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2010-11-11 Home Front: Politix

WH Debt Panel proposes almost $4T of cuts

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Posted by gorb 2010-11-11 04:28|| || Front Page|| [11129 views ] Top

#1 As soon as theyre in office, the Republicans could pull a hat trick, here.

Social Security was originally intended *solely* for minimum wage workers with no other form of retirement. Had it remained just for them, it would have been a good retirement for them. However, socialists wanted to expand it to create a national retirement system, and this fouled it up.

So the end result of SS reform should be to return it to its original purpose. That being said, the question is how do we get everybody else off the system with minimal pain? There is an answer.

First thing, only allow new people into the system if they are minimum wage employees. Nobody else who would otherwise enter the system has to pay FICA (which is both for SS and Medicare, which is also on its way out.)

Then, some years ago, it was suggested that there should be means testing, so that people with other retirement shouldnt get SS payments. This was a no-go and was soundly rejected.

But there is an alternative, RIGHT NOW. Because the ending of the W. Bush tax cuts will be an economic disaster, the Republicans want to restore them. But they should hold off, and instead use this as an opportunity to downsize SS - with tax cuts!

That is, offer people who would get SS payments a deal. If they want the money, fine. But, if *they* want, they can get slightly *more* money through tax deductions (though it would appear to be a lot more, as you can only deduct part of a deduction against your taxes.)

The hat trick is that the Republicans would, in effect, be restoring the W. Bush tax cuts, but at the same time reducing the expenditure of SS dollars, which would make the system far more stable, even sound.

Once the people who are actually getting benefits get this deal, then a version of these tax cuts could be extended to those who are still paying into the system. Instead of paying FICA, which would about double many peoples paycheck, they get a tax deduction for the money they already paid in to FICA.

Each year, they get a deduction to pay for the money they put into the system, so in a matter of speaking, they get their money back as a *double* increase in their net income, both by not paying FICA, and by getting a previous years FICA-payment in tax deductions.

For someone still working, this would be quite a windfall, and there should be private retirement programs available for them to put this extra money into. Fortunately such programs exist right now.

Now, this all will cause a big hit to the federal revenues, but in turn it creates a great opportunity to replace the federal income tax with some much better alternative.

I didnt mention Medicare in this, but it will need equally drastic reduction heading to elimination as well. But that will be a much tougher nut to crack.

Posted by Anonymoose 2010-11-11 08:18|| 2010-11-11 08:18|| Front Page Top

#2 First thing, only allow new people into the system if they are minimum wage employees. Nobody else who would otherwise enter the system has to pay FICA (which is both for SS and Medicare, which is also on its way out.)

?

Nobody else who would otherwise enter the system has to pay FICA (which is both for SS and Medicare, which is also on its way out.)

This would created millions and millions of jobs paying 3 cents an hour over the minimum wage.

But perhaps that's the plan.

Posted by Goldies Every Damn Where 2010-11-11 09:43|| 2010-11-11 09:43|| Front Page Top

#3 Jobs and wealth are going to have to be created at the same time. A more friendly environment for business is going to have to be created. However, under no circumstances can we return to a situation where the government/Wall Street are creating/trading phony worthless paper to loot the economy.

Posted by JohnQC 2010-11-11 09:46|| 2010-11-11 09:46|| Front Page Top

#4 Goldies: "3 cents over minimum wage" doesn't make sense, because for minimum wage workers, there wouldn't be any change, either in the FICA they pay, or the matching funds their employers pay. They would have to be a LOT over minimum wage before they would no longer be part of the system.

It is the salaried employees that would no longer have to cough up half their taxes in FICA. While that money was *supposed* to be used to pay for SS and Medicare, it was *always* spent on other things, with congress just paying the monthly "push" for those getting money *from* the system.

Posted by Anonymoose 2010-11-11 10:42|| 2010-11-11 10:42|| Front Page Top

#5 Do they cut $4 trillion by halving an $8 trillion increase?

Posted by Grunter 2010-11-11 10:51|| 2010-11-11 10:51|| Front Page Top

#6 No. Social Security was sold as a tax to the
Supreme Court as a tax. It was designed to be welfare for very old people right after the great depression. You are trying to find ways to snake within the system. No pyramid scheme is any good.

You put thought into this and that is good, but
welfare state thinking begats a welfare state.
If you truely want a fix, go to fair tax.

Posted by newc 2010-11-11 11:11|| 2010-11-11 11:11|| Front Page Top

#7 AND, make the general fund illegal.

Posted by newc 2010-11-11 11:12|| 2010-11-11 11:12|| Front Page Top

#8 I'm not sure why people who make minimum wage should be able to get Social Security retirements and those making several bucks an hour more than minimum wage will end up destitute in old age.

Posted by Black Charlie Chinemble5313 2010-11-11 11:37|| 2010-11-11 11:37|| Front Page Top

#9 Social security was a good idea for its time. People were less sophisticated (no insult) about financial matters, and most pension plans were defined benefit-style plans. Setting up SS with the age limits as a defined benefits plan, with an immediate payout to the current elderly, was a way to help people who were destitute.

But if FDR was alive and president today and was faced with designing an old age pension plan, he wouldn't do what he did in the 1930s.

So (my two cents) let's design a new system. Aim it at low-income workers, means-test, and make it a defined contribution (ala 401K) plan.

Then transition the country over a generation from SS to new SS. We'd have to continue to pay some sort of FICA tax to support the people who are currently retired or who are eligible for retirement in the near future, but we could then phase out old SS. For example, people in the 45 - 55 age group would get a mixed plan, people in the 35 -45 would get a different mixed plan more like new SS, and workers under 35 get new SS.

It could get a little complicated, of course, and strong leadership would be needed to prevent the politicians from loading up the new plan with all sorts of gim-crack nonsense. But we ought to get away from the old social security. It was good for 1930 but it isn't good for 2030.

Posted by Steve White 2010-11-11 11:42|| 2010-11-11 11:42|| Front Page Top

#10 Better watch that third rail. SS is the safety net for a lot of people, including the disabled, especially since corporations have so gleefully dropped their own retirement programs.

I'm certainly not saying there isn't a lot of waste or fraud in it but Republicans may be rushing in where angels fear to tread. Perhaps they'd be better off finding the rot in the system, i.e. people with "bad backs" or "stress" who claim to be disabled these days and reform the system instead of tear it down wholesale.

I'd personally rather see whole departments of the fed gov't be dismantled, such as Education, before removing SS benefits from other than the wealthy. But of course the wealthy would bitch and moan of how unfair it is, so removing their benefits would never happen either.

There are a whole lot of people who can shift their votes just as quickly in the next election as they did in this one. Just something to remember.

Posted by Black Charlie Chinemble5313 2010-11-11 12:19|| 2010-11-11 12:19|| Front Page Top

#11 Social Security was a terrible idea that derived from the Bismarkian deal to trade up-front low-cost Ponzi scheme social democracy for the right to reassemble the Reich. Where it has lasted the longest, it has crippled the family and voluntary support systems that formerly supported the elderly. Now in the US they are abandoned as a result of federal largesse crowding out the market for resonsible treatment of the aged.

My two cents? People, not the government, are responsible for their own old age. They should rear children who are willing to support them. If they don't they should save lots of money to pay others to take care of them.

Have public assistance for the poor regardless of age, but not as good as today. People should dread ending their lives on the public dole.

I'm tired of paying for other people's abandoned parents and I don't want my children doing so either.

Somehow my grandfather, a carpenter, was able to raise a family during the depression consisting of a mentally retarded boy, another son and daughter, and a wife who suffered for the last 20 years of her life with MS and was able to support himself till his death at 86. Sure he got some Social Security payments, but he also left a fully paid house and inheritance to his second wife. If a carpenter could do that so many years ago, there is no reason it couldn't be done today, if people had the right incentive and their savings weren't destroyed by constant inflation.

We won't adopt even the half-way measures advocate by Dr. White. Instead, this whole rotten mess will collapse in a moment unknown. And then we will start from scratch.

Posted by Nimble Spemble 2010-11-11 12:27|| 2010-11-11 12:27|| Front Page Top

#12 Personally, I think the Social Security issue is the one that is closest to being actually solvable among all the ones the Debt Panel dealth with.

Raising the age of eligibility a few decades before the commission proposes to do so, reducing payments to wealthy retirees, convicted felons are a few other groups, indexing to a more realistic set of values and allowing most income of people over 67 to escape SS taxation (which actually hurts the SS trust fund but helps the economy enormously) would just about take care of the situation .

The other entitlement issues, e.g., Medicare and Medicaid are much, much more difficult to deal with.

Posted by Lord Garth 2010-11-11 12:36|| 2010-11-11 12:36|| Front Page Top

#13 Perhaps all government employees should have their retirement packages eliminated like everyone else.

That would save a lot of money in taxes. Then we can all be poor together and our corporate CEO's and bankers can jet around the world with all the moolah telling us whether we can breathe or not.

Posted by Black Charlie Chinemble5313 2010-11-11 12:49|| 2010-11-11 12:49|| Front Page Top

#14 I'll throw my two-cents in about Medicaid, which I have some experience with:

1)Legal or illegal, non-US citizens cannot receive any sort of Medicaid. If you're here legally and you cannot pay for an emergency room visit, you go on a payment plan linked to your social security number (or the equivalent) and your console is informed. If necissary, Medicaid tracks you back to England, Mexico, or wherever and docs your pay - and other nations cooperate OR ELSE.

If you're illegal, you get treated then deported without the ability to ever return (legally, at least).

2) If you're a US citizen, you don't get it unless you are otherwise uninsurable, disabled or severely ill, and your income or family income falls below a certain level. And when I say disabled, I mean DISABLED: Down syndrome, quadriplegic, and the like. That's who the freaking program was for, anyhow, and those people are being basically robbed by everyone else sneaking onto Medicaid.

3) Turn it into a means to subsidize private insurance rather than (in some cases) a stand alone program. For example, if Blue Cross agrees to insure a one-year-old with Down syndrome and heart problems for a medium income family, the government agrees to cover amounts over "X"

I have no hard facts to back up my plan, but I'm guessing you could seriously save some money this way. Half the current budget, maybe more.

Posted by Secret Master 2010-11-11 13:11|| 2010-11-11 13:11|| Front Page Top

#15 It also proposed a target of revenue into the Federal beast to the tune of 21% of GDP. That's staggering, and very possibly unprecedented in recent decades.

Posted by Grenter, Protector of the Geats 2010-11-11 13:21|| 2010-11-11 13:21|| Front Page Top

#16 Defined benefit retirement plans all depend on accurately guessing future revenues to be paid out in future benefits. All public & private plans have this same weakness. All should be done away with, except for retired military (a small proportion of the public).
Certainly the Feds could get out of the education business altogether, abolish that department, repeal "No Child ~~Allowed to Excel~~ Left Behind" & let the states handle it. The EPA can be reined in by amending the act to exclude regulation of CO2 emissions, think of the savings in that.
Lots of good ideas, but the whole thing is dead on arrival. The electorate is too ignorant of what needs to be done, and too insistent on getting theirs, to tolerate these suggestions. I am guessing the system will have to collapse first before they will come around. National debts, public & private, can only be dealt with 2 ways, by default or by being paid off. Then there is the 3rd way, to shuck & jive, which is so far working just fine.

Posted by Anguper Hupomosing9418 2010-11-11 16:21|| 2010-11-11 16:21|| Front Page Top

#17 An interesting clock, the U.S. Debt Clock: Clock Here

Posted by JohnQC 2010-11-11 17:20|| 2010-11-11 17:20|| Front Page Top

#18 I watched the announcement. I thought it an encouraging start. Then slammed my fist on the table with about the loudest rant of bullshit I have done.

There are some alright ideas and a lot of facade. Calling it doa in committee made me want to burn my w-2 like a draft card.

Posted by swksvolFF 2010-11-11 17:39|| 2010-11-11 17:39|| Front Page Top

#19 I would give EVERY benifit I had to ensure my Country survives me.

OUR country is not about ME's, it is about growing better than all others.

Posted by newc 2010-11-11 23:44|| 2010-11-11 23:44|| Front Page Top

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