Why None of this Debt Ceiling Stuff Matters. Vol. II: This Time With Graphs

Well Congress did it…they passed the debt ceiling bill.  Hooray!  Hooray!  We’ve avoided certain DOOM.  So, it’s all over now right?  Well, sorta.  I mean, the debt ceiling crap is over (for now), but we did just pass a bill that allows the treasury to borrow another $2.4 trillion!  From a conservative’s perspective, the deal seems better than contracting syphilis, but not by much.  But still you ask how could averting DOOM not matter?  DOOM is, after all, bad.  This is why:

So what does this fancy graph mean?  It means that, by 2049, every penny of tax revenue will get eaten by the entitlement programs.  And even if we raise revenue by taxing the filthy rich, it might get us a few more years.  And absolutely nothing is being done about it…and I don’t really anticipate anything being done about it until we simply run out of money and the programs all go bust.

I know, you’ve been told that stuff like Social Security doesn’t contribute to the deficit.  “Never contributed a nickel” is what libs like to say.  They point to the FICA on your paystub and say “see, it’s earmarked for Social Security.”  Here’s the problem: there is no special little fund where the FICA goes…it goes into the same pot as all the other taxes, and Social Security (and Medicare, and Medicaid) get paid out of that pot.  So, instead of your FICA going to a bucket somewhere so that it can pay you upon retirement, it’s actually going straight to your dad (freeloader).  Anywhere else, this sort of “take from Peter to pay Paul” relationship would be illegal…it’s called a Ponzi scheme (see Bernie Madoff).

Here’s the point: we’re never going to get rid of our debt without significantly changing the entitlements…and no one will touch “granny’s income” until there literally is no income.  Without doing something about entitlements, we eventually get this…

…debt we literally can’t pay for and we get DOOM for real.  Don’t believe me?  See Greece.  Don’t worry though.  Your Congressman who doesn’t want to hurt granny will be dead by then.  And you’ll be eating cats.   But not those big fat cats like Garfield.  I’m talking the small, bony cats you see in those ASPCA commercials.  Yes.  The ones with all the lesions.

Oh, and you think I’m kidding.  Remember Moody’s from Vol. I?  Well, even with the debt ceiling increase, they’re still considering downgrading us.  Why?  Because of the fancy graphs upstairs.  So, hooray for compromise!  Hooray for cooperation!  Hooray for taking over my t.v. for several days and ultimately doing nothing that will matter in the long run.

My argument for the wealthy.

I want your money.

I’m here to stand up for the wealthy.  And by that I mean the ridiculously wealthy.  You know…the Scrooge McDuck types.  Is it because they need it?  Obviously not.  Is it because I’m one of them?  Obviously not (If I was, you’d know it because you’d see my awesome blog (and face) on huge billboards.  Everywhere.).    Is it because I hope to be one someday?  No.  In fact, the longer I live, the less I care about how much money I make.  I’m perfectly happy spending my weekends scaring my neighbors by mowing my lawn shirtless while drinking PBR.  I’m going to stand up for the wealthy because, well, I’ll get to that later.

As you may know by now, Washington is all a-twitter with the debt ceiling debate.  Apparently Congress needs to authorize itself to spend more of our money, and it’s having a difficult time securing such authority.  The right wants huge spending cuts…which include cuts to the entitlements.  The left doesn’t like to cut any entitlements, but instead, wants to raise taxes on the dirty rich people.  Many people out there think asking the ultra-wealthy to carry a little more of the burden, as opposed to taking food out of the mouth of grandma, is fair.  I say many people are idiots (and no one is trying to take food away from grandma, by the way).

Today, Treasury Secretary Tim Geithner said this:

‘The president has proposed some very sensible tax reforms that would eliminate loopholes and ask the wealthiest Americans to pay a modest additional share of the burden,’ Geithner said.

“Modest additional share of the burden.”  To that request, I ask this: why?  It’s an undisputed, proven, absolute fact that the United States has the most progressive income tax in the industrialized world.  What does that mean?  This:

The latest data show that a big portion of the federal income tax burden is shoul­dered by a small group of the very richest Americans. The wealthiest 1 percent of the population earn 19 per­cent of the income but pay 37 percent of the income tax. The top 10 percent pay 68 percent of the tab. Meanwhile, the bottom 50 percent—those below the median income level—now earn 13 percent of the income but pay just 3 percent of the taxes. These are proportions of the income tax alone and don’t include payroll taxes for Social Security and Medicare.

In other words, the wealthy are paying the majority of income taxes, while earning a comparatively disproportionate amount of the money.  At the same time, the bottom 50% pay virtually nothing as far as income tax.  What’s the point?  The wealthiest Americans already shoulder far more than their fair share.

Why do I care?  Because citizens of this country should benefit from their success.  We should all get to keep more of what’s ours.  And everyone should actually have to pay their fair share.  In fact, I’d bet you my lunch that if everyone actually did have to pay their fair share, you’d see both parties drop tax rates real quick.  But I digress….

The idea that we should tax the wealthy more because liberals can’t stop throwing money at the “most vulnerable” is nonsense.  And don’t start talking to me about “doing what’s right.”  Liberals lost the right to make the morality argument once they offered the assertion that an unborn baby equates to an appendix.  Oh, and if you’re really interested in “helping your vulnerable neighbor,” try walking next door and offering them some help.  That’s what most of us do.

None of this matters at the end of the day though, because real reform won’t occur without the economy truly crashing.  What’s real reform, you ask?  Allowing me to opt out of Social Security.  Allowing me to opt out of paying for public schools that my kids don’t attend.  Reforming the tax code and related legislation so that there are simple low rates for everyone (and every business), and all subsidies and deductions are eliminated.  That means no more of my money going to a solar energy plant that can’t light my house in January.  So, in a round about way, it’s all about me.

Social Security. Why?

I'll be dead before people realize this was a bad idea.

I’ve always wondered what the American people were thinking in 1935, when they allowed FDR and Congress to pass the Social Security Act.  Well, strike that, they probably weren’t thinking about it at all because of the Great Depression and trying to eat and stuff (example of never letting a good crisis go to waste? hmmm…).  Seriously, is there anything more un-American than the federal government passing a law that forces you to pay a certain amount in taxes so that the government can hold the money until you retire?  And the rationale behind it all is that you’re too stupid to save for retirement yourself?  We’re not talking about the “common good” here.  We’re talking about a government-mandated ”stupid tax,” and we’ve allowed it to not only exist, but expand ever since.  I find it shocking. 

Well, thanks to the inevitabilities of our duly-elected representatives raiding any pot of money in existence, maybe Social Security will be going away for good.  I previously posted about the President’s Debt Commission this past summer.  I’m not going to link it because, well, I’m too lazy to look for it.  But the gist of their findings were we’ll never get out of debt until we do something about the three biggest black holes of tax revenue: Medicare, Medicaid and Social Security.  This finding elicited much wailing and gnashing of teeth from the left, because they luv their entitlement programs.  The most contentious issue was Social Security though.  Why?  Because, as libs like to say, SS doesn’t have any impact on our budget.  It’s funded entirely by the FICA tax, and it shouldn’t be receiving any money from other tax revenue.  Thus, it shouldn’t contribute to the deficit.  Well, they’re right in that it shouldn’t use other federal tax revenue…just like my son shouldn’t place himself within biting distance of his two year old sister over and over again.  The point is: they do.  And with respect to SS, there’s no more blood coming from that stone.

New congressional projections show Social Security running deficits every year until its trust funds are eventually drained in about 2037.

This year alone, Social Security is projected to collect $45 billion less in payroll taxes than it pays out in retirement, disability and survivor benefits, the nonpartisan Congressional Budget Office said Wednesday. That figure swells to $130 billion when a new one-year cut in payroll taxes is included, though Congress has promised to repay any lost revenue from the tax cut. 

Oh no!  The oldies are going to starve!  Just kidding.  The deficit will be made up with money from the general budget.  The problem, though, is that we can’t afford to pay for it out of the general budget.  So, we’ll borrow it from the Chinese.  Problem?  Not for me.  I enjoy kung pao chicken, so I welcome our new overlords. 

Is all lost then?  Probably.  But my hero, Rep. Paul Ryan, has a plan.  He would like people to have the option of opting out of SS, and invest the money themselves.  Sounds good to me.  I’m more comfortable using my money to “make it rain” in a crack house than letting the government “lock it away” for the future. 

Will Rep. Ryan’s plan ever be codified into law?  Probably not.  Why?  Because all politicians love slush funds.  But remember, it’s projected to run out completely in 2037, so those of you that are my age…I would recommend starting to save for retirement. 

It’s our money dill-hole.

 

Is this surprising?

Remember Peter Orszag?  You know…the director of the Obama White House Office of Management and Budget that skipped town after realizing that he was about as useful in fixing the economy as my six year old daughter?  Well, he’s now one of the New York Times‘ esteemed Contributing Columnists.  In his first Op-Ed, he argues that Congress should extend all of the Bush tax cuts for two years, and then dump them all permanently.  In doing so, he presents the liberal position that has been thrown about for so long that it’s simply met with a shrug.  In short: at some point, we need to raise taxes because the government needs to buy stuff…because, as we all know, buying stuff is fun; especially when it’s someone else’s money.  I continue to find this logic absurd and worthy of endless ridicule.

I have to give Orszag credit on one issue that the “progressives” fail to acknowledge: ending the Bush tax cuts for anyone, even those evil rich people who have stolen all of their money from the rest of us without creating any jobs (that’s sarcasm for those of you who are new to this blog) would actually hurt an already crappy economy.  It’s his next points that cause me great consternation.

Many conservatives are even worse: they’d make the tax cuts permanent for the likes of Warren Buffett, even though he’d prefer they didn’t. Making all the tax cuts permanent would expand the deficit by more than $3 trillion over the next decade.

Ah Warren Buffett…how I disdain you.  You of statements like (and I’m paraphasing here), “it’s not fair that my secretary pays more in taxes than I do.”  Look Warren, I know you like to look at the man in the mirror every morning and wax poetic about how gracious that person is, but you’re the one drinking fifty year old scotch out of a golden goblet.  In other words, if your secretary is paying more taxes then you, then stop paying your lawyers and accountants to find ways to shelter your money…or stop paying your secretary so much.   Plus, if you really want to pay more in taxes, feel free to write the IRS a check…I’m certain it won’t be sent back.

But I digress.  My point is this: the only way tax cuts could increase the deficit is if the government DOESN’T CUT ITS OWN SPENDING.  See, the government isn’t entitled to whatever amount of revenue it wants so that it can do rad stuff like give grants to scientists to prove cats hate showering with naked people or to prove global warming exists by cherry picking climate stats.

Orczag continues,

Let’s look at the facts. The projected deficit for 2015 is 4 percent to 5 percent of G.D.P., depending on whose assumptions you use. A sustainable level is more like 3 percent or lower. So we need deficit reduction of 1 percent to 2 percent of G.D.P., or about $200 billion to $400 billion a year by 2015. These figures are uncertain, but they’re the best we have (and they may well turn out to be too optimistic).

These are only “facts” if you’re Nostradamus.  In other words, you need to know what the budget will be in 2015.  Since there is no budget for 2015, you’re simply assuming it will be more or less the same as it is now.  Why not assume that the government will decrease its spending in 2015? 

The federal government, and those employed by it, decided long ago that they were entitled to whatever amount of taxes they decided were appropriate and that they found to be politically palatable.  It began with FDR and his New Deal and Social Security and continued largely unabated through Johnson’s Great Society.  Each time the American people were told the government needs more money for the betterment of society; except society never asked for it.  So now we have Social Security, Medicare and Medicaid…and Obamacare.  Liberal entitlement programs forced down America’s collective throat that amount to little more than theft.

Orszag asserts that Social Security needs reform…no kidding.  Will it get the reform it needs?  Well, being that the reform it needs is to, at the very least, allow Americans the opportunity to opt out of it and invest their money themselves, it’s  not likely.  How about Medicare and Medicaid?  Orszag asserts that Obamacare has resulted in substantial savings to both programs.  Considering the net effect of Obamacare will be to increase government spending, simply moving money from column A to column B and calling it savings seems a bit dubious, yes?

Simply put, our government has marched us slowly towards more and more taxes in the name of social progress.  Now we’re told we can’t “afford” to keep more of our own money.  Well, to that I say: I’m pretty sure we can.  Plus, Warren’s willing to pay more.