Obamanation Re-election MegaThread

[StrangeSox]

Obamacare at least attempts to do something about Medicare/caid.

 

The DoD has recommended a budget that Paul Ryan, Mr. Very Serious Deficit Hawk, claimed was just the Generals lying. Paul Ryan's budget gives ample increases to Defense while Obama's does not (and especially true for the Progressive Caucus budget, for that matter).

 

There's still not any real equivalency on those issues.

[StrangeSox]

I'm just glad that Obama has apparently finally realized that the Republicans have zero interest in bipartisanship to get any major legislation done no matter how much he moves to adopt their positions. Hell, look at all the flak Obama gets from the right over not embracing B-S (which is a terrible austerity plan, but that's another issue) while at the same time Mr. Very Serious voted against it when he was on the damn committee.

[NorthSideSox72]

Obamacare at least attempts to do something about Medicare/caid.

 

The DoD has recommended a budget that Paul Ryan, Mr. Very Serious Deficit Hawk, claimed was just the Generals lying. Paul Ryan's budget gives ample increases to Defense while Obama's does not (and especially true for the Progressive Caucus budget, for that matter).

 

There's still not any real equivalency on those issues.

I said nothing of equivalency in terms of failing to compromise. On the contrary, the parties are alike specifically for what they ignore, or only do very little to address. PPACA doesn't do much to curb Medicare spending, as I understood it. No one wants to touch Soc Sec, and in fact they keep borrowing from it. And the military budget is still way to large, not because I think the generals are lying, but because they are forced to budget for a force capable of acting in ways I don't believe they should be acting.

 

[StrangeSox]

I said nothing of equivalency in terms of failing to compromise. On the contrary, the parties are alike specifically for what they ignore, or only do very little to address. PPACA doesn't do much to curb Medicare spending, as I understood it. No one wants to touch Soc Sec, and in fact they keep borrowing from it. And the military budget is still way to large, not because I think the generals are lying, but because they are forced to budget for a force capable of acting in ways I don't believe they should be acting.

 

I didn't say in terms of failing to compromise. I meant in terms of addressing those issues you laid out.

 

Obamacare attempts to bend the cost-curve for medical care. Whether it will is another question, but it at least attempts to slow down the growth which would impact Medicare/caid spending. Ryan proposes addressing Medicare by essentially eliminating it. I suppose that counts as addressing spending on the program, but it's not actually a realistic policy proposal.

 

I'm right there with you in agreeing that the military budget is far too large, but look what happens when Obama proposes a budget that doesn't continue growing the military exponentially: he's hammered from the right to the point of their star deficit hawk implying that the generals are lying due to political pressure and of course the tried-and-true "democrats are weak" talking points.

 

No one needs to touch Social Security, at least for a while, and it doesn't impact the deficit.

[Balta1701]

I said nothing of equivalency in terms of failing to compromise. On the contrary, the parties are alike specifically for what they ignore, or only do very little to address. PPACA doesn't do much to curb Medicare spending, as I understood it. No one wants to touch Soc Sec, and in fact they keep borrowing from it. And the military budget is still way to large, not because I think the generals are lying, but because they are forced to budget for a force capable of acting in ways I don't believe they should be acting.

The PPACA included $500 billion in Medicare cuts over the first 10 year period. That money was then used to finance the coverage expansion in Medicaid and the transition to the exchanges. While this isn't enough to bring Medicare into long-term fiscal balance...it actually would bring the overall budget into long-term fiscal balance if the tax cuts were removed, which was not the case beforehand. More can be done on this long-term, but the PPACA literally bought 10 years or more before things really got out of hand, and may well have done even better than that, possibly as shown by the fact that Medicare Spending Growth has plummeted in the past 3 years and is currently at a 2.5% annual growth rate, which would actually be long-term sustainable. Not all of the credit for that can go to the PPACA since it hasn't been fully implemented yet, but Medicare is actually moving in the right direction.

 

Secondly, the Social Security issue still remains incredibly small, 20 years out, easy to fix, and really, the only reason to attempt to "Fix" social security right now is to do what happened last time...use the larger surpluses to finance larger general fund tax cuts.

[NorthSideSox72]

No one needs to touch Social Security, at least for a while, and it doesn't impact the deficit.

I am tired of seeing this. For one thing, it isn't true - we are borrowing from those funds all the time, which is basically a hidden debt. Also, this idea that we don't need to address it right now, is the same as people saying we don't need to address the deficit or debt at all right now. It is deciding to live in ignorance of the path you are on, hoping to deal with it later, when it will be much more difficult and expensive to deal with.

 

Real simple fix for Soc Sec: disallow any further borrowing from Soc Sec for any reason, keep the current lowered payroll tax rate, lower it to that rate for businesses too, and remove the cap. I've seen this type of scenario laid out with all the math - it gets rid of virtually any risk of future shortfalls. And makes the tax less regressive.

 

[StrangeSox]

The PPACA's impact on Medicare is where we got all sorts of fun things like "death panels" and "KEEP GOVERNMENT OUT OF MY MEDICARE!" signs.

[Balta1701]

Real simple fix for Soc Sec: disallow any further borrowing from Soc Sec for any reason, keep the current lowered payroll tax rate, lower it to that rate for businesses too, and remove the cap. I've seen this type of scenario laid out with all the math - it gets rid of virtually any risk of future shortfalls. And makes the tax less regressive.

I actually really dislike the "disallow further borrowing from Social Security", because what that effectively does is it puts the government into a position where one portion of it is running a permanent surplus. I get the motivation, because every time there's a Social Security surplus the immediate response has been to use it to slash upper-tier tax rates, but that strikes me as treating a symptom rather than curing the problem. The problem is that anything and everything is an excuse to slash top tier tax rates.

[NorthSideSox72]

I actually really dislike the "disallow further borrowing from Social Security", because what that effectively does is it puts the government into a position where one portion of it is running a permanent surplus. I get the motivation, because every time there's a Social Security surplus the immediate response has been to use it to slash upper-tier tax rates, but that strikes me as treating a symptom rather than curing the problem. The problem is that anything and everything is an excuse to slash top tier tax rates.

If you bothered to read my post, you'd see I was actually calling for the opposite - keeping tax rates low for lower incomes, raising them for upper incomes, and lowering them for business on the hiring side.

 

Also, the entire idea of Social Security is a trust fund for the American people. You WANT a surplus in there, enough so to cover forseeable contingencies.

 

[StrangeSox]

I am tired of seeing this. For one thing, it isn't true - we are borrowing from those funds all the time, which is basically a hidden debt. Also, this idea that we don't need to address it right now, is the same as people saying we don't need to address the deficit or debt at all right now. It is deciding to live in ignorance of the path you are on, hoping to deal with it later, when it will be much more difficult and expensive to deal with.

 

Real simple fix for Soc Sec: disallow any further borrowing from Soc Sec for any reason, keep the current lowered payroll tax rate, lower it to that rate for businesses too, and remove the cap. I've seen this type of scenario laid out with all the math - it gets rid of virtually any risk of future shortfalls. And makes the tax less regressive.

 

I don't consider "stop taking money from SS" as addressing any problems with SS since the problem is "taking SS money away from SS" and not actually something wrong with SS. I'm in favor of stopping that.

 

We really don't need to deal with the debt or deficit now as in we don't need to get to a balanced budget next year. As we have ample evidence for now (recent Romer and Delong paper), short-term deficit obsession leading to strict austerity during the current economic situation we find ourselves in actually hurts long-term revenue growth and worsens the debt down the road. There's also Modern Monetary Theory that advocates low-level deficits in perpetuity, but that's the extent of my knowledge on that.

 

I don't see any issues with your proposed fixes, but I'd like to see them laid out.

Edited April 4, 2012 by StrangeSox

[Balta1701]

If you bothered to read my post, you'd see I was actually calling for the opposite - keeping tax rates low for lower incomes, raising them for upper incomes, and lowering them for business on the hiring side.

 

Also, the entire idea of Social Security is a trust fund for the American people. You WANT a surplus in there, enough so to cover forseeable contingencies.

Really though, this is actually currently the case. The problem is that we're projecting so far out, 25+ years, that near-impossible economic trends wind up mattering.

 

The Trust Fund as it currently sits, by covering through about 2040 (I'd expect its position to improve slightly with economic recovery), basically does exactly what you ask it to do, covers the foreseeable problem of the baby boom retirement.

 

Increasing the trust fund size now would actually be a hamper on the rest of the economy, and I think it's the wrong way to respond to the next foreseeable contingency. The next foreseeable contingency is not caused by demographics, its caused by a quirk of the program; that the benefits rise at a rate faster than inflation. Thus, if you take the projection far enough out, Social Security benefits as a share of the economy wind up growing with time.

 

If inflation + Productivity growth winds up winning, you have no problem...and that basically happens if you have the same productivity growth as the U.S. has seen for the last 50 years. If you project lower productivity growth, then you have a problem, but the right answer is to slightly slow the growth rate of the program there, IMO.

[NorthSideSox72]

Really though, this is actually currently the case. The problem is that we're projecting so far out, 25+ years, that near-impossible economic trends wind up mattering.

 

The Trust Fund as it currently sits, by covering through about 2040 (I'd expect its position to improve slightly with economic recovery), basically does exactly what you ask it to do, covers the foreseeable problem of the baby boom retirement.

 

Increasing the trust fund size now would actually be a hamper on the rest of the economy, and I think it's the wrong way to respond to the next foreseeable contingency. The next foreseeable contingency is not caused by demographics, its caused by a quirk of the program; that the benefits rise at a rate faster than inflation. Thus, if you take the projection far enough out, Social Security benefits as a share of the economy wind up growing with time.

 

If inflation + Productivity growth winds up winning, you have no problem...and that basically happens if you have the same productivity growth as the U.S. has seen for the last 50 years. If you project lower productivity growth, then you have a problem, but the right answer is to slightly slow the growth rate of the program there, IMO.

 

That does bring up another issue - I do believe the benefits should only increase at the rate of inflation.

 

[Y2HH]

If you bothered to read my post, you'd see I was actually calling for the opposite - keeping tax rates low for lower incomes, raising them for upper incomes, and lowering them for business on the hiring side.

 

Also, the entire idea of Social Security is a trust fund for the American people. You WANT a surplus in there, enough so to cover forseeable contingencies.

 

This is well said.

 

The SS fund isn't the governments money, and thus it's not the governments money to borrow and do with what they will. It's not a fund designed or meant to be filled with risky IOU's that may never materialize, for example, "Green Investments", or stock certificates. It's the peoples money that the government has agreed to "safeguard" as a future social safety net, which is self funding. The governments job is nothing more than to defend the money, while investing it in, and limited too, government backed securities. These investments will never give you stock market returns, but they will also never "disappear" so long as the US Government doesn't "disappear". It's meant to be invested in ultra safe ultra conservative US govt instruments, NOT stocks, not oil, not real estate, etc...

[Balta1701]

That does bring up another issue - I do believe the benefits should only increase at the rate of inflation.

If you were to make that happen...there would be no need for any other change to Social Security's funding. Ever. If you made that change now, the Trust Fund would decline a little for the next decade and that would be it, it would be solvent forever. And at that point, the trust fund ought to actually shrink quite a bit because there'd be no need to have such a large stockpile of bonds sitting in the hands of OASDI.

[Y2HH]

If you were to make that happen...there would be no need for any other change to Social Security's funding. Ever. If you made that change now, the Trust Fund would decline a little for the next decade and that would be it, it would be solvent forever. And at that point, the trust fund ought to actually shrink quite a bit because there'd be no need to have such a large stockpile of bonds sitting in the hands of OASDI.

 

There were other changes to the fund over the years that it wasn't truly meant to cover. It was supposed to be a fund people paid into, and then collected out of in the future, designed as the ultimate final safety net. The issue is it also became something of an "insurance program" over the years, for example, you dying before you were able to collect, and it paying out to your children until they're 18...even if it overdraws how much you ever contributed. That's a form of life insurance...and it wasn't intended to cover things to that extent, such as it is.

[StrangeSox]

There's always been the disability insurance aspect of it, so you could always far over-draw how much you contributed if you were disabled at a young age.

Edited April 4, 2012 by StrangeSox

[Balta1701]

There were other changes to the fund over the years that it wasn't truly meant to cover. It was supposed to be a fund people paid into, and then collected out of in the future, designed as the ultimate final safety net. The issue is it also became something of an "insurance program" over the years, for example, you dying before you were able to collect, and it paying out to your children until they're 18...even if it overdraws how much you ever contributed. That's a form of life insurance...and it wasn't intended to cover things to that extent, such as it is.

Nothing you say here is a bad thing. We call it "Social Security" and that is the appropriate name...it provides...Social Security. It provides a specific set of societal safety nets, including things like disability payments or helping spouses in the event of the death of a main wage-earner. The life insurance payouts are at best limited in most cases, although I'm sure there are some cases in the event of disability I haven't studied.

[StrangeSox]

The formal name is actually "Old-Age, Survivors, and Disability Insurance (OASDI)." It's not a government-run 401(k) plan and was never meant to be.

 

edit: the trust fund itself was a later amendment to the original program.

Edited April 4, 2012 by StrangeSox

[NorthSideSox72]

If you were to make that happen...there would be no need for any other change to Social Security's funding. Ever. If you made that change now, the Trust Fund would decline a little for the next decade and that would be it, it would be solvent forever. And at that point, the trust fund ought to actually shrink quite a bit because there'd be no need to have such a large stockpile of bonds sitting in the hands of OASDI.

Then do both, and use the extra funds in the short term to offset the stupid IOU's hanging out there. When those are wiped out, lower the overall rate to however low you can go and still maintain the future of the funds.

 

[Balta1701]

Then do both, and use the extra funds in the short term to offset the stupid IOU's hanging out there. When those are wiped out, lower the overall rate to however low you can go and still maintain the future of the funds.

Huh?

 

Do you mean you'd be interested in eliminating the entire trust fund?

[NorthSideSox72]

Huh?

 

Do you mean you'd be interested in eliminating the entire trust fund?

What? I am saying that the added revenue in the short run could be used to cover the IOU's for money that Congress has been borrowing for general spending. Did I miss something here?

 

[StrangeSox]

Then do both, and use the extra funds in the short term to offset the stupid IOU's hanging out there. When those are wiped out, lower the overall rate to however low you can go and still maintain the future of the funds.

 

That'd amount to a transfer from taxpayers to bondholders, wouldn't it?

[Balta1701]

What? I am saying that the added revenue in the short run could be used to cover the IOU's for money that Congress has been borrowing for general spending. Did I miss something here?

I don't think it works that way.

 

The OASDI trust fund buys up what are (hopefully) risk-free US Treasury Bonds. That money then is transferred directly to the treasury. As long as there is a Social Security trust fund and the Trust Fund is invested in Treasuries (and God help us if they ever try to invest it somewhere else), that money is going to go into the general fund.

 

The question then is not one of there being some level of "IOU's" that the Treasury has written the Trust Fund. If the trust fund exist, that money gets put into buying treasuries and thus is supplied to the general fund.

 

Basically, all that matters is whether the general fund is running a deficit or not. If the general fund is balanced, then there's really no such thing as an "IOU to the Social Security program" or anything like that, because the balance there would include payments on the bonds owned by the OASDI program.

 

The only way to have there be no "IOU's" is to have there be no trust fund.

[NorthSideSox72]

That'd amount to a transfer from taxpayers to bondholders, wouldn't it?

well its convoluted, but my impression is that it goes to the fed either way, or through it. If you use SS funds to flatten negative positions to the Fed, I think that is the same as going into the fund generally. I could be wrong though.

 

[NorthSideSox72]

I don't think it works that way.

 

The OASDI trust fund buys up what are (hopefully) risk-free US Treasury Bonds. That money then is transferred directly to the treasury. As long as there is a Social Security trust fund and the Trust Fund is invested in Treasuries (and God help us if they ever try to invest it somewhere else), that money is going to go into the general fund.

 

The question then is not one of there being some level of "IOU's" that the Treasury has written the Trust Fund. If the trust fund exist, that money gets put into buying treasuries and thus is supplied to the general fund.

 

Basically, all that matters is whether the general fund is running a deficit or not. If the general fund is balanced, then there's really no such thing as an "IOU to the Social Security program" or anything like that, because the balance there would include payments on the bonds owned by the OASDI program.

 

The only way to have there be no "IOU's" is to have there be no trust fund.

 

I may be misunderstanding this... but if the general fund is negative outbound, and therefore is using equivalent funds from the Treasury that would otherwise had been held in trust for Soc Sec, then it is still borrowing. In reality, the positions should be segregated, but they don't really do it that way.