News Should the Bush tax cuts be extended?

[mheslep]

Rep Paul Ryan SS Plan:
http://www.roadmap.republicans.budget.house.gov/plan/#retirementsecurity
Background:

More than 30 million Americans depend on Social Security to provide a significant share of their retirement income. Since the program was enacted in 1935, it has served as a vital piece of the “three-legged stool” of retirement security, which today includes employer-provided pension plans and personal savings. Still, President Roosevelt himself viewed Social Security as an evolving program. As he wrote in a 1939 message to Congress: “We shall make the most orderly progress if we look upon Social Security as a development toward a goal rather than a finished product. We shall make the most lasting progress if we recognize that Social Security can furnish only a base upon which each one of our citizens may build his individual security through his own individual efforts.” In this regard, Social Security is one critical piece of the retirement security safety net for seniors – especially those with limited incomes.

As currently structured, however, Social Security is going bankrupt and cannot fulfill its promises to future retirees. Without reform, future retirees face benefit cuts of up to 24 percent in 2037. Attempts to fix the problem without fundamental reform will excessively burden future workers and sacrifice U.S. prosperity.

Further, even if the current system could be sustained, it is no longer a good deal for American workers. The real rate of return for current workers is only about 1 percent to
2 percent, and the expected rate of return for today’s children is expected to fall below
1 percent.

Social Security’s shrinking value and fragile condition pose a serious problem that threatens to break the broader compact in which workers support the generation preceding them, and earn the support of those who follow. To maintain the program’s significant role as a part of the retirement security safety net, Social Security’s mission must be fulfilled somehow. The legacy envisioned by President Roosevelt must be completed without bankrupting future workers

Voluntary Opt Out to Guaranteed Personal Savings Accounts:

Personal Choice in Retirement Accounts. Beginning in 2012, the proposal allows each worker younger than 55 to shift a portion of his or her Social Security payroll tax payment into a personal retirement account, chosen from a group of investment funds approved by the government (see below). When fully phased in, the personal accounts will average 5.1 percentage points of the current 12.4-percent Social Security payroll tax.

The personal investment component is phased into allow a smooth transition. Initially, workers are allowed to invest 2 percent of their first $10,000 of annual payroll into personal accounts, and 1 percent of annual payroll above that up to the Social Security earnings limit. The $10,000 level will be indexed for inflation. After 10 years, the amount that workers can invest will be increased to 4 percent up to the inflation-adjusted level, and 2 percent above that. After 10 more years, these amounts will be increased to 6 percent and 3 percent. Eventually, by 2042, workers will be able to invest 8 percent up to the inflation-adjustment level, and 4 percent of payroll above that, for an account averaging 5.1 percent.

The choice of personal retirement accounts is entirely voluntary. Even those under 55 can remain in the current system if they choose. Further, those who choose to enter the personal account system also have an opportunity to leave the system, and those who initially opt out of the system of personal accounts can enter into it later on.

Property Right. Each personal account is the property of the individual, and the resources accumulated can be passed on to the individual’s descendants. This contrasts with current government Social Security benefits, which are subject to reductions or other changes by Congress, and which cannot be passed on. The benefits of the personal accounts are tilted in favor of low-income individuals who do not have disposable income to invest. As a result, these individuals will be able to join the investor class for the first time. As Social Security benefits become an individual’s property, the government no longer will be able to raid this money to pay for spending on other programs.

Soundness of Accounts. Those choosing the personal account option will select from a list of managed investment funds approved by the government for soundness and safety. After an account reaches a low threshold, a worker will be enrolled in a “life cycle” fund that automatically adjusts the portfolio based on age. A worker may continue with the life cycle option or choose from a list of five funds similar to the Thrift Savings Plan options. After workers accumulate more than $25,000 in their account, they can choose to invest in additional nongovernment options approved by the Personal Social Security Savings Board.

Protection for Current Retirees and Those Nearing Retirement. As with Medicare, this plan recognizes the obligation to preserve the existing Social Security Program for those who already are retired, and for those near retirement who have planned on its benefits for most of their working lives. Therefore, persons now retired and receiving Social Security benefits, and those currently 55 and older, will remain in the existing system and will receive their promised benefits. Their benefits will in fact be more secure because the transformation of the program, along with other reforms in this proposal, ensures the Federal Government will be able to pay promised benefits.

2 Yr increase in Retirement Age

Modernizing the Retirement Age. When Social Security was enacted, the average life expectancy for men in America was 60 years; for women it was 64. Today, average life expectancy has increased to 75 years for men and 80 years for women (2007 figures). Life expectancies are expected to continue lengthening throughout the century. Given these facts, and the choice among many Americans to work additional years, this proposal extends the gradual increase in the retirement age, from 65 to 67, occurring under existing policies, and speeds it up by 1 year. Once the current-law retirement age reaches 67 in 2026, this proposal continues its progression in line with expected increases in life expectancy. This will have the effect of increasing the retirement age by 1 month every 2 years. The retirement age will gradually increase until it reaches 70 in the next century.

The modernization of the retirement age will not affect the ability of an individual who chooses the personal account system to retire early, as long as his or her account has accumulated enough funds to provide an annuity equivalent to 150 percent of poverty.

 

[mheslep]

More on topic, Ryan's proposed tax rates:

http://www.roadmap.republicans.budget.house.gov/Issues/Issue/?IssueID=8514
Which goes along with the elimination of nearly all tax deductions.

Ryan had his plan with these rates http://media.economist.com/sites/default/files/images/20100213/201007USC886.gif"

 

[Gokul43201]

Rep Paul Ryan SS Plan:
http://www.roadmap.republicans.budget.house.gov/plan/#retirementsecurity
Background:


Voluntary Opt Out to Guaranteed Personal Savings Accounts:


2 Yr increase in Retirement Age

I strongly support both ideas. In fact, I'd like to see a more aggressive rise in the retirement age, and to have it subsequently match life expectancy.

 

[Al68]

Let's look at who might be concerned about lifting or removing the cap on SS-taxable wages instead. Those who earn over the present cap, and the companies that employ them...

Yeah, there's no need to address my (and other non-rich people's) concern about it. Just claim that I don't exist instead.

I know moderators on this forum give a free pass to left-wing nonsense, but your continued absurd ad hominem attacks like this have nothing to do with any kind of honest debate.

Neither does your "never-ending drum beat" of hateful and Marxist class warfare propaganda like this:

The people who resist allowing tax cuts for the wealthy to expire have no justification to fall back on, except their subservience to the wealthy.

You want me to find quotes by self-identified Marxists and full blown communists that are "almost word for word" as this, and for most of your posts about the Bush tax cuts?

Why is it so difficult to comprehend that we are not all Marxist ideologues? That it's actually possible to disagree with you and Democrats without being "for the rich"? It's not that hard of a concept.

 

[Gokul43201]

I know moderators on this forum give a free pass to left-wing nonsense...

You know nothing of the sort. And please quit the ad hominem attacks on the moderators. If you have a complaint about a specific post, report it.

 

[mheslep]

I strongly support both ideas. In fact, I'd like to see a more aggressive rise in the retirement age, and to have it subsequently match life expectancy.

Well we have a caucus then, and the plan should easily pass in the Spring.

 

[Gokul43201]

Yeah, I remember hearing Dick Durbin (who supports the increase in retirement age) having to really, really try hard to convince his (radio) audience that this was not a terribly unreasonable position to hold. And all that for a very gradual increase. I just don't get the immense resistance to this idea.

http://www.pollingreport.com/social.htm

 

[WhoWee]

I strongly support both ideas. In fact, I'd like to see a more aggressive rise in the retirement age, and to have it subsequently match life expectancy.

You have to be careful with life expectancy - without Medicare at 65 - well nobody wants to be responsible for killing grandma - do they?

 

[turbo]

You have to be careful with life expectancy - without Medicare at 65 - well nobody wants to be responsible for killing grandma - do they?

You also have to be mindful of peoples' occupations. I started up and ran a high-speed paper machine when I was younger. I quit when I had 10 years vested in the company's retirement program. There is no way that I could possibly continue doing that job today, much less for another 8 years until my "legal" retirement age. Some people are doing jobs that few healthy people could do day after day, and the older they get, the tougher it is to keep up. Not everybody gets to lay back or sit on their butts as they get older - something that seems to escape Alan Simpson and his ilk.

 

[nismaratwork]

You also have to be mindful of peoples' occupations. I started up and ran a high-speed paper machine when I was younger. I quit when I had 10 years vested in the company's retirement program. There is no way that I could possibly continue doing that job today, much less for another 8 years until my "legal" retirement age. Some people are doing jobs that few healthy people could do day after day, and the older they get, the tougher it is to keep up. Not everybody gets to lay back or sit on their butts as they get older - something that seems to escape Alan Simpson and his ilk.

Hell, it's not just manufacturing either, there are a lot of jobs that flat-out kill you by your sixties that don't seem hazardous. For example in art they always say that the potters die first... and when you realize how much crap they breathe it's no shock.

I think it's fine to raise retirement ages, but that has to be in the context of retraining programs for REAL jobs, not Wal-Mart greeting or something that you simply can't hack at the relevant age.

 

[WhoWee]

Hell, it's not just manufacturing either, there are a lot of jobs that flat-out kill you by your sixties that don't seem hazardous. For example in art they always say that the potters die first... and when you realize how much crap they breathe it's no shock.

I think it's fine to raise retirement ages, but that has to be in the context of retraining programs for REAL jobs, not Wal-Mart greeting or something that you simply can't hack at the relevant age.

There is also an issue of competency in professional positions (although that's never been a concern in Congress?).

 

[Gokul43201]

There is no way that I could possibly continue doing that job today, much less for another 8 years until my "legal" retirement age.

If I understand this correctly, when SS was set up, it was meant to kick in at the age when people were likely to die, not at the age when they were likely to retire. It was assumed that most people would be retired by that age. And it was even referred to as an "old age" insurance.

To me, SS, if it should exist, should be an insurance against outliving your savings, because that is something that no individual can, even in theory, plan for. One can only plan their retirement and savings based on reasonable life expectancy numbers with some measure of safety thrown in for outliving that. But there's no way of knowing how much any individual may under-live or outlive the statistical mean.

 

[CRGreathouse]

If I understand this correctly, when SS was set up, it was meant to kick at the age when people were likely to die, not at the age when they were likely to retire. It was assumed that most people would be retired by that age. And it was even referred to as an "old age" insurance.

To me, SS, if it should exist, should be an insurance against outliving your savings, because that is something that no individual can, even in theory, plan for. One can only plan their retirement and savings based on reasonable life expectancy numbers with some measure of safety thrown in for outliving that. But there's no way of knowing how much any individual may under-live or outlive the statistical mean.

Exactly!

 

[OmCheeto]

If I understand this correctly, when SS was set up, it was meant to kick at the age when people were likely to die, not at the age when they were likely to retire. It was assumed that most people would be retired by that age. And it was even referred to as an "old age" insurance.

To me, SS, if it should exist, should be an insurance against outliving your savings, because that is something that no individual can, even in theory, plan for. One can only plan their retirement and savings based on reasonable life expectancy numbers with some measure of safety thrown in for outliving that. But there's no way of knowing how much any individual may under-live or outlive the statistical mean.

I like this idea also.

But would that disqualify me from being a Marxist?

 

[WhoWee]

If I understand this correctly, when SS was set up, it was meant to kick at the age when people were likely to die, not at the age when they were likely to retire. It was assumed that most people would be retired by that age. And it was even referred to as an "old age" insurance.

To me, SS, if it should exist, should be an insurance against outliving your savings, because that is something that no individual can, even in theory, plan for. One can only plan their retirement and savings based on reasonable life expectancy numbers with some measure of safety thrown in for outliving that. But there's no way of knowing how much any individual may under-live or outlive the statistical mean.

I don't want to de-rail the thread, but one of the unintended consequences of advances in medicine is that people are living longer - with a lower quality of life - and often outlive their savings. Next, many people don't understand that Medicare only covers 100 days in a skilled nursing facility and very limited at home medical care.

There is a type of insurance designed to cover nursing home or assisted living situations - called Long Term Care - but it doesn't fit every budget and typically can only be purchased by healthy individuals and ideally in the 45 to 55 age range (lower premiums).

Without LTC coverage, it is common practice to sign over the deed to the fqmily home along with the SS check - and rely on Medicaid to pay for an extended nursing home stay.
http://www.pacificlife.com/Channel/Educational+Information/Taxes+Glossary+and+Other/Nursing+Home+Costs.htm

"According to a recent survey, nursing home costs now average about $168 a day—$61,320 a year1. That is about 10% more than two years ago."

 

[turbo]

To me, SS, if it should exist, should be an insurance against outliving your savings, because that is something that no individual can, even in theory, plan for. One can only plan their retirement and savings based on reasonable life expectancy numbers with some measure of safety thrown in for outliving that. But there's no way of knowing how much any individual may under-live or outlive the statistical mean.

Tough call! My wife and I have saved all of our lives, and built up tax-advantaged retirement funds. A catastrophic illness for either of us could erase that in no time, since the US considers health-care a privilege, not a right. Another little wrinkle - females in my wife's family are notoriously long lived. Her grandmother lived into her late 80's despite obesity and a penchant for living on cheese, peanuts, and other fatty, salty treats. Her mother is 93 and going strong (although with senile dementia so severe that she can not live at home without supervision). How do you plan for such a contingency? I'll not out-live my wife, with my ongoing health issues, but what happens if she needs treatment for an aggressive cancer (for instance) and lives well into her 90s and needs long-term care? We have been as fiscally conservative as possible, but there is no way to plan for a catastrophic illness, and that can wipe out a small fortune pretty quickly.

 

[turbo]

Hell, it's not just manufacturing either, there are a lot of jobs that flat-out kill you by your sixties that don't seem hazardous. For example in art they always say that the potters die first... and when you realize how much crap they breathe it's no shock.

Silicosis probably claims most of them. My wife's aunt died of complications from her exposure to asbestos during WWII. She was a "Rosy the Riveter" type that built ships for the war effort. Nice lady, who suffered immensely during her final months. The physical pain was manageable by means of a morphine pump, but the loss of her "spark" and wit was palpable. My wife and I would like to visit her and play card games with my mother-in-law or another person, so we could play 63. Ada always wanted me for a partner and would love to find ways to cheat. I knew she had given up when she started played by the rules.

 

[Gokul43201]

Tough call! My wife and I have saved all of our lives, and built up tax-advantaged retirement funds. A catastrophic illness for either of us could erase that in no time, since the US considers health-care a privilege, not a right.

I think of SS as an insurance against catastrophic longevity. I'm not averse to considering a separate proposal for catastrophic illness, and I believe Medicare is meant to deal with at least some of that, but I know very little about it, so can't say anything intelligent on that matter.

 

[WhoWee]

I think of SS as an insurance against catastrophic longevity. I'm not averse to considering a separate proposal for catastrophic illness, and I believe Medicare is meant to deal with at least some of that, but I know very little about it, so can't say anything intelligent on that matter.

I've always thought of Social Security as a safety net. Unfortunately, our politicians think of it as a cookie jar. I'm not real happy about this 2% reduction - just heard an interview whereby the Dems now want to cut lump sum checks 'to help people pay for Christmas 2010'. I'll try to find a link.

If that happens - I'm going to start raising money for Tea Party candidates - enough is enough - these idiots want to take $120Billion out of a program facing $Trillions in future deficits - and throw it to the wind.

 

[mheslep]

I hope the SS discussion continues, but to get back on topic for a moment: I'm curious about the uproar on the left with Obama's deal with the Republicans. The common refrain is he 'rolled over' or the like. From those who think similarly, I'd like to know just what they expected him to do? Laws require agreement from the House, Senate, and the President. He doesn't have the votes in the Senate now, and will lose control of the House all together in a few weeks.

 

[mheslep]

So far, nothing's been passed yet, so this may be a little early, ...

Nah. Congress (Pelosi/Read) have no choice, politically, though they may yet attempt to dicker w/ the estate tax or something. Consider: If Pelosi refuses the deal and allows the increases to go through, the entire country will see a with-holding hit on the first paycheck in January. Shortly after the Republicans will take over the House and retroactively rescind it within a few weeks. That's the political equivalent of throwing herself out the window.

Well we'll see. Pelosi may be out on the window ledge. Just an hour ago:

"[URL Democratic caucus angrily objects to tax-cut package
[/URL]

 

[Gokul43201]

From those who think similarly, I'd like to know just what they expected him to do? Laws require agreement from the House, Senate, and the President. He doesn't have the votes in the Senate now, and will lose control of the House all together in a few weeks.

My opinion, is that it's just Dems venting steam at having to do something they don't like at all (and maybe also for having been shut out of the process). We'll see how many people were really serious about their objections when it comes time to vote on the actual bill. My guess: a lot of those who objected will eventually end up voting for it after they've decided it's time to stop talking and start thinking.

The only sensible alternative I can imagine is some attempt at a compromise position between this compromise and the one that failed the last Senate vote - but it wouldn't work. I can't imagine that anything less than the Obama version would satisfy Republicans.

 

[mheslep]

If I understand this correctly, when SS was set up, it was meant to kick in at the age when people were likely to die, not at the age when they were likely to retire. It was assumed that most people would be retired by that age. And it was even referred to as an "old age" insurance.

To me, SS, if it should exist, should be an insurance against outliving your savings, because that is something that no individual can, even in theory, plan for. One can only plan their retirement and savings based on reasonable life expectancy numbers with some measure of safety thrown in for outliving that. But there's no way of knowing how much any individual may under-live or outlive the statistical mean.

You also have to be mindful of peoples' occupations. I started up and ran a high-speed paper machine when I was younger. I quit when I had 10 years vested in the company's retirement program. There is no way that I could possibly continue doing that job today, much less for another 8 years until my "legal" retirement age. Some people are doing jobs that few healthy people could do day after day, and the older they get, the tougher it is to keep up. [...]

Yes, but disability from those illnesses also occurs later in life over what was seen in FDR's day. Hips, knees, eyes, ears, arthritis, diabetes, and a multitude of other ailments now may disable people at 50-60-70, used to disable them at 40-50 or just kill them. Given that knowledge, and the original intention of SS being as Gokul states above, could you now agree to increasing the SS retirement age by two years?

 

[Al68]

You know nothing of the sort.

It's obvious from the nonsense and false/unsubstantiated claims routinely made.

And please quit the ad hominem attacks on the moderators.

It's not an ad hominem attack to refer to someone's actions. I never attacked their motives. In fact I have no reason to think their motive are less than honorable.

If you have a complaint about a specific post, report it.

Now that, I've thought about. But I've never been one to report posts. And it's not like the moderators are unaware of the posts. I assume that the moderators "on the other side" don't want to delete posts from posters they fundamentally disagree with. Maybe it should be done by moderators "on the same side", but that doesn't happen, either.

 

[Gokul43201]

It's obvious from the nonsense and false/unsubstantiated claims routinely made.

No, it's not. You do not know for instance, if for every false claim there are 99 that are deleted by mods. You do not know when those making false claims get infracted for them.

And yes, it's ridiculous to imagine that moderators read every single post here. The only way to help improve quality is to report posts that violate forum rules.

 

[CAC1001]

The people who resist allowing tax cuts for the wealthy to expire have no justification to fall back on, except their subservience to the wealthy.

This is simply nonsense. We can raise the taxes once the economy is healthy, but right now, it could dis-incentivize investment and it could harm small businesses. We don't want to penalize job creation at all right now.

The US has very liberal rules and regulations regarding business, investment, etc. The people that make millions and billions under our system should be expected to pay to support that system. There is nothing wrong with a progressive tax system in which the people who make the most money pay a higher percentage of their earnings in taxes. I expect someone will jump in now and call me a Marxist, but let's look back at the establishment of SS in the 30's. It helped keep old people from starving and freezing to death.

What does SS have to do with it? SS was supposed to be a system you pay into and then get paid back out of. It had nothing to do with taxing the wealthy.

The GOP mantra of "never raise taxes in a recession" is pretty lame when you look back at how bleak things looked in the 1930s.

Raising taxes during the 1930s is likely part of what caused the Depression in the first place.

My parents were born in the 20's and were raised in abject poverty. It would be hard for you to find 2 people who were more fiscally conservative, but they both voted Democrat consistently, thanks to FDR.

FDR did a lot of good things that made the Democratic party popular, such as SS, unemployment insurance, he did create jobs, and the infrastructure programs he created that built roads ports, electrical infrastructure, etc...allowed many formerly backwoods areas to become thriving economies. These were the good aspects of the New Deal.

These types of Democrat were the good form of Democrat. Today's Democrats are different.

I supported Republican causes in the 60's and thereafter, until Reagan sold out to the neo-cons.

In what way? Reagan was so fiscally-conservative that he was at one point going to cut the school lunch programs, but ultimately decided not to. Many of the people who hated Reagan hated him for the government he cut.

 

[Astronuc]

Some perspective on the subject.

http://nymag.com/news/intelligencer/topic/69931/
ONE MILLIONAIRE’S TAX BILL
Year: 2000
Income: $406,000
Taxes paid: $40,376 (<10%)

Year: 2009
Income: $398,000
Taxes paid: $18,818 (<5%)
(Money earned through investments is often taxed at a lower rate than wages.)

I pay about the same as the 2009 taxes, but I earn quite a bit less than $400K. I don't imagine he works harder than me.

http://www.fiscalstrength.com/

 

[WhoWee]

To get us back on track - here is a write up from the (NOT Right) Left perspective
http://www.huffingtonpost.com/stephen-herrington/let-the-bush-tax-cuts-exp_1_b_794233.html

"Let the Bush Tax Cuts Expire in 2010 or Make Matters Worse"

"What raising taxes on the rich will do is put some revenue in the pipe to support state budgets and forestall the shift of state tax burdens to the already less fortunate. What letting all the Bush tax cuts expire will do is the exact same thing with hardly any effect on the middle class and none on the poor who pay no taxes anyway. Half of Americans pay no taxes at all and are, in fact, dependent on social programs to make ends meet at all. This is because wages have not kept pace with inflation and poverty levels have risen sharply in the last decade. Government has stepped in and is literally subsidizing business and the rich by borrowing money to supplement the incomes of the working poor. Wal Mart is the prime example, it paying so little that its employees qualify for Medicaid. Wal Mart's health insurance plan is Medicaid."

It gets better...

"If the Bush tax cuts expire, some $370 billion dollars will be collected by government instead of being in the pockets of consumer's and the rich. That's 2.6% of GDP going to government coffers instead of being spent or saved by individuals. In light of the magnitude of these numbers, where that money goes is of serious concern. The answer is simple though. It's all spent by government and with certain foreign and corporate welfare dalliance's excepted, the money goes right back into the economy and shows up over a year in every paycheck or government benefit not matter who you are. Upset over taxation and spending at the level of the middle class is nothing but an argument over where and how the money is spent and is economically neutral. Even regressive taxes are beneficial if returned in benefits to the poor, but the problem is that they usually are not. Regressive taxes are meant most often to relieve the tax burdens of the rich, in some tax fairness melodrama that ignores a broader sense of justice.

What damages economies is when money is lost from the economy. In the case of the Great Depression and now our Great Recession, the rich were, and now are, at a peak in terms of how much of the nation's per capita income went to them. Now as in 1929, the rich took money out of the economy and "invested" it in non productive speculation apart from the real economy. Some $18 trillion in corporate cash are sitting on the sidelines waiting in vain for some market magic to offer some reason to re-enter the real economy. The notion that wealth is invested in economies and finances new homes and factories hasn't been true for over a century, not since Dow and Jones set up shop on Wall Street. The bulk of wealth now circulates in and out of stocks, bonds, currencies, commodities and hedge funds and will never see the real economies of the world again unless it is taxed back into it and spent by governments. "

I guess 401K's and Pension funds are no longer participating in the Market and IPO's have been eliminated?

Perhaps it is best to do nothing - until next month.

 

[CAC1001]

Some perspective on the subject.

http://nymag.com/news/intelligencer/topic/69931/
ONE MILLIONAIRE’S TAX BILL
Year: 2000
Income: $406,000
Taxes paid: $40,376 (<10%)

Year: 2009
Income: $398,000
Taxes paid: $18,818 (<5%)
(Money earned through investments is often taxed at a lower rate than wages.)

I pay about the same as the 2009 taxes, but I earn quite a bit less than $400K. I don't imagine he works harder than me.

Capital gains and dividends are taxed lower than ordinary income because oftentimes the corporations from which the money is obtained themselves pay corporate taxes and also investment taxes, which ultimately can mean a triple tax.

 

[Gokul43201]

Reagan was so fiscally-conservative that he was at one point going to cut the school lunch programs, but ultimately decided not to. Many of the people who hated Reagan hated him for the government he cut.

Ummm ... Reagan spent more than every single President before him, outside of the WWII period.

He also broke the record on peacetime deficits.

Source: http://www.usgovernmentspending.com...tack=1&size=l&title=&state=US&color=c&local=s