The budget compromise thread

[aklim]

Originally Posted by MS Fowler

I was just trying to anticipate an objection to a national sales tax ( It will unfairly impact the poor).

I agree that no rebates, no bank cards would be simpler. I would accept it either way.

What I would oppose would be the addition of a sales tax to the existing income tax. It all comes from us in the end, and piling taxes on top of taxes would make it impossible to pay.

Not sure how it will unfairly impact anyone since I pay say 10% for the purchase of a $100 item to a total of $110 just as Bill Gates will? It would be unfair in the current circumstance where I am a billionaire and have to pay say 30% income tax when you pay 20%.

Not to mention fairer. I don't need to keep track of what you buy and for what reason since there is NO deductions given. Give all your money to charity for all I care. Doesn't impact what you pay for your next hot dog.

Ah, but you won't even notice it. A dollar here, 10 there and viola, you are broke.

[roflwaffle]

Originally Posted by Hatterasguy

40 billion isn't enough to really make a difference.

Inheritance tax is easy to avoid with trusts. It really does punish small business's and farmers whose land is all of a sudden valuable, but lack the sophistication to plan for the inheritance of their assets after death. Those who know how to plan never pay it.

As a result it should probably be reformed.

I don't think naivety is an excuse when someone can spend a small fraction of what would be taken in taxes to have some set up a trust. That's like saying the income tax punishes people who lack the ability to fill out their taxes or pay someone to do so.

[el presidente]

2012 Budget Mostly Ignores Bowles-Simpson Recommendations

David Godow
February 15, 2011, 11:30am

"Like the fiscal commission never happened." That was Ezra Klein's take on how much attention the budget gives to the commission's recommendations for reforming entitlements and comprehensive tax reform. You know, the things that are actually going to be necessary to balance the budget. Not that anyone should be surprised by this - the President admitted during his State of the Union address that he didn't agree "with all their proposals" (translation: I'm going to ignore every politically unpalatable suggestion they made).

The predictability of passing over the commission's report doesn't make it any less galling. As Klein says, the fiscal commission's audacity in going after the budget's sacred cows "opened up the field on the budget," in a way that stimulated healthy debate among and between both sides of the aisle. To see the discussion of tax and entitlement reform passed over by the Administration isa slap in the face to those who are serious about fixing the budget.

Still, it might be unfair to say that the budget completely ignores the deficit commission's report. Let's take a quick run through and see how the two compare.

DISCRETIONARY SPENDING: The fiscal commission called for an 8 year freeze on discretionary spending and annual cuts of 2 percent, the White House will ask for a 5 year freeze: OK, the Administration gets some credit here for following up on a good idea, even if it's not as long as was recommended. The problem is that the fiscal commission's discretionary spending freeze was accompanied by more or less substantive ideas for dealing with mandatory spending as well, whereas the Administration's budget lamost completely ignores that point. Even where discretionary spending is concerned, the budget ignores the commission's recommendation of cutting 2 percent from the discretionary budget each year (over and above the spending freeze).

REFORMING GOVERNMENT: The commission report called for a plethora of compensation reforms for federal employees, the budget offers only a 2 year pay freeze. To be fair, the commission only wanted a 3 year pay freeze. But it also suggested reducing the size of the federal workforce, and reducing travel, printing and vehicle budgets. Kudos to the Administration, however, for following up on the commission's recommendations to sell (and inventory!) excess federal property and curtail congressional earmarks.

TAX REFORM: A complete whiff by the White House. No substantive proposals were offered except a tax hike on the wealthy and businesses. While the fiscal commission's report offers an actual proposal for cutting taxes and streamlining the system to spur economic growth, the Administration seems satisfied with letting the Bush tax cuts expire for the wealthy, and cutting some tax deductions for higher-income taxpayers and oil/gas companies. The President's budget also promises to pay for three years of Alternative Minimum Tax relief (the conversation needs to be about eliminating entirely) and to "begin the process" of corporate tax reform. The story here is a big opportunity to reform our broken tax system has been squandered.

HEALTH CARE: The budget would extend the "doc fix" and continue to implement Obamacare, but otherwise offers no new proposals. Granted, the fiscal commission's report is not strong on this either. People are still not talking about meaningful reform to reduce long-term Medicare costs. Part of the reason this doesn't figure more prominently in the budget is that the White House assumes extensive savings are already coming as a result of Obamacare. Good luck with that.

SOCIAL SECURITY: No meaningful proposals in the budget. The fiscal commission's report, which should have been addressed, essentially suggests raising the payroll tax and cutting benefits for the rich. The second paragraph of the budget's recommendations on Social Security begins thus: "The President believes that we should come together now, in bipartisan fashion, to strengthen
Social Security for the future." That pretty much sets the tone for the rest of the section - no substance whatsoever.

While the Administration seemed willing to cherry pick some relatively innocuous recommendations from the fiscal commission's proposal, it ignored all the painful, pressing reform we'll need to see in the tax system and entitlement spending.

http://reason.org/blog/show/2012-budget-mostly-ignores-bowles-s

[el presidente]

Survey Reports
February 10, 2011
Fewer Want Spending to Grow, But Most Cuts Remain Unpopular
Changing Views of Federal Spending


From: To:
Overview
The public’s views about federal spending are beginning to change. Across a range of federal programs, Americans are no longer calling for increased spending, as they have for many years. For the most part, however, there is not a great deal of support for cutting spending, though in a few cases support for reductions has grown noticeably. The survey also shows that the public is reluctant to cut spending – or raise taxes – to balance state budgets.

Since June 2009, there have been double-digit declines in the proportions favoring increased federal spending for health care (by 20 percentage points), government assistance for the unemployed (17 points), Medicare (13 points) and veterans’ benefits and services (12 points). Fewer Americans also favor increased spending on military defense (down nine points) and environmental protection (seven points).

In two areas in particular – aid for the unemployed and national defense – the public’s attitudes toward federal spending have changed dramatically. Currently, as many favor decreasing spending as increasing spending for assistance to the unemployed and national defense. In 2009, far more supported funding increases than decreases for these programs.

Despite these changing views, however, majorities or pluralities favor increased spending in five of 18 areas. Fully 62% favor increased funding for education – the highest percentage for any program tested and little changed from 2009 (67%). In all, there is only one area – economic assistance to needy people around the world – for which a plurality favors cutting federal spending.

The latest national survey by the Pew Research Center for the People & the Press, conducted Feb. 2-7 among 1,385 adults, finds that President Obama’s overall job rating has ticked up: 49% approve of Obama’s job performance while 42% disapprove. From September through January, roughly as many approved as disapproved of Obama’s job performance.

Most Americans (56%) say President Obama could be doing more to improve economic conditions while 39% say he is doing as much as he can. A year ago, somewhat fewer (50%) said Obama could be doing more on the economy and in March 2009, just 30% expressed this view.

Still, views of former President Bush’s efforts to improve the economy at a comparable stage in his presidency were slightly more negative than they are for Obama today, though the economy was in much better shape. In January 2003, 61% said Bush could be doing more to improve economic conditions while 33% said he was doing all he could.

The survey finds somewhat more positive – or at least, less negative – views of the nation’s economy. Only about one-in-ten (12%) says economic conditions are excellent or good, a figure that has changed little over the past three years, but the proportion saying the economy is “poor” has edged lower. Currently 42% rate economic conditions as poor, which is virtually unchanged from December (45%), but down nine points from October (54%).
 
A plurality (42%) continues to say it will be a long time before the economy recovers, but that is 10 points lower than in September. The percentage saying the economy is recovering has more than doubled – from 10% to 24% – over this period.

Yet there has been no improvement in people’s assessments of their own finances. And while economists say that the recession has ended, more than a third (36%) say that the recession had a major effect on their finances and they have yet to recover.

Jobs remain the public’s dominant economic concern, but a new threat has emerged. The proportion citing rising prices as the national economic issue that most worries them has risen from 15% in December to 23% currently. Over the same period, the proportion citing the deficit as the most worrisome economic problem is flat (19% in December, 19% today).

As state budget problems worsen, most say that the states themselves should be responsible for addressing these problems, without the help of the federal government. Six-in-ten (60%) say the states should deal with budget shortfalls by raising taxes or cutting services, while just 27% favor the federal government giving more money to the states. These opinions are virtually unchanged from last June.
 
But there continues to be far more opposition than support for nearly all specific proposals to balance state budgets. Large majorities say their state should not decrease funding for primary and secondary education, health services, higher education, and road maintenance and public transportation. Most also oppose raising personal income and sales taxes, as well as taxes on business as ways to balance their state’s budget.

There is greater willingness to decrease funding for the pension plans of government employees. Even so, as many oppose this option as support it as a way to balance their state’s budget (47% each).

The survey finds little change in opinions about both political parties over the past few months. Currently, 47% have a favorable impression of the Democratic Party while 46% express an unfavorable view. For the GOP, 43% have a favorable opinion and slightly more (48%) have an unfavorable view.

The shift in the balance of power on Capitol Hill has not changed the public’s view about the level of discord between the president and Congress. Fully 65% say Obama and GOP leaders are not working together on the important issues facing the country; an almost identical percentage (67%) expressed this view at the beginning of last year. As was the case a year ago, far more of those who say the two sides are not working together blame Republican leaders (31%) than the president (19%).

http://people-press.org/report/702/

[aklim]

Question. What does Obama have to do with it, in reality? Sure, he signs off on the budget, aka Hostage Situation. If he has some items he wants, either he gets it and Congress gets their pork or nobody gets nothing. What does that mean? Well, if any problems arise, who does anyone thing will get the heat first? Congress or the White House?

Next Question: How does this budget thing work? IIRC, Obama sends Congress his "Mother May I" list. Congress sends him back a list of things they will approve. In return, they want his signature on the list which includes items he probably doesn't want. His option is to take it as it is or veto it. If he vetoes it, any problems stemming from the veto, be it Wall Street getting nervous or say soldiers not getting the equipment they need and die or schools that don't get enough money and programs have to be cut, etc, etc, will be ON HIS HEAD and not Congress. After all, how many times do we blame the Prez for the budget when congress gets a free ride.

[Hatterasguy]

Originally Posted by Honus

I used to be in favor of raising the retirement age for Social Security and the eligibility age for SSI (which is a separate program), but have changed my mind. Raising the retirement and eligibility ages favors people with desk jobs and good health care. I think we should make adjustments in other areas.Definitely.

Social Security was never meant to provide a retirement for everyone, it was meant for people of marginal means to die in dignity.

Problem is it kicks in at 65 and a lot of people live 20-30+ years past that. When it was enacted this wasn't the case.

SS really should be pegged to the life expectancy, if you want to stop working sooner than save up your money and do that. Labor jobs often pay better than a lot of office jobs so no sympathy there.

[MTI]

Leaving the hard work for the legislative branch and not proposing the task force's recommendation is no surprise and was even stated in the President's press conference. While the GOP says it shows a "lack of leadership" or that he "punted" on the entitlement cuts, what was done is not only realistic, but also tactical.

It is realistic since only the legislative branch can made the fundamental changes to programs and taxes, not the executive. It is also tactical since the GOP, elected on a so-called wave of fiscal responsibility, now has to address the issue in a bi-partisan manner, possibly also incorporating the task force's recommendations, or appear no better than the DNC members that were swept out of office in 2010.

Paul Ryan, the GOP chair of the House Budget committee has a major opportunity here.

[aklim]

Originally Posted by Hatterasguy

Social Security was never meant to provide a retirement for everyone, it was meant for people of marginal means to die in dignity.

Problem is it kicks in at 65 and a lot of people live 20-30+ years past that. When it was enacted this wasn't the case.

SS really should be pegged to the life expectancy, if you want to stop working sooner than save up your money and do that. Labor jobs often pay better than a lot of office jobs so no sympathy there.

Lets not forget that when it was enacted, we had 20 some workers to 1 retiree. Now it is like 3 and lessening every day to 1

[Hatterasguy]

Originally Posted by roflwaffle

I don't think naivety is an excuse when someone can spend a small fraction of what would be taken in taxes to have some set up a trust. That's like saying the income tax punishes people who lack the ability to fill out their taxes or pay someone to do so.

Well people do it, I can't explain it.

[Botnst]

Originally Posted by Hatterasguy

I'd be in favor of expanding it to everyone, with a provision to have a private option....

Let's say I 'opt-out'. Do my tax dollars still support it? Uh, yeah.


No thank you.

[Hatterasguy]

Originally Posted by Botnst

Let's say I 'opt-out'. Do my tax dollars still support it? Uh, yeah.


No thank you.

Unfortunitly that's just the way it is, I can't opt out of the 15% I pay towards SS even though I would love to. I could invest that 15% far better on my own and turn it into millions over my life time vs the little check I may someday get but most likely won't because the numbers don't work.

I view the chances of me getting a SS check when I retire in 60 years at about 5% or less.

Instead I get to pay for your retirement!

[aklim]

Originally Posted by Botnst

Let's say I 'opt-out'. Do my tax dollars still support it? Uh, yeah.


No thank you.

Here is the question. Lets say I let you "opt-out". So you keep your money. Well, what happens when you have "buyer's remorse"? IOW, what happens when you find you have zero dollars? Americans tend to be squeamish about letting people suffer for their mistakes and hence we don't have a learning thing going on here. I agree that watching you starve is a great motivator but how many of us have the stomach for it? In simple terms, will you be "bailed out" when you have no money and nothing saved or will you be left to your devices?

[roflwaffle]

Originally Posted by Botnst

Let's say I 'opt-out'. Do my tax dollars still support it? Uh, yeah.


No thank you.

That's true in a lot of situations. I don't have kids, but I still have to pay to have the little buggers learned. Someone is almost always going to end up paying for something they won't use, and if it's too much for them to take then they end up finding someplace else to live.

[Hatterasguy]

I pay for people without insurance to go to hospitals, yet I have insurance.

Life isn't fair.

[MS Fowler]

Originally Posted by MTI

Leaving the hard work for the legislative branch and not proposing the task force's recommendation is no surprise and was even stated in the President's press conference. While the GOP says it shows a "lack of leadership" or that he "punted" on the entitlement cuts, what was done is not only realistic, but also tactical.

It is realistic since only the legislative branch can made the fundamental changes to programs and taxes, not the executive. It is also tactical since the GOP, elected on a so-called wave of fiscal responsibility, now has to address the issue in a bi-partisan manner, possibly also incorporating the task force's recommendations, or appear no better than the DNC members that were swept out of office in 2010.

Paul Ryan, the GOP chair of the House Budget committee has a major opportunity here.

Was or 'tactical" or gamesmanship?
I understand tactics, but what we really need is leadership. The President had the opportunity to set the agenda and show true leadership. Instead, he played coy, and, according to some pundits" set a trap for the republicans". So if they go ahead and suggest the sort of cuts we've all been discussing here, does Obama roll out the White House propaganda office and demonize every cut?
At some point we all have to realize that we just cannot afford to continue spending as in the past--even for good and noble things. Not all, maybe not even many of the entitlement programs are bad, or evil. Many might even be good things. But if we are serious about cutting the deficit, we have to realize that you can't spend the money.