[kenberg]

The Romney/Obama thread has run its course are Romney recedes into the history books,. The Petraeus affair is, I hope, a brief blip. But the economy is always with us and we have a biggie coming up.

Here, for example, is a Post story.
http://www.washingto...ry.html?hpid=z1


In my opinion, a tax increase is absolutely necessary. And entitlements have to be brought under some sort of control. I am open to hearing how this should be done. I accept that what appears sensible can have unintended side effects when applied at a national level, so some skill in doing this is desperately needed. But bills have to be paid, debt has to be reduced.

While I hope for positive solutions, I want to single out one thing that I find unacceptable, namely the contemplated "adjustment" in the formula for the cost of living adjustment . This is pure political quackery. I accept that social security payments may have to be means tested. I can live with that. Eligibility age must continue to go up. I am 73, but I also thought the age should go up when I was 65. But screwing around with the cost of living adjustment is one of those things that can be sold as having little effect but, really over time, has a very large effect and the effect will be felt most strongly by those who live into their nineties and beyond. That is, by those who are least capable of coping with it. Whatever cuts have to be made in entitlements should be made in a straightforward manner. We have seen the results of selling people on adjustable rate mortgages and other schemes of the "no problem now, why worry about later" sort. We should learn from this.

Anyway, the politicians are gathering, the pundits are punding, we are the wise ones, what are your thoughts?

[hrothgar]

kenberg, on 2012-November-12, 08:58, said:

Anyway, the politicians are gathering, the pundits are punding, we are the wise ones, what are your thoughts?

Interesting times...

Personally, I think that there is little hope for a solution unless Obama cuts the Republican leadership completely out of the loop.

From what I can tell Boehner and McConnell appears to be rejecting any solution that involves tax increases. (They're fine with revenue increases, so long as those are doled out by the tax cut fairy). Obama and the Democrats ran on tax increases and just won a convincing election. I don't believe that they consider this point negotiable. Nor should they.

Equally significant, Boehner has consistently demonstrated that he can't control his caucus. No matter what he might personally think, he can't deliver votes. Trying to reach an agreement with Boehner will simply waste time.

I am guessing that the best option for Obama is to try to cut the leadership out of the loop, and negotiate directly with rank and file house members, and try to get enough of them together to break party unison.

I am hoping that Obama will be willing to come forward with a pretty bold vision, plant the flag firmly, and stand on his convictions. If this means running over the fiscal cliff, so be it. (Hopefully the markets won't over-react) Better this than dealing with terrorists.

FWIW, I would very much like to see the following:

1. Radical tax simplification aiming towards a progressive tax code without deductions for children, mortgage interest, etc.
2. Income and capital gains get taxed at the same rate
3. Large cuts to the Defense budget

[Winstonm]

Quote

FWIW, I would very much like to see the following:

1. Radical tax simplification aiming towards a progressive tax code without deductions for children, mortgage interest, etc.
2. Income and capital gains get taxed at the same rate
3. Large cuts to the Defense budget

Second.

[ArtK78]

hrothgar, on 2012-November-12, 09:16, said:

FWIW, I would very much like to see the following:

1. Radical tax simplification aiming towards a progressive tax code without deductions for children, mortgage interest, etc.
2. Income and capital gains get taxed at the same rate....

The last time this happened was 1986, during the Reagan administration. The result was a drastic cut in taxes for the wealthy. The top tax rate was reduced to 28% and the capital gains rate was the same as the regular income tax rate. Eventually, the capital gains tax rate was reduced to 20% and then further.

Dependency exemptions were not changed with the enactment of the 1986 tax code. Deductions for interest paid (other than mortgage interest and interest paid relating to investments and businesses) were largely eliminated, and the deduction for mortgage interest has been limited to interest on mortgages on primarily residences and one other residence, and, in the case of refinances and home equity loans, is no longer unlimited.

I would not hold my breath for a sweeping change in the tax code as happened in 1986, especially with only 7 weeks until the fiscal cliff.

[blackshoe]

kenberg, on 2012-November-12, 08:58, said:

I accept that social security payments may have to be means tested.

I don't. I paid into the government's damn Ponzi scheme, I'm entitled to a return on my investment. "Means testing" turns the Ponzi scheme into a welfare program. Not acceptable. OTOH, there may be people receiving SS payments who probably should not be. Get them outta there. If a contributor to SS dies before he can collect, pay his estate a (non taxable) lump sum based on his contributions and be done with it. I don't know how payments for disabled people are currently calculated, but if they aren't based solely on that person's contributions to the SS Fund, they're doing it wrong.

AFAIK, SS never guaranteed any specific ROI, but the bean counters can certainly calculate, for any given contributor, or for groups of contributors (e.g. all those who were born in 1947) what the ROI should be (or should have been, given the way Congress has been raiding the SS Fund). Pay them that ROI. If there's not enough money, Congress should admit they've bilked the people, and pay whatever ROI they can get out of what's left. If that's zero, then perhaps we should confiscate the assets of every living congresscritter, senator, president and vice president, and use that to provide the people something.

Okay, that last part is a rant. Sorry about that.

[hrothgar]

blackshoe, on 2012-November-12, 13:24, said:

I don't. I paid into the government's damn Ponzi scheme, I'm entitled to a return on my investment. "Means testing" turns the Ponzi scheme into a welfare program. Not acceptable. OTOH, there may be people receiving SS payments who probably should not be. Get them outta there. If a contributor to SS dies before he can collect, pay his estate a (non taxable) lump sum based on his contributions and be done with it. I don't know how payments for disabled people are currently calculated, but if they aren't based solely on that person's contributions to the SS Fund, they're doing it wrong.

AFAIK, SS never guaranteed any specific ROI, but the bean counters can certainly calculate, for any given contributor, or for groups of contributors (e.g. all those who were born in 1947) what the ROI should be (or should have been, given the way Congress has been raiding the SS Fund). Pay them that ROI. If there's not enough money, Congress should admit they've bilked the people, and pay whatever ROI they can get out of what's left. If that's zero, then perhaps we should confiscate the assets of every living congresscritter, senator, president and vice president, and use that to provide the people something.

Social security is NOT about giving you an adequate return on your "investment".

Social security was designed to provide a basic standard of living for one of the most vulnerable segments in society and smooth out long term cycles in the stock market.

If you don't like it, you're welcome to go Galt.
(Don't let the door hit your ass on the way out)

[blackshoe]

Mrgh. I find myself almost agreeing with Hrothgar and Winston. I must be ill.

Problem is, it won't work. Even if Congress does those things, the next day they'll start tinkering, and undo whatever good might have come.

On the defense budget, I agree we probably need to reduce it, but the first thing we need to do is decide what we want our military to accomplish, and how best to accomplish it. For example, do we really need so many aircraft carriers (not saying we don't, just providing an example)? Do we really need soldiers on so many bases all around the world? Do we really need to be toppling regimes just because they're nasty (and unfriendly to us)? Do we need better ways to combat piracy and terrorism? Note that some things we need or want our military to do are likely to involve new expenditures. It would be folly, imo, to fail to fund those as part of some blanket "cut the military budget" policy.

[Phil]

+1 to tax code simplification.

BIG + 1 to ending middle class welfare, er the mortgage interest deduction. Credit card interest was deductible until the mid-80's, and people pissed and moaned when this was outlawed. However, I really doubt that anyone in DC has the stones to implement this, however.

[mikeh]

Like many Canadians, I've become a bit of a US politics junkie...your elections are far more interesting than ours usually are, and have almost as much potential impact on our economic health. Indeed, even the republicans seem to view the US and Canada as inextricably interwined, tho I suspect their language on energy was simply the usual way of lying to the gullible/uneducated voter. Hence their talking point on oil was always North American self-sufficiency, not US self-sufficiency.

They know that the US cannot wean itself off of foreign oil imports without buying into conservation and green energy, both of which concepts are anathema to those who are either funded by the fossil fuel industries or think they still live in the 1950s when oil was cheap and plentiful, so they assume that our Oil Sands can be counted upon to fill US needs despite being perhaps the largest single source of global warming emissions in the world...heck, since global warming is the creation of a few thousand dishonest scientists, and can't be happening because god wouldn't allow it, who cares?

Rant over.

The chances of the republican house leadership caving on the fiscal cliff seem low because too many of the leadership are going to be running for re-election in 2014, including Boehner. I listened to one seemingly well informed commentator who said that many republicans are going to make their decision based on their view of how their conduct would impact them during the next primary, rather than the next election.

Gerrymandering has become so prevalent and so effective that many republicans (and some democrats) are in seats where they have no risk of losing the general election no matter what. However, for a republican to act in any way as a moderate means risking losing the primary to a tea party wingnut.

Losing a primary means kissing goodbye not only to the perks and powers and ego-gratification of being in congress but also to a lucrative career as a lobbyist or perhaps running for Senator or Governor some day.

And it is very easy to convince oneself that one's decisions are not for personal benefit....for example, a vote for tax increases would mean that a real wingnut would beat me in the primary, and it is better for the country to go over the fiscal cliff with me in Congress than for the economy to be saved and me lose my job.

So I agree with those who suggest that Obama's only real hope is to go around the leadership. Perhaps some of the newly elected members will vote the right way because they figure they have 4 years in which to re-establish their conservative credentials. It wouldn't take many to swing the vote, since the Dems did make a few pickups in the House.

[PassedOut]

mikeh, on 2012-November-12, 16:09, said:

So I agree with those who suggest that Obama's only real hope is to go around the leadership. Perhaps some of the newly elected members will vote the right way because they figure they have 4 years in which to re-establish their conservative credentials. It wouldn't take many to swing the vote, since the Dems did make a few pickups in the House.

Senators serve 6-year terms, representatives 2-year terms.

[mikeh]

PassedOut, on 2012-November-12, 16:16, said:

Senators serve 6-year terms, representatives 2-year terms.

oops...for some reason I thought congress was staggered, with half running every 2 years. Me bad. Makes the problem worse, tho, not better.

[Bbradley62]

hrothgar, on 2012-November-12, 09:16, said:

FWIW, I would very much like to see the following:

1. Radical tax simplification aiming towards a progressive tax code without deductions for children, mortgage interest, etc.
2. Income and capital gains get taxed at the same rate
3. Large cuts to the Defense budget

I agree with this. (There should, though, continue to be per-person exemptions.)

In addition, to keep Social Security/Medicare solvent:
4. Eliminate the SS Wage Base, which is the maximum annual amount that is subject to SS/MC taxes. All wages should be included in premium payments and benefit calculations.
5. Gradually increase the normal retirement age from 67 to 69 for both SS and MC.
6. Never again have a "SS Tax Holiday".
7. There should be no means testing. SS taxes are paid specifically to fund SS benefits; if you make the payments you should get the benefits.
8. Don't mess with the cost-of-living adjustments; they are necessary and appropriate to keep our most elderly citizens taken care of.

[luke warm]

i feel that if the reps compromise on what they view as principles, they will be blamed, or not given credit, no matter what happens... if the compromise, whatever it is, goes south, obama can and probable will say "half measures don't work, as you can see when we were forced to settle on this compromise"... if things approve he will say "see what i've been saying? they could have done this 2 years ago and we'd be well on our way to a full recovery"

so my suggestion is for the reps to say "the people spoke, they wanted the prez's policies adopted... while we cannot in good conscience vote for that with which we strongly disagree, we will not stand in the prez's way... we will give the people what they voted for... we will not vote against his plans, we will vote 'present'" that has its dangers also, of course, but i don't think there's much way out for them unless they do something like that... give the dems everything they want and see what happens... who knows, things might even work out

[nigel_k]

luke warm, on 2012-November-12, 16:51, said:

so my suggestion is for the reps to say "the people spoke, they wanted the prez's policies adopted... while we cannot in good conscience vote for that with which we strongly disagree, we will not stand in the prez's way... we will give the people what they voted for...

Maybe I am mistaken, but I thought all money bills must originate in the House and the people recently voted for a Republican majority there. Maybe it should be Obama letting the people have what they voted for.

You are correct that the Republicans will be blamed. When Democrats blocked the appointment of federal judges, this was the constitutional system of checks and balances working correctly. If Republicans do a similar thing, it is irresponsible and undemocratic obstructionism. But this is a function of the media, not the election result, and Republicans cannot avoid it except by not doing anything, ever.

[luke warm]

nigel_k, on 2012-November-12, 17:21, said:

Maybe I am mistaken, but I thought all money bills must originate in the House and the people recently voted for a Republican majority there. Maybe it should be Obama letting the people have what they voted for.

but the people voted, regardless of the house make-up, to *not* repeal obamacare, to not cut taxes, etc etc, by re-electing the prez and senate... yes, money bills originate w/ the house but i don't know what your point is...

[hrothgar]

nigel_k, on 2012-November-12, 17:21, said:

Maybe I am mistaken, but I thought all money bills must originate in the House and the people recently voted for a Republican majority there. Maybe it should be Obama letting the people have what they voted for.

You are correct that the Republicans will be blamed. When Democrats blocked the appointment of federal judges, this was the constitutional system of checks and balances working correctly. If Republicans do a similar thing, it is irresponsible and undemocratic obstructionism. But this is a function of the media, not the election result, and Republicans cannot avoid it except by not doing anything, ever.

Comment 1: House districts are heavily gerrymandered. The failure of the democrats to retake the house is (primarily) a function of Republican redistricting efforts in 2010. It will take the Democrats years to make significant headway.

Comment 2: No one denies that the democrats blocks some of Bush's appointments. The Republican's get blamed for obstructionism because of the sheer number of blocks and holds.

[kenberg]

As long as we have elections, we will have political posturing. But there are limits, or there should be. During the last four years more than a few Republicans have portrayed Obama as a foreign born devil, and any sort of cooperation with him as treason. There is a local bumper sticker reading "Democrats: American Traitors". Ok, a bumper sticker is not a party policy but there are a rather large number of folks out there who have lost any sense of proportion. During the campaign I learned from the forum (from Phil, if I recall correctly) about the reviews of binders on Amazon (eg "Contrary to what you may expect, these binders do not contain women. You must supply your own women."). I thought it was hilarious, regardless of politics, and sent the link to my kids. I asked Becky if she wanted to include anyone else and on a whim she included a woman who had been sending us various e-mails proving that Obama is a Muslim. We have not heard from her since, which I suppose is a blessing.

I am neither a doctrinaire liberal nor an enthusiastic Obama supporter, and I am hoping that some Republican would actually like to try for my vote. Even if s/he doesn't get mine, there are a lot of out there and s/he can well look to getting some. Working productively with Democrats to produce reasonable legislation would be a good start.

[PassedOut]

Yesterday Robert Rubin explained some of the difficulties of trying to increase revenue by eliminating deductions instead of letting the cuts in tax rates expire: The Fiscal Delusion

Quote

Reducing tax expenditures to pay for both lower personal income tax rates and deficit reduction may seem like a politically attractive alternative to raising tax rates or cutting entitlements or other spending.

However, many of these tax expenditures are important and popular policy programs on which people now rely. They include the deductibility of mortgage interest, charitable contributions and the exclusion from income of employer-provided health insurance. Some tax expenditures should be cut back and reformed. But when the substantive effects and political realities of large-scale reductions are examined, it becomes clear that there would not be sufficient savings to reduce tax rates and also cut the deficit.

Not long ago, a former senior official involved in the federal budget process told me that various senators used to meet with him periodically and argue for reducing tax expenditures. He would say that was a good idea, and then go down the list of large tax expenditures. At each one, the senator would say, “Oh no, we can’t do that,” and at some point the senator would repeat his proposition and the conversation would end.

The nonpartisan Congressional Research Service examined the full range of existing tax expenditures and concluded that, “Given the barriers to eliminating or reducing most tax expenditures, it may prove difficult to gain more than $100 billion to $150 billion” a year. But most plans based on reducing tax deductions and other expenditures project revenues of three to four times that amount.

I'm fine with any plan that, in due course, resumes bringing down the US debt as a percentage of GDP. But the numbers must be real (not based on fantasy growth projections) and must add up.

With the republicans controlling the house and the democrats controlling the senate and the white house, any plan that passes won't be too extreme in any direction. As a practical matter, though, it might turn out best to let the tax cuts expire naturally. That would give the Norquist republicans a chance to vote for a tax cut even if the new tax rates are higher than we pay now.

[nigel_k]

Here is some things I would do with the US budget:

I am going to disregard political feasibility, which makes the whole thing pure fantasy, but I don't think there is a politically feasible solution. Voters would rather bankrupt the country in 20 years than accept the necessary changes now. I'm also going to disregard whether things need to be done at federal or state level.

The debt level as such is not the problem. After all, my personal debt is around 500% of my income and I'm doing fine because I have the money invested and producing greater returns than the interest I'm paying. The problem in the US is spending levels. The claims that economic growth alone cannot fix it are true, but only if growth is restricted by continuing to consume so much rather than investing.

Medicare and Social Security should not dominate the discussion as much as they do. They have to be dealt with, but there is now a mindset that there's really no point in looking too hard at other spending because we can't balance the budget with that alone. All those small and medium items put together add up to some real money.

Some more specific actions:

1. Raise revenue through taxes on land and consumption (i.e sales tax). These do the least to discourage productive activity. Don't increase income taxes. Measures that reduce investment will also reduce growth which we don't want.

2. Increase the retirement age and don't do it gradually. Current retirees have benefited from the years of government spending in excess of taxation so they should not be immune from having to pay for it. It's just not fair to pass the debt entirely to future generations.

3. Reduce social security benefits. This I would do gradually and not impact current retirees. In the long term leading to a system where the government pays a subsistence level benefit and people are expected to also have private arrangements.

4. Single payer healthcare for for significant health issues only, e.g. by having a high deductible. You're taken care of if you get cancer, but other people will not be forced to pay for your contraceptives and you can't choose to go to the doctor when you stub your toe just because someone else is paying.

5. Minimum wages will have to go and unions should not have a different legal status than any other private society. People are just going to have to get used to a lower standard of living.

6. Wealth redistribution should only be done directly, i.e. if your income is low you get money paid directly into your bank account. No food stamps or any other income-based benefit or service of any kind. Otherwise it becomes impossible to even track the cost or whether help is actually reaching the intended recipients. Also for reasons of basic dignity and because people need to act responsibly. If they don't, we won't fix it by eliminating the consequences.

7. Don't pay for higher education except for scholarships targeted at the top 5% or so. The benefits just don't exceed the cost of the education itself plus the cost of having people out of the workforce for four years. It should be normal to start work at 18 or earlier. Technology has made degrees less useful, not more useful, as you can find answers more easily in other ways.

8. Defense spending should be for actual defending, which will obviously be a lot cheaper than what it has been used for. In cases like Iraq or Kosovo, I doubt that I could sit around and do nothing, so probably I would just put a generous bounty on the head of the political leader responsible.

9. There needs to be a lot more drilling for oil. There are plenty of beautiful places that don't have oil under them.

[TimG]

luke warm, on 2012-November-13, 05:03, said:

but the people voted, regardless of the house make-up, to *not* repeal obamacare, to not cut taxes, etc etc, by re-electing the prez and senate... yes, money bills originate w/ the house but i don't know what your point is...

Maybe they voted not to repeal Roe v Wade and not to reinstitute DADT. To think that the election was a referendum on any one issue is pretty silly, IMO.