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May 28, 2005

The People's Debt

I thought I might chase The Ethical Werewolf's notes on The People's Money with a snapshot of The People's Debt.  I've been following this story for several months, and I've noticed that it doesn't get much air time.  The essence is simple.  Assume the Republican Party makes all of its recent regressive tax changes permanent (but does not go farther down that path) and then only increases discretionary spending with GDP (by among other things, not debt-financing colonial adventurism).  By 2040, almost every penny that the Federal Government takes in goes just to pay the interest on the national debt.  For those who are curious about what that looks like, there's a chart below the fold.

That's not my opinion.  That's the opinion of the General Accounting Office, based on a middle-of-the-road set of assumptions.  And yet, the Republican Party talking points are that Social Security is bankrupt because in 2042, the Social Security Trust Fund will be depleted, and the amount of money then coming in earmarked for Social Security will only be enough to pay between 70% and 80% of the then-scheduled payments (again, based on a middle-of-the-road set of assumptions).

If the Republicans can't tell the difference between these two situations (and apparently, they can't, or they'd be far more worried about the General Fund than Social Security), they really shouldn't be trusted with the The People's Money to run the government.  Frankly, The People should probably think twice about whether the Republicans can even be trusted with The People's Ten-spot to buy The People a six-pack at Circle K.

- paperwight

Gdp_1

May 28, 2005 in Economy, Republicans, Social Security, Taxes | Permalink

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Comments

Okay, for a guy who's absolutely slammed and has no time to write, you're posting an awful lot of stuff. Your low level production is more like my peak performance. Please tell me that some of these posts were already in the incubator.

The enormity of the mess is so overwhelming that it's hard to figure out how to tackle this. Boy do Dems suck. I mean, we should have been able to make this clear.

Posted by: Abby | May 28, 2005 7:06:58 PM

The democrats seem very timid about this taking issue and castigating republicans for it. Their record on fiscal matters ought to be plenty of ammo to use against the GOP. It's a devicive issue for them. There must bee some old school small government conservatives apalled by this behavior.

Posted by: Sonny | May 28, 2005 9:22:13 PM

There must bee some old school small government conservatives apalled by this behavior.

There are no 'old school small government conservatives' left -- the GOP is in the hands of people whose fiscal policy is their certainty that Jesus is coming before the bills fall due.

Posted by: Davis X. Machina | May 28, 2005 11:46:37 PM

Old school small government conservatives would therefore like a party which represents their concerns then, Hm. Sounds like EW has synergy going.

Posted by: opit | May 29, 2005 1:11:54 AM

"based on a middle-of-the-road set of assumptions"

Nope. In the midst of an otherwise excellent post you have bit on the Big Lie. Intermediate Cost (the standard) is not middle-of-the-road and has not been for years. Instead it is fixed in relation to Low Cost. Low Cost is stated to be the upper end of a range of possible economic outcomes. This is clearly not true, Low Cost for this year sets economic productivity at 2.1% when the economy returned 3.3% last year and is returning 3.5% year to date. How exactly can we accept 2.1% as "optimistic"? And only if we do can we accept Intermediate Cost numbers, which by definition are set at a lower rate than Low Cost, as "middle-of-the-road".

The Three Alternatives
What does Low Cost mean?

Your post is not only on point, but that point is way sharper than you may realize. When I say "Social Security is not broke" I really mean to say "Under any ordinary set of economic outcomes 12.4% payroll tax substantially overfunds the Trust Fund" Social Security by the Numbers

The dialogue on Social Security is going to move to a whole new territory in the next couple months and privatizers are going to be left behind choking in the dust wondering who was driving the wagon that ran them over. I don't know if Paul or Josh or Matt or Ezra or Brad will be holding the reins, but me (and the Chief Actuary of Social Security) will be riding shotgun. Hmm. Table V.B1 and Figure II.D7. Yummy. My take on the 2005 Report - with links to the real thing

Posted by: Bruce Webb | May 29, 2005 9:20:50 AM

Oops. I left out Max S as a potential driver, and the ur-Economists on this topic Dean Baker and Mark Weisbrot Social Security: the Phony Crisis They got it right back in 1997.

Posted by: Bruce Webb | May 29, 2005 9:47:10 AM

No one here has mentioned cutting SPENDING, and that is an important key to this problem.

It is true that I am deeply disappointed in the Republicans for their inability to cut spending, especially on domestic programs. That being said, there is absolutely no hope of having Democrats doing that either. So here is my dilemma.
Vote Republican and maybe get some reduction in taxes and hope that they can be shamed at some time into cutting spending and getting a conservative social agenda or vote Democratic and have no hope of cutting spending, higher taxes as well as getting homosexual marriage, gun control, and other unpopular domestic social changes.

Posted by: Robert Zimmerman | May 29, 2005 12:18:28 PM

Mr. Zimmerman should go look at the charts and see where the Federal Government spending actually falls -- the biggest target for discretionary spending cuts would be defense, and I'm sure he doesn't want that cut. What he means by cutting spending is cutting spending on people he thinks don't deserve the money. And he conveniently fails to note (as The Werewolf does) that when Republicans run the country, spending goes *up* and so do deficits, and the brutal fact of the interest payments intrude. There's *no* evidence that the Republicans are interested in cutting overall spending in any meaningful way, except where it can be done by transferring costs from the wealthy to the poor. Even then, parochialism seems to win out ($1.5M for a bus stop?). Also, one might note, if one bothered to click through to the Washington Post story, that even the Domestic Policy Director of the Heritage Foundation thinks that taxes will have to go up as a percentage of GDP.

But hey, one shouldn't let actual facts get in the way of a good faith-based talking point.

Posted by: paperwight | May 29, 2005 1:33:13 PM

Bobby Z, if Social Security is fully funded why would we even be taking about cutting SPENDING (your CAPS). All we ask is that on this topic we address it on its own merits. Is Social Security as presently constituted fully funded or not?

Legally the two are separated, in practice of course they are blended. But in point of fact Social Security has a source of funds flowing in (12.4% of payroll overall) and a cost flowing out (survivor, disability and retirement checks). And the question remains is the former going to be able to offset the latter?

Social Security solvency depends exactly zero on homosexual marriage or gun control. If you enjoy spending long evenings slowly stroking your 44 magnum with a cloth lightly soaked with gun oil, well hell it is a free country and I support the 2nd Amendment too.

But back in boot camp I seem to remember some guy barking out "Drop your cocks and grab your socks".

You can argue that people should vote Republican because of every issue except Social Security "crisis" and Iraqi WMD's. Maybe you do have a big Aslan in your closet. Maybe God is just beaming down on Tom Delay. But none of that changes the underlying question: is Social Security broke?

Posted by: Bruce Webb | May 29, 2005 1:38:55 PM

That's just great.

Just the mere mention of possibly cutting spending somewhere, in some undefined fashion violates the group mindset so violently that multiple posters feel compelled to quash this deviancy in it's infancy. Can't consider that!!!
One poster attempts to speak for me, guessing what i would or would not prefer and attempts to portray me as the dreaded gun nut because I mentioned a constitutional right while the other has determined that until all government entitlements are fully funded, there can be no cuts anywhere. (Shhh. Don't tell him that the structure of these programs can be changed to make them more solvent).

Way to go. Take this attitude and go win an election.....NOT!!!!

Posted by: Robert Zimmerman | May 30, 2005 9:46:45 AM

Debt: "How To Get Out Of Debt By: John Mussi "

Debt: "Eliminating Credit Card Debt By: Alan Barnes "

Debt: "We all know about debt. If you don't have too much as an individual you can increase the quality of your life,"

Posted by: Debt | Jun 7, 2005 12:04:10 AM

144184: Hey, does anyone know where I can find a list of gas stations with low prices in my area?

Posted by: Debra Riley | Oct 17, 2005 7:07:47 PM

I can’t believe it, my co-worker just bought a car for $56281. Isn’t that crazy

Posted by: Betsy Markum | Oct 27, 2005 1:26:05 PM

I’ve managed to save up roughly $03521 in my bank account, but I’m not sure if I should buy a house or not. Do you think the market is stable or do you think that home prices will decrease by a lot

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