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

[WhoWee]

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.

my bold

All of the employers should be subject to SUTA and FUTA.

http://www.irs.gov/businesses/small/international/article/0,,id=104985,00.html
http://www.staffmarket.com/peo/pricing-suta-2010.asp

 

[turbo]

my bold

All of the employers should be subject to SUTA and FUTA.

http://www.irs.gov/businesses/small/international/article/0,,id=104985,00.html
http://www.staffmarket.com/peo/pricing-suta-2010.asp

I agree. The big retailers in this state generally keep their hourly workers capped at around 30 hours/week so that they don't have to pay any unemployment tax on them. This is a huge give-away that shifts costs to the taxpayers. Plus, it leaves the workers with no possibility of getting some income if they get fired, so they are often willing to work off-the-clock, without mandated work-breaks, etc, just to stay in the good graces of the managers.

 

[WhoWee]

I agree. The big retailers in this state generally keep their hourly workers capped at around 30 hours/week so that they don't have to pay any unemployment tax on them. This is a huge give-away that shifts costs to the taxpayers. Plus, it leaves the workers with no possibility of getting some income if they get fired, so they are often willing to work off-the-clock, without mandated work-breaks, etc, just to stay in the good graces of the managers.

I looked up Maine rates and SUTA is applicable to the initial $12,000 in wages. You might want to scan this:
http://www.maine.gov/labor/unemployment/suta_dumping.html

 

[turbo]

I looked up Maine rates and SUTA is applicable to the initial $12,000 in wages. You might want to scan this:
http://www.maine.gov/labor/unemployment/suta_dumping.html

Thank you. Things have changed substantially in the last decade, and I failed to keep up. When I was consulting for pulp and paper mills, one of my clients insisted that I show proof of workers comp insurance. As soon as I bought the policy, the state taxation people started dunning me for "employees" that I was keeping "off the books", and insisting that I give them list of all "associates" and "contractors" for whom I was failing to pay withholding and unemployment taxes. It was a royal pain, and no number of letters would make them let up.

 

[WhoWee]

Thank you. Things have changed substantially in the last decade, and I failed to keep up. When I was consulting for pulp and paper mills, one of my clients insisted that I show proof of workers comp insurance. As soon as I bought the policy, the state taxation people started dunning me for "employees" that I was keeping "off the books", and insisting that I give them list of all "associates" and "contractors" for whom I was failing to pay withholding and unemployment taxes. It was a royal pain, and no number of letters would make them let up.

I would imagine worker's comp rates would be very high in a pulp or paper mill.

 

[turbo]

I would imagine worker's comp rates would be very high in a pulp or paper mill.

VERY high. Plus, I had to carry $1M in professional liability coverage, since I was advising them WRT the operation of their power boilers and Kraft chemical recovery boilers (very dangerous critters).

 

[WhoWee]

VERY high. Plus, I had to carry $1M in professional liability coverage, since I was advising them WRT the operation of their power boilers and Kraft chemical recovery boilers (very dangerous critters).

My guess is the company probably had even more coverage on top of your professional policy?

You've highlighted a good point - there are a lot of mandated costs to do business that nobody thinks about. While not specifically taxes - the mandates are to insure against irresponsible behavior and performance.

IMO - worker's comp (like it's second cousin health insurance) needs to be standardized across state lines.

 

[Char. Limit]

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.

Where exactly are you getting that 50 hr/wk figure from!? I worked 27 hours this week. That was after taking over 9 hours from other people unable to work at those times, which means that I can expect 16-18 hours a week. That won't pay for an apartment, car, car insurance, and fuel, much less food on top of all that. Seriously, where in the US can people expect 50 hours a week in a company?

Edit: Also, where are you getting your $9/hr figure? I live in the state with the highest minimum wage in America, and I take home $7.80/hr.

 

[turbo]

My guess is the company probably had even more coverage on top of your professional policy?

Yes, they had their own coverage, though they required that I carry my own in case my advice led to damages, loss of production, etc.

You've highlighted a good point - there are a lot of mandated costs to do business that nobody thinks about. While not specifically taxes - the mandates are to insure against irresponsible behavior and performance.

IMO - worker's comp (like it's second cousin health insurance) needs to be standardized across state lines.

Standardization would be good. Here, we have Memic. It is nearly impossible to make a claim stick. Memic requires employers to cooperate with their denials, even if the employer knows that the employee has been injured on the job. Also, the injured employee is required to be seen by one of Memic's paid doctors, who will fight the employee's own doctor and nay-say all their findings. This creates enough plausible deniability so that it's difficult, if not impossible for the injured employee to prevail in court. On top of that, if the employee is not wealthy, they cannot afford to hire labor-lawyers, and there is no incentive for labor-lawyers to take comp cases on speculation because there is very little chance of prevailing and getting a large enough settlement to pay their costs.

I have a friend who was very badly injured in the paper mill I used to work in. The possibility of a large settlement lured a labor-lawyer into taking the case on a contingent-fee basis. It took years and years working up through the courts, and Memic is still appealing the award years after it was adjudicated. Justice delayed is justice denied.

 

[mege]

Where exactly are you getting that 50 hr/wk figure from!? I worked 27 hours this week. That was after taking over 9 hours from other people unable to work at those times, which means that I can expect 16-18 hours a week. That won't pay for an apartment, car, car insurance, and fuel, much less food on top of all that. Seriously, where in the US can people expect 50 hours a week in a company?

Edit: Also, where are you getting your $9/hr figure? I live in the state with the highest minimum wage in America, and I take home $7.80/hr.

The http://www.cnn.com/2011/US/06/02/georgia.immigration.farm.workers/index.html?iref=allsearch" there are several states in the mid-$8 range. The article must be mistaken, but that's where I got my number.

Current binary employment issues aside, my point is that actual take-home isn't the issue for those that are working full time. Working 50 hours at a mill or farm isn't out of the ordinary - unskilled labor for road construction, county crews, etc, generally pay much higher (esspecially for unionized employees). The problem is really WHAT jobs people are doing. It's easy to be willing to work at WalMart or Target, and you're getting paid accordingly - lots of people love retail jobs because of the extreme flexability and possible discouts/perks. It's also a job that can be done by someone with on the job training, making these jobs also good for young folks in college or just starting out. The retail environment is sketchy for the employer - you cannot give all of their staff full time hours. I was a supervisor at a big box store for about 2 years - out of 25 employees in my department during christmas, I had 3 that were full time. 6-8 each day during the week and everyone on Saturday and Sunday. In the non-holiday times that scaled down to a total of 8 with 2 full time. 3 per day during the week, and again, everyone on the weekends. How can I employ more people - the business couldn't handle it? Mandating that a company has x% full-time employees is lunacy and will spell doom for the retail industry - or prices will neccessarilly go up accordingly.

One could argue that the issues that General Motors faced in the past decade were because of their generous hiring practices. As a rule through the 60s and 70s, GM didn't hire temporary workers, it didn't hire part time workers - it didn't need to. It could afford the inefficiencies with the excuse that they had a huge available talent pool (ever heard the phrase 'Generous Motors'?). As their market share shrunk through the 80s and into the 90s they had to start cutting chaff and become more lean and mobile. They voluntarilly chose to be a respite, of sorts, for the community and had very loose hiring standards and practices - but that ended up biting them in the rear. Now, except for some highly specialized engineering positions, they're not hiring for permanent positions and they've started contracting more temps than ever. They got bit by the excess on their employee's behalf.

Finally, and I generally avoid any ad hominem discussions - but if you're only working 20 hours/week, that's your own fault. There may not be jobs you want to do out there to make minimum wage or better with full time hours, but they are out there. I've always had a job where I was getting 40+ hours. For the first time, come this spring, in almost 10 years I will not have a full time job (by my own choosing, to focus on school). I've jumped between jobs as I've moved around, but a month or two of unemployement aside - I've worked 40-60hrs/week for a decade. Most have been indoor desk or retail jobs, but some of the best paying jobs I've had were labor (I did road construction for 3 summers between my first stint at college). Most of that time was spent living in the Detroit area... so arguebly an area that has been worse for longer as far as employement has concerned. Point being - jobs are there, it just may not be precicely what you want to do.

 

[mege]

I have a friend who was very badly injured in the paper mill I used to work in. The possibility of a large settlement lured a labor-lawyer into taking the case on a contingent-fee basis. It took years and years working up through the courts, and Memic is still appealing the award years after it was adjudicated. Justice delayed is justice denied.

I think that is a tangental issue, employers use litigation because they can. The litigious nature of our system need to be curbed somehow (and this applies to more than just your example). I don't have a good solution, but something needs to be done to all types of insurance to make them less prone to long court time.

Also, if I understand right, your friend's case is out of the employer's hands and in the hands of Memic (whom I'm presuming is the UEIns provider?), so the employer's only fault is using Memic for their unemployement insurance.

 

[turbo]

Also, if I understand right, your friend's case is out of the employer's hands and in the hands of Memic (whom I'm presuming is the UEIns provider?), so the employer's only fault is using Memic for their unemployement insurance.

Memic is the state's worker's comp provider. The playing field is highly skewed in favor of Memic, despite the claims from the right that our state's laws are "anti-business". Injured workers have no chance in this system unless their claims have the potential to be large enough to prompt a labor-law firm to take their cases on a contingent-fee basis. Injured workers are simply cast aside, for the most part. No lawyer is going to take your case unless they have a reasonable expectation of getting their expenses covered, so injured employees are hung out to dry.

 

[WhoWee]

Memic is the state's worker's comp provider. The playing field is highly skewed in favor of Memic, despite the claims from the right that our state's laws are "anti-business". Injured workers have no chance in this system unless their claims have the potential to be large enough to prompt a labor-law firm to take their cases on a contingent-fee basis. Injured workers are simply cast aside, for the most part. No lawyer is going to take your case unless they have a reasonable expectation of getting their expenses covered, so injured employees are hung out to dry.

Ohio has a mandatory system based upon "exclusive remedy".

Basically, under the definition of exclusive remedy, the employee, whether injured in Ohio or another state, under the laws of Workers Compensation, gives up his or her rights to sue the employer. Exclusive remedy means employers are responsible for work related injury and disease - regardless of whether it was the employees fault. In return, the injured employee gives up the right to sue when the employer's negligence causes the harm.

The injuries may not be self-inflicted or caused by the employee's intoxication or under the influence of any substance - testing is done within 8 hours of an event.

 

[Vanadium 50]

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?

Yes, we could. However, it means that unemployment would increase.

To show why, let's imagine a simplified case where all workers are full-time or half-time. You have a company with 100 full-time and 100 half-time employees, so the number of FTE's is 150. Under your law, they would have to bring on 34 of the 100 half-timers on to full-time, leaving them with 32 half timers.

So, of the 100 original half-timers, 34 of them got more work, 32 stayed the same, and 34 of them are now unemployed.

 

[WhoWee]

Yes, we could. However, it means that unemployment would increase.

To show why, let's imagine a simplified case where all workers are full-time or half-time. You have a company with 100 full-time and 100 half-time employees, so the number of FTE's is 150. Under your law, they would have to bring on 34 of the 100 half-timers on to full-time, leaving them with 32 half timers.

So, of the 100 original half-timers, 34 of them got more work, 32 stayed the same, and 34 of them are now unemployed.

The first thing you learn in business school is the concept of on-going concern. The management of a company is responsible for the continued survival of that firm. The ultimate goal is continued profits for it's owners.

If the company needs (A) full time workers to operate, (B) workers on a part time basis and (C) part/full time seasonal workers - those needs will be priced and filled as budget constraints allow. Why is budget important? If the company spends too much on labor, it may not be able to service debt, pay taxes and insurance, occupancy costs or support revenues with marketing.

This is something that Government clearly doesn't understand - or we wouldn't have a $14Trillion national debt growing at OVER 10% per year ongoing for decades - AS IT'S PLAN.

The subject of this thread is "how do we cut spending" - my response is account for EVERY dollar. It has now become acceptable for politicians to round bills to the nearest hundred-billion and talk in terms of trillions - it seems just a few years ago $1Billion was a lot of money - now it's a waste of a politicians time to discuss? (IMO)

 

[turbo]

This is something that Government clearly doesn't understand - or we wouldn't have a $14Trillion national debt growing at OVER 10% per year ongoing for decades - AS IT'S PLAN.

The subject of this thread is "how do we cut spending" - my response is account for EVERY dollar. It has now become acceptable for politicians to round bills to the nearest hundred-billion and talk in terms of trillions - it seems just a few years ago $1Billion was a lot of money - now it's a waste of a politicians time to discuss? (IMO)

One reason for our excessive spending IMO is that huge omnibus bills are cobbled together, loaded with pork that might not pass if they were considered on their own merits. Perhaps we could get congressional rules changed so that every spending bill is considered separately, with only relevant amendments allowed. That would create more transparency. As things stand now, only a handful of staffers and lobbyists are likely to know what is in these monster bills.

 

[WhoWee]

One reason for our excessive spending IMO is that huge omnibus bills are cobbled together, loaded with pork that might not pass if they were considered on their own merits. Perhaps we could get congressional rules changed so that every spending bill is considered separately, with only relevant amendments allowed. That would create more transparency. As things stand now, only a handful of staffers and lobbyists are likely to know what is in these monster bills.

I agree - smaller focused Bills would expose waste and drive accountability on every level.

 

[Al68]

Memic is the state's worker's comp provider.

Seriously, that explains a lot.

The playing field is highly skewed in favor of Memic, despite the claims from the right that our state's laws are "anti-business".

Could it be that the businesses the right was referring to are not those businesses in bed with the state, getting their business from the state, like Memic?

 

[turbo]

Seriously, that explains a lot.

You don't know the back-story. My uncle and other business-owners in the forest-products industry in this region banded together to self-insure for workers comp. When you have a lot of guys out in the woods with chain-saws, cable skidders, etc, there is potential for some serious injury, and the comp coverage available was too expensive. My uncle and his partners found out that self-insurance not only saved them money, the premiums that they paid to their consortium earned them some serious interest, since they were quite cognizant of worker safety and kept injuries as low as possible. Get caught running a chain-saw without cut-resistant chaps, gloves, helmet with face-shield, etc? Down the road you go.

Enter the state insurance board, which in its "wisdom" decreed that such self-insurance plans had to be dissolved, putting those business owners at the mercy of the costly insurance market, which already had deemed the logging and forest-product trucking industries to be high-risk. The big insurance companies and their lackeys in Augusta win again. In this case, the state was anti-business for real. Just anti-modest-sized entrepreneurial businesses. The insurance giants made out just fine, thank you.

 

[Al68]

You don't know the back-story...Enter the state insurance board, which in its "wisdom" decreed that such self-insurance plans had to be dissolved, putting those business owners at the mercy of the costly insurance market, which already had deemed the logging and forest-product trucking industries to be high-risk. The big insurance companies and their lackeys in Augusta win again. In this case, the state was anti-business for real. Just anti-modest-sized entrepreneurial businesses. The insurance giants made out just fine, thank you.

That was my point. The anti-business nature of the state's laws referred to by the right are clearly not referring to businesses in bed with the state, that benefit from such policies.

They're talking about private businesses that want only to be left alone by the state, not businesses that profit from state intervention in the economy.

 

[mege]

That was my point. The anti-business nature of the state's laws referred to by the right are clearly not referring to businesses in bed with the state, that benefit from such policies.

They're talking about private businesses that want only to be left alone by the state, not businesses that profit from state intervention in the economy.

As an aside - this is exactly part of why the Affordable Care Act scares me - the insurance companies are for it.

One reason for our excessive spending IMO is that huge omnibus bills are cobbled together, loaded with pork that might not pass if they were considered on their own merits. Perhaps we could get congressional rules changed so that every spending bill is considered separately, with only relevant amendments allowed. That would create more transparency. As things stand now, only a handful of staffers and lobbyists are likely to know what is in these monster bills.

I would go one step further that each bill needs to have a necessary end date and be reinstituted (think about how they implemented the PATRIOT Act). Shouldn't policies be placed in mind to solve something? (solving indicating a resolution) Too many bills become self-serving loads on the government's books because no one has the heart to say 'wait, why do we still need this?' The way bills are passed now, force politicing and don't have long term goals in mind other than 'solve right now!'

 

[Al68]

As an aside - this is exactly part of why the Affordable Care Act scares me - the insurance companies are for it

Yes, plus the name. A general rule of thumb is that the name of a law promoted by the left tends to be the opposite of its contents. The use of the word "reform" always means it's the epitome of corruption. So of course they're going to put the word "affordable" in the name of a law that does the opposite. Just to be sarcastic and rub it in, you know.

 

[WhoWee]

IMO, the only way to effectively cut our deficit is to cut spending ASAP and to keep all future spending on-budget and transparent.

We can get rid of a lot of spending with a few moves. First, close at least 600 foreign military bases. They are not necessary to the security of our country. Foreign bases are a drain on our treasury and a direct monetary transfer to the countries that host those bases. Bring home the military personnel, administrators, and their families. We will all be better off.

Next, drop a couple of carrier groups. Our Navy does not need to be able to project aggression all over the world. No other country has this force.

Next, drop the support for ethanol, and all other price-supports for agricultural programs that steer so many millions of dollars to ADM, Monsanto, etc, while making basic foods more expensive for US citizens.

This is not an inclusive list. I hope others can chime in.

The GOP fantasy that we must attack deficits by cutting Medicare, Medicaid, and Social Security, is just that. A fantasy that cannot work while keeping our most vulnerable citizens covered by at least a minimum social net.

I think we can all agree there are basically 2 ways to cut spending - immediately or in phases.

With that said, it might be wise to engage in a policy of non-renewal or non-replace whenever possible?

As for the "GOP fantasy that we must attack deficits by cutting Medicare, Medicaid, and Social Security" - how can we not make cuts and other adjustments somewhere in these areas? As the economy tanked, Medicaid has been expanded very rapidly over the past few years - does anyone think this expansion is sustainable at the state level?

 

[turbo]

As for the "GOP fantasy that we must attack deficits by cutting Medicare, Medicaid, and Social Security" - how can we not make cuts and other adjustments somewhere in these areas? As the economy tanked, Medicaid has been expanded very rapidly over the past few years - does anyone think this expansion is sustainable at the state level?

SS is self-sustaining, and can continue to be so for many decades. Just lift the cap on earnings.

Medicaid and Medicare costs are increasing not because the programs are broken and need to be slashed, but because of our out-of-control health-care costs. Health insurance is far too expensive in the US. Other industrialized countries do not pay anywhere what we have to in order to get coverage for their citizens. Institute a true public option, perhaps by allowing younger, healthier workers to opt into Medicare.

 

[WhoWee]

SS is self-sustaining, and can continue to be so for many decades. Just lift the cap on earnings.

Medicaid and Medicare costs are increasing not because the programs are broken and need to be slashed, but because of our out-of-control health-care costs. Health insurance is far too expensive in the US. Other industrialized countries do not pay anywhere what we have to in order to get coverage for their citizens. Institute a true public option, perhaps by allowing younger, healthier workers to opt into Medicare.

IMO - as we speak, Social Security is under attack from the "generosity" of our politicians. We've discussed this previously:
https://www.physicsforums.com/showthread.php?p=2983851&highlight=SSDI#post2983851

Medicaid costs are increasing because the program is expanding - and it's putting a great deal of stress on the states. Isn't Medicare 100% under the control of Government already?

 

[WhoWee]

This sums up the problem - IMO.

http://www.usatoday.com/news/washington/2011-06-06-us-owes-62-trillion-in-debt_n.htm

"The government added $5.3 trillion in new financial obligations in 2010, largely for retirement programs such as Medicare and Social Security. That brings to a record $61.6 trillion the total of financial promises not paid for.
This gap between spending commitments and revenue last year equals more than one-third of the nation's gross domestic product.
Medicare alone took on $1.8 trillion in new liabilities, more than the record deficit prompting heated debate between Congress and the White House over lifting the debt ceiling.
STORY: Government's mountain of debt
Social Security added $1.4 trillion in obligations, partly reflecting longer life expectancies. Federal and military retirement programs added more to the financial hole, too.
Corporations would be required to count these new liabilities when they are taken on — and report a big loss to shareholders. Unlike businesses, however, Congress postpones recording spending commitments until it writes a check.
The $61.6 trillion in unfunded obligations amounts to $527,000 per household."

 

[Al68]

"The government added $5.3 trillion in new financial obligations in 2010, largely for retirement programs such as Medicare and Social Security. That brings to a record $61.6 trillion the total of financial promises not paid for.

Does anyone really think our children and grandchildren should assume such a debt, when they made no such promise? A debt of over $500,000.00 per household?

Are they really expected to buy the argument that they owe that debt on the basis that they will in return receive a promise that their children and grandchildren will assume a debt to them in return? Only complete sheep would buy such a Ponzi scheme argument and assume a debt they do not in fact owe. And the amount is far beyond what even the sheepiest of socialist Ponzi drones could assume even if they wanted to.

There are only three alternatives: massive changes to the Ponzi schemes in question, abandonment of the Ponzi schemes in question, or collapse of the federal government.

At this point, if so many people have such a narrow and delusional worldview as to consider the Ryan plan "far right", that last option seems inevitable. That's the normal fate of Ponzi schemes, anyway, and a federal government could be re-instated sans unconstitutional Ponzi schemes.

 

[WhoWee]

Does anyone really think our children and grandchildren should assume such a debt, when they made no such promise? A debt of over $500,000.00 per household?

Are they really expected to buy the argument that they owe that debt on the basis that they will in return receive a promise that their children and grandchildren will assume a debt to them in return? Only complete sheep would buy such a Ponzi scheme argument and assume a debt they do not in fact owe. And the amount is far beyond what even the sheepiest of socialist Ponzi drones could assume even if they wanted to.

There are only three alternatives: massive changes to the Ponzi schemes in question, abandonment of the Ponzi schemes in question, or collapse of the federal government.

At this point, if so many people have such a narrow and delusional worldview as to consider the Ryan plan "far right", that last option seems inevitable. That's the normal fate of Ponzi schemes, anyway, and a federal government could be re-instated sans unconstitutional Ponzi schemes.

my bold

Is it any wonder the Left hates Glen Beck?

http://www.foxnews.com/story/0,2933,542521,00.html
"BECK (voice-over): The Cloward-Piven strategy in a nutshell.
Left-wing radicals Richard Cloward and Frances Fox Piven advance their strategy to end poverty in a May 2, 1966 article in The Nation.
Cloward-Piven starts with the idea that there is a wide gap between the entitlements that poor people are eligible for and the entitlements that they are actually collecting. They say getting everybody on to the welfare rolls will wipe out poverty and the only way to accomplish that is through a massive multi-city education campaign making heavy use of the media.

So, once the poor know that they're eligible and start to sign up, what happens next? In their own words, "a crisis." A crisis that starts in the cities that would rapidly spread to a nationwide level and force the government to move quickly to create a new program for direct income distribution: Marxism.
Wait a minute — community organizations overwhelming the system that would lead to a massive redistribution of wealth? Gee, where have I heard that before?
That's Cloward-Piven strategy in a nutshell."

 

[Zarqon]

One the one hand I can see how all this extra spending lead to economic issues, but on the other hand I just don't get how our society can "run out of money" to provide a good life for everyone when we're so much more efficient at producing stuff than every before in our history.

Compared to let's say 100 years ago, our capability for producing things like food and houses are vastly superior. For example, even in the face of a increasing life expectancy, and thus more older people to care for, how can we not have become so much more efficient that it is a a simple matter to provide all basic needs to these people?

What in the society is eating up all the efficiency we have developed over the last century?

 

[mege]

What in the society is eating up all the efficiency we have developed over the last century?

http://en.wikipedia.org/wiki/File:United_States_Capitol_-_west_front.jpg"