U.S. Taxpayers on the Hook for $9.7 Trillion

Discussion in 'Congress' started by ScreamingEagle, Feb 10, 2009.

  1. ScreamingEagle
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    ScreamingEagle Gold Member

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    The Credit Crisis: U.S. Taxpayers on the Hook for $9.7 Trillion -- Seeking Alpha

    As the government has bailed out various companies, guaranteed debt, bought commercial paper, etc, in response to the credit crisis, one of the big questions has been: "how much is all of this going to cost the taxpayer?" Well we now have a very disturbing answer: "$9.7 Trillion."

    (From Bloomberg): "Feb. 9 (Bloomberg) -- The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages.

    The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged up to $5.7 trillion more. The Senate is to vote this week on an economic-stimulus measure of at least $780 billion. It would need to be reconciled with an $819 billion plan the House approved last month.

    Only the stimulus bill to be approved this week, the $700 billion Troubled Asset Relief Program passed four months ago and $168 billion in tax cuts and rebates enacted in 2008 have been voted on by lawmakers. The remaining $8 trillion is in lending programs and guarantees, almost all under the Fed and FDIC. Recipients’ names have not been disclosed.

    “We’ve seen money go out the back door of this government unlike any time in the history of our country,” Senator Byron Dorgan , a North Dakota Democrat, said on the Senate floor Feb. 3. “Nobody knows what went out of the Federal Reserve Board, to whom and for what purpose. How much from the FDIC? How much from TARP? When? Why?”

    ......

    Now the first thing to keep in mind is that we're actually at risk for an amount that's far greater than $9.7 trillion, because it's all borrowed money and you have to add interest expense to the total. Furthermore the cost of servicing the debt (even if we're only on the hook for say 25-50%) will impact us in other ways, whether it's budget cuts, higher taxes, etc, etc.
     
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  2. ScreamingEagle
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    ScreamingEagle Gold Member

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    This makes all the fuss about the 800 billion$ seem like a diversion....
     
  3. auditor0007
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    auditor0007 Gold Member

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    The bottom line is very simple. At some point in the not so distant future, either the government will be forced into cutting the budget drastically, or taxes will be increased significantly. Most likely, it will involve some type of combination where entitlements are cut and taxes are increased.

    For those of us still in our prime, and those who are younger, we best be prepared for this. Quite honestly, if we continue to spend like this, the debt will become so large that those who are left with the bill may turn it against us. I know if I was young and found out I had to pay twice as much in taxes as past generations, I'd vote to cut retirement benefits drastically. We need to be wary of what the next couple of generations might do if we can't get our house in order now.
     
  4. toomuchtime_
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    toomuchtime_ Gold Member

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    I believe it was always intended as a diversion. Every economist knows that the recession can only be turned by restoring liquidity to the financial system, but the Democrats have been running on a populist platform that they justify with class warfare rhetoric, so how can they now tell the public that they are going to give all these bankers they have been characterizing as greedy and incompetent trillions of dollars so that these same bankers can get us out of the recession?

    So Obama tells Pelosi to write up an $800 billion box of goodies and he bangs away at executive pay and takes swipes at the Bush administration's handling of the first part of the TARP money to set up the public for what we all know is coming, requests for trillions of dollars to give to the bankers he expects to save the US from the recession. Make no mistake about, Obama is not talking about nationalizing the banks or exerting tight oversight about how the bankers handle the money or having the Treasury decide how these trillions will be spent - he is saying that the same bankers he has characterized as greedy and incompetent will make the decision about how best to use the money and he is trusting they will make the right decisions to get us out of this recession.
     
  5. toomuchtime_
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    toomuchtime_ Gold Member

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    We can fix our retirement benefits, SS and Medicare, very simply and forever. Instead of having a fixed retirement age, when some one reaches a certain age, say 62 or 65, he/she should receive a letter from SS in which he would be told that based on the taxes he paid in, his monthly benefit would be such and such if he retires at 65, and this amount if he retires at 66 and so on perhaps through age 75 or later. Since the monthly benefit would be determined in the same way as a lump sum annuity payable for life would be, after a certain period of adjustment SS would never run out of money or run huge deficits, and everyone would know well ahead of time what the best age would be for him/her to retire.

    Medicare benefits would begin when SS benefit payments began, and since many people can be expected to delay retirement in order to get a larger monthly benefit, Medicare costs would also be reduced. This is how SS should have been set up in the first place.
     
  6. auditor0007
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    auditor0007 Gold Member

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    They already do this with SS. My father waited until he was 70 to start collecting SS benefits so he would get a bigger check. As it stands now, that's only a spit in the bucket. The other problem is that companies do not like keeping older people employed if they have to pay for their healthcare. Premiums are determined by the average age of the companies employees. The higher the average age of those employees at any given company, the higher the premiums. This creates a disincentive to keeping older employees.

    These are the types of issues that must be looked at as our population continues to get older.
     
  7. toomuchtime_
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    toomuchtime_ Gold Member

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    What I'm suggesting is different. Today, the benefit you qualify for is based on what you have paid in but determined by a formula that does not actually take into consideration what the sum of your taxes plus interest would actually be able to cover. I'm suggesting the benefits you would be eligible for would be actuarially determined based only on the expected lump sum of your taxes plus interest less, of course, the unfunded benefits SS also takes responsibility for such as SSI.
     
    Last edited: Feb 10, 2009
  8. auditor0007
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    auditor0007 Gold Member

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    Basically, your saying that we should reduce benefits, because the vast majority of people now collect substantially more than they put in. The biggest problem with this is that the people who would be affected the most would be lower income earners. Higher income earners would not be affected because they have other retirement resources. In the end, those lower income earners would be in much worse shape which would create the need for government to find additional funding for these retirees, and that puts us right back to square one.
     
  9. toomuchtime_
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    toomuchtime_ Gold Member

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    Actually, it would stop unintentional increases in SS. If you think about it, every time your life expectancy increases, the total you will receive from SS increases, and it's this unintentional increase that has gotten SS in trouble. Now we all know the only way to deal with the expected shortfall in SS is to either raise taxes or reduce benefits or raise the retirement age. I'm suggesting a mechanism that would automatically make the age/benefit adjustment without requiring continuing acts of Congress on a crisis basis.

    If SS had originally been set up this way, it never would have gotten in trouble, but neither would it have been a very popular idea at the time because hardly anyone was expected to live long enough to collect very much then. How do you think it would have been received by the public if FDR had said, "Look, I've got this great idea. You'll pay taxes to fund a retirement benefit all through your working life, and then you'll retire and collect a small benefit for a few months before you die"? Would that have gotten him a third term?
     
  10. indago
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