tag:blogger.com,1999:blog-28867873560323831352024-03-13T22:43:17.360-06:00MyGovSpending BlogGovernment Budgeting on a Family Scale.Vince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.comBlogger29125tag:blogger.com,1999:blog-2886787356032383135.post-59868917536400072392011-12-13T15:03:00.002-07:002011-12-13T15:04:44.089-07:00THIS BLOG IS ON THE MOVEWe packed up the blog and moved it over to the mother-site of MyGovSpending.<br />
<br />
Catch up with the latest from Vince at Mygovspending.com/government-spending-watch<br />
<br />
Better yet, <a href="http://mygovspending.com/government-spending-watch">CLICK HERE</a>Vince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.com0tag:blogger.com,1999:blog-2886787356032383135.post-41259050574012005362011-12-12T17:38:00.000-07:002011-12-12T17:38:42.505-07:00DEFICIT HAWK - DAVID WALKER<div class="MsoNormal">David Walker is a Name-to-Know in the battle for governmental financial responsibility. He knows what he's talking about. He was head of the <st1:country-region w:st="on"><st1:place w:st="on">US</st1:place></st1:country-region> General Accounting Office under both Clinton and W before he left to fight deficits full-time at the Peter G Peterson Foundation. Now he's pursuing the same mission leading the Comeback America Initiative.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal">If you've seen the movie IOUSA, you've seen David Walker in action. If you haven't check it out.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal">Take his Fiscal IQ quiz then read his explanation at the end. Don't worry about your score. Think of it as an exploratory mission, not a mission of conquest.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal">Also, he's attempting to forge a bi-partisan coalition. To do that, each side has to see him as hitting the other side with at least as much pain as they think they are taking. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">And remember that a point or two he presents as fact are actually opinions. I was tweeked a bit along the way, but hey, I'm an adult...one who believes in freedom of expression. So I didn't get all bent out of shape even though I disagree with a point or two.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal">His goal is deficit reduction, almost whatever it takes to get there. That might be different than you or I. That's OK.</div><div class="MsoNormal"><br />
</div>I suggest that you<span style="font-size: 12pt;"> <a href="http://fiscaliq.net/" target="_blank">take his quiz</a>. It's good stuff.</span>Vince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.com0tag:blogger.com,1999:blog-2886787356032383135.post-16099809890030223742011-12-08T14:29:00.000-07:002011-12-08T14:29:40.372-07:00RHODE ISLAND UNION BOSS: "THEY ARE NOT ACTING LIKE DEMOCRATS"<div class="MsoNormal">Pensions and retirement funding are the core of this nation's looming financial difficulties. <st1:state w:st="on"><st1:place w:st="on">Rhode Island</st1:place></st1:state> stands tall and faces the problem.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal">In spite of most expert opinion, national politicians have not yet deemed <st1:place w:st="on"><st1:state w:st="on">Washington</st1:state></st1:place> finances as worth the effort to fix. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><st1:state w:st="on"><st1:place w:st="on">Rhode Island</st1:place></st1:state> decided it no longer has the luxury of waiting. It has long possessed one of the least financially prudent state governments. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">Two key points:</div><div class="MsoNormal"><br />
</div><div class="MsoNormal">* Dems pulled a Nixon-in-China and "disrespected" their union base to get the job done.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal">* Younger state workers broke with their unions and supported the plan. They'd rather have some state pension than none. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><a href="http://www.stateline.org/live/details/story?contentId=617854" target="_blank">Click here to read this great story in Stateline.</a></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><a href="http://www.pensiontsunami.com/" target="_blank">And click here to keep up with public policy pension news at PensionTsunami.</a></div>Vince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.com0tag:blogger.com,1999:blog-2886787356032383135.post-21876660116417976942011-12-07T09:37:00.000-07:002011-12-07T09:37:23.997-07:00TEA PARTY THOUGHT INFILTRATES FRENCH ACADEMIA<div class="MsoNormal">Theo Vermaelen, a professor of the elite French University Insead, illustrates a central point regarding government and human nature.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal">Incentives matter. For politicians, too. He says we should pay them for fiscal discipline.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal">His plan is to compensate politicians with bonds issued by the countries they rule. Then they bear the risk of their actions in the form of actual, real financial losses. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">Professor Vermaelen writes that this "could be used to provide a counterweight to politicians' tendency to buy votes with other people's money". Does that sound Tea Party-ish to you? It does to me.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal">His sentiments are a reaction to what insurers refer to as moral hazard. Politicians are inclined to take more risk with taxpayer money because spending increases their pleasure (chances of re-election) more than the pain of the bills they incur. After all the bills could be pushed into the future seemingly forever. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">Professor Vermaelen's comments trigger a second thought, this one a mere synaptic stroll: politicians often do not represent their constituents well. Economists refer to this as the agency problem. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">People (taxpayers or stockholders) may think they've hired an agent (politicians or management) to carry out their instructions faithfully. But the agent has his or her own personal goals that often conflict with their employer. Those personal goals get in the way. Hence, in the political case, runaway spending results.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal">And this leads to a third closely related point: government has its own economic interests separate from its citizens. When those interests are not perfectly aligned, government pursues its objectives first. Citizens are treated as neglectable supplicants.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><a href="http://online.wsj.com/article/SB10001424052970204903804577082493104507200.html?mod=opinion_newsreel" target="_blank">Read Professor Theo Vermaelen's piece.</a> http://online.wsj.com/article/SB10001424052970204903804577082493104507200.html?mod=opinion_newsreel</div>Vince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.com0tag:blogger.com,1999:blog-2886787356032383135.post-70564687559596686612011-12-06T13:36:00.008-07:002011-12-06T14:16:44.091-07:00FIX THE NATIONAL DEBT 1<div class="MsoNormal">By gosh, do it your way. Spend a few quick seconds on this first-of-a-series. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">We've built a website to help you design the government you want. Deficits. Debt. Taxes. Government Spending. It's your money.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal">Before you know it, you will have designed a better government budget than your elected representatives. AND we'll get your instructions to them.</div><div class="MsoNormal"><o:p><br />
</o:p></div><div class="MsoNormal">Click here to <span class="Apple-style-span" style="color: blue; font-weight: bold;"><a href="https://www.mygovspending.com/advanced/My_Household?ss=369" target="_blank">Fix the National Debt</a>. </span>Oh, and click the "Open Notes" link first when the page opens.<br />
<br />
.</div>Vince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.com0tag:blogger.com,1999:blog-2886787356032383135.post-33256291435297565282011-11-23T13:44:00.000-07:002011-11-23T13:44:01.153-07:00SUPERCOMMITTEE FAILS - CURRENT BUDGET CAN REDUCE DEFICIT MORE THAN 'GO BIG'The experts over at the Concord Coalition do good work on the federal budget. They are budget hawks and well worth listening to. <br />
<br />
They note that doing nothing will balance the federal budget (excluding interest costs) by 2014. <br />
<br />
Doing nothing unleashes automatic tax increases and smaller spending cuts. Past tax reductions are scheduled to expire as is the "doc fix" which temporarily increases Medicare payments to physicians.<br />
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The automatic tax hikes may be part of the reason that SuperCommittee Dems didn't negotiate.<br />
<br />
Concord is promoting strict pay-as-you-go rules as a one path toward a budget fix. It's a piece Washington needs - crisis or no.<br />
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http://www.concordcoalition.org/issue-briefs/2011/1122/super-committee-gave-congress-cantVince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.com0tag:blogger.com,1999:blog-2886787356032383135.post-73397965618707288172011-11-08T15:34:00.001-07:002011-11-08T17:07:20.769-07:00SUPERCOMMITTEE SELF-SABOTAGE?<div class="MsoNormal"><span lang="EN">Democrats want the SuperCommittee to fail, according to <a href="http://online.wsj.com/video/opinion-a-look-inside-the-super-committee/848E77D9-0807-4870-B1F4-AF05A048DEB0.html?KEYWORDS=steve+moore">Steve Moore of the Wall Street Journa</a></span>l. He spoke with four of the six Republican members and reports that the six Democratic members have not offered any serious entitlement reform - which is where the big bucks lie.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">His sources say Democrats have been offering less than $1 of spending cuts for each $1 of tax increases. The bipartisan Simpson Bowles commission last year, widely thought to be an excellent model for the SuperCommittee, came up with $3 of spending cuts for each dollar of tax increases. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><st1:city w:st="on"><st1:place w:st="on"><span lang="EN">Moore</span></st1:place></st1:city><span lang="EN"> explains that election year politics are getting in the way of a deficit reduction deal. The logic is that if Republicans do not agree to a SuperCommittee deal, Obama can run against a "Do Nothing" Congress. If the Republicans DO agree to tax cuts, that is expected to weaken Republican unity enough that Obama can romp to victory. lET'S <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">Previously federal, state, and local governments have put each family on the hook for $800,000 of government debt beyond the $1.3 million in taxes that a family earning $75,000 yearly will already pay over its career. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">Time is ticking toward the next financial crisis. The political clock is running much slower than the economic clock.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">Could it be that representative democracy has run aground, laden with special interests, dreamy ideals, self-righteousness, and blind ambition? <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">For this observor, more direct democracy is growing in appeal.<o:p></o:p></span><br />
<span lang="EN"><br />
</span><br />
<br />
</div>Vince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.com0tag:blogger.com,1999:blog-2886787356032383135.post-79040840510372206192011-10-31T09:42:00.000-06:002011-10-31T09:42:29.416-06:00COUNTDOWN TO US BUDGET BLOWUP<div class="MsoNormal"><span lang="EN">How long before the <st1:country-region w:st="on"><st1:place w:st="on">US</st1:place></st1:country-region> budget implodes?<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">It's an intriguing question. If deficits of the current magnitude continue, at some point confidence will fail and higher interest rates will detonate the debt. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">We'll have a financial crisis like the last, but without the reserves to cushion the pain. The <st1:country-region w:st="on"><st1:place w:st="on">US</st1:place></st1:country-region> will have to get by on a balanced budget, with no time to adjust. Recession will be on this economy like a teen on pizza.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">Alice Rivlin is a person of extraordinary eminence among budgeteers with a mild left leaning bias. She is an alumnus of the <st1:city w:st="on"><st1:place w:st="on">Clinton</st1:place></st1:city> administration - yet well respected across the aisle. Paul Ryan has worked with her on his health care reform proposal. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">She reinforces fiscal conservative sentiment when she says: "I don't think we have very much time at all. We may get our comeuppance fairly soon. ...we're gonna decide we're not competent - this government does not work."<a href="file:///C:/AB%20MyGovSpending/MyGov%20Writings/MyGov%20Posts.doc#_ftn1" name="_ftnref1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span lang="EN" style="font-size: 12pt;">[1]</span></span><!--[endif]--></span></a><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">The conclusion that readers of Ron Suskind's sympathetic look at Obama as President, Confidence Men, come to is that Obama has largely wasted his presidency on the deficit reduction score. In fact, he actually made the situation worse - Obamacare being Exhibit A. Now, he seems to be running out the clock. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">How much precious time does the <st1:country-region w:st="on"><st1:place w:st="on">US</st1:place></st1:country-region> have to right the budgetary ship? Four staff economists at the International Monetary Fund took a look at the issue across various nations in their work FISCAL SPACE.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">They conclude the ultimate debt limit is controlled primarily by two factors: 1) How fast the economy is growing - including inflation. and 2), the level of interest rates. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">For example, if the economy is growing at 5% including inflation, debt is at moderate levels, and interest rates on that debt are 4%, then deficits can run at 1% of GDP without becoming unsustainable. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">If one takes the same situation, but debt is at high levels, people spook more easily. A small disturbance can push interest rates up fast, and kaboom, and the debt sprints explodes to an unsustainable level. Once government's access to debt is cut off, unemployment will skyrocket and everything else swirls down drain. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">The trick is to adjust the economy to run without that debt before it gets axed. It's not easy. So far, the body politic has retched at the mere thought of it. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">The IMF, Alice Rivlin nor anyone else knows how close we are to the precipice. We might be a step, a hundred yards, or a mile. But the global economy is moving in that direction.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">What can you do? Write your elected officials at every level of government whether they be friend or foe. Or call them. Tell your friends. Influence elections. Vote for candidates that have detailed plans to lower deficits.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">And control what you personally can control. Save as much money as possible for yourself and your family. You will need it later more than now. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">Is this viewpoint nuts? Let us know.<o:p></o:p></span></div><div><!--[if !supportFootnotes]--><br clear="all" /> <hr align="left" size="1" width="33%" /> <!--[endif]--> <div id="ftn1"> <div class="MsoFootnoteText"><a href="file:///C:/AB%20MyGovSpending/MyGov%20Writings/MyGov%20Posts.doc#_ftnref1" name="_ftn1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-size: 10pt;">[1]</span></span><!--[endif]--></span></a> from Committee for a Responsible Federal Budget (CRFB) seminar on Go Big, from 21 Sep 2011, </div><div class="MsoFootnoteText">20 minutes into Panel 1. </div></div></div>Vince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.com2tag:blogger.com,1999:blog-2886787356032383135.post-9235552976419377912011-10-24T10:25:00.003-06:002011-10-24T10:26:15.777-06:00SUPERCOMMITTEE POKER FACE - Citizens to be Dealt a Poor Hand?<div class="MsoNormal"><span lang="EN">The Congressional SuperCommittee set up as part of last summer's debt ceiling agreement has the power to right the <st1:country-region w:st="on"><st1:place w:st="on">America</st1:place></st1:country-region>'s finances. It is due to report on 23 November. So far members have been extraordinarily tight-lipped as to progress. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">Six Democrats and six Republicans sit on the committee. Not all of them are known to be eager to do a deal. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">If they fail to agree to measures that close deficits over the next 10 years by $1.2 trillion, then automatic spending cuts take effect that are projected to do the same. Those cuts leave Social Security unscathed and hit Defense hard.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">If the SuperCommittee fails to come to any agreement, expect confidence in the <st1:country-region w:st="on"><st1:place w:st="on">US</st1:place></st1:country-region> to deteriorate rapidly. Falling stock prices are distinct possibilities. The Fed may see its ability to suppress higher interests fade, with growth stopping impact. Alice Rivlin, former <st1:city w:st="on"><st1:place w:st="on">Clinton</st1:place></st1:city> budget director, says, "I think we may be facing a double dip recession".<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">On the other hand, if the SuperCommittee succeeds in a "Go Big" deal of $4 trillion in 10 year deficit reduction, expect a surge of near euphoria. Stocks could rebound marvelously and justifiably. Confidence would strengthened across the globe.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">More likely, than outright failure or clear success, however, the SuperCommittee will do just enough to get by. It'll squeak out $1.2 or $1.5 trillion in deficit reduction. It'll not reform entitlements or taxes in any meaningful way.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">Economic queasiness will continue to reign - until the next financial squall.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">Related Resources:<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">http://crfb.org/document/going-big-could-improve-chances-success<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">http://www.thefiscaltimes.com/Articles/2011/10/16/Super-Committee-Battles-Deadlines-and-Doubts.aspx#page1<o:p></o:p></span></div>Vince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.com0tag:blogger.com,1999:blog-2886787356032383135.post-40867565556721441082011-10-10T16:40:00.003-06:002011-10-11T09:51:53.120-06:00PUBLIC SECTOR EXPECTS TO TANK UP ON SQUEEZED FAMILIES Off-Off Election Year Tax Increases - The Path of Least Resistance<div class="MsoNormal">(I've submitted the following editorial to one of my local newspapers, The Vail Daily. The basic points have broad application wherever you pay taxes)<br />
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State and local tax authorities are asking voters to raise taxes again. They have presented it as a nickel and dime proposal.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal">Those nickels and dimes will be spread over time. When valued today, they total $11,600<a href="file:///C:/AB%20MyGovSpending/MyGov%20Writings/201110%20Vail%20Daily%20-Propsed%20Tax%20Increase/Proposed%20Tax%20Increase%20-%20Final.doc#_edn1" name="_ednref1" title=""><span class="MsoEndnoteReference"><span class="MsoEndnoteReference"><span style="font-family: 'Times New Roman'; font-size: 12pt;">[i]</span></span></span></a> per <st1:place w:st="on"><st1:placename w:st="on">Eagle</st1:placename> <st1:placetype w:st="on">County</st1:placetype></st1:place> household. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">Broken apart, the local school district wants $9,400; the local fire district wants $700, State Senator Rollie Heath of <st1:place w:st="on"><st1:city w:st="on">Boulder</st1:city></st1:place> wants another $1,500, also for the public K-12 industry<a href="file:///C:/AB%20MyGovSpending/MyGov%20Writings/201110%20Vail%20Daily%20-Propsed%20Tax%20Increase/Proposed%20Tax%20Increase%20-%20Final.doc#_edn2" name="_ednref2" title=""><span class="MsoEndnoteReference"><span class="MsoEndnoteReference"><span style="font-family: 'Times New Roman'; font-size: 12pt;">[ii]</span></span></span></a>. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">Should Mr. Heath's five year tax hike become a permanent tax increase, the present value cost of the three ballot measures balloons to $43,000 per household<a href="file:///C:/AB%20MyGovSpending/MyGov%20Writings/201110%20Vail%20Daily%20-Propsed%20Tax%20Increase/Proposed%20Tax%20Increase%20-%20Final.doc#_edn3" name="_ednref3" title=""><span class="MsoEndnoteReference"><span class="MsoEndnoteReference"><span style="font-family: 'Times New Roman'; font-size: 12pt;">[iii]</span></span></span></a>. That's big money for ordinary families.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal">These measures have some 'hidden charges', too. At the Colorado Public Employees Retirement Association (PERA), fast and loose benefit increases during good times are now coupled with losses from aggressive investing during bad times. That devilish duo opened a pension shortfall of $12,026 per taxpayer family<a href="file:///C:/AB%20MyGovSpending/MyGov%20Writings/201110%20Vail%20Daily%20-Propsed%20Tax%20Increase/Proposed%20Tax%20Increase%20-%20Final.doc#_edn4" name="_ednref4" title=""><span class="MsoEndnoteReference"><span class="MsoEndnoteReference"><span style="font-family: 'Times New Roman'; font-size: 12pt;">[iv]</span></span></span></a>.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal">PERA is trying to make up its losses by shooting out the lights in the stock market. If it fails, taxpayers are ultimately on the hook for the missing money. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">Local bureaucracies have made big money mistakes right here at home, too. Taxpayers now have expensive, excess boom-era buildings to pay for. Public sector folks are often terrific people, but management practices seem intentionally designed to suppress employee initiative and productivity. Low productivity is expensive.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal">Then there is the power imbalance between rulers and ruled. Taxing authorities have zero tolerance for people who do not perform up to their expectations. Any doubt? Divert some of your taxes to a better cause and see the reaction. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">On the other hand, if a taxing authority does not fulfill a taxpayer's reasonable cost and quality expectations, that individual citizen has no effective recourse. None.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal">And, of course, taxing authorities have great power to influence elections. They can call votes in off-off years - like 2011 - when turnout is expected to be low. A small but fired-up group of tax recipients can easily swamp the broader, more diffuse general interest. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">Local governments also have the big budgets, consultants, salaried leadership, paid staff, employee leverage to push for ever more money. The lonely taxpayer, however, is on her own.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal">Given this unbalanced relationship, it is not surprising that government spending has grown much faster than the rest of the economy for generations. Public expenditures have increased from 10% of GDP to 38% over the last century<a href="file:///C:/AB%20MyGovSpending/MyGov%20Writings/201110%20Vail%20Daily%20-Propsed%20Tax%20Increase/Proposed%20Tax%20Increase%20-%20Final.doc#_edn5" name="_ednref5" title=""><span class="MsoEndnoteReference"><span class="MsoEndnoteReference"><span style="font-family: 'Times New Roman'; font-size: 12pt;">[v]</span></span></span></a> - through a continual stream of "small" tax increases driven by politically opportunistic special interests. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">A typical family earning $75,000 of cash income annually will pay approximately $1.3 million in taxes over its working career<a href="file:///C:/AB%20MyGovSpending/MyGov%20Writings/201110%20Vail%20Daily%20-Propsed%20Tax%20Increase/Proposed%20Tax%20Increase%20-%20Final.doc#_edn6" name="_ednref6" title=""><span class="MsoEndnoteReference"><span class="MsoEndnoteReference"><span style="font-family: 'Times New Roman'; font-size: 12pt;">[vi]</span></span></span></a>. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">Beyond that $1.3 million tax load, <st1:state w:st="on"><st1:place w:st="on">Washington</st1:place></st1:state>, state and local governments have piled on another $100,000<a href="file:///C:/AB%20MyGovSpending/MyGov%20Writings/201110%20Vail%20Daily%20-Propsed%20Tax%20Increase/Proposed%20Tax%20Increase%20-%20Final.doc#_edn7" name="_ednref7" title=""><span class="MsoEndnoteReference"><span class="MsoEndnoteReference"><span style="font-family: 'Times New Roman'; font-size: 12pt;">[vii]</span></span></span></a> of national debt per $75,000 income family.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal">There's more. The same gang mentioned above has run up an additional $70,000 in unfunded government employee pension liabilities<a href="file:///C:/AB%20MyGovSpending/MyGov%20Writings/201110%20Vail%20Daily%20-Propsed%20Tax%20Increase/Proposed%20Tax%20Increase%20-%20Final.doc#_edn8" name="_ednref8" title=""><span class="MsoEndnoteReference"><span class="MsoEndnoteReference"><span style="font-family: 'Times New Roman'; font-size: 12pt;">[viii]</span></span></span></a>. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">Brace yourself for the big hit. <st1:state w:st="on"><st1:place w:st="on">Washington</st1:place></st1:state> has "arranged" that each family and their descendants will pay $600,000 (today's value) in benefits for Social Security and Medicare<a href="file:///C:/AB%20MyGovSpending/MyGov%20Writings/201110%20Vail%20Daily%20-Propsed%20Tax%20Increase/Proposed%20Tax%20Increase%20-%20Final.doc#_edn9" name="_ednref9" title=""><span class="MsoEndnoteReference"><span class="MsoEndnoteReference"><span style="font-family: 'Times New Roman'; font-size: 12pt;">[ix]</span></span></span></a>. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">It all tallies up to $770,000 in unfunded public liabilities per family. Oooph! Richer families are on the hook for more, poorer families for less<a href="file:///C:/AB%20MyGovSpending/MyGov%20Writings/201110%20Vail%20Daily%20-Propsed%20Tax%20Increase/Proposed%20Tax%20Increase%20-%20Final.doc#_edn10" name="_ednref10" title=""><span class="MsoEndnoteReference"><span class="MsoEndnoteReference"><span style="font-family: 'Times New Roman'; font-size: 12pt;">[x]</span></span></span></a>.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal">Throw in the demographics of aging and it is easy to build a muscular case that financial pressure is only starting to build...both globally and in <st1:place w:st="on"><st1:placename w:st="on">Eagle</st1:placename> <st1:placetype w:st="on">County</st1:placetype></st1:place>.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal">No wonder growing numbers of taxpayers feel like they are locked in a careening car with a drunk driver. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">Regardless of the outcome in November, taxing authorities are likely to face ever more scrutiny from increasingly sophisticated, value seeking taxpayers. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">Rising demands for lower costs, higher quality and more individual self-determination will certainly stress these traditional public institutions. Their most determined defenses are unlikely protect them from reform forever. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">The days when bureaucrats can expand their share of society's wallet simply by saying "trust us" are rapidly drawing to a close. That's been tried and found wanting.</div><div><br />
<hr align="left" size="1" width="33%" /><div id="edn1"><div class="MsoEndnoteText"><span class="Apple-style-span" style="font-size: x-small;"><a href="file:///C:/AB%20MyGovSpending/MyGov%20Writings/201110%20Vail%20Daily%20-Propsed%20Tax%20Increase/Proposed%20Tax%20Increase%20-%20Final.doc#_ednref1" name="_edn1" title=""><span class="MsoEndnoteReference"><span style="font-family: Arial;"><span class="MsoEndnoteReference"><span style="font-family: Arial;">[i]</span></span></span></span></a><span style="font-family: Arial;"> The cost of tax increases are often presented as one annual payment. Unless there actually is only one annual payment, the cost is more. Financial analysts calculate how much that stream of payments is worth today assuming one can earn a return on money invested today. <o:p></o:p></span></span></div><div class="MsoEndnoteText"><span style="font-family: Arial;"><span class="Apple-style-span" style="font-size: x-small;"> Evaluating a tax increase based on one annual payment is analagous to buying a car knowing only what one monthly payment would be. It is also important to know the price of the car. The Present Value (today's value) of the tax is the price of the tax, like the price of purchasing a car.<o:p></o:p></span></span></div><div class="MsoNormal"><span style="font-family: Arial;"><span class="Apple-style-span" style="font-size: x-small;"> Note: only humans with heartbeats pay taxes. The fact that businesses are taxed at higher rates does not reduce individuals' tax burden. Individual citizens pay taxes on businesses in addition to those levied specifically on individuals, too, through reduced compensation for employees, higher prices for customers, and lower profits and higher risk for business owners. <o:p></o:p></span></span></div><div class="MsoEndnoteText"><span style="font-family: Arial;"><span class="Apple-style-span" style="font-size: x-small;"> To the extent businesses compete out-of-county those businesses become less competitive as relative taxes increase, shifting jobs to more efficient tax jurisdictions. <o:p></o:p></span></span></div></div><div id="edn2"><div class="MsoEndnoteText"><span class="Apple-style-span" style="font-size: x-small;"><a href="file:///C:/AB%20MyGovSpending/MyGov%20Writings/201110%20Vail%20Daily%20-Propsed%20Tax%20Increase/Proposed%20Tax%20Increase%20-%20Final.doc#_ednref2" name="_edn2" title=""><span class="MsoEndnoteReference"><span style="font-family: Arial;"><span class="MsoEndnoteReference"><span style="font-family: Arial;">[ii]</span></span></span></span></a><span style="font-family: Arial;"> <st1:place w:st="on"><st1:placename w:st="on">Eagle</st1:placename> <st1:placetype w:st="on">County</st1:placetype> <st1:placetype w:st="on">School District</st1:placetype></st1:place>, Eagle County Colorado Ballot Issue 3B, is a permanent tax increase, that does not increase with inflation. <o:p></o:p></span></span></div><div class="MsoEndnoteText"><span style="font-family: Arial;"><span class="Apple-style-span" style="font-size: x-small;"> The Eagle River Fire Protection District, Eagle County Colorado Ballot Issue 5A, proposed tax increase is for seven years and not capped at a fixed dollar amount. The author valued this income stream as one that increases with inflation. <o:p></o:p></span></span></div><div class="MsoEndnoteText"><span style="font-family: Arial;"><span class="Apple-style-span" style="font-size: x-small;"> Colorado Ballot Proposition 103, the Rollie Heath Tax, is a five year tax increase with no fixed dollar cap. The author valued this income stream as one that increases with inflation. <o:p></o:p></span></span></div></div><div id="edn3"><div class="MsoNormal"><span class="Apple-style-span" style="font-size: x-small;"><a href="file:///C:/AB%20MyGovSpending/MyGov%20Writings/201110%20Vail%20Daily%20-Propsed%20Tax%20Increase/Proposed%20Tax%20Increase%20-%20Final.doc#_ednref3" name="_edn3" title=""><span class="MsoEndnoteReference"><span style="font-family: Arial;"><span class="MsoEndnoteReference"><span style="font-family: Arial;">[iii]</span></span></span></span></a><span style="font-family: Arial;"> If the Rollie Heath tax becomes permanent, its cost to taxpayers jumps far beyond the five-year edition of this tax, largely because the tax is assumed to increase with inflation. For present value purposes, long-term inflation-protected Treasury bonds are assumed to be used to fund the tax liability. They currently are generating record lows yields, requiring a large initial investment to fund the tax, hence the greater value (or cost) of the tax today.<o:p></o:p></span></span></div><div class="MsoEndnoteText"><br />
</div></div><div id="edn4"><div class="MsoEndnoteText"><span class="Apple-style-span" style="font-size: x-small;"><a href="file:///C:/AB%20MyGovSpending/MyGov%20Writings/201110%20Vail%20Daily%20-Propsed%20Tax%20Increase/Proposed%20Tax%20Increase%20-%20Final.doc#_ednref4" name="_edn4" title=""><span class="MsoEndnoteReference"><span style="font-family: Arial;"><span class="MsoEndnoteReference"><span style="font-family: Arial;">[iv]</span></span></span></span></a><span style="font-family: Arial;"> Colorado PERA shortfall is as of 31 Dec 2010 from Colorado PERA Summary Annual Financial Report for the fiscal year ended December 31, 2010, page 4. The number of <st1:state w:st="on">Colorado</st1:state> households is calculated as <st1:state w:st="on"><st1:place w:st="on">Colorado</st1:place></st1:state> 2010 population from http://quickfacts.census.gov/qfd/states/08000.html accessed during the week of 25 October2011 divided by 2.7, an estimate of population per household.<o:p></o:p></span></span></div></div><div id="edn5"><div class="MsoEndnoteText"><span class="Apple-style-span" style="font-size: x-small;"><a href="file:///C:/AB%20MyGovSpending/MyGov%20Writings/201110%20Vail%20Daily%20-Propsed%20Tax%20Increase/Proposed%20Tax%20Increase%20-%20Final.doc#_ednref5" name="_edn5" title=""><span class="MsoEndnoteReference"><span style="font-family: Arial;"><span class="MsoEndnoteReference"><span style="font-family: Arial;">[v]</span></span></span></span></a><span style="font-family: Arial;"> Calculated from US Bureau of Economic Analysis data, NIPA tables 1.1, 3.1, 3.2, 3.3.<o:p></o:p></span></span></div></div><div id="edn6"><div class="MsoEndnoteText"><span class="Apple-style-span" style="font-size: x-small;"><a href="file:///C:/AB%20MyGovSpending/MyGov%20Writings/201110%20Vail%20Daily%20-Propsed%20Tax%20Increase/Proposed%20Tax%20Increase%20-%20Final.doc#_ednref6" name="_edn6" title=""><span class="MsoEndnoteReference"><span style="font-family: Arial;"><span class="MsoEndnoteReference"><span style="font-family: Arial;">[vi]</span></span></span></span></a><span style="font-family: Arial;"> MyGovSpending.com estimates. Based on economic income, not cash income.<o:p></o:p></span></span></div></div><div id="edn7"><div class="MsoEndnoteText"><span class="Apple-style-span" style="font-size: x-small;"><a href="file:///C:/AB%20MyGovSpending/MyGov%20Writings/201110%20Vail%20Daily%20-Propsed%20Tax%20Increase/Proposed%20Tax%20Increase%20-%20Final.doc#_ednref7" name="_edn7" title=""><span class="MsoEndnoteReference"><span style="font-family: Arial;"><span class="MsoEndnoteReference"><span style="font-family: Arial;">[vii]</span></span></span></span></a><span style="font-family: Arial;"> Federal data from BEA NIPA data. State and local data from the Census Bureau. Per household calculations from MyGovSpending.com.<o:p></o:p></span></span></div></div><div id="edn8"><div class="MsoEndnoteText"><span class="Apple-style-span" style="font-size: x-small;"><a href="file:///C:/AB%20MyGovSpending/MyGov%20Writings/201110%20Vail%20Daily%20-Propsed%20Tax%20Increase/Proposed%20Tax%20Increase%20-%20Final.doc#_ednref8" name="_edn8" title=""><span class="MsoEndnoteReference"><span style="font-family: Arial;"><span class="MsoEndnoteReference"><span style="font-family: Arial;">[viii]</span></span></span></span></a><span style="font-family: Arial;"> Federal data from US Treasury, 2010 US Government Financial Report, pg xi, state and local data from Pew Center for the States, The Trillion Dollar Gap. Income adjusted per family calculations by MyGovSpending.com.<o:p></o:p></span></span></div></div><div id="edn9"><div class="MsoEndnoteText"><span class="Apple-style-span" style="font-size: x-small;"><a href="file:///C:/AB%20MyGovSpending/MyGov%20Writings/201110%20Vail%20Daily%20-Propsed%20Tax%20Increase/Proposed%20Tax%20Increase%20-%20Final.doc#_ednref9" name="_edn9" title=""><span class="MsoEndnoteReference"><span style="font-family: Arial;"><span class="MsoEndnoteReference"><span style="font-family: Arial;">[ix]</span></span></span></span></a><span style="font-family: Arial;"> Present value of Medicare and Social Security shortfall from US Treasury, 2010 US Government Financial Report, pg 172, Table 6, Update from 2010 to 2011 and per family disaggregation calculations by MyGovSpending.com.</span></span></div></div><div id="edn10"><div class="MsoEndnoteText"><span class="Apple-style-span" style="font-size: x-small;"><a href="file:///C:/AB%20MyGovSpending/MyGov%20Writings/201110%20Vail%20Daily%20-Propsed%20Tax%20Increase/Proposed%20Tax%20Increase%20-%20Final.doc#_ednref10" name="_edn10" title=""><span class="MsoEndnoteReference"><span style="font-family: Arial;"><span class="MsoEndnoteReference"><span style="font-family: Arial;">[x]</span></span></span></span></a><span style="font-family: Arial;"> From </span><span class="apple-style-span"><span style="background-attachment: initial; background-clip: initial; background-color: white; background-image: initial; background-origin: initial; font-family: Arial;"><a href="https://www.mygovspending.com/advanced/Revise_Progressivity?ss=369">https://www.mygovspending.com/advanced/Revise_Progressivity?ss=369</a> accessed on 20111003</span></span></span><span style="font-family: Arial;"><o:p></o:p></span></div></div></div>Vince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.com0tag:blogger.com,1999:blog-2886787356032383135.post-1441182972647406042011-10-10T09:47:00.000-06:002011-10-10T09:47:13.757-06:00Obama Supporter and Former Union Leader Andy Stern Believes President Made a Mistake by Not Pushing Simpson-Bowles Deficit Reduction Plan.<div class="MsoNormal"><span lang="EN">At a confab of heavy hitting federal budget players a couple of weeks ago, the most frequent White House visitor early in Obama's administration, his confidant and advisor, Andy Stern, said the President made a mistake by not supporting the Simpson-Bowles budget plan of late last year. </span></div><div class="MsoNormal"><span lang="EN"><br />
</span></div><div class="MsoNormal"><span lang="EN">"That was our best opportunity at a moment in history to do something."<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">He blamed himself for not voting for the plan, as well as those across the aisle including fiscal conservatives Paul Ryan, Dave Camp, and Jeb Hensarling.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">Simpson Bowles would have lowered tax rates, simplified the tax code, and cut spending. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN">The Andy Stern comment comes at about 1 hour and 50 minutes into the Panel Two discussion, available at http://www.c-span.org/Events/Leaders-Urge-Deficit-Reduction-Committee-to-quotGo-Bigquot/10737424299/<o:p></o:p></span></div>Vince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.com0tag:blogger.com,1999:blog-2886787356032383135.post-46914349003081437852011-07-05T16:14:00.002-06:002011-07-28T14:04:14.822-06:00DEBT CEILING DEADLINE TASERS D.C. PROCRASTINATION<div class="MsoNormal"><b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;"><span style="font-family: Garamond;">Pols Get Busy with Budget Numbers</span></i></b></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Garamond;">On 2 August, the US Treasury expects to run short of cash. Both sides fear a <st1:country-region w:st="on"><st1:place w:st="on">US</st1:place></st1:country-region> Government default if the debt ceiling is not raised in time. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Garamond;">Vice President Joe Biden is attempting to shepherd a group of Senators and House Members toward a budget deal that keeps the government borrowing. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Garamond;">Public deficits have been chronic since the US Bureau of Economic Analysis began its tally in 1929. <st1:place w:st="on"><st1:state w:st="on">Washington</st1:state></st1:place> is quaking at the thought of changing its "don't worry, be happy" tax and spending habits. But change they will. Those policies have gradually metastasized over the last 80 years into a lifetime tax of $1.3 million for a typical US family and unfunded public liabilities of $800,000 in addition. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Garamond;">With concern swelling last year, President Obama appointed the Simpson-Bowles commission to recommend a fix. Contrary to near universal expectations, the team produced a remarkable work product. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Garamond;">It recommended wholesale reform of the corrupted <st1:country-region w:st="on"><st1:place w:st="on">US</st1:place></st1:country-region> tax code. In return for closing tax breaks and straightening the twisted economic incentives, the Commission would lower tax rates significantly.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Garamond;">Further, Simpson-Bowles grasped the famous third rail of Social Security and Medicare. It recommends cuts to senior subsidies and increasing related taxes, while boosting benefits to the poorest of oldsters.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Garamond;">The Commission's plan makes progress reducing the federal deficit to 1.5% of GDP by 2020 from 10% last year. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Garamond;">Obama did not endorse Simpson-Bowles. On 13 April the Administration issued the President's Framework, staking out a separate budget position.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Garamond;">That Framework does not change Social Security. Attempting to control medical costs, it goes beyond Obamacare in shifting more power away from the public and to a beefier Medicare bureaucracy. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Garamond;">Notably, the President supports sweeping tax reform and lowering corporate income tax rates.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Garamond;">The President's Framework cuts deficits $2.5 trillion over the next 10 years, versus Simpson Bowles cuts of $4.0 trillion. That's from a baseline of $9.4 trillion in deficits the President first proposed in February.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Garamond;">Paul Ryan, chair of the House Budget Committee, reforms more. His plan cuts <st1:state w:st="on"><st1:place w:st="on">Washington</st1:place></st1:state> deficits by $4.0 trillion between 2012 and 2021. And it does this while reducing the nation's tax burden by $610 billion. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Garamond;">Senior subsidies are at the core of the nation's self-destructive financial trajectory. Ryan tackles Medicare by changing the program from a free all-you-can-eat buffet to a fixed government payment toward seniors' health insurance. Most importantly, he caps the growth in taxpayer costs per beneficiary to inflation. Of the three leading budget plans, Ryan's proposal addresses medical costs most squarely. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Garamond;">Ryan's plan is a greater agent of change than the other two. His youth-oriented budget puts more of the boomer generation's cost on the boomers themselves. That reduces the burden on younger people. It offers the best hope of broad prosperity for the middle-aged and the young. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Garamond;">Each of these three prominent proposals agree on important points. All favor major reform of the tax code. All make attempts at controlling medical costs. All cut spending. Regrettably, all continue to run deficits for a decade, too.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Garamond;">The current round of budget action is expected to go to the brink. Former President Clinton remarked, <span style="color: black;">“If we defaulted on the debt once for a few days, it might not be calamitous.” Expect wonderful political theatre. <o:p></o:p></span></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Garamond;">This observer suggests that if you do not play a role, you will be written out of the script. Contact all your federal, state, and local elected officials with your opinion. Do it early. Do it often. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Garamond;">Regardless of the outcome of the current negotiations, intense budget debate is here to stay. And that is healthy for democracy. Citizens are learning that public sector finance is too dangerous to leave to the public sector.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Garamond;">Sources: US Bureau of Economic Analysis, MyGovSpending.com, the Committee for a Responsible Federal Budget, Wall Street Journal<o:p></o:p></span><br />
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</span><br />
<span style="font-family: Garamond;">(This article first appeared in the June issue of Smart Girl Nation.)</span></div>Vince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.com0tag:blogger.com,1999:blog-2886787356032383135.post-5163902939998831432011-07-05T16:12:00.000-06:002011-07-05T16:12:03.862-06:00BUSTED BOOMERS<div class="MsoNormal">Mismanaged Entitlements and Generational Bankruptcy</div><div class="MsoNormal"><span style="color: black;">Will You Pay? Or Someone Else?<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="color: black;">"...The boomers are stealing our future..."<span style="mso-spacerun: yes;"> </span>I overheard these words from a 35ish fellow talking on his cell phone. I'm a boomer. He is right.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="color: black;">Social Security and Medicare together are by far government's largest expenditure. They account for 22% of federal, state, and local spending.<span style="mso-spacerun: yes;"> </span>Next in line is education at 15% and defense at 13%.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="color: black;">Social Security and Medicare pump out an average of $50,000 annually per retired couple whether seniors need it or not. According to Robert Samuelson, a quarter of households over the age of 65 have incomes that exceed $75,000 annually.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="color: black;">The fabled trust funds are just that - fables.<span style="mso-spacerun: yes;"> </span>From a taxpayers' viewpoint, the trust funds are irrelevant. They never held any real money.<span style="mso-spacerun: yes;"> </span>The trust funds can pay out only if citizens pay in - with higher taxes, fewer public services, or borrowing yet more.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="color: black;">Holistically, the boomer's retirement picture is even worse. In 2007, before the recent recession, the median household aged 55-65 had wealth of only $250,000. The cost of a barebones retirement is in the neighborhood of $600,000 to $800,000 depending on assumptions. That $350,000 to $550,000 shortfall can only be closed if seniors' cut living expenses or youngsters pay up. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="color: black;">A hard view of the situation is that seniors consumed their earning years while relying on Social Security's "don't worry, be happy" financial structure. Only the boomers are financially responsible for their own mistake. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="color: black;">The softer, more emotionally soothing view is that the retiring boomers are senior citizens stuck in a tight spot. How they got there does not matter. They need a big financial hand from the youngsters in the pursuit of one version of fairness.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="color: black;">As younger people living in the boomers' wake come to grips with the problem, a middle position seems logical. The boomers dallied while the most anticipated train wreck in history unfolded. They were negligent in planning for their retirement.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="color: black;">Therefore, the <st1:place w:st="on"><st1:city w:st="on">Woodstock</st1:city></st1:place> generation should take a large portion of the financial responsibility by accepting lesser subsidies.<span style="mso-spacerun: yes;"> </span>Subsequent workers will pony up some of the boomers' shortfall out of the goodness of their hearts.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="color: black;">So far, young people are too busy studying, building careers, and raising families to pay much attention. So not surprisingly, today's proposals put most of the burden on them. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="color: black;">Post-boomers will be prudent to make sure this does not happen again. So they'll engineer a stronger retirement funding mechanism.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="color: black;">There are only three ways to fix today's problem. 1) Cutting senior subsidies puts the burden on boomers - unless, of course those benefit cuts are pushed into the future. That puts the cost on youngsters. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="color: black;">2) Raise taxes. Here, again the weight falls on youngsters because they'll be paying those taxes. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="color: black;">Or 3) reduce the cost of retirement. This could be a very rich vein. <st1:country-region w:st="on"><st1:place w:st="on">US</st1:place></st1:country-region> health care is two to four times more costly than other rich country medical systems. Productivity savings of 6% - 10% of GDP are ripe for harvest...sufficient to ease the transition to a new system.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="color: black;">Chew on this issue. Don't discard proposals condemned as politically undoable now. Times change.<span style="mso-spacerun: yes;"> </span>Cutting current benefits, means-testing, pushing medical cost savings, prioritizing disability, and private accounts all have great potential. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="color: black;">Enough stress is building in the system to force a torrent of change over a short span. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="color: black;">With the cohesion that Smart Girl Nation Summits build, and a little luck, the Smart Girl generation can enjoy a theft-free future.</span></div><div class="MsoNormal"><span style="color: black;"><br />
</span></div><div class="MsoNormal"><span style="color: black;">(This article first appeared in the May issue of Smart Girl Nation.) <o:p></o:p></span></div>Vince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.com0tag:blogger.com,1999:blog-2886787356032383135.post-83455998604675234082011-07-05T15:52:00.004-06:002011-07-05T16:10:12.206-06:00The Tax Man Cometh<div class="MsoNormal"><i style="mso-bidi-font-style: normal;">This year 38% of <st1:place w:st="on"><st1:country-region w:st="on">America</st1:country-region></st1:place> will be funded via coercion.</i></div><div class="MsoNormal"><br />
</div><div class="MsoNormal">The tax man cometh. This month and every month. This day and every day. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">Citizens obediently dish out the shekels in the certain knowledge that if they refuse, the state will respond with serious ugliness. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">Take Kaleesha Cashstrapt, a woman with a husband and two kids. Together they expect to earn a very typical $75,000 in cash income this year. Government will pump $30,000<a href="file:///C:/AB%20MyGovSpending/MyGov%20Writings/SmartGirlNation/201104%20SGN%20article%20submission/THE%20TAX%20MAN%20COMETH%2020110415%20article%20submission%20for%20SGN%20by%20Vince%20Emmer%20%20FINAL.doc#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span class="MsoFootnoteReference"><span style="font-family: 'Times New Roman'; font-size: 12pt;">[1]</span></span></span></a> directly and indirectly from her family into its own wallet. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">Government has punctured Kaleesha's finances with a variety of intravenous tubes. Income taxes - often thought of as a big, brazen pipeline - account for only 14% of Kaleesha's total tax. Social Security and Medicare suck out another 37%. Sixteen percent drips out in deceptively small streams via sales and other taxes on everyday purchases. Then Kaleesha's family ultimately pays all business taxes through higher prices, lower wages, or smaller returns on stockholdings. That's 20%. Property taxes make up most of the rest.</div><div class="MsoNormal"><br />
</div><div class="MsoNormal">But we're still missing a big piece. Borrowing is simply taxes deferred. So add another 33% to that tax burden. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">Note that the rich pay more. Good estimates show the top 4% of families by income paying 32% of all federal, state and local taxes. As a portion of economic income (which includes more than cash income) the non-rich pay 26% of their income in taxes. The rich - those earning above $200,000 - pay 30%. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">Clearly, the threat of force is necessary to collect taxes. Government is expected to spend 38% of GDP this year. So 38% of the economy is coercively based. <st1:place w:st="on"><st1:country-region w:st="on">America</st1:country-region></st1:place>'s founding ideals appear forgotten. George Burns may have inspired the public sector when he cracked, "Sincerity is everything. If you can fake that, you've got it made". </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">With 38% of citizens lives deemed public property, raising taxes may no longer be the path of least resistance. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">Finally citizens are paying attention to public finances. Rolling back the concentrated force of government won't be easy. Nor will taxpayers ever be rubes again. </div><div class="MsoNormal"><br />
</div><div class="MsoNormal">The tax man will never goeth away. Nor should he. In time, however, he may be satisfied little more than a simple cup of tea.</div><div class="MsoNormal"><br />
(This piece was first posted in the April 2011 issue of Smart Girl Nation.)</div><div style="mso-element: footnote-list;"><br />
<hr align="left" size="1" width="33%" /><div id="ftn1" style="mso-element: footnote;"><div class="MsoFootnoteText"><br />
</div></div></div>Vince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.com0tag:blogger.com,1999:blog-2886787356032383135.post-8746025141158743042011-04-18T15:54:00.000-06:002011-04-18T15:54:07.980-06:00A GREAT TOP TEN LIST! Our perspective on CRFB's tax debate list<div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;">The Committee for a Responsible Federal Budget takes great pains not to alienate either of the bipolar political viewpoints lest it seem to be playing favorites.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;">It's no surprise that they don't always succeed.<span style="mso-spacerun: yes;"> </span>This CRFB piece focuses on taxes. Since budget balance is their overriding goal, it favors tax increases. If you're a fiscal conservative, don't pout. When CRFB talks expenditures, big spenders squeal. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;"><b><span class="Apple-style-span" style="font-size: large;">10.</span></b><span style="mso-tab-count: 1;"> </span>Record low federal revenues as a % of GDP, tax breaks were higher. Federal tax revenues ran just a smidgeon under 15% of GDP in 2010, the same as 2009.<span style="mso-spacerun: yes;"> </span></span></div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;"><i style="mso-bidi-font-style: normal;"><br />
</i></span></div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;"><span style="mso-spacerun: yes;"></span><i style="mso-bidi-font-style: normal;">MyGovSpending.com comment: The recession cut revenues, stimulus did, too..<span style="mso-spacerun: yes;"> </span>Federal taxes historically have averaged 18% of GDP.</i><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;"><b><span class="Apple-style-span" style="font-size: large;">9.</span></b><span style="mso-tab-count: 1;"><b><span class="Apple-style-span" style="font-size: large;"> </span></b> </span>The first round of tax reform since Reagan is in gestation.<span style="mso-spacerun: yes;"> </span>Senators Wyden (D) and Coats (R) are working to simplify the tax code.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><i style="mso-bidi-font-style: normal;"><span lang="EN" style="mso-ansi-language: EN;">MyGovSpending.com comment: Arthur Laffer pointed out today in the Wall Street Journal that compliance adds 30% to the cost of taxes. In one accepts that, the $28,000 all-in taxes that an average family generating $70,000 of cash income is really a tax burden of $36,000. Ouch.</span></i><span lang="EN" style="mso-ansi-language: EN;"><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;"><b><span class="Apple-style-span" style="font-size: large;">8.</span></b><span style="mso-tab-count: 1;"><b><span class="Apple-style-span" style="font-size: large;"> </span></b> </span>The 2010 tax deal gave everyone something and charged it on the national credit card. <span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;"><span style="mso-tab-count: 1;"> </span><i style="mso-bidi-font-style: normal;">MyGovSpending.com comment: The SWAG (slang for promotional freebies) came under the banner of stimulus. Ostensibly, these goodies will be withdrawn at the end of 2012.<o:p></o:p></i></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;"><b><span class="Apple-style-span" style="font-size: large;">7.</span></b><span style="mso-tab-count: 1;"> </span>Estate Taxes disappeared, then re-appeared.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><i style="mso-bidi-font-style: normal;"><span lang="EN" style="mso-ansi-language: EN;">MyGovSpending.com comment:<span style="mso-spacerun: yes;"> </span>The 2001 tax killed estate taxes.<span style="mso-spacerun: yes;"> </span>They were brought back at the end of 2010.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></i></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;"><b><span class="Apple-style-span" style="font-size: large;">6.</span></b><span style="mso-tab-count: 1;"><b><span class="Apple-style-span" style="font-size: large;"> </span></b> </span>Value Added Taxes (VAT) get voted down.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><i style="mso-bidi-font-style: normal;"><span lang="EN" style="mso-ansi-language: EN;">MyGovSpending.com comment: VAT are a type of sales tax levied at every level of production through an economy. They are credited with quietly boosting the tax take of governments across the world. In the <st1:country-region w:st="on"><st1:place w:st="on">US</st1:place></st1:country-region><span style="mso-spacerun: yes;"> </span>the left complains that they do not ding the rich enough, and the right worries VAT revenues will be added to existing revenues. VAT off the table for the moment.<o:p></o:p></span></i></div><div class="MsoNormal"><i style="mso-bidi-font-style: normal;"><span lang="EN" style="mso-ansi-language: EN;"><span style="mso-tab-count: 1;"> </span><o:p></o:p></span></i></div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;"><b><span class="Apple-style-span" style="font-size: large;">5.</span></b><span style="mso-tab-count: 1;"><b><span class="Apple-style-span" style="font-size: large;"> </span></b> </span>Spending cuts are labeled tax increases. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><i style="mso-bidi-font-style: normal;"><span lang="EN" style="mso-ansi-language: EN;">MyGovSpending.com comment: Here is a lovely example of both semantic infiltration and the distance of <st1:state w:st="on"><st1:place w:st="on">Washington</st1:place></st1:state> from its citizens.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></i></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><i style="mso-bidi-font-style: normal;"><span lang="EN" style="mso-ansi-language: EN;">Fiscal folks have taken to renaming tax deductions and credits as tax expenditures. It applies to mortgage interest deductions, charitable contribution deductions, child tax credit, etc... The idea is that these items are spending through the tax code - that money not collected by politicians is equivalent to money spent.<span style="mso-spacerun: yes;"> </span>It seems reasonable. <o:p></o:p></span></i></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><i style="mso-bidi-font-style: normal;"><span lang="EN" style="mso-ansi-language: EN;">Or is it. <span style="mso-spacerun: yes;"> </span>It reflects a power-centric viewpoint, that government has first claim on the money citizens earn. <span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>Pushed a bit further, the concept implies that any money people take home from their paycheck after taxes is a tax-expenditure - money the government has not collected.<span style="mso-spacerun: yes;"> </span>Therefore it is the rightful property of government.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></i></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><i style="mso-bidi-font-style: normal;"><span lang="EN" style="mso-ansi-language: EN;">Taxpayers are more likely to think of taxes as the expenditure, not the absence of taxes</span></i><span lang="EN" style="mso-ansi-language: EN;">. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;"><b><span class="Apple-style-span" style="font-size: large;">4.</span></b><span style="mso-tab-count: 1;"><b><span class="Apple-style-span" style="font-size: large;"> </span></b> </span>Non-Story of the Year. Politicians patch the AMT.<span style="mso-spacerun: yes;"> </span>MyGovSpending.com comment: The Alternative Minimum Tax is tax code running parallel to the Form 1040. It was originally designed for people who took advantage of too many tax breaks. Now it is snaring many decidedly non-rich taxpayers. Rather than fix it permanently, Congress duct-taped it for another year. <span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;"><b><span class="Apple-style-span" style="font-size: large;">3.</span></b><span style="mso-tab-count: 1;"><b><span class="Apple-style-span" style="font-size: large;"> </span></b> </span>CUTGO cuts out the PAYGO.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><i style="mso-bidi-font-style: normal;"><span lang="EN" style="mso-ansi-language: EN;">MyGovSpending.com comment: This is the latest attempt Congress has made to appear to be fiscally prudent while leaving enough loopholes that it can act as it pleases. <o:p></o:p></span></i></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;"><b><span class="Apple-style-span" style="font-size: large;">2.</span></b><span style="mso-tab-count: 1;"><b><span class="Apple-style-span" style="font-size: large;"> </span></b> </span>"Make Work Pay" tax credit expires. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><i style="mso-bidi-font-style: normal;"><span lang="EN" style="mso-ansi-language: EN;">MyGovSpending.com comment: This $400 tax credit was designed to be explicitly stimulative and temporary.<span style="mso-spacerun: yes;"> </span>It turn out that it actually is temporary.<o:p></o:p></span></i></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;"><b><span class="Apple-style-span" style="font-size: large;">1.</span></b><span style="mso-tab-count: 1;"><b><span class="Apple-style-span" style="font-size: large;"> </span></b> </span>Simpson-Bowles "Zero Plan".<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><i style="mso-bidi-font-style: normal;"><span lang="EN" style="mso-ansi-language: EN;">MyGovSpending.com comment: Obama's Fiscal Commissioners Erskin Bowles and Alan Simpson turbo-charged the tax debate by proposed to wipe out all tax breaks - even the best loved - then lowering tax rates.<span style="mso-spacerun: yes;"> </span>Overall, they targeted a revenue increase with larger spending reductions.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></i></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><i style="mso-bidi-font-style: normal;"><span lang="EN" style="mso-ansi-language: EN;">The Bowles-Simpson Commission put radical tax reform on the table for the first time in a generation. A huge step forward. Finally.<o:p></o:p></span></i></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><a href="http://crfb.org/document/top-ten-tax-policy-developments-past-year"><span lang="EN">See <o:p></o:p></span>http://crfb.org/document/top-ten-tax-policy-developments-past-year</a></div>Vince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.com0tag:blogger.com,1999:blog-2886787356032383135.post-59341199964839404792011-04-15T17:02:00.000-06:002011-04-15T17:02:16.104-06:00Big Government Needs Big Reforms<div class="MsoNormal"></div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;">(This article was first published in Smart Girl Nation online magazine in March 2011)</span></div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;"><br />
</span></div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;">Only humans with heartbeats pay <st1:place w:st="on"><st1:state w:st="on">Washington</st1:state></st1:place>'s enormous tab. Real people pay every nickel. Even corporate taxes are ultimately paid by flesh and blood people. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;">Take an ordinary, every-day American family; one that averages $70,000 of income during its earning years.<span style="mso-spacerun: yes;"> </span>It will spend a stunning $1,300,000 in taxes during its lifespan.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;">After extracting that sum, in an act that has been characterized as governmental child abuse, politicians push fresh debt equal to $11,000 per family onto politically undefended youngsters.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;">The Government Accountability Office notes that the federal government will have to raise its taxes 50% simply to stabilize the national debt.<span style="mso-spacerun: yes;"> </span>Or it can cut spending 35%. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;">Certainly, portions of government provide vital functions. Nonetheless, it is vulnerable to charges of widespread inefficiency, special interest control, and financial negligence. Look at the money lost by the Post Office and Amtrak; a formidably mediocre public education system; the empty Social Security trust fund; and a Defense Department that cannot pass a basic accounting audit.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;">Naturally citizens are looking for ways to save tax money. The biggest programs deserve the closest examination.<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;">Social Security and Medicare together consume a whopping 8% of the economy. They are large public policy mistakes. The $2.9 trillion trust funds are empty and the programs are short by a stunning $225,000 per family.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;">Two keys to a realistic understanding of reform: First, the money that trusting citizens paid into Social Security is gone. Disappeared. Spent. Flushed. Second, the social injustice of raising taxes on younger people for a political "oversight" of this magnitude is profound. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;">Benefit cuts are not the end of the world. Many Social Security beneficiaries do not need it.<span style="mso-spacerun: yes;"> </span>In 2008, 25% of families headed by someone 65 or over had income of more than $75,000. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><st1:country-region w:st="on"><st1:place w:st="on"><span lang="EN" style="mso-ansi-language: EN;">US</span></st1:place></st1:country-region><span lang="EN" style="mso-ansi-language: EN;"> health care offers more low hanging fruit. It is twice as expensive as that of other rich countries. <st1:country-region w:st="on">Singapore</st1:country-region>'s patient-centered, free-market model is four times more cost effective than the <st1:country-region w:st="on"><st1:place w:st="on">US</st1:place></st1:country-region>. Vast healthcare savings of 8% - 12% of GDP are within grasp, enough to solve much of the looming retirement shortfall.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;">Defense and education, the second and third largest programs, are nearly equal in cost. Each burn through 6% of GDP.<span style="mso-spacerun: yes;"> </span>For decades, the <st1:country-region w:st="on"><st1:place w:st="on">US</st1:place></st1:country-region> has performed the bulk of the globe's security work. Perhaps the current arrangement is optimal, perhaps not. In light of the mounting financial pressures, a thorough re-evaluation is in order. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;">Federal, state and local governments will spend $880 billion on education in 2011, but struggle with quality. Productivity has fallen in half. Per-pupil K-12 funding doubled since 1971 while reading and math scores have remained flat. In 2009 international comparisons, American 15 year olds posted a mediocre 14th ranking in reading and struggled at 25th in math. <span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;">A flick of a policy switch would greatly lessen a critical difference between the rich and the rest - high quality education. Less-than-wealthy families cannot escape the public K-12 system. It is a tool of financial repression. Watch quality increase and costs fall after freeing parents to use their tax dollars to shop for education in a truly free market. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;">Of course, government is necessary. Of course, collecting taxes is necessary, as well. Necessity, however, does not make tax collection less coercive. And coercion should be held to an minimum in any society purporting to be free. <span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;">A government that extracts $33,000 in cash and liberty annually from middle income families to fund a sprawling, inefficient, and often venal government - then borrowing $11,000 per family more - is increasingly difficult for taxpayers to justify.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span lang="EN" style="mso-ansi-language: EN;">Fire up your imagination. It's time to re-think government.<span style="mso-spacerun: yes;"> </span>Completely.<o:p></o:p></span></div><br />
<div style="mso-element: footnote-list;"><div id="ftn18" style="mso-element: footnote;"> </div></div>Vince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.com0tag:blogger.com,1999:blog-2886787356032383135.post-50606581709290755232011-04-12T07:50:00.001-06:002011-04-12T07:52:03.932-06:00David Walker on the federal budget and Health CostsHooray! David Walker, former comptroller general of the US Government Accountability Office, is proposing something akin to Singapore's health care system. That country's exemplary system costs 4% of GDP, compared to our 17%. <br />
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In Singapore, most health care is paid for from citizens' mandatory health savings accounts. The truly poor are subsidized, and there is a layer of insurance for the big risks that might deplete that account. <br />
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The key is that patients control most of the dollars directly. Providers respond with efficiency gains, much lower costs, and great quality. <br />
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It's way past time to try it here.Vince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.com0tag:blogger.com,1999:blog-2886787356032383135.post-7730517300851920192010-10-04T11:15:00.010-06:002010-10-04T11:45:49.233-06:00ACT I: A GRAND BARGAIN FOR THE NATIONAL DEBT- Will It Be Applauded, Booed Off Stage, or Simply Ignored?Your odds of being richer tomorrow, rather than poorer, just got a wee bit better. <br />
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Maya McGuineas, a fiscal hero from the New America Foundation and the Committee for a Responsible Federal Budget, and Bill Galston from the Brookings Institute, put a fresh federal budget proposal on the table, <a href="http://crfb.org/blogs/my-view-maya-macguineas-and-bill-galston">summarized here</a>. <br />
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It has the critical elements of a Grand Bargain necessary to avoid an exceedingly grand financial wreck. <br />
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Whether Washington acts on it in time remains to be seen. So far, camps of the right and left are having buckets of fun bludgeoning their opponents. There is a profusion of passion but no palpable progress. <br />
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<a href="http://crfb.org/document/future-now-plan-stabilize-public-debt-and-promote-economic-growth">McGuiness and Galston's 18 page plan</a> moves beyond the Bashing Bozos. It realistically pushes the federal budget to near balance and stabilizes the federal debt at 60% of GDP, a number that has surfaced as a rough estimate of "safe". It gets this job done in ten years. <br />
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For the left, McGuiness and Galston tilt Social Security benefits more towards the poor. They raise taxes both by cutting tax breaks and by adding a carbon tax. Their plan trims defense and adds a war surtax, too.<br />
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For the right, the proposal adds private accounts to Social Security, freezes domestic spending for three years, and institutes tort reform.<br />
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The plan is fertile seed on middle ground that is currently barren. The Obama Administration's budget doesn't even pretend to get close to balance or to stabilize the national debt, much less bring it down. And Republican Congressman Paul Ryan's proposed budget works the federal debt back down to 60% of GDP by 2066 - snail's pace in a lightning fast world. <br />
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It's not that either man lacks the intellectual capacity to plan for a credible, sustainable, and timely budget. It's that the old political formula - spend big, tax less, to heck with tomorrow - still wins with special interest groups, the press, and most voters.<br />
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With the McGuiness-Galston plan, the first steps to gain control of the federal budget are clear. Both left and right can walk away winners.<br />
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Yet even if the plan were adopted tomorrow, government finances would still pose grave threats to family prosperity. <br />
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A grossly inefficient health care sector would still pour concrete into overshoes worn by every family's budget. Public employees would still be owed retirement benefits equal to 100% of the national debt. State and local governments would still have some very weak sisters that will soon be asking for taxpayer bailouts. And our present tax system would still bear a striking resemblance to Medussa's hairstyle.<br />
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Thanks to Maya McGuiness and Bill Galton, Washington no longer needs to write a script. It can simply raise the curtain and get to work. Let's hope it does.<br />
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See Maya McGuineas in action before the President's Fiscal Commission on <a href="http://www.youtube.com/watch?v=iSXhjjsRcCQ">YouTube</a>.<br />
Roll forward to 14:30 where she is introduced.Vince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.com3tag:blogger.com,1999:blog-2886787356032383135.post-23686828298843714302010-09-09T22:08:00.008-06:002010-09-25T12:08:48.932-06:00SIX PUBLIC MONEY MISFIRES - Typical Families Face Nearly $30,000 In Fresh Annual TaxesAt the risk of sounding alarmist, the financial condition of America's government is in even worse condition than the deplorable state most people believe. <br />
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If the US attempts to restore public financial health through tax increases alone, in a few short years the odds are very high that a typical family earning $75,000 will be paying $29,000 more in taxes than that family now pays. <br />
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How is this possible? The federal budget deficit is huge, the national debt is crossing into financial no-man's land, state and local governments are on a long spending spree, government has been making "off the books" promises, and Social Security and Medicare threaten to consume enormous swaths of the economy.<br />
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First and foremost is the task of balancing the federal budget and bringing the national debt down to safer levels. Trimming the federal budget deficit by a mere 1% of GDP each year will run up the national debt because current deficits are running 9% of GDP - so deficits will continue to add to the pile of money owed for nine more years. Using conventional government economic forecasts, the country will not bring the national debt down to its current 60% of GDP for 12 more years. The debt to GDP ratio won't fall to a comfortable 30% until 2030. While this slow rate of deficit reduction is politically courageous, financially it is weak. It takes too long, risks more financial crisis, and requires taxes on a typical family to gradually increase to an additional $16,000 annually in 11 years. <br />
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And it still leaves much necessary public financial reform undone. The feds have run up another $5.7 trillion in promises for employee benefits for which nothing has been saved. Assuming no cut in benefits, that obligation will be paid off as those pension liabilities come due. If we make the simplifying assumption that taxpayers spoon that out evenly over 40 years, that will add another $2,300 dollars of annual taxes starting immediately.<br />
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There are more hidden surprises, too. State and local governments have run up big debts. If they are folded into the definition of national debt, and we pursue a limit of 60% of GDP, then this debt should be extinguished. If taxpayers pay it off over 40 years at 4% that will add another $1,000 to the typical family's annual taxes. <br />
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Fourth, like the federal government, state and local governments have also made promises to government employees beyond which they have been willing to save. This shortfall could be as high as $3 trillion. We'll use $2 trillion to err on the conservative side. Assuming this gets paid over 40 years, and is evenly spread across the country (which it is not) it adds another $800 to that $75,000-a-year family's taxes. <br />
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Fifth and sixth, Washington still has to deal with Social Security and Medicare. If we pay for the shortfalls there evenly over the next 75 years, and close that gap with tax increases, Social Security adds $2,700 and Medicare adds $7,800 in fresh taxes per family each year<br />
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To deal with these issues squarely and through tax increases alone means raising taxes on our typical US family by $14,600 next year and ramping that up to $29,000 of fresh taxes - on top of taxes already paid - by 2021.<br />
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What will this do to our typical family? Obviously, it will strangle their cash flow. Many are already dealing with mortgages they cannot afford, and retirement savings that are critically short. <br />
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Where is all this money going to come from? Ultimately, every penny comes from someone with an actual heartbeat. That narrows it down to individuals. Companies are merely paper tigers owned, worked, and supplied by live, flesh-and-blood people. The bottom line: only real people pay taxes.<br />
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The middle class and the poor will not escape lower standards of living even if politicians could stick the rich for the whole bill. Since rich people are the nation's primary savers, taxing the rich succeeds in depleting the nation's pool of capital. Without that investment, Americans will feel innovation dry up, smell the decay of slowing productivity growth, and watch the paint peel across the country.<br />
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One can safely bet that discretionary family expenditures of all kinds will feel the cleaver. Cuts will come in vacations, restaurants, clothing, cars, books, housing. More cuts will come from education, retirement and yes, maybe even medical care. <br />
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Paying those taxes will also take more sweat, more hours on the job, more output for each hour worked, more teen employment, more elderly employment, fewer stay-at-home moms. The 40 hour workweek - widely exceeded by salaried folks and nothing more than a distant dream for most small business people, is in jeopardy for hourly workers, too. And bet on a larger "under the table" economy. <br />
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For American families, it looks like the New Normal is just starting.<br />
_____________________________________________<br />
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All numbers used in the analysis reported above are derived from government sources with the exception of state and local government unfunded liabilities. Government does not estimate these numbers, private sources do occasionally. Contact me if you would like more detail.Vince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.com4tag:blogger.com,1999:blog-2886787356032383135.post-70608489389232109462010-07-14T10:09:00.001-06:002010-07-14T10:17:32.195-06:00Stark Doubts From A High-Wattage BrainLuminaries in economics and business have been expressing concerns about America's financial future recently. They may not be household names, but they are well known in their fields. Among them are Carmen Reinhart, Ken Rogoff, Bill Gross, Mohamed El Arian, Stephanie Pomboy and, of course, Nouriel Roubini. <br />
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Now another high-wattage brain, who happens to be a global media billionaire, is expressing doubts about America's future, too. Starkly.<br />
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When the <a href="http://online.wsj.com/article/SB10001424052748704808904575359410603458730.html?KEYWORDS=john+malone">Wall Street Journal interviewed John Malone</a> recently and asked about risks in the cable business he responded; "The concerns really tend to be much more macro: Is America going to make it, rather than are we going to make it? It's pretty hard. If the country doesn't make it, do any of us make it?"<br />
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He goes on to muse about illegally fleeing to Canada on a snowmobile trail. <br />
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This sounds a bit wacko. But this is not a man known for rash judgmentVince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.com0tag:blogger.com,1999:blog-2886787356032383135.post-80635668291262436852010-07-01T16:40:00.000-06:002010-07-01T16:40:08.879-06:00The Other National DebtKevin Williamson of National Review Online has sharpened his pencil toted up the national debt numbers. He finds "the other national debt" to be 10 times the official $14 trillion. <br />
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Why? Because no one holds government to accounting standards remotely as stringent as those that business uses. Like so many entities; it can fudge, so it does. <br />
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His piece is both entertaining and sobering. Read <a href="http://article.nationalreview.com/436123/the-other-national-debt/kevin-williamson">The Other National Debt</a>.<br />
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Or listen to him <a href="http://www.850koa.com/cc-common/mediaplayer/player.html?redir=yes&mps=shows_rosen.php&mid=http://a1135.g.akamai.net/f/1135/18227/1h/cchannel.download.akamai.com/18227/podcast/DENVER-CO/KOA-AM/Rosen06-29-10-10AM.mp3?CPROG=PCAST?CCOMRRMID&CPROG=RICHMEDIA&MARKET=DENVER-CO&NG_FORMAT=&NG_ID=&OR_NEWSFORMAT=&OWNER=&SERVER_NAME=www.koaradio.com&SITE_ID=668&STATION_ID=KOA-AM&TRACK=">talk about the article</a> in this radio interview on Mike Rosen's 850 KOA Denver. <br />
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These numbers are starting to sink in. Let's hope we take action before they sink us.Vince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.com0tag:blogger.com,1999:blog-2886787356032383135.post-40536031235918618802010-06-30T20:37:00.001-06:002010-06-30T20:43:09.347-06:00Fear the Boom and Bust - A Great Rap!This is the decade ordinary people will cease taking the economy for granted. <br />
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Check out this funny rap parody of two great economists, Keynes and Hayek debating the greatest economic question of their time - and ours - how to tame booms and busts.<br />
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<a href="http://www.youtube.com/watch?v=d0nERTFo-Sk">Rap: Fear the Boom and Bust</a><br />
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For a wonderfully well written and remarkably balanced line-by-line commentary (and lyrics) visit the Daily Kos, of all places. And read the comments, too.<br />
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<a href="http://www.dailykos.com/story/2010/3/1/8929/21462">Smackdown: Keynes vs. Hayek</a><br />
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Both Keynes and Hayek would like to know how you build your government budget at MyGovSpending.com.Vince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.com0tag:blogger.com,1999:blog-2886787356032383135.post-89107074784436783732010-05-04T13:57:00.000-06:002010-05-10T17:30:49.706-06:00HARD THOUGHTS ABOUT SEMI-HARD DEBT<strong>What in blazes is semi-hard debt?</strong> Semi-hard debt is made up of government obligations taxpayers are now expected to cover, but of which they are largely unaware. It's a termite colony inside taxpayers' wallets.<br />
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Semi-hard debt is composed primarily of retirement benefits government has promised its employees but has not saved. <br />
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<strong>It's a big chunk of change</strong> - about $8 trillion or $70,000 of additional government debt for a typical American family of three generating $75,000 of annual income (1). <br />
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Federal employees are responsible for $5.3 trillion(2) Because the books of state and local governments are a motley bunch, no one really knows how much they've run up. <br />
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It is not less than $1 trillion and some suggest that it could be $3 trillion. MyGovSpending.com is currently using $2.4 trillion(3). <br />
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For perspective, $70,000 per family is roughly equal to one additional college education for each.<br />
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<strong>The money is not yet spent...</strong> It promised to do so. Government employees are counting on them to do so. But in fact, this money has not yet slipped through government's fingers.<br />
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<strong>...but it is growing.</strong> This $70,000 for Mr and Ms Middle America is the amount necessary to invest today to grow large enough to make a stream of payments on many tomorrows. It is a "present value" of the retirement obligations.<br />
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So, if the money is not set aside today (it isn't) the amount necessary to make the retirement payments grows by the rate of interest each year. It increases like an unpaid mortgage. <br />
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Assuming an interest rate of 5%, that $70,000 taxpayer debt will be $73,500 next year, $77,175 the following year in addition to whatever new unfunded retirement obligations government promises<br />
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<strong>How Big is the Family Tax Hit?</strong> If taxes are collected tomorrow as they are today, the tax bill for Ms and Mr Middle America will rise by a minimum of $3,800 annually to pay it off(4).<br />
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<strong>Who Takes the Hit?</strong> Right now, all knowledgeable parties in officialdom expect taxpayers to pay up. Taxpayers, however, haven't been fully informed of this particular invoice. <br />
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Once taxpayers are knowledgeable parties, too; this being America, it seems unlikely they will simply plunk down the cash, shake hands, and walk away. <br />
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The legal requirement that taxpayers cough-up for semi-hard debt is certainly more compelling than it is for soft debt. Nonetheless, the case for taxpayers to pay semi-hard debt is not etched in stone as deeply as it is for hard debt. <br />
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VIDEO: For a terrific 30 minute summary of underfunding of state pension, see the interview with Orin Kramer posted by the Financial Times. Mr. Kramer is a Democratic Party heavyweight, top tier businessman and chair of the New Jersey State Investment Council, which manages New Jersey's public pension funds. That site does not post direct links so: \<br />
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* Go to <a href="http://videoft.com/">http://videoft.com/</a><br />
* In the search box in the upper right corner type "Orin Kramer", select video in the box immediately to the right, click on the "Search" button, <br />
* Click on the clip titled "Feb 18: Orin Kramer of the New Jersey State Investment Council (14m 21 sec)"<br />
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Postnotes:<br />
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(1) Government has run up roughly $1,000,000 of unfunded liabilities for typical US family described in the article. Refer to post on this blog of 25 Feb 2010 entitled "Average US Family Owes $1 Million in Government Obligations. No Kidding." for details<br />
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(2) From 2009 Financial Report of the US Government, pg xiii, table entitled Nation By The Numbers, available from http://www.fms.treas.gov/fr/index.html. <br />
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(3) The Trillion Dollar Gap, Pew Center on the States, available at http://www.pewcenteronthestates.org/uploadedFiles/Trillion_Dollar_Gap_embargoed.pdf<br />
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The $3 trillion comes from Robert Novy-Marx and Joshua Rauh in NBER working paper No. 14343 titled The Intergenerational Transfer of Public Pension Promises available at http://www.nber.org/papers/w14343, and referenced in Barrons article of 15 March 2010 entitled The $2 Trillion Hole available at <a href="http://online.barrons.com/article/SB126843815871861303.html#articleTabs_panel_article%3D1">http://online.barrons.com/article/SB126843815871861303.html#articleTabs_panel_article%3D1</a>. I expect to refine the $2.4 trillion estimate as the picture clarifies.<br />
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(4) To arrive at a $3,800 annual typical tax increase I make the courageously optimistic assumption that there are no further increases in unfunded liabilities and that current balances are paid off over a 50 year amortization schedule at 5% annual interest rate.Vince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.com0tag:blogger.com,1999:blog-2886787356032383135.post-78176389712136371752010-04-27T15:49:00.000-06:002010-04-27T15:52:02.818-06:00WANNA FLAT TAX? America Already Has It...By Accident.Despite perceptions, the case is strong that taxes in America are distributed with remarkable evenness across income groups. <br />
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Families with up to $20,000 in cash income pay 26% of their economic income in federal, state and local taxes. Families earning between $75,000 and $200,000 pay 26% too. Those with cash incomes above $200,000 pay a modestly larger share of their income in taxes: 30%. <br />
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So, including the federal income tax and all other taxes beyond it as a package, the tax code overall is remarkably flat. There's no need for a new tax if its purpose is to include the middle class more. <br />
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Tax reform for simplification and to raise tax visibility (so taxpayers can make informed choices), continues to be important.<br />
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Federal income tax receipts are by far the most progressive piece of federal revenues, and also highly visible. <br />
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So it is easy to assume that the rich bear a very heavy burden of the cost of government relative to the rest of the population. And they do in absolute terms, but less so as a percentage of their earnings. <br />
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First, MyGovSpending.com looks at the picture from a holistic viewpoint. So we combine federal, state and local revenues. Federal income taxes amount to just 25% of government revenues, so its impact on the progressivity of the entire tax code is diluted.<br />
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The next big tax is payroll tax at 20% of government revs. These are actually regressive, and undo much of the progressivity of the federal income tax.<br />
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Sales taxes are 9% of government revenues, and are notably regressive. The rich pay a smaller portion of their income in these taxes because the rich save more and consume less, relative to their incomes. <br />
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Then there are corporate income taxes, other levies on businesses, and property taxes, too. These foot to another 21% of the government's cream. <br />
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Economists can quibble about who actually pays these. Economists we rely upon argue that 70% of the bulk of these taxes are paid by workers and 30% by stockholders. If one accepts that, these taxes have a regressive bent to them, too. <br />
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Then 10% government revenues are often thought of as "non-tax" revenues. These are proceeds from government-owned businesses, like the post office and lotteries. It also includes fines and fees of various kinds. <br />
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MyGovSpending.com forwards the argument that these revenue streams are owned by citizens as equal "shareholders" in government. To the extent these revenue streams are controlled by legislatures instead of retail level citizens, they qualify as taxes. <br />
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The rich DO bear federal income taxes disproportionately. By design. <br />
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Holistically however, American taxes are spread remarkably evenly across income groups. By accident.<br />
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Note, although this analysis indicates the tax code is much flatter than commonly assumed, that should not be taken to imply that the poor are unfairly fleeced. The next logical step, and one beyond the scope of this post, is to analyze who receives government spending. <br />
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See this excellent paper by Andrew Chamberlain and Gerald Prante of the Tax Foundation entitled Who Pays Taxes and Who Receives Government Spending for a look at that topic.<br />
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It is available at http://www.taxfoundation.org/publications/show/2282.html.Vince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.com0tag:blogger.com,1999:blog-2886787356032383135.post-31256891273372637842010-04-21T13:04:00.000-06:002010-04-21T13:15:49.963-06:00Quick take on a new paper from the Committee For A Responsible Federal Budget (CRFB) - A PREVENTABLE CRISIS: EXPLORING FISCAL CRISIS SCENARIOS FOR THE UNITED STATESSober-mindedness is a deeply embedded characteristic of the Committee for a Responsible Federal Budget (CRFB). There is an impressive array of former senior policy makers, deep thinkers, and assorted movers-and-shakers from both parties on its board. <br />
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The Committee released an uncharacteristically provocative short new paper entitled <a href="http://crfb.org/document/preventable-crisis-exploring-fiscal-crisis-scenarios-united-states">A Preventable Crisis: Exploring Fiscal Crisis Scenarios for the United States</a>. <br />
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In the absent of extraordinary political compromise, preferably delivered as fast as one can buy a Whopper with Cheese, a financial crisis of unprecedented magnitude appears to be riding down upon us.<br />
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CRFB (pronounced "kurfba") notes that the jitters have begun. Financial markets are getting queasy about lending money to the US government.<br />
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So what's next? CRFB muses that we could muddle along as we have, with Washington lacking the political courage to address the problem. In fact, politicians can even make the problem worse by expanding entitlements, leading to a Catastrophic Budget Failure. Lenders cut off credit to the government, it cannot pay its bills, and public spending is sharply curtailed, pronto. Imagine the unemployment rate then! <br />
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Another path to the same end passes through inflation first. This path is widely anticipated among both professional and armchair economists. The Federal Reserve bows to political pressures to pump up inflation and print money to buy government debt and - presto - high interest rates detonate a cut-off of government borrowing and a fresh recession with no rescue in sight.<br />
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Or, the US could continue to borrow until the debt reaches such heights, and the interest costs become so burdensome, that Washington simply decides the pain of paying the interest is less than the pain of trashing the United States' credit score. It simply walks away from the obligations - an outright default.<br />
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CRFB concludes "...while most economists consider the worst case (default) to be unthinkable for the United States, we unfortunately live in an era where the unthinkable has become thinkable." <br />
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Carrying this line of thought to the next step beyond the paper's scope quickly leads one to ponder the impact on families and individuals. <br />
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How does widespread and lengthy unemployment affect families? How do curtailed defense budgets affect global stability, most immediately in the Middle East? How do tumbling public budgets affect retirees and children in school?<br />
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What calamity are we courting? What can individuals do to avert it? (One thought, let your federal elected representatives know what you think either by calling, emailing or via <a href="https://www.mygovspending.com/beginners/new">MyGovSpending.com</a>.)<br />
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If the ship doesn't turn, what can ordinary people do to minimize the damage to their families? <br />
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How much damage will be done to you, your family, your country, your world? <br />
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What will emerge?Vince Emmerhttp://www.blogger.com/profile/16574195169940834304noreply@blogger.com0