| Author | Message | ||
     wharfrat Citizen Username: Wharfrat Post Number: 1616 Registered: 6-2001 |
Deficits and Deceit By PAUL KRUGMAN Four years ago, Alan Greenspan urged Congress to cut taxes, asserting that the federal government was in imminent danger of paying off too much debt. On Wednesday the Fed chairman warned Congress of the opposite fiscal danger: he asserted that there would be large budget deficits for the foreseeable future, leading to an unsustainable rise in federal debt. But he counseled against reversing the tax cuts, calling instead for cuts in Social Security, Medicare and Medicaid. Does anyone still take Mr. Greenspan's pose as a nonpartisan font of wisdom seriously? When Mr. Greenspan made his contorted argument for tax cuts back in 2001, his reputation made it hard for many observers to admit the obvious: he was mainly looking for some way to do the Bush administration a political favor. But there's no reason to be taken in by his equally weak, contorted argument against reversing those cuts today. To put Mr. Greenspan's game of fiscal three-card monte in perspective, remember that the push for Social Security privatization is only part of the right's strategy for dismantling the New Deal and the Great Society. The other big piece of that strategy is the use of tax cuts to "starve the beast." Until the 1970's conservatives tended to be open about their disdain for Social Security and Medicare. But honesty was bad politics, because voters value those programs. So conservative intellectuals proposed a bait-and-switch strategy: First, advocate tax cuts, using whatever tactics you think may work - supply-side economics, inflated budget projections, whatever. Then use the resulting deficits to argue for slashing government spending. And that's the story of the last four years. In 2001, President Bush and Mr. Greenspan justified tax cuts with sunny predictions that the budget would remain comfortably in surplus. But Mr. Bush's advisers knew that the tax cuts would probably cause budget problems, and welcomed the prospect. In fact, Mr. Bush celebrated the budget's initial slide into deficit. In the summer of 2001 he called plunging federal revenue "incredibly positive news" because it would "put a straitjacket" on federal spending. To keep that straitjacket on, however, those who sold tax cuts with the assurance that they were easily affordable must convince the public that the cuts can't be reversed now that those assurances have proved false. And Mr. Greenspan has once again tried to come to the president's aid, insisting this week that we should deal with deficits "primarily, if not wholly," by slashing Social Security and Medicare because tax increases would "pose significant risks to economic growth." Really? America prospered for half a century under a level of federal taxes higher than the one we face today. According to the administration's own estimates, Mr. Bush's second term will see the lowest tax take as a percentage of G.D.P. since the Truman administration. And don't forget that President Clinton's 1993 tax increase ushered in an economic boom. Why, exactly, are tax increases out of the question? O.K., enough about Mr. Greenspan. The real news is the growing evidence that the political theory behind the Bush tax cuts was as wrong as the economic theory. According to starve-the-beast doctrine, right-wing politicians can use the big deficits generated by tax cuts as an excuse to slash social insurance programs. Mr. Bush's advisers thought that it would prove especially easy to sell benefit cuts in the context of Social Security privatization because the president could pretend that a plan that sharply cut benefits would actually be good for workers. But the theory isn't working. As soon as voters heard that privatization would involve benefit cuts, support for Social Security "reform" plunged. Another sign of the theory's falsity: across the nation, Republican governors, finding that voters really want adequate public services, are talking about tax increases. The best bet now is that Mr. Bush will manage to make the poor suffer, but fail to make a dent in the great middle-class entitlement programs. And the consequence of the failure of the starve-the-beast theory is a looming fiscal crisis - Mr. Greenspan isn't wrong about that. The middle class won't give up programs that are essential to its financial security; the right won't give up tax cuts that it sold on false pretenses. The only question now is when foreign investors, who have financed our deficits so far, will decide to pull the plug. Copyright 2005 The New York Times Company | ||
| Innisowen Citizen Username: Innisowen Post Number: 559 Registered: 3-2004 |
We may "starve the beast," but we are feeding the "fat cats" of the banking, pharmaceutical, and petroleum industries with laissez-faire largesse as though there is no tomorrow. Strains of the kingdom of France under the last Louis before the revolution. What's next, a salt tax on the poor, and more estates and lands for the already fattened cats who were high dollar contributors to the Bush-Cheney re-election campaign? Odd how history repeats its patterns... | ||
| Nohero Citizen Username: Nohero Post Number: 4402 Registered: 10-1999  |
"What's next, a salt tax on the poor ..." Hey, with Greenspan proposing "consumption taxes" as the way to go, that's not so far-fetched ... | ||
| cjc Citizen Username: Cjc Post Number: 3223 Registered: 8-2003 |
They've never starved the beast, as the budget increases steadily year to year. | ||
| Tom Reingold Supporter Username: Noglider Post Number: 5709 Registered: 1-2003  |
cjc, we are talking about different beasts. | ||
| Local_1_crew Citizen Username: Local_1_crew Post Number: 431 Registered: 3-2004 |
social security and medicare should be abolished. people should accept personal responsibility and stop counting on the government to give them handouts. a major part of our economic problem is the lack of savings in this country. this lack is endemic of a nation of people who feel that their government ismeant to bail them out of financial trouble whenever they dont feel like planning for the future. medicare is the reason for soaring health costs. when it only costs you $25 to go to the doctor then it is very easy to go too often and for the doctor to order all sorts of unnecessary and expensive tests to cover his •••, safe in the knowledge that the gov't will pick up the tab. i am tired of saving my money, making wise investments, and planning for the future while also having to pay exorbitant taxes in order to subsidize those who cant be bothered to do the same. The Medicare Modernization Bill is crap, but there was one tiny rider in the bill that allowed for Healthcare Savings Accounts. It will revolutionize the world They're like an FSA (where you can pre-tax money and have it pay for medical expenses), but unlike the FSA, if you don't use the money, it rolls over to the next year. It grows with interest, so it's identical to an IRA, with an added bonus that you can take the money out for medical expenses and never have to pay a cent of tax on it. Why its going to change everything, is that it has to be tied to an insurance plan with a high-deductible. So you personally have to pay for the first $1,000 (as an individual) or $2,000 (as a family) of your medical expenses, no matter what they are. Then after that, your insurance company pays. So you pay for the incidental stuff, and if anything major happens, your insurance company pays for it. You put $1,000 in, but it's really only about $500 because you're saving the tax. Also your company can put money in, instead. So that's reason #1 why it's going to change the world. Instead of your company paying $5,000-$10,000 a year per employee for insurance (where that cost is wasted for about 50% of the people who don't ever go to the doctor), they can pay like $3,000 a year for high deductible insurance, and put $1,000 into your account. They'll save money, and you'll get $1,000 asset. Now reason #2. You have $1,000 that you have to spend. It's your money. When was the last time you asked a doctor (if you have insurance) "how much does this cost?". Because it's not going to be a "I pay the first $10 and anything after that is covered by my insurance company, no matter how much" people are going to start putting pricing pressure on doctors and hospitals and drug companies. | ||
| Innisowen Citizen Username: Innisowen Post Number: 574 Registered: 3-2004 |
I think that Local 1 Crew has an interesting and increasingly widespread point of view, even if it's a simplistic one that doesn't address key problems. One of the chief reasons for soaring health costs is the significant charges and unbundling of charges by health insurance companies: They get the docs (the medical practitioners) on one end by charging increasingly higher med mal insurance and liability rates. They get the docs on the other end by squeezing them through capitation rates, in-network fees, and massive amounts of paperwork (automated or not) that elevate the docs' costs of being in business. The insurance companies get the plan sponsor coming and going by charging increasingly high rates in the programs they offer, along with higher retention and renewal fees, undependable client services, and frequent changes of staff, as well as more work being "pushed out" to the plan sponsor. The insurance companies get the plan member and the insured both ways: rates raise every year, services covered are reduced either in scope or in amounts paid for, networks of providers are progressively more severely limited. At the same time, the insurers have very poor internal controls on expenses and senior executive compensation, even as they outsource all clerical, most administrative, most customer service, and increasing numbers of critical functions to off shore entities. When despite all its financial advantages, an insurance company fails, it's usually government money that either props it up, bails it out, or replaces coverage, patching the problem, rather than solving it. | ||
| Local_1_crew Citizen Username: Local_1_crew Post Number: 432 Registered: 3-2004 |
my view is a coherent and focused view. it is compatible with my libertarian beliefs. | ||
| tom Citizen Username: Tom Post Number: 3134 Registered: 5-2001 |
Presumably then you're against the Bush plan, since its stated aim is to save the system. | ||
| Chris Prenovost Citizen Username: Chris_prenovost Post Number: 371 Registered: 7-2003 |
Back to starving the beast. . . In "Mein Kampf", Hitler wrote that 'a big lie always works better than a small one'. So it is with the 'starving the beast' argument. Let's cut taxes on the rich, send the deficit into the stratosphere, and tell the people that this is good, that it will force the government to restrict it's spending. In the five years of the Bush administration, federal spending has increased MORE than during the whole eight years of that draft-dodging, big spending Clinton. We have sucessfully replaced those dastardly tax-and-spend democrats with those upstanding borrow-and-spend republicans. Local_1_crew: I hate to intrude with a little reality, but there are already insurance plans such as the one you describe with $1000 deductibles. And they cost upwards of $10,000 per year, not 3K. And individuals have no bargaining power whatsover with doctors or hospitals. The times I have asked my physicians what something costs, I always get the same awnser: 'I don't know'. We have the only private health care system left in the western world. And by far and away the most expensive - 14% on GDP versus 9% in Canada, the next highest. | ||
| Local_1_crew Citizen Username: Local_1_crew Post Number: 433 Registered: 3-2004 |
a few companies offering the plan is totally different than the government makibg it happen | ||
| Local_1_crew Citizen Username: Local_1_crew Post Number: 434 Registered: 3-2004 |
and tom,yes,i am against bush's ss plan. | ||
| Chris Prenovost Citizen Username: Chris_prenovost Post Number: 372 Registered: 7-2003 |
Good. Now, how about some REAL spending cuts? Phasing out social security at incomes over $50k would save about $45 Billion a year. Eliminating all agribusiness subsidies would save $15 Billion a year. How's that for a start? "The Government That Governs Best Is That Which Governs Least." | ||
| Local_1_crew Citizen Username: Local_1_crew Post Number: 435 Registered: 3-2004 |
good idea, but lets take it further and phase out social security all together. you cant make a cutoff and have those people continue to make contributions | ||
| Montagnard Citizen Username: Montagnard Post Number: 1453 Registered: 6-2003  |
Let's phase out the police and the courts while we're at it, then we can use our money to buy guns and ammunition, which will be useful in robbing and extorting money from Local and his (temporarily) rich buddies. Why save when you can steal? | ||
| Local_1_crew Citizen Username: Local_1_crew Post Number: 436 Registered: 3-2004 |
your comparison is absurd. i am not rich but i save what i can and am trying to make sure that i can live comfortably when i retire. i dont feel that those of us who are responsible and forsighted should be forced to create a cushion for those who refuse to take responsibility for their own futures. | ||
| Innisowen Citizen Username: Innisowen Post Number: 579 Registered: 3-2004 |
Then keep Social Security for what it was intended to be: not a pension program, but an insurance program safety net to help people whose finances, for whatever the reason, were inadequate for their old age. With 76 mm baby boomers starting to head towards retirement, we're bound to have a number of people who will need that net. What would you do, send them off to the poor houses, as was done in England in the 19th century? And you don't think for a moment that all the members of Gen X (the generation after the boomers) are going to have adequate funding for their retirements, do you? | ||
| Local_1_crew Citizen Username: Local_1_crew Post Number: 437 Registered: 3-2004 |
i hate to sound uncaring but, tough for them. they screwed up. why am i forced to subsidize their idiocy? they did not take responsibility for their futures and now i am responsible for them? bull****! everybody has an answer as to how social security should work except for the correct answer: be responsible for yourself and prepare for the future. | ||
| Montagnard Citizen Username: Montagnard Post Number: 1454 Registered: 6-2003 |
Sure pal. If you pay up, you'll be comfortable. Now that the AARP's become a gay marriage outfit, we have to start getting creative about our pension plans. Hey, we might even trash your house just for fun. | ||
| Innisowen Citizen Username: Innisowen Post Number: 580 Registered: 3-2004 |
Ah, Local 1, so I guess you went through schools that received no federal subsidies, and you use transportation means that are not built or subsidized with public funds, go to doctors and hospitals that receive no federal grant money---I guess you've pretty much picked up the tab by yourself for everything you've done in life so far. Not bad at all--- let us all in on how you managed to do that, please, get by so far in your life without other people and entities subsidizing something for you... |
