One columnist I kind of admire, or was bred to admire, is James Fallows. And in a crisis like this one, one wants to be able to trust people like that. But this piece falls apart in the first paragraph:

tax cuts over the past decade have played a huge role in creating mammoth federal debt.

I'm a freelancer/contractor. I've had jobs that paid a lot and some that paid a little less. When the 'little less' ones happen, I don't spend as much. Why isn't our Congress similarly responsive?

I'll tell you why not.

Because Democrats and Republicans alike think they have a moral claim to the wealth you create. That they might not be able to actually reach into your wallet to take it means nothing to them... People who complain about the "Bush tax cuts", or ANY tax cuts, don't think the cuts are real. The only contribution they want you to make to society is to fork over your money.

They're GOING to spend the money. Rhetoric like Fallows' is unambiguous on this point. In their hearts, their authority over your work is foregone.

Enforcement is a detail.

____________


A big part of me wants the tea partiers to be enraged by this weekend's solution... WHATEVER IT IS.

I understand the point that Rowan is trying to make, but the debt ceiling is a non-story. The debt ceiling itself is only a convention of convenience for the Congress. Instead of having to approve each individual bond issue, the power to issue debt securities is ceded to the executive branch. This, itself, may be the root of the problem.

The possibility of default is also a non-story. The Treasury Secretary would be a fool to default on any interest payments. There is plenty of money coming in all the time. $2.2 Trillion this year. So, the Executive isn't even really playing chicken with the House, as there's no chance that the interest payments will not be made.

What would be interesting is a situation in which the House refused to raise the debt ceiling, full stop. Which programs would the Executive de-fund? I'd really like to see where President Obama's priorities lie.

The debt ceiling is completely arbitrary. As Muslim non-terrorist Fareed Zakaria points out in this essay, Denmark is the only other country with a debt ceiling.

It's like if you and your spouse have $10,000 of pre-approved credit but decided "We're not carrying more that $3,000 worth of credit card debt per month." If you run into some onerous bills for one month, you have to decide "Are we going to raise our self-imposed limit or be fiscally disciplined and not pay for Timmy's school or health insurance."

The US is NOT going to default on paying off the minimum of its credit card [money borrowed via bonds to foreign and domestic investors], so any short-term pain will be bourn by Americans who can least afford the sacrifice -- the old and infirm, in the form of Social Security or Medicare coverage.

Is that right, or should we raise the taxes on those most able to absorb the sacrifice that comes with being an American, and reaping the benefits of living in the most pro-capitalist society in world history? And we're not talking about taking British levels of taxation from folks like Bill Gates -- just returning to Reagan-era levels of taxation would go a long way towards balancing our budget again.

Tyler, you do know that Congress is responsible for the Federall budget, yes?

> What would be interesting is a situation in which the House
> refused to raise the debt ceiling, full stop. Which programs would
> the Executive de-fund? I'd really like to see where President
> Obama's priorities lie.

Dunno why the link I posted got swallowed, but here 'tis again:
http://globalpublicsquare.blogs.cnn.com/2011/07/28/the-damage-is-already-done/

That middle paragraph spends a lot of time talking about environmental protection and complaining about it.

It's completely reasonable to question whether or not we've gone too far with environmental protection and certainly possible to point to ridiculous cases here and there of excesses in this regard.

However, I'm now living in a country that is just down the jet stream from China, a country that doesn't give a rat's ass about pollution. I've had a persistent cough since living here that magically cleared up during a one week trip back to the States and, just as magically, reappeared upon my return.

I won't endorse everything the EPA does, but I'm glad we have it. There are reasonable functions for "big government".

Mickey.

I'm with Franko. Let's move the top marginal rate back to 27% and watch the economy start moving again.

I don't worry about taxing the rich as much as failing to tax the poor. Poorfolk hate it when people with guns (like the IRS) take their money. No one is as impatient with incompetent government as the impoverished.

We should be counting on our poor people to keep this machine in good motion. Instead, government has carefully made sure they're oblivious and literally uninterested... When not abjectly dependent. Progressive taxation gums up the works.

Dear Fellow paranoics: Read the comment under the earlier post: Posted by: Diana Myers at August 1, 2011 12:04 AM

Aphorism from some forgotten genius: "Never ascribe to venality what can be blamed on incompetence...."

The question franko, is:

Should programs such as medicare, medicaid, and social security, exist at ALL?

These programs literally rob from Peter to pay Paul. They take taxes from me and give it to somebody else. AND they have administrative overhead to manage it all, so we're all getting fleaced twice for all intents and purposes. I'm not unsympathetic to the elderly, I'm TOTALLY unsympathetic to the elderly. They've had their whole lives to prepare to be old, and I'm supposed to pay while I'm young because they didn't? And the promise here is that when "I" get old, my grandkids will get fleaced to pay me? No, no, and a thousand times no.

Forget raising taxes, lets slash our spending down to the point where the government can afford to do its job, and its job is supposed to be a lot smaller than what they're doing.

The federal government should not be protecting the environment, the states should be looking after their land themselves.

Do we really need the Federal government dictating milk production? Can't states look after their own internally produced products?

The House and the Senate should NOT be drawing federal benefits or paychecks, they're elected by the states, they should be paid by their states.

>Tyler, you do know that Congress is responsible for the >Federall budget, yes?

Yes, and there hasn't been a budget passed by this or the preceding Congress. The President would still have to decide which parts of government to shut down and which federal workers to furlough.

Off topic— This is the article of the day:

Black soot from the detonated Black Hawk charred the wall of the animal pen. Part of the tail hung over the wall. It was clear that a military raid had taken place there. “I’m glad no one was hurt in the crash, but, on the other hand, I’m sort of glad we left the helicopter there,” the special-operations officer said. “It quiets the conspiracy mongers out there and instantly lends credibility. You believe everything else instantly, because there’s a helicopter sitting there.”

Ah, sorry: Linky-poo.

Back to our regularly scheduled topic....

I agree with crid, every freaking american should be paying taxes. I am not sure when this happened, as a teenager in the 70's, I made about 8k one year and stillpaid federal taxes, even on 3k. It is ridiculous how some folks not only don't pay taxes, but actually get money refunded. How are folks supposed to have a vested interest in government if they do not feel the pain of paying for that government. Our nation has become a charity base because 50 percent of the voters do not pay taxes. IF that was you, wouldn't you always vote for free stuff that somebody else pays for? That is the root of the spending problem.

Agree with Robert!

Reasonable people from both parties have developed the "debt ceiling" and its caps. If the "debt ceiling" is a rational and reasonable law then how come we do not hear any voices advocating that we just follow the law and stop spending more than we take in?

Like so many people participating in the debt ceiling debate, this guy has no idea what he is talking about. The debt ceiling was created back in the early 20th Century to delegate bond issuance to the executive so that Congress doesn't have to approve each and every bond issue. The issue of spending more than we take in or not is determined by the budgeting process, not the debt ceiling.

I don't worry about taxing the rich as much as failing to tax the poor.

This strikes me as a good point. Making sure everyone is vested in the expenditures made on his behalf is a good idea.

> This strikes me as a good point.

Because I'm one of the people described in your earlier paragraph, I'm grateful to you for saying so

I just spent eight days riding my bike across the (hilly and hot) state of Iowa. Before I left, all the headlines were screaming about the debt ceiling debate. While I was gone, I did not once log onto the Internet or go anywhere near a newspaper. When I returned, the headlines said the same thing. Three days later, the government did exactly what I predicted it would do. It raised the debt ceiling by enough that it could keep borrowing for another couple of years, and it "mitigated" this with phony spending "cuts" that are really just reductions in future projected spending increases, the net of which is still a spending increase. So in other words, it's going to keep printing, borrowing, and spending, and has kicked the can down the road yet again.

This all makes me wonder why I bother reading the news, since I already know what is going to happen and it only pisses me off.

And I agree with both Robert and Crid. I would eliminate the mortgage interest deduction, the per-child tax credit, and get some of the middle class paying taxes again. I'd also eliminate loopholes like the one that allows hedge fund managers to endlessly "borrow" from their funds without ever declaring it as income.

I agree with questioning the very validity of our entitlement programs, as well. At the very least, we should start cutting entitlements for the people who don't even need them. Social Security and Medicare are supposed to be insurance programs. Just because you are accident-free for 25 years doesn't mean you get to go back to your auto insurance company and demand all your premiums back. These people stomping their feet and insisting that they "get back what they paid in" sound like a bunch of whiny fifth-graders. If you made it to financial independence in your old age, be GLAD for chrissake. You don't NEED welfare. Social Security was never intended to be a savings account. When people stopped getting their money back and instead saw it frittered away on people who had already frittered their OWN money away, we'd get down to the question Robert is suggesting - should we really have these programs at all?

But this is a fruitless debate for the time being, because the government caved, and at this point the only way to keep the checks going out the door for everyone is to keep the printing presses going, which just means your silly check won't by squat. There, feel better? Here's your check, now go buy a gallon of milk with it.

Part of me hopes the Tea Partiers see this and do what they have to do.

Was a collection of Democrats & Republicans EVER going to shrink government? Like, ever?

> I would eliminate the mortgage
> interest deduction...

Amy, PJ blasphemes Allah... Punish her.

Hmm? Eh? My mortgage? Oh, there's still six figures yet to pay off...

OK PJ, it's not that you're wrong, but try to understand the fight that we're looking at.

On the other hand, don't worry about it. Our debt will soon be correctly priced anyway... The fight is coming to us whether we're ready or not.

Don't disagree with you, Crid:

http://blogs.wsj.com/deals/2011/06/17/mean-street-obama-wont-say-it-but-americans-are-corrupted/

My chief gripe with the mortgage interest deduction is the paternal kind of government social engineering that goes with it.

Followed closely by my second gripe, which is that it directly incentivizes people to borrow more money! It certainly has its share of blame in the mortgage bubble.

But yes, correct pricing is like gravity - it always happens.

I'm thinking of limiting my news reading to science and technology news.

Social Security and Medicare are supposed to be insurance programs. Just because you are accident-free for 25 years doesn't mean you get to go back to your auto insurance company and demand all your premiums back.

My auto insurance company didn't take those premiums at the point of a gun.

And I was free to switch insurers at any point along the way, choosing between lower premiums, better service, lower coverage, or even a lovable mascot.

For a while, I was even free to risk going without insurance.

These people stomping their feet and insisting that they "get back what they paid in" sound like a bunch of whiny fifth-graders.

If I'd had the money the government stole from me the entire time, I could have invested it.

And by investing it, I could have made more money from it. Instead, I'm asking Social Security just for the principle I gave them. They can keep the interest they SHOULD have been making on it.

Let me sum up that budget deal: The government gave itself permission to obligate a whole bunch more of our money to service its debt. In exchange, we the people got... a committee.

The Republicans just blew a once-in-a-lifetime opportunity. This may very well get Obama re-elected. And then we'll all rue the day.

That's a good piece, PJ. For the record, I'd surrender the deduction tomorrow if I could get something for it... ANYTHING. But that will not happen.

Not hyperbole, not panic-mongering — I can't imagine anything short of a great depression that would teach people the meaning of prices. The detachment of our government, and all it's surrounding enterprises, is just too profound. Even a favorite libertarian commenter was pimping for this deal. She lives in, and is sustained by, DC.

Pirate Jo - why, oh why, would you bike across Iowa?

"My auto insurance company didn't take those premiums at the point of a gun."

Yes, yes, this just gets back to Robert's point, about why do we have the government running this, anyway?

"If I'd had the money the government stole from me the entire time, I could have invested it."

Ya THINK, Conan??? Ya fuckin' THINK??? Well that certainly falls into the 'no shit' category! This was never about people like you, who would dutifully save money for your old age. It was all about 'What do we do with all the dumbasses who through 90% shitty decision-making and 10% bad luck wind up on a cat food diet?' THEY can't be trusted to save their own money, they'd just piss it away! Oh, and WHAT did the government do with the trust fund?

You make a great argument for why we should never have had the program in the first place. But we HAVE, for decades now. Please tell me your thoughts when you have moved past the 'denial' and the 'what could have been' stages.

Dave B, have you ever tried it?

I have driven I35 through Iowa many times going between Texas and Minnesota. Maybe I was just very tired, but it seemed like I was caught with Alice in a loop, and didn't seem to move as we were moving.

I would do it by horse - trying to do North Dakota next year or so - but never by bike (unless it was motorized).

Amy's comment reminded me that in the 1940s, a barber, and his wife (a beautiful red head) who was a cocktail waitress, bought a 2 bedroom house and birthed 3 children. This was in Los Angeles. In 1951, they bought a bigger house, 3 bedroom, to make more room because of the third child (living proof the rhythm method doesn't work). Still in Los Angeles, near Inglewood, still on a barber's income plus his wife's (now a waitress in a deli, more respectable for the neighbors, I think). My point - less government then, made it possible for people to live and prosper. Those in Washington can live well today, the politicians and the related industries, but for a barber and a cocktail waitress - not so much. Oh and Amy, your tip makes me smile - my Mother's training.

just returning to Reagan-era levels of taxation would go a long way towards balancing our budget again. -- franko at August 1, 2011 1:32 AM

I'm with Franko. Let's move the top marginal rate back to 27% and watch the economy start moving again. -- brian at August 1, 2011 6:48 AM

What right does any government have to my labor (or income) -- whether it be digging ditches or editing software?

Are you saying that if I paid 27% of my income the budget would be balanced? Then why can't they balance the budget with 19% of my income?

What if every single taxpayer had to pay $5 dollars. Why is it fair that 53% of the population has to pay money in while the other 47% takes money out?

What if they changed the rules -- unless you are paying $1 more in taxes than you get you couldn't vote in federal elections? Why isn't that fair?

Just asking a few questions that I am eagerly awaiting a nice logical answer.

Jim - your questions are all rhetorical and cannot be answered.

However, there is some level of government that we need. The founders created our government for the purpose of securing each individual's rights from others.

I'll agree that the tax code is fucked. That's because people keep voting for socialists and imbeciles.

Ya THINK, Conan??? Ya fuckin' THINK??? Well that certainly falls into the 'no shit' category!

"Stan, you really need to lay off the cough syrup. Seriously. I'm worried about you, man."

This was never about people like you, who would dutifully save money for your old age. It was all about 'What do we do with all the dumbasses who through 90% shitty decision-making and 10% bad luck wind up on a cat food diet?' THEY can't be trusted to save their own money, they'd just piss it away!

And that makes it my responsibility to support them?

Social Security was intended to be a temporary solution to the fact that even the dutiful savers were wiped out by the Stock Market crash in '29 and the subsequent bank runs.

WHAT did the government do with the trust fund?

Didn't you hear Al Gore? The government put it in a lockbox.

Unfortunately, the government then took the money out of the lockbox and put treasury notes (ones that cannot be traded or sold) in its place.

So now, the Social Security slush fund is solvent only as long as the US government is. And a tidal wave of retirees is about to hit the beach.

Please tell me your thoughts when you have moved past the 'denial' and the 'what could have been' stages.

Nobody's in denial or debating what could have been.

I'm just a "whiny fifth-grader" who wants back "what [he] paid in." My money was taken from me with a promise. I'm at an age now where that promise is starting to matter. And because the government gave me no choice in giving it the money, I want my money back.

Elminating Social Security will be painful (see my related post on eliminating the minimum wage in another thread).

While your needs-based assessment for Social Security sounds fine in theory, the government's track record in assessing needs and abilty to pay is pretty crappy. As attested to by the BMW-driving food stamp recipients, the impoverished support-providing non-custodial parents, and the universal declaration by every liberal that a $100,000 income makes one "rich" (regardless of the local cost of living).

The government's chronic inability to assess needs is why Sam Donaldson can get agricultural subsidies for his farm while still making millions of dollars from television and books.

And it's unrealistic to think that people who paid into the program [at gunpoint] are going to smile as they're told they cannot withdraw from it while watching their loser cousins and derelict in-laws buying cars and building pools with their Social Security payments.

I agree something needs to be done. And it will be painful.

Thanks to the "progressive" fair housing advocates' near-complete elimination of mortgage underwriting standards and entirely predictable resultant economic collapse, most soon-to-be-retired Baby Boomers now don't have nearly the savings they had only a few years ago.

The Boomers were going to be the richest retiring cohort ever. Absent the collapse, a needs-based adjustment in Social Security might have worked on them with only a little pain. Now, it's going to hurt ... and hurt all of us.

While I'm all in favor of the Baby Boom's chickens coming home to roost, I'm at an age where I'm going to be sucked into any whirlpool created by that generation's comeuppance.

The biggest problem with reforming Social Security is that it is a pyramid scheme. Generation B supports retired Generation A. Then, Generation C supports a retired Generation B. TO reform and eventually eliminate Social Security, one generation is going to pay and get nothing.

George W. Bush tried to initiate the discussion of a partial investment plan which would have given people control over their Social Security dollars and would enable the system to move to being one in which Generation A's investments would be used to support Generation A in retirement. He was excorciated and told by Nancy Pelosi, Hillary Clinton, Harry Reid, Barney Frank, Chris Dodd, et al that such a program would not even be debated and that he was a monster for even suggesting it.

Now, we're facing the bankruptcy and probable elimination of the entire program. Who's the monster now?

I would LOVE to see the elimination of the entire program.

Jim - your questions are all rhetorical and cannot be answered. -- brian at August 2, 2011 6:17 AM

You are ducking the issue:

• What right does any government have to my labor (or income) -- whether it be digging ditches or editing software?

  I will grant that this one is 
  more in the rhetorical class, but 
  changing it to: What right does the
  U.S. Federal Government have to 20%
  of my income? What about 10% Why not
  70%? Just because you exist doesn't
  mean I need to support your voracious
  appetite.
  

• Are you saying that if I paid 27% of my income the budget would be balanced? Then why can't they balance the budget with 19% of my income?
  

  Now here is a question that isn't
  
  so rhetorical: What if I told you that
  
  you are fired. You find a job that pays
  
  you 10% less than your previous position.
  
  What do you do: find a way to cut your
  
  budget, or continue spending the way you
  
  used to? What happens when you max out
  
  your credit cards and your spending no
  
  longer sustainable?

• What if every single taxpayer had to pay $5 dollars. Why is it fair that 53% of the population has to pay money in while the other 47% takes money out?
  

  Why is it fair that Obama and others
  
  are harping on taxing the rich? If you
  
  raised the tax rate to 100% on any 
  
  income over $250K you would get about
  
  $8 Billion per year max. That would 
  
  be about two days spending at current
  
  levels?
  
  Just to give you a small visual example:
  
  $       35,000,000 <-- Million
  
  $    8,000,000,000 <-- Billion
  
  $2,000,000,000,000 <-- Trillion

And what does the guy who makes $35 
million a year do with that money? There
is a good chance he will employ at least 
seven-ten personal aides (maid, cook, 
gardener, pool boy, etc.) His company
will employ numerous people from other
execs, assistants, secretaries
let alone the people that actually produce
the actual product or provide the service
to the consumer.

• What if they changed the rules -- unless you are paying $1 more in taxes than you get you couldn't vote in federal elections? Why isn't that fair?
  

  Unless you are contributing to 
  
  the government and society, why should
  
  you have a say in it? Read Starship 
  
  Troopers for that reference.

So for being rhetorical -- how did I do? Can you refute any of the concepts I brought forth?

Hai Peej

(PS- You're still not wrong! You're still not wrong! Just sayin'.)

Starship troopers should be required reading every year from 6th grade on

I know, Crid. Even when people realize a program or tax loophole is wrong, they won't vote against it if it is something that benefits them personally.

Conan seems to understand that Social Security is a bad program. He knows the money he's been paying in has been spent, and that the only way he gets benefits is if he gets the money someone else is paying in. (For that matter, if he's a Baby Boomer, that still won't be enough, and the government will be required to borrow to cover the difference.) He doesn't feel he should be held responsible for someone else's retirement planning. And he knows it's a pyramid scheme.

Yet most people his age still "want back what they paid in" and will demand it anyway. Because the key here is that THEY want back what they paid in and don't give a rip about anyone under the age of 50. It's okay for younger generations to work until they're 80, but the Boomers want to go on welfare when they turn 62, just like all the old people they know have.

Frankly I don't care how much they've paid in. The government has been raiding the trust fund since the 60s, before I was even born, let alone those in their 20s and 30s, and nobody did a thing about it. I guess they liked having that money spent on things for themselves. Then they are happy to let the kids and grandkids pick up the tab so they can enjoy a nice check for the Winnebago payments on top of their pensions. (There aren't any young people who get pensions now.)

The Boomers are an easy target, but I still won't go as far as to say they are any more evil than any other generation. Maybe today's young people would behave the same way if they stood to reap the benefits of it, and maybe the only reason we all just hate the program is because we've always been set up to be screwed by it and have always known this.

Governments seem to find the worst in people and blow it up big. So although I meet individuals in my life who are self-reliant, moral, and capable of seeing the big picture, I can't read headlines and not think that people in general just suck. I don't think we can count on most people to do the right thing. And unfortunately they would throw anyone out of office who tried to.

Sooooo .... we wait for the big flush. And hope it doesn't cause too much civil and social unrest.

> And hope it doesn't cause too much civil
> and social unrest.

This will not be a pleasant cleansing.

See also.

Well, if I owe someone $100,000, I am screwed. If I owe him $1,000,000, HE is screwed.