Washington Post: Mitt Romney Tax Plan 'Garbage'
- Thread starter Free Thinker
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Sure, some of these programs could be reduced, but it would literally require a complete elimination of most of them to make up the necessary difference and "grow our way out of debt". I don't think that is realistic. Seems more realistic to me if we actually acknowledge the elephant in the room. Health Services and Social Security are burying us. Not only are they by far the majority of outlays, but they grow at a rate that is 4-5X faster than all other spending. At this rate, in less than 10 years, Health Services/SS and net interest will reach 75% of total outlays.
I agree that we shouldn't be borrowing money to give away, but that accounts for barely over 1% of total outlays and a good portion goes to places that we have active combat troops so we are essentially contracting support from that country so we don't have to send as many. So to argue that we should cut that aid, is to argue that we should either pull out or increase our defense budget to do it on our own.
Jem, It seems Epic made some very good points that you might consider.
You're proposing to cap spending in nominal dollars and decrease, via tax cuts, revenues in deflated dollars relative to a pre-tax-cut baseline. This will, as you say, eventually bring a sort of "balance," but it will be nominal, "capped" budget dollars balanced against inflated revenue in deflated dollars. The governments buying power will decline, unless growth in revenue exceeds inflation, in spite of tax cuts. And how is that possible in the absence of Republican magic? As the government's buying power falls against ever inflating prices, the government sector will shrink --something you would find desirable-- but unless the private sector grows apace to compensate, the country will be thrown into ever deeper recession as both government and private sector jobs are lost, along with subsidies of the private sector, i.e., government spending in the private sector.
Since you propose, in effect, to shrink government and its buying power along with its subsidies of the private sector, what is your plan to sufficiently grow, in real terms, the private sector to compensate and to avoid deep recession or depression in the economy? Or are you taking the Greenspan approach and relying on the forces of unfettered, i.e., unregulated, markets, to return balance to the economy, just as the unfettered markets of 2008 began to do before the government stepped in.
Elimination IS what I had in mind. While a real leader with the country's best interest at heart could do what's needed. You're correct that it's unrealistic with our current career politicians at the helm.
It's already acknowledged by me. In fact I don't think the federal government has any business being involved in either.
While I don't necessarily disagree with that statement completely, I don't think that a "real leader" just steps in a rights the financial ship without any regard for those who will suffer the consequences.
I don't have any problem telling everyone under 45 years old right now that they will not be receiving any SS payments in the future even though they will still be expected to support the current system for those already in it. I do have a problem with telling people to count on it being there for decades and then jerking it out from under them when they have nothing else. That is why I hate the idea of pensions all together. Just like SS, they make assumptions that are impossible to make and promise future security to people based on those assumptions. These people then rely on the integrity of those promises. It is the ultimate in cruelty to let them get to where they are completely dependent on it, and then pull it away. IMO, 20 years is enough time to get something else together for retirement. Anything less would be very difficult if you've spent the last twenty years of your working life contributing your income to a system that is going to be taken away from you.
So it isn't really fair to say that the federal gment should terminate involvement in both programs in the short term. But a weening off should definitely be on the table.
To health, let's add military expenditure nearly that of all other nations combined. Though military expenditures are currently shrinking rather than growing, thank goodness.
With regard to Social Security, the old age and survivors benefits part, not the disability part, I must disagree with those who would lump this together with the problem of rising health costs (medicare/medicaid).
Here's why. Social Security is based on actuarial calculation and is intended to be paid for in advance through social security taxes and interest earned. The amounts involved are huge, but we are speaking of retirement benefits for a nation of 300 million, so that's expected. If Congress will proceed with the Trustee's recommendation and simply increase the total employee/employer contribution rate by about two cents per earned dollar, the system will remain sound for now. (There is roughly 3 trillion surplus in the Trust at the moment).
However, that is not to say that Social Security won't face a big problem going forward. That is the problem of the Treasury having not enough money to redeem the bonds in the Trust in a timely manner without borrowing. This is not a fault of Social Security but caused instead by deficit spending in the discretionary budget.
I completely agree however regarding the problem of ever rising health care costs. This is a killer, and something must be done about it. The U.S. can not go on much longer spending twice as much or more on health care than other industrialized countries do. And to add salt to the wound, the health results in the U.S. are worse than in other countries.
I have posted many times on these forums that if the U.S. could do just two things: Bring both its health and military costs in line with other industrialized countries, its problem with rising debt could be quite easily addressed.
There is another potentially serious problem social security faces. The problem of indexing pensions to inflation. If the government can't get its fiscal house in order and more and more debt piles up that must be monetized, the prospect for accelerated inflation going forward increases. This would require that the S.S. actuaries call for increases in the contribution rate to keep pace with anticipated, future, indexed payouts. This won't be much of a problem if the Congress allows the contribution rates to be adjusted in a timely manner, which they often don't, and if, and this is the big IF, wages track inflation.
But wages haven't been tracking inflation. They have lost ground to it and are still losing ground, so that middle class workers real wages are less today then twenty years ago. In that situation the only way Social Security can keep up with inflation is for contribution rates to rise relative to wages . Not a good thing, especially at the low end of the wage scale where there is virtually no disposable income and no room for increased Social Security contributions on top of shrinking real wages.
Something must be done about this!
But wages haven't been tracking inflation. They have lost ground to it and are still losing ground, so that middle class workers real wages are less today then twenty years ago. In that situation the only way Social Security can keep up with inflation is for contribution rates to rise relative to wages . Not a good thing, especially at the low end of the wage scale where there is virtually no disposable income and no room for increased Social Security contributions on top of shrinking real wages.
Something must be done about this!
Lucrum, are you libertarian in philosophy? My natural tendency is to lean that way. I want minimal government. One that's there when I need them, but otherwise gets out of my life and keeps my taxes low. With time, however, I've begun to realize that a libertarian world will only work well if there are perfect people in it. It seems there is a shortage of perfect people.
Because of these less than perfect people, if we erstwhile libertarians had had our way I don't think we'd have liked the result. Unless of course we could have joined other perfect people sort of like in, I suppose, a retirement complex in Scottsdale with a guard at the gate.
I would propose a completely different tax system than our current. One that would eliminate the problem of declining real income and at the same time accelerate growth. I believe if done right it could be revenue neutral also.
Coming from an obscure blog I read a while back.
5% --- Land Value Tax (unimproved land value only)
10% -- Retail Consumption Tax
20% -- Capital Gains Tax (no differentiation between LT vs ST)
Very few exemptions or deductions.
0%---
Corporate
Income
Estate
Repatriation
Property
Etc..
Pair this with a dramatic overhaul of the health care system with the following points.
Mandatory health savings account contribution between 7 and 10% of income to be invested by the individual in much the same manner as current qualified plans. Based on age and family situation each HSA would have a required minimum balance that the individual would be working toward. Once that minimum had been passed, the surplus funds are free to be borrowed against interest free with a 20-50 year amortization.
Corresponding HSA to be provided by private insurance corps, but with a minimum annual deductible of $10,000 and a stop loss around $50K. HSAs with a $10K deductible are very cheap, and the idea is for each person to have to actually withdraw from money that they have saved to pay for medical bills.
Medical centers and pharmacies forced to make publicly available (including online) the expected cost of typical treatment as well as provide good faith estimates up front before admitting patients (excluding emergency care). Private online services free to setup cost comparison apps and websites to rank and review value of all health facilities.
In order to assist with health expenses for the poor, a voucher system or HSA supplementation is suggested to be the most efficient method.