Some ideas on how to fix our economy

[tortoise1956]

ACcording to a recent story in the news, the Greek government currently has 750,000 employees on the payroll, with a total population of 11 million. That would be comparable to our government having 21 million federal employees. That is a little inflated, wouldn't you say? Good thing our government isn't as wasteful as Greece, right?

Well...

According to the IRS website, the U.S. government annual revenue is approximately 18% of the GDP. However, current government spending is equal to 24% of the GDP. No one can outspend income by 33% and expect to stay even close to solvent for very long. No matter what they do about taxes, the simple fact is that the government HAS to cut spending one way or the other.

I see several ways to do this:

1. Rework the Social Security program. I am 55 years old, and I depend in large part on SS to help me retire with a semi-comfortable income. I'm lucky - I will have a military reserve pension, a company pension and (maybe) a 401K to help. In spite of that SS will be more than a third of my income, taking me from just above the poverty line to decent. In spite of that, I would rather see relatively minor adjustments to SS now, than have it disappear or be reduced dramatically. While it will hurt me, it will wipe out plenty of other folks who are not as fortunate as I am.

2. Cut military spending. This can be done without major impact on the soldiers in the field. For example, retired military health care costs could be raised somewhat with little pain. there are other areas also. One such area is the F-35B (Marine VTOL variant), that we don't need.

3. Start going over the government cabinets with a fine-tooth comb. I'm guessing, based on more than 44 years of either living with civil servants, working for them, or working with them, that there are all kinds of cuts that can be made without shutting down services or even restricting substantially.

4. Tax reform. Something has to happen to equalize things. However, I have problems with having a large minority of people who pay no taxes at all. I would recommend that anyone making up to 150% of the poverty level should have not any federal income tax burden. Above that, start off with a 1% tax bracket for up to 250% of the poverty level, then bring it up to 15%, and so forth up to the maximum bracket (whatever that is). The 1% tax is largely symbolic, but it might help to make those who pay it more interested in how their taxes are being spent.

5. Cut down on federal subsidies to corporations, agribusinesses, and foreign interests. (aid to Pakistan, for example).

6. Streamline the tax code to make it harder for attorneys to drive through the loopholes. That includes reducing deductible expenses, both for individuals and businesses.

7. Treat capital gains as ordinary income. that will keep lower income people form getting dinged bad, while those who are collecting millions in capital gains a year will pay more.

8. Either means-test for SS payments, or raise the ceiling on paying SS taxes. I would lean toward the second, on the principle that if you pay into a program, you should get SOMETHING back.

I would like to hear inputs on these ideas. Reasoned debate is encouraged. I'll lift a virtual leg on those who just rant...

[JDPriestly]

1. The only change to Social Security should be to raise the Cap.

Those of us who have just been forced into retirement by the lame job market will be severely penalized for the rest of our lives if the Social Security benefits are now reduced or reduced in the future.

Cutting Social Security will not help the economy. It will just shift the burden for caring for elderly parents increasingly on young families.

Those of us who paid into Social Security since 1985 paid more than enough into the Social Security Trust Fund to pay for our retirement. The Congress now needs to get the backbone to repay that money by raising the taxes on the rich. The best way to start repaying that money is to end the Bush tax cuts for the rich.

We also need to rebuild our manufacturing base in an environmentally healthy way. That is the key to everything else. And achieving that goal means ending our give away free trade agreements. China subsidizes its industry. That is one of the major reasons that it is so "competitive." We need to subsidize our industry -- but not through tax breaks. They don't do the job.

I agree about military spending. It could be cut without reducing our defense or readiness capacity.


Instead, we need to impose tariffs on imports and use that money for health care so that our businesses do not pay for the health care of their employees. That would be the best way to help subsidize businesses and the American people.

[tortoise1956]

3. One comment

I have been paying into SSI since 1972, full time since 1976. The sum total of my payments is around $120,000. Over the next 7 years, that will probaly rise to around $170,000. If I were to retire as soon as I hit 62, it will take less than 9 years even at the reduced payments to be paid back every cent I put into the program. If I were to wait another 4 years for full retirement, It would take less than 7 years. After that, someone else's money will be paid covering my benefits.

The sad truth is that SSI is top-heavy now, and will only get more so as the number of retired baby boomers increases. It won't level off for about 30-40 years, when most of the boomer generation will be taking the dirt nap. We have to work on getting the program through that time period in fiscally sound condition. Even raising the cap won't cure it. It needs to be restructured as well, so that it is there not only for us, but for my children, grandchildren, and beyond. That's why I say I would rather see a small hit now, even if it's as simple as decreasing COLA's while raising the cap. In addition, Medicare and Medicaid need work - but that's a future post...

Another thing - I think it's almost criminal to reduce the SSI tax rate as has been done for the past year or so. Yes, it put more money in my pocket, but it also cut down on the amount of money that was collected, which in turn will lead to more borrowing by the government. The short term pleasure of having a bit more cash in our pocket will cost quite a bit more in interest on what was borrowed.

[JDPriestly]

4. I'm talking about Social Security retirement benefits. SSI

is slightly different in its funding. You are not taking into account the massive inflation that makes the dollars you put into Social Security in the 1970s worth a great deal more in today's dollars than they were when you paid them in.

Many investments that you made in the 1970s and then held for all those years would have grown considerably in value. Social Security payments are really not that high. The average payment is about $1200 per month.

The real problem is that older people who are healthy and would probably be working in the economy we enjoyed in the 1990s are now forced into taking early retirement. That's the real problem.

Once you are over 65, the chance that an employer will hire you is very slim at this time. If you have a job you may be able to keep it, but even that is often doubtful.

Some past generations had pensions, but the current retirees seldom do -- because unions have been destroyed.

Even if we did not have Social Security, the government would have to pick up the tab for most retirees because they would have no place else to turn. There is no alternative to our current Social Security system and the monthly benefits are just enough to keep about half of the recipients barely above the poverty level.

There isn't any room to cut back on Social Security. This is especially true because it is one of the ways that nursing homes that care for the very, very helpless elderly are kept viable.

[PETRUS]

2. some thoughts

#2 - In addition to your observations, I'd like to point out that 25% of the Pentagon's budget is unaccounted for. A South American country (Brazil? I forget...) promises to set up a website so any citizen can see all the expenditures and what they're for. If we knew where the money went, it might change things.

#4 - Yes, the tax code needs to change. We should also impose a financial speculation tax (a half a percent would raise billions and have the added benefit of reigning in the kind of behavior that cause commodities prices to spike for no real reason) and a (small, say 1 or 1.5%) wealth tax on holdings on holdings above a certain threshold, say $10 million.

#5 - Our healthcare system amounts to a HUGE subsidy. Bush's drug plan for seniors was a fat giveaway to big pharma. Some of the biggest projected future liabilities are Medicare/Medicaid and the CEPR studies show that is almost entirely attributable to running the programs though inefficient (a gazillion companies, each with its own bureaucracy), for profit enterprise.

#8 - No means testing. Social Security is national insurance, not welfare.

We could also do other things to seriously goose the economy - and therefore boost treasury revenues. There are options that rarely, if ever, get discussed. Why? Because while they would benefit the nation as a whole, the financial sector would be taken down a few pegs in the process. For example, the fed could not only keep interest rates low but deliberately allow inflation to go up somewhat, creating a real negative interest rate. This would stimulate all kinds of much needed investment in a wide variety of enterprises and also give desperately needed debt relief to consumers, graduates with student loans etc. We could also devalue the dollar, making exports much more competitive and allow us to reinvigorate our manufacturing and re-employ millions.


(Occupy Wall Street)

[Taitertots]

5. It really is just that easy to get the country in better shape

1. There should be no FICA cap. Apply FICA to all income streams.

2. End the wars NOW. We shouldn't have to be concerned with protecting our soldiers because there is no reason for them to be in any of those places.

3. The caveat being that there should be a one-to-one relationship between cuts and new expansion. For example, the savings from firing a wasteful over paid bureaucrat must be redirected toward schools or infrastructure.

4. Poor people already pay a significantly higher percentage of their income to taxes. Maybe not federal income tax, but that is not the only tax. The simplification should be that the federal government only funds itself through income and property taxation. NO ONE is not paying taxes, that is a Republican lie.

5. We need to move from blank check aid to direct action aid programs. We should help the people of the world who are in need by paying Americans to help them, not just dropping some cash on them.

6. Tax all incomes the same. This goes with #7. We need to stop taxing rich people's income at a significantly lower rate.

7. Yep

8. Remove the ceiling entirely. Regressive taxation is a bad thing.

[tortoise1956]

6. My thanks to all who responded

I read through all posts. I won't say I agree with everything, but on the whole I have no arguments.

In any case, all posts were civil, well reasoned, and presented in a logical manner with no arrogance or put-downs. I had a hunch it could be done here somewhere, at least in one forum. Thanks for proving me right!

[craticdemo]

7. They should take every penny spent on the wars

and invest it in infrastructure/environmental programs here. That's create lots of jobs...

[alwayssmile206]

8. Re: god to bailout greece

Here you go!

http://ithp.org/articles/greece.html

My solutuion