The validity of the public debt of the United States... shall not be questioned
Except when one wants to screw over Americans by cutting social safety nets under the guise of a debt ceiling crisis.
After Congress and the Obama administration ranted and raved for months and under the cover of non-stories like Casey Anthony, we have Obama is putting social security, medicare and social safety nets up on the faux pas debt ceiling negotiation block, to be cut and slashed.
After putting controversial cuts to Social Security and Medicare on the table in negotiations with congressional Republicans over a plan to raise the nation's debt ceiling, President Obama still doesn't have a deal in the works. Emerging from a meeting with congressional leaders on Thursday, Obama said that both sides in the negotiations would find the ultimate outcome "painful." He also explained that the two sides had not yet arrived at an accord, but would reconvene talks on Sunday.
"I want to emphasize that nothing is agreed to until everything is agreed to," Obama said, adding that the talks were conducted "in a spirit of compromise" but that the parties "are still far apart on a wide range of issues."
Both sides must come to a resolution to raise the $14.3 trillion limit by August 2, or the federal government could risk default, Treasury officials warn.
Obama has offered to reform the nation's entitlement programs in return for a deal that would increase government revenue by closing loopholes in the tax code.
One trick is to use a different cost of living adjustment, called chained CPI to actually reduce the meager social security benefits to future retirees.
Who are those future retirees? The people who have had their careers cut short, lost their retirement due to stock market crashes and having to empty their 401ks to survive. A huge percentage of people have zero funds available to retire on and are counting on social security more than ever.
Economist Chinn, ran the numbers on chained CPI. Over 10 years, it would have cut in social security benefits by 3.6%.
If we were using chained CPI instead of CPI-W over the last 10 years, Social Security benefits would be about 3.6% lower than they are now.
Another group, created the above chart and is pointing out the cuts to Medicare will hurt women the most. Medicare is under attack, but not to clean up the rolls, instead just cutting benefits to the most poor and vulnerable.
The situation is worse than the above. Even when Democrats propose a 50-50 budget, where tax increases are matched with cuts, we cannot find the details. Such is the insanity of Congress and this administration.
They want to cut $4 trillion over the next 10 years. The fallacy of this debt showdown is having the focus be on Medicare, Medicaid, Social Security and tax increases. First the specifics are impossible to discover but the obvious, the United States is in two wars with further military action we cannot afford, is not on the table. Neither are the bad trade deals, tax incentives to offshore outsource your job, repealing the Bush tax cuts and a host of other insane policies that are eroding the U.S. economy. There is talk of the defense budget being cut by $700 billion, yet the details are scarce. Even determining what tax increases are being proposed is impossible to discover.
Some of the tax proposals are vague and budget experts have yet to calculate just how much they would raise. For example, limiting deductions for high-income families and small businesses could raise anywhere between $210 billion and $290 billion, depending on what threshold is established as high income.
Obama is proposing to eliminate $41 billion in tax breaks for oil and natural gas companies, raise taxes on investment fund managers by $21 billion and change the way many businesses value their inventories for tax purposes. The change in inventory accounting would raise an estimated $70 billion over the next decade, hitting manufacturers and energy companies, among others.
So, we have no problem cutting into people's meager social security, that will not support them as it is, yet closing tax loopholes for oil companies isn't an option.
Ritholtz posted a probability flow chart on the debt ceiling games. Click on the image to zoom.
Paul Krugman again shows that austerity will cause the economy to contract and many are screaming we need infrastructure, to invest in America, which falls on deaf ears.
Needless to say things that make no sense, such as the United States paying China taxes won't be considered. Edwin Way analyzed what would happen if we matched the China VAT on U.S. goods and services. By enacting sane policy here would help balance the budget deficit.
Matching Chinese border taxes would raise $2 trillion: How the US can avoid savage cuts to social security and steep income tax increases while paying for new infrastructure and leveling the playing field for US manufacturers
As Washington debates how to cut trillions of dollars from the US budget deficit, it would be wise to consider looking to China for insight. The Chinese government is not only sitting on three-trillion dollars worth of foreign currency — making it the richest entity on the planet — but the central government has enjoyed large surpluses even as it invests hundreds of billions of dollars in new schools, high-speed rail, military modernization and advanced high-tech industries.
There is much the US can learn from China given striking difference in the way the US and Chinese government raise revenue. Fortunately, while these differences are rarely mentioned, information on China’s system of taxation can be easily found on the website of the Ministry of Finance.
The biggest difference in the way the Chinese and American governments raise revenue is that Beijing relies much more heavily on import taxes. More than 20% of Chinese central government revenue in 2009 was generated from import taxes, while the comparable figure for the US was just 1.4%.
Another tax which could curtain flash trading is a Wall Street transaction tax. Of course reasonably policies that turn the United States economy in a better direction at the same time are not at the table. Nothing that could possibly help the real America, that's us, shall be considered.
Comments
Tax profits from derivative trading as gambling
Transaction tax is good. But what about treating all profits from trading in derivatives (paper based on paper) as earnings from gambling?
transaction tax, Tobin Tax, derivatives
There are a host of taxes they could do to reduce contagion, stop these automated trades by large financial institutions, stop the router/hop/technology game on getting there a few microseconds before the other guy on a trade or information and esp. tax derivatives.
Frankly we've written so many times that CDSes are mathematical fiction and are walking contagion timebombs yet nothing happens. It's obvious, not only is it in the mathematics but it's pretty damn obvious that one cannot allow everyone to place insurance and bets on assets they have no involvement with.
So, this post is not a complete list of what could be done to improve the economy and help balance the budget at the same time, but good idea, maybe I should write up a post with projected revenues and more importantly, projected job growth of each one.
Right now, it's so clearly insane, both sides, out to destroy the nation politically, it's hard to invest the time and energy to write about policies that would actually work.
To me, the Congressional leadership is almost treasonous at this point. The GOP is absolutely out to destroy the nation and Democrats are clearly only 1 degree less of severity with "change and hope Obama" caving or I believe more, doing whatever corporate lobbyists want him to do at every time.
Corporate lobbyists are who got us into this mess in the first place. They are not loyal and even worse, they only seem to see a couple of quarters out. This is affecting multinational's bottom line or eventually will and they don't seem to every realize that.
Their agenda is toasting the national economy as well as the global one and they could care less as long as their quarterly profit statements increase over the next two quarters.
Inside Man
You’re right – and in fact Osellout may be the greater danger – he pretends to represent the Progressive Democratic ideals but then he gives the extremist Right and its corporate Stepford politicians, the “compromises” / objectives for which there is no political support and which they would have no chance of obtaining on their own.; i.e. in a movie, he would seem to be the classic “Inside Man” (for the corporatists here). And in most movie plots, the Inside Man may not be doing much for the group’s (country’s) future but he’s building his nicely.
Could this be "the plan"?
"Right now, it's so clearly insane, both sides, out to destroy the nation politically ... " -- Robt. Oak
Who can make sense of it?
Of course, I don't know what 'the plan' is anymore than you do! But trying to make 'sense' of it all, the only clear picture(s) I can get are to be found by doing a ...
Google Images search on
"north american union currency"
I know this sounds like conspiracy nuttery, but this approach makes more sense than anything else, trying to dope out what on earth 'they' must be planning!
Anybody have a better idea for how to understand the strange seemingly totally insane phenomena?
What on earth can 'they' be planning?
But shouldn't we be ssking ourselves:
"What are WE (US) planning?"
AMI presents an alternative.
Taxes and Monetary Sovereignty
The entire debt controversy, and the lack of sufficient stimulus, is based on ignorance of Monetary Sovereignty (http://rodgermmitchell.wordpress.com/2010/08/13/monetarily-sovereign-the...). In a Monetarily Sovereign nation, neither federal debt nor deficits are unsustainable or even a threat.
Recession and inflation are the only two economic threats. Which one is the greater danger, today?
The federal “debt” could be ended tomorrow, if the government merely stopped creating purposeless T-securities.
Those who do not understand Monetary Sovereignty do not understand economics.
Rodger Malcolm Mitchell
You wrote: One trick is to
You wrote:
One trick is to use a different cost of living adjustment, called chained CPI to actually reduce the meager social security benefits to future retirees.
This also affects current retirees.
true, chained CPI screws all on Social Security
Not just future. Although on Medicare it seems the GOP is determined to screw people who had planned on Medicare and are too old to financially adjust for anything different.
Seems the last of the baby boomers, about 1964-1959 are under assault.
Republicans trying to
Republicans trying to dismantle Medicare are constantly harping on the "fact" that current beneficiaries will not see a cut in benfits. The chained cpi puts the lie to this talking point, at least regarding social security
Medicare "current" retirees
Right, they are trying to zero in on those currently aged 50-55 to screw, thinking they are not old enough to join AARP and not large enough to sway an election. This is obscene! Over and over it has been shown the U.S. is getting the shaft on medical costs. These people will not even identify the real problem and causes. They are insane, pushing more agenda items that truly will wipe out the United States.
Making Cuts to Waste on Medical Care
Of course nobody says that but that's precisely what's going on. Because no one will tackle reducing inflation of medical care costs, all this cutting is taking money from a host of programs and people and feeding into the excessive medical costs machine.
We're paying too much already and the costs for 2011 and 2012 are predicted to go up around another 8% each year, as I recall.
In other words, at that rate medical care cost will double in ten years. Who's going to stop the insanity?
Waste on military expenditures much greater
Yes, of course, there are problems surrounding the U.S. medical care delivery system ... and no one seriously addresses these problems aside from a few dedicated physicians and public health specialists. (And you won't hear their voices in your MSM!)
First, we have to take down the lobbies. We still prevent Medicare from negotiating directly on pharmaceuticals, yet MSM echoes the lie that Part D is underfunded. Yes, there are many, many leaks in the ship -- and there are some who work hard to patch those leaks. But demands to scuttle the ship or to scrap and jettison it piece-by-piece are ill-advised. Overall, Medicare runs a tight ship and we should build on it, not abandon or sabotage it.
At this time, the medicare trust fund hasn't run out and, in my opinion, the brouhaha over medicare, cutting Part D, etc., is a charade to disguise the obvious fact that U.S. military and war expenditures are disastrously bloated and unnecessary, essentially playing into the hands of our "potential adversaries" (aka 'enemies').
Defict Reduction Messaging Hides Wealth Distrubtion Choices
The real ideological "argument" in current U.S. political circles is how much of the national wealth will be redistributed, to whom, and by way of what channels -- the public sector, the private sector, or some combination thereof. It is not about goosing the economy or creating jobs.
Both U.S. parties have displayed unseemly eagerness to starve domestic, non-military/police expenditures. They have repeated various propagandized as reasons for doing this. Both parties use such messaging to conceal the underlying agenda of relinquishing public sector power to redistribute wealth at home so as to permit the private sector (or some P3 combination) to exert even more control in national wealth distribution. Historical economic data evidences to what end of the distribution tail that private wealth tends to flow absent strong public investments, progressive taxation, and regulations.
The only political argument playing at the MSM of your choosing is whether, or by how much, federal tax revenues will be boosted, i.e., how fast the public sector will permit increased flows of wealth to one end of the tail. The political tactics of both parties are designed merely to avoid taking the blame for what will be in the end, bad joint decisions for most of us being shoved to the other end of the economic tail.
According to the MSM, neither side is negotiating ways to create jobs (let alone good jobs) or to boost the real economy, although spokespersons from each side will graciously bend over backwards to convince anyone who asks about such goals that by maintaining their unquestioned adherence to public deficit reduction messages, they will most certainly have fixed all and every problem known and unknown, including jobs, education and housing. I wait with great anticipation to see who will next be honored with "Man of the Year" recognition, or with a Nobel Peace prize.
It should attract attention that this austerity cover is being used in Europe, too. Public austerity measures and attendant propaganda on both sides of the Atlantic, is a concerted political effort to shift the costs of bailouts of the FIRE sector losses in the U.S. and Europe to the great unwashed public body.
The China Problem
China needs to be delt with.
The key to Chinese policy is the hoarding of foreign exchange, especially US dollars.
The $500 Billion per year hoarded by China is money taken directly out of the US economy, driving down prices and causing, in itself, 5 million unemployed in the US, and driving many US manufacturers to and over the brink.
See: http://anamecon.blogspot.com/2010/04/effects-of-unbalanced-trade.html
If the Chinese spent the money on US production, there would be no problem, but the CHINESE ARE AT WAR WITH THE US.
Their talk and bluster are just moves on the battlefield. Unfortunately, WE are governed by idiots, guided by the myopic. They do not see 5 million unemployed as casualties of war. They do not see idled and closed factories, an eroding tax base, and a decaying infrastructure, as damage inflicted by the enemy.
Until they acknowledge that they’ve been stupid, they cannot get smart. Assuming they are merely stupid, and not treasonous.
Chinese mercantilist policies are responsible for a great deal of our grief. Until we acknowledge that the destruction of our domestic production capabilities is a problem, nothing will happen
Austerity will leverage the situation, causing disproportionate contraction of US productive interests. China will increase US market share, as US market shrinks.
Are we losing or have we already been conquered?
The classic Chinese strategist, Sun Tzu, advises that the best way to win a war is by conquering the enemy without the enemy even realizing that he has been conquered.
The best thing for the U.S. to do is to stop playing the game of neo-mercantilism. The people of the U.S. support protectionism. Protectionism is good, not evil. Protectionism is the American way.
We should immediately impose an across-the-board tariff. Such a tariff can work to balance trade and the budget. It would not be anti-Mexico or anti-China -- it would just be pro-America. It would not stop trade across our borders -- it would just alter the terms of trade in favor of our survival as a nation.
We probably can co-exist with China, we probably must do so. But if we continue to allow the nation to be run by internationalists and foreign interests (including "our" MNCs), we will continue to be exploited.
What a collection of excellent comments
Rather than muddy the clear waters, I'll just repeat one of yours that everyone needs to keep in mind:
This is who we're dealing with, those in power; they pick on the "most poor and vulnerable." Not a recommending quality.
Great post.
Michael Collins
Links?
The link to "above chart" does not go to a source for that chart.
NWLC chart
pulled from a pdf report which has many more graphs and figures. report pdf link.
I don't often link directly to pdfs because they launch with plugins or are large downloads and so on.
The link given is to their blog post ranting on their findings.
I overview CPI (in the left hand column) but others had already analyzed chained so well, I just used their results, multiple sources. It's valid, what they are saying, using chained CPI will screw people over on social security.
Thank you
This is exactly what I have been looking for ... although probably no one will be convinced by the facts ... as usual ...
BTW: PDFs
BTW: I like PDFs, probably because I'm in the old-fashioned reader category in my cognitive style. I think they launch with plugins only when you don't already have Adobe Acrobat (Adobe Reader), which is a free download.
PDFs and Adobe
It may be that Adobe outsources some customer services for North America to India. At least, that's my impression. As a penny-ante English-speaking Adobe customer, I find that if I want to talk to a real person within a relatively short time-frame, I'm talking to somebody with excellent English in that Indian accent (not that I have frequent need for customer service) ... but if you fill out a request and wait a few days, you will likely get a call from someone somewhere in the U.S.. CEO Shantanu Narayen, of course, is from Hyderabad ... but, according to the Wiki article "Adobe_Systems", 40% of their 9,000+ employees work in San Jose (how many on H-1Bs?).
Here's an interesting connection: earlier this year, Obama appointed Narayen to the President's Management Advisory Board. Hmmmm ...
Governments in the U.S. seem to like PDFs, including interactive PDFs. For example, court forms in many or most states are available as PDFs, often interactive.
Of course, Adobe's software generally is ridiculously pricey, but I suppose it's labor-intensive to get that near-universality that is what you want for the largest audience. Lately though, I find that the people who have gone mostly mobile just about never open any PDF attachments to their email. Not sure that many of them can open PDFs on whatever their mobile-device operating system may be. On your tiny screen, you can view the video, it seems, more easily than you can read the PDF.
Problem with PDFs is that the format or file extension is proprietary. Another problem is that tables and other components are tricky to break out of PDFs, I think. Not exactly a smooth object-oriented system for the end user, and that's probably how it's meant to be. Also, there's this trend toward e-books and lately I see .pub (MS proprietary, I gather).
OPEN source, not outsource ... that's the way to go global. I mean, if we're going to be gushy about one world and all, let's be consistent about it. Let's globalize altruism! Then we can all be paid equally ... zero! Even Adobe's CEO could be paid equally ... zero! I guess that's been tried, Soviet Union or wherever, but open source is an awesome world.
enough with pdfs!
First, come on people, let's not turn the site into a pdf discussion. Second, there are open source tools to read pdfs. PDF is a file format not Adobe. You don't have to use Adobe. Google has many tools, including gmail, Open Office, Foxit Reader, Apple, Linux....go to download.com and find 101 tools to read and edit pdfs.
It's true Adobe offshore outsources.
But this is just a format and while I do use links as references, i.e. click on the link to find the reference, this is just one time I linked to a group's blog post overviewing their actual report, because the actual report is linked clearly at the bottom of their blog post overviewing it.
I do this often so one doesn't start a large download to check a reference link.
So, this basically is a non-issue.
I plead no contest
In mitigation, my intent was to consider issues of interest at EP through an exploratory case study of Adobe -- including issues relating to work visas and outsourcing. My impression is that you can't get reliable numbers revealing extent of these practices, but I thought I could extrapolate out from my first-hand experiences to form a picture of what is happening in one case.
Thank you for information on the open standard for PDFs and on your policy to avoid links that start downloads. There could be, for PDFs, something like the poster that is used to start playing a video ... but there isn't or it isn't used ... there's just the same kind of link that is used to go to any webpage, so your readers can't know what they are getting into. Thank you for pointing that out.
My thought is that there could be a cover page of a PDF with a pointer in the middle to start the download, just like the way videos are linked. So, yes, EP isn't the place to discuss that, but the fact that one is used widely and the other not at all says something about trends, with some implications for economics.
I think there has always been, and will be, tension between open-source doves and proprietary hawks. (And then there are the hackers who recently embarrassed Sony.)
According to Wiki Portable_Document_Format --