By way of background, entitlements are slowly eating the entire federal budget and soon there won’t be any money left to do anything more than cover entitlements and pay the interest on Obama’s debt. This will get much worse soon too as the number of retired baby boomers is expected to soar. Like locusts, they will drain the system dry. The solutions being proposed to fix this are: N/A.
Solutions that could solve this problem include (1) pushing back the retirement age, (2) lowering benefits, (3) means-testing benefits to cut them off for people who don’t “need” them, (4) increasing co-pays and fees on things like Medicare, and (5) tax increases on workers.
According to Axelrod and Barnes, the Democrats understand that entitlements are out of control. They also are willing to fix the crisis. . . BUT they need tax increases to be part of the equation. And the reason isn’t what you think. According to both, the Democrats know that tax increases can’t solve this problem and they are only looking for tax increases as a means to provide them political cover with their base. Said Asselrod:
“What we’re saying is that if you’re going to ask Democrats to vote for entitlement reform, then that you have to at the same time have revenue increases on the other side of the equation in order to move forward.”Barnes added:
“You’ve got to link arms and jump ship together.”The thinking is that entitlement reform will anger Democratic constituents so the Democrats want the tax hike to anger conservatives equally so they don’t get crushed in the next election. Ok.
Here are my thoughts. First, I don’t think conservatives are as opposed to tax hikes as the Democrats want to believe. I believe the conservative opposition is rational rather than principled. In other words, conservatives aren’t opposed to tax hikes no matter what, they have simply learned that there’s no good reason to accept hikes. Basically, since government spending never goes down, we’ve learned that agreeing to tax hikes only gives the Democrats more money to spend. It’s called throwing good money after bad. IF conservatives could be assured that the taxes would actually go to fixing the problem, AND we got genuine cuts in addition to make the government smaller, then I think conservatives would be willing to accept tax hikes. . . even at the risk of incurring the wrath of a man called Grover.
So problem solved right? //scratches head
Hmm. Actually, no....
... why do WE want to fix entitlements?
Entitlement reform will hit our people more than theirs. Indeed, the people who will be hurt are oldster and veterans. . . they vote for us, so why do we want to be seen voting to take their benefits away? And why should we also agree to tax the middle class (our other supporters) in exchange for being allowed to inflict pain on the rest of our supporters? That doesn’t make any sense.
Moreover, the Democrats are the party who love government, not us. So why should we do anything to upset our voters just to help make government work? If the Democrats love it so much, let them do their own dirty work. Not to mention that as the entitlement problem grows, the real harm will be to the government’s ability to do anything. Indeed, as the share of the budget going to entitlements grows, the share available for all the programs the Democrats love will go down. Fixing entitlements just frees up that money for more Democratic party time. Why do we want that?
So yeah, I think conservatives would be willing to agree to tax hikes if we believed they would actually fix a problem, but I don’t really see any reason WE should fix the problem. The Democrats created this mess. Since at least the age of Reagan, they’ve fought every attempt to fix it, even when they could have done so with only tiny changes, so let them fix the mess on their own now.
I know a lot of Republicans have recently decided this is the magic bullet that will somehow win us something or other, in fact, the "think tanks" seem to have become obsessed with the issue. But frankly, the more I think about it, this is a really stupid idea for us to run on... “Hey, we’re gonna cut your benefits so the Democrats can keep all their other programs going!” It sounds like a change of focus is needed. We need to focus rhetorically on “protecting” Social Security and Medicare and condemning the Democrats for letting these programs die. Then make the Democrats do the dirty work of proposing benefit cuts. Alternatively, if we are going to trim these programs, then the Democrats will need to agree to across-the-board cuts in their programs.
Thoughts?
I think you are on the correct track here, Andrew. You are hitting on the crux of all the right issues. Americans seem to love their benefits, they just hate to pay for them. If we go back to your discussion on Sweden, the big difference is they tax big, but keep spending to what they can tax. The baby boomer issue is huge right now, because of it's massive size. I thought this issue would be a little clearer in the last election, but it wasn't.
ReplyDeleteI'll noodle this further and comment more later. Politicians hate cutting anything, especially Democrats, and with the help of the media, they have shown a great ability to lie about what is ahead, and obfuscate the problem.
You are correct about thinking Republicans agreeing to tax hikes if, and only if, we see the politicians are working to solve this massive problem
All I want (amongst other things) is to be able to opt out of Social Security. I'm not yet 30 and realize that it's possible that by the time I need it, it'll probably no longer be available, or funded. Can't I just keep that money and do what I want with it? Please?! Oh well, I can keep dreaming.
ReplyDeleteOtherwise, I agree with your article.
Jed, I think "the right thing" to do is to fix entitlements, but I'm scratching my head at why we should be the bad guys on this? IF the Democrats hadn't been so obnoxious during the Reagan years, there would have been minor tweaks and no problem today. If they hadn't lied about the "lock box" under Clinton/Gore, there again would be no problem today. But they wanted to play games.
ReplyDeleteSo why should we bail them out now? Let them fix this problem because the harm an unfixed program will do will be to the things they want. And fixing it will hurt our friends, so why should we be hurting our friends to help theirs?
This is one time we need to behave irresponsibly and make the Democrats fix their own mess.
Jocelyn, I would love to see an opt out, but I don't think we'll get it. I have an idea I'm going to propose soon (I'm starting the Agenda 2016 next week) that I think would do the same -- give everyone a private account based on the same plans that government employees get for retirement. Then everyone could control the fate of their own money to a large degree AND the government couldn't spend it anymore.
ReplyDeleteTwo words: death tax.
ReplyDeleteAndrew: Then everyone could control the fate of their own money to a large degree.
Bush suggested it and got his Presidential gonads handed to him. After all, the stock market crashes, but (sarc on) governments never go bankrupt (sarc off).
Andrew...Agree with most of your premise here except for: "(3) means-testing benefits to cut them off for people who don’t “need” them."
ReplyDeleteI believe this flows right into the Dims approach. Who defines "need?" Is it poverty rate + 50%...100%....150%? And again we're right back into the old conundrum.....those that pay into the system will not see the benefit, it will go to those who either did not save, plan or in many cases barely paid into the system.
Once again, it could turn into their beloved redistributionist plans.
I can see raising the retirement age and refusing Soc Sec benefits to those with a net worth at retirement age of let's say $5 million or more. In addition, why do we cap the tax at $109,000 or so? Why don't we pay the tax for ALL income, not stopping at a certain income level?
Anyway, I believe we the people, will find a way to fix this problem eventually, without borrowing money to pay for it. Yet it will take a courageous and brave leader, unlike our Community Activist-in-Chief who has enriched himself and his cronies from the national treasury. I feel quite sure they are all rich beyond their wildest dreams off stimulus dollars that THEY don't really give a crap about Soc Sec and its impact on the majority of the American people.
Andrew, I think some of the younger national Republicans are starting to sing the same tune. Certainly Paul Ryan defended entitlement programs in relation to his mother and his upbringing. And Marco Rubio in his response to SOTU quipped that "anyone who is in favor of leaving Medicare exactly the way it is right now is in favor of bankrupting it." And as you pointed out, oldsters and vets belong to the GOP, so clearly the old "Republicans want to kill Grandma" is only working on folks other than Grandma.
ReplyDeleteI think letting them be hoisted on their own petard would be awesome...
ReplyDeleteIt's really too bad (as I've said before) that there isn't actually some GOP-controlling spider sitting in the midst of a roving web so that all GOPers could get on the same dang page...
And I'll take this opportunity to say again:
ReplyDeleteRemember the Alamo!!!!
https://www.tsl.state.tx.us/treasures/republic/alamo-01.html
(after all I wasn't on her on Saturday to wish y'all a Happy Texas Independence Day!!)
ReplyDeletespam & onions!
ReplyDeleteAnyway - I am not spam - just off-topic (again)
I saw this article on Detroit's blight and thought of the conversation on here the other day...
http://www.nationalreview.com/articles/342267/battling-blight-detroit-jillian-kay-melchior
rlaWTX - I am a bad Texan because I failed to acknowledge Texas Independence Day. Sorry. I hope Big Tex can forgive me this once.
ReplyDeleteAs for Social Security changes, I agree that it should gradually be moved to a voluntary system. But at what point and in which generation. Those of us who are closer to "retirement" than not have been forced to pay into this system our entire working lives, as have our parents. Should we expect less? And why should my parents Or me get less return on our investment just because we planned and saved for our 'golden' years during our working years.
And since Soc Sec. is the mother of all pyramid schemes where the newer members pay for the benefit of the older members in exchange for someone else younger pay for those benefits, it's a really hard carousel to jump off of.
But we also must recognize that there will always be a segment of the population that needs this safety net to survive. But then the Death Panels may just solve that problem for us.
But we must do something because the Baby Boomers who are starting to go on Soc Sen now and will be for the next 15 or so years. And, as is happening in Europe now, so we can see the future in store for us if we don't do something now, our population of available tax paying citizens is declining at an alarming rate.
K, Bush suggested "privatization." I'm not suggesting that at all. I'm talking about private accounts just like federal employee retirement accounts.
ReplyDeletePatriot, I wasn't really suggesting fixes, I was just pointing out the things that could be done.
ReplyDeleteIn terms of means testing, I'm not honestly sure that means testing would be anything other than a placebo unless they set the "means" very low. But honestly, it would make sense to cut off benefits for people with lots of assets since the thing is basically welfare for old people (and yes, I know they all claim they paid into it, but all it ever really was was a tax linked to a handout program).
tryanmax, I'm not sure on Ryan for the simple reason that I think Ryan is still a Boy Scout. He wants to do the right thing and the right thing is to delve into these programs and find ways to fix them asap. I think the better plan is to stop doing the Democrat's dirty work and make them fix this... under threat that the government will die if they don't.
ReplyDeleteThat said, I am starting to see a lot more people say the things I've been writing about. People seem to be waking up. BUT so far, they are all still stuck in the mindset of the past. In other words, they now realize that fighting the gay menace is a mistake, but their alternate agenda is "fix entitlements" and "fiscal responsibility". That's still the wrong track to win people over... that's "green eyeshade" stuff.
Next week I'm going to start laying out my agenda and that is hopefully "the next level" in this discussion. I can tell you that I'm not hearing anyone talk about the things I'm thinking about. So either there are some good ideas there or I'm crazy... or both.
rlaWTX, It would be great if Republicans learned to coordinate. That's something we really do need to work on -- team work. Check out the film site article today! :)
ReplyDeleteP.S. Happy Independence Day!
ReplyDeleterlaWTX, Thanks for the link, I'll check it out later: LINK.
ReplyDeleteBev, The whole social security system could have been fixed in the 1980s with (1) a slight hike in the tax rate to hit all those boomers, and (2) pushing back retirement to maybe 70. But the Democrats decided to play politics instead and called these outrageous attempts to kill old people.
ReplyDeleteYou'll see my solution in a week or so -- creating accounts for everyone. But if that won't happen, then they will need to (1) cut benefit payments (probably by lowering the COLA), (2) raise the retirement age, (3) add a couple percent to the payroll tax, and (4) cut off benefits for people with money. That will likely be the solution both sides agree upon.
I love this idea but McCain will fudge it up. We can call you approach Obamizing because that is what he does. He never proposes any solution to any problem. He just sits back in his golf cart and criticizes any GOP idea or plan. It is very passive aggressive but who cares. I really like the idea of "you crapped in your bed, now you sleep in it."
ReplyDeleteWhat Axelrod and those other idiot democrats are trying to do is to get people like me to pay "my fair share" of social security tax. Since I will see $0 benefits (due to income), my fair share is $0. This bugs them and should be a warning regarding any tax hike. I like the idea of a tax paying for a specific and related item. Social security tax for later benefits. Gas tax going to roads.
One issue I heard about social security is that it would be in ok shape if they wouldn't have added so many others who never put in to the system: elderly family members of new immigrants, disabled patients, etc. There has been an explosion of these patients and that is what has screwed it up more than the baby boomers.
Koshcat, Here are the reasons the system is in trouble:
ReplyDelete1. The way the system was set up, the first few generations to get the money never paid as much in as they took out. I don't remember the exact date, but I think it wasn't until the 1980s that the first person started taking out only what they had paid in.
2. The system was set up with the assumption that people would die in their 60s. They now live into their 80s. So they didn't count on needing 20 extra years of benefits.
3. Despite Clinton/Gore talking about a "lock box" the truth is that there is no social security fund. It's just a series of IOUs all with Uncle Sam's name on them. All payouts come from the general treasury rather than some pool of money that have been stored. That's why the baby boomers pose such a problem. The number of workers per retiree was 16-1 in 1950. Today it's 3-1. When the boomers retire it will be around 2-1 or 1-1. That means that every worker must pay enough in taxes to cover one retiree. That's not possible.
Agreed about McCain. Guys like him are pathological when it comes to bailing out the Democrats. I really don't understand that.
P.S. Agreed on Obama too. All he does it attack ideas other people have. He never offers his own. It's time for the Republicans to do the same and make him offer the ideas. And if he doesn't, let the government implode. He'll start offering fixes when he realizes we won't do his dirty work for him anymore.
ReplyDeleteI think there was a "fix" I believe in the 1980's that was suppose to account for the baby boomers, many of which are going to find they are not going to get much back. This fix did not predict for the huge jump in disability and non-citizen leeches.
ReplyDeleteOne of the most annoying issues of most federal taxes is the line items FICA and Medicare. I think people see those as separate dollars earmarked for those departments. Guess what? Just another federal tax. Kind of like JAFO but with a T (JAFT? JAFFT? you know it almost works).
Koshcat, That's a big problem. They've been saying all along that "this isn't a tax, this is your contribution and you get that back," but that's entirely not true. They've been spending the money all along and treating this just like any other tax. Now there is no fund to pay people, so everything needs to come out of tax revenues.
ReplyDeleteAs for the babyboomer fix, there was never a fix. There was some tinkering with the COLAs, I believe they pushed the retirement age back a couple years as well, but there was never a fix.
In terms of disability and immigrants, they contribute to the problem, but they aren't the problem. The problem is that the thing is a ponzi scheme that ended up upside down and is now quickly rushing to insolvency.
One of the simplest "fixes" I have seen was to increase the age by two months every year until you get to age 70. Not sure if it would take care of all of it but it would help yet be small and slow enough that the average person wouldn't even notice much. This is what drives me insane about the entitlements. Because they are so big, sometimes very small changes like that are all it takes. To fight a change like that in my eyes is negligence.
ReplyDeleteBTW, that "tinkering with the COLA" slapped some people pretty hard, including my grandmother. One person's tinkering is another person having only enough to afford a small bag of potato chips for dinner.
Koshcat, That's the frustrating thing and that's what tells us how irresponsible our politicians have been over this. These programs are so large that tiny changes are often enough to make huge changes, but they won't even agree to tiny changes. There was no reason not to move the retirement age back to 70 starting a long time ago... but they never did it.
ReplyDeleteTinkering with the COLA has become the new way for politicians to make changes they think no one will notice. And if it was one right, that would be true. Something like a 0.5% difference over the course of 2-3 years, done repeatedly would slowly but surely reduce the level of benefits without hurting people too much. But that's not how they do it.
Andrew, There was a cap on continued income to get your full benefit if you take Soc Sec at age 65.
ReplyDeleteWhat they changed was to add a rule that if a senior defers their Soc.Sec until age 70 1/2 there will be no limit to how much they can earn with other income.
What's really stupid is that Seniors have to pay income tax on their Soc Sec income which really isn't "income" as it is a tax payment of taxed income that has ALREADY been taxed. A tax on a tax...
Bev, I knew it was something like that which created a multi-tier approach but didn't really solve anything.
ReplyDeleteI agree about the stupidity of the tax on a tax. Our tax system is insane.
Bev,
ReplyDeleteYour...post...is making me...dizzy...
Koshcat - Sit down put your head between your knees and breath slowly in and out...
ReplyDeleteBut for the record, it's not ME who makes you dizzy. It's the whole cobbled together process. It's kind of like the Winchester House of tax codes. with blind alleys, hundreds of stairways that go nowhere, stairways that hit walls and doorways that don't open. Total crazyiness!
**News Flash**
ReplyDeleteOkay, has anyone been following Rand Paul's filibuster of John Brennan's confirmation hearings? He is actually doing an old-fashioned Mr. Smith talk until you drop filibuster! Pretty cool considering that Holder just issued a memo yesterday in response to Paul's request, that the US Gov't is well within its rights to drone US citizens on US soil. Of course the examples he uses are "Pearl Harbor" and "9/11", both perpetrated by NON-citizens. But, to make you feel better, Holder DID say that the Obama Admin would never USE a drone that way. I feel so much better....
Never underestimate the government's ability to get their filthy hands on your money.
ReplyDeleteKoshcat, That is the one thing the government is good at... it learned from the mob.
ReplyDeleteBev, I didn't realize he was actually planning to talk. Cool. :)
ReplyDeleteYeah, I feel much safer to learn that while Obama thinks he has the right to blow me up... he would probably never do it.
Protecting Social Security
ReplyDeleteImpossible over the long term. Unreported future government liability is 87 trillion for SSN alone according to Forbes. They have by the way been telling us for decades it was going to fall apart.
The problem is the same thing that supported ERISA in 74. Certain companies had pay as you go plans relying on current workers to pay current retirees. Excess money was spent. When they lost headcount their plans were in trouble ERISA made this illegal.
For over 50 years SSN surplusses were put back into the General Fund and spent. That money is gone. Any tricks or gimmicks to save SSN should have been done a decade ago. I beleive 2012 is the first year SSN started running at a deficit requiring money form the General Fund instead of putting money into it.
None of these solutions mentioned in my view will work long term. Long Term we have to reduce the level payout which may cause civil unrest or we are going to have to impose taxes on all all income not just employee income (this means interest, dividends capital gainss, etc.) and the cutoff at 100K is it now needs to be eliminated the way medicare was.
I don't think people understand how seriously defunded SSN is. It is the result of decades of ignoring the issue.
Personally I don't beleive Social Security will be around to collect on when I retire. I don't see DC fixing the issue.
ReplyDeleteYou ahhh evil republicans...just don't understand....simple uhh economics. To fix social security...I just have to call....my friend uhhhh Mr. Bernanke ahhh to print more money.
ReplyDeleteIndi, I think that too many people believe (and everyone in Washington wants you to believe) that the money is just sitting there waiting for you. The truth is there is no money. The piggy bank is empty.
ReplyDeleteI have no idea if they'll ever figure out a way to fix it, or how they would do it. I suspect the current plan is slashing benefits and raising taxes.