Sheer stupidity.

Spend more without income is stupidity.

Choices are:
1) Cut spending to your income.
2) Get a second job.
3) Apply for another credit card.

I think it makes sense to do number one and PDQ until you get number two in the bank and number three might be required short term. But I could be wrong.

If anybody has an option four please tell Obama, Reid and Boehner.

And yes, this is the crux of the issue.

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Sheer stupidity.

Spend more without income is stupidity.

Choices are:
1) Cut spending to your income.
2) Get a second job.
3) Apply for another credit card.

I think it makes sense to do number one and PDQ until you get number two in the bank and number three might be required short term. But I could be wrong.

If anybody has an option four please tell Obama, Reid and Boehner.

And yes, this is the crux of the issue.

Nobody - and I do mean nobody - that I have met, heard of, or read, believes that the current structural problems can be fixed without massive spending cuts as well as restructuring the tax code, Medicare, and Social Security. It's also damn difficult to count on revenues coming off the worst economic downturn in 70 years.

You'd prefer to cut off everyone receiving government benefits off and it's every man for himself. Fine. I get it. I don't agree, but I get it.

I will never agree because one of those government programs you despise so much saved my family. I do not come from money. My paternal grandfather was a milkman and a laborer. My maternal grandfather emigrated from Wales with a sixth grade education. Both of my parents were the first in their families to go to college. Both were teachers. My mom quit working to raise my little sister and me. My dad died suddenly at 39. I was 11. My sister was 7. For the first year after my father's death, the only income we had was from a small life insurance policy and the survivors benefit from Social Security. My father's Social Security benefits enabled us to keep our home and buy food in the months after his death. Fortunately, within a year, my mother secured a teaching job and also did tutoring. We never had a lot, but we made it.

Those Social Security benefits saved our family and gave my sister and me an opportunity that we both recognize and greatly appreciate. One of the reasons I joined the Army was to give back the country that looked out for me when I needed it most. I was (and still am) proud to do it.

I know you can't understand it, but I'm happy to pay my share of taxes. I know that there is waste, abuse, fraud, and incompetence in many government programs. I hate this as much as anyone. But I also know that there are real people with genuine needs who deserve the same opportunity that I had.

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Join the PACK!

Sheer stupidity.

Spend more without income is stupidity.

Choices are:
1) Cut spending to your income.
2) Get a second job.
3) Apply for another credit card.

I think it makes sense to do number one and PDQ until you get number two in the bank and number three might be required short term. But I could be wrong.

If anybody has an option four please tell Obama, Reid and Boehner.

And yes, this is the crux of the issue.

Nobody - and I do mean nobody - that I have met, heard of, or read, believes that the current structural problems can be fixed without massive spending cuts as well as restructuring the tax code, Medicare, and Social Security. It's also damn difficult to count on revenues coming off the worst economic downturn in 70 years.

You'd prefer to cut off everyone receiving government benefits off and it's every man for himself. Fine. I get it. I don't agree, but I get it.

You cut the biggest slice first and that is the military. Sorry boys, no lusting after new weapons systems, better get ready to use dumb weapons and cannon fodder. Or if you can't bring yourself to put people on the ground realize it means the only option is to press the big red button and screw the planet forever. I just hope the rest of the world realizes it.

Wasn't it Obama that got us into a third war? Wasn't he supposed to get us out of two wars? Never mind that is in the past.

Next biggest slide is interest payment. Hard to cut that, except by repaying that. If we could do that we wouldn't need to raise the debt limit.

Next slice is Social Security, well that is a trust, damn hard to cut that for people already getting a check. Could raise the retirement age again to delay the crash.

Then we come to bureaucrats. About 1/2 of them are unnecessary as the remainder can do all the work that really needs to get done.

Past that everything else is so small even taken together it is a zero. No need to mess with it right away, but the waste and fraud should go soon.

Now as to those so called Social Security taxes, Republicans can see that as a trust fund, which means it isn't taxes to them, it is a pension plan. They never pledged no increases in pension plan funding. Of course if it was individualized that it is a trust fund not taxes would be obvious to everyone. That would also require it to be fully funded. I don't think that is possible as it would mean no pork barrel for a couple of decades and congressmen and senators couldn't use tax money to bribe votes then.

Wasn't it Obama that cut the social security rate? Never mind that is in the past.

What Mr. Reid and company need to understand is if we default and have to go to the IMF, they are going to force something even worse than the republican cuts on the country and likely force tax increases on the poor. So it is already game over. Take what is being offered from the House. Changes can be made later. Even things like new very high income tax brackets.

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Hey Gary, why don't we just stop paying all taxes alltogether??? I pay way more than most and if I shouldn't get ANYTHING at all like you seem to suggest why bother?
With all this Politics as usual it has probably already cost the American tax payers big time...When we lose our 3 star credit rating and become a second rate Country I guess that will be worth it to you...As long as No One gets a thing that will be OK. I see you don't care if our Military becomes second rate...My guess not a Vet. There are a hell of a lot of things that need fixing especially all the Huge Tax Breaks most big companies get but haven't noticed you talking about that much....Wonder which side of the fence you sit? Just for a BREIF second sit in the middle.

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Official Abuser of Boinc Buttons...
And no good credit hound!

Hey Gary, why don't we just stop paying all taxes alltogether??? I pay way more than most and if I shouldn't get ANYTHING at all like you seem to suggest why bother?

??Huh?? Where does this come from? Especially when my post proposed new taxes.

With all this Politics as usual it has probably already cost the American tax payers big time...When we lose our 3 star credit rating and become a second rate Country I guess that will be worth it to you...As long as No One gets a thing that will be OK. I see you don't care if our Military becomes second rate...My guess not a Vet. There are a hell of a lot of things that need fixing especially all the Huge Tax Breaks most big companies get but haven't noticed you talking about that much....Wonder which side of the fence you sit? Just for a BREIF second sit in the middle.

First you need to understand that corporations never pay taxes; it is impossible to get taxes out of a sheet of paper. Only people pay taxes. Now if you want to trigger a mass round of inflation from prices going way up and another round of mass layoff as production moves out of the USA to escape taxes, by all means raise corporate taxes and make the poor people poorer.

As to the credit rating, on capitol hill this morning one of the credit ratings agencies flat out said unless there are 4 trillion or more in cuts, no matter the tax increases, we must cut your rating. Process that. Spending must be brought under control and it is the top priority.

Gosh you seem to think that raising taxes on companies so they have to fire more to stay in business so we can pay more unemployment benefits is a good strategy. I think you are chasing your tail.

As to the USA being second rate, we already are. The NIMBY's won. We don't make things anymore because manufacturing isn't pretty. Pretty is more important than a strong military. Pretty is more important than jobs. I didn't make that decision, but now we have to deal with its consequences.

(I'm having to deal with a planning board and apparently the color of the paint for the building is more important that the 50 jobs of the workers who can't work until the paint color is dictated. That is what is wrong with America!)

I also didn't pass the least common denominator law called NAFTA and its cousins. Slave labor and dirty process have to compete with OSHA regulations and union contracts. Now we have to deal with its consequences.

(Hey, maybe that contract about no new taxes was no new income taxes and a big fat juicy excise tax increase could be made. Have Reid float that.)

A lot of the stuff that has dragged us down into the third world sounded nice at the time. No one stopped to figure out what its real cost would be. Now it is time to pay the piper. Sorry if you can't face reality.

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Let's see -- we've spent $2T or more for wars that were not funded by revenue. That's half the $4T right there. So we cut ongoing foreign war funding -- that like is $1T over the next decade. Then we set up a 'we spent for this war, and forgot to get revenues for it' tax which would go away after the $2T was paid off.

We don't really need to change tax rates, just reduce tax expenditure entitlements -- defining and executive and fund trader wages as capital gains as we currently do results in a fair amount of revenue.

Second house mortgages -- yup, there's another 'tax expenditure'.

Interest Mortgages over $500K -- gone.

Those are actually entitlement reform.

Cuts -- OK -- let's freeze the top pay out for Social Security, and increase the full retirement age up to 68 or even 69 over time. But in order to insure solvency, let's eliminate the cap on what gets paid in.

Medicare cuts -- well for starters, how about reducing payments to speicialists -- currently a dermatologist gets 4 to 6 times per minute what a pediatrician, or gerontologist gets -- that can be fixed and reduce the cost there (and I'm sure the insurance companies would follow this one as well). Not only do you reduce costs, but also you encourage future physicians to go into fields where there are shortages (because they can make so much more in other medical fields). With the drug program, stop making it an entitlement for the drug companies, use the massive leverage of Medicare to negotiate deals for medicines at least in line with what those very same medications can be purchased for from Canada.

Now, I'm not a fan of cuts in Medicaid -- as cuts there simply roll back into the system as charges to others who pay (much like Gary's aversion to Corporate taxes).

Military acquisition programs -- lots of things not needed there.

Agricultural subsidies -- originally these were intended to keep small farmers in the game, these days, the subsidies go to large agricultural corporations. Also, the ethanol program is a major dislocation of funding.

This list can go on, but I find arguments regarding the heavy burden of taxes today as the cause of our problems, to be frank, specious. Taxes as a portion of our GDP have not been this low in 60 years. So, for those who cite the need to reduce taxes or never increase tax revenues, PLEASE take whatever medications necessary to clear the Norquist coolaid out of your system.

I don't have time for a proper response but while my arguments may sound like they are not looking at all sides, I am just not talking about all the garbage history that was tried and failed. You wanted solutions that would work and history that has been proven by he test of time, that is what I gave you. I have spent several years understanding where our country has gone wrong and what can be done to correct it. The solution is going to be painful but not doing it now will be far more destructive and will make the great depression look like a picnic. We have to pay the debit that our fathers and grandfathers left or we will be passing even a bigger mess on to our children. It may be a few weeks before I post again and this should be history by then.

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Didn't I read recently that the total US debt was about 68 trillion at this point. (Assumes a fully funded Social Security and Medicare.) I think that means each American owes the Federal Government a house. That is why it is called a default people. You can't pay it, nor are there enough rich people to pay it for you. Especially as the population of workers is shrinking and forecast to stay shrinking for some decades.

We are worried about 4 T on 68 T. That is 5% people.

S&P is going to cut your credit card into pieces with the downgrade. The cuts have barely begun.

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By fully funded -- do you mean all obligations for eternity? The public debt outstanding is short of $15T. But we quibble <smile>

I agree, cuts have indeed barely begun, and increased revenue has barely begun. With taxes as a portion of GDP down at modern historically low levels (back to 1950), we can (or at least should) expect increases in taxes (both rates and as reduction of 'tax expenditures' -- entitlements writ rich).

Of course state and local governments have similar issues -- particularly with underfunded pension plans based on past contractual agreements. I expect that states will also deal with this issue on both the spending and tax side.

Anyone believing that the problem can be resolved purely by cuts or purely by revenue increases might well be deep into the Medical Marijuana program of their respective locality.

Didn't I read recently that the total US debt was about 68 trillion at this point. (Assumes a fully funded Social Security and Medicare.) I think that means each American owes the Federal Government a house. That is why it is called a default people. You can't pay it, nor are there enough rich people to pay it for you. Especially as the population of workers is shrinking and forecast to stay shrinking for some decades.

We are worried about 4 T on 68 T. That is 5% people.

S&P is going to cut your credit card into pieces with the downgrade. The cuts have barely begun.

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By fully funded -- do you mean all obligations for eternity?

Able to pay out the retirement and medical benefits of those who are eligible to be paid when due, without dipping into the general fund. (Accrual accounting not cash accounting) The $ amount changes every year as more of less people are eligible and the birth and death rates and costs change. It is never going to be exact, but it should be close.

Another way to look at this is, if the program ever is terminated there should be just enough money to pay the last person due his death benefit when that day comes. Most of us would sleep better knowing this is what the target is in funding the plan. Not hearing that in 2036 they will be bankrupt. Mind you that isn't that many years in the future.

The suggestion that taking the cap off the SSA tax would cover this is false. While it will help, it is short of the total needed. A Social Security rate increase is needed. Everyone's paycheck is going to get smaller. The alternative is to slash payouts and raise retirement age.

Medical costs are going up exponentially and people are living longer so they are having more lifetime costs. Big issue that will require politicians firmly grabbing ahold of the third rail. A Medicare tax rate increase is needed and may even need to be tied to the CPI so it automatically goes up as costs increase.

State, County and City Governments face the same issue with their pension plans. So do some corporations. It is the major reason GM went under. IBM got out from this by dumping pension plans and shifting everyone to 401(k). GM couldn't as its union refused. I hope the union workers are happy with their now much smaller checks from PBGC.

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OK -- so the assumption for that debt number is that no more money would be coming in. Fair enough.

OK -- and raising the age would help -- I expect that will end up being passed in the next few years -- over a lot of gnashing of political teeth for sure.

Perhaps a rate increase as well, I can see that. But remember, by capping the top pay out (ie elimination of COLA entirely) that would be an implicit (and increasing) cut in benefits. That's something I mentioned previously.

Medical costs -- agreed -- there are a number of components to that which could be attacked:

Payments to specialists -- it really is not clear to me why a dermatologist makes 5 to 6 times per minute of patient contract what a pediatrician, internist, or psychiatrist makes. Clearly there are some medical lobby interests that need to be dealt with.

Also, end of life care, heroic interventions and the like, represent a significant (and for hospitals a quite profitable under Medicare) piece of the health care pie -- this should be rationalized.

One thing which is sort of interesting, compared to Europe and Japan (and increasingly China) we have less of the aging problem - we've actually managed things quite poorly.

Again, our tax burden is at the lowest level since the early 50's -- that is going to have to change.

Also, the very wealthy (top 1 or 2 per cent) are making (and own) a far greater piece of the American pie than they did 30 years ago. Call it the Reagan revolution. My guess is that if we come to our senses, THAT will change.

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What will really happen when the US Defaults?

Armageddon

Also an outcome quoted on Radio 4 in the UK yesterday.

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flaming balloons

Again, our tax burden is at the lowest level since the early 50's -- that is going to have to change.

I see this mentioned time and time again as if it is a problem and needs to change (be raised). Having the lower taxes puts more money in the pockets of consumers which gives them more spending power in a competitive market.

With today's unemployment, raising taxes is only going to affect a portion of the citizens, while the employed will simply spend less (or have less to spend). To spur the economy back into action, we need more money in the hands of everyone and more spending power in the hands of consumers. Raising taxes discourages all of this.

I am in over my head in debt (mostly my own fault and I can accept that), but raising taxes will absolutely kill me financially. I don't even have a steady job (I'm contracting at the moment), and if the company I'm trying to get hired with cannot afford to hire me because they have to pay more in taxes, then I'll be right back out in the job market, and I have absolutely no savings to coast along until I find another job (used up what little savings I had while out of a job before I found this one), which means I'll likely be out on my ass. Homeless people don't typically get hired by companies.

Taxes need to stay where they're at or be lowered. It's the spending that needs to get cut or more average Americans will be out of jobs and home, which means less tax revenue overall, making the problem far worse.

OK -- so the assumption for that debt number is that no more money would be coming in. Fair enough.

Well, not quite, but close. The fund will earn money from capital investing, which at present is limited to interest earned on treasury securities.

But remember, by capping the top pay out (ie elimination of COLA entirely) that would be an implicit (and increasing) cut in benefits. That's something I mentioned previously.

I think I missed you implication that the cap was the elimination of COLA's. I thought you meant some sort of it doesn't matter how much you put in (earn) you are only going to get this much out. Stopping COLA's is going to make the AARP very very mad and I dare say they might muster even more clout than the NRA so I doubt that is ever possible.

One thing which is sort of interesting, compared to Europe and Japan (and increasingly China) we have less of the aging problem - we've actually managed things quite poorly.

In China it is by design. They realize they have more people to support than their country can sustain. Hence the one child restriction.

After WWII in Japan women were no longer chattel to be sold into marriage and kept barefoot and pregnant. As they entered the work force and aged much more before they had children the population aged as well. The same force, choosing work over babies, is at play in the USA but it started some years later than in Japan. It is the reason that the Ponzi scheme social security system we now have is going bankrupt. However if you get in enough up front to pay it out in the future, population changes don't matter and you remove the Ponzi scheme element of Social Security. This needs to be done or the USA will really default and we will have inflation like Zimbabwe.

As to medical costs, someone is making a pile of money. Who? Banks. Student loans. By the time the Dr. starts practice he is bankrupt and it takes much of the rest of his working life to pay the loans. Insurance is another killer. That one can be addressed. Boards of Medical Quality need to pull far more licenses than they do now and that means they need people walking into Dr.'s offices and finding out if treatments are correct. Get the quacks out of the system and the insurance rates fall. May have the side effect of making lawyers hungry, but I think that is a good thing. But this can't be addressed in a budget and it is in the realm of State Government.

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Hmm -- well Social Security started with the assumption that there would be a population of workers paying into the program -- I think that still applies, it is just that as our population ages, the ratio of those paying in to those receiving funds has changed. As a result things need adjustment, including raising the age and perhaps elimination of COLA. You indicate that AARP would raise a major stink, but then gain, any solution is likely to raise a stink. Look at the absolute stench the concept of treating hedge fund manager income (much of which finds its way into capital gains payment) as income. If such a small group can find major support in Congress to protect them, then think of a highly motivated AARP.

The thing is, your view (I'm not denying its validity) requires major change -- with major pissed off groups -- if you think this can't be done, what makes you believe raising the age for Social Security or raising the rates can be done?

The problem in China with their one child policy is now coming home to roost -- the society is aging -- and doing so rapidly -- before living standards have risen high enough to support that aging population. Also, their one child rule has yielded a MAJOR gender problem -- there are something like 120 males from the one child tranche to 100 females.

Medical costs -- clearly there are groups making a pile of money. These include the insurance companies which add a relatively inefficient series of layers as 'gate keepers' plus the very high compensation at the top end (welcome to the American Scream) (something that doesn't suck up mega bucks in Europe), the big drug companies (their arguments as to why the same drugs -- which come from the same manufacturing sites -- cost 1/2 as much in Canada is 'interesting), to hospitals (who get 'per diem' funding for keeping folks alive on life support past midnight as an example), to specialists. My wife is a psychiatrist/psychoanalyst. She has her MD and a doctorate in psychoanalysis. When she sees a patient for 45 minutes of direct patient contact, the typical Medicare fee is $110 -- for 45 minutes of direct contact! Now I am not saying that is too low (well I am, but we can manage in a low overhead environment), but the thing is, for someone in one of the 'favored' specialities, 45 minutes of direct contact would generate 6 to 7 times that amount -- with no greater training. Those rates are not set by Congress (as I understand it) but by the Medicare 'board', You want to reduce costs and redirect Med students from 'favored specialties' to needed primary care slots -- revise the compensation system to provide that encouragement.

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Social Security started with the premise the population would always be going up at a pretty good clip. Much like a Ponzi scheme depends on new suckers to pay off the old ones or it collapses.

As to the stink, payment rates are not an issue to AARP as they are no longer paying them, in fact they could see higher rates as insurance their COLA's will get paid and be in favor of them.

I am sure you can tweak all the knobs at once or everyone will be pissed off at something.

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A ponzi scheme starts with malice and the intent to defraud. Social Security when started was based on, at the time, current population growth. Estimates were obviously off. This is where an adjustment to the tax can put a plug in the dam. A ponzi scheme doesnt bother filling the holes. It covers early investments and counts on future suckers. Again its a matter of intent. the Federal gov't when it started Social Security created it as a safety net. A means to supplement savings when one retires.

We now have businesses that have eliminated pensions and insist on poorly running 401k plans to meet ones retirement needs. While better than nothing its hard to imagine working at walmart and saving $1000 a month to put into a 401k.

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In a rich man's house there is no place to spit but his face.
Diogenes Of Sinope

A ponzi scheme starts with malice and the intent to defraud. Social Security when started was based on, at the time, current population growth. Estimates were obviously off. This is where an adjustment to the tax can put a plug in the dam. A ponzi scheme doesnt bother filling the holes. It covers early investments and counts on future suckers. Again its a matter of intent.

Try that argument with a judge and jury if you are short on your income tax several years in a row.

We now have businesses that have eliminated pensions and insist on poorly running 401k plans to meet ones retirement needs. While better than nothing its hard to imagine working at walmart and saving $1000 a month to put into a 401k.

Amazing thing. Business reads the future. Articles were published about this in the early '90s. It was poo-poo'd as fear mongering. What did the articles say? They said the stock market is going to crash when baby boomers start drawing retirement because of population contraction. Gosh what happened? They also said that for a couple decades after that growth would be flat. So far that looks to be true too. So business who had to cover any losses in defined benefits plans, switched to defined contribution plans. Those that did are still around with employees, those that didn't like GM went bankrupt. Better thank those who look 20 years or more down the road.

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Gary -- the concept of American businesses which look far down the road -- well at least you have a sense of humor.

Build a compensation plan for the top tier of a corporation based on stock price and what you get is American businesses with a 3 month to 12 month planning horizon.

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Gary, when I was younger, I figured that Social Security just might not be around when I retired.

I'm 60 now, my wife is 63. We fed our various retirement plans -- I draw about $400/month from two defined benefit plans. My rolled over 401K plans, plus our accumulated IRA/SEP/Keogh will take care of quite well.

That being said, with Social Security for us, when we tap that (we're both self-employed so we actually have been out of pocket for 1.5 times the personal employee rate for Social Security) will mean we get to travel more than we would otherwise.

But for other folks, Social Security is what they LIVE on. So we do need to take care of it in a way that doesn't turn folks out on the street.

Of course, budget wise, for Fed, State, Local and many corporations, I suppose euthanasia might be a real financial corrective plan.

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