The Gang of Six plan, Social Security and other entitlements
Jim Galloway’s Political Insider blog will return later this week.
Some additional points on the deficit reduction plan by U.S. Sen. Saxby Chambliss and the Gang of Six:
– When U.S. Sen. Tom Coburn, R-Okla., withdrew from the bipartisan effort to reduce the deficit after five months of negotiation, many in Washington pronounced the Gang of Six dead – or at least, irrelevant. Which in D.C. is worse than dead.
But on Tuesday, there was Coburn in the members-only briefing of the Senate, endorsing the proposal. What brought him around? For one thing, an increase in 10-year savings from Medicare and Medicaid, from $370 billion or so to $500 billion. Just how those savings will be accomplished are details that would be left to the proper Senate committee.
– Look for a good deal of emphasis today on making Democrats more comfortable with the Gang of Six plan. “Balancing the deficit on the backs of the elderly” is the slogan they’re vulnerable to. Proponents today are emphasizing that savings from Social Security reform – means testing is a possibility – are to be plowed back into the Social Security system. They wouldn’t be applied to the deficit.
– The silence – so far — from the House Republican side is a sign that the Senate venture is being taken seriously. Certain elements of the GOP base and the tea party, of course, are another matter. One Tweet from this morning from Adairsville Rob to U.S. Rep. Phil Gingrey, R-Marietta, who was celebrating his Tuesday vote for the GOP caucus’ cut-cap-and-balance plan:
Thank you, sir! Now PLEASE run against Saxby Chambliss! Pragmatism is killing the Republic!
That is a thought certainly worth discussing.
- By Jim Galloway, Political Insider
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246 comments Add your comment
BehindEnemyLines
July 23rd, 2011
4:21 am
Sellout Saxby better enjoy his remaining time in Washington, he’d have a tough time being elected dogcatcher after stabbing so many people in the back in his rush to embrace his new found tax-happy friends in D.C. His capitulation wasn’t a huge shock, once he started consorting with the enemy you sort of had to see it coming. If he had any character at all he’d resign & allow the people who made the mistake of voting for him to correct the error, admitting that he was nothing but a fraud all along … but we’ve already seen how little character he possesses. Counting the days until this treacherous embarrassment is put out to pasture.
Buckhead Boy
July 23rd, 2011
6:24 am
The axiom in negotiation is that there is no agreement on anything until everything is agreed. Excuses aside, it is evident that the Republicans again ceased to negotiate and purposely delayed communicating that until after the market had closed. Although I suspect that was merely the last gesture for the benefit of their TEA-types, and the debt ceiling will be raised; but should it not be, the adverse consequences for all of us will be far greater than any tax increase that may be envisioned. Then, there will be no bliss in ignorance.
kc
July 23rd, 2011
7:52 am
td, then why do most polls show that dems, indep and repubs voters believe a balanced approach (cuts and revenue) is the answer….what if dems in congress sign a pledge not to cut entitlements….seems rather myopic to me…..then we have to listen to boehner say prez changed goalposts just as repubs did on medicaid cuts and both sides are playing chicken with the enforcement mechanism…..just seems to me that dems have given up more than other side which happens to be in minority in terms of executive/congressional makeup…
yet we read corporate profits up….so combined with 8 years of bush tax cuts our job creators aint getting the job done….and the greedy corporate folks want only 5% tax on repatriation, when the last time we did this they used for dividends to stockholders (many of top execs) and no jobs created…..but hey i feel like i am talking to a brick wall
Dick
July 23rd, 2011
8:59 am
td,
I want what you are smoking! Stop drinking the Kool-Aid. My husband and I are business owners, and I can assure you taxes, tax credits and the cost of employee benefits are NEVER consideration when we are thinking of hiring. If business coming in the door calls for hiring, we do it. Simple as that. For the sake of honesty: “ObamaCare” doesn’t mandate small businesses provide health care insurance. If you are blessed and find your company approaching having 50 employees, you can create another corporation, or sub-out services, just call your CPA.
pete
July 23rd, 2011
9:26 am
The deadly gang of six !
jconservative
July 23rd, 2011
9:27 am
Here is the problem:
“— U.S. corporations are expanding overseas, not so much at home. … U.S.-based multinational companies have been focused overseas for years: In the 2000s, they added 2.4 million jobs in foreign countries and cut 2.9 million jobs in the United States, according to the Commerce Department. ” Source AP 7/22/11
There are no legislative fixes for this problem. This is the way it will be for the next 30 to 40 years.
Bob Decker
July 23rd, 2011
9:38 am
I agree with jconservative!!!
I am also to the point where I am willing to let the country default, and watch the destruction, good way to start from scratch, no more food stamps, no more paying people to sit on their butts. It would be 2 years of mayhem, probably 100,000 killed maybe more. Then we start all over.
kc
July 23rd, 2011
10:46 am
jconserv, probably correct, but why do we have legislation that rewards companies for this practice? profits helps business in terms of stock value which helps pension portfolios and 401ks, but it is likley more beneficial to high wealth investors ….if our citizens are destined to job/wage stagnation the middle class will dry up more and more which will reduce domestic demand which feeds the downward cycle….guess the version of expanding the pie is a myth (rising tide) and it is more a zero sum game….as long as we keep importing vast amounts more than export, well…….
and decker you are low on your numbers & duration
Centrist
July 23rd, 2011
11:36 am
@ Buckhead Boy who said: “Excuses aside, it is evident that the Republicans again ceased to negotiate and purposely delayed communicating that until after the market had closed.”
When “the jello president” Obama moved the goalposts on the tacit agreement for $800 billion in tax increases by closing loopholes and reducing deductions to $1.2 trillion – he killed the negotiations. Boehner was smart to let the markets close before announcing it – maybe something will be in place before they open on Monday. If not, watch the bond and stock markets react negatively and maybe have rating agencies downgrade Treasury bonds. Corporations and our economy will quickly sink if this happens taking ALL of us down with them.
td
July 23rd, 2011
12:43 pm
kc
July 23rd, 2011
10:46 am
One does not get rich or create wealth by working for a company. I have not seen any laws set up to restrict a person from going out there and working for him or herself. If a person chooses to be middle class then they will work 40 hours a week and get paid for their worth. If a person wants to make more then they will take a chance and work for themselves.
td
July 23rd, 2011
12:50 pm
Buckhead Boy
July 23rd, 2011
6:24 am
Now who has put a plan on the table? Where is the President’s plan (I would like to read it to see if I would support it)? Where is the Senate Democratic plan? The only plan on the table is from the Republicans and the Dems voted it down. I think in the art of negotiation if one side puts a plan on the table and the other side votes it down then it is up to that side to put the next plan on the table.
Centrist
July 23rd, 2011
1:11 pm
There was the grand plan Obama scuttled by moving the goal posts, “The Gang of 6″ plan that died, and these shorter term plans outlined here which now seem more likely: http://www.washingtonpost.com/opinions/the-half-trillion-plan/2011/07/21/gIQA0gnhSI_story.html
Sam I Am
July 23rd, 2011
1:21 pm
“one does not get rich working for a company” tell that to any number of company officers.
DAMN DISGUSTED
July 23rd, 2011
3:59 pm
They suck money from my paycheck every week for my entire working life, and call this an entitlement! FU!
Centrist
July 23rd, 2011
4:53 pm
The debt deal has to be at least partially in place by tomorrow evening before the Asian markets open to avoid massive worldwide economic turmoil.
The cost cutting fixes including raising Social Security and Medicare ages to reflect longer lifetimes, and means testing of earned benefits will take a while to sort out. Such means testing will obviously be done at somewhere above middle class incomes to avoid voter backlash. It may be done at Obama’s historical calls for those with adjusted incomes above $250K or his “millionaire’s” tax. Anything less will get very ugly as we see from comments here. Social Security is NOT a benefit, but a forced investment; and taking away investment principal and interest via means testing is simply confiscation.
yuzeyurbrane
July 23rd, 2011
5:13 pm
td, you are obviously very bright but what are you smoking? Some of your opinions show a lack of actual experience with situations from which many of learn a few things.
Centrist, I often agree with you, and partially agree with what you say about SS. I do disagree that it would be forced confiscation on the earnings of those who earn more than $250,000. Right now, because the SS tax is limited to first $106,000 of earnings, it is extremely regressive with a much lower tax rate on those who earn more. If people want a flat tax on income, they should want one on SS if they want to be consistent. That is the FICA would be paid on full income, not just the first $106,000 that us middle class folks are gouged with. And it shouldn’t be limited to earnings. Hedge fund managers, those who primarily earn interest or dividend income, etc. should have the FICA tax applied to all. What makes that type of income entitle them to exemption from a social obligation? To me, that is the true entitlement. If the cap were removed, SS would be solvent forever and there would then not even be a need to means test, to raise the age, or to use phoney cost of living indexes.
clem
July 23rd, 2011
5:28 pm
how true, some posts authored by folks with dain bramage
Centrist
July 23rd, 2011
5:56 pm
@ yuzeyurbrane wrote: “because the SS tax is limited to first $106,000 of earnings, it is extremely regressive with a much lower tax rate on those who earn more.”
Here is an example of the misunderstanding about Social Security. While it is called a FICA “tax”, it is actually a forced contribution for a partial retirement and insurance fund. Collecting contributions and premiums above and beyond the eventual maximum benefit payouts would be a tax with no return – redistribution of income – not a regressive tax. We already have redistribution of income via income progressive income tax rates and phasouts of exemptions and deductions. The idea of taxing incomes above $106K and also means testing benefit payouts from those contributions is confiscation no matter how you look at it.
yuzeyurbrane
July 23rd, 2011
7:01 pm
Centrist, thanks for your clarification. I did not totally understand the point you were trying to make although I still disagree with you in part. As you probably know, the cap was originally considerably below $106,000 and has gradually risen to that level as part of an earlier attempt to assure SS’s continued solvency. And I agree that we should not means test the program. But my reason is that if that were to happen, support for it would erode as it eventually became a welfare program. So I have no problem with all Americans having some “skin” in the game. As to your point about it being purely an insurance program, that is debateable. I also have read some experts’ opinions that disagree with you re whether the current $106,000 cap really covers all of the benefits people with earnings above that will eventually get. Even assuming, for the sake of argument only, that $106,000 does correlate to the SS benefits received, surely you would agree that this is not a static number but should be adjusted upwards as benefits increase? Nor does it address the question I raised about non-earnings income. Of course, there are a number of relatively minor modifications which could assure SS’s solvency for another 75 years. I have varying degrees of support or opposition to all of these. But I think they should all be considered. However, SS did not add one penny to our current deficit and therefore should not even be part of this debt ceiling discussion which is taking place. It should be considered in the normal legislative process with hearings, proposed legislation, votes, etc.
Centrist
July 23rd, 2011
7:15 pm
yuzeyurbrane – as you say, the earnings limits for FICA collection have risen dramatically and will probably continue to do so. Maximum benefits have NOT risen nearly as much and only through COLA increases that are being debated to diminish. The insurance part of the program is for survivors and disability cases. Social Security Supplemental Income has broadened in scope along with WIC distributions including for children of illegal aliens. Those people who are not subject to FICA deductions are also not part of the system (investment income) to collect benefits. Are you suggesting they should be taxed without access to benefits?
Social Security FICA receipts have been outpacing benefit payments until recently. To hide the level of the deficit, such positive receipts versus benefits were mixed into the budget numbers. Now that such accounting will now actually hurt instead of help the budget deficit, it is an item in debt ceiling negotiations. THERE IS NO SOCIAL SECURITY TRUST FUND. That term and “lockbox” were political fantasies.
OLD DUCK
July 23rd, 2011
8:39 pm
In my 70 + years I have heard the only place the trickle down theory works is in an out-house. You can guess where “We the people stand” in that case.
clem
July 23rd, 2011
9:15 pm
don’t you just love repubs looking out for middle america….florida ag fires 2 folks going after foreclosure fraud…http://www.abajournal.com/news/article/bondi/
guess the banks calling shots in florida
double
July 24th, 2011
1:46 am
TD the big reason is you get to handle the money first.
double
July 24th, 2011
1:53 am
above post in reference to self employment post @td
Atlantan
July 24th, 2011
7:23 am
@OMG Reality – it went up 18% not the normal 3% the insurance people said thank Obamacare. Also, if you actually own a business does the new “grandfathering” aspect on insurance plans bother you? Obama hates small business owners and he plans on funding his socialist dreams or getting even – you decide – on their backs.
For you numnuts yelling tax the rich – how much of one’s income is enough? How much of your own income are you willing to give up?
The government is a bloated mess – there are several agencies that could be cut back or ended. And until we stop using American dollars (borrowing Chinese money) for funding building mosques in Egypt, the new Atlanta trolley and all other assorted wasteful spending and – NO NEW TAXES! Enough is Enough!
Ole Guy
July 24th, 2011
9:55 am
Soldier, TD…I couldn’t agree with you more. There are far too many fingers in the cookie jar and it’s all a derivative of the pc world around us. I’m all for helping those who NEED help (as opposed to those who WANT help). It seems that the gradual move to a socialistic economy has created more of the later, ie auto executives who traveled to Washington, in their corporate jets, to petition Congress for “help” when they could have/should have chosen a less “expansive” means of travel. This is/was not at all unlike the guy who pulls up to the food stamp office parking lot in a brand new Beemer.
The government, while next-to-ignoring the root problems, makes it far too easy for the constituency to cry “HELP”…it is earier to hold out one’s hand, palm up, than it is to exercise a little discipline. This is precisely why, when visiting the local Social Security Office, I see young couples with a squad of crumb crunchers in tow. I know there must be some true need out there, however, I often wonder just who NEEDS the help vs who WOULD LIKE the help/the easy money which our legislators seem all-too-eager to provide to the voting public.
Soldier, even our retirement $/Tri Care seem to be receiving legislative scrutiny; I often wonder what effects this may have on our future National Defense forces. While there seems to be a bottomless bucket of money for hardware the Services really don’t need (I’ll diplomatically hold off on discussing specifics), troops (I was there) had to beg borrow and steal, in the early days of the current conflict, for personel/vehicular armor, all while the money was available to “stealing” the Rangers’ Beret in the misguided notion of enhanced morale among the Army at large. And let us, the true Warriors of yesteryear, not overlook the ever-changing array of uniforms (PT, Fatigues, BDU, DCU, etc) which become more costly with the passage of time. As the PT uniform has evolved from the simple “modified” duty uniform of the 60’s to the “somewhat” costly ensemble(s) of recent, troops have become fatter and less duty-ready.
I suppose we could go on and on, guys, but the “uncomfortable” bottom line is…with fewer workers funding (by way of Social Security taxes) an ever-increasing demand of my generation (possibly, our generation), we’re going to be called upon to exercise that all-too important axiom we learned early in our careers…ADAPT and ADJUST. I know, Soldier, we can do it; it’s been a part of the temperment we have lived by for a great part of our lives. I just hope that those who have not been as privileged as we can learn this very truism.
Knees to the Breeze!
Upset at Both
July 24th, 2011
11:45 am
For Americans, the last three years have been a period as trying as any similar period in the last century. Most of us, regardless of political affiliation, view three issues with growing disquiet: an alarming national debt, annual deficits that add to that debt, and high unemployment that persists like an abscessed tooth. Frustratingly, fixes to one of these issues appear to exacerbate the others.
We need to lower the unemployment rate, thereby increasing the revenues for the country, which, in turn, can help lower the deficit and the national debt. Using tax rates from the Clinton years (the last time the economy was really humming) would increase the revenue stream.
Cutting government spending, of course, is the other side of the coin. My conservative brethren push hard for the latter, appearing, so far, to ignore the former.
Congress is currently wrestling with these questions. Speaker of the House John Boehner and Senate Minority Leader Mitch McConnell claim that allowing the Bush tax cuts for the wealthy to expire will “kill” jobs, hurt small business and hamper the recovery. They insist on keeping tax increases “off the table.” Let’s take a closer look at this premise.
My wife and I run a small lodging business in a resort town in New Mexico, employing eight people. Income from that enterprise approaches the bracket that would be directly affected by elimination of the Bush tax cuts.
We have pondered the personal ramifications of this issue, and have come to the conclusion that increasing our taxes on earnings of more than $250,000 from the current 35 percent to 39.6 percent would have virtually no effect on our spending habits or our lifestyle. More importantly, it would not affect our ability to hire another employee.
Here are some real numbers to illustrate my point.
We typically start employees at $12 per hour. There are 2,080 hours in a working year. Multiplying those two figures gives the cost of one employee for one year: $24,960. Add in FICA and Medicare and we’re up to $28,277 per year. Let’s remember this $28,000 figure.
Now, let’s say that business picks up and our taxable income increases by $100,000. Leaving the Bush tax cuts in place, we would have $65,000 to spend as we see fit. Repealing the Bush era tax cuts for the wealthy would leave us with $60,400.
If we really needed an additional employee because of added work demand, that $4,600 difference would just about fall off the priority scale in the decision to hire someone or not.
If business demanded the additional employee, we would hire them and happily go home with the remaining $32,000. The tax rate increase of 4.6 percent doesn’t and wouldn’t affect our decision to add an employee. This slight increase simply doesn’t add up as the job killer the Republican leadership says it is!
Finally, and most importantly, the Republican leadership correctly points out that a large portion of the taxpayers in the over-$250,000 bracket is actually small businesses, much like our own. This is true, but if a small business is struggling so much that it is in danger of folding, it obviously will not even be in this higher income bracket and would not be affected by repealing the Bush tax cuts for the wealthy.
With that thought in mind, it is clear that allowing the Bush tax cuts to continue for those taxpayers in the under-$250,000 bracket, and letting those cuts expire for those of us above that figure, would actually preserve some of these same struggling small businesses, and create jobs down the road as the economy improves.
The country would be better served if our legislators imposed tax increases on those of us who can afford to pay them, rather than spouting political generalities that are unsubstantiated and numerically challenged.
http://www.postindependent.com/article/20110523/VALLEYNEWS/110529960
Centrist
July 24th, 2011
11:54 am
@ Upset at Both -
Good for you that increased taxes won’t change your business plan or spending habits (other than having less to spend or invest). But you are not typical. Increasing taxes will NOT create jobs – it will lose them. Maybe via your business, but most others. As you point out – unemployment creates a loss of tax revenue, along with more government spending on those unemployment benefits. Increasing taxes in a poor economy does not increase revenue, it reduces it.
Centrist
July 24th, 2011
12:01 pm
How about the Democrats call for increased taxes be triggered to when unemployment goes below 7%?
Upset at Both
July 24th, 2011
12:32 pm
Centrist,
It is a 4000 dollar difference. If the economy is moving like the Clinton Years the revenue brought in to businesses, will mean more people paying taxes and more money for me and others to spend.
Centrist
July 24th, 2011
1:34 pm
We don’t have “an economy moving like in the Clinton Years”. We have nearly double digit unemployment nearly twice of the Clinton years, huge deficits, and greater interest payments on our increased debt. Nostalgia is great, but doesn’t help. Clinton inherited the “peace dividend” from the collapse of the Soviet Union, and huge reductions of defense spending. That all evaporated with Iraq and Afghanistan – however the projections helping the deficit in the future has defense spending dropping back again. But we need tax receipts by re-employing, and halting deficits and increased debt. Raising taxes now will not do either.
DannyX
July 24th, 2011
1:47 pm
Left or right doesn’t matter, seems our so-called centrist has taken another partisan side.
Centrist, when are you going to represent a centrist position? You are all over the place.
Javonda
July 24th, 2011
1:51 pm
Agree w/Centrist, raisng taxes should be off the table. We Americans have been sandbagged too many times by politicians who promised to curtail spending if we just agreed to pay some more taxes.
Fair or not, most of us believe if the government gets its hands on more tax revenues deficit reduction will be quickly forgotten and they’ll only think up new spending schemes – a new entitlement program, another war.
Centrist
July 24th, 2011
2:22 pm
@ DannyX wrote: “Centrist, when are you going to represent a centrist position? You are all over the place.”
Being a centrist does not mean being on the middle of every issue. It usually means being all over the place between left and right issues. I guess you could say I am economically moderate to conservative and socially liberal. Unlike TEA party members and many Republicans, I don’t have a problem with Democrats calling for increased taxes on the (truly) wealthy – but just not until unemployment drops since it would be counterproductive NOW.
I’m not alone. Heard today that in states that require party registration, 65% are now at an all-time high registered as Independents.
DannyX
July 24th, 2011
3:38 pm
You must belong to the Centrist Party. They have stolen the definition of a centrist, and created their own version.
A true centrist, “Voters who describe themselves as centrist often mean that they are moderate in their political views, advocating neither extreme left-wing politics nor right-wing politics,” does describe most independent Americans, but not you.
You advocate extreme views and rarely land in the center.
Centrist
July 24th, 2011
4:01 pm
Other than being an atheist and pro choice where Republicans would call me extreme, what “extreme” views do I express? I don’t condone illegal immigration (not extreme to the vast majority of Americans – just liberal Democrats), don’t agree on tax increases during a weak economy and high unemployment (basic economics), and do not agree on confiscatory means testing policies in regard to the forced contribution system of Social Security. I do advocate a fix to our overly complicated tax system to expand the base of taxpayers to more than 50% of workers which even moderates in the Democratic party agree.
double
July 24th, 2011
4:08 pm
From what i’m reading.Most of you are well off financially.When cuts come it will come from the ones who can least afford.I’m not talking about the freeloaders.Think of this way.Will the 35/39.6% tax rate hurt you more?Will the cut in ss/medicare benefits hurt you most, or someone you know that depends on these benefits?The highest tax rates were under the eisenhower admn.and we had a light recession during his time.So the economy was not so good.Yes we need to cut spending,but not at cost to the poor.We need to stops the incentive for lawyers to defend frivolous claims,and elected officals going to bat for these claimants for their vote or affiliation.
Centrist
July 24th, 2011
4:13 pm
I never heard of the Centrist Party. Went to their website and certainly agree with this:
Economy
Secure – Stable – Sustainable: Well reasoned economics, free markets through market transparency, with market regulation structured to achieve the common good. Enable equality of opportunity and fair competition, based on performance and productivity. Checks and balances to ensure that competition and innovation are not squeezed out of the American Dream. Protect and allow for potential to be achieved by the virtue of individual will, rather than subsidy without performance agreements, or due consideration to cost/benefit relationships. Balance between boutique economic systems and national/international systems. Efficient government and debt reduction are primary missions.
Centrist
July 24th, 2011
4:26 pm
@ Double wrote: “When cuts come it will come from the ones who can least afford. I’m not talking about the freeloaders. Yes we need to cut spending, but not at cost to the poor.”
The poor in our country have a very firm safety net of myriad government programs and pay no taxes like the bottom 50% of working families. Actually, the poor get a “negative income tax” check. I have not heard of any proposed cuts there.
Proposed Social Security and Medicare cuts seem to be means tested, so those who can least afford them are unaffected – other than younger participants who will have to wait longer to start receiving benefits because lifetime/mortality has greatly increased with advances in health and healthcare.
ST
July 24th, 2011
4:52 pm
Be liberal in Giving,
Conservative in living
Is the Christian Way I am taught.
ST
double
July 24th, 2011
5:06 pm
Was Cola raises means tested for last couple years.I think this applied to all ss recipients.If you believe means tested then I understand the athesist part.
td
July 24th, 2011
11:07 pm
double
July 24th, 2011
5:06 pm
COLA’s came to the SS system way after and was never intended in the original law. SS was never intended to be a persons sole source of income for retirement. I do not feel there should be COLA’s in SS or public sector retirement plans. All these do is to draw down accounts faster and make it harder to fund the programs for future generations.
Centrist
July 24th, 2011
11:39 pm
td – thanks for answering him, I couldn’t understand the gibberish. I think he may have had a few early snorts this afternoon.
double
July 25th, 2011
1:28 am
Centrist understanding my gibberish is not the only thing you are lacking in.
double
July 25th, 2011
1:50 am
TD every thing you say is old news.As for how you feel about cola don’t amount to much.
Tea partier identifies America’s greatest enemy « ATLmalcontent
July 25th, 2011
6:33 pm
[...] This tweet was sent by a tea partier to Rep. Phil Gingrey after the Gang of Six plan was unveiled: PLEASE run against Saxby Chambliss! Pragmatism is killing the Republic! [...]