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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: RMF who wrote (43474)	5/26/2010 8:36:11 AM
From: Peter Dierks	Read Replies (2) \| Respond to of 71588

The Party of Debt An unwelcome moniker for the Democrats. BY Gary Andres May 20, 2010 12:00 AM Two seemingly unrelated news stories unfolded in Washington last week -- developments that could further stoke the flames of voter discontent across America. Taken together, these reports could also label the Democrats with an ugly and hard to erase moniker heading into the November elections: They are now the Party of Debt. The first piece of news concerned Congressional Democrats' plan to forgo passing a budget blueprint this year – an unprecedented display of fiscal policy malpractice. A January 2010 Congressional Research Service report demonstrates that only four times in the past 35 years have lawmakers not adopted a concurrent budget resolution (a document projecting long term spending and revenue goals). And even when the two legislative bodies have failed to reach an agreement, in every year since the enactment of the Congressional Budget Act of 1974, at least the House has produced its own blueprint and given members a chance to vote on it. How do we get our fiscal house in order if lawmakers can’t even develop a plan? Democrats might still reverse course and produce a budget this year. But as recently as yesterday, Senate Budget Committee chair Kent Conrad told the Washington Post the chances of doing so were “fading.” The Congressional Budget Office (CBO) provided a second piece of troubling money news last week, demonstrating the health care reform bill won’t reduce the federal deficit after all. According to the CBO, the health care law will cost $115 billion more than original projections. This new estimate means the overall price tag of the Democrats’ bill will top $1 trillion. Senate Republican leader Mitch McConnell blistered Democrats saying the new budget estimate wiped out any of the promised deficit reduction in the health bill. “This is astounding,” McConnell said. “Here was one of the Democrats’ primary arguments in favor of their health care bill – that it would lower the deficit. Yet now we’re learning that it won’t. But you won’t hear a word about it from the people who made that argument day in and day out for more than a year.” Rep. Paul Ryan of Wisconsin provides more evidence further implicating the Democrats as the Party of Debt in his Roadmap for America’s Future. “Debt as a share of the economy is projected to exceed 60 percent this year (2010) – greater than the 2009 level, which was the highest in 50 years – and will reach 82 percent of GDP by the end of the next decade under the administration’s policies,” Ryan writes. “The U.S. has not seen debt at these expected levels since the end of World War II.” Even officials appointed by the Democrats in Congress to provide expert advice on these matters, such as CBO director Douglas W. Elmendorf, are sounding the alarm bells. In an April 23 presentation to the International Monetary Fund Fiscal Forum, Elmendorf issued a clear and stern warning: “Given current law and certain changes to that law that are broadly supported by the Administration and Congress, the budget deficit and debt are on a worrisome path – unsustainable in the long run and posing growing risks even during the next several years.” Congressional Democrats’ response: Skip passing a budget blueprint this year and spend more than planned on the health care bill. It’s a legislative twist on the MasterCard commercial – running up more debt through self-indulgent spending? Priceless. Campaign consultants, however, say this kind of process news rarely registers in the body politic. It’s too “inside baseball.” No one outside the beltway really cares whether Congress passes a budget resolution or about the contents of a CBO report. But this election cycle is different. It began with a massive stimulus bill. Then news of enormous debt accumulation over the next ten years in the first two Obama budgets began to sink in. Now voters worry the European debt problems playing out across the Atlantic represent a picture of America’s fiscal future. The Democrats’ growing debt blitzkrieg is also at odds with how American households are responding to the current economic situation. While citizens across this country continue to “de-leverage” – paying down consumer loans and modify spending – Democrats in Congress are in the midst of a massive debt crisis of their own and would rather kick the can than deal with it. Some say proposing an austerity program in an election year is too risky -- spending fecundity increases incumbent popularity, the story goes. Politicians who slash popular programs will incur the electorate’s wrath. But the Party of Debt may confront a chilling new dynamic this November. Perhaps the greatest hazard is doing nothing at all. weeklystandard.com

To: RMF who wrote (43474)	6/9/2010 6:41:37 PM
From: TimF	Read Replies (1) \| Respond to of 71588

No Good Answers on Public Pensions Jun 1 2010, 2:49 PM ET \| Comment I've spent a fair amount of time over the last few weeks debating what we're going to do about Social Security when the time comes, that time being . . . um, almost now. There are roughly three main plans, all of them unsatisfying: Eliminate the ceiling on payroll taxes. Someone I was talking to recently informed me that this was "all we have to do". All? That's a 12.5% marginal tax increase on a whole lot of income. This is on top of the now-planned reversion to the Clinton tax rates of 39.5% for that income, and the various tax hikes on the rich that have been bandied about to pay for other things. Tack on state and local taxes in high-wage states, and you're looking at many people having marginal tax rates in the 60-65% range. That's too high. To me, it's too high morally--no one should work more hours for the government than for themselves. It's also too high practically. I've long said that the Laffer Curve doesn't apply at US rates--but that's because we don't have people paying taxes at a greater than 60% rate. You'll get Laffer effects from people deciding to work less, but also because with a 65% tax rate, it really pays to shelter your income, transform it into capital gains, or move. You simply cannot hike tax rates by almost 20 percentage points in a few years with no war to stir the patriotic spirit, and expect it to go well. The other problem is that you then shatter the illusion that this is insurance, rather than a legally enforced Ponzi scheme. Which is why I understand the AARP has historically opposed moves like this. Means test the benefits I am in favor of this myself--I think. The problem is that means testing old-age benefits is effectively an enormous tax on saving. Say that saving enough to provide $100,000 a year in income results in a 100% loss of benefits. With a maximum benefit of something under $30K a year, that's a 30% tax on my hundred thousand, on top of the income taxes I'll already pay. Losing Medicare is a potentially even steeper tax. Call it 50%, total, plus maybe 20% income tax. Why bother? You can set the caps higher, so that the marginal tax rate is rather smaller, but then you don't save any money. The very wealthy are numerically few; kicking 20,000 wealthy couples off the rolls is not going to save the system. Raise the Retirement Age I'm also in favor of this. However, I notice that it is a proposal espoused and endorsed by sedentary people who have interesting jobs as policy wonks. Moving people off the social security rolls and onto the disability system is not a huge help. Moreover, this proposal will not do much good unless you also raise the early retirement age; seven out of ten retirees collect their benefits before age 65 (or now 66). Keeping people in the workforce means more years of taxes to prop up the system. Otherwise it's just a benefit cut by another name--and if you cut them far enough, you end up with the elderly on other forms of public assistance to make up the shortfall. theatlantic.com rminnema [Moderator] 1 week ago 10 people liked this. "The other problem is that you then shatter the illusion that this is insurance, rather than a legally enforced Ponzi scheme. " In other words, truth-in-advertising? theatlantic.com