A Forum for Grinches and Ho-Ho-Hoes

[Greedy,Greedy,Greedy]

Originally posted by Mmmm, Burger (C.J.)
Alright, I'll go on the merits, so we can talk more about this.

1) see previous post--you're issuing government debt to buy into the market. As a financial matter, you''re just swapping one form of debt for another, with greater gov't guarantees.

2) how do you define income--cap gains? withdrawls from IRAs? And you're taxing the poor on their first dollar of income--how do you do that? If you're going to do this, why not a national sales tax instead?

3) I think you've hit 3 in 2, but taking the cap off is a fundamental conversion of the program, although I agree that if you're just calling it a surtax this makes sense. But you're getting even further afield from the concept of a limited gov't pension. and how do you answer the pressure to uncap benefits as well?

4) no one who makes few contributions gets big payments, other than SSI. It's based on your wages over a lifetime, so right or wrong, your payments in relate to your payments out. And if there's one benefit of a gov't guarantee is that it will pay even if tax revenues aren't large. If we're going to take this approach, let's take it first with other programs, such as defense and discretionary spending. Not that tax-cycle spending is the most sensible approach.

5) You're taxing all of those accounts at some point, and, other than with Roths, all of the income/gains as well. Indeed--you have to withdraw from IRAs, so you have to pay the tax, either in retirement or when you die. Worse, eliminating (or reducing) tax deferral is exactly the wrong direction to encourage savings. Better to increase the availability of these accounts, but increase taxes on all spent income--either a consumption tax or a national sales tax. And since you tax on withdrawal, how to you account for interim taxes paid without having it become a wealth tax? What is the objection to having people accumulate "enormous assets"? Either they've done it by working hard and saving or by savvy investing. I don't see why either should be penalized (and it's not like these accounts were created by Rockefellers dumping all their assets into a tax-deferred account--IRAs and 401ks have always had contribution limits, so any value increases are a result of modest levels of saving.).

The only "free money" (hi, Hank!) I found in my five points was in one, and, sure enough, there is no free lunch -- it has an impact on other government expenses and programs because we have to borrow from the market. (1) is a philosophical question: when we measure the extent to which SS is in balance, do we assume that one role of the program that must continue is its subsidy of other government programs. I'm answering no.

Yup, I change the tax burden for social security and fundamentally change the idea that there is a limited pay in, and the argument that you should take the cap off the benefit is legit. Let's tier that, though, so we only do it if we can afford it. Am I overlaying on this a Democratic approach to costs and benefits - yes.

I don't like sales taxes. It is a substitution of one tax that disincentivizes business activity for another tax that disincentives business activity. So that's why I didn't propose it. At the same time, I think I have slightly fewer objections to consumption taxes than wage taxes, so I'd consider it as an element.

And, yes, you are taxing retirement benefits at some point, but the deferral is a huge benefit. What are we doing providing enormous benefits for $2 and $3 million dollar indidivudal retirement pots if we can't afford $12,000 a year for grandma who lives in an old broken down ranch in Missouri after working her whole life? If you remove the wage tax you'll have a more direct incentive for business than by whatever impact lessening deferral has on the savings rate.

[Mmmm, Burger (C.J.)]

Originally posted by Greedy,Greedy,Greedy
The only "free money" (hi, Hank!) I found in my five points was in one, and, sure enough, there is no free lunch -- it has an impact on other government expenses and programs because we have to borrow from the market. (1) is a philosophical question: when we measure the extent to which SS is in balance, do we assume that one role of the program that must continue is its subsidy of other government programs. I'm answering no.

I think you're conflating two subjects, but maybe I did too. There are two questions: 1 is whether the SS surplus should be "on budget" such that it can be used to make the real deficit appear smaller (this year--2006--the projected surplus is $280B, compared to a nominal defiict of $390B). I believe it should not, but it's semantics. The second question is what should be done with that surplus. I'm comfortable having it in gov't debt, as opposed to corporate debt (bankruptcy), stocks (volatility), or international (oh, great, which countries).

Yup, I change the tax burden for social security and fundamentally change the idea that there is a limited pay in, and the argument that you should take the cap off the benefit is legit. Let's tier that, though, so we only do it if we can afford it. Am I overlaying on this a Democratic approach to costs and benefits - yes.

not saying it's not legit, but at that point you've converted SS into just another gov't welfare program that uses, essentially, general revenues for funding and pure benefit formulas for payments. It's AFDC all over again, except for retirees.

I don't like sales taxes. It is a substitution of one tax that disincentivizes business activity for another tax that disincentives business activity. So that's why I didn't propose it. At the same time, I think I have slightly fewer objections to consumption taxes than wage taxes, so I'd consider it as an element.

all taxes distort economic activity, so your objection proves too much (or something like that). To the contrary, a flat sales tax (or VAT) is less likely to have odd disincentives, because it won't be filled with loopholes, other than perhaps for consumption (you know milk will be exempt). Businesses will pass the tax along to consumers, who will have a disincentive for consumption.

And, yes, you are taxing retirement benefits at some point, but the deferral is a huge benefit. What are we doing providing enormous benefits for $2 and $3 million dollar indidivudal retirement pots if we can't afford $12,000 a year for grandma who lives in an old broken down ranch in Missouri after working her whole life? If you remove the wage tax you'll have a more direct incentive for business than by whatever impact lessening deferral has on the savings rate.

you make it sound like that 2-3M was acquired through some loophole or great luck. It wasn't. You won't have the pot at all if you eliminate tax deferral--it will just be a normal investment account (unless you want to pull the rug out from everyone midstream). It's just moving the wrong direction. Besides, people are constantly cashing in that 2-3M account (which it's pretty hard to get that large without some really savvy investing), and paying taxes on it. Why not just tax capital gains every year? It's the same problem--you can defer the gains until realization? And remind me why Gramma deserves something more than what she (or her hubby) put into SS or her own retirement savings? Does she own a farm, becaause that would be a good reason.

[taxwonk]

Originally posted by sgtclub
....the DEMs won't come up with a plan to save SS because they absolutely do not want Bush/GOP to get credit for "fixing" it. So instead they equate fixing SS with PRAs, meaning that if you are against PRAs you must be against SS reform. It's a smart PR campaign.

Either that, or it's an opposition to the only game in town. Let's not rush to judgment yet. I am sure I'm being naive, but I'd like to think that the next four years is going to be more positive than a Republican steamroller and a Democratic whine-fest.

[taxwonk]

Originally posted by Tyrone Slothrop
Conservatives have been telling people that the end of SS was nigh for years. The projected demise keeps moving back, though. So you have this situation where everybody knows there's a problem, but the problem is mostly what they know.

As for Medicare, it seems to me that what ails Medicare is also what ails private health insurance, which gets more and more expensive every year. I don't really know how to solve that one; RT has my proxy.

Indeed, I now regret the analogy. Congrats. But why are we talking about this game at all, instead of Medicare or the unsustainable deficit? Craziness. Too much more of this GOP rule is really going to fuck the country over.

The solution to both SS and Medicare, at least in part, is simple, albeit brutal. Let more people die, and die younger.

Modern medical science has been obssessed for decades with chasing technologies and drugs that prolong life, simply for the sake of prolonging it. Why should a woman in her late 70's, with severely metastisized bone cancer, be given course after course of radiation and chemotherapy? So that she can live another five years in pain and waste away? The focus on such patients should be palliative care. And yet, this scenario is played out in every hospital in the country on a daily basis.

In a nation where we face an extreme shortage of donated organs, Mickey Mantle undergoes a transplant at a cost of over a million dollars to live another two years, while a 34 year-old father of three dies for lack of an organ.

Cardiologists are spending countless dollars on artificial hearts designed to work outside the body, passing along the cost to everyone in the health care system, so that terminal patients can spend months in the hospital while the rest of their organ systems slowly shut down. Why? Because we can.

The biggest problem is that we are aging as a population, medicine allows us to extend that aging period, and we are producing less babies to shunt the bill onto, which is what has kept the system going lo these past three generations. Nobody is setting priorities in health care and as a result the money for grants and research is going towards subsidizing our fear of death, instead of improving the general population's overall health and saving those who still have lives to live.

[Shape Shifter]

I hope the administration goes to war against Iran soon. That will be much more fun to argue about than Social Security.

[Sidd Finch]

Originally posted by Say_hello_for_me
Speaking of which, the census data from 2004 apparently shows that Massachussets was the only state in the union to lose population in 2004.

Coincidentally, Roemer noted that 97 of the 100 fastest growing counties in the nation voted for Bush.

That's the beauty of federalism. Some states (e.g., Illinois, Massachussets) race to the bottom while those residents who can break chains and swim towards the surface. Hello Virginia! Hell. Hello Indiana. Its gonna be a hell of a (second, civil) war when the liberals realize all the taxpayers moved out.

Sorry, wrong month. We had the "the blue states subsidize the red states" discussion back in November. That circumstance hasn't changed since the last Civil War. When it does, call us.

[Greedy,Greedy,Greedy]

Originally posted by taxwonk
The solution to both SS and Medicare, at least in part, is simple, albeit brutal. Let more people die, and die younger...

Die, you old folks, die!

.... we are producing less babies to shunt the bill onto, which is what has kept the system going lo these past three generations...

Your are missing the boat again.

Clearly, we ought to be producing more babies instead.

[Greedy,Greedy,Greedy]

Originally posted by Mmmm, Burger (C.J.)

all taxes distort economic activity, so your objection proves too much (or something like that). To the contrary, a flat sales tax (or VAT) is less likely to have odd disincentives, because it won't be filled with loopholes, other than perhaps for consumption (you know milk will be exempt). Businesses will pass the tax along to consumers, who will have a disincentive for consumption.



you make it sound like that 2-3M was acquired through some loophole or great luck. It wasn't. You won't have the pot at all if you eliminate tax deferral--it will just be a normal investment account (unless you want to pull the rug out from everyone midstream). It's just moving the wrong direction. Besides, people are constantly cashing in that 2-3M account (which it's pretty hard to get that large without some really savvy investing), and paying taxes on it. Why not just tax capital gains every year? It's the same problem--you can defer the gains until realization? And remind me why Gramma deserves something more than what she (or her hubby) put into SS or her own retirement savings? Does she own a farm, becaause that would be a good reason.

Not a lot of time at the moment, so a couple quick retorts.

I'm not talking about eliminating deferral, only reducing it. Assume earnings on a 401(k), instead of being tax free, are subject to a 5% tax. Will this discourage anyone's savings? It's a kind of AMT for the 401(k) addicts. And $2-3 million accounts really aren't that rare - I'll bet the majority of BIGLAW law firm partners over 60 have them. Max out for 40 years, that's what you get.

And, on taxes, different taxes have different impacts. Wage taxes discourage employment, consumption taxes discourage consumption. When you look at the international playing field, we tax wages more heavily than others and consumption less heavily, which is why I wasn't getting too upset about replacing wage tax with consumption tax. But I'm really more an income and wealth tax kind of guy.

[Bad_Rich_Chic]

Originally posted by taxwonk
The solution to both SS and Medicare, at least in part, is simple, albeit brutal. Let more people die, and die younger.

Modern medical science has been obssessed for decades with chasing technologies and drugs that prolong life, simply for the sake of prolonging it. Why should a woman in her late 70's, with severely metastisized bone cancer, be given course after course of radiation and chemotherapy? So that she can live another five years in pain and waste away? The focus on such patients should be palliative care. And yet, this scenario is played out in every hospital in the country on a daily basis.

In a nation where we face an extreme shortage of donated organs, Mickey Mantle undergoes a transplant at a cost of over a million dollars to live another two years, while a 34 year-old father of three dies for lack of an organ.

Cardiologists are spending countless dollars on artificial hearts designed to work outside the body, passing along the cost to everyone in the health care system, so that terminal patients can spend months in the hospital while the rest of their organ systems slowly shut down. Why? Because we can.

The biggest problem is that we are aging as a population, medicine allows us to extend that aging period, and we are producing less babies to shunt the bill onto, which is what has kept the system going lo these past three generations. Nobody is setting priorities in health care and as a result the money for grants and research is going towards subsidizing our fear of death, instead of improving the general population's overall health and saving those who still have lives to live.

2. Part 2 of my "fuck the oldsters" plan: shift the healthcare subsidy out of late-stage radical intervention for the elderly and into preventative care for citizens with their lives still ahead of them. Repeal Medicare and instead provide G subsidized healthcare for everyone under 18 (or 21 or whatever).

This is, in my view, one of the better arguments for a single G-payor healthcare system: the CBA of healthcare will have to happen over all of society, and, while I'm not fool enough to believe it will result in rational rationing of care, it can't but improve. While I've no problem with rich old farts paying for whatever fool medical treatments they want, the idea that I am paying for it is intolerable. (This and society-wide risk spreading.)

Why the hell are we subsidizing cancer treatments for someone who's 70 but not someone who's 12 (or 45 for that matter, at the height of economic productivity and having others dependent on them)? Why the hell are we subsidizing bank-busting end-of-life support for someone who's 70 but not paying for adequate asthma treatment for 7 year olds so they can prevent long-term damage to their health, attend more school to become more productive members of society for the next 70+ years? Why are we (now - thanks W, you fucker) paying for the arthritis meds of that 70 year old, and his meds to treat the drug-induced diabetes caused by his arthritis meds, but not paying for life-saving drugs for children?

BR(because the system's fucked, duh)C

By the way, Wonk, this post makes you very sexy. Just thought I'd perk up your day! And, fwiw, if I win the lottery, your new ticker is still high on the list of my first purchases.

[Tyrone Slothrop]

Originally posted by Skeks in the city
Saying Clinton did the under 40 or 50 crowd any good is like saying your better off driving off a cliff at 100 miles per hour than 110 miles per hour. You're fucked either way.

Mr. Fox, come now, come now. You don't have to be so glum now.

Clinton did not reform Social Security. That is true. He did, however, put the federal government's finances in order by running surpluses and reducing the deficit dramatically, reducing the debt load that we will be paying in the future. Sadly, Bush has undone all this.

[Tyrone Slothrop]

Originally posted by Greedy,Greedy,Greedy
Ty has problems with a number of my proposals, including the idea of some kind of reduction in the tax incentives for retirement benefits. He clearly doesn't like the idea of tiering benefits, and I expect most Democrats don't -- I have a lot of ambivalence myself. At the same time, if you're going to cut a retirement benefit, you owe to people to put them on notice of it in time for them to adjust expectations and possibly make up the difference. Dems probably need to put benefits on the table in some way to get to a bipartisan deal, and I put them on the table in a way I found palatable but not tasty.

I don't like the idea of tiering benefits not because I think that rich people particularly need Social Security, but because ensuring that the middle class gets the same benefits as the poor is a way to make sure that the program retains political support in the future. See, e.g., welfare reform.

[taxwonk]

Originally posted by Bad_Rich_Chic
By the way, Wonk, this post makes you very sexy. Just thought I'd perk up your day! And, fwiw, if I win the lottery, your new ticker is still high on the list of my first purchases.

I'm blushing, and it's not even the FB!!

[Sidd Finch]

Originally posted by Greedy,Greedy,Greedy
I'm not talking about eliminating deferral, only reducing it. Assume earnings on a 401(k), instead of being tax free, are subject to a 5% tax. Will this discourage anyone's savings? It's a kind of AMT for the 401(k) addicts. And $2-3 million accounts really aren't that rare - I'll bet the majority of BIGLAW law firm partners over 60 have them. Max out for 40 years, that's what you get.

401(k)s barely scratch the surface of tax-free and tax-advantaged savings vehicles, particularly for people who can call themselves "self-employed" (e.g., partners). They can put away amounts approaching six figures a year, tax-free (not just tax-deferred on the returns), plus huge amounts in a variety of plans where the returns are tax-deferred. Some of which have been rendered invulnerable because virtually every Senator or Rep owns one.

So, what you said, but much more so. Put differently, 2+.

But this will never happen under Bush -- anything that looks like a current tax increase is being rejected out-of-hand. Future tax increases (i.e., massive deficits) are okay, and as a near-40-y.o. I must express my appreciation to younger Repubs for footing that bill on my behalf.

[sgtclub]

Originally posted by Bad_Rich_Chic
2. Part 2 of my "fuck the oldsters" plan: shift the healthcare subsidy out of late-stage radical intervention for the elderly and into preventative care for citizens with their lives still ahead of them. Repeal Medicare and instead provide G subsidized healthcare for everyone under 18 (or 21 or whatever).

I have no problem with focusing on prevention, but I suspect that many of the innovations that have cause the average life span to rise from 47 years (at the time of the new deal) to 77 years (today's rate) would not have happpened if health care was directed as you suggest.

[sgtclub]

Originally posted by Tyrone Slothrop
Mr. Fox, come now, come now. You don't have to be so glum now.

Clinton did not reform Social Security. That is true. He did, however, put the federal government's finances in order by running surpluses and reducing the deficit dramatically, reducing the debt load that we will be paying in the future. Sadly, Bush has undone all this.

You seem to easily forget that the GOP Congress played a part in this as well.