The American Trainwreck

[theaustinescorts]

So much of the Federal budget is now going to interest payments on the debt that it's ridiculous. There's no agreement on reducing the deficit, much less balancing it, much less paying down the debt, which has doubled since Obama took office.

The simple truth is that if this level of government services to the public is necessary than it's unsustainable and therefore an impossible ambition. The left will never understand this.

Another truth is that what's driving this spending are two unavoidable social changes...the aging of the population coupled with the medical industry's ever inventive and expensive ways of treating illness and extending life.

There is a solution however. Total grinding financial and social collapse isn't inevitable.

The solution is this - everybody gives up a little. Just a little.

1.Everyone's social security payments are reduced by five percent or so.

2.The age of retirement is raised by two more years.

3.The disability guidelines tightened up.

4.Medicare payments at the end of life tightened up just a little.

5.Medicaid made available only to citizens [sorry but I would not find free care if I were in Mexico..they would let me die].

6.Questionable defense efforts like so many aircraft carriers and foreign bases reduced.

7.Tax rates can go back to what they were under Clinton....in the end the rich will make more money anyway because the economy will be saved.

8.A three percent sales tax placed on the sale of all all financial securities used for speculation.*

9.Federal subsidies to local governments to pay for their law enforcement and education should be reduced or even eliminated. Let the local governments raise their taxes or reduce their services.

If these small steps were taken the debt could be paid down, the dollar would re-bound, unemployment would dissappear, tax revenues would skyrocket, and we would all have more money.

*Don't believe for a moment that the very rich work as hard for their money as everyone else does. The very rich merely play at making money like children play at a monopoly board. And I know a lot of rich people.

[Wetwork Daddy]

Maybe the federal government needs to hire John Cummuta.

[Whirlaway]

I don't trust the politicans to keep to such a plan. They will just spend it and find wiggle room.

The only solution is to shrink the size of government, and cut spending. Return the power back to the States, as intended in the Constitution.

[theaustinescorts]

The problem with returning to the Constitution is that by now most people are receiving some form of benefit from the Federal government that they depend on.

The only way to avoid disaster is for everyone receiving benefits to give up just a little, and for the financial class to pay the same tax on their sales transactions that we have to pay for jeans and tennis shoes.

So far the Republican solution in the House is to take all our Medicare expenditures and put it in the hands of health insurance companies so they can spend a third of it on their salesmen, advertising, steak lunches, hunting and fishing trips and golden parachutes [thank you Gordon Gekko for pointing that out in 1985!]

Private health insurance runs at over 30% overhead while Medicare runs at only 3%.

ObamaCare's solution is to mandate that insurance companies must henthforth operate on only 20%. WRONG. They'll just find excuses to deny coverage and pocket the difference by expensing it out to themselves.

Until both parties get real and stop just promoting the interests of their financial contributors we will all head over a cliff.

If everyone gives a little we will all not only survive but flourish like we used to, but we've been through so much that we just can't trust each other anymore. We lack the unity and shared purpose our competitors possess.

[O'Mike]

Atlas Shrugged opened today, I want to see how far we have gone on it's path........

http://abcnews.go.com/Business/atlas...ry?id=13384145

[theaustinescorts]

Anyone who would invest in an Ayn Rand film must not care if they get their money back. She wasn't a philosopher or an economist or even a good fiction writer. She was a nut who confabulated any social "altruism" with Stalinism in a lame effort to argue for extreme oligargy. Her favorite systems are those of El Salvador, Guatamala, and Mexico...."Let them starve. That's what they deserve anyway those pigs!"

If you're looking to a right-wing solution to this problem it's actually the Austrian/Chicago school which has dominated national policy for the last 30 years that's contributed to this every bit as much as the left.

It's the reason why the top 5% who own 50% and make over 50% of all profits pay no taxes. It's the reason why the derivatives and other bubbles have sent us over the edge.

The very rich don't actually invest in much. They create very few jobs. Most of their wealth comes from speculation. And I know a lot of rich people.

[davidsmith0123]

The very rich don't actually invest in much. They create very few jobs. Most of their wealth comes from speculation. And I know a lot of rich people.

*******
Wrong. Wrong. Wrong. Maybe/who cares/irrelevant.

[theaustinescorts]

How is purchasing equity in some existing thing from someone else "investing?"

How is purchasing government debt "investing?"

How is purchasing bonds from an investment bank "investing?"

Look on the sites of any personal wealth management bank like Northern Trust and you will see where such places "invest" their clients' monies. This is even worse for foreign banks, such as the US branches of Swiss, UK, German or French banks that wealthy Americans now prefer to our own.

Ninety percent of new jobs in this country are created by small businesses who obtain their finance from credit cards, home mortgages, commercial banks and the SBA. Notice I said COMMERCIAL banks, and not INVESTMENT banks. Commercial banks get their funds from small depositors and the Federal Reserve. Investment banks get their funds from wealthy individuals and institutions such as pension funds.

The rich rarely, and I mean very rarely, put ANYTHING into venture capital.
In fact most rich people steer so clear from anything resembling risk capital that it would shock you.

If you mingled with wealthy people, as I do, you would know this. Are you really gullible enough to believe what their politician minions in talk radio and in the US Congress spew out for purely propaganda purposes? Even Ronald Reagan abandoned his "trickle down" tax cuts for the wealthy in 1983 after the promised revenue from them never materialized. From 1981 to 1983 after these anti-progressive cuts were implimented none of the monies the rich saved went into creating any jobs, so the they were reversed and revenues increased again. That's one reason why after 1984 there was the largest economic expansion this country had yet seen - because Reagan's team were ultimately pragmatists and not talk-radio ideologues.

[pmdelites]

from time april 18, 2011 article on Paul Ryan and the budget discussion going on....

Obama's 2012 budget proposal

+ income $2.6 trillion
$1.1 Trillion personal income taxes
$925 billion social security taxes
$329 billion corporate income taxes
$233 billion other taxes

- spending $3.7 trillion
$767 billion social security
$724 billion defense
$532 billion income security
$495 billion medicare
$362 billion health
$260 billion interest on debt
$560 billion other

= $1.1 trillion deficit

the article doesnt list the numbers from Ryan's proposal.

from the article ...
"Ryan proposes a scrubbing of the tax code that would wipe out hundreds of complex loopholes and apply the savings to lower income tax rates for everyone. ... But he wouldn't raise any new tax revenue - in part because new taxes are anathema to the GOP faithful. Ryan does not ask the wealthy or Big Business to help with the budget rescue; such a move, he says, would smother job growth. ...
Ryan also wants deep budget reductions in nearly every category, saving up to $925 billion by cutting spending back to 2008 levels and freezing it there for five years. That's quite a dramatic sum when you consider how much Congress has been fighting over a few tens of billions of dollars in this year's budget."

"The great unknown is whether the two parties are prepared for the kind of honest debate Ryan says Americans deserve. Can Democrats accept any significant cuts to entitlement programs? Will Republicans ever tolerate tax hikes? Obama said on April 5 that he's "looking forward to having that conversation." But in the shadow of the 2012 presidential campaign, in which both sides will be elbowing for any political advantage, that's not going to be easy."



Whirlaway said "The only solution is to shrink the size of government, and cut spending. Return the power back to the States, as intended in the Constitution. "
Actualy there are MANY ways to resolve the gap. your comment is just one of them.

in my opinion, focusing on only cutting spending or only raising taxes misses the point. spending has to be cut and taxes need to be raised to close that trillion dollar gap.
pareto analysis says go after the big numbers [SS, defense, income security, etc], not the small numbers [epa, npr, planned parenthood, etc].

and until both parties are willing to give and meet in the middle, we the people will be stuck with the current situation getting worse and worse [cf S&P thinking/planning on downgrading the US debt].

[theaustinescorts]

You are correct.

Ryan has staked out a radical and unworkable position, but at least it's a place to begin negotiating.

If both sides give up a little, and there's a compromise in which taxes are increased a little and all spending categories are decreased a little then we can save ourselves from disaster.

The pernicious thing about this kind of disaster is that it won't come in a sudden crisis, but will be a lingering weakening of everything which will deprive most people of their happiness.

btw are Federal income taxes really too high? I heard that the share of the economy taken up by Federal income tax has not been this low since the 1950s!
Can anything the Republicans say about taxes be believed?

I remember the 1981 Reagan tax cuts and then how they were reversed by Reagan himself when they didn't work, but backfired and had the opposite effect he'd campaigned on. Republicans today should look to that when they advocate for doctrinaire tax remedies.

[Chica Chaser]

http://www.fairtax.org/site/PageServer

[Jackie S]

We are no different than any other democracy. Once those that do not want to work band together in order to elect officials who will give them somthing for nothing, the entire system falls apart.

And where do the polititians get the money to pay the dead beat voters. From those that want to work.

I am 64 years old. I make a very good living. I started paying into social security when I was 14. I easilly max it out mid year.

Now you are telling me that I cannot get what is rightfully mine.

[Yssup Rider]

A place to begin negotiating?

Wow!

That's like one side saying YES and the other saying NO.

Ideally they'll meet at MAYBE. As in maybe we ought to try something different for a change!

[Luvgcz]

This website is actually an ad for an investment advisor at the end, but there are a lot of truths here. It's kinda long.

http://www.stansberryresearch.com/pr...VD/6PSIM409/PR

[ibechill]

Since you got all the answers, set up a exploratory committed on your run for president.