Re: Budget Deficits and Supply-Siders Re: Kotlikoff's PSS plan
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" > 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
Re: Budget Deficits and Supply-Siders Re: Kotlikoff's PSS plan
- Original Message - From: "JDG" <[EMAIL PROTECTED]> To: "Killer Bs Discussion" 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, 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 per
Re: Budget Deficits and Supply-Siders Re: Kotlikoff's PSS plan
On Thu, 17 Feb 2005 05:36:34 -0500, Erik Reuter <[EMAIL PROTECTED]> wrote: > * JDG ([EMAIL PROTECTED]) wrote: > > > Republicans pretty well kept that from happening.) 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. > > Wrong. Amazing you can get this so wrong, being a government employee > and claiming to be an economist. > > You have heard of interest? Fiscal 2004 the interest on the debt > outstanding was more than $321 billion. (58% of the national debt is > held by the public, so a rough guess would be that 58% of that interest > is paid to non-government creditors). That is billions of dollars that > would otherwise be available to spend on things like social security, or > to, I don't know, REDUCE THE BUDGET DEFICIT IN FUTURE YEARS! > > http://www.publicdebt.treas.gov/opd/opdint.htm I will add my criticisms along with Erik's. >Touche' on "pyramid-scheme" being a pejorative term for Social Security. >Of course, I would make the argument that the difference is that >"pyramid-scheme" is an *accurate* term for Social Security, whereas >"trickle-down economics" is purely pejorative but ehhh.. point taken. "Trickle-down economics" is a more accurate description - that is the rationale used for tax cuts to the wealthy. It was after focus-group testing showed the huge negatives of this term that Frank Lundz has banned this term from conservative discourse and instructed the recipients of talking-points to denounce it vigorously as pejorative. "Pyramid scheme" is favored by the conservatives. I dislike it because until recently it was assumed that the government would be run by fairly honorable men not out to fleece the public to support their friends and then default, at least in the crowd I run around in. If Bush succeeds in defaulting on the government debt held by the Social Security trust fund than it will have been a "pyramid scheme." Lundz does a lot of testing to reframe the words used in political discourse and the GOP and conservative columnists follow in lockstep, sometimes with humorous results if you are aware of the past discourse which most of the public is not. "Privatization" was the preferred term by the GOP, until the directive came down that it was now focus group testing horribly. "Private accounts" became the preferred term for all of two months before the preferred term became "personal accounts." Most conservatives use the preferred terms not because they are on the talking-points mailing list but because suddenly the language the TV and radio heads and politicians they follow change. This reframing is used less effectively by the Democrats because they are not an organized party following the "1984" model on language. Hell, they are not really an organized party, they're Democrats. One of the longest running instances of reframing is the conservative protest over the use of the term democracy for the American system of government. If "democracy," associated with Democrats, is always denounced and restated that the United States is a "republic," associated with Republicans, it is a point for their side. Who is right, they both are, but it doesn't matter as much as the language you use reshapes the arguments. Gary Denton Easter Lemming Liberal News Digest - I think Brin was on to something in 'Earth' in suggesting the right to vote be dependent upon subscribing to some opposing viewpoint media. ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Budget Deficits and Supply-Siders Re: Kotlikoff's PSS plan
* JDG ([EMAIL PROTECTED]) wrote: > Republicans pretty well kept that from happening.) 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. Wrong. Amazing you can get this so wrong, being a government employee and claiming to be an economist. You have heard of interest? Fiscal 2004 the interest on the debt outstanding was more than $321 billion. (58% of the national debt is held by the public, so a rough guess would be that 58% of that interest is paid to non-government creditors). That is billions of dollars that would otherwise be available to spend on things like social security, or to, I don't know, REDUCE THE BUDGET DEFICIT IN FUTURE YEARS! http://www.publicdebt.treas.gov/opd/opdint.htm ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Budget Deficits and Supply-Siders Re: Kotlikoff's PSS plan
Dan, Touche' on "pyramid-scheme" being a pejorative term for Social Security. Of course, I would make the argument that the difference is that "pyramid-scheme" is an *accurate* term for Social Security, whereas "trickle-down economics" is purely pejorative but ehhh.. point taken. 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. Basically, I think that the best argument you can make is that Bill Clinton wanted to pay down the national debt as much as possible. (Of course, what Bill Clinton really wanted to do was nationalize health care, but the Republicans pretty well kept that from happening.) 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. Anyhow, even with our current deficits, and comparing our current level of overall debt to that of other OECD countries, I am not at all sure that overall US debt is nearing that point.So, while paying down the national debt would have had some marginal positive effects on our future ability to borrow to cover Social Security shortfalls, I am not at all sure that those benefits would have been worth getting all excited about. You then write: >But, the recession is over and, if you include borrowing from the Social >Security trust fund in the deficit, he's running a 600 billion/year deficit >over 3 years after the recession ended. And the again: >Bush's plan is/was to permanantly lower taxes in a manner the benefits the >top 10% households, measured by family income, disporportionately. He >masks this by talking about only part of the total taxes paid by people and >also talking about only part of his tax cut when he makes comparisions. 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. >>whereas Bush's first tax >>cut >> was progressivity-neutral BTW), > >Are you sure. Did you include all of the tax cuts and all of the taxes. >Did you include payroll taxes in your calculation, for example. 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. 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. JDG At 01:42 PM 1/29/2005 -0600, Dan M.wrote: > >- Original Message - >From: "JDG" <[EMAIL PROTECTED]> >To: "Killer Bs Discussion" >Sent: Saturday, January 22, 2005 9:16 PM >Subject: Budget Deficits and Supply-Siders Re: Kotlikoff's PSS plan > > >> Dan, >> >> My point is that "trickle-down economics" is a pejorative propoganda >term. >> Not a term for serious discussion. Or at least, not if you want me to >> take you seriously. > >First, you weren't my audience...I was responding to Erik. Second, if the >use of pejoritive descriptive terms is a sign of a non-serious discussion >when I use them, why aren't they when you use them? For example, calling >Social Security a pyramid scheme fits that very well. > > >> You state the supply-side economics is touted as a means of reducing the >> nominal federal budget deficit, namely by boosting economic growth, which >> should boost federal revenues. > >In the long term. Bush argued again and again that cutting taxes would >"get America going." That they would foster long term ecconomic growth. >Are you seriously arguing that Republicans have not stated that cutting >taxes on the wealthy benefits everyone because that's how the ecconomy is >pushed forward? > >> I find this definition of yours difficult >> to believe, however, as President George W. Bush has always expliticly >> stated that his tax cut plan would decrease revenues. > >Short term, yes
Re: Budget Deficits and Supply-Siders Re: Kotlikoff's PSS plan
On Sat, 29 Jan 2005 17:56:29 -0500, Erik Reuter <[EMAIL PROTECTED]> wrote: > * Dan Minette ([EMAIL PROTECTED]) wrote: > > From: "JDG" <[EMAIL PROTECTED]> > > > > has reduced the government's take of GDP to 17%. > > > > No. It merely has changed the source of the take. In 2000, total > > government spending was 18.4% of GDP. In 2003, it was 19.9%. Using > > T-bills to finance the government doesn't reduce the take. > > > > >Thus, it is not just progressivity, it is the size of the > > >government's share in the economy that is also debated. > > > > Should the size be measured in terms of spending and future > > oblications? Would government have zero size if there was a total tax > > holiday next year and the government was totally financed by debt? > > You are absolutely right that the important figure is government > spending. > > I just wanted to add that, except for those who believe in voodoo > economics and the tooth fairy, a tax cut without a spending cut is not > really a tax cut at all, but rather a tax shift -- to the future. > > -- > Erik Reuter http://www.erikreuter.net/ Agreed. -- Gary Denton Easter Lemming Liberal News Digest - I think Brin was on to something in 'Earth' in suggesting the right to vote be dependent upon subscribing to some opposing viewpoint media. ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Budget Deficits and Supply-Siders Re: Kotlikoff's PSS plan
* Dan Minette ([EMAIL PROTECTED]) wrote: > From: "JDG" <[EMAIL PROTECTED]> > > has reduced the government's take of GDP to 17%. > > No. It merely has changed the source of the take. In 2000, total > government spending was 18.4% of GDP. In 2003, it was 19.9%. Using > T-bills to finance the government doesn't reduce the take. > > >Thus, it is not just progressivity, it is the size of the > >government's share in the economy that is also debated. > > Should the size be measured in terms of spending and future > oblications? Would government have zero size if there was a total tax > holiday next year and the government was totally financed by debt? You are absolutely right that the important figure is government spending. I just wanted to add that, except for those who believe in voodoo economics and the tooth fairy, a tax cut without a spending cut is not really a tax cut at all, but rather a tax shift -- to the future. -- Erik Reuter http://www.erikreuter.net/ ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Budget Deficits and Supply-Siders Re: Kotlikoff's PSS plan
- Original Message - From: "JDG" <[EMAIL PROTECTED]> To: "Killer Bs Discussion" Sent: Saturday, January 22, 2005 9:16 PM Subject: Budget Deficits and Supply-Siders Re: Kotlikoff's PSS plan > Dan, > > My point is that "trickle-down economics" is a pejorative propoganda term. > Not a term for serious discussion. Or at least, not if you want me to > take you seriously. First, you weren't my audience...I was responding to Erik. Second, if the use of pejoritive descriptive terms is a sign of a non-serious discussion when I use them, why aren't they when you use them? For example, calling Social Security a pyramid scheme fits that very well. > You state the supply-side economics is touted as a means of reducing the > nominal federal budget deficit, namely by boosting economic growth, which > should boost federal revenues. In the long term. Bush argued again and again that cutting taxes would "get America going." That they would foster long term ecconomic growth. Are you seriously arguing that Republicans have not stated that cutting taxes on the wealthy benefits everyone because that's how the ecconomy is pushed forward? > I find this definition of yours difficult > to believe, however, as President George W. Bush has always expliticly > stated that his tax cut plan would decrease revenues. Short term, yes. But, he has stated over and over that cutting taxes over the long term will increase prosperity over the long term. "Put the money in the hands of the American people who better know how to use it." > During his election campaign he proposed his tax cuts as a means of reducing the > nominal federal budget surplus And Clinton wanted to save Social Security with the surplus... , and afterwards he was very explicit about > his intent to run a nominal federal budget deficit in a time of the > so-called "trifecta" of "recession, war, and national emergency." But, the recession is over and, if you include borrowing from the Social Security trust fund in the deficit, he's running a 600 billion/year deficit over 3 years after the recession ended. And, he wants to keep the tax cuts permanantbut doesn't include them in his long term budget figures. > While fiscal policy as a means of smoothing economic cycles is certainly > currently in disfavor among economists, I think that it is entirely > possible that the very, very, mild recession experienced by America in the > wake of the popping of the stock market asset bubble may cause some > rethinking of this. Bush's plan is/was to permanantly lower taxes in a manner the benefits the top 10% households, measured by family income, disporportionately. He masks this by talking about only part of the total taxes paid by people and also talking about only part of his tax cut when he makes comparisions. His tax cut can only be justified if supplied side ecconomics works. > Lastly, you wrote: > >In general, if Republicans want to change tax structures, they think that a > >less progressive structure is better. Democrats think a more progressive > >structure is better. > In part, that is because a more-progressive tax structure means higher tax > rates, and presumably boosts the size of government. Indeed, this can be > seen in the way that under Clinton, the government began taking around > 21-22% of GDP in tax revnenues, whereas Bush's tax plan (his first tax cut > was progressivity-neutral BTW), Are you sure. Did you include all of the tax cuts and all of the taxes. Did you include payroll taxes in your calculation, for example. > has reduced the government's take of GDP > to 17%. No. It merely has changed the source of the take. In 2000, total government spending was 18.4% of GDP. In 2003, it was 19.9%. Using T-bills to finance the government doesn't reduce the take. >Thus, it is not just progressivity, it is the size of the > government's share in the economy that is also debated. Should the size be measured in terms of spending and future oblications? Would government have zero size if there was a total tax holiday next year and the government was totally financed by debt? Dan M. ___ http://www.mccmedia.com/mailman/listinfo/brin-l
