What’s Obama thinking with tax hikes on the rich?
Thanksgiving is over, and the fiscal cliff is back on the table. Here in Georgia, Sen. Saxby Chambliss’s public feud with tax-pledge champion Grover Norquist made headlines and ramped up speculation about which Georgia Republican(s) might challenge our senior senator when he’s up for re-election in 2014.
But if there’s going to be a deal on taxes and spending before we start going over the cliff in January, our newly re-elected president will play the most prominent role. I’ve previously written about how the GOP-led House might try to maneuver with Obama. Now Greg Mankiw, a Harvard economist and former adviser to both George W. Bush and Mitt Romney, uses an op-ed in the New York Times to imagine how the president’s internal debate might be going from two perspectives: the committed liberal his critics contend he is, and the pragmatic moderate his supporters believe him to be.
The entire article is interesting and worth a read, but I’m going to highlight one section that isn’t getting much attention in the discussion of how taxes might be reformed:
MOD: According to the Tax Policy Center, if we cap itemized deductions at $50,000 and keep tax rates as they are today, we’d raise $749 billion in tax revenue over 10 years. And 96.2 percent of the extra revenue would come from the top fifth of taxpayers, with 79.9 percent from the top 1 percent.
LIB: I have a couple of concerns about that.
MOD: What?
LIB: First, if you limit deductions, people in high-tax states will be hit particularly hard, because state and local taxes are deductible.
MOD: Isn’t that fair? I don’t see why states and towns that choose to have very high taxes should be subsidized by everyone else.
LIB: These states generally have liberal agendas, which I want to encourage, not penalize. And many of them, like New York and California, vote Democratic. After they helped us win such a great victory, I don’t think we should be asking our allies to bear a disproportionate share of the burden. (Emphases and links original.)
Some context: In February, the Congressional Budget Office estimated that the deduction for state and local taxes represents about 0.3 percent of gross domestic product per year. Only four deductions were larger. In a $16 trillion-a-year economy, 0.3 percent equals $48 billion.
– By Kyle Wingfield
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271 comments Add your comment
Lil' Barry Bailout - OBAMAPHONE!!!
November 26th, 2012
8:31 pm
Nah, just thought it was funny, JDW. Pravda! Didn’t even know they still existed.
Obozo’s voters didn’t pull the lever for him because they’re illiterate, they did it out of greed for other people’s property. Leeches. Parasites. Moochers.
Tiberius - pulling the tail of the left AND right when needed
November 26th, 2012
8:35 pm
And let’s remember, mike, there wasn’t just ONE stimulus package.
There was big stimulus 1, little stimulus II, Cash for Clunkers, and various and sundry other stimulus spending without a means to pay for it. Even CNN estimated that all the stimulus spending Obama racked up was in excess of $3 trillion dollars.
I’m still waiting for someone to present a logical argument why my FEDERAL tax dollars have to pay for LOCAL problems such as funding firefighters, cops and teachers.
When did it become the role of the Federal government to bail out local jurisdictions who don’t have the stones to raise their own local taxes to pay for their spending excesses?
mike
November 26th, 2012
8:39 pm
“US War Costs Reach $3.7 Trillion
Iraq and Afghanistan Wars Have Cost Americans $3.7 Trillion, $12,000 Per Person
A study conducted by Brown University’s Watson Institute for International Studies found that over the past 10 years the wars in Iraq and Afghanistan have cost United States taxpayers a total $2.3 to 2.7 trillion, with a final tally being at least $3.7 trillion, an average of $12,000 per American citizen. According to the study, titled, “Costs of War” (www.costsofwar.org) in 2011 the United States Congress has given $1.3 trillion to the Department of Defense for war spending. Projected costs do not include care for wounded US veterans and interest on the war debt.”
http://www.mediafreedominternational.org/2012/01/25/iraq-and-afghanistan-wars-have-cost-americans-3-7-trillion-12000-per-person/
I believe this number is significantly understated.
Linda
November 26th, 2012
8:44 pm
mike(with a little m)@8:11, Did you read what you cited? The SS expenditures exceeded the SS income for the 1st time since ‘83 & the trend will continue for 75 yrs.! The deficit will rise steeply as the economy slows & as the number of beneficiaries (those taking out of the system) grows faster than the number of workers paying into the system.
Thank you for making my point.
If you take into account the natl. debt., the unfunded liabilities (per the US Debt Clock I cited above), as well as the all the liabilities the US govt. has obligated itself to fund (US Postal Service, Fannie Mae, Freddie Mac, FEMA, student loans, Small Business Adm., etc.), who is to prioritize these programs when the fed. govt. goes broke? Excuse me! The fed. govt. is already broke!
mike
November 26th, 2012
8:48 pm
Tiberius: “CNN estimated that all the stimulus spending Obama racked up was in excess of $3 trillion dollars.”
All I could find was one “blog post” that stated anything near what you are talking about.
http://scottystarnes.wordpress.com/2012/09/05/cnn-obamas-787-billionstimulus-only-created-300000-jobs-at-a-cost-of-262333-per-job/
Could you please post the link to the CNN claim?
mike
November 26th, 2012
8:50 pm
Linda: the Social Security and Medicare Trust Fund is separate and distinct from our Federal government. Really, you just don’t get it do you? Either that or you are hell-bent on distorting the facts to your own conclusion. Either way, you are demonstrating your ignorance to the entire blog.
mike
November 26th, 2012
8:56 pm
Here’s the biggest problem you on the Right face: almost everything you believe is a propaganda lie implanted in your brains by Fox News and various Right-wing sources. Invariably, when you expose them here on the blog, the wilt when exposed to the truth. From unions to deficits and everything in between, everything you hold true is nothing but propaganda lies. You still don’t get it, do you?
Linda
November 26th, 2012
9:10 pm
mike(with a little m)@8:16, The economic stimulus bill passed by Obama & the Democrats in 1/09 was almost a trillion dollars.The cost of both wars as of 1/09 was about the same.
The cost of both wars at the beginning of FY10, beginning on 10/1/09 was $949 B.
http://www.infoplease.com/ipa/A0933935.html
Linda
November 26th, 2012
9:22 pm
mike(with a little m)@8:39, Here’s where you can go 24/7 to find the cost of the 2 wars, without getting hung out to dry by the corrupt mainstream alphabet media.
http://costofwar.com/
The total is less than $1.4T as of today.
If you compare the site you quoted (costofwar.org) vs the cite I quoted (costofwar.com), maybe you will see that you are promoting propaganda.
Lil' Barry Bailout - OBAMAPHONE!!!
November 26th, 2012
9:38 pm
Someone claiming Social Security isn’t adding to the deficit really shouldn’t be questioning others grasp of facts and reality.
Linda
November 26th, 2012
9:46 pm
mike(with a little m)@8:50, There are NO social security & Medicare Trust Funds! There are no lock boxes! The fed. govt. spent the funds. There is nothing left but chits, IOUs, hanging chads. The money is gone! There is no plan as to who gets paid first, second, third, etc. when the fed. govt. defaults. Will it be the poor, the vets, the elderly, the orphans, the widows, etc. Who will decide? Magic Mirror on the Wall?
@8:56, You accuse conservatives of being deceived by the media, when conservatives accuse liberals of being deceived by the media.
Hint: Conservatives are more likely to cite sites than liberals on blogs. Conservatives know better than to quote conservative sites (such as FOX) & liberals do not know better than to quote liberal sites (such as the corrupt mainstream alphabet media). Conservatives quote govt. websites more often than liberals to prove points.
Conclusion: Liberals are more brainwashed than conservatives. Period.
YouLibs
November 26th, 2012
10:08 pm
What’s Obama thinking with tax hikes on the rich?
I’m gonna go out on a limb here:
I think that he is thinking that this country has done pretty well financially, you know, like way, way, way, at the top of the heap, until George W. Einstein drastically reduced the tax rates on the people who got him elected, gave at least $700.00 back to every taxpayer in the country, started two wars and created a Medicare giveaway without paying for them and now the bill is due.
Oh yeah, and there was that global recession thing, too.
Patty
November 26th, 2012
10:20 pm
Fair share of taxes come with fair share of income, if you are getting more than you deserve you pay more. Figure it out.
Excuse me, but just how do you figure out ‘if you’re getting more than you deserve?’ Are you thinking that someone who has worked their way through college, put in the long hours at work and now find themselves reaping the rewards of that work are now ‘getting more than they deserve?’
Linda
November 26th, 2012
10:21 pm
You@10:08, Yes, Bush reduced the tax rates on ALL taxpayers, which reduced the unemployment rates & increased the tax revenues to the highest rates in the history of the country. It’s worked every time in the history of the country. Bush did not start two wars. Terrorists started two wars & Democrats voted for them. Democrats also voted for the prescription drug program without paying for them. The bill is not yet due.
Rightwing Troll
November 26th, 2012
10:36 pm
The lies are thick in here tonight…
ODD OWL
November 27th, 2012
3:38 am
Any cuts to our entitlement social programs are off the negotiating table… Every dollar earned either from wages or investments must have social security payroll tax and medicare tax deducted… The capital gain tax loop hole must be repealed and removed from the tax code… All earned income and investment income will be taxed at the standard marginal rate of 39%…The Republican Governors and Republican controlled state legislations that act in a recalcitrant manner and reject Federal money to cover ObamaCare/medicaid, must be compelled to accept it and provide proper healthcare for all of their citizens… Nathan “No” Deal rejected $14 billion dollars in Federal money for ideological reasons, to cover the cost of the ObamaCare health exchanges and to cover medicaid payments… Any Republican who reject the Obama economic recovery and healthcare plan, do so at their own peril…
Real Athens
November 27th, 2012
6:38 am
Hypocrite: A member of a couple who draws from Social Security monthly, enjoys 2 digit monthly insurance rates but comes on a blog and spouts half-truths, facts out of context, revisionist history, conspiracy theory regarding government defaults and complains about brainwashing — all the while referring to herself as the greatest generation. Priceless.
Social Security and Medicare are not government funds. These entities are funded by the public for the benefit of the public with public funds directed specifically to those entities for allocation for specific purposes. They are not part of the federal general fund nor part of the federal budget and are not funded by citizen income tax dollars.
Every worker receiving a pay check since 1937 has contributed to Social Security with an equal amount coming from his/her employer. As a worker (since the age of 12) AND a business owner I have done both — gladly.
Social Security is not an entitlement it is the publics’ money. It does not belong to the government.
Every pay check and every Social Security check issued since 1966 has included a deduction to fund Medicare. Public contribution to a designated entity for a designated purpose for distribution back to the public as determined by the publics’ need at a later date. The funds therefore are not part of the general fund or the federal budget. They are not federal income tax dollars paid to the government. Therefore they are not entitlements.
Why is this so hard to comprehend ?
As soon as the R’s and D’s get this through their thick heads perhaps they can move on to finding practical, implementable and legal solutions to the budget and debt issues. Just because they have spent the money just like it was part of the general fund does not make it so.
First of all, it must be understood that Social Security has never increased the federal deficit by a single dime. “Unfunded obligations” are a sleight-of-hand in federal accounting. Social Security has always, every year since its inception, taken in more money than it paid out. The problem that arose was what to do with this surplus of money. The answer has been to “buy” U.S. Treasury bonds – which are, in essence, government IOUs that pay interest. In the meantime, the real excess dollars go into the general fund and the politicians spend the real money, leaving the Social Security program with the bonds – the so-called unfunded obligations.
Intelligent people realize that politicians (on both sides of the aisle) have spent the excess Social Security money in the general fund on all sorts of things — a list too long to go int here. Now SS is hamstringing business? Growth?
Please.
Now, the Congress have seized on this accounting sleight-of-hand to try and renege on paying back the money to Social Security and end the whole program, as we know it, in one fell swoop, leaving America’s working people holding an empty bag in their old age.
To continue to insist that Social Security is increasing the federal deficit and bankrupting the country is extremely naive in the least, and an outright lie at worst. It should be corrected, not perpetuated, by the press — Fourth Estate my a@# — on opinion pages, blogs and slanted news networks.
The oldest form of warfare is divide and conquer. Quit thumping your chest for one party or the other and figure out who is conquering you and other mindless dilettantes here.
Real Athens
November 27th, 2012
6:41 am
“Conservatives are more likely to cite sites than liberals on blogs. ”
It’s called footnoting, educated one. Try starting with the above opinion.
Attack Dog
November 27th, 2012
7:10 am
Willard Romney said it best. If you are in debt, ask your relatives for help. Hey Uncle Koch Brothers, if you can drop $200 million a year trying to defeat Obama, you can pay at least that much to help America. We know you weren’t using it to create good paying jobs over the past four years.
iggy
November 27th, 2012
7:47 am
And also, if you are in debt, I dont care. Take your kids, your wife, your dog, your cat, your husband and whatever possessions you might steal and go live in a dumpster or under a bridge.
I ask not for your help so dont expect any from iggy.
PS…address the cause instead of the symptom and watch how things dramatically improve.
Rafe Hollister, dreading the eventual decline caused by Obamanism
November 27th, 2012
8:25 am
Now, the Congress have seized on this accounting sleight-of-hand to try and renege on paying back the money to Social Security
Not just the Congress! I believe it was the first black President, William Jefferson Clinton, that used the SocSec surplus in his budget documents. The so called “surplus” Clinton left us with, was accounting sleight of hand, where he counted the social security surplus as an asset. So, to be consistent, you have to include SocSec in any discussion of the debt and deficit, because the funds have been co-mingled for quite a long time.
fair and balanced
November 27th, 2012
8:32 am
When are we going to have a discussion about all the American Wealth that gets hidden offshore? The 1% could care less about tax hikes . With Romney and George W. in the lead they just will shift more of their wealth to the Caymans. Instead of trying to
show some fake hypocrisy in Obama’s position on tax increase – why not do an expose on that Kyle-
1.Romney and Bain having a substantial source of investments based in the Caymans Sure did not buy him votes with many Americans other than the 1% did it?
2. Romney fundraiser for the 1% on a yacht flying Cayman flaf in Tampa- Wouldn’t you love to see who was invited?
3. Bush speaking at top secret conference in the Caymans Nov.2 on how to hide money offshore to avoid US regulations and taxes.
When are you cons going to get in the head of your leaders and figure out why they absolutely refuse to discuss offshoring of US individual and corporate profits?
Obama keeps mentioning it as a way to raise taxes and Dems keep bringing it up
in the Senate. No not a word from Romney or the Repubs on this as a way to raise revenue. Why? Chinese have strict limits on offshore investments and movement of money out of the country. Their country’s economy seems to be doing better than ours and they are commies? Now why is that?
And it ain’t because of higher taxes- property taxes are much lower there.
Of course this would involve a discussion where you could not blame Obama for the situation.
Rafe Hollister, dreading the eventual decline caused by Obamanism
November 27th, 2012
8:34 am
Attack Dog
We know you weren’t using it to create good paying jobs over the past four years.
Spreading falsehoods again, AD, 70,000 of their employees would take exception with the above statement. I guess in your mind, they should not have quit and gone to work for Solyndra and Abound Solar.
http://en.wikipedia.org/wiki/Koch_Industries
Rafe Hollister, dreading the eventual decline caused by Obamanism
November 27th, 2012
8:40 am
fair and balanced
Off shoring is just one way the wealthy dodge income taxes, close that loop hole and they will find another. Kyle has written before about how no matter how high you raise taxes and how you close loopholes, the revenue to the federal government remains just about the same. The wealthy have the legal resources to avoid taxes, get over it. This obsession with punishing the wealthy is wasted effort. People have a limit to what they think you morally owe Caesar, pass that limit that they will willingly pay, and watch the tax avoidance.
The problem is not revenue, it is spending. Confiscate all the money from the wealthy, all the wealth, and 4 months later, you are looking for revenue again, but the goose is dead at that point. Stop the stupid spending!
Real Athens
November 27th, 2012
8:57 am
The Tax Justice Network estimates that between $21 and $32 trillion is hidden offshore, untaxed. With Americans making up 40% of the world’s Ultra High Net Worth Individuals, that’s $8 to $12 trillion stashed outside the US.
Based on a historical stock market return of 6%, up to $750 billion of income is lost to the U.S. every year, resulting in a tax loss of about $260 billion.
American Exceptionalism
Real Athens
November 27th, 2012
8:59 am
“I believe it was the first black President, William Jefferson Clinton, that used the SocSec surplus in his budget documents.”
Don’t doubt the possibility, however just because one believes it doesn’t make it so. Document your claim. Otherwise, it’s just noise, bigot.
fair and balanced
November 27th, 2012
9:18 am
From yesterday’s Christian Science Monitor about that 1% haven in the Caymans:
“”"”"”"”"”The three-island British territory tucked just south of Cuba in the Caribbean Sea has more than 92,000 registered companies, according to the government, most of which do the majority of their business elsewhere.
A check around the Caribbean reveals similar stories. The islands have long been attractive because they collect little or no taxes. They’ve built economies around financial services, which has proven a more reliable source of income than tourism in recent years. And over time they’ve helped foreign companies and well-heeled individuals reduce their tax bills. Among them is the hedge fund Bain Capital, of Mitt Romney fame, which became a lightning rod for criticism during the presidential campaign.
But something happened on the way to tax haven status: Caribbean governments have accumulated massive debts they are struggling to repay. Without the taxes most governments use to pay for the costs of running public works projects or social programs, the bills have added up. With little in the way of economic expansion – The United Nations forecasts 1.6 percent growth this year for the Caribbean – governments are turning to other means.”"”"”"”"”"
Kinda like those Southern Red States the GOP adores that have low taxes and regulations but take more than their share in Federal Benefits and keep votoing the party line.
I am sure these concerns about the local economy were part of W’s speech in the Caymans but then everyone was sworn to secrecy.Praise the 1% – they sure know ho to find the loopholes and we just help them along the way and cover up their tracks particularly if you are a Republican.
“We gave you people all the information you need” That’s the attitude.
ROYCE WHITE
November 27th, 2012
9:29 am
“trickle up” economy we have had for 4 years, millions unemployed so yea lets go back to “Trickle down” which gaves us a 4% unemployment.
Government spending has increased over 100-150% from 2002-2010 there is no reason for that – and that is not because
of entitlement spending. Look at spending by department not so called programs. if you back out the over runs of SS and Medicare the deficit will still be a Trillion a year.
Repeal all the Bush taxes cuts and will never make up the difference.
People who make under $250,000 a year generally get a W-2 they do not create jobs.
the people who make over $250,000 are the job creators go ahead raise there taxes and see if the unemployment rate doesn’t jump to 10-15%
The Tax Policy Center is full of crap there are bunch of liberal hacks – there numbers don’t add up – they ignore the consequeces of raising and lower taxes.
If the Dems want to prove they will compromise and be non-partisan they could vote to return all spending to 2002 levels
if not they prove they political hacks.
Never in US history was cutting government spending cause the US economy to slow down.
that is a big fat lie told by both sides. exactly the opposite reduce the deficit to -0- and the economy will take off like a bullet
train. Make feds stop watering down our money you will see real incomes go up
The feds having been trying to drive down the dollar for decades
I have been a CPA for 25 years, I make less than 6 figures. I also have a degree in US history and have study the economic
history of the US. Government is out of control we have created an oligarcy in D.C. not just the politicians but the bureaucrats as well, look at the way they spend our money GSA as an example. they are many others that have not be
made public. Yet they say if you cut there budget people will starve and old people will die.
If they do it is because they are throwing parties and making us pay for the high price dinners. both sides are reponsible
for where we are not the Republicans spent money like drunken sailors when Bush was President and he didn’t a
single spending bill his last two years.
if you live in an apartment ir is your own fault. I live that way until I was 40 and than bought a house
we did with out and paid it off in 15 years. no movies no eating out no vacations.
I would have not survived the last 3 years being in and out of work if the house hadn’t been paid for.
We survived on part time jobs now I have a full time which I hope will last.
take away the mortgage interest deduction and we will be like Europe where only the rich can afford there own home
Just think everytime you pay your rent you are making some rich guy richer.
curious
November 27th, 2012
9:39 am
The Bush economy was a PONZI scheme; bound to collapse and it did.
iggy
November 27th, 2012
9:43 am
“The Bush economy was a PONZI scheme; bound to collapse and it did.”
Oh brother. All economys are a Ponzi scheme. Money is a phantom, it isnt real.
Loves Me Some Obama Kool-Aid
November 27th, 2012
9:45 am
In the new ‘Red Dawn’ movie, US invaded by North Korea to set up a central Communist government, but finds Obama beat them to it.
ROYCE WHITE
November 27th, 2012
9:53 am
the economy collapsed because the housing market collapsed. Because Fanny and Freddie were corrupt and forced banks to loan money to people to buy houses they could not afford. Because these institutions that were supposed to
have government oversite were caught fixing there books as far back as 1996. These institutions bribed congress
the people that were so supposed to watch them. Chris Dodd and Barney Frank should be in prison.
the economy won’t come back until the housing market comes back just like in every recession of the past 50 years.
the housing market won’t back until the Feds free up the credit market and Congress stops bashing home owners.
to free up the credit market the feds have to stop sucking money out of banks in order to cover the deficit.
and stop printing money.
iggy
November 27th, 2012
9:54 am
Loves Me Some Obama Kool-Aid
November 27th, 2012
9:45 am
LOL
Buzz Belle
November 27th, 2012
9:54 am
Don’t Tread 1:22 pm
Same thing he’s always thought…the rich are the ‘enemy’ and deserve to be ‘punished’. (Then he can ‘reward’ his supporters with the money taken from ‘the enemy’.)
This isn’t about “the enemy”. If you have been successful in this country, you owe this country, because if it wasn’t for the people who make up this country, you would not be successful. You should not get special breaks from the government because you have been succesful. Nobody should get special breaks, nobody is more special than anybody else here. We are Americans first, and if you don’t want to pay your fair share, you are invited to go to any other country, become successful, and deal with their tax issues. During WWII, all Americans chipped in to help the cause. We were under attack, woman joined, men joined, all Americans bought war bonds, we ALL chipped in. This financial crisis is America under attack. We all need to chip in. I am upper middle class and am more than willing to do my fair share as are most middle class. Why won’t the wealthy?
JDW
November 27th, 2012
9:58 am
@Linda…”The only “surplus” under Clinton was on pieces of paper called “budgets,” submitted many months in advance of the beginning of each fiscal year. There were “oops” that resulted in budget deficits each & every year, which in turn resulted in the natl. debt increasing each & every year under Clinton. The “surplus” were mere projections in the ’90s & fairy tales in 2012.”
Apparently you live in an alternative universe…from the ACTUAL spending/revenue numbers, in millions inculding BOTH on and off budgets numbers….
FY98 surplus…$69,270
FY99 surplus…$125,610
FY00 surplus…$236,241
FY01 surplus…$128,236
http://www.whitehouse.gov/omb/budget/Historicals
md
November 27th, 2012
10:01 am
“When are you cons going to get in the head of your leaders and figure out why they absolutely refuse to discuss off-shoring of US individual and corporate profits?”
Maybe when folks get a clue as to how it all actually works.
Like it or not, we now live and work in a global economy. A good bit of that profit was earned offshore as we have many corps with assets around the globe. It’s also taxed offshore when it is earned.
What the dems don’t seem to understand is the basic math involved in a global decision. If a corp has 100 mil in profit and has a choice between using all 100 mil offshore to STRENGTHEN it’s balance sheet (corps are not gov’ts, they don’t get to take what they need from others) or ship it home with a 25% reduction.
Hmmm…….what makes more sense in terms of dollars?
As for the dems, they also miss the point that it isn’t coming home if they demand it be taxed……so the smart play would be to allow it to come home at a much cheaper rate…..even 0% would be better for our economy. This is where the basic math comes in……..get a few trillion circulating back in our economy and it WILL get taxed through use…….demand a tax to bring it home and we get NOTHING.(unless one is a shareholder of those corps, and they get a better retirement)
mom of 3
November 27th, 2012
10:24 am
My family is in the evil 1% and we don’t know a damn thing about hiding money in the Caymans. We also don’t know a damn thing about “giving back”, but we know a whole lot about GIVING. Finally, I will know all are doing their “fair share” when I see those getting help from the government out cleaning the streets or doing some other necessary job in their community.
Rafe Hollister, dreading the eventual decline caused by Obamanism
November 27th, 2012
10:25 am
“If you took every single penny that Warren Buffett has, it’d pay for 4-1/2 days of the US government. This tax-the-rich won’t work. The problem here is the government is way bigger than even the capacity of the rich to sustain it. The Buffett Rule would raise $3.2 billion a year, and take 514 years just to pay off Obama’s 2011 budget deficit.” -Mark Steyn
Think, Libs, think, there just isn’t enough money in the hands of the rich to support this spending. You are going to have to nationalize business and take over the whole economy, to come up with enough revenue. That is a temporary solution, as folks then adapt, and you are left to just print more money.
Rafe Hollister, dreading the eventual decline caused by Obamanism
November 27th, 2012
10:33 am
Real Athens, just for you, the one too impaired to do his own research.
When Factcheck states that there was a surplus, they are looking at only the public debt and are not including the intra-governmental debt. Looked at this way, yes, there was a surplus. So much money was coming in through Social Security taxes (and used to buy Treasury bonds) that the general fund exceeded the budget by several hundred billion.
Is this a valid way to view the matter? After all, the money the government owes itself shouldn’t count, right? Well, yes, it should. The social security money was already earmarked for future social security payments, and the Social Security Trust Fund will want to get its money back when it comes time to make more payments. So yes, this is real debt and I can’t think of any reason to exclude it.
It should be noted that even without the Social Security money the deficit did go down most years and came within $18 billion of being a completely balanced budget (down from $430 billion under Bush Sr). The expenditures most years increased only modestly as compared with Bush Sr and especially George W Bush. So for this Clinton and Congress during that time period should be commended. However, I see no way to call a $18 billion deficit a “surplus”.
http://quaap.com/D/clinton-surplus-factcheck.html
md
November 27th, 2012
10:35 am
As for the myth that a big superfund exists for SS, from the US Budget:
“These [trust fund] balances are available for future benefit payments and other trust fund
expenditures, but only in a bookkeeping sense. The holdings of the trust funds are not assets
of the Government as a whole that can be drawn down in the future to fund benefits. Instead,
they are claims on the Treasury. From a cash perspective, when trust fund holdings are
redeemed to authorize the payment of benefits, the Department of the Treasury finances the
expenditure in the same way as any other Federal expenditure—by using current receipts or
by borrowing from the public. The existence of large trust fund balances, therefore, does not,
by itself, increase the Government’s ability to pay benefits.”
http://books.google.com/books?id=mLFmLP6kOYEC&pg=PA375&lpg=PA375&dq=%E2%80%9CThese+balances+are+available+to+finance+future+benefit+payments+and+other+trust+fund+expenditures%E2%80%94but+only+in+a+bookkeeping+sense.&source=bl&ots=nUOMBwNHkR&sig=Xyzg8tWWAbR6uYCkqMte4ICU7kU&hl=en&sa=X&ei=6Nm0UNiYGIj49gTVw4DACg&ved=0CDEQ6AEwATgK#v=onepage&q=%E2%80%9CThese%20balances%20are%20available%20to%20finance%20future%20benefit%20payments%20and%20other%20trust%20fund%20expenditures%E2%80%94but%20only%20in%20a%20bookkeeping%20sense.&f=false
Tap Out
November 27th, 2012
10:56 am
Taxes on the rich? Please. We have worst problems in Georgia. Under GOP rule our education system is only graduating 67% of our students….worst than Mississippi, Alabama, and Louisiana. Our biggest recent “accomplishment” is solid support for the loser Mitt.
Finn McCool (The System isn't Broken; It's Fixed)
November 27th, 2012
10:58 am
My family is in the evil 1%
Taxman knows where you live and he’s on his way.
JDW
November 27th, 2012
11:10 am
@md…SS Trust Fund assets are Treasury Bonds secured by the “full faith and credit” of the US Government…just like any other bonds.
JDW
November 27th, 2012
11:14 am
@Rafe…”Is this a valid way to view the matter?”
A valid question to something that has been in place since Lyndon Johnson made the orginal decision. However, until that change is made fact is according to the accounting system in place there were surpluses. You want to change the rules…change them…until then live under them.
md
November 27th, 2012
11:16 am
“SS Trust Fund assets are Treasury Bonds secured by the “full faith and credit” of the US Government…just like any other bonds.”
You mean the Treasury that is currently in the hole 16 trillion? That Treasury?
You do realize that Greek bonds were once upon a time backed by the “full faith and credit” of the Greek Government too…..right?
And the same with the USSR…….it’s all on paper, it means nothing if the money is not there……can’t squeeze blood out of a turnip……….
Linda
November 27th, 2012
11:18 am
JDW@9:58, I stand by my statement. The natl. debt increased each & every year under Clinton.
http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo4.htm
Real Athens
November 27th, 2012
11:20 am
Rafe:
Thank you for your diligence. I was not familiar with that site and have now bookmarked it. My original argument was about Social Security. You attached it to “Clinton’s Surplus”.
I did find this tidbit from the page you referenced amusing, though.
“UPDATE: With great horror I’ve noticed that many republicans are linking to this article to defend their idiotic points. Please understand that this is not a republican support page. While Clinton did not have a surplus, under his watch the growth of the debt slowed quite a bit. …”
md
November 27th, 2012
11:25 am
To understand the Clinton surpluses, one can think of them like this:
Let’s say you have a mortgage of 100k accruing interest…….during any given year, you get a 1k raise at work but decide to stick it in savings……at the end of 4 years, you have 4k in savings, but the mortgage went up to 110k because of the interest………
Smoke and mirrors………..
JDW
November 27th, 2012
11:32 am
@md…
“You mean the Treasury that is currently in the hole 16 trillion? That Treasury?”
Yep that’s the one…the one with the power to print the world’s reserve currency and tax the largest economy in the world. See the key issue with debt is the ability to pay it back which we clearly have.
“You do realize that Greek bonds were once upon a time backed by the “full faith and credit” of the Greek Government too…..right?”
Indeed, but the problem with Greece was no one would buy their paper. Here they line up to bid for the right to buy ours at a return of around 1% per annum every week. BTW anyone that mentions Greece and the US in the same argument trying to draw parallels is demonstrating a complete lack of understanding of the issue.
“And the same with the USSR…….it’s all on paper, it means nothing if the money is not there……can’t squeeze blood out of a turnip……….”
Now you are tilting at monsters coming out of your closet…sounds like the discussion I have with my kids…there are now monsters. As for “blood our of a turnip” a $15 trillion economy is not a turnip and the portion of the debt held by the public is about $9.7 trillion, the rest is held by SS, Medicare and the Fed. To pay $9.7 Trillion COMPLETELY off at current rates assuming economic growth of 2.5.% would take about 12 years with a simple 5% VAT tax should we so choose…
Jerry Eads
November 27th, 2012
11:36 am
I guess what amazes me most is that the Republican (NOT to be confused with conservative) crooks in Washington (and here?) have repeated the trickle-down delusion so often they may actually believe it. There is not now nor has there ever been one shred of (accurate) data that supports this con, yet even Kyle believes it? Got one fine bridge in Brooklyn for ya. Cheap. BTW, read Warren Buffet’s NYT editorial.