Taxes, Spending, the Fiscal Cliff, and Austerity

[boedicca]

The graph shows that 819 billion dollars were collected in SS taxes - with the employee cut in effect and that the amount paid out was 725 billion. I don't know how much clearer you can get than that.
Believe what you want to, I try to keep from arguing matters of faith with logic as belief trumps the facts every time.

Here's what the Trustees are saying now:

The long-run actuarial deficits of the Social Security and Medicare programs worsened in 2012, though in each case for different reasons. The actuarial deficit in the Medicare Hospital Insurance program increased primarily because the Trustees incorporated recommendations of the 2010-11 Medicare Technical Panel that long-run health cost growth rate assumptions be somewhat increased. The actuarial deficit in Social Security increased largely because of the incorporation of updated economic data and assumptions. Both Medicare and Social Security cannot sustain projected long-run program costs under currently scheduled financing, and legislative modifications are necessary to avoid disruptive consequences for beneficiaries and taxpayers. ...

Trustees Report Summary


But I suppose it will take the system collapsing before you are willing to acknowledge it needs serious reform.

 

[saveliberty]

The graph shows that 819 billion dollars were collected in SS taxes - with the employee cut in effect and that the amount paid out was 725 billion. I don't know how much clearer you can get than that.
Believe what you want to, I try to keep from arguing matters of faith with logic as belief trumps the facts every time.

Its like a balloon payment loan idiot.

 

[Wiseacre]

The graph shows that 819 billion dollars were collected in SS taxes - with the employee cut in effect and that the amount paid out was 725 billion. I don't know how much clearer you can get than that.
Believe what you want to, I try to keep from arguing matters of faith with logic as belief trumps the facts every time.

Well I believe I'll take the SSTF trustees' words over your pictures anytime.

 

[JQPublic1]

http://www.cbo.gov/sites/default/files/cbofiles/attachments/06-05-Long-Term_Budget_Outlook_2.pdf


I couldn't give up on researching this hot topic. Looking to the Congressional Budget Office, I found this excerpt at their website. The CBO website makes good use of pdf files and renders a much clearer picture of the long term budget outlook for social security than the Trustees Report does and more. See chapter 4!

From the CBO:

Interest on the trust funds’ balances is credited
to those funds, but because the interest transactions
represent payments from one part of the government
(the general fund of the U.S. Treasury) to another (the
Social Security trust funds), they do not affect federal
budget deficits or surpluses.

Considering the above, It is puzzling that the Republicans want to put Social Security on the bargaining table in talks about the federal deficit. Social Security may need reforming but that reform ought not to be tied to talks about the federal deficit! That was the point Reagan was making in the link I provided earlier and it is the point that I am making now! I think the CBO backs Reagan and me!

 

[Wiseacre]

http://www.cbo.gov/sites/default/files/cbofiles/attachments/06-05-Long-Term_Budget_Outlook_2.pdf


I couldn't give up on researching this hot topic. Looking to the Congressional Budget Office, I found this excerpt at their website. The CBO website makes good use of pdf files and renders a much clearer picture of the long term budget outlook for social security than the Trustees Report does and more. See chapter 4!

From the CBO:

Interest on the trust funds’ balances is credited
to those funds, but because the interest transactions
represent payments from one part of the government
(the general fund of the U.S. Treasury) to another (the
Social Security trust funds), they do not affect federal
budget deficits or surpluses.

Considering the above, It is puzzling that the Republicans want to put Social Security on the bargaining table in talks about the federal deficit. Social Security may need reforming but that reform ought not to be tied to talks about the federal deficit! That was the point Reagan was making in the link I provided earlier and it is the point that I am making now! I think the CBO backs Reagan and me!

What you've written is exactly true! Interest transaction payments from one part of gov't to another does not affect the budget deficit. I said that myself a few times in this thread I think. What DOES affect the budget deficit is when the SSTF has a deficit where less money comes in from employees paying in than benefits going out to retirees. Which as the trustees said in their report has occurred in 2010 and 2011 and is expected to worsen in the coming years. Which is why making structural changes to that program should be done.

 

[JQPublic1]

http://www.cbo.gov/sites/default/files/cbofiles/attachments/06-05-Long-Term_Budget_Outlook_2.pdf


I couldn't give up on researching this hot topic. Looking to the Congressional Budget Office, I found this excerpt at their website. The CBO website makes good use of pdf files and renders a much clearer picture of the long term budget outlook for social security than the Trustees Report does and more. See chapter 4!

From the CBO:

Interest on the trust funds’ balances is credited
to those funds, but because the interest transactions
represent payments from one part of the government
(the general fund of the U.S. Treasury) to another (the
Social Security trust funds), they do not affect federal
budget deficits or surpluses.

Considering the above, It is puzzling that the Republicans want to put Social Security on the bargaining table in talks about the federal deficit. Social Security may need reforming but that reform ought not to be tied to talks about the federal deficit! That was the point Reagan was making in the link I provided earlier and it is the point that I am making now! I think the CBO backs Reagan and me!

What you've written is exactly true! Interest transaction payments from one part of gov't to another does not affect the budget deficit. I said that myself a few times in this thread I think. What DOES affect the budget deficit is when the SSTF has a deficit where less money comes in from employees paying in than benefits going out to retirees. Which as the trustees said in their report has occurred in 2010 and 2011 and is expected to worsen in the coming years. Which is why making structural changes to that program should be done.

I read all of your posts in this thread and I don't remember you saying anything like the CBO excerpt I just posted. On the contrary, your response to the link showing Reagan saying social Security had nothing to do with the federal deficit was:" You do know that things have changed in 30 years, don't you?"

Even more enigmatic is this statement:

What DOES affect the budget deficit is when the SSTF has a deficit where less money comes in from employees paying in than benefits going out to retirees. Which as the trustees said in their report has occurred in 2010 and 2011 and is expected to worsen in the coming years.

The CBO has that same information on their site but they didn't add your wishful thinking
to their synopsis. The difference between payroll taxes collected and expenditures is to what you are referring; and, yes, it was listed as a deficit on that poorly written Trustee's report. But even the Trustees Report stopped short of proclaiming that "shortfall" as contributing to the national or federal deficit. You are caught up in the belief that tax payers are bailing out the SSTF because of that "shortfall." That is NOT the case. The interest payments that helped the SSTF meet its obligations in 2011 when the shortfall occured did not affect the federal deficit at all. That CBO excerpt explains that perfectly!


Nice try, but I gotcha!

 

[Wiseacre]

http://www.cbo.gov/sites/default/files/cbofiles/attachments/06-05-Long-Term_Budget_Outlook_2.pdf


I couldn't give up on researching this hot topic. Looking to the Congressional Budget Office, I found this excerpt at their website. The CBO website makes good use of pdf files and renders a much clearer picture of the long term budget outlook for social security than the Trustees Report does and more. See chapter 4!

From the CBO:

Interest on the trust funds’ balances is credited
to those funds, but because the interest transactions
represent payments from one part of the government
(the general fund of the U.S. Treasury) to another (the
Social Security trust funds), they do not affect federal
budget deficits or surpluses.

Considering the above, It is puzzling that the Republicans want to put Social Security on the bargaining table in talks about the federal deficit. Social Security may need reforming but that reform ought not to be tied to talks about the federal deficit! That was the point Reagan was making in the link I provided earlier and it is the point that I am making now! I think the CBO backs Reagan and me!

What you've written is exactly true! Interest transaction payments from one part of gov't to another does not affect the budget deficit. I said that myself a few times in this thread I think. What DOES affect the budget deficit is when the SSTF has a deficit where less money comes in from employees paying in than benefits going out to retirees. Which as the trustees said in their report has occurred in 2010 and 2011 and is expected to worsen in the coming years. Which is why making structural changes to that program should be done.

I read all of your posts in this thread and I don't remember you saying anything like the CBO excerpt I just posted. On the contrary, your response to the link showing Reagan saying social Security had nothing to do with the federal deficit was:" You do know that things have changed in 30 years, don't you?"

Post #32

Even more enigmatic is this statement:

What DOES affect the budget deficit is when the SSTF has a deficit where less money comes in from employees paying in than benefits going out to retirees. Which as the trustees said in their report has occurred in 2010 and 2011 and is expected to worsen in the coming years.

The CBO has that same information on their site but they didn't add your wishful thinking
to their synopsis. The difference between payroll taxes collected and expenditures is to what you are referring; and, yes, it was listed as a deficit on that poorly written Trustee's report. But even the Trustees Report stopped short of proclaiming that "shortfall" as contributing to the national or federal deficit. You are caught up in the belief that tax payers are bailing out the SSTF because of that "shortfall." That is NOT the case. The interest payments that helped the SSTF meet its obligations in 2011 when the shortfall occured did not affect the federal deficit at all. That CBO excerpt explains that perfectly!

You are mistaken sir, when the SSTF ha a shortfall, the taxpayers have to pay for the redeemed payments from the General Fund.

Nice try, but I gotcha!

I realize you guys on the left believe that money magically appears out of nowhere, but the truth is that when the SSTF runs a deficit in a given year that money has to come from the taxpayers because that deficit is covered by the US Treasury General Fund. There is no lockbox somewhere with trillions of dollars in it.

 

[catatomic]

According to the Silicon Valley Biz Blog,

Barack has offered 1.6 trillion in new yax revenue - including an immediate tax hike on high income earners, and $400 billion in spending cuts (I can't post a link yet).

The GOP today or yesterday (John Boehner) proposed $800 billion (also according to the WSJ). in new tax revenue [closing tax loopholes (I never knew that would bring in so much)], and $1.4 trillion in spending cuts and savings (medicare, social security and farm subsidies).

Also, cnn has said that with energy, investment from making a decision, manufacturing jobs, and a growing real estate market, we could see a renaissance if we only get this deal right. I do not know if this is already included in the math.

I also do not know if even $2.2 trillion over 10 years is better than going off the cliff.

 

[saveliberty]

Despite your efforts to muddy the waters JGPublic1, both parties admit Social Security needs reforming in order to keep it afloat. The Democrats just want to make the Republicans responsible for it. Some leadership there.

 

[PaulS1950]

Since the national debt is growing at over 1 trillion dollars a year I doubt that 2 trillion dollars in cuts and taxes over ten years is going to make much difference. In the last year of his first term the Obama administation added 3 trillion dollars to the debt.

Its already over folks - we are hemaraging our life away and darn few are paying attention. In less than twenty years we will go bankrupt. A nation cannot go on spending trillions more than they bring in in taxes - borrowing what they don't bring in and paying only the interest on the loans. Eventually you have to borrow to pay the interest - Bankrupt!

 

[catatomic]

The sooner we help it the better!

Say we have 300million people and a 16trillion dollar deficit. Say it goes up 1trillion. Then we owe, on average, 6.25% more The amount we owe goes from $53,000 to $57,000.!

 

[Trajan]

Clinton raised taxes on the rich in '92. And the economy cratered, right? Not quite. Longest sustained economic boom in our naton's history.

Then Bushie Baby cut taxes, while engaged in two wars. And the economy did great, right? LOL. 16 trillion in homeowners value and 401Ks lost in two years, from 2007 to 2009.

So, what are we to believe? Recent history or rightwing ideology?

you answered your own post. and don't even know it- this is not 1992. or 1996 or 99....Bush did run 2 wars off budget, not that that matters in the long run, debt is debt..
The economy until the housing market crashed actually did do well, federal receipts were up, but, again, it went out the door and he borrowed too.


Income tax revenue is up 26% over the last 2 years, meanwhile, obama is attempting to enshrine a stimulus and a 1/4 like spending wedge in every budget as he has done the last 3 years and wants someone to pay for it, well, 83Bn dollars will not run the gov. for more than a week and a half, thats what the rate increases gets us....thats an answer to the issue??

And lets be clear what you don't hear discussed is that a) 250k is now classified as 'rich', and b) there already is a 3.8% tax increase on all investment income baked into Obamacare anyway, now we want to add another 4.8% on their income and raise cap gains rates too aside from the obamacare increase?

Obama said in 2010, at the same point in time then that he signed the bush cuts to an extension becasue the economy was to weak, well, its just as fragile now and despite and we got that 26% without it.


go look at what the UK yielded on their taxes on the rich...they dropped 60% of their 'millionaires ' in a year and a half. You tax- money flees. That 83 Bn will be for the first year only, then it will drop and investment which is weak now will drop further, its not the answer. Tax reform is.

 

[oldfart]

The CBO has a very readable report out dated November 22 covering the messy mechancs of infows and outflows of government funds and the trust funds at
CBO | Federal Debt and the Statutory Limit, November 2012

Of the $16.3 trillion in outstanding debt subject to limit, $11.5 trillion is held by the public and $4.8 trillion is held by government accounts...
Debt held by government accounts—Government Account Series (GAS) securities—is dominated by the transactions of a few large trust funds. When a trust fund receives cash that is not immediately needed to pay benefits or to cover the relevant program’s expenses, the Treasury credits the trust fund with that income by issuing GAS securities to the fund. The Treasury then uses the cash to finance the government’s ongoing activities. When revenues for a trust fund program fall short of expenses, the reverse happens: The Treasury redeems some of the GAS securities. The crediting and redemption of securities between the Treasury and trust funds are intragovernmental in nature but directly affect the amount of debt subject to limit.

Emphasis is mine.

The timing of major monthly outlays is

Payments to Medicare Advantage and Medicare Part D plans: on the first day of the month (about $17 billion);
Social Security benefits: on the third day of the month (about $25 billion), with subsequent smaller payments on three Wednesdays per month (about $11 billion each);
Pay for active-duty members of the military and benefit payments for civil service and military retirees, veterans, and recipients of Supplemental Security Income: on the first day of the month (about $25 billion); and
Interest payments: around the 15th and the last day of the month (with some variation).

On the revenue side

Deposits (mostly tax revenues) are relatively smooth throughout each month except for large payments of nonwithheld taxes occurring near specified dates. The largest payments occur in April, when individual tax returns are due. Estimated taxes from corporations and individuals are due at four different points in the year, including mid-December (for most corporations) and mid-January (for individuals). In addition, corporate income tax receipts rise in March, when most corporations’ tax returns are due.

A lot of these transactions tend to cancel each other out.

On net, the amount of outstanding GAS securities tends to fluctuate very little during a month, except when redemptions occur to reflect the payment of benefits for programs like Social Security and Medicare. (Those trust funds account for about two-thirds of the government’s trust fund balances.) However, those redemptions of GAS securities, which reduce the amount of debt subject to limit, are normally offset by additional borrowing from the public to obtain the cash to make actual payments. Most GAS securities pay interest in the form of additional securities on June 30 and December 31. (Recent payments have amounted to about $80 billion on each day.)

If you have an office pool on when the "cliff" arrives, you should be aware of the following dates:

Cash Inflows to the Treasury
Mid-January: receipt of nonwithheld individual income tax payments (which have averaged about $45 billion over the past few years) and
Mid-March: receipt of corporate tax payments (which have averaged about $23 billion over the past few years).
Cash Outflows from the Treasury
February 1: payments for Social Security benefits (ordinarily made on the 3rd of the month, which is a Sunday), Medicare Advantage, Medicare Part D, certain other benefits, and pay for active-duty members of the military (recently about $67 billion);
February 6, 13, and 20: additional Social Security benefit payments (recently about $11 billion each time);
February 15: a large interest payment on publicly issued securities (previously over $30 billion);
March 1: payments for Social Security benefits (ordinarily made on the 3rd of the month, which again is a Sunday), Medicare Advantage, Medicare Part D, certain other benefits, and pay for active-duty members of the military (recently about $67 billion);
March 6, 13, and 20: additional Social Security benefit payments (recently about $11 billion each); and
February and March: ordinarily, substantial payments of tax refunds (amounts vary).

The wild card is tax refunds; so if you have money on the bet, check the IRS website to track the refunds issued week by week. If we are close to the debt ceiling, the IRS will probably delay income tax refunds to stay under the limit. I'm betting (literally, we have an office pool) that this can float things until the April 15 tax payments on balance due returns comes in. So I'm picking May 14 as the actual "drop-dead" or default date.
What's your pick?

 

[Sactowndog]

So you ask, what does this have to do with our fiscal cliff? Well, the president is asking for tax hikes and the republicans are asking for spending cuts. Hard to say what we'll end up with, but I'm pretty sure it'll be weighted more to the tax hike side than the spending cut side. In a recent article appearing the USAToday by Matthew Melchiorre of the Competitive Enterprise Institute, the current fiscal cliff as it is now calls for 4 times the amount of tax increases than spending cuts.

snippet:

Beginning next year, $136 billion of spending cuts are scheduled to take place according to the Congressional Budget Office (CBO). These include the mandatory sequestration of defense and discretionary spending resulting from the failure of last year's bipartisan "supercomittee" to agree on a 10-year plan to cut the federal budget by $1.5 trillion. They also include the end of unemployment benefit extensions and reductions in Medicare reimbursement rates. Keep in mind these aren't real cuts in overall government spending, but merely reductions in its rate of growth.

They are also trivial compared to the $532 billion of scheduled tax increases that CBO also reports. Most of this comes from income tax rates reverting back to pre-2001 levels and the alternative minimum tax expanding deeply into middle-class households. That's roughly four dollars of tax increases for every one dollar of so-called spending cuts.

Column: America must avoid Europe's toxic tax remedy

It is true that significant spending cuts will hurt short term. But it needs to be done, the big deficit drivers are defense, medicare and medicaid, and social security. These programs must be reined in to be sustainable not just for the seniors who need them now but also for younger generations who will need them later. Combine that with tax reform that increases revenue and a cap on gov't spending and we're in business. I think this is Obama's big chance to make his mark in American history; if he can lead us to reasonable and workable solutions that will succeed long term, he could go down as one of our best presidents. If he doesn't, he'll take his place next to Jimmy Carter.

The numbers are indisputable. Spending must be cut and the areas such as Medicare, Medicaide, social security and defense are the major drivers. This can't be disputed by anyone who had seen the numbers.

But you can't blame Obama alone. The Republican Party only cares about tax cuts and doesn't really care about the deficit. This is not the Republican Party of Bill Clinton era it is another breed of cat. They are bound by the no tax pledge and will happy trade off lower taxes for increasing the budget deficit.

Don't believe me, then why are they willing to pass tax cuts for the rest of us with no spending reductions? If they really cared about the deficit they would say you want those tax cuts you have to reduce spending and here are the areas.

Both parties use the deficit as a tool to beat the other but that is where it stops. Neither is willing to give up their sacred cows to address the deficit. Of Obama vetoes the middle class tax cuts without spending cuts because they will drive up the deficit he will have earned my respect.

 

[Staidhup]

Yep, Social Security is forecasted to exceed 5.2% of GDP as measured in annual liabilities within the next 8 years, currently 4.+% of GD,P it has nothing to do with the deficit or budget, so with an increase from 41 million recipients to over 84 million during the next 8 years is nothing to worry about. So when expenses exceed contributions who pays? Ah, but who cares Kiplinger news letter is some sort of right wing rag right? Then what do you call the Congressional budget office. Oh well some people live in fantasy land and some don't.

 

[Sactowndog]

Since the national debt is growing at over 1 trillion dollars a year I doubt that 2 trillion dollars in cuts and taxes over ten years is going to make much difference. In the last year of his first term the Obama administation added 3 trillion dollars to the debt.

Its already over folks - we are hemaraging our life away and darn few are paying attention. In less than twenty years we will go bankrupt. A nation cannot go on spending trillions more than they bring in in taxes - borrowing what they don't bring in and paying only the interest on the loans. Eventually you have to borrow to pay the interest - Bankrupt!

Paul you are right but the problem rest squarely with the GOP. The are prioritizing tax cuts for the wealthy over spending cuts and reforming entitlements. If the GOP reversed those priorities we would have a deal done quickly and between the tax increase and spending cuts we would have made real progress on the deficit.

This model was followed by Clinton and the Republican congress to make real progress and the deficit and the economy did well as a result as people believed we would not be spending ourselves into bankrauptcy.

 

[Wiseacre]

Since the national debt is growing at over 1 trillion dollars a year I doubt that 2 trillion dollars in cuts and taxes over ten years is going to make much difference. In the last year of his first term the Obama administation added 3 trillion dollars to the debt.

Its already over folks - we are hemaraging our life away and darn few are paying attention. In less than twenty years we will go bankrupt. A nation cannot go on spending trillions more than they bring in in taxes - borrowing what they don't bring in and paying only the interest on the loans. Eventually you have to borrow to pay the interest - Bankrupt!

Paul you are right but the problem rest squarely with the GOP. The are prioritizing tax cuts for the wealthy over spending cuts and reforming entitlements. If the GOP reversed those priorities we would have a deal done quickly and between the tax increase and spending cuts we would have made real progress on the deficit.

This model was followed by Clinton and the Republican congress to make real progress and the deficit and the economy did well as a result as people believed we would not be spending ourselves into bankrauptcy.

The Clinton era surplus was due to TAX CUTS and SPENDING CUTS that Clinton had to swallow. Guys like you always blame the GOP, but I don't see the democrats offering any reforms to the entitlement programs. Every deomcrat I see on TV is saying hell no, we can't have that!

The truth is that you guys want complete capitulation, total surrender. You don't want cooperation or compromise, you want it all your way. Sorry dude, Obama may have been re-elected but so did the House republicans.

 

[Katzndogz]

Clinton raised the income tax rate but lowered the capital gains rate. No one wants to think about that part.

 

[saveliberty]

Democrats say they will compromise, but don't

Democrats say give us a list of cuts to make, they get them and reject it.

Democrats say its the Republican's fault, they say a lot don't they?

 

[Foxfyre]

I blame both Democrats and Republicans for growing government and shrinking incentives in the private sector. I blame both Democrats and Republicans for policy and spending that have done far more damage than good. Both have govverned left of center since 2001 if you look closely at the data, The only real difference between the two parties is that the Republicans don't pretend that we can spend ourselves into prosperity even as they stuff the bills with pork that they hope will get them re-elected.

The Republicans at least attempt to talk the fiscal reponsibility game and are more interested in economic prosperity than the Democrats seem to be,

Romney's approach was to get people back to work and the economy moving again. If he had focused on that one single thing instead of diluting his message with concepts that don't resonate as well or that are easier to demonize, he might have fared better. I don't know when you are bucking a system that now is providing some kind of direct government benefit to more than 50% of the population.

But I do know when you look at their plan to spread huge spending cuts over long periods up to ten years, it not only is fantasy land, it not only is a drop in the bucket, but you know it is never going to happen. As they have always done, they'll just keep adding stuff on the bottom of the pile so that the actual burden is never actually reduced.