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Jobs - A Solution at Hand?
Big job confab at the White House today. Some very smart folks are in
attendance. No doubt but that there will be some good recommendations
made. The question is can we afford to implement any of them?
I am as certain as I can be that one of the suggestions that will be
put forward would work. The National Federation of Independent
Business’s (NFIB) has recommended that payroll taxes be eliminated for
at least one-year.
Take a closer look at the implications of this. It is my estimate that
2010 calendar year payroll taxes will be $680 billion. This is a
massive amount of money. If the tax were suspended for a year a portion
of this pile of money would go directly into the pockets of America’s
90 million+ workers. It would equally go into their employer’s coffers.
The primary beneficiaries would be small businesses. In other words,
this would go right to where it is most needed.
At roughly $700 mmm this would be a size equal to the entire two-year
stimulus program of February 2009. But its impact would be multiples of
that in terms of increased demand in the economy.
I do not have a big computer, but a program like this would result in a
jump in GDP of 3-4% just by itself. A guess on job creation would be
around 3mm. If you want a big jolt in the arm this is it.
Eliminating payroll taxes for one year would be a very progressive
step. Therefore there would be political support for this approach.
Doing so for 2010 would put hundreds of billions back in people's
pockets just before next year’s elections. Who could find fault with
that?
There is one significant flaw to this approach. It would devastate the
Social Security Trust Fund. That is something that Congress will not
allow to happen. Even with the benefits that may go with it, that would
be a 'no sale'.
There is a way to do this Revenue Neutral to the Trust
Fund. It is relatively easy. You just have to cut current and future
benefits that the Fund pays out. That would be extremely unpopular.
Nothing like that could pass either.The Grey Panthers would rise up
against the Democrats.
There is one approach that could work. A “means” tax on benefits for a
stated period of time. A simple rule: If one has taxable income over
$150,000 they do not get benefits for the following year. If this were
in place for approximately five years the Fund would have offset the
shortfall incurred in the first year where no taxes are collected.
The number of individuals who are both 65 and earn $150,000 is not
large. They may yell and scream at this, but they are small in number.
Those same individuals have significant irons in the fire. They would
benefit from the robust economy that would follow. To make it fair,
the amount that had been withheld could be deducted from future death
taxes that will come due. My point is, this deal is sellable. The bulk
of the "Panthers" would love it.
These are the pieces for the largest stimulus effort in history. And it is budget neutral.
Keynes would be proud. The results would be dramatic. The impacts would
be lasting. This by itself would not right our economy. But it would
give us three to four years in order to dig ourselves out of a hole.
It will be interesting to see if the approach by the NFIB gets the attention that it deserves.
Note: The Trust Fund owns $2.5 Trillion of Government IOU’s.
For them (through Treasury) to repo $650b into the 1-3 year credit
market over the course of a year would not represent a significant
issue for the bond market. One consequence would be that this would
drain available liquidity; precisely what the Fed has told us it
intends to do. This would be achieved with less impact on supply and
demand than other options available to the Fed. A drain of about $700b
is approximately the right size.
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WaterWings,
I find most of what you post interesting but knock the generational $h!t off. We've all been had, not just boomers. There is an argument that could be made that each successive generation has been more worthless, entitled, and self indulgent than the last. Boomers paid in. They were told they were going to get at least that at the end of their life span. They ain't gonna. You and I paid in, we ain't either (I think of it as the old people's charity, and it ain't even that, it is my monthly rape).
I agree folks don't pay attention enough, but it is very easy to go, work your job you hate, come home, take care of the family the best you can, and then go zone in front of the TV or computer or whatever, just to decompress from the job you hate. Nice glass of wine, ahhhhh! I am not making excuses, just explaining how some of the lack of awareness can happen. Boomers are not unique in this regard. To mock one age group or the other is to fall for yet another flavor of bullshit which keeps us all at each other's throats and keeps us distracted from the real problem: A system that allows a small number to make too much gain off the many.
Ageism, sexism, racism, classism, homophobia, dem/rep, union/nonunion, blue eye/brown eye, weightism, cats/dogs, the list goes on how many different ways we can hate on each other.
Your too good for that bull$h!t. Knock it the f@ck off.
Yes ma'am!
Nuff said - easy to get off 'target'. Gracias!
Don't worry about it, you'll catch me being an accidental asshole some time too. It is soo easy to get pissed, so much is wrong.
Peace Bro.
I came back to cry foul after thinking about it, but, well, you're reasonable.
Placing blame on fellow human beings is never right - it's us against them inhumans. Sometimes everyone needs a little well-meaning jostle in the right direction.
I could tell you cared from the length of your post.
In fact, the more taxes 'they' want to collect the more Jackboots they have to hire to put people away - this eats up tax receipts: ya gotta pay for all the undercooked macarroni and cheese, jello, and 'WTF' on the prison cafeteria menu. But they can get a lot of good advice while inside, like how to start their own business cooking with Sudafed.
As for as being lied too. The Reagan era promised a social security "lock box". This was a complete lie and swindle because all it meant was that the Congress could steal from the Social Security fund as long as they deposited an "IOU". Of course, these were never repaid. As long as the IOUs were in place, they were considered part of the deficit. Clinton balanced the budget simply by getting rid of the IOUs. Now, Congress could steal from the Social Security fund without the charade of the IOU. In fact, Social Security would have adequate funds except that Congress has been stealing from it to fund other programs for the greater part of 40 years. Of course, you probably don't know anything about Reaganomics and its affect on today's world. We're you even alive then?
Well, your observation about the social security swindle is correct.
But the blame goes back to LBJ, not Reagan. He's the one (along with the post-kennedy congress) that decided to start subtracting the social security surplus from the rest of the deficit so that the federal government "owed" the SS trust fund the money. LBJ did it to pay for the "War" on poverty and the Vietnam War. About 45 years later, that trust fund is a bunch of IOU's in some dusty filing cabinet in some federal building basement (ok, it's a metaphor but a good one).
Reagan tried to begin to reverse that with the lock box concept. Got nowhere with a congress hoplessly addicted to spending. No other president since LBJ has made any effort at all to reverse the swindle. Nor has any congress. They are all complicit to some degree or another.
But blaming Reagan for it is laughable.