# Fiscal cliff - could be worse

by Astronuc
Tags: cliff, fiscal, worse
P: 1,737
 Quote by Astronuc In theory, I have about $250K in my SS account (from my and corporate contributions). I'd like to transfer it to my kids, since I won't need it. I think you're aware of this, but just in case someone else is not, there was never any attempt to create an "account" for you, and there has never been an attempt to fund social security. The trust fund is not an attempt to fund the program like a pension fund. P: 1,737  Quote by russ_watters Yes they've been raiding the SS trust fund to fund general government functions, not the other way around. They have not been "raiding" the trust fund. That makes it sound like a decision was made to do something unusual. The trust fund has always been an accounting mechanism. It has never, at any time, been an attempt to set aside real assets to fund SS. The excess of revenues over payments & administration has always* been put in non-marketable treasuries, which is just another way of saying that it was spent like any other taxes, but with a promise that future taxes would instead be transfered to SS recipients, if needed. *well, since treasuries were issued. Prior to that it was really not different in a meaningful way. Admin P: 21,827  Quote by Locrian I think you're aware of this, but just in case someone else is not, there was never any attempt to create an "account" for you, and there has never been an attempt to fund social security. The trust fund is not an attempt to fund the program like a pension fund. I know I don't have an"account", although they apparently track (by SSN) what I've put in since my first job. I get an annual statement of accrual and what I would expect in a payment if I retire at 65, 66, 67, . . . . I expect that by the time I reach 65, I will have put in about$350 K.

Meanwhile, http://www.wamc.org/post/can-fiscal-...-out-reach-yes
P: 1,737
 Quote by russ_watters Different "deficit". Yes, I'd like entitlement spending to be reigned-in, but the budget deficit is more immediate.
Social Security is best thought of on the same budget, at least until the trust fund is depleted. Prior to that, if there is an excess of expenditures over income in SS then the trust fund will be reduced, which will result in money that could have been spent from the general fund instead being sent to SS recipients (or admin). (Or, alternatively, there will be additional debt created.)

Medicare Part A is similar to SS in financing, but note that Part B & D both pull money straight from the general fund, so they are not different budgets.
P: 1,737
 Quote by Astronuc I know I "account", although they apparently track (by SSN) what I've put in since my first job. I get an annual statement of accrual and what I would expect in a payment if I retire at 65, 66, 67, . . . . I expect that by the time I reach 65, I will have put in about $350 K. And it's just so wrong that they do that. It gives so many people the impression that SS is supposed to work like a pension fund. But the last SSA trustees report I read calculated the closed block asset requirements at$20 trillion. Who in their right mind wants or trusts the government to manage $20T in (edit: financial) assets? P: 200  Quote by russ_watters 1. "Deserve" is a completely irrelevant question. There are lots and lots of things in life that are an utter crapshoot. Yeah, it sucks that he died from cancer. A close friend of mine died from a rare form of cancer when he was in 2nd grade and he had the best available care. Definitely unlucky. My sister got and beat breast cancer last year at the relatively young age of 37. Was she lucky or unlucky? Neither of them "deserved" to get cancer, but that's life. Let's get our hyperboles in order here. I never said you claimed he deserved to get it, I said you said he deserved to die because he didn't have the means to get the care. :P I am glad your sister beat it though.  Sometimes (well -- ultimately, always) you die. Speak for yourself, I plan to live forever.  2. It was you who used 100 years ago as a baseline, so please don't switch back and forth. Any treatment beyond the virtually nothing that existed back then is extra. Not getting to take advantage of all of the extras is not a negative, it is just a lack of a positve. And no, that's not the same thing. Try it this way: I have$20. I give that $20 to the person standing next to you. Did you lose$20 or did you just gain nothing? Again, this mindset that people have that they are entitled to everything possible just because it exists is dangerous. Regarding the car, you're missing the point of the analogy. Yes, you can live without a car, but that's not the point. The point is that if you have a car, spending more money can result in more safety. The same exists for planes, not to mention stairs. If two people are in an accident -- and yes, both could have possibly found an alternative to driving -- and the rich one has a modern car with a dozen airbags while the poor one is driving a beat-up 20 year old car without modern safety features, the rich one may live while the poor one dies. Does the poor guy deserve to die? No. Does that mean the rich guy should have bought him a better car? IMO, no. Both as a matter of morality and practicality.
Do I REALLY need to quote A Christmas Carol?

 Quote by Ebeneezer Scrooge from A Christmas Carol “If they would rather die, they had better do it, and decrease the surplus population.”
In any case I'm going to shock you: I'm not actually in favor of the current welfare system as it stands in its entirety. More on that later. But let's be honest with ourselves, that attitude is precisely the reason we ended up with Obamacare and Medicare instead of market oriented systems that could have actually resolved the underlying dysfunctions in our healthcare system while making sure that everyone can get healthcare. But by staking out an extreme socially darwinistic position you made it a choice between the unsustainable statist solutions....or nothing. Not everyone who doesn't think those without means should just die is a statist.

 At the same time, you are trying to create a false dichotomy by saying "you can't live without it" with healthcare because implies that you can live with it. Sometimes you can and sometimes you can't -- both live with it and live without it.
You know what cured your sister of cancer? Healthcare. Don't tell me it isn't necessary to live and then tell me about how it saved her life. I'm glad it did, but you know what often happens with the uninsured? They use the hospital emergency rooms as their primary care practitioner, which is far more expensive and is done at taxpayers expense.

 I don't know if you're purposely belittling the point by focusing just on cancer alone vs the downfall of Western civilization or if you just don't see it, but you are aware that we have a serious debt crisis, in part because of paying for things like cancer treatments (not to mention paying people to get rid of old cars...), right? You are posting in this thread, which is partly about that problem. The current economic downturn and related debt crisis, which is worse in Europe, exists largely because of overindulgence in entitlements. And you are aware that the problem is currently getting worse and not better, right? I'm not suggesting that we're going to collapse back to a hunter-gatherer society, but I think there is a significant non-zero risk of a long-term, significant decline in average standard of living. The healthcare cost problem is going to keep getting worse because the economic model we've chosen is flawed. Do you have a suggestion for how to fix it? The spiral can't continue forever, of course. Either we'll fix it or it will fix itself: 1. It will fix itself by consuming (as mhselp said) a larger and larger fraction of our tax dollars until we simply can't afford to pay for more healthcare and as a result, drug compaines will stop doing research and healthcare quality will stop improving. Or: 2. (also as mhselp said) The reductions in other areas that have to be made to compensate for the "mandatory" spending on healthcare become too great to bear. You want free cancer treatment for everyone, regardless of the cost? Fine: then you can't have your roads maintained and you can't a have a police force and you can't have decent schools for your kids. Those things are not "entitlements". They aren't "mandatory spending". So they'll have to go. When our standard of living drops enough that we can't stand it anymore, we'll start to make the hard choices on "entitlements". Think that's far fetched? The consistently worst city in the US - Camden, NJ - slashed its police force by half in 2011, which significantly increased crime even more. Why would anyone do anything so idiotic? Police forces cost money and if you don't have it, you cut it. It is time we face-up to the economic and moral realities that healthcare is not a more important government function than such basics as police and that if the economy isn't doing well, everything has to take a hit.
Here's what I would do:

1.) Privatize Social Security - this is inevitable, better sooner than later.
2.) Institute vouchercare, on a sliding income scale the government will subsidize the premium and share that cost with the states, with regulatory reform to force insurance companies to accept people with pre-existing conditions as well as banning the practice of having doctors and hospitals in "networks". That way the insurance companies have to offer competitive plans to actually compete with eachother. Since doctors and hospitals would no longer be in these protected "walled gardens" and would have to compete with eachother in a real free market. That's what this should be about: providing consumers with a real choice. Since the onus is now on the individual to have insurance, via the individual mandate, employers would no longer be required to provide healthcare benefits to individuals, and the tax credit that subsidizes this practice would be ended.
3.) Replace the corporate and personal income tax with a VAT, there would be rebates for food and non-designer clothing. But ultimately this makes sure everyone pays their fair share, and a lot of deductibles will go away. People have to pay for these safety nets.
4.) I'd also cut the defense budget. There's no doubt more than a few "budget buster" projects like the F35 that can be safely cut. Also unneeded bases will be closed.
5.) End subsidies for farms and energy projects. The food stamp program is enough of a subsidy by inflating demand, although it is a necessity.

There's probably a couple of other things I would do but these are the big ones.

 You cannot pay for things you don't have the money to pay for.
No arguments here. You're making assumptions about my position that aren't true. But let's stop pretending the statists are the only ones responsible for this mess. We went to 2 wars on a tax cut, that's almost the most fiscally irresponsible thing anyone could possibly do! No one does that, except the GOP of course. Back in the late 1990's when we had surpluses, instead of using it to pay down the debt, the GOP wanted more tax cuts. The GOP controlled congress from '94 to '06 and the white house from '00 to '08, and during all that time nothing was done to reform healthcare or medicare. I will give Bush at least some credit for his attempt to privatize social security, something that will be done sooner or later. I think the American Enterprise Institute has summed up the current state of the GOP quite correctly:

 .an insurgent outlier -- ideologically extreme; contemptuous of the inherited social and economic policy regime; scornful of compromise; unpersuaded by conventional understanding of facts, evidence and science; and dismissive of the legitimacy of its political opposition
And it's refusal to govern has let the country down. The only reason this issue has come up now is the president has a "D" next to his name instead of an "R".

 So you tell me: would you trade a lower chance of dying of cancer for a lower chance of being murdered? That's the type of choice we're already making.
False dichotomy. The solution is radical reform of both the welfare and healthcare systems to make the former financially sustainable and the latter a real free market.
Mentor
P: 22,239
 Quote by aquitaine Let's get our hyperboles in order here. I never said you claimed he deserved to get it, I said you said he deserved to die because he didn't have the means to get the care.
I most certainly never said any such thing. No one "deserves" to get or die from cancer.

Besides which, that is such an extreme case and "deserve" isn't relevant anyway. I could jump out my window right now and would probably break my leg on the landing. Would I deserve a broken leg for doing something so stupid? Definitely. Would universal healthcare cover my medical bills? Yep. Would my current insurance? Yep. "Deserve" just doesn't enter into the equation.
 Do I REALLY need to quote A Christmas Carol?
I can't fathom why you would think that is relevant. Please explain.
 But by staking out an extreme socially darwinistic position you made it a choice between the unsustainable statist solutions....or nothing. Not everyone who doesn't think those without means should just die is a statist.
Why is my position "extreme" when applied to healthcare but people accept it as just a reality of life when applied to other things that are also a matter of life and death?? Is it just because insurance is already collectivized that it makes for an easier transition to federalize it than other products like cars? Do you want to nationalize the supply of cars?

A new safety feature was just invented for circular table saws that stops the blade in microseconds if your finger gets in the way. This would save thousands of people a year from maimings. Since it was just invented, naturally the government should buy one for everyone who currently owns a table circular saw, right?
 You know what cured your sister of cancer? Healthcare. Don't tell me it isn't necessary to live and then tell me about how it saved her life.
Again, you miss the point. If she had lived 50 or perhaps even 30 years ago, this probably would have killed her. And people accepted that as normal back then. People lived with the risk and knowledge that the life expectancy was lower then than it is today.

Now that cancer treatment exists, people think everyone who needs it should have it provided to them. Just because it exists. Even if I agreed with those that think this is a moral imperative, it doesn't matter because of the practical problem: this worldview will bankrupt us if we allow it to continue as currently formulated.
P: 200
 I can't fathom why you would think that is relevant. Please explain.
People who don't have means don't deserve to live. It's relevant because that's your position on healthcare.

 Why is my position "extreme" when applied to healthcare but people accept it as just a reality of life when applied to other things that are also a matter of life and death?? Is it just because insurance is already collectivized that it makes for an easier transition to federalize it than other products like cars? Do you want to nationalize the supply of cars?
If you actually read my proposal you would notice that I didn't collectivize insurance at all. Instead I proposed a solution to the problem of tens of millions of uninsured that doesn't destroy western civilization, that is financially sustainable, and that also solves the underlying problems with our healthcare system all at once to provide people with a free market. I notice you don't say anything about that. It's more or less the Swiss model, and I don't see them going bankrupt any time soon.

 A new safety feature was just invented for circular table saws that stops the blade in microseconds if your finger gets in the way. This would save thousands of people a year from maimings. Since it was just invented, naturally the government should buy one for everyone who currently owns a table circular saw, right?
No, because it isn't a direct threat to life thanks to healthcare. Regulations to require it's installation on new table saws, yes, but it's the owners responsibility to upgrade their saws accordingly. If they choose not to, that's their problem.

See, that's the exactly the problem I mentioned with the GOP, and the absurdities in this discussion proves definitively that it is no longer a party capable of governing. The only reason they are opposed to any and all healthcare reform is because the democrats took initiative and put it on their agenda. So we're left with a choice between financially unsustainable statist approaches, such as Obamacare, or nothing at all.
Mentor
P: 22,239
 Quote by aquitaine People who don't have means don't deserve to live. It's relevant because that's your position on healthcare.
You really need to stop saying that because it isn't true. I have, in fact, said exactly the opposite Several times. And it is ad hominem: you're trying to paint me as a bad person instead of dealing with the argument. It seems like you are trolling me here.

It is easy enough to turn it around, though. In my example of jumping out of my window, I would deserve a broken leg. But my insurance and/or nationalized healthcare would still pay for it. So please drop this ridiculous line of argument you are on. "deserve" has nothing to do with any of this.
 No, because it isn't a direct threat to life... See, that's the exactly the problem I mentioned with the GOP, and the absurdities in this discussion proves definitively that it is no longer a party capable of governing.
Are you suggesting that healthcare should only pay for life threatening conditions? The absurdity is in your posts, not mine.
 If you actually read my proposal you would notice that I didn't collectivize insurance at all. Instead I proposed a solution to the problem of tens of millions of uninsured that doesn't destroy western civilization, that is financially sustainable, and that also solves the underlying problems with our healthcare system all at once to provide people with a free market. I notice you don't say anything about that.
I didn't comment on it because it just looks like handwaving to me. I don't accept that the things you say would happen would happen and I don't want to get into a "will not/will to" type of argument. The fundamental issue to me is that it does not address the logical flaw in healthcare, overall; the fact that people want everything that exists because it exists.
 It's more or less the Swiss model, and I don't see them going bankrupt any time soon.
Their financial unsustainability is the same as everyone else's:

A 50% increase in costs in 12 years. Unsustainable.
PF Gold
P: 3,081
 Quote by aquitaine ...I think the American Enterprise Institute has summed up the current state of the GOP quite correctly:
Ornstein and Mann are not the same thing as the American Enterprise Institute.
PF Gold
P: 3,081
 Quote by aquitaine .... the problem I mentioned with the GOP, ... The only reason they are opposed to any and all healthcare reform is because ....
Sen McCain 2008 health care plan, or pg 47 here.

Rep Ryan health care plan

Ron Wyden (D-Oregon) and Robert F. Bennett (R-Utah) health care plan
Mentor
P: 2,977
 Quote by aquitaine People who don't have means don't deserve to live. It's relevant because that's your position on healthcare.
Please stick to stating your own opinion. Putting words into others' mouths is one way discussions here in P&WA go down the tubes.
 Admin P: 21,827 Reid says fiscal cliff dive likely http://news.yahoo.com/blogs/ticket/r...-politics.html Pointing fingers doesn't help. Meanwhile - Memphis mayor recommends feds, 'Do something!' http://www.marketplace.org/topics/ec...s-do-something Congress will apparently return on Sunday. Let's see what happens.
P: 570
 Quote by Astronuc Congress will apparently return on Sunday. Let's see what happens.
Could it be that they will heroically save the world from the problem they themselves created?
P: 21,827
 Quote by ImaLooser Could it be that they will heroically save the world from the problem they themselves created?
Somehow, I don't see heroic.

 . . . . Absent a solution — or even a pathway to a bill — senators whiled away the hours without any agreement, debating and voting on amendments to a surveillance measure, pondering hurricane aid, and swearing in a new senator from Hawaii. Retiring senators, who had anticipated that their services would no longer be needed, worked in offices in varying states of disassembly, their staffs pecking out e-mails on iPads because their computers had been carted away. . . . . The Congressional impasse over how to avoid tax increases and spending cuts has left this entire city gripping Starbucks cups procured from Georgetown to Capitol Hill, bearing the message “come together,” to wait in low-grade misery for the next chapter in the drama. This would be Sunday night, when House members arrive, just ahead of New Year’s Eve at the summons of their leaders, who decided Thursday that they could not afford to be home killing time while Senate Democratic leaders took to C-Span to take shots at the absent House. . . . .
http://www.nytimes.com/2012/12/28/us...scal-deal.html

They'll take it to the brink, and maybe drop over the edge.

Apparently the US government will reach the current debt ceiling, but then the Treasury can raid other funds ( ), which probably won't be repaid anytime soon, until Congress raises the debt ceiling yet again - and the nation goes deeper into debt.
Engineering
HW Helper
Thanks
P: 6,957
 Quote by ImaLooser Could it be that they will heroically save the world from the problem they themselves created?
I expect they are mostly just counting the days to when they can stop having to pretend to understand economics, and get back to what all politicians like doing best: blaming each other for what happened.
 Admin P: 21,827 Monday morning will be interesting. I imagine the equities markets will pop up with a deal, and tank if there is no deal. The last several days have been pretty volatile.
Mentor
P: 2,977
 Quote by Astronuc Monday morning will be interesting. I imagine the equities markets will pop up with a deal, and tank if there is no deal. The last several days have been pretty volatile.
I've been watching the markets, too, for clues into what's really happening. A couple weeks before Christmas they were going gangbusters, which I interpreted to mean there must be a back-room deal in the works.

Guess that was all just wishful thinking !

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