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The Roadmap

By Big Tent Democrat, Section Other Politics
Posted on Fri Jan 21, 2011 at 09:05:26 AM EST
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Via Meteor Blades, Andrew Whitehead of EPI critiques The Roadmap of Republican Paul Ryan:

The Roadmap would place the entire burden of deficit reduction on spending cuts. "The hefty tax hikes on the middle class included in the plan do not go toward deficit reduction. Nor does the Roadmap’s overall revenue plan improve the long-term fiscal outlook. The plan actually reduces federal revenue relative to either current law or current policy."

So here's my question, in light of The Deal, what is the Democratic alternative? And I do not mean a "wish list" alternative, but one the President and Dems are willing to fight for. After The Deal, are we to really expect that Dems will not capitulate? After The Deal, the threat of government shutdowns and debt ceilings won't have the Dems telling us that agreeing to 98% of the GOP agenda on taxes and spending was not "the best they could do?"

Speaking for me only

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    The Roadmap | 37 comments (37 topical)

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    The moment the Dems signed onto (5.00 / 1) (#15)
    by Anne on Fri Jan 21, 2011 at 11:43:34 AM EST
    the Deal, Republicans knew the Dems had just painted themselves into a corner.  

    And what a corner it is.  

    I picture it as being surrounded by the ring of "demons," with those closest to the front being mostly entitlement, other social-spending-type programs and corporate taxes; the demons of the military-industrial complex and tax cuts for the wealthy are standing in the back.

    Now all Republicans have to do is tell the Dems that the only way to save themselves and get out of the corner is to take this handy machete and start whacking their way out.

    Like watching a horror movie where you want to scream, "climb out the window behind you!" there is no way on God's green earth Dems will notice that open window, so mesmerized and terrorized are they by what is in front of them; honestly, there is not a MacGyver in the bunch who will be able to extract them from this without a lot of collateral damage.

    That's more depressing than I really want to think about.

    I assume (none / 0) (#1)
    by Capt Howdy on Fri Jan 21, 2011 at 09:12:21 AM EST
    its a rhetorical question.
     

    Even the tea party does not want to cut (none / 0) (#2)
    by Buckeye on Fri Jan 21, 2011 at 09:37:00 AM EST
    gov. spending on SS, heelthcare or defense.  The big 3 plus interest on the debt was 65% of federal spending in 2010.  You cannot get anywhere close to balancing budget on spending cuts alone without significantly whacking these things.  This cannot be done politically.  The GOP will fail at what they are trying to do.

    FTR (3.67 / 3) (#3)
    by Big Tent Democrat on Fri Jan 21, 2011 at 09:45:57 AM EST
    Social Security and Medicare are no "on budget" items and cuts to them do not formally cut the deficit.

    You are also wrong even if they were formally on budget items. You could balance the budget by raising taxes.

    Amazing how the Republican logic is just accepted by everyone.

    Parent

    The comment (none / 0) (#5)
    by me only on Fri Jan 21, 2011 at 09:50:44 AM EST
    You cannot get anywhere close to balancing budget on spending cuts alone without significantly whacking these things.

    Your reply:

    You are also wrong even if they were formally on budget items. You could balance the budget by raising taxes.

    I call that a reading comprehension error.

    Parent

    Fair enough (none / 0) (#9)
    by Big Tent Democrat on Fri Jan 21, 2011 at 10:16:39 AM EST


    Parent
    Yes, even the infamous Catfood Commission (none / 0) (#6)
    by KeysDan on Fri Jan 21, 2011 at 10:00:30 AM EST
    acknowledged that Social Security did not contribute to the deficit (the Deal that included a partial payroll tax holiday changes that for this year, since the temporary two percent decrease is to be funded by general revenues).  The Catfood Commission's savings to address the "urgent" issues of social security stayed with the program.  

    Parent
    The real reason IMO for SS being under attack (5.00 / 2) (#12)
    by MO Blue on Fri Jan 21, 2011 at 10:35:00 AM EST
    The financial industry also knows a cash cow when they see one. It would take more than $10 trillion in private accounts to generate the same amount of money as Social Security pays out each year in benefits. If the financial industry collected just 1.0 percent of this sum in fees each year, it would mean another $100 billion a year into the coffers of the Merrill Lynch set. link

    Also the reason why our bought and paid for government will probably make sure that this happens.

    Parent

    Yes, exactly. Other countries which (none / 0) (#13)
    by observed on Fri Jan 21, 2011 at 10:38:01 AM EST
    have privatized pensions show that privatization works---for the finance sector, but not, of course, for the pensioner.

    Parent
    My point is that you cannot make substantial (none / 0) (#7)
    by Buckeye on Fri Jan 21, 2011 at 10:06:08 AM EST
    cuts to government spending without hitting these.  Hitting those are impossible politically.  If repubs are not going to raise taxes and look for further regressive tax cuts, they will fail and our debt problems will get worse not better.  Eventually, taxes will be raise on wealthier people or these things will get cut.  The former will win in the long run.

    Parent
    Wrong Again (5.00 / 1) (#29)
    by cal1942 on Fri Jan 21, 2011 at 08:36:41 PM EST
    Apparently you haven't caught on yet.

    Social Security and Medicare are NOT part of the budget. On budget (where the deficits come from) is entirely the appropriations budget.

    You are using a great fiction.  That fiction is total budget.  Ain't no such thing, not regarding deficits.  Outflows in non-appropriations programs, like Social Security, are self-supporting.

    Balancing the budget is very simple.  RAISE TAXES.

    Parent

    Apparently, Paul Krugman has not (none / 0) (#33)
    by Buckeye on Sat Jan 22, 2011 at 07:47:56 AM EST
    "caught on" either.  Here is one of his posts.

    In it, he says this:

    Social Security and Medicare do have dedicated funding sources, but they are also part of the overall federal budget.

    We cannot have it both ways.  We cannot say the GOP is fradulently accusing us of double counting savings or trust fund improvements to SS and Medicare (as Krugman says in his post), but then exclude SS or Medicare funding problems from our overall debt because it is not part of the budget that records a deficit.

    Parent

    "Tee former will win in the long run" (none / 0) (#8)
    by Big Tent Democrat on Fri Jan 21, 2011 at 10:16:06 AM EST
    After The Deal, you really believe that?

    Parent
    Yes. I agree with you The Deal was a terrible (none / 0) (#11)
    by Buckeye on Fri Jan 21, 2011 at 10:27:13 AM EST
    mistake but the only way to solve our debt problems with spending cuts alone is to start whacking SS, healthcare (medicare), and defense.  Will not happen.  Polls still show the American people support raising taxes on the wealthy.  Even the Tea Party opposes cutting defense, SS, and Medicare.  

    Where The Deal will hurt us is that we will absorb other cuts that will lengthen/deepen the unemployment problems we have as well as giving us less government than a first world country should have.  Cuts in infrastructure and education for example is just eating from our seed bags.

    Parent

    I disagree. If we are talking about (none / 0) (#10)
    by KeysDan on Fri Jan 21, 2011 at 10:25:09 AM EST
    the deficit, social security does not apply.  The real issue behind proposed social security cuts is ideological; minor changes in the program, itself, will continue its viability for more years than just about any private or governmental budgeting can forecast with any accuracy.

    The weak urgency to address the "problems" of social security can be noted from the Catfood Commission's key remedy of raising the eligibility age to 68 in 40 years (2050) and to 69 in 65 years (2075).

    Of course, social security adds to the debt in the same way that you and I might by buying a US Savings Bond, receive interest and, at some point, redeem it. Not that there is anything wrong with that.

    Medicare, is a different and real concern.  However, this concern requires an aerial view of health care progress and costs.  Medicare has already taken a hit in the health care reform by funding almost half ($500 billion) of the extension through still undefined "savings".  

    Parent

    Ben Stein last night said an (5.00 / 1) (#19)
    by Militarytracy on Fri Jan 21, 2011 at 12:10:11 PM EST
    astonishing thing for Ben Stein, he said that the rich must pay more taxes and they must pay more into Soc Security and Medicaid, and because they are rich they should not expect to or receive comparable payback from those programs as the poor does.

    He said that the protection of rich in this country has become insane.

    Parent

    The REAL Ben Stein? (5.00 / 1) (#20)
    by sj on Fri Jan 21, 2011 at 01:38:49 PM EST


    Parent
    Once in a great while (none / 0) (#31)
    by cal1942 on Fri Jan 21, 2011 at 08:49:04 PM EST
    he actually makes the effort to think.  Must be when he's on his meds.

    His father, Herbert Stein, was sometimes called the liberal's conservative.  On occasion papa Stein also looked at the big picture.

    Parent

    He said that he has to take Tums (none / 0) (#36)
    by Militarytracy on Sat Jan 22, 2011 at 12:50:27 PM EST
    when he pays his taxes, he said sometimes he has to take a lot of Tums....but the rich must pay taxes.

    Parent
    He can really (none / 0) (#37)
    by cal1942 on Sat Jan 22, 2011 at 01:11:08 PM EST
    look like a whiny, sniveling scrooge, like when he complained about paying taxes on his FOUR houses.

    Well -- he is a whiny, sniveling scrooge.

    Sometimes I think he's a classic disconnect just like his father.

     

    Parent

    SS is one of the largest expense items (none / 0) (#14)
    by Buckeye on Fri Jan 21, 2011 at 11:08:49 AM EST
    we have.  And haven't surpluses in the trust fund been used to pay for other areas of government? If expenses are cut, wouldn't that create additional surplus dollars that could be used for other expense items.  If we look at the total cost of government, SS is a big spend nut for Norquisters (even if revenue dedicated to SS is sufficient).

    The only way to lower debt problems of country if we look at total government revenue/expenses through spending cuts alone is to whack the big 3.  That simply will not happen.

    Is there something I am not understanding about trust fund accounting or what is on budget or not (this does confuse me I will admit).

    Parent

    Why does the government have the (5.00 / 2) (#18)
    by Militarytracy on Fri Jan 21, 2011 at 12:07:22 PM EST
    right to default on taxpayers....yet won't allow a default on Wall Street?

    Parent
    Expense (5.00 / 0) (#32)
    by cal1942 on Fri Jan 21, 2011 at 08:54:19 PM EST
    Social Security is NOT an expense.  It is self-financing.

    FICA withholding goes into the SS Trust fund and benefits are delivered out of the SS trust fund.

    If you get a Social Security check it is written on the Social Security Administration NOT the US Treasury.

    In a very real way it's not even government spending.


    Parent

    I think what you don't understand is (none / 0) (#16)
    by Anne on Fri Jan 21, 2011 at 11:55:57 AM EST
    that the US is sovereign in its own currency, and that matters when discussing the debt, the deficit and spending.

    Here's part of a (very long, but very good) post at Corrente, which may be instructive:

    There are other nations however, including the United States, Australia, Canada, New Zealand, Japan, the UK, Argentina, Brazil, and many others that issue their own currencies, owe no debt in anyone else's currency, do not peg the value of their currency to any commodity such as gold or silver, and allow their currency's value to float freely in the International currency markets. Those nations are sovereign in their own currency, and they have no GBC [Governmental Budget Constraint] because they have the constitutional authority to create the currency that is the basis for all financial resources in the non-Government Sectors of their economies.

    The US, as one of these nations, has an unlimited constitutional authority to spend, and in the process of spending to create new financial resources. It does not matter if the US owes $13 Trillion in previous debt, or $26 Trillion in such debt. It does not matter if its debt-to-GDP ratio is 60% or 200%. As long as the US retains its currency sovereignty, it has no GBC that is not self-imposed by Congress. It therefore cannot be forced to become insolvent. It cannot run out of money, unless Congress forces it to do so.

    The US doesn't have to tax, or borrow to "fund" its spending, as the President seems to think. Unlike Households or corporations that cannot create money, the US always has the constitutional authority to spend by simply marking up the USD in private sector accounts within the banking system. It also has other money making powers. But the main point here is that it raises money through taxing and borrowing not to "fund" spending, but only because Congress has chosen to forbid the Executive from using its constitutional power to spend beyond what it has raised in taxes or from borrowing.

    The Congress prevents the Treasury from running a negative balance in its Federal Reserve accounts as a result of its spending. The Congress also mandates that the Treasury issue debt to prevent such negative balances. It also imposes a debt limit on the amount of debt that can be issued at any time.

    So, the GBC President Obama will tell us about in February is a GBC which exists at the option of the Congress. There is no constitutional reason why the US Government should ever become insolvent. Continued solvency is always at the option of Congress, which can remove the mandate for the Treasury to issue debt, remove the requirement that the Treasury not run a negative balance at the Federal Reserve, or remove or increase the debt limit.

    The entire post is well worth reading, but perhaps what I have excerpted will help you - and others - to understand that all this hysteria about debt and deficits and entitlements is just that: hysteria.

    Parent

    It is Wall Street that wants (none / 0) (#17)
    by Militarytracy on Fri Jan 21, 2011 at 12:04:39 PM EST
    our deficit paid down, otherwise the United States doesn't look like a good equity risk.  And only Wall Street benefits from such a thing at this time.

    But the Fed has the printing press running full time right now with quantitative easing.  We are being flooded with currency right now, or what the Fed likes to call liquidity.  We really don't create our own money though, the Fed does and then lends it to us.  I think FDR tried to get rid of the FED control, but was not successful.  Being controlled by the FED though is really at this time like being controlled by the world's biggest banks, that is who makes money off of the FED system and who seems to make all the FED decisions.

    Parent

    Interesting read, thanks for sharing. (none / 0) (#23)
    by Buckeye on Fri Jan 21, 2011 at 03:42:52 PM EST
    My question, if it is true that:

    All of these Governments have budgetary constraints because they have either given up their power to create currency or the value of the currency they create is determined by the value of another currency they do not control.

    If we could create wealth by creating currency, or said differently, we can create whatever social safety net we want regardless of the cost and not worry about how to pay for it, as long as we maintain our own currency, then every country could be wealthy.  Just have their own soveriegn currency and keep printing money.  Something does not seem right about that.

    He also said this:

    Currently, there is a news blackout in much of the blogosphere, including its "progressive" wing, in the cable new networks, and in the MSM media on the question of whether or not there is a deficit problem. Most of the progressive blogs won't carry the view that the deficit problem is a fantasy, or the reasoning or argument that makes that conclusion inescapable.

    Krugman is hardly someone who would allow himself to be "blacked out" and he sees the long term debt problems as extremely frightening.  Krugman thinks we still have some time and should be using government stimulus until recovery happens and then deal with long term debt.  Robert Reich is of the same mindset.

    Parent

    Krugman is of the opinion that (none / 0) (#25)
    by Anne on Fri Jan 21, 2011 at 03:55:53 PM EST
    defict or no deficit, the government needs to be spending, and that's because the government can spend when you and I and the private sector cannot.  It is, actually, more irresponsible for the government not to spend in difficult economic times than it is for it to cut, cut, cut.  It can pump money into the economy in the form of jobs programs that lead to lower unemployment, which leads to greater demand, which leads to higher tax revenues, etc.  It's a "spiral-up" rather than the spiral-down that comes from the kinds of austerity programs that other countries have tried, that this country seems poised to undertake.

    Modern Monetary Theory is extremely weedy and wonky, and takes the kind of focus that most media outlets, and even the great Paul Krugman, have not had much interest in getting into.  Which is too bad, because I think if people understood it better, they would be better able to fend off the hysteria currently sweeping the country and which is likely to lead to some very bad decisions.

    Parent

    Completely agree with you on the short (none / 0) (#26)
    by Buckeye on Fri Jan 21, 2011 at 04:00:42 PM EST
    term spending need and that recovery should be our priority.  Not sure I am buying the argument that we can use our sovereign currency to make debt created from the misalignment of taxes and spending not be an issue in the long run.  Seems inplausible.  I need to read more about it though to understand I admit.  It just does not seem plausible.

    Parent
    The social security program is often (none / 0) (#21)
    by KeysDan on Fri Jan 21, 2011 at 03:12:23 PM EST
    made more confusing than it need be. Since the program's inception in 1935, it has been presented as retirement insurance, although it does need to be understood somewhat differently than private-sector annuities or insurance.  The basic idea is the payroll taxes on employers and workers (FICA-Federal Insurance Corporation of America) are collected in exchange for future retirement benefits.  

    The taxes currently received are used for benefits for those eligible workers who reach the specified age (the age of 65 was based on the thinking of Otto von Bismarck).

    Since the Reagan Administration, more tax revenues have been received  than benefits disbursed.  In accord with plans, the surplus was placed in a Trust Fund (actually two, disability and old age) to be used to supplement tax revenues in the future, thereby providing long-term financial viability in keeping with the changing worker base and demographics.

    The year, 2010, will probably be the first year that tax revenues do not meet benefit obligations owing to the high unemployment. But, this is temporary, and is expected to return to balance this year. Even in 2010, there will be no actual shortfall since interest income from the Trust Fund will be used.

    However, in keeping with the plan formulated in the 1980's, the Trust Funds will  start to be needed  to supplement the tax revenues in about six years.  The robustness of the Trust Fund will permit  the incremental continuation of  such supplements so as to assure full benefits for at least 27 more years and, then, even if nothing is changed, at least 75 percent of benefits will continue. Minor modifications can easily sustain viability for another 100 years (and these estimates do not take into account the possible growth in the economy)

    The Trust Fund (cumulative surplus plus interest) is comprised of interest-bearing US Treasury securities.  The receipts from the sale of these Treasury securities  are used by the Treasury in a manner not dissimilar to the funds obtained from sale of any other US Treasury notes, bonds or other securities.  Of course, the Treasury does not keep social security funds in a sock to be released when needed, nor should it.  

    The ideologic propaganda would like us to succumb to the notion that there will not be any money available when young people retire, that the social security money has been "raided",  that the Treasury securities are "just pieces of paper", that the system is broke, that it contributes to the deficit,   better returns would occur for everyone through Wall Street, or other misinformation du jour.

    Parent

    But hasn't the trust fund money been spent? (none / 0) (#22)
    by Buckeye on Fri Jan 21, 2011 at 03:27:52 PM EST
    From what I have read, the trust fund is a pure accounting artifact with $3 trillion in paper reserves that represent payroll taxes collected long ago and have been fully spent on general fund programs or other areas.

    I thought Dubya promised a lock box for SS funds but never delivered.  Like his poppy and Clinton, they spent that money on other government expenditures.  In fact, didn't dubya admit to raiding the fund during the SS privatization attempt?

    Parent

    The surpluses in the SS Trust fund (5.00 / 1) (#24)
    by Anne on Fri Jan 21, 2011 at 03:47:45 PM EST
    have been loaned to the federal government.  The myth that never seems to die is that the government doesn't have the money to pay it back.

    That's just nonsense.

    Parent

    Whether the government has the money (none / 0) (#27)
    by Buckeye on Fri Jan 21, 2011 at 04:03:30 PM EST
    to pay it back is not relevant to the point that it has been spent.  The trust fund was spent.  Sure, government can allocate money and replensish it, but it has been spent.  The surplus was used to pay for other government expenses.  That surplus will eventually go away and will not be a kitty for the general fund.

    If you look at the total cost of all government and total revenues, that surplus is gone.  The government spent it.  Putting back is the same thing now as an intercompany transfer.

    Parent

    No, the Trust Fund money has (5.00 / 1) (#28)
    by KeysDan on Fri Jan 21, 2011 at 04:40:44 PM EST
    been placed in US Treasury securities.  It is collecting interest and the securities will be redeemed as needed in accord with financial planning for the program.  The Treasury has used the money as it sees fit as it does from any borrowed money, such as loans from China.

    You do not collect interest on an accounting artifact. No serious official is saying that the government will not redeem the Trust Fund's Treasuries, not even the social security-hostile Catfood Commission.

    Most of the privatization schemes, such as the one Bush tried to cash in  on with his "political capital" on winning a second term, involve "options" such as placing the equivalent of social security taxes into the stock market.  That idea collapsed under its own weight, even before the stock market tanked.  But, like Freddy Krueger, its back.  Time to act while the stock market is once again rebounded, thanks to Geithner, and with Obama at the helm serving in an" only Nixon could go to China" role.  Indeed, if the Trust Fund assets were illusory Wall Street would not be so interested.  We need to be always mindful of the powerful forces happy to deliberately pooh poohing social security in one way or another.

    Parent

    Finally, someone (5.00 / 0) (#30)
    by NYShooter on Fri Jan 21, 2011 at 08:43:34 PM EST
    got it right.

    "Buckeye" is worried that the SS fund, or surplus, has been "spent." "Spending" those funds was simply for expediency, and was replaced with the safest instruments today's world has: U.S. Government Bonds, notes, and paper. It is backed by the full faith and credit of the Government and is the safest and most highly rated "money" known to man.

    Sleep well, Buckeye. You have to learn to differentiate political words and sentences, meant to obfuscate, confuse, and distort what's happening from the real deal.

    Krugman is a good place to start. He may not be 100% right, all the time, but he's pretty close.


    Parent

    Read this post from Krugman (none / 0) (#34)
    by Buckeye on Sat Jan 22, 2011 at 08:21:45 AM EST
    where he eviscerates I think quite convincingly the GOP attack on the supposed "double counting" of SS and Medicare.  

    In it, he says:

    2. Alleged "double-counting" of Medicare savings; actually, there's no double-counting involved. Savings are savings. It's true that some people have spoken loosely as if the gains to the Medicare trust fund and the reduction in the deficit are separate and additive, but the CBO never has, and all of that is irrelevant to the 10-year estimate.

    he also says:

    4. Social Security taxes -- I think they mean Medicare, but anyway, additional tax revenue does reduce the deficit, regardless of what trust fund it's allocated to.

    This seems to cut against what people have been arguing.

    In this post, Krugman says:

    This is just like the attempt to wave away Medicare savings, and it's equally nonsensical. Social Security and Medicare do have dedicated funding sources, but they are also part of the overall federal budget. Put it this way: if you took the current GOP line, it wouldn't matter how much Medicare costs -- it's all off-budget, so who cares?

    I agree with this.  If Obamacare improves the savings to the SS and Medicare funds, the CBO should count it as deficit reduction as a scoring exercise (even if they do not technically reduce the deficit).  But the other side is true also.  Whatever shortfalls these funds have are part of our overall debt problem as a country.  Taxes must be raised to pay them or spending will be cut.

    As for the funds used to buy Tbills with a guarantee that they will be paid back, it seems more like an intercompany transfer.  If I buy Tbills, I loaned the government money getting the safest investments in the world.  But government borrowing increased.  Gov. spent that money.  I can show it as a real asset b/c another entity owes me money.  But SS trust fund bought Tbills that the gov. spent.  IOW, government loaned money to itself that it spent.  The debit in one account is offset by a credit in the other.

    FTR, I am not worried about SS going insolvent, I realize the Tbills will be redeemed and the checks will be made.  My point/questiones are about whether or not the money was really spent and that we really do have an overall budget where it does not really matter how we allocate taxes and spending.

    Parent

    You're are going sideways on this, (none / 0) (#35)
    by Anne on Sat Jan 22, 2011 at 10:58:04 AM EST
    and the only way I think you can get back on course is to do some more research and study on how the government operates.

    Probably the first thing you need to do is to stop thinking that the government has to operate its budget and spending the way we do.

    In general, I think the country is woefully uneducated about how its government works - and I include in that group a fair number of the members of Congress and the president who, whether they are or are not educated on this issue, prefer to take advantage of the country's ignorance for their own political and ideological interests.

    Much of what you are hearing out of the mouths of these politicians is pure fairy tale stuff - except that, if they get their way, the ending is not likely to be "and they lived happily ever after."

    Parent

    Seems to me that, from President Obama's (none / 0) (#4)
    by KeysDan on Fri Jan 21, 2011 at 09:50:06 AM EST
    perspective, everything is on the table--the Republican's table. Even his prized (as Biden called it, a big, ....deal) achievement in health care has been opened up with amendments welcomed that will be "improvements".

    I would think that the authors of this  big...deal would stand behind it,  give it a chance to come into effect, be evaluated, and then changed where appropriate.  We know that the "compromise" that resulted in extension of the Bush tax cuts was applauded without much notice that the Deal did not get the Republicans to even fund the government through the end of the fiscal year--and that was before the House changed hands.  I worry that the Administration's  co-opting skills will be more than matched by its observed negotiating abilities.

    The Roadmap | 37 comments (37 topical)

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