Bad, bad tax news

[westcoastdog]

I have bad news for you younger people. In today's San Francisco Chronicle (September 12, 2004) there is a front page article about the government's unfunded liabilities--as much as 70 trillion. In other words, if you calculate the present value of all the government's liabilities, such as future SS and Medicare costs, the total is between 50-70 trillion. In plain language, if you calculate the future payments by the government in today's dollars, they will exceed total tax income by 50-70 trillion. To put this in perspective, the Gross Domestic Product for the U.S. is currently approx. $11 trillion.

Paul O'Neil, Bush's honest Treasury Secretary, appointed a commission to make recommendations to solve the problem of the unfunded liabilities. They made three tax recommendations:

1. More than double the payroll, immediately and forever, from 15.3% to approx. 32%.
2. Raise the income tax by 2/3, immediately and forever.
3. Cut SS and Medicare by 45%, immediately and forever.

If taxes are not raised, the government must eliminate forever all discretionary federal spending except transfer payments. This means no defense, no highways, no national parks, ad nauseum.

So, you younger folks, save your money and invest carefully. In 2008 the baby boomers will begin to retire, and that’s when the fiscal hurricane begins. Meanwhile, while the government faces a financial catastrophe within the next decade or two, the Bush administration focuses on waging war on a few thousand terrorists and defending tax cuts for the rich. For the rich, the government giveth and the government taketh. Around the year 2010, 50 million Social Security recipients are going to demand their right to benefits over your right to drive $50k cars and drink champagne.

[tman_ndsu08]

This means no defense, no highways, no national parks, ad nauseum.

I somehow doubt that national defense is in the same teir as highways and national parks.

I hope the government starts selling off it's more useless departments such as DOTransportation and DOEducation.

[Compugasm]

Originally posted by westcoastdog, If taxes are not raised, the government must eliminate forever all discretionary federal spending except transfer payments. This means no defense, no highways, no national parks, ad nauseum.

Hahaha, bullshit. They'll find a way.

[Zeebadee]

You have no legal right to collect Social Security payments, the government isn't required by law to pay anyone a dime, no matter how much you've contributed.

http://www.ncpa.org/pi/congress/pd042500g.html

[Technosoul]

Also the government could announce being backrupt and make void all debts owed.

[westcoastdog]

When countries can't pay their bills, i.e. various south American countries, they just print more money. Consequences, hyperinflation. So the choice is either higher taxes or inflation on the scale of 100% per year or higher.

The unfunded liability problem is the 800 pound financial gorilla that politicians--all of them, especially Republicans--pretend is fantasy, not cold reality. Even the national networks avoid the problem.

[tman_ndsu08]

They simply have to start selling off government assets to in order to raise money.

I pray for this day to come ASAP.

[westcoastdog]

Do you realize that Japan and China own hundreds of billions of dollars in U.S. treasuries. Do you want our national forests and parks owned by these two countries? I hope you like Chinese food. I do. Sushi too.

[forecg]

Westcoastdog, would you mind providing a link to those recommendations by Paul O'neil? I looked for the article you mentioned on the San Francisco Chronicle website and came up blank, then I searched for "Paul O'Neil tax recommendations" and got a bunch of stuff that had nothing to do with what you mentioned. I'm sure it's out there somewhere, but I'd like to read it from the source.

As a 25 year old worker, the thought of shelling out a third of the fruits of my labor to a 70-year-old Ponzi scheme doesn't exactly float my boat. Unless old people start dying like they used to or my generation has starts having babies like mad, no accounting tricks are going to change the number of people paying in relative to the number of people collecting.

The most laughable thing about social security is the obvious question that no one seems to ask: When it's my turn to retire and life expectancies are even longer, am I really supposed to believe that the following generation will be stupid enough to put up with even higher taxes in the hopes of passing the buck on to their own kids? Call me cynical, but I think they'd throw us out on our butts before they do, which may well be what we should be doing now.

I sincerely hope that we figure out a way to diffuse this time bomb without undue pain and suffering for those who trusted politicians to take care of their retirement, but I would not be at all surprised if this leads to very bad things in another 40 or 50 years. One could reasonably say that the American Revolution and the Civil War both started out largely as tax revolts, and the taxes in question then weren't nearly as high as what it would take to keep Social Security afloat indefinitely now. I, for one, certainly won't be branding my grandchildren as un-American for taking up arms against a 50% payrole tax.

[westcoastdog]

Forecq,

This is the website for the SF Chronicle article:

http://www.sfgate.com/cgi-bin/article.cgi?...MNG2S8NOI21.DTL

[Compugasm]

Originally posted by tman_ndsu08, They simply have to start selling off government assets to in order to raise money.

Govenator did that recently. I don't know how effective it was, I lost track of the story. But, at least they got rid of something.

[westcoastdog]

It was a garage sale. No real estate, no land. Mainly old office equipment, outdated computers, junk.

[bishop]

Originally posted by westcoastdog, When countries can't pay their bills, i.e. various south American countries, they just print more money. Consequences, hyperinflation. So the choice is either higher taxes or inflation on the scale of 100% per year or higher.

what if more money was printed, combined with slightly higher interest rates and slightly higher tax rates - the revenues of which would be used entirely as additional funding for debt reduction?

remember that in the years before bush, we were on track to eliminating a massive chunk of our national debt.

correcting our debt situation would have a direct benefit to social programs like social security, medicare, etc..



i do agree with the general thrust of your argument. it's a damn shame that this issue hasn't gained the attention it deserves. what gets me is that kerry IS actually talking about this issue (or the deficit in general) and has ideas of how to return to fiscal responsibility. neither bush nor the media (which bushistas claim is conspiring against him) is paying any attention to it. what gives???

[westcoastdog]

Young people have a tremendous financial problem. First, there is a distinct possibility that their jobs may be outsourced to China or India. Then there is the burden of Social Security and Medicare. Currently 3.3 workers support each SS recipient. In a few decades there will be only 2 workers for each recipient. The math just doesn't add up. BTW, Europe and Japan also face this dilemma.

[bishop]

i don't view outsourcing as a problem, although i do believe that the government ought to close tax loopholes and return to the idea of creating incentives for investment in america. outsourcing was rampant during the clinton years, but job creation was growing faster. the solution is better pro-growth policies, not protectionism.

i've seen the futures charts many times. everything begins to exponentially spike up in about 5 years. this one issue spells fundamental economic change imo. sometimes i feel like this could be the event horizon that marx once dreamt of. not that i'm a socialist by any stretch of the imagination, although i do like the notion of egalitarian tendencies (progressivism) over darwinist/completely selfish capitalism.

they still can correct the problem, although that isn't likely whatsoever. although i won't vote for him, i like that badnarik thus far has been the ONLY candidate to mention the chilean version of social security - a retirement system that works and is favored over big government ideas.

[Technosoul]

Originally posted by tman_ndsu08, They simply have to start selling off government assets to in order to raise money. I pray for this day to come ASAP.

Guess what? The governor of California is doing that idea (Anorld Terminator) is having a big garage sale of sorts and is selling off all the stuff the government has in storage or what ever is owned by the state which is no longer in use. Office funiture, all kinds of equipment, and stuff that the texpayers had to pay for to run the government in the past that is no longer in use, some of which is still new in the box. They expect to raise millions which will be used to "save the budget". Good deals on a massive inventory of computers.

Heck, if the price is right Anoald might even sell you the S.F. bridge.

Technosoul.

[Technosoul]

Originally posted by westcoastdog, Do you realize that Japan and China own hundreds of billions of dollars in U.S. treasuries. Do you want our national forests and parks owned by these two countries? I hope you like Chinese food. I do. Sushi too.

In China they do not use plastic chop sticks, they must be made out of wood and they are cast away after once used. One state here in the USA (when the auto industry shut down) recovered a little by chopping down trees and all the wood was exported to this chop stick company in Hong Kong. Thousands of trees turned into temporary chop sticks for eating rice. Hmmmm?

They would love owning our national forests, millions of people in China, Japan, etc need chop sticks three times a day, a lot of wood. How much wood can a wood chuck chuck if a wood chuck could chuck wood?

Technosoul.

[westcoastdog]

I live in San Francisco, and I've know programmers and software engineers whose jobs were sent to India. Medical records are being transcribed in India, and even tax returns are being prepared by Indians! Wal-Mart buys 10% of China's exports! Even the garlic growers in Gilroy, home of the garlic festival, are becoming importers because Chinese garlic is much cheaper.

Did you know that most disk drives are being made in China? It wasn't long ago that disk drive manufacturing was state of the art engineering. Now the Chinese are building silicon foundaries. As you are aware, most of our chips are made in Asia.

If I were planning a career, I would chose one that could not be exported. I'm serious about this. I would not go into manufacturing!

[bishop]

yet our industrial output continues to rise..

i agree with you on the last part completely.. i'm going into finance/economics, thankfully, so i'll be comparatively safe.