12 million illegal aliens, boomers paid into the system for decades and they're first in line for scarce resources. Period.

2. Tort reform -- caps and loser pays. Would elimate more than anyone thinks. 4 MDs can be called in to consultant on one case in a hospital when only 2 are needed because it spreads the lawsuit risk. Doctors don't even think about it anymore, because they even forgot why they started this wasteful bad habit. Tort reform would also prevent guys like John Edwards from running good doctors out of needed specialties like OB by keeping their malpractice rates down.

3. Get rid of the government-paid $6000 wheelchairs. Gone! And all the other $$ crap we don't need. The price will then come steight down, and people will be able to afford them out of their own pockets if they still want them.

4. Get rid/limit state government mandated covered health services -- forces everybody to pay for non-essential crap we don't need.

5. Get rid of insurance company fiefdoms, protected by state governments, which excludes competition. Make them all compete across the country and state lines. This will force them to be provide cheaper and better insurance products to choose from.

 

What if we reformed the criminal justice system like Obama did Health Care to save money Instead?

One economic student, now teaching at University of Chicago, estimated that the total cost of crime in the USA was about $1.5 Trillion per year. This included the exhaustive list of things like locks, insurance, repair damage, security systems, medical costs, injury time out work, etc., as well as the usual police, courts, labs, jury time, jails, prisons, rehab, parole, etc. Most crime problems are caused by the young career criminal types who will go on to cost society throughout their entire lives. We all know who the problem is, and who is casting us oodles, right Bruce?  

The point is that it is a really big number caused by an identifiable group. And whatever the total number happens to be it's up there with medical costs. Now, the politicians are never likely to mention cutting back on lawyers and the legal system, but just for fun, why not use the exact same rationing and ethics logic on the judicial system so we can move some of that money over to health care? Making criminals pay = fair.

Suppose a lawyer represents a client for murder and a government bureaucrat says a $2 million trial is too expensive. The lawyer is told he must expedite the case, to save money, by pleading guilty on behalf of his client, who will then receive death by lethal injection, to save money. Absurd you say? Gets better.

Now, suppose the lawyer refuses and is fined $200,000 by said government. And suppose the lawyer does this repeatedly and is then subject to jail time and imprisonment after the first fine every time he does not follow government orders. Totally absurd, you say? I wish. 

That is exactly what Obamacare and the eggheads idiots are doing to our doctors and patients.

The government is going to dictate to doctors how to treat, or not, dialysis and cancer patients, for example. They are prepared to let them die, to save money, so we can pay for $2 million criminal trials and appeals for murderers.

The doctors who disobey and treat the patients against the bureaucrat's decision will be fined $200,000 for the first offense. Thereafter, they will be subject to imprisonment for further "offenses."  And these are our good people we are talking about treating this way, the law abiding innocent ones. Doctors and patients are not criminals, much less individuals accused of a capital crime who might well deserve to be imprisoned or told to die.

The issue of who is really costing society resources and who deserves to be thrown under the bus is being discussed in absurb terms and not being discussed honestly. We're being made to fight amongst ourselves over age, race and class for the dwindling scraps when the obvious solution is to just to ration away the government out of our lives. 

Think about what the government is telling us we must do: A doctor, a free member of society, shall be jailed for treating a sick patient against the government's order. Now let that one sink in for a minute and then ask yourself..... have we really sunk so low it's really come to that?

 

Fri, 07/22/2011 - 12:44 | Link to Comment psychobilly
psychobilly's picture

words

Or, alternatively, we could go back to a system of laws where an actual victim has to be produced before it can be said that a crime has been committed.  Most "crimes" that people are charged with in the USSA are nonsensical.  That would eliminate most "criminal" law and more than half of the "crime" in one fell swoop.  We'd need a lot fewer government parasites.  And fewer prisons.  A lot of bald-headed, costumed, 'roid-enraged mongoloids would have to find a new way to scam society. 

Fri, 07/22/2011 - 11:53 | Link to Comment Thisson
Thisson's picture

This was a great, thought-provoking post.  Thank you!

Fri, 07/22/2011 - 06:28 | Link to Comment Raymond K Hassel
Raymond K Hassel's picture

LASIK is another great example, constantly getting better and cheaper for the last 15 years

Fri, 07/22/2011 - 10:20 | Link to Comment Dburn
Dburn's picture

What is the cost these days for LASIK?

Fri, 07/22/2011 - 00:23 | Link to Comment BigJim
BigJim's picture

But it would be the dumbest mistake we ever made to degrade the military so they could not react if and when needed.

Yes, but react to what? We could 'degrade' the military 90% and still have enough to secure the continental US.

The rest is just empire building.

Fri, 07/22/2011 - 00:05 | Link to Comment papaswamp
papaswamp's picture

Health Care bubble!...I love it! 

Thu, 07/21/2011 - 23:30 | Link to Comment malek
malek's picture

I don't get your calculation of $190 billion initial revenue pool at 20% participation rate, with each participating person contributing $22k per year.

20% of what?
That should be 20% of the boomers getting $1400 or more SS per month. How many of all current retirees / future retiring boomers get that much SS?

Fri, 07/22/2011 - 08:59 | Link to Comment Bruce Krasting
Bruce Krasting's picture

I assume this takes a few years. By then the Medicare population will be ~50mm. 20% of that is 10mm. That times the $19k ($22k total minus $3k rebate to medicare) =190b

 

To actually look at something like this one would need A) a very big computer B) access to a National Income Accounts Data base and C) some very complicated analytical skills.

I am quick to admit that I have have none of these things. This is just an outline. A discussion draft, if you will.

 

 

Thu, 07/21/2011 - 23:16 | Link to Comment ThirdCoastSurfer
ThirdCoastSurfer's picture

Nice plan! There are so many tax exempt, government aided (free postage even) charities out there already who would fall flat on their face if subjected to the 20% administrative cost rule of the Health Care Reform Act that we could then focus on requiring them to actually help someone more than they help themselves. 

The only flaw I see is that the medical profession operates on tenets that are far,far from a free market society. Theirs' is a tightly controlled closed end loop where the reward structure in a large enough aggregate to affect the whole is not tied to success or quality but volume and duplication.

So, while creating a large pool of funds to cover everything will work for a short period of time, in the long run it will serve only to expand and increase the inefficiency in the absence of a true free market delivery system.  

In a world devoid of greed and avarice it would work to the benefit of all though. 

Thu, 07/21/2011 - 22:41 | Link to Comment arby63
arby63's picture

Am I wrong or would we not even be having this conversation at all if we hadn't let our government grow wildly out of control? Now that can also be blamed on the boomers I think.

Thu, 07/21/2011 - 23:07 | Link to Comment curmudgery
curmudgery's picture

Eisenhower called out the power & corruption game when he left office.  Now let's see, I wasn't even 5 when he left office.  Worth noting that E's advisors strongly advised him to redact the "congressional" part of his cautionary parting speech about the military-industrial-congressional complex.  It was already ON in a big way, long before the boomers were created as post-war celebrations.  Could it be that even the Greatest Generation had a hand in it?  No, it was all the Boomers.  The same boomers who protested Vietnam and were called unpatriotic for it. 

Yep, it's all the boomers' fault.   I hope that makes everyone else feel comfortable about doing nothing.  Hah.  Do you really think all your problems will be solved just because the Boomers pass away???   Dream on.  Or start fighting for common cause with like-minded members of all generations.

 

Fri, 07/22/2011 - 01:08 | Link to Comment YouThePeople
YouThePeople's picture

 + The whole weak sauce 'it's the boomers fault' is laughable...and he calls himself a boomer.

     http://youtu.be/uV-7D4iolRs

 

Thu, 07/21/2011 - 22:40 | Link to Comment Michelle
Michelle's picture

A simple solution is to "check yourself out" before one becomes a burden on society. Sacrificing oneself for the good of the whole is never discusssed but is certainly a viable option. Forgo medical care and tell your friends and family to let you go peacefully when the time comes. These are very personal decisions and not for most, as most are fearful of death. I would rather live a shorter life and not become a burden to my family or society, and perhaps pass on some inheritance versus paying for end-of-life care.

Thu, 07/21/2011 - 22:56 | Link to Comment nmewn
nmewn's picture

But thats just it...its a personal matter, an individual choice. It should be a free choice.

No one should be made to feel guilty for clinging to what they have always known, the ones they love or pushed toward something else for the benefit of a "society" of strangers.

When that happens it becomes something more...something sinister.

Something I want no part of.

Thu, 07/21/2011 - 23:56 | Link to Comment wisefool
wisefool's picture

snark: Would you consider doing my taxes for me? I am not in the 51%, so it will be a challenge, but  I will likely die long before the average life expectancy.

Fri, 07/22/2011 - 07:50 | Link to Comment nmewn
nmewn's picture

At this point on the Keynesian rollercoaster, I'm not sure why income taxes are even collected.

It must only be some statist contrivance to keep the masses in their place at this point.

I mean aren't we being told that raising the debt ceiling is all that really matters for the government to function? ;-)

Fri, 07/22/2011 - 11:45 | Link to Comment Thisson
Thisson's picture

Income taxes are collected so that people are required to accept Federal Reserve Notes in trade, for the purpose of paying their taxes.  Once that requirement is met, all other expenditures can be funded via Uncle Ben's printing press.

Thu, 07/21/2011 - 22:39 | Link to Comment the grateful un...
the grateful unemployed's picture

the people milking the system are upper middle class, you can bury a lot of cadillac moms in just one bogus defense contractor. look i followed the bush follies, through duke cunningham, and his shadow defense contractor pals. enough to know also that billions went through venture capital firms, (you know anything about VENTURE CAPITAL??) because deficits are never a problem if they are used wisely, and not corruptly, think every GOP President since (and including) Lincoln.

and i am sure there are double dipping sorts who game the system for all its worth. i know a few of them. in fact sucking up the trough is the only way to make a living. what brought that about? not sure, but it works just as well during GOP presidencies, as Democract. You are a Wall Street trader, who is covering you ass baby, since 1987!! most people don't want to admit they suck it up at the trough. they like to pretend they are independent businessmen. stop that laughter now. the day is gone when a man or woman made their living without Uncle powdering their behind. 

Thu, 07/21/2011 - 22:15 | Link to Comment curmudgery
curmudgery's picture

If sensible action continues to be politically mooted, insurrection becomes more likely.  Here's one from left field - I know plenty of fellow baby boomers, at least the "back half" cohort, who are F'ING FED UP and consideing the previously unthinkable, would happily subvert authority and fight to make things right without care for whatever so-called "entitlements" read: narcotics from TPTB) may be coming their way.  My kids and their hipster friends, OTH, are unbelievably complacent.  They won't be fighting for anything, anytime soon.  Come to think of it, they grew up on playgrounds where fights weren't allowed (no scratch that, they grew up indoors glued to video games so they wouldn't be at risk of being accosted by some wacko).  Sometimes getting older lets you be more willing to fight.  You aren't impressing anyone to get dates, your kids are grown, and your own life's worth is absolutely what you do with it, not what material things you get or consume.  

The boomers have the numbers to make a difference.  I hope I and they have the guts to do it.   The old people I know are the embodiment of entitlement; well whatever.  The kids are checked out, figure that living for today is the smartest thing you can do (maybe they're right?). 

Anyone here feel the same way?  As the P.N.G. bboomer, tired of being blamed for everything?  We can certainly change that.

 

 

Fri, 07/22/2011 - 10:55 | Link to Comment Dburn
Dburn's picture

See this?

Charley Reese's Last Column...
I don't know if you have seen this. It is an interesting column......and very true and truly politically neutral.

 
Charley Reese's Final Column for the Orlando Sentinel...
  
By Charles Reese - March 31, 2011

He has been a journalist for 49 years.
He is retiring and this is HIS LAST COLUMN.

Be sure to read the Tax List at the end.

This is about as clear and easy to understand as it can be.. The article below is completely neutral, neither anti-republican or democrat.  Charlie Reese, a soon-to-be- retired reporter for the Orlando Sentinel, has hit the nail directly on the head, defining clearly who it is that in the final analysis must assume responsibility for the judgments made that impact each one of us every day.  It's a short but good read.  Worth the time.  Worth remembering!

545 vs. 300,000,000 People - By Charlie Reese

Politicians are the only people in the world who create problems and then campaign against them.

Have you ever wondered, if both the Democrats and the Republicans are against deficits, WHY do we have deficits?

Have you ever wondered, if all the politicians are against inflation and high taxes, WHY do we have inflation and high taxes?

You and I don't propose a federal budget. The President does.

You and I don't have the Constitutional authority to vote on appropriations. The House of Representatives does.

You and I don't write the tax code, Congress does.

You and I don't set fiscal policy, Congress does.

You and I don't control monetary policy, the Federal Reserve Bank does.

One hundred senators, 435 congressmen, one President, and nine Supreme Court justices equates to 545 human beings out of the 300 million are directly, legally, morally, and individually responsible for the domestic problems that plague this country.

I excluded the members of the Federal Reserve Board because that problem was created by the Congress. In 1913, Congress delegated its Constitutional duty to provide a sound currency to a federally chartered, but private, central bank.

I excluded all the special interests and lobbyists for a sound reason. They have no legal authority. They have no ability to coerce a senator, a congressman, or a President to do one cotton-picking thing. I don't care if they offer a politician $1 million dollars in cash. The politician has the power to accept or reject it. No matter what the lobbyist promises, it is the legislator's responsibility to determine how he votes.

Those 545 human beings spend much of their energy convincing you that what they did is not their fault. They cooperate in this common con regardless of party.

What separates a politician from a normal human being is an excessive amount of gall.  No normal human being would have the gall of a Speaker, who stood up and criticized the President for creating deficits. The President can only propose a budget. He cannot force the Congress to accept it.

The Constitution, which is the supreme law of the land, gives sole responsibility to the House of Representatives for originating and approving appropriations and taxes. Who is the speaker of the House? John Boehner. He is the leader of the majority party. He and fellow House members, not the President, can approve any budget they want.  If the President vetoes it, they can pass it over his veto if they agree to.

It seems inconceivable to me that a nation of 300 million cannot replace 545 people who stand convicted -- by present facts -- of incompetence and irresponsibility. I can't think of a single domestic problem that is not traceable directly to those 545 people. When you fully grasp the plain truth that 545 people exercise the power of the federal government, then it must follow that what exists is what they want to exist.

If the tax code is unfair, it's because they want it unfair.

If the budget is in the red, it's because they want it in the red.

If the Army & Marines are in Iraq and Afghanistan it's because they want them in  Iraq and Afghanistan .

If they do not receive social security but are on an elite retirement plan not available to the people, it's because they want it that way.

There are no insoluble government problems.

Do not let these 545 people shift the blame to bureaucrats, whom they hire and whose jobs they can abolish; to lobbyists, whose gifts and advice they can reject; to regulators, to whom they give the power to regulate and from whom they can take this power. Above all, do not let them con you into the belief that there exists disembodied mystical forces like "the economy," "inflation," or "politics" that prevent them from doing what they take an oath to do.

Those 545 people, and they alone, are responsible.

They and they alone, have the power.

They and they alone, should be held accountable by the people who are their bosses.

Provided the voters have the gumption to manage their own employees.

We should vote all of them out of office and clean up their mess!

What you do with this article now that you have read it... is up to you.

This might be funny if it weren't so sad & true.

Be sure to read all the way to the end:

Tax his land,

Tax his bed,

Tax the table, at which he's fed.

Tax his tractor,

Tax his mule,

Teach him as a child that taxes are the rule!

Tax his work,

Tax his pay,

Tax his cow,

Tax his goat,

Tax his pants,

Tax his coat,

Tax his ties,

Tax his shirt,

Tax his work,

Tax his dirt,

Tax his tobacco,

Tax his drink,

Tax him if he tries to think.

Tax his cigars,

Tax his beers,

If he cries tax his tears.

Tax his car,

Tax his gas,

Find other ways to tax his ass.

Tax all he has then let him know that you won't be done till he has no dough.

When he screams and hollers;

Then tax him some more, tax him till he's good and sore.

Then tax his coffin,

Tax his grave,

Tax the sod in which he's laid...

Put these words upon his tomb,

'Taxes drove me to my doom..'

When he's gone, do not relax,

Its Time to Apply The Inheritance Tax!!!

Accounts Receivable Tax,

Building Permit Tax,

CDL license Tax,

Cigarette Tax,

Corporate Income Tax,

Dog License Tax,

Excise Taxes,

Federal Income Tax,

Federal Unemployment Tax (FUTA),

Fishing License tax,

Food License Tax,

Fuel Permit Tax,

Gasoline Tax (currently 44.75 cents per gallon in Florida , could be higher in your area),

Gross Receipts Tax,

Hunting License Tax,

Inheritance Tax,

Inventory Tax,

IRS Interest Charges on Tax,

IRS Penalties (tax on top of tax),

Liquor Tax,

Luxury Taxes,

Marriage License Tax,

Medicare Tax,

Personal Property Tax,

Property Tax,

Real Estate Tax,

Service Charge Tax,

Social Security Tax,

Road Usage Tax,

Recreational Vehicle Tax,

Sales Tax,

School Tax,

State Income Tax,

State Unemployment Tax (SUTA),

Telephone Federal Excise Tax,

Telephone Federal Universal Service Fee Tax,

Telephone Federal, State and Local Surcharge Taxes,

Telephone Minimum Usage Surcharge Tax,

Telephone Recurring and Nonrecurring Charges Tax,

Telephone State and Local Tax,

Telephone Usage Charge Tax,

Utility Taxes,

Vehicle License Registration Tax,

Vehicle Sales Tax,

Watercraft Registration Tax,

Well Permit Tax,

Workers Compensation Tax...

STILL THINK THIS IS FUNNY?

Not one of these taxes existed 100 years ago & our nation was the most prosperous in the world.  We had absolutely no national debt, had the largest middle class in the world, and Mom stayed home to raise the kids.

What in the heck happened?  Can you spell 'politicians'?

I hope this goes around THE USA at least 545 times!!!  YOU can help it get there!!!
 

 

Thu, 07/21/2011 - 21:24 | Link to Comment Implicit simplicit
Implicit simplicit's picture

These suggestions would buy some time; however, the crux of the problem still will be the lack of internal growth through real wealth creation (making stuff). It will be tough for health care to lead the way with job growth; after all, most of these jobs are supported at least in some tertiary manner by Medicare and Medicaid. These are the type of goverment supported  programs that move us closer to socialism and bankruptcy.

The only way to grow (1)GDP for long-term prosperity is through (2) affordable energy. The two are directly proportionate.  This is where job creation, entrenpreneurs, investors and the goverment need to focus. The patient needs to be made well through work, not bigger goverment, banks, military etc... which eventually just suck the life out of her.

Thu, 07/21/2011 - 21:19 | Link to Comment Arch Duke Ferdinand
Arch Duke Ferdinand's picture

Time to Abolish Congress and Replace it with Internet Voting...

http://seenoevilspeaknoevilhearnoevil.blogspot.com/2011/07/time-to-aboli...

OT: Hilarious 2 Min Vid...

http://www.youtube.com/watch?v=W0Uju3tYS2s

Thu, 07/21/2011 - 20:37 | Link to Comment Chump
Chump's picture

Bruce, nice try.  At least you acknowledge reality, so you're about 1.5 trillion steps ahead of everyone else.

Thu, 07/21/2011 - 20:27 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Bruce,

I agree that the heavy lifting will need to be done in the so-called entitlements category. But you and I both know they will not touch defense spending, other than a little snip here and a little snip there. Here is defense spending in "constant" dollars from a ZH article from a few days ago.

http://www.zerohedge.com/article/charting-60-years-defense-spending-and-why-mean-reversion-will-cost-millions-jobs

When 'they' are willing to share the pain, then they can touch 'entitlements'. Did you notice how they passed the defense spending bill a few weeks ago with a net increase in spending? Whew, got that out of the way. Now let's cut the entitlements.

I appreciate what you are doing Bruce. You are speaking plainly and realistically. So let's talk realistically about defense spending. THEY WON'T CUT IT.

Thu, 07/21/2011 - 22:24 | Link to Comment HellFish
HellFish's picture

CD, That's a BS graph.  Graph it out as a % of GDP.  It's already been going down.  End these stupid muslim friendly wars.  There's the only defence cut we should entertain.  Next war with the muzzies should be total war.  It's way cheaper and more effective.  No more of spending US dollars and lives to save useless muslim lives.  Total war when war is necessary otherwise - stay uninvolved.

Thu, 07/21/2011 - 23:05 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

How is the chart BS?

It shows military spending in constant dollars. Military spending has increased an average of 9% per year since 2000. GDP has not increased 9% each year since 2000.

http://en.wikipedia.org/wiki/Military_budget_of_the_United_States

The U.S. Department of Defense budget accounted in fiscal year 2010 for about 19% of the United States federal budgeted expenditures and 28% of estimated tax revenues. Including non-DOD expenditures, defense spending was approximately 28–38% of budgeted expenditures and 42–57% of estimated tax revenues.[citation needed] According to the Congressional Budget Office, defense spending grew 9% annually on average from fiscal year 2000–2009

Fri, 07/22/2011 - 00:16 | Link to Comment cosmictrainwreck
cosmictrainwreck's picture

I won't call the chart BS, like our friend....BUT can't help but wonder what it looks like as % of GDP over time AND - boy am I stoopid - WTF is "constant dollars"? My metric would be inflation-adjusted (same?)

Pardon my cynicism, but charts like this...uh...uh, lemme see... well, they illustrate endless growth & "too much" of _________ (fill in the blank with any given $ BILLIONS catagory). All that's needed is to cut all waste, fraud and abuse and we "cut" a large %. Unfortunately, that is freakin' impossible, as has been amply confirmed with any given part of the machine.

We soooooo fucked.........

Thu, 07/21/2011 - 20:56 | Link to Comment penisouraus erecti
penisouraus erecti's picture

Isn't that one of the reasons we elected the hopey changey guy? The anti-military guy? Oh yeah, sorry that was the campaign when he felt that way...........

I guess we hadn't perfected urban warfare enough by Jan. 2009 that the puppet would be allowed to pull the troops, still perfecting it for some future crisis closer to home apparently.

Thu, 07/21/2011 - 20:43 | Link to Comment Chump
Chump's picture

Dude they won't cut fucking anything, and what they do cut will be designed to cause immediate and noticeable pain.  The cuts that can be afforded just will not happen, because that's not how this works.

Thu, 07/21/2011 - 21:46 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Thank you for stating my case. They won't cut anything that is 'protected'.

Fri, 07/22/2011 - 08:23 | Link to Comment Chump
Chump's picture

Ha, you're welcome.  I've noticed you have difficulty expressing yourself sometimes...just thought I'd help...

Fri, 07/22/2011 - 00:02 | Link to Comment Milestones
Milestones's picture

Which takes us straight back to the the banking system. Loans to governments so we can go on a Great Crusade to save -----what the fuck was it, --oh yea, Merica. And the beat goes on.    Milestones

Thu, 07/21/2011 - 20:42 | Link to Comment NOTaREALmerican
NOTaREALmerican's picture

Re: THEY WON'T CUT IT.

 

Well,  in reality nothing can be done.   Nobody is going to allow the socialism scam they are getting rich off of (or did get rich off of) to be cut.  

We've had a socialist utopia for 50+ years now,  huge numbers of people lived very well milking the system for every dime they could get (Big-MIC was one of the first).   I sure don't want MY scam to stop now, and I don't hold it against anybody that wants their scam to continue.

May all our socialist scams continue forever-and-ever (amen).

Thu, 07/21/2011 - 20:53 | Link to Comment penisouraus erecti
penisouraus erecti's picture

+14 trillion

Thu, 07/21/2011 - 20:38 | Link to Comment Greenhead
Greenhead's picture

Cog Dis, "They" won't cut it until "We" demand it.  When we are borrowing or printing 40 cents out of every dollar the fedgov is spending, focusing on "fair share" or "means testing" or whatever other collectivist euphemisms we use still don't adequately address the need to radically CUT SPENDING significantly.

But oh, my, the economy might stall.  Yes, it will.  It is currently running at an unsustainable level.  All the debt we have incurred only brought future spending into the present.  Understand a compound curve, you can't do that forever.  Debt creates an interest obligation and the ability to bring future consumption into the present is limited and ultimately collapses when there isn't enough current income to service the debt.  That is what bankruptcies are for, to clear out excess debt and allow the consume to start over.  All Bruce is talking about is how to extend and pretend a while longer but it isn't sustainable.  He is playing arithmetic games, shell games, moving this piece and that without addressing the real issue.  Which is spending.  The real economy doesn't include government spending.  They redistribute the economy's wealth but they sure don't create it.  Rant over.

Thu, 07/21/2011 - 22:23 | Link to Comment Rusty_Shackleford
Rusty_Shackleford's picture

We all tend to make things much more complicated than they need to be.

Simple rules:

  • Play fair.
  • Don't hit people.
  • Put things back where you found them.
  • Clean up your own mess.
  • Don't take things that aren't yours.
  • A=A
  •  

    We ignore these necessities for prosperity at our own peril.

     

    (Hey Greenhead, I like the cut of your jib.  Good posts on this one.)

    Fri, 07/22/2011 - 07:48 | Link to Comment Sudden Debt
    Sudden Debt's picture

    Seriously. I'm a pretty descend guy but rules like that will only get you sucker punched.

    It might work with the boyscouts but in business that just won't work.

    If you ever want to be a manager, those "rules" must be open to interpretation.

    YES THEY APPLY! To others.

    I don't like to play fair. Fair = Idiot.

    I don't hit people but I'll sucker punch they with a smile.

    Put things back where you found them...= add: If you're cought.

    Clean up your own mess:  That's just stupid. That's showing your the weakest and lost. Never do that.

    Don't take things that aren't yours: You're right! USE THEM AT THE LOWEST COST!, don't take them.

    A=A but B+C*2=A and A=B²...

     

    Do NOT follow this link or you will be banned from the site!