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On The Money

Bruce Krasting's picture





 

 

We got a big reminder of the importance of government spending in the Q4 GDP report. The damn military delayed some expenditures for a few months, and it knocked 1.3% of the quarter's growth rate. If it weren't for the pikers at the Pentagon, we would have been in the black. GDP = Jobs, and everyone wants jobs, so it would be "patriotic" if the Generals and Admirals got off of their asses and and got back to spending. Right?

As it turns out, the Top Brass can't move the economy's needle, at least not compared to other parts of the government that are spending the bucks that keeps things humming.

 

The pride of the military is the aircraft carrier. We have 11 of them floating around today. There's good reason to believe these ships, with their monster offensive capability might come in handy, so for that reason, and the good of the economy, we should build some more. These babies cost $12B:

 

8019589239_271e8842d7_z

 

$12B sounds like a lot, but compare it to what Social Security has paid out in just the month of February - $66b went out the door. SS is now spending at the rate of five aircraft carriers a month!

 

Of course if you're going to build the odd dozen carriers, you will need lots of new planes to go with them. Each ship needs 70 of the F/A -18 attack bombers.

 

i0LHoMKBj51g

 

The F/A-18 goes for $60m, about 90 minutes worth of SS payments. Some other comparisons of military hardware and SS:

 

The M1 Abrams Tank (a monster) cost the same as 3 minutes worth of SS's annual cost.

 

abrams-tank-920-33

 

We could probably use a few more of these B1 bombers. They must be a blast to fly. They are very expensive, each one costs about two hours of the tab for SS.

 

b1-bomber

 

The future is drones. What better way to fight a war but behind a TV screen, right? The MQV-1 Predator is just what we need. The good news that these killers only cost the equivalent of 3 minutes of SS. The Hell Fire Missiles the MQV fires leave a big hole in what ever they hit, the cost is negligible. SS is spending at a rate equal to the cost of 15 Hell Fires - every second.

 

Screen-Shot-2012-12-19-at-12.21.42-AM

 

Okay, I'm kidding a bit with this. But the comparisons are legit. America can't change spending by reducing the carrier fleet 10%. The cost of the extra ship is a rounding error when compared to SS.

Please don't take this to read that I want to increase military spending as a vehicle to create jobs. This is just another effort of mine to make some comparisons of what is going on at SS. The numbers are mind boggling. Yet in the next several weeks, as the sequester talks hit the pavement, SS will not be addressed. There will be some talk, but there will be no action.

 

Spend

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Fri, 02/08/2013 - 22:08 | Link to Comment SKY85hawk
SKY85hawk's picture

Bruce:

I'm impressed that you have access to such a volume of detail information.  But, I only see talking points that do not expose the extent of the 'Problem' in SS, or Medicare or SS Disability.  The govt would use this method to distract sheeple from seeing the truth.

I think you can do better.  A real balance sheet analysis would make the problems in SS and Medicare more visible.

I'd like to know how much money was paid into Social Security and Medicare and NOT escrowed.  Yes, I know that FICA means Federal Insurance Contribution Act. 

Congress spent the money as fast as it came in. They gave Treasury Notes in exchange for the cash.  

Shouldn't all those notes be redeemed before fixing/changing Soc Security?

Wed, 02/06/2013 - 14:57 | Link to Comment NoWayJose
NoWayJose's picture

We can't be too far from the day when the United States does spend more Bernanke Bucks on many new carriers, aircraft, missiles and drones, and then tells the world - "I want all your gold".

Wed, 02/06/2013 - 14:34 | Link to Comment WaEver
WaEver's picture

QE5: bernanke prints aircraft carriers....

Wed, 02/06/2013 - 14:31 | Link to Comment JoeKnowsPhils
JoeKnowsPhils's picture

Bruce, you are correct when you say that SS can be fixed an should be fixed. There are ways to do that, and I hope we are not too late adopting them.

As great a threat as SS is the Medicare system. I learn a lot from your writing and I would like to see you turn your analytical skills to aspects of that problem. (As an old math prof of mine used to say: "this is left as an exercise for the student").

Comparing total SS dollars to total military dollars is misleading it seems to me. We spend at least a trillion a year on our military, spy agencies, drug wars and what not. How much of that is not necessary? Could we get by spending half a trillion (say)? Call that number X. How much of SS spending could be eliminated? Call that Y. Which is larger -- X or Y?

Your writing is interesting and entertaining. Keep up the good work.

Wed, 02/06/2013 - 15:14 | Link to Comment SKY85hawk
SKY85hawk's picture

Seems you are unaware of how much money was paid into Social Security and NOT escrowed.  Congress spent the money as fast as it came in. They gave Treasury Notes in exchange.  

Shouldn't all those notes be redeemed before changing Soc security?

How many CEO's & CFO's w/b in jail if they did this with employee's retirement money?  It's bad enough that they are allowed to underfund the company plans.  Pray they don't acquire the 'exemptions' that CONgress enjoys.

Wed, 02/06/2013 - 14:19 | Link to Comment NEOSERF
NEOSERF's picture

All I know is there are going to be a buttload of boomers eating squirrels in 2020.

Wed, 02/06/2013 - 14:47 | Link to Comment Omen IV
Omen IV's picture

that's not going to happen!

bruce - you are touting the "doctrine of false equivalency" as clear as day!!!!

defense expenditures get nothing but accumulation of rust in the desert or eventually barnacles stored on the sacramento or hudson rivers and kids who dont deserve the brain damage or dismemberment

the creation of endless bad guys out of whole cloth or even worse  - drone attacks on Al Qaeda in Pakastan and then give the same Al Qaeda group  arms and money in Syria is the height of Schizophrenia

your  lap dog peterson propaganda is clearly financially motivated - how much is he paying you? when did you become a whore?

there is no SS or Medicare problem  - there is a pricing problem for the products and services from Big Pharma and Insurance Cos - cure those will take 65% of the issues away and an increase in the max wage to $500k takes care of the rest

are you an indian? sounds like you speak with forked tongue!

 

Thu, 02/07/2013 - 08:43 | Link to Comment Bruce Krasting
Bruce Krasting's picture

Right, me and Pete Peterson are best buds, and he is paying me cash money to write articles trashing SS.

 

What planet are you from?

Wed, 02/06/2013 - 14:43 | Link to Comment Cast Iron Skillet
Cast Iron Skillet's picture

Poor squirrels! In the cities there are lots of rats ....

Wed, 02/06/2013 - 14:34 | Link to Comment Mi Naem
Mi Naem's picture

Yep, I think I'm going to buy some bunnies and some chicken wire. 

Gonna build a ranch down in the basement.  Sell them to my hungry neighbors. 

Wed, 02/06/2013 - 14:58 | Link to Comment Transformer
Transformer's picture

I continue to marvel at all this discussion about SS.  "2031". "2015", "will run out of funds in __ years", and on and on.  They just print the money, and will do so until it all falls down, which will likely be way before we get to 2031.  This appears to me to be simply another L/R Paradigm issue, to divert attention from real issues.  Although, when you discuss SS, you do end up talking about debt and deficits a lot.

We, the wage earners, already paid for it.  It aint our fault that politicos stole the money to use on other programs.  The whole thing is going down, and since their is no more interest income on savings, at least we should keep paying the old folks who paid their money in.  I paid over $160K into SS, and that was probably the equivalent of over $450K today, and I will never even begin to see that much in inflated dollars.  That money I paid was stolen, so just print some replacement money, and as Lori Anderson said, "Pay me what you owe me".

Wed, 02/06/2013 - 15:36 | Link to Comment Pure Evil
Pure Evil's picture

The way to save SS is to limit recipients to the amount they paid in period. This will automatically force everyone to work until they're practically in the grave.

Wed, 02/06/2013 - 13:46 | Link to Comment blu
blu's picture

Someone with access to the correct numbers and rates of change should be able to give us a ballpark estimate of how long it will be before the entire tax income of the US Federal government will be spent to service just two things only; SS and interest on debt.

Given that SS outlays and the debt keep growing and income keeps dropping, and this disparity will continue for many years yet, the day cannot be too far off.

Wed, 02/06/2013 - 14:19 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

Social security is presently around 772.3 billion, debt interest is presently around 223.1 billion, so 995.4 billion.  Fed tax revs are around 2.475 trillion.  So, presently we're looking at 40% of tax revenues are going to pay for social security + debt.  This does not include federal pensions (212.7 billion), Medicare (807.6 billion), defense (668 billion) or income security/welfare (353.5 billion).  All of these items add up to 2.042 trillion dollars, which on top of the 995.4 billion above, comes to 3.037 trillion.  Grand total spending is 3.539 trillion, for a present deficit of 1.065 trillion dollars.  

I would suggest that when thinking about social security, we're also thinking about federal pensions, because these two items are ultimately "legally iron clad" shit we have to pay for (in addition to debt interest).   These three things together are 1.208 trillion a year, or about 49% of total tax revenues (including income, payroll, and corporate).

Fun side note:  we currently take in about 856 billion in payroll tax money, which is supposed to fully fund Medicare and Social Security.  These programs currently cost 1.58 trillion.  So, these programs are underfunded by 723.9 billion dollars.  Payroll taxes would basically need to double just to fully fund the programs it's meant to fund.  So, while I agree with the folks saying "I paid into it, I should get my benefits", keep in mind that these programs have been chronically underfunded, and the only real solutions are a 1/2 cut in benefits, or a doubling of payroll taxes.  Or, we keep borrowing money, which is just a tax in another format.  I would suggest that due to the lack of political will on a benefit cut, and the lack of political will on a doubling of payroll taxes, borrowing money is the only realistic option.  Ergo, why we keep borrowing money.  Enjoy your stealth taxes from here to the "other side", whenever that is and whatever shape that takes.

Wed, 02/06/2013 - 14:55 | Link to Comment Bob
Bob's picture

If you love fiscal resposibility, support SS.  18% of the National Debt that is so desperately important for us to rein in is owed to the SSTF:

http://www.gao.gov/special.pubs/longterm/debt/debtbasics.html

Let's pay that shit down!  A financial transactions tax would be a fine way to finance it

Wed, 02/06/2013 - 16:08 | Link to Comment Thisson
Thisson's picture

No thanks . I don't want to be burdened by a Tobin Tax in addition to the litany of other taxes.  Taxes are already too high. 

Wed, 02/06/2013 - 14:30 | Link to Comment secret_sam
secret_sam's picture

    which is supposed to fully fund Medicare and Social Security.

Medicare was never "fully funded," and it was just made hella worse with the D extension from '03, which added no additional budgeting for the *massive* expenditure increase implemented to subsidize our pharmaceutical industry.

Wed, 02/06/2013 - 14:39 | Link to Comment Mi Naem
Mi Naem's picture

"D extension from '03, which added no additional budgeting for the *massive* expenditure increase implemented to subsidize our pharmaceutical industry."

Nope, that can't be right.  That was President Bush's program.  He's a conservative.  He wouldn't do that. 

Wed, 02/06/2013 - 15:04 | Link to Comment secret_sam
secret_sam's picture

Congress passes laws, Preznuts just sign 'em.

It was a pretty compelling demonstration of the real focus and priorities of all those TEA Party freshmen, tho. 

See what happens when you elect a 'Pub Congress?  They give away the store!  Heh. 

(That's a joke, BTW, I don't think the fact that it was a 'Pub Congress really has much to do with it.  Dems would've been just as likely to do something similar.)

Wed, 02/06/2013 - 15:33 | Link to Comment Pure Evil
Pure Evil's picture

The tea party didn't come into focus until after the idiot from TX signed the part D bill.

Start of TeaParty

Wed, 02/06/2013 - 16:14 | Link to Comment secret_sam
secret_sam's picture

My point is: many of those guys got elected on campaign promises to reduce spending and IMMEDIATELY forgot about the issue after taking office.

Wed, 02/06/2013 - 14:08 | Link to Comment steve from virginia
steve from virginia's picture

 

 

The government is a sovereign issuer of currency, it can never 'go broke'. It chooses to borrow from finance because the government has sold the money-creation franchise to bankers.

 

As a sovereign issuer, it can simply retire debts as they fall due by issuing currency: both the debt AND the currency are extinguished so there is NO INFLATION. See Irving Fisher.

 

See also: Abraham Lincoln and 'Demand Notes' (Greenbacks).

 

Because the government is able to issue at will any/all government debt is 'risk free'. Some interpret this to mean that the government can always borrow affordably from the central bank but to do so generally means the inevitable insolvency of the central bank! This is because real goods and services are paid for with empty promises. If the central bank is lending it is because the private sector's empty promises are perceived to be worthless ... the central bank's promises cannot be any better.

 

Demand notes function because the government has an army. The government can order the army to round up and put all the bankers to death. The bankers can do nothing but run away. If I was in charge this is what would happen: there would be dead bankers, politicians, climate change deniers hanging from metal poles lining the Northeast Corridor from DC to New York City.

 

At bottom, our problems have little to do with ... Social Security. Instead, they are the result of centuries of non-productive resource waste, the exhaustion or resources and looming bankruptcy that results from exhaustion. The problem is at the end of your driveway ... nowhere else.

 

Hang the auto executives, too.

 

 

Wed, 02/06/2013 - 15:14 | Link to Comment Encroaching Darkness
Encroaching Darkness's picture

As soon as the people we are borrowing from, whether they be bankers or foreigners, lose the "confidence" that their debts will repaid in such a way as to allow them to recover the value of their lending, this Ponzi scheme will collapse. The government can't go broke? Who is buying the bonds of Zimbabwe, Greece and now Spain?

There will be plenty of death to go around once the merchants can't restock because no one wants to trade for FRNs; grocery stores, hospitals, dentists, all will find it impossible to find supplies, and paying their staff will become highly problematic. Soldiers too! Would you work for free? And how would you pay your bills, once the landlord demands gold, silver or diamonds, or out you go in the street?

The endless coercion ("the government has an army") will fail to work any better here than it did in Soviet Russia ("We pretend to work, and they pretend to pay us!").

It is rather simplistic to say the problem is at the end of your driveway, nowhere else; mis-management, ideology (socialism / communism), fantastic thinking (Keynesian economics), opportunism (money-printing in general) and government waste, fraud and abuse all have their place in the causes of collapse, and will eventually be corrected, one way or another.

Wed, 02/06/2013 - 15:29 | Link to Comment Pure Evil
Pure Evil's picture

That dude was just mad cause he couldn't hang the climate change deniers from every light pole along the eastern I-95 corridor.

I could suggest that he join DHS and become a psychotropic zombified "active shooter". That way he'll be able to live out some of his mass murderer fantasies.

Wed, 02/06/2013 - 15:42 | Link to Comment Orly
Orly's picture

I think you misunderstood what "that dude" said.  Perhaps you should try again.

But it is nice of you to expose yourself that way, so we'll know to be careful talking to you...

Wed, 02/06/2013 - 14:41 | Link to Comment Mi Naem
Mi Naem's picture

"climate change deniers hanging from metal poles lining the Northeast Corridor

As bad as our politicians are, I'm glad you are not "in charge". 

Wed, 02/06/2013 - 15:25 | Link to Comment Pure Evil
Pure Evil's picture

Of course there's climate change doofus. There's global warming and there's global cooling. Right now where I'm living were suffering from regional global cooling. We have snow on the ground and there's a chill in the air. As we progress through the seasons we see our geographic area of the Earth start to warm up until we reach summer thereby having achieved regional global warming. As the year progresses we'll be right back to our cooling trend.

And each day as the sun comes up over the horizon the day warms up and as the sun disappears over the horizon the night cools down.

If you want temperatures that stay within a limited range you can always move to the artic regions or live between tropics of cancer and capricorn.

So yes we do have climate change my dear Watson.

Wed, 02/06/2013 - 15:40 | Link to Comment Orly
Orly's picture

The weather is not climate, Sherlock.

Wed, 02/06/2013 - 13:46 | Link to Comment smartstrike
smartstrike's picture

It just happens that you share the same agenda like most republicans--increase military budgets and cut SS. (wink/wink)

You purposefully omit a few things from your cost analysis :

1. cost of upkeep of military hardware

2. you assume that $10b spent on SS benefits has the same economic impact as building (1) CV.  By mine calculation, $10 billion comes to over 8 million individuals receiving a benefit of $1200/mo.

   On the other hand, one aircraft carrier equals to one more billionaire with a Swiss account.

Wed, 02/06/2013 - 16:19 | Link to Comment Thisson
Thisson's picture

There is no utility in either expense: (1) Building aircraft carriers is a waste of resources that could be used to form capital and/orincrease domestic wealth; (2) paying retired people money to prolong their lives does not produce wealth.  Therefore, what you're making is a moral argument ("supporting the old folks is the right thing to do") not an economic one.

We spend more on our military than every other country in the world combined.  It's a no-brainer to immediately reduce our miltary expense to whatever the country in 2nd place spends.  Similarly, it's a no brainer to prohibit anyone from receiving more from SS than the actuarial value of what they've put in, at least above some poverty threshhold.  Let's start with that and then see how much more needs to be done to balance the books.

Wed, 02/06/2013 - 13:44 | Link to Comment presk_eel_pundit
presk_eel_pundit's picture

Bruce doesn't mention that SS is an insurance program, not an entitlement. SS ran a surplus for years, but Clinton and Bush used the money to mask their budget deficits.

Defense spending, for the most part, is just throwing money down a rat hole. Most of that money goes to protecting Europe, Japan, Korea, Afghanistan, Israel, etc. The Defense budget is about $700 billion a year. The sequester proposes Defense budget cuts of less than $50 billion a year. We could save that much just by getting out of Afghanistan, yet spending cut critics complain that cutting that much out of the Defense budget would "hollow out our military". Bullshit. Spend defense money protecting OUR borders, not someone else's.

By the end of this month, Congress will vote another extension of the sequester. We're screwed.

Wed, 02/06/2013 - 14:42 | Link to Comment Canucklehead
Canucklehead's picture

I wonder why the garbage states in Africa and South America are busy nationalizing Canadian et al mines, but not bothering any American owned mines...

What are the odds that Argentina will get their hands on that Falkland Islands black gold?

Wed, 02/06/2013 - 14:33 | Link to Comment JustObserving
JustObserving's picture

The Defense budget is about $700 billion a year.

 

While everyone knows that the defense budget is large -- even in the numbers that the public sees as the formally admitted figures by the Department of Defense -- the truth is that when one scratches beneath the bureaucratic veneer, national security spending is much larger, nearly double the amount US citizens are told.

A Republican, numbers-compulsive defense wonk at the Center for Defense Information, Winslow Wheeler, has published a great summary of what America's defense budget 'really' is.  

 

When you add in all the numbers, America's defense budget is nearly $1 trillion a year (within 1%).

http://www.theatlantic.com/politics/archive/2012/02/the-real-defense-bud...

 

Ron Paul says U.S. has military personnel in 130 nations and 900 overseas bases.

Yeah, we can afford all those bases but social security is a problem.

 

Wed, 02/06/2013 - 14:45 | Link to Comment Canucklehead
Canucklehead's picture

Ron Paul is a douche of the first order.  Imagine, he wanted to be president.  His comments on the loss of Chris Kyle?  Karma?

What kind of decisions did Ron Paul expect to make if he became president?  Clearly Ron Paul would not measure up to the task.

Wed, 02/06/2013 - 13:52 | Link to Comment steve from virginia
steve from virginia's picture

 

 

Another Krasting groin kick at Social Security.

 

http://www.youtube.com/watch?v=fZPTw2Ayz_w

 

Waffo? All the money 'spent' by Social goes to the bottom or the US economic food chain where it circulates ... unlike the trillions handed to defense contractors which flow to offshore accounts or back to banker buddies.

 

Besides, folks receiving Social paid into it unlike the defense contractors. I guess Social pay-ins (FICA) should be considered a gift to the government by working people. After all, if the recipients need the money they must not deserve it.

 

Maybe Krasting should just come out and say to eliminate Social because it costs the government money ...

 

Why not? The government is like a household right? It needs to turn a profit like a business, right? If the government overspends it runs out of cash, right? What's the argument Krasting ... other than the 'right' of the nobility to steal with impunity, to take what isn't theirs, to reduce everyone besides themselves to abject poverty because these misfortunates are not nobles themselves.

 

Then again, all agreements here in Soviet Union 2.0 are 'negotiable'. No deal with the government is a good one or valid, just ask the Indians. White man speaks with forked tongue ... right?

 

Krasting, you throw away whatever credibility you earn elsewhere with yr half-on, half-off, half-baked hatchet jobs on Social. You never make an argument, you simply trot out stupid non-sequiturs, you don't frame a problem or offer anything in the way of solution other than to imply. This is intellectually dishonest and cowardly, frankly. It's easy to sit back as a blogger @ ZeroHedge and throw darts at a 'Social (Welfare) Program'.

 

You should be ashamed of yourself, Krasting, you give finance analysts a bad name ... 'neo-fascist political hack' is one that comes to mind.

 

!!!

Wed, 02/06/2013 - 16:23 | Link to Comment Thisson
Thisson's picture

Are you really so naive?  Yes, the military money goes to corporate interests.  SO DOES THE WELFARE SPENDING.  It ends up in the hands of those who make consumer goods.  The profits from both types of spending end up in those offshore accounts.

Wed, 02/06/2013 - 20:19 | Link to Comment steve from virginia
steve from virginia's picture

 

 

Social isn't welfare, recipients pay into the program, some (ordinary working people) have paid hundreds of thousands into their Social Security accounts.

 

Most seniors are thrifty, they don't 'consume' and many that I know look carefully for that 'Made in USA' label. I know I do.

 

Payments to defense contractors are basically direct kickbacks for bribes, some of the funds flow to to contractor employees (in all fifty states, don't forget). The ownership cadres have the offshore accounts. There are better ways to support US workers than defense spending (which is simply waste).

 

Currency that flows to China tends to flow back either directly (loans to the Treasury) or indirectly though the petroleum channel and Middle East. Unfortunately, much of the petroleum channel funds also flow to defense contractors ...

 

China holds dollar assets not so many dollars. It cannot afford to hold them (inflation).

Wed, 02/06/2013 - 14:42 | Link to Comment Bruce Krasting
Bruce Krasting's picture

How many articles do I have on SS? Hundreds (I know, too many). I have said for 4 years what should be done. I don't like the solution one bit. It would take money out of my pocket. That does not matter - it has to be done.

 

SS is insurance. If you pay car insurance, and don't have an accident, you are very happy. SS is no different. If you you lived a life with no financial accidents, you are very happy, and you don't need the insurance you paid along the way.

I would put in a strict means test for SS benefits. The test would be on BOTH income and assets (net worth). (No one else is talking like this - my views are extreme)

 

70% of all SS beneficiaries NEED this income. It would be extremely unfair to have across-the-board cuts. That outcome is a real possibility the way things are currently configured. That would be an insane outcome for the richest country in the world.

 

The only other alternative is to raise taxes on ALL workers by an IMMEDIATE 2%. That would be the stupidest thing that could be done. More income taxes on younger workers is NOT the answer - Period!

 

So you tell me, what's wrong with what I have advocated all these years? I think you're just blowing smoke.

 

Sincerely,

neo-fascist political hack

Wed, 02/06/2013 - 20:09 | Link to Comment steve from virginia
steve from virginia's picture

 

 

 

@Krasting:

 

"SS is insurance. If you pay car insurance, and don't have an accident, you are very happy. SS is no different. If you you lived a life with no financial accidents, you are very happy, and you don't need the insurance you paid along the way."

 

The small-r republicans have been trying to torpedo Social since 1935, the bosses liked the idea of people living in rags eating out of garbage cans ... and they still do. You have no credibility, disclaimers to the contrary.

 

Social is not car insurance! If you pay in you are a recipient, no exceptions. The 'Washington Effect' of tiny adjustments here and there results in reforming the program to death or burying it under layers of contrived complexity ... a lawyer is required already to gain Social Security Disability.

 

It's about choices: the establishment has borrowed hundreds of TRILLIONS of dollars (those BIS-noted forex and interest rate derivatives hedge something real). What has all this credit been spent upon? Building out the soulless suburban wasteland and spreading it around the world ... giving everyone access to a Red Lobster. What is there to show for the trillions? Some used cars, potholes and smog. Now that it is time for the old folks to sit by the fire and the debt cupboard has become surprisingly bare ... isn't that a coincidence?

 

The proposal is for the government to cut benefits so that it does not have to borrow ... at the same time the government borrows for something else! What is more important than the country's committment to its own citizens? Tycoons? Bankers? Auto manufacturers? Good grief!

 

Social is expensive. Indeed, other programs are a lot more expensive, particularly those which subsidize waste.

 

People hate the government now, if it reneges on Social benefits while it bails out banks and insurance companies and other big businesses there will be a revolution. It won't be the old folks with rifles in their hands and murder in their hearts it will be their children ...

 

Choices: Stuart Staniford and Gregor Macdonald and other smart guys talk about high tech and its promise to save modernity from its own wastefulness. What is this high-tech in reality? Stealiing the future from children and retirements from the elderly: private sector pensions are looted then the public sector recipients are stiffed. Where does this credit go?

 

It isn't hard to figure out ...

 

 

 

>>>>>

Wed, 02/06/2013 - 15:01 | Link to Comment Orly
Orly's picture

Bruce, don't be so hasty.  We should pore over each and every solution the wonderful Steve put forward in his baseless rant before we criticise him.

 

Okay, done.

Steve, your first argument holds no water. I've done the math and your conclusions do not add up on the ledger.

As to your second "solution"...

Why don't you put up or shut up?  That would be a nice change for you, wouldn't it... having something of substance to add to the discourse?  I mean, besides clever ZeroHedge catchphrases?

If it wouldn't be too painful for you...we'll wait.

:/

Wed, 02/06/2013 - 20:26 | Link to Comment steve from virginia
steve from virginia's picture

 

 

Solution: borrow.

 

If the US can borrow for Citigroup/BofA/Goldman senior debt holders it can borrow for its own citizens.

 

Even if the government loses money!

 

The government can 'stop borrowing' for its citizens when it 'stops borrowing' for other things first.

 

BTW, if you think I don't have solutions you aren't paying attention:

 

Get rid of the goddamned cars. All of them. Now. Before the entire country is bankrupted by them.

 

:)

Wed, 02/06/2013 - 21:26 | Link to Comment Orly
Orly's picture

The cars.  Yes, I remember.  Never got an answer as to whether we were supposed to build high-speed trains between Paducah and Abilene, though.

Borrow from whom?  Isn't that effectively what we are doing?  How about a practical solution?

Why not lump SocSec and Medicare into one government program?  Call it FedNet or something.  Get rid of the waaaay over-bloated bureaucracy and have government workers actually do something and be held responsible for that action.  Kill unions for all government agencies.  Means-test SocSec recipients and get insurance companies out of setting pricing for medical services.  Voila!  More than half the problem is solved right there.

Then, we can hone in on other stuff to save money.

_______________

Why do you hate cars so much anyway?

Wed, 02/06/2013 - 14:59 | Link to Comment Bob
Bob's picture

I suggest if taxes are to be raised to cover repayment of this portion of the federal debt, it should be paid entirely by the class of people who have grabbed virtually all increases in the "national income" over the last 30 years, in spite of massive productivity increases by labor--forcing those already ripped-off people to shoulder recapitalization of their own fund is a sociopathic con, imo.

Even more specifically, if you like, I'd favor a significant financial transactions tax. 

Means testing sounds great, until you realize the obvious: Once the upper class becomes completely divorced from any personal benefit, they'll shit on it as "welfare" and cut it to nothing . . . with even more sociopathic self-righteousness than they exhibit today on this subject. 

Wed, 02/06/2013 - 15:28 | Link to Comment Encroaching Darkness
Encroaching Darkness's picture

No thanks.

I have to take issue with the idea that the top 0.00001% owns all the financial assets; there are still quite a few 401ks, IRAs, and so forth carrying on by the lower classes (defined as everyone under the 0.00001%).

A transaction tax is just another way to give more money to governments, to waste, reward their friends, and redistribute to buy even more influence. Why do you want to punish the lower classes (see above) in this way?

Also, the SS tax was originally only x% MAXIMUM on the top Y% of tax payers; now X approaches 7%, and Y approaches everyone. Why do you think a financial transaction tax would be any different?

That's the way it would be sold; only a 0.1% tax on transactions > $1000, or some such.

To get everyone to pay their "fair share", the transaction tax would eventually increase, until there is no profit for anyone in any financial transaction.

Also, "financial transactions" covers a lot of territory; debit card charges? Real estate transfers? Anything that moves money in an fashion?

Are you willing to go to jail for failing to pay a "financial transaction tax" for selling your old lawnmower to your neighbor for $20?

check the IRS regulations before you protest that such a sale would never be counted!

No financial transaction tax; cut government by 50%, and look for more. Start with DOEducation, DOEnergy, DHS, H&HS, and DOD and keep looking.....

Wed, 02/06/2013 - 16:23 | Link to Comment Bob
Bob's picture

Au contrare, I think it's the roughly top 10% who would be impacted by a capital markets/financial transactions tax via pensions, 410k's, IRA's, etc. So what?   That is exactly the class I alluded to above.  If they prefer to weight it against the .000001%, I'm just fine with that.  But sticking it further to the working class muppets doesn't cut it. 

With a FTT, the more you churn, the more you pay.  It doesn't have to be especially complicated or produce a silly financial remake of the Blob From The Black Lagoon threatening my lawnmower.  

Wed, 02/06/2013 - 16:29 | Link to Comment Encroaching Darkness
Encroaching Darkness's picture

Never underestimate the venality of politicians and regulators - which is what I think you are doing here.

There's a whole segment of "tax protesters" who complain that the IRS definition of income is vastly more extensive than the law's definition of it. Their contention is that "income" does not include A,B and C that the IRS insists is income. In court, sometimes one side wins, sometimes the other. But those who haven't the cash to fight a court suit automatically lose!

This is where I'm coming from - it won't be a Blob from a Black Lagoon, it'll be a bureaucrat in a cheap suit. And he won't threaten your lawnmower - he'll threaten YOU, with fines, interest and jail time.

your financial transaction tax will only apply to stock and bond sales and purchases - for about fifteen minutes. Then, in response to an "emergency", it will be expanded to debit and credit card transactions - then private transactions, then every transaction. You only have to look at the history of the income tax, SS and so on to see this.

Or you can deny, decry and delude yourself. It's up to you.

Wed, 02/06/2013 - 16:29 | Link to Comment Thisson
Thisson's picture

As any economist will tell you, increasing transaction costs reduces the efficiency of an economy.  In other words, a transaction tax will kill even more jobs.

Wed, 02/06/2013 - 17:02 | Link to Comment Bob
Bob's picture

Lemme guess: This is where we should start taking economists serously? 

You're a Job Creator on Wall Street, right?

Here's an economist who speaks to the real issue . . .

Michael Hudson: The Road to Debt Deflation, Debt Peonage, and Neofeudalism

http://www.iadb.org/intal/intalcdi/PE/2012/09985.pdf

Wed, 02/06/2013 - 16:40 | Link to Comment presk_eel_pundit
presk_eel_pundit's picture

"a transaction tax will kill even more jobs."

 

Especially for HFT robots.

Wed, 02/06/2013 - 14:04 | Link to Comment Greenhead
Greenhead's picture

All the money 'spent' by Social goes to the bottom or the US economic food chain where it circulates ...

Steve, by that definition, most of it ends up overseas.  Walmart does a great job collecting a lot of that money as do a number of service providers for that demographic and an awful lot of those goods are made overseas.  Somehow the tax collected under the SS guise is more noble than any other tax???

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