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Thu Nov 15, 2012, 03:33 PM

Senate Democrats say deficit package must include stimulus

Source: The Hill

Senate Democrats, feeling confident from their net gain of two seats in last week’s election, say any deficit-reduction package negotiated in the coming weeks must include stimulus measures.

They have yet to decide which prime-the-pump measures to push, but are mulling options such as new infrastructure spending and an extension of the payroll tax holiday.



Some Republicans are likely to balk at the notion that a package to cut the deficit would include new spending. But Democrats argue the No. 1 concern for voters is job creation and that the government needs to take a more aggressive role in spurring the economy.

“We need to do something on stimulus as part of the overall fiscal cliff,” said Sen. Charles Schumer (D-N.Y.), the Senate Democrats’ chief political strategist. “We have to do something because the economy is not growing fast enough in the first year or two.”



Read more: http://thehill.com/homenews/senate/267923-senate-democrats-say-deficit-reduction-package-must-include-stimulus



This is what I call playing offense.

You want a grand bargain? Okay, let's bargain.

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Arrow 20 replies Author Time Post
Reply Senate Democrats say deficit package must include stimulus (Original post)
geek tragedy Nov 2012 OP
BlueStreak Nov 2012 #1
ProudProgressiveNow Nov 2012 #12
Myrina Nov 2012 #2
Bandit Nov 2012 #8
greymattermom Nov 2012 #3
DJ13 Nov 2012 #4
bvar22 Nov 2012 #5
plethoro Nov 2012 #10
ProgressiveEconomist Nov 2012 #17
bvar22 Nov 2012 #18
plethoro Nov 2012 #6
mac56 Nov 2012 #7
plethoro Nov 2012 #9
mac56 Nov 2012 #11
plethoro Nov 2012 #13
bvar22 Nov 2012 #14
plethoro Nov 2012 #15
DallasNE Nov 2012 #16
ProgressiveEconomist Nov 2012 #19
DallasNE Nov 2012 #20

Response to geek tragedy (Original post)

Thu Nov 15, 2012, 04:03 PM

1. Infrastructure investments, please. No more tax cuts. They never produce significant stimulus.

If tax cuts created jobs, we'd be at 2% unemployment today because our taxes are as low asn they have been for 50 years.

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Response to BlueStreak (Reply #1)

Thu Nov 15, 2012, 08:19 PM

12. +1 nt

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Response to geek tragedy (Original post)

Thu Nov 15, 2012, 04:09 PM

2. "We have to do something because the economy is not growing fast enough "

Wow, Chuck - you just noticed that and realized that infrastructure spending would benefit both people AND the country? Brilliant.



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Response to Myrina (Reply #2)

Thu Nov 15, 2012, 06:30 PM

8. The Democrats have had a jobs/stimulus bill ready for a year or more but Republicans

won't allow it to the floor for a vote...He hasn't just noticed it, but he feels more emboldened because of how the election went...

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Response to geek tragedy (Original post)

Thu Nov 15, 2012, 04:11 PM

3. Rebuild cities

I'd love to see a stimulus that would clear all of the abandoned houses and buildings in places like Detroit. Just make some forest preserves for now.

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Response to geek tragedy (Original post)

Thu Nov 15, 2012, 05:37 PM

4. No more payroll tax holidays

If they want to do something like that go back to the "making work pay" tax rebates that we had prior to last year.

That was better targeted at the lower classes than the drip drip drip payroll tax holiday that was of little help to the lower wage workers.

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Response to geek tragedy (Original post)

Thu Nov 15, 2012, 05:43 PM

5. Extending the "temporary " "Payroll Tax" Holiday is a bad, BAD idea.

The "Payroll Tax Holiday" was a Bad idea for a number of reasons:

#1) The framing is Republican Speak.
This isn't the "Payroll Tax" to Democrats.
Democrats call this by its proper name, "Federal Insurance Contributions",
or "Federal Insurance Deductions".

FICA = Federal Insurance Contributions Act , and it IS the independent funding mechanism for Social Security and Medicare.
It is NOT a "tax" per se because YOU get this money back.

Just like the "Inheritance Tax" was successfully re-framed by the Republicans to the "Death tax",
so to they have worked their re framing magic to distort what this really is,
and Democrats have followed blindly along.
I CRINGE every time I head a supposed Democrat call this the "Payroll Tax", and say to myself, "No wonder we lose".

#2) FICA contributions ARE the funding mechanism for Social Security.
For the first time since the creation odf the most successful social program EVER,
and the cornerstone of the modern Democratic Party,'Social Security is NOW directly connected to The Deficit.

The Payroll Tax "Holiday" directly connects Social Security Funding to The Deficit.
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x1538388

No longer can Democrats honestly claim the Social Security does NOT contribute to The Deficit,
because thanks to the Payroll tax Holiday, NOW it does!
We WILL regret connecting Social Security to The Deficit.
The creators of Social security established a completely independent funding mechanism
For a Good Reason.

We NEED to dump this BAD IDEA Tax Holiday ASAP.
There are better ways to fund a stimulus than connecting Social Security to The Deficit.





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Response to bvar22 (Reply #5)

Thu Nov 15, 2012, 06:43 PM

10. There is nothing even comparable to how bad

 

an idea this is. After the decision is announced I will be forced to announce to a large, large group of people that in my opinion that with the latest payroll tax reduction extension, Social Security has been breached and for those of you under 60, I suggest you begin making plans on saving more money for retirement because you will not have what your current Social Security Statements says you will have in retirement. Bernie Sanders as much as told us this was going to happen.

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Response to bvar22 (Reply #5)

Thu Nov 15, 2012, 09:37 PM

17. Are you willing to sacrifice 800,000 jobs next year for your political theory about SS?

See http://www.cbo.gov/sites/default/files/cbofiles/attachments/11-08-12-FiscalTightening.pdf .

Extending INCOME tax cuts for the wealthy is a bad idea because it would not add significant jobs in the short run and would raise the deficit by a trillion dollars over ten years.

Treasury issuing two percentage points worth of 2013 Social Security payroll deductions in non-tradable bonds held by the Trust Fund without taking that money from workers is IMO a GREAT idea. First, letting the workers keep the extra money help them create jobs and boost economic growth in the short run. Second, contrary to your political theory about Social Security, that's 2 percentage points less in workers' earnings for future Congresses and future Republican Presidents to loot. as Reagan and the Bushes did for over 25 years.

Social Security does not and never has added to the deficit. But past Republican LOOTING of FICA taken from workers, for "tax cuts" for the wealthy and unnecessary "wars", DOES add to the budget obligations of their successors.

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Response to ProgressiveEconomist (Reply #17)

Thu Nov 15, 2012, 10:28 PM

18. Fear Mongering Bullshit!

Since the Payroll tax Holiday MANDATES that ANY shortfall in SS funding be made up from the General Fund,
it would cost EXACTLY the SAME to simply send everyone a check from the General Fund. Bush-the-Lesser already set a precedent for this.
WHY go to all the extra complexity and hassle of transferring funds from the general Fund to FICA
when it would be easier and cost exactly the same and produce EXACTLY the SAME amount of stimulus to simply cut everyone a check from the General Fund?

A Good Rule of Thumb:
When you are involved in a financial transaction that has become unnecessarily complex due to the unnecessary movement of funds from different accounts,
YOU ARE BEING SCAMMED.

There was NO Good Reason for the Payroll tax Holiday EXCEPT to connect it directly to the General Fund.
THAT was a Good Reason for the people who want to kill Social Security.

You are in error.
The Payroll tax Holiday MANDATES that shortfalls in FICA collections due to the Tax Holiday WILL be made up by transfers from the General Fund.

What Happens to the "Missing" Social Security Funds?

To prevent Social Security from losing tax revenue, Congress mandated that revenues be transferred from the general fund to the Social Security trust funds to make up for the tax reduction.

That directly connects Social Security to The Deficit.

No Charge.



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Response to geek tragedy (Original post)

Thu Nov 15, 2012, 06:18 PM

6. This is exactly what I thought would happen when the payroll tax holiday was installed. Anyone

 

thinks it will ever be reversed if allowed to stay for another year is point-blank nuts. It if stays and it is Democrats doing it, Social Security is on its way out. And that is not all that will be on the way out--

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Response to plethoro (Reply #6)

Thu Nov 15, 2012, 06:20 PM

7. Social Security is not "on its way out."

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Response to mac56 (Reply #7)

Thu Nov 15, 2012, 06:34 PM

9. Sorry, if the payroll tax cut is extended another year that will be the approximate END

 

of Social Security. Will it stop tomorrow, next month, next year? No, of course not. But there will be adjustments (cuts) within a few years for current recipients and those under 50 will see nothing. And the attribution for the end of this program will fall not to Republicans--but Democrats. The Republicans are COUNTING on this. And it is so abominably stupid. With the Demographics favoring the END of the Republican Party altogether, maybe even after this last election, this development will give them a new life in 2014. I can almost hear the political adds from the Republicans. It blows my mind that people don't see what's going on. I can only attribute it to age.

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Response to plethoro (Reply #9)

Thu Nov 15, 2012, 08:04 PM

11. "I can only attribute it to age."

Snarkiness on top of fearmongering. Nice.

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Response to mac56 (Reply #11)

Thu Nov 15, 2012, 08:40 PM

13. Why is that fearmongering? The younger people won't

 

have been around long enough to see how the government does things. The old people will. I am nearing 67. I have seen how the government ends programs. Step by step: 1. Obama extends the payroll tax cut. 2. Social Security payments are still made although adjustments to the programs are also made, the latter causing people some pain because of those that follow them will get nothing. 3. The economy continues South as many people realize that they will not have Social Security as promised and have to save more money. 4. The Democrats lose House seats in 2014 and also some in the Senate as the economy is still in what is now a Japan-style stall with older Americans decreasing spending dramatically. 5. Obama is out in 2016 and the man who replaces him, Democrat or Republican, says we need to cut Social Security to current recipients because we don't have the money to make payments and the deficit is too high. Adding, don't blame me: it was Obama who did this--not me.

End of story.

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Response to plethoro (Reply #6)

Thu Nov 15, 2012, 08:52 PM

14. The FireWall HAS been breached,

AND it took a Democrat to rip it out.
No Republican would have EVER been allowed to tear down the wall between Social Security and The General Fund (Deficit),
or use the funding mechanism for Social Security for other purposes.

The damage has already been done.
NOW, any future Republican Administrations (and they WILL come) will be FREE to raid FICA and call it a "Democratic" stimulus.

There really is no going back.
The Rubicon has been crossed.

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Response to bvar22 (Reply #14)

Thu Nov 15, 2012, 09:02 PM

15. That is exactly right. Democrats who may be counting on demographics to

 

insure they will remain in office will be real surprised when they learn little Bobby now 49 will be getting no Social Security based on the government's underfunding of Social Security and appropriation of the fund. It is absolutely insane that this being allowed to happen. Do you have any idea how many suicides this will cause by people having no other way to provide the lost funds for their spouses, children and maybe even underfunded parents.

And they can't go back. No more than they can find a lost America again.

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Response to geek tragedy (Original post)

Thu Nov 15, 2012, 09:37 PM

16. Bad Idea To Extend The Payroll Tax Holiday

The appearance is just awful. It says extend the Obama tax cuts but don't extend the Bush tax cuts. I don't know how you sell that. Besides, it plays right into the republicans hands that want to either cut Social Security or privatize it. Don't do that. Yes, that will be a small drag on the economy but offset that with infrastructure spending. Heaven knows, with all of the storm damage on top of the decaying infrastructure there are plenty of projects.

The Fed has indicated they will likely continue to buy back bonds to keep long term interest rates low but that is an inefficient stimulus. But it shows the Fed is more than willing to do their part. With the Euro Zone in recession already something does need to be done to juice aggregate demand so let's at least be smart about what we propose. If that means a little bit more infrastructure spending to offset the expiration of the payroll tax holiday, so be it.

Maybe if the standard deduction was increase some it would offset the expiration of the payroll tax holiday. There are ways to do this. Think.

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Response to DallasNE (Reply #16)

Thu Nov 15, 2012, 10:55 PM

19. Standard deduction hike? No, the people whose extra spending would stimulate job growth

the most are too poor to owe any income tax. A substantial Earned Income Tax Credit expansion would target them the best, but just extending the 2 percent Payroll Tax cut politically would be a much easier way of doing substantially the same thing.

I don't understand why so many supposedly progressive people want FICA taxes on the poorest workers increased. Alan Greenspan's 1983 SS tax "reforms" failed fundamentally to create a viable pre-funding mechanism for Baby Boomers' retirements. Thirty years worth of extra FICA from hard-won poor people's earnings did not go into a sovereign wealth fund of the kind every State uses to fund government employees' pensions. Reagan and the Bushes used that extra FICA to fund income "tax cuts" for the wealthy and unnecessary "wars". Even worse, they--and especially Dubya--ran up deficits to the point that rolling Trust Fund debt over into tradeable Treasury debt will be very difficult.

IMO, until there no longer is any possibility of an annual SS "surplus", every FICA dollar a worker is allowed to keep is a dollar that can't be stolen from workers by future Republican Congresses and Presidents.

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Response to ProgressiveEconomist (Reply #19)

Fri Nov 16, 2012, 12:06 AM

20. I Threw That Out There As An Afterthought

I did think about seniors that might benefit from this while not paying payroll taxes but told myself I could defend that. I didn't think about how many there are that currently pay no federal income taxes but are impacted by the payroll tax change, only looking at those that pay income taxes but do not itemize - which is also a sizable number.

LBJ was the first President to go to the unified budget. Before that the trust funds were not part of the general budget. That included not just Social Security but also the highway trust fund financed by fuel taxes. Both were in surplus and LBJ was running up ever larger deficits with the war in Vietnam and rather than raise taxes to pay for it he opted for the unified budget to hide the true cost of Vietnam. Still, Social Security needs adequate funding and the lost revenue needs to be recovered. The cap could be increased and the rate could be made progressive, i.e. the first $40,000 could be at one rate and above $40,000 could be at a higher rate -- more of my more than one way to skin a cat thought.

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