Are 47% of americans “takers?”

[oldfart]

The recent leaked remarks of Gov Romney at a fundraiser where he made a somewhat garbled claim that 47% of the American public were “dependent on government” and unreachable to the attractive features of his programs because they paid no federal income tax raises some questions of fact and perspective. First to be fair to Mr. Romney, I believe that he is sincere in what he believes and that much of the blowback is the result of him misspeaking what he believes. So I am going to spot him a big one and assume that he does NOT think that 47% of the American public is “takers” in the parlance of the Randian universe, even if that is what he said. This is like Ronald Reagan’s comment about welfare Cadillac’s; he presented it as an anecdote without claiming that any specific percentage of those on public assistance were irresponsible moochers or crooks.

In particular, Romney bemoaned the fact that nearly half the country doesn’t pay federal income taxes: “These are people who pay no income tax. Forty-seven percent of Americans pay no income tax. So our message of low taxes doesn’t connect. … [M]y job is not to worry about those people. I’ll never convince them that they should take personal responsibility for their lives.”

The confusion started with the 47% figure itself. Actually in the Statistics of Income Bulletin the figure given is 46.4% and is the percentage of 2011 federal income tax returns filed that show no net income tax liability. So the first caveat is that this is a percentage of filed Form 1040 series returns, not a general population figure. This introduces two distortions; first not all 2011 returns are filed (extensions are due October 15) and apparently Mr. Romney himself is in this category. Secondly, it says nothing about those who do not file tax returns, most of whom are not required to file tax returns.

Almost all of the data about tax return filing and information comes from the Statistics of Income Division of the Internal Revenue Service and can be accessed in excruciating detail through Tax Statistics. Since individual tax return information is protected from disclosure by law, all information is presented as aggregates, but some of the series, like the top 400 individual returns characteristics, can be pretty interesting. The data is so available and accessible I have trouble seeing a good reason not to fact check this data when quoted. The biggest problem is that there is so much data published it can be hard to find exactly what you are looking for.

Perhaps the biggest limitation of this data and how Romney used it is that it is for one year. Typically filers go through a life cycle, showing low income when students, higher income while working, and lower income again when retired. And most small businesses have good years and bad years; I’ve got a few zero years in my Social Security earnings record myself. Using Census information, the Hamilton Project show that until age 60 or so, about 80% of all tax filers pay income and/or payroll taxes, and that from ages 25 to 60 about 70% of filers pay some income tax. The point is that most return filers pay income tax during their working years, even if they do not pay income tax in the current year. I think that it is obvious that drawing conclusions about Americans work ethic based on a single year of tax data is a misuse of the data; most Americans during their normal working years pay income tax.

[Sorry, I am having trouble posting the graphics of the charts; if I can't fix it I will at least post the url]

So who are the remaining 20%, are they the same people each year, and what tax advantages cause them to have no income tax liability? Obviously not all of them are poor; in fact about 4,000 millionaires pay no income tax each year.

One way to look at this is to consider which portions of the tax law are used to reduce income tax liability to zero. Using SOI data the Brookings Institution provides the following:

---Tax breaks for the elderly (mainly partial exclusion of Social Security benefits) 44.0%
---Credits for working poor (mainly child tax credit and earned income tax credit 30.4%
---Exclusions for tax-free benefits (like health insurance) 6.0%
---Education credits 5.6%
---Exclusion for tax-exempt interest 5.1%
---Itemized deductions 5.0%
---Other tax credits 2.5%
---Favored treatment of capital gains & dividends 1.3%

The only groups on this list that I think could conceivably support Mr. Romney’s comment are the credits for working poor. But these programs owe their existence to the Republican Party and have been for over 20 years been pointed to with pride by Republicans who argue they are a vital part of moving poor people from welfare to jobs. The original EITC was invented by the famous liberal economist Milton Friedman when he was chief economic advisor to the Barry Goldwater campaign. Back then it was called the “Negative Income Tax” and was the darling of conservatives and libertarians because it was far cheaper to administer than welfare programs such as public housing and food stamps and was less intrusive into people’s private lives. The first earned income credit was proposed and signed by President Nixon.

But have these programs created a permanent class of low-paid workers dependent on these credits for a major portion of their income year after year? Apparently not. Most EITC recipients only get the credit for two consecutive years or less. Many of them soon move up the income ladder and start paying taxes back into the system. One paper found that, over their lifetime, these EITC recipients pay more in taxes than they receive in benefits.

Consecutive years of receiving EITC
---one year 42%
---two years 19%
---three/four years 20%
---five or more years 20%

[Shamelessly stolen from “Americans who pay no income taxes, EITC edition”
TheWashingtonPost website, October 24, 2011 by Brad Plummer. } http://www.washingtonpost.com/blogs...-eitc-edition/2011/10/24/gIQAfbzfCM_blog.html

“Approximately half of all taxpayers with children used the EITC at least once [between 1989 and 2006],” writes Indivar Dutta-Gupta of the Center on Budget and Policy Priorities. Most EITC beneficiaries only use it for a year or two, before scrambling up the income ladder. Workers were especially likely to use the EITC when their kids were very young. By and large, the program helps many workers get ahead, and it alleviates early-childhood poverty. You can see why it’s been so popular for so long among both parties — Ronald Reagan, for one, at the signing ceremony of the 1986 Tax Reform Act on October 22, 1986, stated, “The bill I'm signing today is not only an historic overhaul of our tax code, and a sweeping victory for fairness; it's also the best anti-poverty bill, the best pro-family measure, and the best job-creation program ever to come out of the Congress of the United States.

Conservative revisionists might want to rewrite history now, but the plain truth is that these tax credits were conceived by conservative Republicans, enacted by conservative Republicans, and claimed as great achievements by conservative Republicans, from Goldwater through Nixon and Reagan forward at least until 2010. If any conservatives want to demonize these programs and claim that the 5.6% of tax filers who owe no federal income tax for more than two years because of the refundable child tax credit and earned income tax credit constitute and underclass of “takers”, they are pointing the finger at their own intellectual heritage. And the size of this group is astonishingly small compared to the 5.6% who owe no federal income tax due to education credits or the 5.1% who avoid federal income tax because their income consists mostly of tax-free bond interest (and they generally do this every year!).

So where are we left? Every government program has some waste, fraud, corruption, and inefficiencies; that’s why each agency has an inspector general. Some agencies do a better job of improving their operations than others. Every program should strive to improve. There are some people who game the system, including the tax system. Some of these people are poor and some of them are extremely wealthy and everywhere in between. But tax statistics do not support the notion that there is a huge underclass of Americans who are permanently dependent on government support.

 

[jwoodie]

One way to look at this is to consider which portions of the tax law are used to reduce income tax liability to zero. Using SOI data the Brookings Institution provides the following:

---Tax breaks for the elderly (mainly partial exclusion of Social Security benefits) 44.0%
---Credits for working poor (mainly child tax credit and earned income tax credit 30.4%
---Exclusions for tax-free benefits (like health insurance) 6.0%
---Education credits 5.6%
---Exclusion for tax-exempt interest 5.1%
---Itemized deductions 5.0%
---Other tax credits 2.5%
---Favored treatment of capital gains & dividends 1.3%
_________________________________________________________________

You are comparing relative "portions of the tax Law" (i.e., number of pages devoted to each section)? The number of government employees, contractors, financial aid recipients and their dependents easily equals 40% of the population. The fact that some small percentage move in and out of these categories from year to year is immaterial.

 

[candycorn]

Alleging that the 47% contribute nothing (i.e. moochers) is as intellectually dishonest as a politician has been lately.

I believe that the Castro gentleman had it right; Romney doesn't know how good he has it.

 

[flacaltenn]

OldFart --- Good post and Welcome..

Coupla points..

1) The 47% is also a close approximation to population who have no contribution to the General Fund. Because the number of filed returns showing no liability is close to 76Million and studies have shown that expands to represent just about 45 or 46% of the population.

2) I really don't care HOW you whittled 47% down to 20%. If the argument is about "fair shares" then by definition --- half the folks pay O into General Fund and that's not a fair share. Granted, there should ALWAYS be exempt filers.. The percentage can be discussed. But when folks in the 2nd and 3rd higher quintiles of income start to fall into the 47% -- there can be no argument about "fairness" without including them in the discussion..

3) Romney's major mistake here was stepping into the big pile of poo that is Class Warfare. Instead of simply using this factoid to bolster a wider focus on "fairness". He made unconscienable stereotypes about WHO the 47% were and how he had written them off. Just as Obama has written off the Bitter Clingers.

When the Soc Sec crisis accelerates from a $40Bill deficit lately into a $100Bill deficit soon, the 57% is gonna be stuck with the bill. Because payments are gonna come NOT from the phoney Trust Fund -- but from these INCOME TAX PAYERS.. THAT -- represents a huge redistribution of money from the 57% to the 47%.. To solve this and other time bombs, we can't ask 1% of the population to solve these problems. We need more hands on deck..

P.S. I find taxing of ANY S.S. benefits irritating and cynical.. It's like taxing Lottery winners. The FEDs TAKE IN after tax monies and then tax the proceeds of the distribution. I'd like EVERYONE to have smaller tax assessments. But it's getting harder to give tax breaks when 47% are paying nothing in Income Tax to begin with..

 

[oldfart]

You are comparing relative "portions of the tax Law" (i.e., number of pages devoted to each section)?

You are mistaken, my post has nothing to do with the length of any section of the IRC. Every tax benefit comes under an appropriate section of the IRC; Sec 86 for example deals with the taxable portion of Social Security and RRA Tier I benefits. Brookings used SOI data to determine how many filers who ended up owing no income tax did so because of what Code section.

If you want to argue methodology, look up the report.

The number of government employees, contractors, financial aid recipients and their dependents easily equals 40% of the population.

Which again has nothing to do with my post. Government employees, like the Specrtre gunship crews training a quarter mile away from me right now on the gun range get paid for their work.

The fact that some small percentage move in and out of these categories from year to year is immaterial. Talk about missing the forest for the trees...

Some categories such as those over 65 are pretty stable. Others, like people who recieved EITC turn over pretty quickly. So what? My point is that the 47% figure is not an indication of dependency on the government.

 

[flacaltenn]

You are comparing relative "portions of the tax Law" (i.e., number of pages devoted to each section)?

You are mistaken, my post has nothing to do with the length of any section of the IRC. Every tax benefit comes under an appropriate section of the IRC; Sec 86 for example deals with the taxable portion of Social Security and RRA Tier I benefits. Brookings used SOI data to determine how many filers who ended up owing no income tax did so because of what Code section.

If you want to argue methodology, look up the report.

The number of government employees, contractors, financial aid recipients and their dependents easily equals 40% of the population.

Which again has nothing to do with my post. Government employees, like the Specrtre gunship crews training a quarter mile away from me right now on the gun range get paid for their work. I

The fact that some small percentage move in and out of these categories from year to year is immaterial.

Some categories such as those over 65 are pretty stable. Others, like people who recieved EITC turn over pretty quickly. So what? My point is that the 47% figure is not an indication of dependency on the government.

Uh Oldfart --- you may not have noticed (being "old" and all) but the reason we're lookin down the barrel of a Soc Sec/Medicare crisis is BECAUSE "categories such as over 65" are NOT stable at all.. About 10,000 a day joining those ranks..

I'm completely with ya about the 47% not being the same group "dependent on the govt".. But it's REALLY REALLY interesting to me that when you do the math and start adding up all those people you started to mention -- the military, city/state workers, Fed workers, contractors who's sole customer is govt, the unemployed on benefits, the retired govt workers on pensions, defense contractors etc ---- I believe you'd get to a really similiar number. Probably tip the scale at about 47% wouldn't it?

Remember ole Ross Perot's chart? When that number gets above 50% ----- we can just forget about trying to restrain the size and scope of Govt. Instead of the govt working for us --- we'll all be working for the govt..

 

[oldfart]

2) I really don't care HOW you whittled 47% down to 20%. If the argument is about "fair shares" then by definition --- half the folks pay O into General Fund and that's not a fair share.

I am perfectly happy debating the fairness of the tax system, but I think it is a little distorted to consider only income taxes. Most government services are actually paid for by sales and property taxes, not income taxes.

Granted, there should ALWAYS be exempt filers.. The percentage can be discussed. But when folks in the 2nd and 3rd higher quintiles of income start to fall into the 47% -- there can be no argument about "fairness" without including them in the discussion..

I'm not sure where the point leads to. A majority of the population does not pay excise taxes on tobacco or explosives, but that does not make those taxes inherently unfair. Discussions of fairness of revenue policy should include all sources of government revenue: taxes, fines, and fees included.

3) Romney's major mistake here was stepping into the big pile of poo that is Class Warfare. Instead of simply using this factoid to bolster a wider focus on "fairness". He made unconscienable stereotypes about WHO the 47% were and how he had written them off. Just as Obama has written off the Bitter Clingers.

I agree with you there!

When the Soc Sec crisis accelerates from a $40Bill deficit lately into a $100Bill deficit soon, the 57% is gonna be stuck with the bill. Because payments are gonna come NOT from the phoney Trust Fund -- but from these INCOME TAX PAYERS.. THAT -- represents a huge redistribution of money from the 57% to the 47%.. To solve this and other time bombs, we can't ask 1% of the population to solve these problems. We need more hands on deck..

I see we can have a really good conversation about the Trust Funds in the future. For now, let me just point out that the projections don't have the benefit levels going to zero (when the fund balance is zero, the system could pay out about 70% of projected benefit levels from current receipts and the the passing of the demographic bulge would eventually return the system to full benefits).

P.S. I find taxing of ANY S.S. benefits irritating and cynical..

When I got my Treasury card unemployment benefits and Social Security were completely untaxed. It was Reagan's idea to tax them to fund rate cuts on the upper end. Hell, I remember when there was a sick pay exclusion and when all interest was deductible. Given the choice, I think most taxpayers would rather go back to the tax codes of 50's (we did pretty well under Ike) or 1980.

I'd like EVERYONE to have smaller tax assessments. But it's getting harder to give tax breaks when 47% are paying nothing in Income Tax to begin with..

We have something like that in the tax code. It's called the Alternative Minimum Tax and if Congress doesn't fix things by January, it reverts to the 2000 rules and about 40 million middle class taxpayers will see their tax bill go up. It is a genuine "flat tax" and everyone hates it. When the CBO issued a report about five years ago the AMT was virtually the only part of the tax code they found that served no discernable purpose. The IRS National Taxpayer Advocate's #1 recommendation to Congress in 2008 was to abolish it.

Let's face it, just about everyone pays sales tax and property taxes (directly or as part of rent). This is what pays for police and fire protection, schoolteachers, state parks, and state and local court systems and prisons and jails. Why the fixation on everyone paying some income tax? Would everyone be happier with a 1% tax on all income with an offsetting sales tax reduction?

 

[oldfart]

But it's REALLY REALLY interesting to me that when you do the math and start adding up all those people you started to mention -- the military, city/state workers, Fed workers, contractors who's sole customer is govt, the unemployed on benefits, the retired govt workers on pensions, defense contractors etc ---- I believe you'd get to a really similiar number. Probably tip the scale at about 47% wouldn't it?

OK, if you added together all federal, state, and local employees, all employees of firms who have contracts with any level of government, all retirees, all disabled, etc. you have a lot of people. About 35% of all spending is done by some level of government. So what is the point? That we need to fire more policemen?

We can afford as a society whatever goods and services we are willing to pay for. No economy can consume more than it produces in the long run. We can debate what services we really want and we should vigorously root out waste and corruption and find better ways to produce goods and services, but that has nothing to do with demonizing government.

Want to save $50 billion a year? Get rid of Medicare Advantage. It costs 10% more that traditional Medicare and doesn't delivery any better service. Don't like all those working poor getting earned income credit? Go back to the old welfare system instead. Reality is that lots of things in this country are broken and need to be fixed or replaced. The hard part is that most of the simple easy solutions don't work. It takes a lot of hard work to get the details right and improve anything. The biggest barrier to doing that is our political climate where scoring points is deemed a substitute for solving problems.

I don't see an economic problem in this country that is not soluble. But solving them will require honest intellectual effort. So if we want to discuss fixing public education, or the Social Security trust funds, or health care financing, or our broken justice system, let's give it a shot.

 

[flacaltenn]

2) I really don't care HOW you whittled 47% down to 20%. If the argument is about "fair shares" then by definition --- half the folks pay O into General Fund and that's not a fair share.

I am perfectly happy debating the fairness of the tax system, but I think it is a little distorted to consider only income taxes. Most government services are actually paid for by sales and property taxes, not income taxes.

Don't want to talk about "other taxes". The topic is the 47% that don't contribute to the day to day functioning of the FEDERAL GOVT.. Not a tire for HumVee, not a pencil for a bureaucrat, not a dollar for Solyndra, not a penny for the Dept of Ed or 20 other departments.

If we DID talk about other taxes, you'd find my sense of "fairness" more than fair.

Granted, there should ALWAYS be exempt filers.. The percentage can be discussed. But when folks in the 2nd and 3rd higher quintiles of income start to fall into the 47% -- there can be no argument about "fairness" without including them in the discussion..

I'm not sure where the point leads to. A majority of the population does not pay excise taxes on tobacco or explosives, but that does not make those taxes inherently unfair. Discussions of fairness of revenue policy should include all sources of government revenue: taxes, fines, and fees included.


I agree with you there!



I see we can have a really good conversation about the Trust Funds in the future. For now, let me just point out that the projections don't have the benefit levels going to zero (when the fund balance is zero, the system could pay out about 70% of projected benefit levels from current receipts and the the passing of the demographic bulge would eventually return the system to full benefits).

There IS NO "balance" in the Trust Fund. It's been robbed. Nothing but an accounting fiction and the promise for FUTURE INCOME TAX PAYERS to pick up the bill. Which is another reason why 47% shouldn't be excused from cleaning up after the robbers. It's gonna be 53% writing those soc sec checks. Just like they are now picking up $40Bill/yr in the deficit that Soc Sec is running thanks to Obama stealing from the FICA premiums.

P.S. I find taxing of ANY S.S. benefits irritating and cynical..

When I got my Treasury card unemployment benefits and Social Security were completely untaxed. It was Reagan's idea to tax them to fund rate cuts on the upper end. Hell, I remember when there was a sick pay exclusion and when all interest was deductible. Given the choice, I think most taxpayers would rather go back to the tax codes of 50's (we did pretty well under Ike) or 1980.

I'd like EVERYONE to have smaller tax assessments. But it's getting harder to give tax breaks when 47% are paying nothing in Income Tax to begin with..

We have something like that in the tax code. It's called the Alternative Minimum Tax and if Congress doesn't fix things by January, it reverts to the 2000 rules and about 40 million middle class taxpayers will see their tax bill go up. It is a genuine "flat tax" and everyone hates it. When the CBO issued a report about five years ago the AMT was virtually the only part of the tax code they found that served no discernable purpose. The IRS National Taxpayer Advocate's #1 recommendation to Congress in 2008 was to abolish it.

Let's face it, just about everyone pays sales tax and property taxes (directly or as part of rent). This is what pays for police and fire protection, schoolteachers, state parks, and state and local court systems and prisons and jails. Why the fixation on everyone paying some income tax? Would everyone be happier with a 1% tax on all income with an offsetting sales tax reduction?

Obviously you don't place much value on the 26 or so Federal Agencies that LIVE off of Income Tax. That's why there's a fixation.. And the printing presses and tons of BONDS that are being floated to finance 40% of the Fed Budget.. Until you understand why there's a "fixation" on this problem ---- I can't believe you can seriously prescribe a solution...

Hell --- if you don't value the benefit those Agencies deliver --- we should start slashing pretty aggressively and let you live off LOCAL SERVICES funded by LOCAL taxes...

 

[Katzndogz]

As early as 1998 obama wanted to build a majority coalition of welfare recipients. He's made it to only 47%.


The full recording reveals that Obama saw welfare recipients and the working poor in Chicago as a “majority coalition” who could be leveraged politically. (RELATED: Pat Buchanan: “Fabian socialist” Obama “is a drug dealer of welfare&#8221

“What I think will re-engage people in politics is if we’re doing significant, serious policy work around what I will label the ‘working poor,’” he said, “although my definition of the working poor is not simply folks making minimum wage, but it’s also families of four who are making $30,000 a year.”

“They are struggling. And to the extent that we are doing research figuring out what kinds of government action would successfully make their lives better, we are then putting together a potential majority coalition to move those agendas forward.”



Read more: Full audio of 1998 Obama 'redistribution' speech reveals liberal positions on gun control, health care, welfare reform | The Daily Caller

 

[flacaltenn]

As early as 1998 obama wanted to build a majority coalition of welfare recipients. He's made it to only 47%.


The full recording reveals that Obama saw welfare recipients and the working poor in Chicago as a “majority coalition” who could be leveraged politically. (RELATED: Pat Buchanan: “Fabian socialist” Obama “is a drug dealer of welfare”)

“What I think will re-engage people in politics is if we’re doing significant, serious policy work around what I will label the ‘working poor,’” he said, “although my definition of the working poor is not simply folks making minimum wage, but it’s also families of four who are making $30,000 a year.”

“They are struggling. And to the extent that we are doing research figuring out what kinds of government action would successfully make their lives better, we are then putting together a potential majority coalition to move those agendas forward.”



Read more: Full audio of 1998 Obama 'redistribution' speech reveals liberal positions on gun control, health care, welfare reform | The Daily Caller

Friendly suggestion.. Tred carefully here. That particular 47% number are NOT all Obama dependents. It includes a significant chunk of Conservative support that isn't the "give-me" mentality..

I would hope that Repubs could leave the Class War to the leftists. But obviously now -- they want to become the Class War..

Remember --- those that are deeply on welfare and not producing for whatever reasons, -- that percentage isn't even REQUIRED to file an income tax return.. So that demographic isn't even IN the 47%....

 

[oldfart]

Don't want to talk about "other taxes". The topic is the 47% that don't contribute to the day to day functioning of the FEDERAL GOVT.. Not a tire for HumVee, not a pencil for a bureaucrat, not a dollar for Solyndra, not a penny for the Dept of Ed or 20 other departments.

OK, if we ignore the payroll taxes that fund the various trust funds, I will agree that most of the general fund expenses are paid out of income tax proceeds. I guess we just disagree on the meaning of that. I don't see any great reason why that burden should not be allocated on an ability to pay basis.

There IS NO "balance" in the Trust Fund. It's been robbed. Nothing but an accounting fiction and the promise for FUTURE INCOME TAX PAYERS to pick up the bill. Which is another reason why 47% shouldn't be excused from cleaning up after the robbers. It's gonna be 53% writing those soc sec checks. Just like they are now picking up $40Bill/yr in the deficit that Soc Sec is running thanks to Obama stealing from the FICA premiums.

It's true that the Social Security trust funds are invested in US Treasury securities. They always have been since 1936. This is not peculiar to Obama, it's also true of FDR, Harry Truman, Ike, JFK, LBJ, Dick Nixon, Gerry Ford, Jimmy Carter, Ronald Reagan, Bush 41, Clinton, and Bush 43. If this is an "accounting fiction" it is shared by China and about 250 other countries which use Treasury securities as a major part of their foreign currency reserves.

As I mentioned before, we could pay 70% of current benefit levels for awhile when there are no bonds left in the trust funds and eventually demographic changes would allow us to return to full funding benefit levels. If you are suggesting that the US government would default on its bonds held by the trust funds, I ask you if at the same time the governent would default on all of its debt? Would we stop redeeming savings bonds and Treasury bills? An actual default would be a very big deal; and the effect on the trust funds would e the least of our problems. Or do you think we should selectively default so we pay the Chinese and big banks holding Treasury securities while saying "sorry" to retirees?

Obviously you don't place much value on the 26 or so Federal Agencies that LIVE off of Income Tax. That's why there's a fixation.. And the printing presses and tons of BONDS that are being floated to finance 40% of the Fed Budget.. Until you understand why there's a "fixation" on this problem ---- I can't believe you can seriously prescribe a solution...

Hold on. I don't mean to raise your blood pressure. I personally like the Park Service and having the Feds chase down the source of salmonella outbreaks. I agree that the best way to fund these is an income tax. I just don't view a progressive income tax as "the end of civilization as we know it".

 

[Old Rocks]

Argue the specifics all that you want. The upshot is that the general population judged what he meant, and now he is behind the President even in North Carolina. One more dumb statement, and he may start losing even 'safe' states.

In the meantime, many Senate and House seats that were previously 'safe' for the GOP are now in doubt. Thank You, Mitt, Thank You!

 

[flacaltenn]

Uh -Oh -- Oldfart there's a problem we need to chat about..

It's true that the Social Security trust funds are invested in US Treasury securities. They always have been since 1936. This is not peculiar to Obama, it's also true of FDR, Harry Truman, Ike, JFK, LBJ, Dick Nixon, Gerry Ford, Jimmy Carter, Ronald Reagan, Bush 41, Clinton, and Bush 43. If this is an "accounting fiction" it is shared by China and about 250 other countries which use Treasury securities as a major part of their foreign currency reserves.

As I mentioned before, we could pay 70% of current benefit levels for awhile when there are no bonds left in the trust funds and eventually demographic changes would allow us to return to full funding benefit levels. If you are suggesting that the US government would default on its bonds held by the trust funds,

Look Oldfart -- We need to stop here.. I didn't want to be the one to break this to ya..

But that myth about the Trust Fund being "invested in Treasury Bonds" ----- PURE horsepucky..
There is NOTHING OF VALUE in the "trust fund".. It contains non-negotiable, non-transferable InterAgency memo notes. Essentially IOUs.. And they aren't redeemed. Current INCOME TAX PAYING citizens will cover any SS deficit or NEW TREASURY DEBT will be issued to cover the shortfalls..

Don't take my word for it.. Take your pick ---- CBO or the horse's ass...

CBO | Federal Debt and Interest Costs

Gross debt, which comprises federal debt held by the public plus Treasury securities held by federal trust funds and other government accounts, is sometimes used to evaluate the government's overall fiscal situation. At the end of 2010, gross federal debt totaled $13.5 trillion--the $9.0 trillion in debt held by the public plus $4.5 trillion in debt held by government accounts. More than half of the latter amount is held by the Social Security trust funds. Because those trust funds and other government accounts are part of the federal government, transactions between them and the Treasury are intragovernmental; that is, the government securities in those funds are an asset to the individual programs but a liability to the rest of the government. The resources needed to redeem the government securities in the trust funds and other accounts in some future year must be generated from taxes, income from other government sources, or borrowing by the government in that year.

http://www.socialsecurity.gov/history/pdf/tr09summary.pdf

The combined difference grows each year, so that by 2016, net revenue
flows from the general fund would total $369 billion (1.8 percent of
GDP). The positive amounts that begin in 2016 for OASDI, and started in
2008 for HI, initially represent payments the Treasury must make to the
trust funds when assets are depleted to help pay benefits in years prior to
exhaustion of the funds. Neither the redemption of trust fund bonds, nor
interest paid on those bonds, provides any new net income to the Treasury,
which must finance redemptions and interest payments through
some combination of increased taxation, reductions in other government
spending, or additional borrowing from the public.

See -- the Congress didn't BUY BONDS on the market when they stole that surplus. They didn't even ISSUE Treasury Bonds to cover it.. They put an paper entry into the books and let US PAY TWICE for those Soc Sec dollars..

And seeing as how you don't believe that we ALL need to contribute to the DOD or Homeland Security or Dept of Education or Dept of Energy or GM buyouts or Windmill subsidies === ad nauseum -- WE AT LEAST need to agree that the 47% are ALSO not the ones fixing the Soc Sec problem that belongs TO ALL OF US...

And my reference to OBAMA STEALING the FICA premiums ???? He's not doing what EVERY president since Johnson has done as you suggested. HE INVENTED the cynical practice of STEALING from the PREMIUMS (since there is no more surplus to steal) so that he could CLAIM he's Robin Hood giving "tax breaks" to the little guy..

But he helped Soc Sec over the cliff and into bankruptcy about 5 years early with this ploy. Because now --- SS is running about a $40Bill/yr deficit which is NOT COMING from the Trust Fund --- it's coming out of tthe pockets of the 53% that DO pay income tax. A spectacular accomplishment of income redistribution by the Class Warrior in Chief..

 

[CrusaderFrank]

Dems have been building a permanent underclass since FDR

 

[Wiseacre]

Pointing fingers at people who don't pay income taxes is not a lot different from pointing fingers at the top 2% for not paying enough either. It's both sides of class warfare and it ain't doing us any good. Damned if I know why we can't reform the tax code to pull out the tax breaks and loopholes and special exemptions, that would make it a lot fairer for starters. How come I don't hear democrats loudly calling for that, they seem to want fairness so much. Know why? Cuz they want to serve their own special interests as much as the repubs do. Everybody wants somebody else to take a hit.

And BTW, I am so tired of all the emphasis on higher taxes, as though it matters a tinker's damn. Jesus H. Christ, we're facing yearly deficits of over a trillion dollars but all Obama and the democrats can talk about is allowing the Bush tax cuts to expire on the top 2%. So you get what, maybe 80 billion in more revenue? MAYBE? Balance that against over a trillion in annual debt, it's like pissing on a forest fire for all the difference it'll make.

So what happens? We go into debt, deeper and deeper. You do know that interest rates will never stay low forever. They never have, sooner or later they will go up and when they do we will be royally screwed. Actually, it'll be our kids and grandkids, I just don't understand how we can possibly be that irresponsible and self centered.

 

[oldfart]

Damned if I know why we can't reform the tax code to pull out the tax breaks and loopholes and special exemptions, that would make it a lot fairer for starters.

I understand your frustration. Every goodie in the tax code has a constituency (some of which are not what they seem!). Every constituency has lobbyists, who have lots and lots of money. Public officials are not for sale, but 80% of them can be rented for a vote now and again. There are not a lot of people who understand much of the tax code, and it is pretty easy to slip in a sop for your favorite home town buddy without anyone noticing. The smart players don't even bother with the elected officials; they deal with the staffers who do the actual drafting.

Personally I think you and I and any randomly selected group of Americans could do a better job of reforming the tax code, but we have to try to do it through Congress. As long as the political system is for sale and broken, the tax code is going to be ugly.

How come I don't hear democrats loudly calling for that, they seem to want fairness so much. Know why? Cuz they want to serve their own special interests as much as the repubs do. Everybody wants somebody else to take a hit.

Believe me, Democrats are not happy with the tax code either. They just realize that great sound bites and simple sweeping solutions don't work. The devil is in the details.

And BTW, I am so tired of all the emphasis on higher taxes, as though it matters a tinker's damn. Jesus H. Christ, we're facing yearly deficits of over a trillion dollars but all Obama and the democrats can talk about is allowing the Bush tax cuts to expire on the top 2%. So you get what, maybe 80 billion in more revenue? MAYBE? Balance that against over a trillion in annual debt, it's like pissing on a forest fire for all the difference it'll make.

If you have the political will, you can squeeze enough big bucks out of loopholes ( also known as "economic incentives to promote growth and fairness") to at least get to a balanced budget when revenues return to a more normal level (like 6% unemployment or under).

So what happens? We go into debt, deeper and deeper. You do know that interest rates will never stay low forever. They never have, sooner or later they will go up and when they do we will be royally screwed. Actually, it'll be our kids and grandkids, I just don't understand how we can possibly be that irresponsible and self centered.

You're right that interest rates will rise in the future and servicing the public debt will become more challenging. With decent economic growth, it will be a manageable problem. Without it, we are all screwed anyway.

The idea that the debt is transferred from one generation to another is a bit deceiving. We also transfer the stock of capital (physical capital, infrastructure, human capital, and institutional infrastructure like commercial law) to the next generation. The pieces of paper don't really matter that much; if we give them a capital stock they can use to be productive, the paper debt, governmental and private, can be dealt with. In twenty years I don't want bonds or pensions, or gold; I want affordable housing for elderly, good medical care, and the resources to afford travel and all the other toys I intend to become addicted to.

 

[Mr Natural]

So roughly every other person is on the dole?

I smell bullshit.

 

[Leweman]

No ... but the deaths of four American's are just "bumps in the road"

 

[CrusaderFrank]

No ... but the deaths of four American's are just "bumps in the road"

under the rug, they're no longer even on the road.