Yes Virginia, sooner or later we will all be paying more taxes

My previous post dealt with two “surprise” taxes buried in the new Affordable Care Act regulations.  And for the past year, observers have been listing the plethora of new taxes scheduled to take affect in 2013, fiscal cliff or no fiscal cliff.

But that isn’t the whole story.  Far from it, in fact.

All that you need in order to understand what I’m about to explain, is a little math.

Ready?

Since the end of WWII, total annual Federal tax revenues have stayed at around 18% – 19% of annual GDP.  That includes the years where the top marginal income tax rate exceeded 90% of adjusted gross income.   During the same period, the Federal government has spent an average of 18% – 20% of annual GDP.  This includes both the Cold War years, where defense spending alone often exceeded 10% of annual GDP, and the post-Great Society years, where entitlement spending routinely exceeded 50% of the total Federal budget.

The result was a rough balance between receipts and outlays, with a manageable annual deficit of around 1% – 2% of annual GDP.  But the Obama Administration has significantly altered the former status quo.  Federal tax revenue for 2012 is projected to be around $2.47 trillion, or roughly 17% of projected GDP.  Meanwhile, Federal spending for 2012 comes in at around $3.7 trillion, or roughly 24% of projected GDP.  The Obama Administration originally justified drastically increased spending as a remedy for the ailing post housing bubble economy.  But the inflated spending of 2008 – 2009 has become the new budget baseline, with annual Federal government spending projected to rise to $4 trillion and beyond, in the next decade.

Of course this creates an enormous problem – massive annual budget deficits in excess of $1 trillion.  We can’t continue to borrow this amount of money indefinitely.  The revenue from tax increases already slated for 2013 and beyond will be largely consumed by the Federal government’s take-over of the health care industry.  And even if income tax rates are increased for “the rich,” the revenue raised from these increases will be insignificant compared to the size of our projected annual budget deficits.

So how will the government close the massive 5% – 7% gap (relative to GDP) between Federal outlays and receipts?  Right now, it seems unlikely that the Federal government will voluntarily reduce spending back to a level that corresponds with 20% of annual GDP.  Another option would be solid economic growth that would rapidly expand our annual GDP and reduce the current Federal spending level back to the 20% range.  But our current anemic rate of economic growth, combined with Obama Administration rhetoric and policies focused on denigrating and punishing successful investors and businesses, makes such a scenario seem like nothing more than wishful thinking.

The remaining option, and obviously the most appealing route for money and power-hungry government officials, is tax increases.  But don’t look for them to be in the form of hikes in traditional income tax rates.  The current arguments over income taxes are nothing more than a smoke screen, a distraction that is easy fodder for pundits, bureaucrats, and Facebook meme-spreaders.  Right now, behind closed doors, DC power players are planning the real taxation strategy: various cleverly packaged tax increases that will affect all tax payers, and that can be sold to a gullible public through arguments about fairness and equality.

The primary tools for drastically increasing tax revenue will certainly include the elimination of significant existing tax exemptions and deductions.  One such item already being targeted is employee health care benefits, which are currently exempted from taxable income:

Workers pay no income or payroll taxes on what their employer contributes for health insurance, and in most cases on their own share of premiums as well.

It’s the single biggest tax break the government allows, outstripping the mortgage interest deduction, the deduction for charitable giving and other better-known benefits. If the value of job-based health insurance were taxed like regular income, it would raise nearly $150 billion in 2013, according to congressional estimates. By comparison, wiping away the mortgage interest deduction would bring in only about $90 billion.

“If you are looking to raise revenue to pay for tax reform, that is the biggest pot of money of all,” said Martin Sullivan, chief economist with Tax Analysts, a nonpartisan publisher of tax information.

Another area of interest involves the IRA, 401(k), and 403(b) tax-deferred retirement savings plans.  Pundits have already noted that these plans add a “tax expenditure” to existing tax revenue streams that amounts to around $240 billion per year.  A recent study of Denmark’s similar tax-deferred retirement savings plan found that total retirement savings increased by only 1% of the total money given in government tax breaks.  Conclusion: these tax deferments are a huge waste of much-needed money.  And the class warfare argument is also taking shape.  According to the Tax Policy Center, most of the substantial savings available with tax-deferred retirement savings plans are enjoyed only by the top 20% of wage earners.

We should expect to see this issue discussed more frequently in the coming months, with an emphasis restricting or eliminating tax-deferred contributions (particularly for high income earners) or taxing annual growth in retirement accounts as regular income.

There is also another option, favored by an increasing number of DC bureaucrats – abolishing tax deferred retirement plans, and replacing them with a government-managed retirement plan funded by mandatory contributions from all wage-earners.  New School for Social Research professor of economics Teresa Ghilarducci has already discussed how such a scheme might work:

  • The Federal government sets up a retirement account for all working Americans
  • Funds from workers’ existing retirement accounts – IRA’s, 401(k)’s, 403(b)’s, etc. – are transferred to these new accounts and converted into Treasury bonds
  • Workers will be required to make a mandatory contribution (say, 5%) to these accounts from each paycheck, with the money converted into Treasury bonds yielding 3% interest plus an adjustment for inflation
  • In lieu of the tax savings realized from traditional tax deferred retirement plan contributions, workers will receive an annual tax credit (say, $600)
  • Upon retirement, workers will receive a monthly payout from this retirement account in addition to Social Security

If you’re scratching your head right now, you should be.  What you just read is a plan to convert real money – your money – into government IOU’s, camouflaged by the notion that you are investing in a kind of government-managed annuity.  We should all keep a very close eye on this scheme, because with over $10 trillion currently invested in IRA’s, 401(k)’s, and other tax deferred retirement accounts, the temptation for the Federal government to raid our retirement piggy banks is simply too great.

Finally, we should expect a renewed discussion of the Value Added Tax (VAT).  Put simply, the VAT is an incremental tax, levied in stages on a product, based on formulas that derive the amount of “value” added to the product (or its components) at each stage of production.  The VAT is figured into the wholesale cost of materials or products at each stage of production, with manufacturers or distributors each paying the tax corresponding to the value that they have added, minus an allowance for the VAT already paid by entities who have previously handled the products or materials.  When the product is offered for retail sale, its price reflects the cost of the VAT that has been added.  Ideally, VAT rates are adjusted so that the final cost of the product including the VAT will be equivalent to the cost of the same product plus a traditional retail sales tax.

Proponents of the VAT argue that since it has very few exemptions and is calculated in a very straight-forward manner, the VAT is a much simpler and far more lucrative revenue tool than traditional sales or income taxes.  But the VAT can only be a preferable alternative to retail sales taxes if it is offered in their place.  Would a new Federal VAT replace existing sales taxes?  Probably not, since most of our existing sales taxes are levied by state and local governments to help fund their respective costs.  Nor would it replace income taxes.  Economist Robert Samuelson believes that a Federal VAT simply isn’t feasible without corresponding Federal spending cuts:

Applied to all consumption spending—about 70 percent of GDP—the required VAT rate would equal about 8 percent. But the actual increase might be closer to 16 percent because there would be huge pressures to exempt groceries, rent and housing, health care, education, and charitable groups. Together, they’re nearly half of the $10 trillion of consumer spending. There would also be other upward (and more technical) pressures on the VAT rate.

Does anyone believe that Americans wouldn’t notice 16 percent price increases for cars, televisions, airfares, gasoline—and much more—even if phased in? As for a VAT’s claimed benefits (simplicity, promotion of investment), these depend on a VAT replacing the present complex income tax that discriminates against investment. That’s unlikely; the needed VAT rates would be implausibly steep. Chances are, we’d pay both.

Higher consumer prices from the VAT could also slow the economy. The Federal Reserve would face policy dilemmas. If it tried to prevent businesses from passing the tax along to consumers, it would have to raise interest rates and risk a recession. If it tried to blunt the effect of higher prices on spending, its easy-credit policy might trigger a new wage-price spiral.

… A VAT might be the least bad tax, though my preference is for energy taxes. But what’s wrong with the simplistic VAT advocacy is that it deemphasizes spending cuts. The consequences would be unnecessarily high taxes that would weaken the economy and discriminate against the young. It would become harder for families to raise children. VAT enthusiasts need to answer two questions: What government spending would you cut first? And how high would your VAT rates go?

Even if we succeed in balancing future Federal budgets with additional tax revenues, we will be living in a very different nation; a nation with a vastly expanded Federal government that consumes 25 cents out of every dollar that its economy creates.  In other words, a nation with a noticeably diminished private sector, and thanks to ever-increasing regulation, a nation with significantly diminished liberties.  Despite the attempts by big-government supporters to dismiss these changes, I believe that an increasing number of Americans will begin to grasp their significance, once they have become noticeably impacted by the government’s encroachment on their lives.  The road ahead looks like a very difficult and costly one for the American taxpayer.

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  • jim_m

    They will tax us until they realize that they can no longer make the money necessary to sustain their spending. Then they will monetize the debt and bankrupt the nation. But they will never cut spending.

  • ackwired

    We are currently only paying for about 57% of our government with taxes. We can not tax our way to a balanced budget. Nor can we cut our way to a balanced budget. Every objective entity that has looked at the problem has concluded that we need to cut entitlements, cut military spending, and raise taxes. It is highly unlikely that the Republican/Democrat duopoly will be willing to solve the problem, as their primary political advantage lies in blaming the other party for the problem.

    • jim_m

      Actually, you can always cut your way to a balanced budget. The reality is that no one has the will to do so and that it would prove unpopular.

      But it is true that the current political hacks in control of our government not only lack the will to cut spending but lack any real interest in doing so. It’s just so easy to spend other people’s money and there is no incentive to stop doing so.

      • http://wizbangblog.com/ Baron Von Ottomatic

        The blame is bipartisan. It’s not like there was a granny-killing reduction in spending when GWB was in the WH and Republicans held both houses of Congress. All that’s left is the boning. Just a matter of when and how deep.

    • herddog505

      I won’t bother to ask who these “objective entities” are, but simply point out some basic numbers:

      US budget, FY2007 -

      revenue – $2.57T

      expenditures – $2.73T

      US budget*, FY2012 –

      revenue – $2.627T (requested)

      expenditures – $3.729T (requested)

      So, between 2007 and the present year, Uncle Sugar’s income was approximately stable at around $2.6T, while his expenditures have gone through the roof, increasing by about 37%.

      1. WHAT IN THE BLUE F*CK ARE WE SPENDING THAT TRILLION DOLLARS ON????

      2. Now, tell me again that we need to take a “balanced approach” to solving this fiscal conundrum, that we MUST have tax increases to help solve this problem.

      ====

      (*) I use the term loosely as that pack of courthouse loafers haven’t bothered to pass an actual budget in years.

      • jim_m

        That trillion is going directly into the pockets of the dems. That’s why you never see a budget. They would have to account for it then.

      • ackwired

        The government spends most of the money on military, Next comes Health Care followed by pensions, welfare and interest. Since pensions and interest must be paid, military, health care, and welfare spending must be cut. Reasonable people agree that it would be stupid to cut military, health care and welfare to the level that the budget would be balanced. While cuts should far exceed tax increases, both are necessary to get to a realistic budget.

        • jim_m

          The government spends most of the money on military,

          Really, Ackwired, I’m disappointed in you. 20% of government spending is on the military. 45% is on entitlements. If you want to break down every entitlement program into individual line items, then yes, they are smaller than defense. But the reality is that defense is not the low hanging fruit it was after the Berlin Wall came down.

          Reasonable people look at this like Herddog has and ask WTF are we spending $1T on? We aren’t getting a heck of a lot more services for that $1T. We should be able to cut it off entirely. No one has bothered to explain where it goes. It apparently goes into government waste or it goes into the pockets of dem donors (or both as in the case of Solyndra).

          We should be able to go back to the 2007 budget levels without any serious cuts to services. If the government has to cut services it is because they are stealing our money and they value their graft more than they value doing their jobs.

          Oh, and technically, none of it HAS to be paid. I am sure that if obama felt it were to his advantage he would default on any or all of it in an instant.

          • http://wizbangblog.com/ Baron Von Ottomatic

            I remember back when Gingrich was in Congress and he went on some Sunday show and said (paraphrasing) “We’ve cut all we can cut, show me where we can cut more.” I thought it was a goof, a rhetorical ploy to get Clinton to say “Well we could cut here and we could cut there.” Nope, he was freaking serious. That was a real eye-opener for me. Neither side is serious about spending cuts. We are doomed.

          • herddog505

            I think that you’re absolutely right. What we presently have is a politician’s dream: they can spend money without being accountable for it. Nobody can say, “You voted for / against the budget!”

          • http://www.rustedsky.net JLawson

            That $1 tril a year? There’s a lot of votes that wouldn’t be bought if that were cut. We’d best not touch it…

            /sarc

          • herddog505

            jim_mNo one has bothered to explain where it goes.

            That’s because only disgusting RAAAAACIST tea baggers bother to ask, and nobody needs to pay them any attention. They should just go away. Rest assured, however, that the money is being spent – INVESTED – wisely. Yessir, unlike when BUSH (snarl!) was in office, we’re spending money a lot smarter, providing more vital services for the American people and pulling us back from the brink.

            / sarc

            It’s a great time to be a politician: those clowns have got what amounts to a blank check.

          • ackwired

            Anybody that bothers to look knows where the money is being spent. Here is my source:

            http://demonocracy.info/infographics/usa/us_deficit/us_deficit.html

          • jim_m

            Nice graphics. The link doesn’t say where the money goers just that there is way too much of it going out,

          • ackwired

            I think that is a bit of a black hole. But my opinion is that a disproportionate share goes to the corporations that fund the elections.

          • jim_m

            That is essentially what I said: It goes to dem donors.

          • ackwired

            Yep! Although in fairness, most of them are also Republican donors.

          • jim_m

            Seriously? In an obama admin that wants to know what donations are being made by government contractors so they can steer contracts to dem donors exclusively?

            Sorry if I’m unimpressed with your assertion that “most of them are also Republican donors.”

          • ackwired

            Seriously! Corporations are not ideological. Their only interest is making money. They feed both parties and are fed by both of them.

          • jim_m

            So you are standing by your claim is that the obama admin gives more money to GOP donors than it gives to dem donors. I’d appreciate a citation for that.

          • ackwired

            I’d appreciate a citation for what you say is my claim.

          • jim_m

            Yep! Although in fairness, most of them are also Republican donors.

            Wish granted. You claimed “Most” people getting money from the government were GOP donors. I’m guessing that was an error because I cannot believe that you would really be trying to say that obama gives more government money to GOP donors than dem donors. (and this is for new government contract/grants not pre-existing ones since he would have inherited numerous contracts signed by Bush)

          • ackwired

            What I was saying was that most of the corporate supporters of the Democrats are also supporters of the Republicans. For a corporation to “bet” on one party or the other would be poor business. Most want access to and an implied obligation on the part of whoever wins.

          • jim_m

            Ok Gotcha. My bad.

        • herddog505

          Pray, show us the numbers. Explain to us why so much of that roughly $3.5T MUST be spent that we simply MUST ask people to pay more in taxes. Explain why we’re spending approximately TWICE what we spent in 2000. Has inflation REALLY gone up that much?

          Then, please explain why we “must” pay pensions and interest (for our credit rating? Don’t make me laugh) but not defense or health care.

          Let me help (I wish one could put tables in Disqus):

          FEDERAL REVENUES*

          2000 – $1.883T

          2007 – $2.57T

          2012 – $2.627T (requested)

          FEDERAL EXPENDITURES

          2000 – $1.765T

          2007 – $2.73T

          2012 – $3.729T (requested)

          DEFENSE SPENDING

          2000 – $311.7B

          2007 – $527.4B

          2012 – $707.4B

          So, in summary, defense spending has more than doubled in the past decade. That sounds bad, but that actual dollar value is “only” +$400B. In contrast, the total federal budget has increased by approximately $2T since Slick left office. Where is this money going? What are we getting for it? And why have people got to pay more in taxes to allow us to keep spending it? IF we returned to 2000-level spending, we’d run quite a tidy surplus; hell, if we went back to 2007 spending levels, we’d still be going in the hole, but at least we wouldn’t be charging full-tilt towards national bankruptcy.

          So, please, again: tell us why we’ve GOT to raise taxes, why we CAN’T cut out way out of this mess we’re in.

          ===

          (*) Sources for data:

          http://en.wikipedia.org/wiki/2000_United_States_federal_budget

          http://en.wikipedia.org/wiki/2007_United_States_federal_budget

          http://en.wikipedia.org/wiki/2012_United_States_federal_budget

          http://www.infoplease.com/ipa/a0904490.html

          • ackwired

            Sure, here are the numbers:

            Military ……………..$902.2Billion

            Health Care………..$846.1Billion

            Pensions……………$819.1Billion

            Welfare……………..$451.9Billion

            Interest……………..$224.8Billion

            Source:http://demonocracy.info/infographics/usa/us_government_budget/us_govt_budget.html

            You also asked why we had to pay pensions and interest. I guess the simple answer is that honorable people pay other people what they have agreed to pay them. Honorable people also expect their government to pay the debts that they have incurred. These 4 items comprise $3,244.1Billion of the total $3,795.6Billion or about 85% of the total expenditures. To balance the budget about 43% would have to be cut, which is $1,632.1Billion. Military, Health Care, and Welfare total about $2,2Trillion. So 75 % cuts would have to be enacted in these areas to achieve a balanced budget.

            Looking to the future, Social Security can be revised to reduce future expenses. But that is going to have a very small effect on the total budget problem.

          • jim_m

            It would be informative to know what portion of these entitlement budgets was actually given to recipients and how much was spent on bureaucracy. I’d be surprised if less than 50% were spent on bureaucracy. They should be put to the same test as charities where the standard is that the charity should spend less than 30% for overhead and the rest should go to recipients/program activities.

          • http://wizbangblog.com/ Baron Von Ottomatic

            Ja, the raw numbers say we spend ~24% of the budget on “defense” but that also includes the overhead at the Pentagon, the VA and veterans’ benefits/healthcare, and loads of civilian contractors. We clearly spend a staggering amount on hardware and equipping current troops in the field, but what percentage of the total allocated for defense?

            Yet try and cut a few billion through sequester and oh the howls of protest and predictions of soldiers dying in the field for lack of equipment.

          • http://wizbangblog.com/author/rodney-graves/ Rodney G. Graves

            Also note that the Defense Budget has been larded up with such urgent military programs as breast cancer research and global warming remediation…

          • ackwired

            It’s my opinion that we are going to have to cut both benefits and bureaucracy in all of these areas if we are ever to get to where we need to be.

          • jim_m

            Agreed, but while you and I would say to cut bureaucracy first and THEN benefits, the politicians will cut benefits first and never bureaucracy. When have you ever heard of government employees being laid off (that is employees other than in the military)?

            Heck, as we’ve seen this past week, even the ones who resign in disgrace don’t really lose their jobs.

          • herddog505

            Your source shows rather more being spent on the military than mine, but let’s take your numbers as given. They still show HUGE growth in the federal budget over the past ten years, not all of which can be accounted for by growth in defense spending. So, why the growth? What are we getting for that money? And why can’t we cut it to balance the budget without asking people to pay more?

            Quite aside from the apparent fact that spending is way, waaaaaay out of control, we all know how the game is played: tax increases come through but spending cuts… well, Congress MEANS to get around to them, but – dang it! – there are only so many days in the year, and they just never quite seem to find the time.

            So, for those two reasons, I vociferously deny that we need ANY new taxes.

            [EDIT]

            Oh, as for what “honorable” people do regarding the budget, I in general agree: “honorable” people DO pay what they owe. They usually do this in a realistic manner, which means cutting back until the debts are paid or, at least, under control. They don’t demand that other people pay more to keep the lousy, destructive system afloat.

            “Honey, I really had a bad run in Vegas and I owe people a lot of money. You need to get another job to help pay that off, m’kay? You can look while I’m gone fishing with the boys next week; I’m really looking forward to trying out my new boat.”

          • ackwired

            According to the Heritage Foundation, spending per household has grown at a fairly consistent rate (using inflation adjusted dollars) since 1965, with a rather sharp bump during the Bush II years. This is a trend that needs to be reversed. You are asking where the money went, which is a good question. I don’t know. But much of it went into two wars that were funded off the books.
            I’m all for cutting spending. I voted for Gary Johnson who wanted to cut spending by 43% to balance the budget, as opposed to Mitt Romney who wanted to increase spending and cut taxes, making an already intolerable problem worse.
            If it were possible to achieve fiscal responsibility by only cutting spending, I would be all for it. But the numbers tell the tale. You would have to cut military, health care, and welfare spending by 75% to do it, and that is simply not politically possible.

          • ackwired
          • Vagabond661

            My eyes tend to glaze over when talk goes to the budget. How much did two failed stimuli and using the rest of the TARP figure in on this?

            Maybe a bad idea but has any serious thought gone into taxing the 47% with a national lottery?

          • ackwired

            I’m sure a national lottery will be proposed when people start to understand the real scope of the problem.

          • retired.military

            The politicians would simply spend the money instead of using it to cut down the deficit. I am sure one is coming in the next 5 years.

            NOt saying it is a bad idea. Just saying my expectations from the results. Same way if congress creates a govt “retirement fund” where we pay money into instead of 401Ks. It will turn into another SS slush fund to be wasted by politicians.

          • ackwired

            I hear you and share your fears. We can’t tax our way out of this problem and we can’t cut our way out of this problem. the politicians have to get real! (and I don’t recall that happening before in my lifetime…)

          • herddog505

            Slight quibble: the big “bump” occured in ’08 / ’09, with the biggest “bump” showing up when Barry rammed through the historic, unprecedented (literally) stimulus that “brought us back from the brink”.

            Now, what the chart shows is what we all know: federal spending just goes up and up and up, pretty much independent of who is running the show in DC. There’s plenty of blame to go around.

            As for how much to cut, we need to reduce spending by about $1T, which is approximately 30% of the present “budget”. The devil is in the details: WHERE will that money come from? Is it, therefore, possible to reduce all the “departments” (other than interest payments) by that amount and get to where we need to be?

            I suggest simply going back to 2007 spending levels. It’ll hurt, but I fail to see why we can’t run the government as we did a mere five years ago.

          • ackwired

            Would be a good start. Unfortunately, it still would not be enough, as we would still be about $600Billion to $700Billion overspent. Economists seem to be in general agreement (they never really agree on anything) that our debt ceiling should be no more than 60% of GDP. We are currently over that by quite a bit and need to run some surpluses to get to that level. So your suggestion is a good start. But we still need to do more.

        • lasveraneras

          There’s that favorite leftist word again: “realistic.” Realistic according to whom? A meaningful increase in taxes on an already overburdened economy is NOT realistic. Actual tax revenues are not likely to increase as the economy adjusts downward to offset the costs from increased tax liabilities

          The increase in unfunded spending liabilities EACH YEAR, given the current entitlement system, is $7 TRILLION PER YEAR. Please explain to me how this EVER GETS PAID. Stein’s Law reads as follows: “if something can’t go on forever, it will stop.” That is a fair description of the current legal and operational structure of the Imperial Federal Government.

          • ackwired

            I guess “realistic” according to me is anyone who thinks that 75% cuts to military, health care, and welfare is politically impossible. I think the most “realistic” tax hike would be to add a tax on stock and derivative transactions. The vast majority of these transactions are now computer generated and for extremely small time periods. A tax could generate some revenue and make the markets more “realistically” reflect the actual value of the underlying stock or commodity.
            Given that the total US Government budget is about $3.8 Trillion, I find your claim that a portion of it is increasing by $7Trillion doubtful, and I would ask you to double check your arithmetic.

          • jim_m

            A tax could generate some revenue and make the markets more “realistically” reflect the actual value of the underlying stock or commodity.

            Nope. A tax only generate revenue if it does not cause people to change their behavior to avoid that tax. The dems assume in their budget projections that taxes do not change behavior. This is asinine.

            Also taxes do not make the market “More ‘realistically’ reflect actual value”. Taxes distort the market and make values reflect artificially imposed circumstances. Taxes create a false market that does not reflect reality. The greater the tax the less the market reflects reality. The truth is the exact opposite of what you claim.

          • ackwired

            Thanks for the lesson in your ideology. The fallacy of course is the assumption that the effect of a tax is digital rather than analog. In the markets, computer trading would continue notwithstanding the tax to the degree that a profit could be achieved. In other words, the hold time for the underlying stock or derivative would be lengthened. The effect would be a volume that more realistically reflected the positive and negative interest in the underlying.

          • jim_m

            In the markets, computer trading would continue notwithstanding the tax to the degree that a profit could be achieved.

            Are you really so naive that you think that computer programs cannot be changed? I know people who write these programs. They can change them in a matter of days, if that long.

            Regardless you have basically admitted my point. That people will change behavior to avoid taxes.

            Alas, you still fail to see that taxes distort the market. Taxes create incentives that were not present in the marketplace and they change the behavior of people in the marketplace. Taxes cause market behavior to change and lead to changing the value of products in the marketplace. Government meddling in the housing market lead to the sub prime crisis. Keep the government out of trying to manipulate the market. It is not competent to do so.

          • ackwired

            Sorry to challenge your ideology. I did not expect to change your mind. Just wanted to introduce a little reality.

        • retired.military

          Military spending is dwafed by entitlement spending.

          • ackwired

            Yes, entitlement spending is about half again as much as military spending. Both need to be cut significantly to get the fiscal house in order.

          • jim_m

            Half again as much would be only 30% of spending. Entitlements are 45% of spending. Even the data you post below demonstrated that entitlements are more than double military spending.

            Please stop trying to minimize the enormity of entitlements. They are more than double what we spend on the military. At $2.3Trillion spent on entitlements we could give every man woman and child in the bottom quintile of income $36,600. Don’t tell me that we are giving fewer people that much value for what we are spending. The amount of government waste is epic. If even a third of the money allocated for entitlements gets to recipients you will shock me.

          • ackwired

            Let’s define our terms and see if we can understand this. I am including Social Security and Medicare as entitlements. Please identify what you are including in addition.

          • jim_m

            Sure, here are the numbers:

            Military ……………..$902.2Billion

            Health Care………..$846.1Billion

            Pensions……………$819.1Billion

            Welfare……………..$451.9Billion

            Interest……………..$224.8Billion

            Those are the numbers you posted. That’s $2.117T in entitlements vs $902.2B for the military. (plus the $224 B in interest, I should not have included that in my calculation previously)

            Half again the military spending level would be $1.353 Trillion. Your designation of entitlements as being half again the military spending level was inaccurate.

          • ackwired

            So you are including all of Welfare, which is social exclusions, food stamps, unemployment, housing assistance, and workers compensation, all of pensions, which includes federal employee retirement and disability, and all of health care, which includes Medicaid, health R&D, and Public Health. Is there anything there that you feel is not an entitlement?

          • jim_m

            Hey you posted the numbers, You didn’t break them down. By the same token you don’t make much of a fuss about the military spending including VA benefits etc.

            But the answer is yes, I would definitely include all Medicare and associated healthcare spending. I would definitely include Welfare, Food Stamps, Unemployment, etc, etc. These are all entitlements. I am not saying to do away with them. I am saying to cut the staff to the bone. We can cut a lot out of these agencies without cutting on the benefits. (Heck you can apply for and receive unemployment benefits online and you never have to set foot in the office. It’s a hell of a lot easier for the unemployed to get online than it is for the victims of hurricane Sandy. If FEMA can demand that people go online then so can the unemployed.)

            The problem is that these are all AFSCME/SEIU members and it will be a cold day in Hell before obama ever jeopardizes the job of an union worker, since a significant portion of that person’s pay goes back into the Dem campaign fund.

          • ackwired

            OK. Now we are talking about the same thing. Let me revise my statement to conform to your numbers: Yes, entitlement spending is about twice as much as military
            spending. Both need to be cut significantly to get the fiscal house in
            order.

  • GarandFan

    “…abolishing tax deferred retirement plans, and replacing them with a
    government-managed retirement plan funded by mandatory contributions
    from all wage-earners.”

    Which will then be ‘means-tested’. Translation, “You contribute at the point of a (legal) gun, but good luck on collecting anything!”

    • http://www.rustedsky.net JLawson

      The clowns in Washington haven’t managed a budget in 4 years. Why would anyone think they could have ANY success at “…abolishing tax deferred retirement plans, and replacing them with a government-managed retirement plan funded by mandatory contributions from all wage-earners.”

      More and more it’s not about providing choices for the people – it’s about taking away their options so they’ve got no choice but to be dependent on the government.

      Once they’ve got your balls in their hands – you’d damn well better cough up what they want on cue.

  • Quietus

    health should never be linked to employment. So funny watching people contort themselves into knots to try to “fix” while ignoring how it’s done, and works everywhere else.

    Gotta love the crisis mentality of American culture. Nothing is to be fixed until it completely breaks.

    • Sky__Captain

      Health care insurance (not healthcare or “health” according to Carl Jr.) was linked to employment to get around a wartime edict by FDR that wages could not be raised. Health care insurance was added as a benefit.
      Should that be changed? Probably. However, 0bamacare is not a cost-effective answer. Indeed, it is rapidly showing to be the opposite. Government-run health care has never been cost-effective nor successful.

      The “crisis” mentality being decried by Wizbang’s latest leftist troll is being practiced by the American left only, led by the SCOAMF.

    • jim_m

      Actually, if you want to you can get health insurance apart from employment. People do. I had a friend who was a private engineering consultant and that is what he did.

      Funny how the only solution the left offers for any problem is more government.

    • herddog505

      Where / how does it work “everywhere else”?

  • http://www.traveLightgame.com/ ljcarolyne

    SOONER THE STATES SECEDE FROM THIS DICTATOR GOVERNMENT, sooner we will be over this crap!!! FU on all of them, pay no more taxes, what can it hurt, it can’t get any worse than it is now!

  • Vagabond661

    I don’t think either party would do this but theoretically couldn’t the government hire an outside firm to go over the budget and present them with options for real cuts?

    Both parties could shift blame to that company (America, we don’t want to but the company says we have to!) and serious cuts can be made. Unless….neither side wants real spending cuts. Sure the House does, but maybe neither side in the Senate wants cuts because neither really wants to make the government smaller because if you make the government smaller you lose power. If you lose power then maybe your constituents would starting voting in term limits. And since there are term limits then you can kiss your cushy retirement good-bye. And they make you use Obamacare instead of your exclusive congressional health care. And oh my god what if they take away our lobbyists?

    Well played.

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