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Tue Dec 20, 2011, 09:27 AM

Please stop repeating false Republican talking points!

The payroll tax cut is NOT affecting Social Security Trust fund. This is just one of many posts that have made this very clear, but somehow right here on DU the facts are blurred.

http://factcheck.org/2011/12/bachmann-wrong-on-social-security-jobs-debt/

"Shorting the Trust Fund?

Bachmann said she didn’t support last year’s payroll tax cut, because it took money from the Social Security trust fund and “put senior citizens at risk.” But that’s not true. The Social Security and Medicare Boards of Trustees said that the tax cut would have “no financial impact” on the trust fund."

"The Social Security and Medicare Boards of Trustees said in its 2011 report: “The loss of payroll tax revenue due to this one-year reduction will be made up by transfers from the General Fund of the Treasury to the OASI and DI Trust Funds and will thus have no financial impact on either program.”

The Congressional Budget Office estimated that the tax cut, passed in December 2010, would reduce Social Security revenues by about $115 billion in fiscal 2011 and 2012. Again, that shortfall will be covered by the general fund. The trust fund isn’t being “denied” any money, as Bachmann claimed.


We get enough crap from FOX news without repeating it on the DU.

Thanks for your attention to this matter.

PS. What ever happened to spell check?

55 replies, 6116 views

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Arrow 55 replies Author Time Post
Reply Please stop repeating false Republican talking points! (Original post)
rgbecker Dec 2011 OP
DCKit Dec 2011 #1
Cigar11 Dec 2011 #2
jtrockville Dec 2011 #3
surfdog Dec 2011 #11
jtrockville Dec 2011 #16
Enrique Dec 2011 #4
joeglow3 Dec 2011 #5
RC Dec 2011 #6
bornskeptic Dec 2011 #22
RC Dec 2011 #33
zipplewrath Dec 2011 #7
RUMMYisFROSTED Dec 2011 #8
Romulox Dec 2011 #9
yodermon Dec 2011 #12
Romulox Dec 2011 #13
yodermon Dec 2011 #17
Romulox Dec 2011 #19
Igel Dec 2011 #25
Yo_Mama Dec 2011 #37
izquierdista Dec 2011 #10
alc Dec 2011 #14
Laelth Dec 2011 #15
dawg Dec 2011 #18
doc03 Dec 2011 #20
NNN0LHI Dec 2011 #21
joeglow3 Dec 2011 #23
NNN0LHI Dec 2011 #24
joeglow3 Dec 2011 #40
NNN0LHI Dec 2011 #46
hfojvt Dec 2011 #26
rgbecker Dec 2011 #42
hfojvt Dec 2011 #43
rgbecker Dec 2011 #44
SunsetDreams Dec 2011 #50
great white snark Dec 2011 #52
hfojvt Dec 2011 #53
SunsetDreams Dec 2011 #49
hfojvt Dec 2011 #54
MjolnirTime Dec 2011 #27
deacon Dec 2011 #28
TheKentuckian Dec 2011 #29
NNN0LHI Dec 2011 #30
rgbecker Dec 2011 #31
NNN0LHI Dec 2011 #32
Yo_Mama Dec 2011 #34
bhikkhu Dec 2011 #45
Yo_Mama Dec 2011 #55
Hutzpa Dec 2011 #35
kentuck Dec 2011 #36
Yo_Mama Dec 2011 #38
Yo_Mama Dec 2011 #39
rgbecker Dec 2011 #41
Hoyt Dec 2011 #51
greiner3 Dec 2011 #47
mmonk Dec 2011 #48

Response to rgbecker (Original post)

Tue Dec 20, 2011, 09:32 AM

1. Spell check never did work in the titles.

 

However, I've often found it makes random, unwanted changes to the body text, even when the words are spelled correctly.

As to your main point, I was unaware that money from the GF was going to be transferred to SS. It's not as if anyone but the Pentagram has money to spare.

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Response to rgbecker (Original post)

Tue Dec 20, 2011, 09:33 AM

2. The more you watch FoxNoise

The Stupider you become.

and Rush called Democrats Uninformed.

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Response to rgbecker (Original post)

Tue Dec 20, 2011, 09:41 AM

3. Is my understanding correct?

 

We're covering the payroll tax cut with general revenue.

Since we have a budget deficit, general revenue is borrowed from the SS surplus (via bonds) or from somewhere else (like China, Japan, et al).

So we're paying into SS with money we borrow from SS or other countries. Yet this doesn't jeopardize SS.

/earnestly trying to understand

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Response to jtrockville (Reply #3)

Tue Dec 20, 2011, 09:55 AM

11. You are implying ...

 

Everything that is paid for through the general fund creates debt.

That isn't accurate

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Response to surfdog (Reply #11)

Tue Dec 20, 2011, 10:13 AM

16. True, but we are running a huge deficit.

 

At least some (maybe most?) of the general fund is borrowed. Any idea how much?

btw - I'm not trying to imply anything... just trying to understand how the "pay back" works.

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Response to rgbecker (Original post)

Tue Dec 20, 2011, 09:46 AM

4. Bachmann's lie is that she cares about the future of Social Security

according to everything I have ever heard her say about the economy, she sees no purpose in the program.

On the other hand there are people who are genuinely concerned about the cuts if they continue for a long time.

On yet another hand, a good number of those people do support short-term cuts as a stimulus. They're not a problem in the short term.

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Response to rgbecker (Original post)

Tue Dec 20, 2011, 09:47 AM

5. Exactly. The Trust Fund is just as bankrupt as it was 2 years ago

Of course, it is NEVER bankrupt insomuch as we can always print a few trillion dollars (just please ignore the impact of it on inflation and the value of everything you may own, including your home).

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Response to rgbecker (Original post)

Tue Dec 20, 2011, 09:48 AM

6. What part of -

 

"...made up by transfers from the General Fund of the Treasury...' does not raise a big Red Flag for you?
Transfers from the General Fund IS the problem. This give Congress a legitimate excuse to suck money from the Social Security and Medicare Trust Funds in the future. It sets a precedent for the Republicans to help destroy Social Security and Medicare somewhere down the road.
Do not help them by deigning the obvious.

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Response to RC (Reply #6)

Tue Dec 20, 2011, 11:15 AM

22. Why did you throw in Medicare, much of which has always been paid from the general fund?

Many trillions of dollars have gone from the general fund into Medicare. When was the last time you heard a Republican say "We have to cut Medicare because much of it is paid from the general fund"? You never have, because trying to attack Medicare on that basis would be politically disastrous. I've never even heard that argument with regard to Medicaid, the federal portion of which comes entirely from the general fund. Why should Social Security be different? Furthermore, it's ridiculous to think the Republicans could gain some traction in their attack on Socia Security by screaming that it took a few hundred billion from the general fund while they persist in showering goodies on the rich and big corporations from the general fund. I would find this wimpy fear of Republican talking points disgusting even if the dreaded talking points weren't so totally idiotic.

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Response to bornskeptic (Reply #22)

Tue Dec 20, 2011, 02:31 PM

33. This is why.

 

Box 6: Medicare tax withheld. Box 6 reports the amount of taxes withheld from your paycheck for the Medicare tax. The Medicare tax is a flat tax rate of 1.45% of your total Medicare wages.

http://taxes.about.com/od/formw2/a/IRSFormW2_3.htm

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Response to rgbecker (Original post)

Tue Dec 20, 2011, 09:49 AM

7. Technically you are correct

However, the "general fund" is broke so to speak. It's all spent. So we are borrowing funds to cover the shortfalls of the tax cut. We've been "borrowing" from the Social Security Trust Fund for decades. That is going to have to be repaid some day from the general fund. (Actually, its constantly being "repaid" and then reborrowed). By not collecting payroll tax now, it just hastens the day that the Trust Fund will run out of cash.

It's all accounting jargon. All the taxes pay for everything that the government spends. We're using tax cuts to stimulate the economy and this is just another one of them. We'll have to make it up some day with tax increases, or other spending cuts.

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Response to rgbecker (Original post)

Tue Dec 20, 2011, 09:51 AM

8. It's the linking of GF revenue to SS that concerns many, not that SS is taking an immediate hit.

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Response to rgbecker (Original post)

Tue Dec 20, 2011, 09:51 AM

9. There is no money in any "Social Security Trust Fund", so how could a tax cut change that?

Like arguing about how global warming affects Santa.

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Response to Romulox (Reply #9)

Tue Dec 20, 2011, 09:55 AM

12. so all those us treasury bonds everyone owns the world over, are worth "no money"?

good info, thanks.

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Response to yodermon (Reply #12)

Tue Dec 20, 2011, 09:58 AM

13. The "Trust Fund" doesn't own any US currency (hard cash), nor any US Treasury Bonds.

Here's your government's explanation of the matter:

By law, income to the trust funds must be invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government. All securities held by the trust funds are "special issues" of the United States Treasury. Such securities are available only to the trust funds.

http://www.ssa.gov/oact/ProgData/fundFAQ.html

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Response to Romulox (Reply #13)

Tue Dec 20, 2011, 10:29 AM

17. The very next paragraph.

In the past, the trust funds have held marketable Treasury securities, which are available to the general public. Unlike marketable securities, special issues can be redeemed at any time at face value. Marketable securities are subject to the forces of the open market and may suffer a loss, or enjoy a gain, if sold before maturity. Investment in special issues gives the trust funds the same flexibility as holding cash.


from that same page:
The Social Security Trust Funds are the Old-Age and Survivors Insurance (OASI) and the Disability Insurance (DI) Trust Funds. These funds are accounts managed by the Department of the Treasury. They serve two purposes: (1) they provide an accounting mechanism for tracking all income to and disbursements from the trust funds, and (2) they hold the accumulated assets. These accumulated assets provide automatic spending authority to pay benefits.


Another link, more detail on the special-issue securities,
http://www.ssa.gov/oact/ProgData/specialissues.html

Special issue types and properties
There are two types of special issues: short-term certificates of indebtedness and long-term bonds.
The certificates of indebtedness are issued on a daily basis for the investment of receipts not required to meet current expenditures, and they mature on the next June 30 following the date of issue.
Special-issue bonds are normally acquired only when special issues of either type mature on June 30. The bonds have maturities ranging from one to fifteen years.


another link: http://www.usconstitution.net/const.html#Am14

The validity of the public debt of the United States, ...shall not be questioned

You are questioning the validity of the public debt of the United States, and as such are in violation of the Constitution. Please turn yourself in.

have a nice day.

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Response to yodermon (Reply #17)

Tue Dec 20, 2011, 10:40 AM

19. Right. I provided the link so you could read on. It's all there. No cash. No Treasury Bonds.

"You are questioning the validity of the public debt of the United States, and as such are in violation of the Constitution. "

No. I'm not. I'm stating facts, and the "validity of the public debt" wasn't central to the point to which you responded.

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Response to yodermon (Reply #17)

Tue Dec 20, 2011, 11:47 AM

25. You rely on a really crucial hair-splitting definition.

That the special-issue "trust fund" bonds are of the same legal status and have the same status as "public debt" as regular issue T-bills held by the public. Moreover, that there's no way to legally separate the two and redefine them.

All that's required is that the special-issue bills be reclassified as a kind of public debt not covered by the Constitution (considering that it's a kind of debt that didn't exist when the Constitution was penned, not a big problem). Then they could "default" on them by merely altering the terms of redemption. This would trigger no Constitutional sanction. Since they're a special issue, there's no need for investors to think that the value of other T-bills, those clearly publicly held, are at risk. This would amount to a slight internal reorganization of the executive branch, nothing more, done by a simple redefinition and a law that is then clearly within Congress' power--all the more so since it affects mostly government accounting. (Congress has separate authority to alter the terms and conditions of SS benefits, and has done so repeatedly over the years. It couldn't readily deprive the SSA of funding without altering entitlement payments without violating the law, although it's unclear to me that anybody would have standing to challenge Congress' actions if it did violate the law.)

Of course, there are simpler ways of doing it that don't rely on judges' accepting a redefinition.

The SSA is a critter of Congress. It's created by Congress. It's funded by Congress. (It's a part of the administration and executive branch not really under the control of the chief executive.) The monies levied for it by Congress are just taxes that Congress has decided it'll keep separate and turn over in toto to the SSA. Congress has no special authority for different kinds of taxes, it just has a general taxation authority. This means that the SSA has only the rights and privileges that it's granted.

Congress could require that the SSA forgive the debt and rip up the special-issue Treasury bills. Or it could repurpose the FICA monies at any time and tell the SSA that if it wants them it has to redeem the Treasury bills it has. It could even pay off the total amount and then require that the SSA return any unspent funds to the general treasury, leading to a 30 second increase in the money supply of several trillion dollars (best done at 2 a.m. when the markets are closed Three non-default ways of accomplishing precisely what a default would.

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Response to yodermon (Reply #17)

Tue Dec 20, 2011, 03:02 PM

37. No, he isn't.

The special obligations in the Trust Funds are not by law negotiable. They can't be sold or transferred for money. The only way the Trustees can get money to pay benefits for them is to give them to the General Fund and have the General Fund give the Trustees the money. Therefore, their entire value rests on the ability of Congress to either raise revenue by taxation or borrow revenue on the open market.

This is US Treasury Debt To the Penny:
http://www.savingsbonds.gov/NP/BPDLogin?application=np

Total debt, as of 12/16, is 10.4 trillion held by the public (US negotiable securities). Intragovernmental is another 4.66 trillion. These are the "special obligation" securities. They do not represent any independent fund or assets - they are simply a legal right to get money from the General Fund.

The total of the two as of 12/16 is nearly 15.1 trillion, which is about 100% of annual nominal US GDP. If we tried to raise cash for all the special obligations now we couldn't - the market would run away screaming. It is debt held by the public that controls whether we can keep borrowing or not.

As of 1/1/2011 Debt Held By The Public was 9.4 trillion. We have borrowed more than a trillion dollars already this year, and we are still borrowing. We only have the ability to do this for a couple more years until we have to start paying higher interest rates, at which time the whole thing cartwheels out of control.

For your information, nothing the Constitution says controls whether the US defaults on its debt or not. The US already defaulted once, on Liberty Bonds which were payable in gold dollars:
http://en.wikipedia.org/wiki/Liberty_bond#The_Default_of_the_Fourth_Liberty_Bond

The U.S. Treasury called this bond on April 15, 1934, but refused to redeem the face value of the bond in gold as required by the terms of bond which read:

The principal and interest hereof are payable in United States gold coin of the present standard of value.

Since the United States had devalued the dollar from $20.67 per troy ounce of gold (the 1918 standard of value) to $35 per troy ounce in the preceding year the 21 million bond holders lost 139 million troy ounces of gold, or approximately 41% of the bond's principal. This was the equivalent of $2.866 billion (1918) dollars, or approximately $200 billion at the 2011 price of $1500 per troy ounce.

The legal basis for the refusal of the U.S. Treasury to redeem in gold was House Joint Resolution 192, dated June 5, 1933. This resolution was later held to be unconstitutional and thrown out by the U.S. Supreme Court. Chief Justice Hughes writing for the majority elaborated the precedent that Congress may not legally nullify its own contracts:

We conclude that the Joint Resolution of June 5, 1933, insofar as it attempted to override the obligation created by the bond in suit, went beyond the congressional power.
—Chief Justice Charles Evans Hughes, Perry v United States, 294 US 330 (1935), Page 294 U. S. 354

However, due to the significant restrictions placed on gold trading by Roosevelt's reforms, the Court ruled that the bond-holders' loss was unquantifiable, and that to repay them in dollars according to the 1918 standard of value would be an "unjustified enrichment". The ruling therefore had little practical effect.


Bottom line - you can win the case in the SC, but the SC can't write the check. SC has already ruled that no one has any legal right to SS or DI benefits, so you can't collect that way either.

What everyone buying bonds now expects is either to sell them before the US hits the wall (they are highly liquid due to the EU problems), or that the US will not redeem those intragovernmental obligations in such as manner as to increase debt held by the public past about 95% of GDP.

We are currently borrowing well over a trillion a year.

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Response to rgbecker (Original post)

Tue Dec 20, 2011, 09:53 AM

10. In the long run it will

 

There's a reason that FICA is a separate itemized payroll deduction, and why it shouldn't be commingled with the income tax funded General Fund.

What gets me is how this whole topic is being viewed ass-backwards, with the Defenders of Social Security (Democrats) playing fast and loose with the "Lockbox", and the LetThemEatCake bunch (Republicans) suddenly worried about seniors. Something doesn't smell right, be the wind from the left or the right.

In my view, the net result here is to take the dysfunction that is afflicting the General Fund/Income Tax budget and infect an actuarially sound Social Security trust fund. If this 'payroll tax cut' goes on for too long, then Social Security WILL look sick, maybe even to the point that removing the FICA cap will not fix it. If the Democrats let it get to that point, then the Republicans will have won and Social Security will be as worthless as old Soviet pensions are in modern Russia.

Bottom line, I want to see payroll taxes back to where they need to be to support a healthy Social Security. But in order for that to happen, we need to get the economy back on its feet, which won't happen until the Bush tax cuts are not only obliterated, but recouped by a "top 1% surtax".

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Response to rgbecker (Original post)

Tue Dec 20, 2011, 10:03 AM

14. still bad to mix general revenue and SS books

Democrats and Republicans argue over whether or not to include SS as part of the yearly budget discussion. Technically it should not be included as it should be an independent set of books and live/die on it's own. The more the two are mixed the more that technicality fades.

If they want to let people keep an extra 2% of their salary, then decrease income taxes by 2% for the first $106k. I haven't seen a good reason why they want to play games with SS by cutting it and transferring 2% from income tax - the bottom line of both sets of books is the same and people keep the same amount of their salary, but there is another tie between the general budget and SS.

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Response to rgbecker (Original post)

Tue Dec 20, 2011, 10:08 AM

15. Groan (for reasons well-stated above). n/t

-Laelth

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Response to rgbecker (Original post)

Tue Dec 20, 2011, 10:37 AM

18. I agree.

The cut does not affect amounts to be credited to the SS trust fund, and people shouldn't say otherwise.

I do wish, however, that this tax-cut had been designed in a less confusing way. I'm certain some Republicans will use the same spurious argument to claim that now we *really* have to cut SS benefits.

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Response to rgbecker (Original post)

Tue Dec 20, 2011, 10:47 AM

20. That's not what Bernie Sanders says and I trust his judgement better than anyone else

in Washington including the president.

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Response to rgbecker (Original post)

Tue Dec 20, 2011, 11:07 AM

21. This is Fact Check everyone

You know, the guys that check the accuracy on things.

Think I would feel kind of funny arguing against Fact Check on a public forum.

And not the kind of funny that makes people laugh either.

Don

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Response to NNN0LHI (Reply #21)

Tue Dec 20, 2011, 11:21 AM

23. Fact check is merely confirming the shell game

A shell game, mind you, that would land any private citizen or corporate officer in jail if they perpetuated it (okay, maybe not the corporate officer who bought off his representative, but I digress). If you collapse these "divisions" of the Federal government into one consolidated financial statement (like the SEC requires of all companies filing financial statements), fact check's entire argument falls apart.

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Response to joeglow3 (Reply #23)

Tue Dec 20, 2011, 11:25 AM

24. Arrrrrrrrrrrrrg!

I just jumped through the Looking Glass.

Don

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Response to NNN0LHI (Reply #24)

Tue Dec 20, 2011, 04:10 PM

40. I was hoping to see a picture of a pirate.

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Response to joeglow3 (Reply #40)

Wed Dec 21, 2011, 07:45 AM

46. LOL

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Response to rgbecker (Original post)

Tue Dec 20, 2011, 12:06 PM

26. Is it still okay to repeat them if they come from Obama?

"tax cuts (for the rich) will create jobs"

"I hope you'll join me in raising your voices to make sure that Congress enacts an economic stimulus plan big enough to help people who are looking for work, a plan big enough to encourage economic growth." May 12, 2003 in New Mexico

"The unemployment number is now at 6 percent, which should serve as a clear signal to the United States Congress we need a bold economic recovery package so people can find work. (Applause.) That 6-percent number should say loud and clear to members of both political parties in the United States Congress, we need robust tax relief so our fellow citizens can find a job. (Applause.)" May 6, 2003

"tax increases (on the rich) will seriously harm the economy"


"these tax cuts for the rich are really middle class tax cuts"

"When you hear the debate about this kind of class warfare, rhetoric about, oh, this is for the rich, only for the rich -- I want you to think about the Joe Kempers of the world. I certainly will. A fellow who worked for our government, and now a fellow who we trust with that $3,500, because it's his money. And when he invests it, it's going to have a positive effect. All the Joe Kempers of the world taking that extra money and investing it will mean somebody else is likely to find a job, and that's important for our fellow Americans to understand." Feb 12, 2003


"most people get $1,000 from this tax cut"

"The tax relief is for everyone who pays income taxes -- and it will help our economy immediately: 92 million Americans will keep, this year, an average of almost $1,000 more of their own money. A family of four with an income of $40,000 would see their federal income taxes fall from $1,178 to $45 per year. (Applause.) Our plan will improve the bottom line for more than 23 million small businesses." Jan. 28, 2003


Shares of the payroll tax cut

to the richest 10% - 26.7%
to the poorest 60% - 26.1%

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Response to hfojvt (Reply #26)

Tue Dec 20, 2011, 05:54 PM

42. Why are you putting W. Bush quotes up with a heading indicating they are Obama's words?

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Response to rgbecker (Reply #42)

Tue Dec 20, 2011, 10:28 PM

43. yes, you are missing that Obama is making the same arguments as those Bush quotes.

the dates make it fairly clear they are Bush quotes, but don't we know hear the same arguments from Obama?

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Response to hfojvt (Reply #43)

Tue Dec 20, 2011, 10:33 PM

44. I haven't. Maybe you have some links.

I'm open to the possibility but need some references to be convinced.

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Response to hfojvt (Reply #43)

Wed Dec 21, 2011, 08:29 AM

50. "don't we now* hear the same arguments from Obama?"

No we don't, unless of course you watch Faux news and company.

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Response to hfojvt (Reply #43)

Wed Dec 21, 2011, 09:18 AM

52. Why are you still spreading this untruth?

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Response to great white snark (Reply #52)

Wed Dec 21, 2011, 11:53 AM

53. which part is untrue?

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Response to hfojvt (Reply #26)

Wed Dec 21, 2011, 08:21 AM

49. When did Obama say Tax Cuts (for the Rich) will create Jobs?.....

When did Obama say tax increases (on the rich) will seriously harm the economy?

When did Obama say these tax cuts for the rich are really middle class tax cuts?

Your last quote is irrelevant.

The heart of your claim though is Republican policy. I have never heard Obama advocate for tax cuts for the rich.
Please provide evidence of Obama saying this other than quoting Bush to back up your claim.

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Response to SunsetDreams (Reply #49)

Wed Dec 21, 2011, 12:13 PM

54. Obama is proposing social security tax cuts as a way to create jobs

Obama says that if the payroll tax cuts expire that will harm the economy.
Obama calls these payroll tax cuts, middle class tax cuts.


Well, Bush claimed that his tax cuts would help the middle class too, and they did too, hence the desire to keep them in place for incomes less than $100,000 instead of letting them all expire.

Obama is advocating for payroll tax cuts, and in my eyes, those payroll tax cuts are tax cuts for the rich.

The rich - the top 10% get 26.7% of the payroll tax cuts.
The top 20% - the upper quintile - get 46% of the payroll tax cuts

Compare this to what the bottom 20% gets - 3.8%

Let me repeat. The RICHEST 20% get 46% of the tax cuts, the poorest 20% get 3.8% of the tax cuts.

The poorest SIXTY percent get a mere 26.1% of the tax cuts. Less than the richest 10% get.

Like Republicans, Obama is advocating tax cuts to create jobs.
Like Republicans, Obama is advocating tax cuts that favor the rich.
Like Republicans, Obama is claiming that his tax cuts do NOT favor the rich, when they pretty clearly do.

Now back when he first ran for office, the Hope and Change we could believe in promised a "making work pay credit" of $500. That tax credit gave a mere 8.8% of its benefits to the richest 10%. While it gave 12.8% of its benefits to the bottom 20% and 49% of its benefits, not to the richest 20% but to the poorest 60%.

And to think I used to love this video back in primary days

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Response to rgbecker (Original post)

Tue Dec 20, 2011, 12:07 PM

27. It appears some here actually buy into Repig Talking points whole hog. Sad.

 

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Response to rgbecker (Original post)

Tue Dec 20, 2011, 12:25 PM

28. K + R

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Response to rgbecker (Original post)

Tue Dec 20, 2011, 12:27 PM

29. Most of our policy is a mess of Republican talking points Gingrichcare, Payroll Tax Holidays,

indefinate detention, Free Trade Agreements, War on Drugs, War on Terror, tax cuts by the assload, "drill, baby, drill", "wise consumers of healthcare", "stakeholders", "can't raise taxes during a down turn", and on and on.

The policies we are promoting about all come straight out of right wing think tanks and Republican policy makers over the last four decades. Some of them we were campaigning against just a few years ago.

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Response to rgbecker (Original post)

Tue Dec 20, 2011, 12:34 PM

30. This thread is a DU classic

I am putting this one on my desktop with an icon so I don't ever lose it.

Thanks for posting this rgbecker. It was a real eye opener.

Don

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Response to NNN0LHI (Reply #30)

Tue Dec 20, 2011, 02:00 PM

31. When they said getting Democrats in line is like herding cats, they weren't kidding.

It's clear our education system is failing when you can have 30 people reading information about how the SS system works and still have people coming away with completely opposite ideas about what is going on. God help us if they ever start thinking too hard about the dollar bill in their pocket or what the number on their bank statement actually represents. Are we actually a lot closer to a barter society than the last 4000 years of civilization would indicate?

Meanwhile, the Republicans simply have a few radio stations here and there that remarkably report the same line and whole country falls for it.

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Response to rgbecker (Reply #31)

Tue Dec 20, 2011, 02:21 PM

32. Do you know how many Unrecs this thread would have on DU2?

Hundreds.

And not because what you posted wasn't the truth either. Because it is. It would be because it wasn't what someone wanted to hear. Doesn't fit into their agenda. There are some here who would rather throw their lot in with Rand Paul, Jim DeMint and Michelle Bachmann than admit Paul Krugman, Robert Reich and Fact Check are right. Think about that one for a minute.

They are smart enough not to come here and argue with Fact Check yet they will start their own threads doing the same thing. Like they can't see this thread or something?

Crazy world isn't it?

Don

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Response to rgbecker (Original post)

Tue Dec 20, 2011, 02:32 PM

34. It weakens the assets in the Trust Fund

It really does. It doesn't change the total in the Trust Fund, but since the only way you can get money from the Trust Fund is through the General Fund, if we remove a huge revenue source from General Revenue (which this does), we are implying that the Trust Fund will become meaningless.

It's probable that the Trust Fund is already meaningless, and that these programs will have to be paid for through dedicated revenue streams.

If we are saying that the economy is too weak to withstand the impact of the FICA Tax (which already was too little to pay for the year's benefits), then we are saying the economy is too weak to pay SS for very long.

The Trust Fund is not a source of money from which to pay SS or DI benefits. It's a legal right to borrow. As long as that legal mandate to borrow were still the law, abolishing the trust fund would change absolutely nothing about how SS & DI benefits are paid.

This is not a right wing talking point at all - it's an important government accounting issue.

And the point is that we did not have to do this. We could have provided about as much stimulus simply by keeping the MWP tax credit and increasing it. That would have cost less overall and preserved the FICA structure.

Any tax cut that gives a household earning 150K a 3K tax cut, but gives a household earning 20K a $400 tax cut is a very ineffective stimulus. The payroll tax cut was never a good idea! And now we see the problem with it - many analysts are saying we will never be able to restore FICA to its current levels. That means effectively abandoning the SS system.

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Response to Yo_Mama (Reply #34)

Tue Dec 20, 2011, 11:03 PM

45. The current level of FICA is where it is because of the wage cap

It was set there by Reagan in the 80's. We could lower it easily, and do quite a bit better if income over 100k wasn't tax-free.

Of course, any number of things would be better solutions to current problems, and better approaches to governing well. All we have to do is convince the boneheads in congress of that...

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Response to bhikkhu (Reply #45)

Wed Dec 21, 2011, 01:14 PM

55. Yeah, well if we are going to continue the payroll tax cut we need to raise FICA cap very high

It is currently 110,100 for 2012. It has been 106,800 the last couple of years.

Looking at SS wage stats (latest available) about 94-95% of American workers don't exceed the wage cap:
http://www.ssa.gov/cgi-bin/netcomp.cgi?year=2010

That makes it almost impossible to cover FICA cuts for everyone by raising the wage cap as usually proposed (to about $160,00). Raising the wage cap and leaving FICA tax at the regular 6.2% would have covered SS shortfalls so that we could keep paying scheduled SS benefits for a long time, but it won't cover that need AND the FICA rebate.

Look at that table and look at the aggregate amounts in each category.

If you raised the FICA cap for the employer side (currently that's 4.2% of wages and salary) to $1,000,000, and did not include the extra taxation when figuring benefits, then figuring the combined effects of the overall FICA tax cut (6.2. > 4.2) and the increase in employee-side FICA cap to 1 million (a person earning $1,200,000 would pay 4.2% extra FICA tax on another $893,200 in wages) gives you a net balance of 137 billion (in other words, total FICA revenue would increase by 137 billion).

However we are already running an SS deficit of about 50 billion, so that means we'd have about 87 billion to save. The best way would be to distribute about half out there as deposits in banks and use the rest to buy REAL Treasury bonds off the market instead of this bullshit special obligations crap, both of which would tend to stimulate the economy. Putting the cash out in banks increases the lending base, and buying the Treasury bonds means that it tends to push interest rates down. Neither would be inflationary, as happens when the US Treasury buys bonds, because the cash would already have been withdrawn via taxation from the economy.

As retirees increase in ratio to workers, the yearly surplus would steadily diminish and then disappear, but by then there would be real cash reserves for SS Trustees to use to pay benefits that neither required raising taxes or borrowing more money on net.

This is doable - but note that they don't want to do it. It's fair, but again, they aren't interested.

That's why I am so displeased by my government. I have a right to be - this is utter and total dereliction of the public trust. They are very familiar with all of these numbers - they just don't give a damn about the welfare of the average person.

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Response to rgbecker (Original post)

Tue Dec 20, 2011, 02:35 PM

35. Yes!

now where are those deniers?

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Response to rgbecker (Original post)

Tue Dec 20, 2011, 02:48 PM

36. Instead of going broke in 2036...

It will now go broke in 2035.

So far, it has had little effect on the SS fund. However, over a period of time, a few years, the SS system could be greatly deteriorated.

There was a reason the SS system was created separate from the general revenues. It is not dependent upon the whims of Congress. The people pay into their own security fund. Once they cease to pay into the system, the system will die. There is not enough political support in the Congress today to take care of retired old people. They are more concerned about taking care of the wealthy. It is naive to think they will do this out of the goodness of their hearts.

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Response to kentuck (Reply #36)

Tue Dec 20, 2011, 03:04 PM

38. Precisely

The whole reason for cutting FICA was to create support in the country to cut SS & DI.

The DI trust fund will be exhausted by 2018, and DI benefits will be cut then.

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Response to rgbecker (Original post)

Tue Dec 20, 2011, 03:17 PM

39. Hmm, an awful lot of Democrats disagree with you:

http://www.nytimes.com/2011/12/16/us/politics/payroll-tax-cut-extension-seen-as-peril-to-social-security.html?_r=1&pagewanted=2


Sixty-one liberals in the House, nearly one-third of the Democrats there, wrote to Mr. Obama in July to say they were “gravely concerned that yet another, unacceptable cut to Social Security’s revenue stream appears to be on the table.”


If we don't have a dedicated revenue stream for SS, we won't be able to pay it. It's that simple.

The trust funds are an accounting mechanism rather than a source of money from which we can pay benefits when revenue coming in is too little to fund benefits. The trust funds keep track of how much money we owe to the program (and accumulated interest on that money). They do not pay benefits.

Money from the General Fund pays benefits, when revenues are too little. And if we allow revenue sources for SS to be cut, at some not-too-distant time benefits will be cut.

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Response to Yo_Mama (Reply #39)

Tue Dec 20, 2011, 05:42 PM

41. Your vision of the future may be wrong or it may be right.

But in the past, the FICA tax rate has been increased to cover the benefits paid out and there is nothing in my tea leaves that suggests a similar outcome would be ruled out.

Either way, the present situation requires a government stimulas to get us out of the unregulated bank crisis and Obama and the Democrats have few options. W. Bush sent everyone a $400 check and then started the Iraq war but those are options Obama won't be allowed and won't want.

The lack of jobs providing wages that can be taxed for the SS trust fund is the real worry right now...forget 2035.

Play around with this chart and imagine a future based on real past data and government projections.

http://www.usgovernmentrevenue.com/revenue_chart_1970_2016USb_13s1li111mcn_30t


I'm afraid the 61 liberals in the house are overlooking the simple political reality that the Republicans are not going to be voting for a government stimulas unless it looks like a tax cut.

To be stating that the money is reducing the SS trust fund is just plain wrong and should not be repeated. Say whatever you want about your guess for the future.

Buy Gold?

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Response to rgbecker (Reply #41)

Wed Dec 21, 2011, 09:09 AM

51. Basically agree. Until the economy improves, every government benefit/program is at risk.


We can raise taxes on the "rich," cut military spending, etc. -- and should -- but, that won't get us very far if the economy does not improve. Unfortunately with the Republican's saying "No" to just about everything, this seems the only approach to getting a few extra dollars to people and small businesses. If the temporary FICA reduction helps, it is worth it. Long-term, our economic model needs to change -- but that won't happen quickly.

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Response to rgbecker (Original post)

Wed Dec 21, 2011, 08:00 AM

47. "PS. What ever happened to spell check?"

Get Firefox. One of their Add Ons is a dictionary that gives you real time spell checking abilities. Any word not in the database, that is within your browser, is highlighted by a squiggly red line running along the bottom of the word. Not only are you given the option to change it to a recommended word, but you are given the option to add the word to your database.

I do agree with the first poster, even Firefox does not catch misspelled words within the post's title but I am aware of that and REREAD all my posts anyway, both for spelling AND grammar.

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Response to rgbecker (Original post)

Wed Dec 21, 2011, 08:02 AM

48. The problem is we then leave it to the politicians

and appropriations. Depends on your level of trust.

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