House Democrats have smacked down President Obama’s tax cut compromise with the Republicans, with Oregon’s Rep. Peter DeFazio leading the rebellion.
The House Democratic caucus this morning approved a motion by DeFazio to reject the provisions of a tax deal agreed upon by Obama and the Republicans. Among other things, the bill would extend George W. Bush’s tax break for billionaires and drastically ease the estate tax burden.
“House Democrats are particularly angry over provisions related to the estate tax, which would set a generous $5 million exemption for wealthy estates and a maximum rate of 35% for two years,” the New York Times reported.
In an interview with ABC News, DeFazio said opposition to the deal was “nearly unanimous” in the Democratic caucus and blasted the argument that continuing the Bush tax cuts would boost the economy.
“Look – we did $1.3 trillion of tax cuts between the Bush tax cuts and the stimulus bill,” he said. “Did that put America back to work? Will more tax cuts and trickle down by showering money on the wealthy, will that put America back to work? That hasn’t worked.”
After the caucus vote, House Speaker Nancy Pelosi told a press conference that she wouldn’t allow the tax bill in its present form to come to the floor of the House. She didn’t indicate what modifications would have to be made for her to change her mind.
“The broad opposition to the tax cut plan among most House Democrats is no surprise, but the potential unwillingness of Ms. Pelosi to bring it to the floor could pose a serious problem,” according to the Times story. “With strong Republican support, the tax plan could easily pass the House with two-thirds or more of Democrats opposing it, but it needs to reach the floor first.”
Oregon’s three other Democratic congressmen – Earl Blumenauer, David Wu and Kurt Schrader – also have come out strongly against Obama’s tax deal.
Obama claims he had no choice but to appease the Republicans to keep unemployment benefits from running out and prevent tax cuts for the middle class from expiring along with those for the rich. But what would have been wrong with this idea: Let the Bush tax cuts expire, then come back in January with a middle-class-only tax cut bill – and DARE the Republicans to block that?
And after watching the Republicans kick Obama around like a soccer ball for two years, how could anybody doubt they were setting him up to get rolled again? “Look,” they’d say, “we have this terrible deficit” – which they just helped make worse – “so we’ve got to cut ‘socialist’ programs like unemployment benefits and food stamps.”
I’m not sure how this will all play out – the Democratic congressional leadership may fold again as it’s done so many times before – but at least temporarily I’m proud of them, and of Oregon’s Democrats in the House.
This article appears in Dec 9-15, 2010.
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If there’s a petition I can sign to state that I’m strongly oppose to the new tax proposal in which the bush tax cuts are further extended. I will sign it immedately. Worse comes to worst, let them all expire.
One small problem with your analysis, Bruce:
“Let the Bush tax cuts expire, then come back in January with a middle-class-only tax cut bill – and DARE the Republicans to block that?”
The House has already done this, just the other day, in fact. And the Republicans had no problem whatsoever blocking it in the Senate. The same will hold true in January, where there will be even fewer Dems to vote for it.
As a hard-left liberal, I don’t much care for the tax deal. But, I think it’s unfair to assail Obama for it. He is, quite literally, over a barrel. If some sort of deal doesn’t go through, taxes will rise on everybody, and it won’t be pretty. And you can bet your bottom dollar that the Republicans will be on every news channel chanting in unison, “Obama/Reid/Pelosi raised your taxes!!!” It won’t matter what the truth is…it won’t matter that middle class taxes went up because Republicans wouldn’t vote to extend the current rates. The media will continue to ignore that part of the story. And yes, it will hurt Obama and the Democrats come 2012.
Liberals just need to accept the fact that Republicans are vastly better at strategy. Take the 2008 election: they KNEW that a Democrat was going to win, no matter who they fielded as their candidate. The public was tired of Bush, the economy was circling the drain, the deficit was skyrocketing. Not only did they know that the Dem would win, they wanted the Dem to win. That way, the resulting economic collapse, the huge deficits, the massive unemployment, etc. would all be laid at the hands of the other party, and give the Republicans in Congress something to fight against and blame for everything. They fielded McCain knowing he would lose, while leaving their more electable candidates to wait in the wings, unscathed, for 2012.
You have to admit, their strategy has played out as predicted.
“Liberals just need to accept the fact that Republicans are vastly better at strategy.”
We have to face it, but we do NOT have to accept it.
bravo to DeFazio for standing up against this crazy plan of this white house keeping the tax cuts that lead to America’s demise to continue.
“Look – we did $1.3 trillion of tax cuts between the Bush tax cuts and the stimulus bill,” he said. “Did that put America back to work? Will more tax cuts and trickle down by showering money on the wealthy, will that put America back to work? That hasn’t worked.”
typical lib! “showering money on the wealthy” are you kidding me?! Don’t you mean letting the wealthy keep more of what they’ve earned? When was the last time anyone got a job from a poor person… that’s what I thought. It’s the “evil” rich people who create jobs and afford others opportunities in this country. Let’s continue penalize success in America!
defazio wont get my vote next time around …he is toast for not backing my president
“When was the last time anyone got a job from a poor person.”
Yawn. Same old right-wing, dribble-down, Ayn Rand bullcrap we’ve been hearing for 50 years. You righties evidently think rich people get their wealth from some mysterious source (it rains down on them from the sky, maybe) and then, out of the goodness and benevolence of their hearts, they give jobs to the rest of us.
Throughout my career I’ve gotten my jobs from hundreds of thousands of poor and middle-class people — the people who bought the newspapers I worked for, and bought the stuff advertised in those newspapers, thereby enabling the companies that published the newspapers to make a profit and pay my salary.
Without employees to make products and perform services, owners of businesses have nothing to sell. Without consumers to buy those products and services, they have nobody to sell them to. Prosperity flows from the bottom up; it does not trickle from the top down.
This is the most rudimentary economic principle, yet conservatives either can’t or won’t understand it.
YES! Say it again and keep saying it! Economic prosperity must (and does) flow from the BOTTOM UP! Think about it sheeple. If/ when that basic concept is finally grasped we will get our ‘economic recovery’. BOTTOM UP RECOVERY! BOTTOM UP RECOVERY! BOTTOM UP RECOVERY!
This is why India and China are the economic powerhouses they are today.
“after watching the Republicans kick Obama around like a soccer ball for two years” – as if the Democrats weren’t as completely obstructionist as they could be with Bush for eight years, come on HBM!
If the Dems hadn’t packed the stimulus bill with as many of their pet agendas and programs, maybe we would have a bit less of a deficit to worry about in the first place.
Why do the liberals hang on to this socialist perspective that it’s the rich folks obligation to support the rest of the population? How do they see this as equitable? Their premise seems to be that the wealthy have made their money solely on the backs of the poor and middle class, and thus need to make amends by picking up the tab. On the flip side, they seem to hold that the less well to do, couldn’t possibly have any personal responsibility for their situation. The Dems need to realize that the wealthy are not necessarily the bad guys – if that’s so Obama, Pelosi, et al are among them!
“as if the Democrats weren’t as completely obstructionist as they could be with Bush for eight years, come on HBM!”
Bullcrap. Most Democrats gave Bush almost everything he wanted, including two wars (one totally unnecessary), a huge tax cut (also unnecessary) and deregulation of the financial industry (unnecessary and ultimately disastrous).
“Why do the liberals hang on to this socialist perspective that it’s the rich folks obligation to support the rest of the population?”
Why do the right-wingers hang onto this ridiculous caricature of what liberals actually believe? You’ve been reading too much Ayn Rand. Lift up your eyes from “Atlas Shrugged” and take a look at the real world.
“Yawn. Same old right-wing, dribble-down, Ayn Rand bullcrap we’ve been hearing for 50 years. You righties evidently think rich people get their wealth from some mysterious source (it rains down on them from the sky, maybe) and then, out of the goodness and benevolence of their hearts, they give jobs to the rest of us.
Throughout my career I’ve gotten my jobs from hundreds of thousands of poor and middle-class people — the people who bought the newspapers I worked for, and bought the stuff advertised in those newspapers, thereby enabling the companies that published the newspapers to make a profit and pay my salary.”
Drill down a bit deeper, Bruce. At the head of that comapny is quite probably a wealthy person. They’re the one that had the intelligence and insight to percieve the need for the business in the first place. They’re the one that took the risk and made the investment to start it. They’re the one that put their inititive and hard work into making it a success and keeping it growing. They’re also the one that hires others. So no Bruce, wealth doesn’t rain down from some mysterious source and indeed wealth does flow downward. Yes, those folks do make more than others and in my book they deserve to, instead of being penalized!
“At the head of that comapny is quite probably a wealthy person. They’re the one that had the intelligence and insight to percieve the need for the business in the first place. They’re the one that took the risk and made the investment to start it. They’re the one that put their inititive and hard work into making it a success and keeping it growing.”
And they wouldn’t have been able to do it without the help and labor of a lot of other people. (Including, in virtually all cases, the direct or indirect help of government.)
Randist conservatives / libertarians have this grand romantic notion of the entrepreneur flying out there all alone in the blue, building his vast empire out of nothing but his own brains, talent, hard work and determination. Sorry, that ain’t the way it is. I repeat: Take a look around you at the way things really are in the real world instead of in some novel.
BTW like most really rich people in this society, the wealthy people who owned the publishing companies I worked for all inherited their wealth. That’s another fact that Randist conservatives omit from their fantasy.
“Most Democrats GAVE Bush almost everything he wanted”
So either the Dems were mindless automatons that kowtowed to Bush’s every whim despite of their own liberal agenda, without doing their own due diligence and without acknowledging their constituents desires, or they with ingenuous liberal bellowing and gnashing of teeth signed off on what they thought was the right thing to do!
“Why do the right-wingers hang onto this ridiculous caricature of what liberals actually believe?”
Per your Messiah, “I do think at a certain point you've made enough money”, or “I think when you spread the wealth around, it's good for everybody.”
“And they wouldn’t have been able to do it without the help and labor of a lot of other people. (Including, in virtually all cases, the direct or indirect help of government.)”
Yes Bruce, that’s called job creation! And the best thing government can do for the economy is making it profitable for companies to hire!
“Randist conservatives / libertarians have this grand romantic notion of the entrepreneur flying out there all alone in the blue, building his vast empire out of nothing but his own brains, talent, hard work and determination. Sorry, that ain’t the way it is. I repeat: Take a look around you at the way things really are in the real world instead of in some novel.”
“BTW like most really rich people in this society, the wealthy people who owned the publishing companies I worked for all inherited their wealth. That’s another fact that Randist conservatives omit from their fantasy.”
Actually Bruce, I’ve worked for and have known several “real world” entrepreneurs that started from scratch right here in Bend, and no they aren’t wealthy, they’re middle class folks. But they managed to successfully grow their businesses, provide for their families and create jobs for the citizens! Central Oregon has some wealthy entrepreneurs too, Les Schwab for instance. Why is it so hard to acknowledge that and what is your problem with inherited wealth? I would imagine that quite often it’s used to continue family business or start new enterprises which in turn create jobs, support people and create new wealth because the children inheriting it were also raised with a spirit of entrepreneurship. Most of the very wealthy are also generous philanthropists.
The liberals seem to embrace this conspiracy theory view that the rich, all of whom have (God forbid) inherited or gained their money in some other nefarious manner, have been out to oppress the less fortunate and keep them under the heel of their boots. Get over it; they’re the ones living in a dream world!
By the way, I haven’t yet read Ayn Rand’s “Atlas Shrugged”, though I might enjoy it.
To be fair, the deregulation of the financial industry (and all the chaos we’re now dealing with as a result) can’t be pinned on Bush. It was a long process that started in the 70’s. Arguably the most important piece was the repeal of the Glass Steagall act during the Clinton administration. Bush just kept the ball rolling.
“Per your Messiah, “I do think at a certain point you've made enough money”, or “I think when you spread the wealth around, it's good for everybody.”
I’m not sure what he meant by the first statement (enough money for what?) or in what context he made it, but on the face of it I don’t think I’d agree with it. As for the second one, I agree 100%. Excessive concentration of wealth is not good for the economy or the society. For one thing, it makes it tougher for the innovative entrepreneurs to get a foothold.
“Central Oregon has some wealthy entrepreneurs too, Les Schwab for instance.”
He’s dead. Has been for years.
“The liberals seem to embrace this conspiracy theory view that the rich, all of whom have (God forbid) inherited or gained their money in some other nefarious manner, have been out to oppress the less fortunate and keep them under the heel of their boots.”
You will continue to flail away at this straw man because that’s so much easier than trying to honestly refute the real liberal/progressive arguments. That’s okay, I understand.
“By the way, I haven’t yet read Ayn Rand’s “Atlas Shrugged”, though I might enjoy it.”
It’s one of the worst novels ever written, but you probably would enjoy it.
“Liberals just need to accept the fact that Republicans are vastly better at strategy.”
Yes thank god martin luther king was a republican and the civil rights movement of the 60’s would have not gone anywhere without the repubs thanks hbm for pointing that out.
great job peter why dont you run for ron’s widens set when its up he’s flake. john boyle la pine
What’s wrong with inherited wealth? The answer is simple. If money is inherited by heirs, it’s not taken by the government and that’s a crying shame to liberals because they know what’s good for us. Nothing pisses off a liberal/progressive more than knowing there’s something (wealth) out there that they have not taken. It absolutely drives them nuts!!
“To be fair, the deregulation of the financial industry (and all the chaos we’re now dealing with as a result) can’t be pinned on Bush. It was a long process that started in the 70’s”
True. Many Democrats were complicit in it.
blue book: You’re talking about ancient history. The positions of the parties on racism switched in the mid-1960s when the Civil Rights Act was passed. When he signed it, LBJ said, “We have lost the South for a generation.” The Republican Party then started pandering to white racists with its “Southern Strategy.” That strategy has been spectacularly successful; the states of the former Confederacy now vote consistently red. The once-solid Democratic South is now the solid Republican South.
“When was the last time anyone got a job from a poor person…” When was the last time a poor person outsourced a CEO’s job out to a third world nation?
“This is why India and China are the economic powerhouses they are today.” Jeez–I thought it was because the powerhouse of American Capitalism decided to do everything they could to cut costs, ditch labor expense in this country, and transfer manufacturing to India and China, regardless of the social costs of their actions at home. Why innovate and reinvent when improving profits can be done more easily by some other means?
“Yes Bruce, that’s called job creation! And the best thing government can do for the economy is making it profitable for companies to hire!” With diminished demand what is the incentive for hiring? Since the 1970’s this country has been living on a bottomless credit card. Bubbles of imaginary wealth and easy credit have loaded the masses with debt that they can’t deal with. Wealth has been increasingly concentrated in the top 2%. Which companies will hire to do what? We are a service and retail economy. Most people can’t afford to buy–who is there to sell to? What retailers are going to hire–except for the Walmarts who sell the cheapest to the greatest number–and almost all of it made in Asia? How long before the services–legal,software development, online support, and the rest are farmed out to–oops’ too late! (Aloo, dees ees Cheep, how may I help you?)
Conservatives know all the answers–both of them: cut taxes! cut costs! Too bad they only want to answer the first question. When it comes to cost cutting they walk away from the defense budget, social security, and medicare. Easier to talk about foreign aid or the endowment for the arts–you know, the big buck programs. If the tax cuts lead to increased deficits–so what, our grand children will deal with it.
Libs don’t get away scott free, though. Pretending that there is money to pay for all of the pensions, payrolls, and programs that have resulted in a burgeoning of the deficit abyss is criminal. We can’t afford to pay for everything we want–maybe it’s time to adjust to providing for our needs.
Everyone can stop pretending that the politicians are going to create job one. Unless you’re a fundraiser, media consultant, or prostitute, most politicians feel you’re on your own.
As a country, it is time to sacrifice–ALL of us. Raise taxes on the wealthy. Cut back of pensions. Means qualify Social Security. Raise the retirement age. Penalize companies that outsource jobs overseas. Take cell phones away from kids and put the text books back in their hands. Politicians have to learn to say no to the voters sometimes. Parents have to learn to say no to their kids sometimes. We all have to learn to say no to our own impulses sometimes, and do what is right for everyone, not just ourselves. Even if it huts, makes us uncomfortable, or requires a little more work.
If we don’t start relating to one another as people, we will shortly become a society of sociopaths–if that hasn’t happened already.
Stephen: Excellent post. However, I take issue with two of your suggestions:
1. Means-testing Social Security. If we do that, Social Security will come to be seen as another “welfare” program, which will make it politically easier for the right wing to slash or eliminate it.
2. Raising the Social Security age. That could be okay, but only if we make exceptions for physically demanding jobs. You don’t see many 70-year-old coal miners or oil rig roughnecks.
I think we should re-label anyone who earns over 2,500 per year as “rich”. If you look around the globe most people make less than 1,000 bucks a year. So isn’t 2,500 considered “rich” by those people? That way we can impose the same tax rates on the “rich” as we do now. Of course close all those loopholes! I think this is fair.
“1. Means-testing Social Security…”
Lest we forget that FICA means the “Federal Contibuton Insurance Act.” The operative word should be Insurance. That means if you need it, it’s there and if you don’t then perhaps you get only a minimum amount. Means testing will be the only way to save it unless the cap is substantially raised to say $250,000.
Or perhaps better yet, if you have the means, then you choose between a reduced benefit or for every dollar you forego in full benefits you get a dollar of tax deduction.
Bruce, you should recall that it was a democrat president, one who remains highly revered by all liberals, that slashed welfare benefits; yeh and the big bad republicans made him do it. Best thing that ever happened to the system to restore self respect and responsibility.
And you needn’t worry about old coal miners and oil rig roughnecks. Thgere won’t be any becasue the EPA has a bulls eye on both those industries. You should be more concerned about their unemployment rather than their retirement.
HBM–
Think about it–creating a loophole for ‘demanding’ jobs is the same BS that took the tax code and complicated it to the point where everyone has a dog in the loophole hunt. I can already hear the whining.
No, this is shared sacrifice in the face of a catastrophe. No one wants to share in the pain: “Or perhaps better yet, if you have the means, then you choose between a reduced benefit or for every dollar you forego in full benefits you get a dollar of tax deduction.” I won’t take anything so don’t make me contribute to help someone else. “Are there no workhouses? Are there no prisons?” Tis the season, so what else should I expect.
The inheritance from the generation that fought WWII and then got us through the next 20 years is being cast upon the altar of greed and selfishness by wastrel children and grandchildren.
We have to assume responsibility and act now. Boehner’s tears and Pelosi’s outrage are the acts of a piss-poor cast of actors in the theatre of the absurd. WE got us here and WE have to get us out!
“creating a loophole for ‘demanding’ jobs is the same BS that took the tax code and complicated it to the point where everyone has a dog in the loophole hunt”
You think coal mining is not a “demanding” job? Would you like to be doing it NOW — much less when you’re 70?
The idea that Social Security is on the verge of bankruptcy (Medicare is another story) is a myth propagated by the right wing, and I’m surprised you fell for it. Its expenditures are not projected to exceed its revenue until 2018 (meaning it would have to start dipping into its trust fund) and that situation can easily be avoided by modestly reducing benefits, increasing the salary cap, or a little of both. See http://money.cnn.com/pf/features/popups/socsec_straight/content.1.html.
“Means testing will be the only way to save it unless the cap is substantially raised to say $250,000.”
Works for me.
“Or perhaps better yet, if you have the means, then you choose between a reduced benefit or for every dollar you forego in full benefits you get a dollar of tax deduction.”
That could work too.
“Bruce, you should recall that it was a democrat president, one who remains highly revered by all liberals, that slashed welfare benefits; yeh and the big bad republicans made him do it. Best thing that ever happened to the system to restore self respect and responsibility.”
What’s the point of mentioning this? Are you saying Social Security is welfare?
BTW I do not “highly revere” the Great Triangulator, Bill Clinton. Like many liberals, I consider him a DINO.
Social security is in trouble now if all we have is eight years before it goes upside down. The government is going to start tapping any ‘trust fund’ long before that for things like–oh, I don’t know…how about medicare or the ever-expanding, unending “war on terror?” After all, can’t raise taxes or cut benefits. Acting now will mitigate the need for some draconian acts of desperation then. Focusing on social security and the federal government ignores state funding problems, county funding problems and city funding problems , all of which must be paid for sooner or later.
I don’t doubt that being a miner is a hard, thankless, debilitating and dangerous job. No–I wouldn’t want to do it when I’m seventy–but have you been in Walmart, Target, Home Depot, or Costco lately? You’ve seen the 70+ year-old employees who didn’t think they would still be in the job market. At some point in the last fifty years, a comfortable retirement, along with a big home, two cars, and a big screen plasma, became a right. I wish my grandparents were still around to take part in this discussion. It’s a toss-up as to what would kill them–uncontrollable laughter or outrage.
“At some point in the last fifty years, a comfortable retirement, along with a big home, two cars, and a big screen plasma, became a right.”
I don’t know about all that other crap, but I do believe that in “the greatest country in the world” (or at least the richest) people who put in 45 or 50 years of productive work should be able to enjoy, if not a “comfortable” retirement, at least one in which they don’t have to live in a hovel and eat cat food.
And if the object is job creation, raising the retirement age is not the way to do it. We have a labor surplus in this country, not a shortage. If we want to reduce unemployment, logically we should be LOWERING the retirement age — and shortening the work week.
The country has no wealth. The top two percent transferred the wealth and riches to themselves and through the use of mythology created a belief structure where the vast majority believe that what is good for the elite is good for them. Posts on your blog clearly prove that the belief in the ‘American Dream, and ‘American Exceptionalism’ prompt people to advocate against their best interests and deny that they are doing so. Why else would the so-called ‘death tax,’ something that affects only about 6000 families in the US, be a major deal for the vast majority–the 90% of Americans that inherit nothing.
The ‘safety net’ of social security was initially intended to make sure that people didn’t ‘live in a hovel and eat cat food.’ No one is advocating that. No one is hoping for that. The ‘safety net’ concept was abandoned, though, and social security was expanded beyond the original intent. It became a retirement strategy and politicians were willing to create and maintain that impression if it bought them votes and power. The way it has been handled, it is a non-sustainable Ponzi scheme that would make Bernie Madoff proud.
The object of my discussion is not job creation. It is survival. As a country we are in economic meltdown and logic, prayer,and bullsh_t won’t solve it. Working together and sacrificing for the greater good might.
Stephen, would you please explain how Social Security qualifies as a “Ponzi scheme”?
The only reason I can see for calling Social Security a “Ponzi scheme” is that it counts on future revenue to cover future outlays. But by that standard the U.S. government — in fact, any government — is a “Ponzi scheme.” Every corporation is a “Ponzi scheme.” My household budget (and yours, I bet) is a “Ponzi scheme.”
It’s been the right wing’s wet dream to get rid of Social Security ever since it was created. The current BS propaganda about it being “bankrupt” and being a “Ponzi scheme” is just the latest effort in that direction. As I said before, I’m surprised — and disappointed — that you apparently have been taken in by it.
As for “sacrificing for the greater good,” that’s fine — but when are the multimillionaires and billionaires and zillionaires going to do some of the sacrificing? They continue to get richer while working-class and middle-class Americans get poorer; all the while they whine about their terrible tax burden and lecture the peasants about “shared sacrifice.”
The wealthy will start to contribute when someone with balls will actually tax them. Presidents–when was the last time we elected a president who was not in that top two percent–Clinton was the only one since 1980 and he’s comfortably in that 2% now. Wealth leads to power. Power leads to wealth. The Senate–more millionaires than in Microsoft’s boardroom. The House–they get reelected by catering to the interests of the wealthy and as time passes enter that top 2% themselves. If the 90% would get pissed off and demand that it happen, it would. They won’t–they have sold out to a fantasy.
For the last two days the Bulletin has been running articles about how people who make over $250 k are only ‘middle class’ because their expenses are so high. Not easy to work those massages in such a tight budget. Again, the problem for these people is an inability to distinguish between needs and wants. Forgive me, this crocodile is shedding tears and it makes it difficult to see my screen and keyboard.
Why is SS a Ponzi scheme in my eyes? Because outlays for past taxpayers are made from revenues of current tax payers who will be paid from the revenues of future taxpayers. Current demand exceeds fund availability. The so-called trust fund has been borrowed for other purposes and covering shortfalls is done through borrowing. To cover those treasury notes we borrow from someone else to redeem them. How is that sustainable?
Republicans and Democrats are pretending that the recovery, the deficit, and the budget shortfalls can be solved pain-free: no new taxes, no program cuts, no reduced expectations. It’s all good. The truth of the matter does not lie in the rantings of ideologues.
As for the ‘trust fund,’ here’s another take on it. And by the way, the fed is already drawing on it. http://money.cnn.com/2010/08/09/news/economy/social_security_value.fortune/index.htm As for me, the days of running my business and my household based on ‘future revenues’ are over. I have what is left over after real revenues–real dollars–pay for real bills. If the excess cash isn’t there, I temper my desires. I live in real time, now, and I don’t know if I will ever trust my future revenue expectations ever again. I’m in the world of cash flow.
Sacrifice is an ugly truth–ignoring it as everyone insists we can do will shortly become impossible.
“Why is SS a Ponzi scheme in my eyes? Because outlays for past taxpayers are made from revenues of current tax payers who will be paid from the revenues of future taxpayers.”
Did you read my previous comment? That is not the description of a Ponzi scheme; that is the way every government, every business and every household operates. I have some experience with budgeting, both personally and professionally. You anticipate what future expenses will be, you anticipate what future income will be, and you make the numbers balance. If they don’t, you need to make adjustments. The Social Security “budget” has gotten out of balance because of the coming retirement of the Baby Boomers, but it can be balanced again without draconian measures.
“Current demand exceeds fund availability.”
Not true.
“The so-called trust fund has been borrowed for other purposes and covering shortfalls is done through borrowing.”
That should not have been done. However, the fact that it has been done is not a valid reason for gutting Social Security.
A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned. The Ponzi scheme usually entices new investors by offering returns other investments cannot guarantee, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors to keep the scheme going.
Bruce–I’ll give you your point on the technical definition of a Ponzi scheme–but the similarities are disturbingly numerous.
The SSA started drawing on the SS Trust for the first time since the 1980’s this year because taxes did not meet the requirements of disbursements. If I’m wrong, I stand corrected. In order to redeem the Trust’s notes, the government has to borrow money. Sounds like demand is exceeding the supply of funds.
‘You anticipate what future expenses will be, you anticipate what future income will be, and you make the numbers balance. If they don’t, you need to make adjustments. The Social Security “budget” has gotten out of balance because of the coming retirement of the Baby Boomers, but it can be balanced again without draconian measures.’ Means testing and raising the retirement age aren’t ‘gutting’ SS nor Draconian in nature. It’s trying to slow down disbursements and make sure the money is going to people who need it–trying to deal with an out of balance budget. The only other option is to raise SS taxes–and those taxes are regressive.
A Ponzi scheme simply pays off money owed to old investment not with assets/profits from their investment, but with money raised from new investment/investors.
With SS as with any pension system, you determine the PRESENT VALUE of the future outlays based upon the demographics/actuarial stats of the participants while taking into account the expected contributions of those participants through retirement age.
If the Al Gore Lockbox has enough IOUs from the Treasury to cover the present value of this net liability, then the liability is considered funded, if not (as is the case now), it’s underfunded.
Bruce, where do you think the money will come from when outlays exceed contributions? Do you really believe there is a Trust fund to draw upon? Our SS contributions go right into the General Fund and we are on a pay-as-you go approach. Those of us who actually pay income taxes will now have to cough up more. SS contributions have historically been higher than outlays and used to conceal more ominous deficits.