News Can Cutting Military Spending and Subsidies Solve the US Deficit Crisis?

[loseyourname]

That is simply not true. S.S. can be made solvent by very modest tweaks in the eligibility age. In fact, if the eligibility age were adjusted even moderately for increased life expectancy, payroll taxes could be cut in half, and the system remain solvent.

But the ultimate goal should be to not only privatize it, but make it voluntary. Forcing people to participate in a Ponzi scheme is not a legitimate permanent solution for a free society.

Yeah, I didn't mean those are the only ways. Heck, I thought it was pretty clear I wasn't even advocating that. I was advocating means-testing. I just meant that Social Security with the current payout levels and retirement age and everything else will not remain solvent past two or three decades at current FICA rates and caps.

 

[loseyourname]

Also, the ability of the fed to manipulate treasuries is limited- people still have to be willing to buy them, at the end of the day.

I wouldn't say their ability is very limited at all. The Fed is the entity doing the purchasing, so no, nobody else has to be willing to buy them until the Fed decides to reverse ship and dump these back on the market. But then it's a bid process and people can buy them as cheaply as the real market allows. In principle, the Fed can buy every single outstanding Treasury issue if it wanted, and it could buy at face value and charge 0% interest if that was the goal. Hell, the prevailing T-bill rate went from like 5% to 0.25% in a matter of months based solely on Fed open market operations. That's not a very limited scope of ability to manipulate at all.

Don't get me wrong. I think the US deserves a low interest rate. We're not risky like Greece or Ireland or something like that. We still have the world's largest GDP, we're top ten in GDP per capita, and bottom two I believe among the OECD in aggregate tax burden, so there is plenty of room for us to pay off debt, even a lot more than we currently carry. US T-bonds are still the safest instrument in existence. But is it really that much safer than Australia, for instance, which still yields around 5%?

 

[Al68]

Don't get me wrong. I think the US deserves a low interest rate. We're not risky like Greece or Ireland or something like that. We still have the world's largest GDP, we're top ten in GDP per capita, and bottom two I believe among the OECD in aggregate tax burden, so there is plenty of room for us to pay off debt, even a lot more than we currently carry.

I would disagree with that for a few reasons:

First, we can't just compare the U.S. GDP to other countries that simply, in many other countries, a larger percentage of GDP is controlled by government. Other countries' citizens are also more "sheep-like" about being taxed.

Second, as was demonstrated in another recent thread, the federal government can only realistically expect to actually collect about 19.5% of GDP regardless of tax rates, short of drastic changes. A better comparison would be to compare federal debt to federal revenues, not GDP.

Third, what is referred to as the federal debt is only the debt of the federal government, not the entire debt of the nation. We have state government and local government debt, as well as a lot of private debt to go along with that large private GDP.

Finally, our debt as it is isn't going to cause our demise, it's the path of ever increasing debt that will, if we stay on that path. Servicing it costs us more and more each year, and will spiral out of control when interest rates rise in response.

 

[WhoWee]

I don't think any attempts to cut costs will succeed until we have a major change in attitude and mentality in this country. We used to be the land of opportunity - where all you needed was a dream and a strong work ethic to succeed. Now - IMO - we have a welfare state mentality - "how do I get mine" seems to be the mantra?

There was a lottery winner in the news last week defending his right to continue to collect food stamps.
http://www.msnbc.msn.com/id/4309195...illion-lottery-winner-still-gets-food-stamps/

When do we say ENOUGH?

 

[ParticleGrl]

I wouldn't say their ability is very limited at all. The Fed is the entity doing the purchasing, so no, nobody else has to be willing to buy them until the Fed decides to reverse ship and dump these back on the market.

The fed isn't the only entity buying treasuries, which is my point. The market is buying hundreds of billions of very low interest treasuries.

Hell, the prevailing T-bill rate went from like 5% to 0.25% in a matter of months based solely on Fed open market operations.

Its not based solely on the fed's operations. The big drops in 2008 were probably due to an investor flight to quality when every other market became incredibly illiquid, and that was before quantitative easing. It is this liquidity preference that (according to standard macroeconomic theory) is allowing the fed to print money without touching off core inflation.

We used to be the land of opportunity - where all you needed was a dream and a strong work ethic to succeed. Now - IMO - we have a welfare state mentality - "how do I get mine" seems to be the mantra?

Lets try figuring this out with some actual data. Who has the welfare state mentality? Who is saying "how do I get mine?" How do we define opportunity? Instead of having opinions, let's explore the question rationally. Has the welfare state expanded or contracted in the last 30 years? Have opportunities increased or decreased?

 

[WhoWee]

Lets try figuring this out with some actual data. Who has the welfare state mentality? Who is saying "how do I get mine?" How do we define opportunity? Instead of having opinions, let's explore the question rationally. Has the welfare state expanded or contracted in the last 30 years? Have opportunities increased or decreased?

That's fair. Let's label this entire post - IMO.

First, let's agree to a definition of "welfare state" - ok?

This is highly generalized, but my starting point would be the major (personal) programs (some include the states) food stamps, housing subsidies, Medicaid, "re-training" and unemployment extension programs/COBRA, and tax credits such as EITC and Making Work Pay. Also in this realm would be ANY benefits provided to illegal aliens. Next would be the rules regarding diversity" in loan programs. Next, are the corporate/business welfare such as "green energy" subsidies like ethanol. Next are bailouts.

Last, and I don't expect you to agree, unionization of Government workers is a contradiction IMO - WHY do workers need protection from the Government?

 

[hillzagold]

There was a lottery winner in the news last week defending his right to continue to collect food stamps.
http://www.msnbc.msn.com/id/43091952...s-food-stamps/

A lottery winner? Since when was anecdotal evidence of a single data point ever admissible?

 

[Al68]

A lottery winner? Since when was anecdotal evidence of a single data point ever admissible?

You mean you aren't buying the argument that most lottery winners collect food stamps and most food stamp recipients are lottery winners?

 

[hillzagold]

Yeah, and I'm not buying the argument to cut welfare either. Feel free to express how obvious that is, too.

 

[mege]

A lottery winner? Since when was anecdotal evidence of a single data point ever admissible?

The point was, I think, that that the system is broke enough that it only looks at income and not assets. Welfare and medicare/aid only use your tax filings to determine eligability in most states (I think CA looks at savings... would have to do more digging).

On a tangent: I have an issue with this inconsistency when it comes to how Federal Grants via student loans are given out. Parents that save money can be punished because their assets can be a burden. If a family makes 50k/year and saves prudently for college, they could be denied a grant compared to a family that makes 80k/yr and doesn't save. Which is really more worthy of the grant?

That's fair. Let's label this entire post - IMO.

First, let's agree to a definition of "welfare state" - ok?

This is highly generalized, but my starting point would be the major (personal) programs (some include the states) food stamps, housing subsidies, Medicaid, "re-training" and unemployment extension programs/COBRA, and tax credits such as EITC and Making Work Pay. Also in this realm would be ANY benefits provided to illegal aliens. Next would be the rules regarding diversity" in loan programs. Next, are the corporate/business welfare such as "green energy" subsidies like ethanol. Next are bailouts.

Last, and I don't expect you to agree, unionization of Government workers is a contradiction IMO - WHY do workers need protection from the Government?

Something that I think needs to be emphasised, are tax credits. What was the statistic floating around? Over 1/2 of income earning Americans had zero tax burden? While this is potentially only a small amount of income/year, it's something. I'm a proponent of greatly simplifying our tax code to being bare bones to whatever lightly marginalized tax rate is necessary (any income-based tax breaks would be built in. Something like 5% for up to poverty then 25% for any income over poverty line (or 1.5 poverty or different %s or whatever the numbers need to be there)). If we're going to have a national income tax, make it fair, make it worthwhile, and make it easy so we can ditch the bulk of the IRS.

One thing that most of the 'welfare state' politicies have in common: no end date. I know some states have kill clauses in them, but there are some people who live off of government assistance indefinately. In addition to limiting the welfare policies, there needs to be MUCH stronger incentives to getting off of the government programs. I'm fundamentally against this level of government involvement, but I understand the opportunity our country has to support underprivledged. Too bad we're not in a position to be as generous any more.

Something close to me: I have an aunt whom was diagnosed with lupus about 15 years ago (and is still doing well, considering). She's only ever worked part-time or seasonal jobs, more to keep busy than income. She's been married since just out of high school, and isn't divorced. Because Social Security pays out based on a comparative salary of your spouse (he's always been the sole-supporter), she gets a sizable check just for being unable to work every month. How many other situations are there like this in the country where someone whom wasn't contributing to start is taking from a pot that is meant to be for contributors?

 

[Al68]

Something that I think needs to be emphasised, are tax credits. What was the statistic floating around? Over 1/2 of income earning Americans had zero tax burden? While this is potentially only a small amount of income/year, it's something. I'm a proponent of greatly simplifying our tax code to being bare bones to whatever lightly marginalized tax rate is necessary (any income-based tax breaks would be built in. Something like 5% for up to poverty then 25% for any income over poverty line (or 1.5 poverty or different %s or whatever the numbers need to be there)). If we're going to have a national income tax, make it fair, make it worthwhile, and make it easy so we can ditch the bulk of the IRS.

But then how could power hungry politicians deceive people about the tax code and stir up hatred?

I'm fundamentally against this level of government involvement, but I understand the opportunity our country has to support underprivledged. Too bad we're not in a position to be as generous any more.

Using the word "generous" to refer to government programs is just silly. Generosity means the willingness of someone to share their own money, etc, and that's clearly not what we're talking about here.

 

[hillzagold]

The point was, I think, that that the system is broke enough that it only looks at income and not assets.

A wonderful point from you, but not from WhoWee. His entire post was about mentality.

As for fixing that problem you mentioned, the article states that they are attempting exactly that. They call it a loophole, meaning it's nothing they intentionally wanted. I imagine they never considered lottery winners when they wrote their welfare guidelines. Maybe they should have, but this is a matter of negligence and not intent.

The rest of what you said is well written and I agree with several parts of it.

Using the word "generous" to refer to government programs is just silly. Generosity means the willingness of someone to share their own money, etc, and that's clearly not what we're talking about here.

That didn't work during the Great Depression when Hoover tried it, is there any indication it would work better now? (We agree that the destitute need help one way or another, I hope.)

 

[Al68]

That didn't work during the Great Depression when Hoover tried it, is there any indication it would work better now?

You mean Hoover's spending and taxing too much, increasing national debt, and placing millions on the dole of the government? His reckless and extravagant spending? His actions that started leading the country down the path of socialism?

 

[WhoWee]

A wonderful point from you, but not from WhoWee. His entire post was about mentality.

As for fixing that problem you mentioned, the article states that they are attempting exactly that. They call it a loophole, meaning it's nothing they intentionally wanted. I imagine they never considered lottery winners when they wrote their welfare guidelines. Maybe they should have, but this is a matter of negligence and not intent.

The rest of what you said is well written and I agree with several parts of it.


That didn't work during the Great Depression when Hoover tried it, is there any indication it would work better now? (We agree that the destitute need help one way or another, I hope.)

You are correct - this is a matter of mentality. We have a national debt of $14,400,000,000,000 - growing at $1,650,000,000,000 per year with no end in site. We have another thread that discusses should poverty be comfortable. Accordingly, I won't address that topic here. However, I believe welfare should be used to put people back on their feet - not enslave them to a life of Government rations.

I've made this comment many times in a variety of threads - we need term limits (and to address the lifetime benefits of Representatives) in the House. The introduction of a time limit would remove the burden of re-election. IMO - career politicians use benefits to buy votes and likewise beneficiaries vote to support the pandering politicians out of fear of loss. It's a very sick mentality - again IMO.

 

[hillzagold]

You mean Hoover's spending and taxing too much, increasing national debt, and placing millions on the dole of the government? His reckless and extravagant spending? His actions that started leading the country down the path of socialism?

...You're always going to sidestep simple questions, aren't you.

I've made this comment many times in a variety of threads - we need term limits (and to address the lifetime benefits of Representatives) in the House. The introduction of a time limit would remove the burden of re-election. IMO - career politicians use benefits to buy votes and likewise beneficiaries vote to support the pandering politicians out of fear of loss. It's a very sick mentality - again IMO.

That's a fair point, but remember that while the not-rich use votes to demand benefits for themselves, the rich use campaign contributions to demand benefits for themselves too. No one is above taking part of the blame.

However, I believe welfare should be used to put people back on their feet - not enslave them to a life of Government rations.

Is welfare the one and only reason people stay on welfare? If not, how big a contributor is it, and what other contributors exist?

 

[Al68]

...You're always going to sidestep simple questions, aren't you.

I didn't sidestep anything. I was asking for clarification about what particular Hoover action you were referring to, since you were unclear about it.

 

[WhoWee]

That's a fair point, but remember that while the not-rich use votes to demand benefits for themselves, the rich use campaign contributions to demand benefits for themselves too. No one is above taking part of the blame.

Let me be clear in my opinion - WE THE PEOPLE are to blame for allowing this behavior to continue.

 

[Char. Limit]

I didn't sidestep anything. I was asking for clarification about what particular Hoover action you were referring to, since you were unclear about it.

No you weren't. Don't even try and pretend that you were ASKING anything.

 

[WhoWee]

Is welfare the one and only reason people stay on welfare? If not, how big a contributor is it, and what other contributors exist?

A poor job market certainly contributes. I'll label this as IMO in lieu of support - our manufacturing base (typically higher paying jobs) has shrunk and the retail/service sectors have expanded (typically lower paying from minimum wage up). The retail/service sectors also typically offer more part time position (less benefits) than manufacturing.

 

[Al68]

No you weren't. Don't even try and pretend that you were ASKING anything.

LOL, I'll admit my post had a (smarta$$) dual purpose, but it really is unclear what "that" refers to in this:

That didn't work during the Great Depression when Hoover tried it, is there any indication it would work better now?

 

[hillzagold]

You were talking about volunteerism, which Hoover very much believed in. This is a well known fact. It seems you didn't know that, though, or you chose to ignore it. I ask one final time, if volunteerism was ineffective 80 years ago, why would it be more effective in this decade?

A poor job market certainly contributes. I'll label this as IMO in lieu of support - our manufacturing base (typically higher paying jobs) has shrunk and the retail/service sectors have expanded (typically lower paying from minimum wage up). The retail/service sectors also typically offer more part time position (less benefits) than manufacturing.

Exactly how much does welfare contribute then, with your best guess? 10% of the problem? 90% of the problem? How does it compare to the effects of the poor job market? You can cite information if you want, but I'm more interested in your gut opinion here.

 

[WhoWee]

You were talking about volunteerism, which Hoover very much believed in. This is a well known fact. It seems you didn't know that, though, or you chose to ignore it. I ask one final time, if volunteerism was ineffective 80 years ago, why would it be more effective in this decade?


Exactly how much does welfare contribute then, with your best guess? 10% of the problem? 90% of the problem? How does it compare to the effects of the poor job market? You can cite information if you want, but I'm more interested in your gut opinion here.

Let me ask you a question - does the extension of unemployment benefits fit into the category of welfare? My "gut feeling" is that too many people are more comfortable sitting at home - living off Government assistance programs - rather than working in the retail/service segment - possibly at less than $10.00 per hour. We have a thread on this subject - deals with question of is welfare too comfortable.

 

[mege]

Let me ask you a question - does the extension of unemployment benefits fit into the category of welfare? My "gut feeling" is that too many people are more comfortable sitting at home - living off Government assistance programs - rather than working in the retail/service segment - possibly at less than $10.00 per hour. We have a thread on this subject - deals with question of is welfare too comfortable.

http://www.cnn.com/2011/US/06/02/georgia.immigration.farm.workers/index.html?iref=allsearch". The quotes in the article are priceless:

"It could be a setback for people," Mosley said. "The only people that would even think about doing that are people who have nothing else left...An educated black person does not have time for that. They didn't go to school to work on a farm, and they're not going to do it."

Maybe that sense of entitlement is why some don't have a 'non-farm' job in the first place...

 

[WhoWee]

http://www.cnn.com/2011/US/06/02/georgia.immigration.farm.workers/index.html?iref=allsearch". The quotes in the article are priceless:

Maybe that sense of entitlement is why some don't have a 'non-farm' job in the first place...

IMO - it's insane to argue a need to address immigration reform BECAUSE we need migrant workers - when the unemployment rate is north of 8%. If the people who entered the US illegally were made citizens - wouldn't they be paid minimum wage or better? Why shouldn't unemployed people be expected to work these jobs - regardless of education or skills?

In the D.C. area, I've personally hired/employed hundreds of legal immigrants through the years on a full or part time basis - a lot of people from Africa and Asia. After getting to know many of these people, I discovered quite a few were educated professionals who struggled in the US with a language barrier. Most were dedicated and attentive to details - and rarely late or absent. Quite often, I hired the friends and family members of a proven employee. I also came to understand the work ethic - many held 2 or 3 other jobs - their entire day was spent going from job to job - which required scheduling stability. I recall a few instances where I co-oped with other local businesses to keep people fully employed, that is we shared employees at non-competing times. Business A might have needed someone from 6 - 9 AM to stock shelves, I needed someone from 10 - 2 PM, and business B might have needed help from 4 - 8 or after midnight? By working together everyone was happy and the employees were protected.

 

[Al68]

You were talking about volunteerism, which Hoover very much believed in. This is a well known fact. It seems you didn't know that, though, or you chose to ignore it. I ask one final time, if volunteerism was ineffective 80 years ago, why would it be more effective in this decade?

Ineffective or effective at what? What on Earth are you even talking about? I made no claim about volunteerism being either effective or ineffective at anything, or whether or not Hoover believed in it. You are making no sense. Why would I explain something I never said?

I pointed out that the word "generous" means a willingness to share one's own money, not a desire to take someone else's. Then you said "That didn't work when Hoover tried it", which makes no logical sense as a response.

And you still haven't explained what action by Hoover you're referring to. "Believing in volunteerism" hardly qualifies as a specific action to critique.

 

[WhoWee]

A poor job market certainly contributes. I'll label this as IMO in lieu of support - our manufacturing base (typically higher paying jobs) has shrunk and the retail/service sectors have expanded (typically lower paying from minimum wage up). The retail/service sectors also typically offer more part time position (less benefits) than manufacturing.

The jobs report shows 9.1% today 6/3/11 (my bold):

http://www.bls.gov/news.release/empsit.nr0.htm

"The number of unemployed persons (13.9 million) and the unemployment rate (9.1
percent) were essentially unchanged in May. The labor force, at 153.7 million, was
little changed over the month. (See table A-1.)

Among the major worker groups, the unemployment rates for adult men (8.9 percent),
adult women (8.0 percent), teenagers (24.2 percent), whites (8.0 percent), blacks
(16.2 percent), and Hispanics (11.9 percent) showed little or no change in May. The
jobless rate for Asians was 7.0 percent, not seasonally adjusted. (See tables A-1,
A-2, and A-3.)

In May, the number of long-term unemployed (those jobless for 27 weeks and over)
increased by 361,000 to 6.2 million; their share of unemployment increased to 45.1
percent. (See table A-12.)

The civilian labor force participation rate was 64.2 percent for the fifth
consecutive month. The employment-population ratio remained at 58.4 percent in
May. (See table A-1.)

The number of persons employed part time for economic reasons (sometimes referred
to as involuntary part-time workers) was essentially unchanged in May at 8.5
million. These individuals were working part time because their hours had been cut
back or because they were unable to find a full-time job. (See table A-8.)"

 

[Char. Limit]

I think part of the problem is that in most states, a part-time job at minimum wage (which is all a lot of people can get) is quite simply not enough to get by in this economy. Hence, welfare is needed unless you want a lot more beggars in street corners. I'm lucky to live in a state with a relatively large minimum wage, so I'm actually fine, but not everyone has the same luck I do.

Note: This is personal opinion. Don't expect me to support it with fact.

 

[turbo]

I think part of the problem is that in most states, a part-time job at minimum wage (which is all a lot of people can get) is quite simply not enough to get by in this economy. Hence, welfare is needed unless you want a lot more beggars in street corners. I'm lucky to live in a state with a relatively large minimum wage, so I'm actually fine, but not everyone has the same luck I do.

Note: This is personal opinion. Don't expect me to support it with fact.

That is indeed the case. Most service jobs can't support a family unless you have two wage-earners in the family, and at least one of them takes on extra work on evenings/weekends. Maine has a Tea-party governor who bragged about his job-creating record all through the campaign, while slamming all the people who need social-services to get by. The facts don't bear him out, though. He was the GM of a large retailer that pays crap wages and keeps all their hourly people part-time with no benefits and no access to unemployment insurance so they are all in fear of losing their jobs and will toe the line obediently. The fact is that public assistance programs like subsidized housing, food stamps, heating fuel assistance, and Medicaid are all welfare programs for companies like his. Instead of paying fair wages with benefits and unemployment insurance, companies like his foist all of these costs onto the taxpayers and we have to pay taxes to keep these families, warm, fed, and (barely) out of poverty, with a modicum of medical care. The Tea Party faithful don't seem capable of parsing this, and are for cutting all public assistance except for their SS and Medicare - those are popular with the Tea Partiers.

Instead of calling people who need such services "leeches" etc, wouldn't it be better to alter the working conditions that leave them in need of such services? For instance, if your company has more than 50 employees, could we legislate that at least 80% or more of them be full-time with at least unemployment insurance paid on them? That would take a lot of pressure off the average taxpayer and put it fairly on the backs of the big retailers that benefit from our weak labor laws. If you work for WalMart, the big supermarket chains, the big clothing chains, etc, you need at least two jobs to get by, because one won't cut it.

 

[mege]

I think part of the problem is that in most states, a part-time job at minimum wage (which is all a lot of people can get) is quite simply not enough to get by in this economy. Hence, welfare is needed unless you want a lot more beggars in street corners. I'm lucky to live in a state with a relatively large minimum wage, so I'm actually fine, but not everyone has the same luck I do.

Note: This is personal opinion. Don't expect me to support it with fact.

I disagree - I think that people expect too high of a 'minimum' standard of living. 50hr/week at $9/hr gets about 1200/mo takehome. (and a yearly ~1k return of taxes with standard deduction). That's enough for a 550/mo 1br apartment, a 100/mo car insurance payment, and 200/mo for food. That's 350 extra month for savings or whatever (car payment, etc). You add two people at minimum wage and it becomes much more efficient as you split the apartment payment.

Sure, that's no cable internet or fancy TV, but very easy to live off of with a car and apartment. What bugs me is when I see food-stamp mothers with their kids nose deep in a new Nintendo DS with 2 new DVD movies in their shopping cart. It gives a bad impression that those on assistance aren't prudent to start, why are we paying folks to be a little lazy.

 

[Al68]

He was the GM of a large retailer that pays crap wages and keeps all their hourly people part-time with no benefits and no access to unemployment insurance so they are all in fear of losing their jobs and will toe the line obediently. The fact is that public assistance programs like subsidized housing, food stamps, heating fuel assistance, and Medicaid are all welfare programs for companies like his. Instead of paying fair wages with benefits and unemployment insurance, companies like his foist all of these costs onto the taxpayers and we have to pay taxes to keep these families, warm, fed, and (barely) out of poverty, with a modicum of medical care. The Tea Party faithful don't seem capable of parsing this...

Because it's illogical nonsense. You are treating those workers' personal needs and "costs" as if they were created by that company, as if their personal needs and circumstances were the result of a company offering them a crappy job, as if those needs would have never otherwise even existed.

You speak of a company "foisting" those costs onto taxpayers, despite the fact that those costs were never the company's at any time. That's fallacious logic, and "parsing" it as such is elementary to anyone capable of rational thought.