I agree with Dan on all of this. Gary (top posting) Denton
On Sun, 20 Feb 2005 17:05:37 -0600, Dan Minette <[EMAIL PROTECTED]> wrote: > > ----- Original Message ----- > From: "JDG" <[EMAIL PROTECTED]> > To: "Killer Bs Discussion" <brin-l@mccmedia.com> > Sent: Wednesday, February 16, 2005 10:25 PM > Subject: Re: Budget Deficits and Supply-Siders Re: Kotlikoff's PSS plan > > > Dan, > > > I'm not really sure that it is accurate to describe Bill Clinton as > wanting > > to save Social Security with the surplus, but I can't admit to being > > particularly interested in that debate right now either. Now, paying > down the > > national debt would only really have benefited Social Security to the > > extent that the overall ratio of US debt to GDP might become so overly > > burdensome in the near future as to prevent the government from borrowing > > to cover revenue shortfalls in Social Security. After all, nothing done > >in the current year can affect nominal budget *deficits* in future years. > > The last statement is clearly false. We are fortunate that the interest on > the debt is low because interest rates, overall, are low right now. But, > given a T-bill rate of only 6% (which is below the 40 year average of > 7.5%), every trillion in debt reflects a 60 billion/year deficit. > > Second, the effect borrowing to cover revenue shortfalls in the future has > to depend on previous borrowing. For example, let us assume that, instead > of cutting income taxes and raising deficits, Reagan Bush I and Bush II had > budgets with deficits that changed the total national debt, (including that > held in governmental accounts) as a % of GDP, in the same way they changed > under Johnson, Nixon, Ford, Carter, and Clinton. If that happened, we > would have the trust fund exceeding the total national debt, (which would > be in the low 20% of GDP range.) > > In this situation, if we funded SS with deficit spending after about 2015 > or so through 2050, as intended, the national debt in 2050 would be lower > than if we followed the course we did and then agreed to fund general > government from the excess of SS taxes vs. outgo and then yearly cut SS > benefits to match the tax rate. With the lower national debt, we could pay > for many other functions of government via. T-bills and be in the exact > same > place in 2050 that we would be if SS benefits were cut from 2015 through > 2050. > > Let me try to put it another way. We agree that for algebra, addition > commutes, and is associative, right. In other words a + (b+c) + (d+e) = > (a+e) + (d+c) + b, right? So all analysis that involve these functions are > equivalent. So, by cutting income taxes at the same time the SS tax is > raised above that which is needed to fund is equivalent to shifting the tax > burden for general government > > > > To which I can only point out, that you can't have it both ways Dan. > On > > one hand, the Social Security Trust Fund represent savings from which the > > government is borrowing. On the other hand, the Social Security Trust > > Fund represents taxes. You'll have to pick one or the other, Dan - its > > not fair to keep switching to the one or the other as need to bash > > Republicans. > > I thought about this, and I think that there is a vast difference in > perspective between us concerning the nature of government. That's the > only way that I can see you setting up this dichotomy. > > The SS Trust Fund is supposed to be saved and accumulated taxes. I was > almost 30, with a job and a family at the time the plan was announced, by > Greenspan et. al. The agreement was that the balance between general > governmental spending and non SS taxes would stay roughly where it had > been. Thus, the excess SS taxes would then represent a change in the > amount of funding available later. It is true that there is no difference > between a total government debt of 7 trillion with a SS trust fund of 3 > trillion and a debt of 3 trillion, and just a debt of 4 trillion and no > money set aside for SS. > > But, there is a big difference between a total debt of 4 trillion and a SS > trust fund of 3 trillion and a total debt of 4 trillion and no SS trust > fund. > > At the time payroll taxes were raised, it was with the expressed > understanding that it would not just be a substitute for income taxes. > Clinton followed this, the total national debt as a % of GDP was lower when > he left than when he came in. Reagan, Bush I and Bush II did not. > > Social Security > > > In keeping with the convention of Bush's critics, I did not consider > > payroll taxes to be taxes. I did include all of the tax cuts, and > their > > likely extensions - or rather Citizens for Tax Justice, which performed > the > > analysis that I am citing, did all of these things. > > Then I am confused, one goes to that site and finds, from their analysis, > > <quote> > The figures, computed by the Institute on Taxation and Economic Policy > using the ITEP > Tax Model, show that combined federal, state and local taxes on the > wealthiest one > percent of Americans will equal 32.8 percent of income this year. For all > other income > groups, combined taxes will average 29.4 percent of income. > # The tax cuts enacted under President Bush have lowered the overall > federal, > state and local tax rate on the best-off one percent of taxpayers by 12 > percent. > # For the poorest 20 percent of taxpayers, the Bush tax cuts have cut > overall > taxes by only 3 percent. > # For all other income groups, Bush's tax cuts have reduced overall > federal, state > and local taxes by between 7 and 8 percent. > <end quote> > > http://www.ctj.org/ > > from their 4/13/04 report on the flattening of the tax rates: > > > > Lastly, I'll admit that I screwed up in describing the government's > "take" > > of the economy in terms of revenues rather than expenditures. The > point, > > however, was that increased government revenues, particularly surpluses, > > will over time generally allow expenditures to increase (this was > > particularly evident in the behavior of State Government budgets over the > > past decade), whereas Bush has been explicit that one of his goals has > been > > to lower Federal Government revenues, and then use pressures to balance > the > > budget to hopefully achieve a concomitant decrease in Federal Spending. > > That sounds to me, because the total debt is increasing, that he is > lowering the ability of the Federal Government to act in order to shrink > government. > > Dan M. _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
