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(First posted in August, just before the current “Occupy Wall Street” movement)
It is very clear that in the current debate of Annual Deficits, Debt Ceiling, and National Debt, our elected officials are more interested in scoring short-term political points and in posturing, rather than in acting as elected leaders of a nation in crises and focusing on the long-term well-being of our nation.
Principles
Our solution lies in looking inward to America’s values and principles, and to the character that made America great and unique in the world, and a willingness and readiness to make and be determined about our difficult choices. We can no longer afford to kick our responsibilities down the street for a later generation.
America reached its soaring heights because of our work ethic, our willingness to embrace the contributions of immigrants, the facilitation of innovation and entrepreneurship, and most importantly because we built a strong middle class that shared in the fruits of our nation’s labor and productivity.
A Unique 1%
And America became the envy of the world as we exported our goods, services, and our freedoms and our ideals. But our freedoms and ideals were never free. They required the sacrifice of our nation’s military, veterans and our families. Our military and our veterans have always been a unique 1% of the population – As a nation we have come to expect much from them. And they always shown us through sacrificing personal well-being, personal wealth, and with their own lives that our country is and must always be first!
Guidelines Forward
First of all, there must be a clear recognition that one party’s win is/and has been a loss for America.
Secondly, stop the blame game. There must be a clear recognition by all that America’s problems did not start in any particular Presidential administration nor in any particular Congress, but that it has been continued by all, and at times, intentional or not, made worse by some more than others.
Thirdly, there must be a willingness to compromise and to consider any and all solutions.
Fine Balancing Acts – We must lower our Deficits, and our National Debt
Our National Economy is about $14 Trillion per year. Our National Debt Limit is also about $14 Trillion. But our long-term TOTAL UNfunded National Debt is about $65 Trillion. The biggest components of our Total Unfunded National Debt consists of Trillions in Social Security, Medicare Parts A, B, and D.
TOTAL Unfunded Debt (US$ in Trillions) | |||
Years —> | 2000 | 2007 | 2009 |
Future Social Sec | $3.8 | $6.8 | $7.7 |
Future Medicare Part – A | 2.7 | 12.3 | 13.8 |
Future Medicare Part – B | 6.5 | 13.4 | 17.2 |
Future Medicare Part – D | Zero | 8.4 | 7.2 |
Total Social Sec + Medicare | $13 | $40.9 | $45.9 |
A Simple $8 Trillion Solution
Medicare Part D was passed in November 2003 by the Bush Administration. This law violated basic free-market principles because it prohibited a federal agency (HHS) from negotiating Price & Volume discounts. This problem is compounded in the US because we subsidize the world’s prices on pharmaceutical products. We must reverse this giveaway, and allow HHS to negotiate Price & Volume discounts in the purchase of pharmaceutical products for a savings in this category of $8 Trillion. Previously we went from zero Cost to about $8 Trillion additional costs (see slide 17 for 2000 & 2007 numbers).
Create Jobs and Solve Health Needs – $35 Trillion Solution
And our Deficits and Annual and long-term Debt is made worse by this near depression recession, and by the fact that we will have about 75-80 million baby boomer retiring out of a total US population of 300 million. An aging population that lives longer requires more health care. Since Medicare represents about $30-$35 Trillion of our National Debt, we have the opportunity to address both unemployment and our single largest component of the National Debt at the same time.
But this requires a “sputnik” action. We must invest in creating more nurses and doctors, and more clinics and hospitals. When I was in the US Marines (1987-1994), I attended a US Naval hospital off Keller exit off I-580 in Oakland. This was a top-notch facility with top notch naval doctors and medical personnel. Sadly, this high-rise facility has been vacant and dilapidated for several years. I see this often, because I visit a good friend that lives about 1 mile away. We can reverse this. By investing in our people, and in our life sciences, we will create millions of jobs across America (that cannot be off-shored nor out-sourced.), and we will tackle the Long-Term Unfunded National Debt.
We must make infrastructural investments that pay dividends
Successful companies forgo higher profits in the short-term by making Research and Development investments (a current expenditure); for the expectation of product and service innovations resulting in greater sales and thus greater profits in the long-term.
- We must invest in technologies of the future and the “greener” the better.
- We must invest in technologies that increase our national security, that free us from foreign dependencies, and which are protective of our environment and finite resources.
- We must invest in education vs paying the higher social and fiscal consequences.
Benefiting the top 1%
In the last several years and decades, America’s middle class has benefitted the top 1% of our society several times. For example, in the fall of 2008 America transferred about $1.2 Trillion in Direct Cash to wealthy financial institutions plus about $18.6 Trillion in Indirect Guarantees. AIG alone received about $185 Billion – a top manager of theirs received about $120 million bonus because of this bailout. Citibank and Bank of America received about $50 billion each. And the top executives immediately turned around and gave themselves about $5 Billion in bonuses again because of these tax payer funded bailouts.
1% must equal 1%
There is a reluctance by both parties to raise revenues, in great part to successful lobbying by groups or individuals – as if the top 1% of our most privileged society was a sacred cow. Yet this is opposite to most pragmatic or realistic solutions. The focus cannot just be on cutting costs and on borrowing.
There must be an open mindset to raising revenues, which may come either or both from reducing or eliminating certain subsidies, or certain tax preferences, or as a last resort enacting or raising certain taxes.
According to the Peter G. Peterson Foundation, “To keep deficits and debts from reaching unsustainable levels, revenues will have to increase substantially, spending will have to be cut substantially, or some combination of revenue increases and spending decreases will have to be enacted”.
For example, subsidies to extremely profitable industries can be eliminated i.e. the oil industry; corporate farmers, and others. Additionally, mortgage deductions can be limited to $500K – $750K of the primary residence, and not allowed for all other mortgages. The government does not need to be subsidizing expensive homes.
Having an open mind to various solutions, though politically difficult, can help bring back confidence and certainty to businesses. The consequences of failing to act comprehensively and expecting more from the top 1%, can result in “indirect taxes” to the middle class and to our economy. For example, Consumer Spending accounts for about 65-70% ($9.1 to $9.8 Trillion) of our annual economy of about $14 Trillion. So if you assume a higher cost of about 10-20% on consumer spending, this translates to about $1-$2 Trillion of additional “tax” on the middle class.
So if in the past, if our American middle class has borne, or may continue to bear the heavy cost of financial misdeeds or fiscal mismanagement by others, or if in essence 1% of our population (our military) have sacrificed even their lives, for the well-being of our ideals, our freedoms and our way of life, I know it is only fair to ask and expect financial sacrifice from the privileged 1% of our society for the well-being of our nation.
Cutting spending and borrowing without raising revenue only defers and magnifies the pain. Our future and our American way of life is at stake, but it requires contributions and sacrifices from all.
Francisco, – Paco
I know you are a smart Mexican and a patriot of the American country,
I know you mean good for the common people, but this idea of 1% human sacrifice against the 1% of the richest people in America will fly only if more visionaries
can act as the positive ground, that the negative current has eroded.
I do not know much about politics, however I can reach via the internet others in another country and learned about their hostility feelings against our American way.
I am proud of your ability to think and to act, I also know that you have earned it through your hard work and dedication, I am your older brother and you certainly
didn’t get it from me other then not wasting time and working hard, you certainly did not get it from our father because we never had one. So is my space to say that I am very proud of you.
God Bless you and I will pray that your ideas does not go to waste, specially in such needed, “right change”
Should not the 1 percent who owns ?? 90 percent of the wealth pay 90 percent of the cost (the taxes)?
Ever hear of the term “tax free exchange”? The one percent’ors have.
Is it fair that 47% of Americans pay ZERO federal income taxes? Is it fair that the top 3% pay 95% of all federal income taxes? I agree that we have to close loopholes (there were 5000 changes to the tax code last year, each adding a specific corporate loophole) – but a general call to raise the top tax rate is naive and ridiculous.
Is it fair that 47% of Americans pay ZERO federal income taxes? (Must be)
Would you like to move to a wealth tax instead? Just tax the wealth and leave the wage tax at Zero.
Why should labor pay more taxes and at a higher rate than capital.
Anyone have an answer to that question? Why labor pays more than capital?
Geoff,
“Is it fair that 47% of Americans pay ZERO federal income taxes”
You’re right, why can’t all those households earning less than $50,000 (majority earning less than $30,000) a year pay more?
Why do their “kids” (plenty of them are over 5) go to school when they could be out working? Why do they have “homes”? Give those lazy SOB’s cardboard boxes!
How dare they have cars, don’t they have feet? Food stamps? Whatever happened to gruel and shoe leather?
I bet Geoff could raise his family on $30,000 dollars a year and have plenty of spare change to boot. C’mon Geoff, show the peasants how it’s done.
Nice, anonster – ignore the real argument and move straight to hyerbole –
Actual facts – people making up to $64,000 pay no taxes – I am not saying that we should bankrupt these folks, but I do think it fair that everyone should pay 5%-10% of their income in taxes if we are going to ask other folks to pay 40%+ in taxes.
Income and wealth are not directly related – there are plenty of folks with modest incomes that have significant wealth and plenty of people with high incomes that have negative wealth.
It is not the government’s job to decided how people spend their money and it is certainly not for the government to punish those that are more frugal than others.
Anonster, why all of the anger at the folks that have worked hard and saved their money – have you wasted yours buying capital letters for your blog responses?
Geoff,
“Hyperbole”?
Wanting poor americans to pay “5%-10%” more of their incomes in taxes is SICK, got that? SICK! SICK! SICK!
What kind of sick, twisted, perverted mind thinks that a family in this country, scraping by on $30,000 a year should pay $3,000 a year MORE in federal taxes?
Actual facts? here’s some;
From the Center on Budget and Policy Priorities;
Misconceptions and Realities About Who Pays Taxes
By Chuck Marr and Brian Highsmith
… It also is important to consider who the people are who don’t owe federal income tax in a given year.
Some 70 percent of people who owe no federal income tax in a given year are low-income working households.
These people do pay payroll taxes, as well as federal excise taxes (and, as noted, state and local taxes).
Most of these working households also pay federal income tax in other years, when their incomes are higher — which can be seen by looking at the low-income working households that receive the Earned Income Tax Credit (see next bullet).
The majority of EITC recipients receive the credit for only one or two years at a time, such as when their incomes drop due to a temporary layoff; they pay federal income tax in other years. In fact, EITC recipients pay much more in federal income taxes over time than they receive in EITC benefits. A leading study of this issue found that taxpayers who claimed the EITC at least once during an 18-year period paid a net $473 billion in federal income tax over that period (in 2006 dollars). [7] This finding shows that — while in any single year some taxpayers will receive refundable tax credits whose value may exceed their payroll tax liability — EITC recipients as a group pay significant federal income taxes over time in addition to the payroll and state and local taxes they pay each year.
The fact that most people who do not pay federal income tax in a given year do pay substantial amounts of other taxes, and also are net federal income taxpayers over time, belies the claim that households that don’t owe income tax will form bad policy judgments because they ostensibly “don’t have any skin in the game.”
The federal tax system is progressive overall, but state and local tax systems are regressive and undo a significant share of that progressivity. There is nothing wrong with having one part of the overall tax system shield low- and moderate-income households, who pay substantial amounts of other taxes and who generally pay federal income tax as well in other years.
To significantly increase the share of households that owe federal income tax, policymakers would have to take such steps as lowering the personal exemption or standard deduction — which would tax many low-income working families into, or deeper into, poverty; weakening the EITC or Child Tax Credit, which would significantly increase child poverty while reducing incentives for work over welfare; or paring back the tax exclusion for Social Security benefits, which would subject more seniors with small, fixed incomes to the income tax.
Hmm, Anonster referencing a left-leaning think tank report – I’m shocked. And with concrete phrases like “Some 70 percent of people who owe no federal income tax in a given year are low-income working households” and “EITC recipients as a group pay significant federal income taxes over time” and “who pay substantial amounts of other taxes” – way to provide real numbers and not squishy, undefined terms – it must be true.
Newbie,
From the CBPP’s home page;
“What Is the Center on Budget and Policy Priorities?
The Center on Budget and Policy Priorities is one of the nation’s premier policy organizations working at the federal and state levels on fiscal policy and public programs that affect low- and moderate-income families and individuals.
About the Center
The Center conducts research and analysis to help shape public debates over proposed budget and tax policies and to help ensure that policymakers consider the needs of low-income families and individuals in these debates. We also develop policy options to alleviate poverty.
In addition, the Center examines the short- and long-term impacts of proposed policies on the health of the economy and the soundness of federal and state budgets. Among the issues we explore are whether federal and state governments are fiscally sound and have sufficient revenue to address critical priorities, both for low-income populations and for the nation as a whole.
Over the past 30 years, the Center has gained a reputation for producing materials that are balanced, authoritative, accessible to non-specialists, and responsive to issues facing the country. Our materials are used by policymakers and non-profit organizations across the political spectrum, and by journalists from a wide variety of TV, radio, print, and online outlets.”
Yeah, what would they know.
Kind of hard to discuss things when I say “I don’t think it unfair” and you respond with “SICK, SICK, Sick” – since when is it unfair for people to pull their weight? Since when is it unamerican for us to ask everyone to chip in their share? Large numbers of people did not peal off of the tax roles until the “war on poverty” started fourty years ago with huge entitlment increases and I don’t see the poor or middle class better of since then.
Geoff,
You said “… I do think it fair that everyone should pay 5%-10% of their income in taxes …” poor people already PAY a higher PERCENTAGE of their incomes in taxes, than most wealthier americans.
What part of POOR, don’t you understand?
How do you expect a household existing on 2,500 dollars a month to come up with an “extra” 250 dollars a month for federal income taxes? And you WANT to do this just so households making over 250,000 dollars are year aren’t taxed 3% more on any income ABOVE that first $250,000!
SICK!!!
“Large numbers of people did not peal off of the tax roles until the “war on poverty” started fourty years ago with huge entitlment increases and I don’t see the poor or middle class better of since then.”
Not born out by statistics, they WERE better off, until Reagan and his regressive tax policies;
http://en.wikipedia.org/wiki/File:US_poverty_rate_timeline.gif
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Yes, we should just follow the Greek example and train everyone that the government owes them and they owe nothing in return.
Thanks for making my point – that “you people” see nothing but EXTREMES.
The Greek situation is “extreme?” Please distinguish the Greek economic issues from the Portugeese, Spanish, French or [fill in blank of socialized non-German Euoropean country].
You really didn’t understand that?
“Following the Greek example and training everyone that the government owes them and they owe nothing in return” is one absurd extreme that you put up as the only alternative to the savage inequality that anonster describes in America.
Also known as a straw man argument. Do you know THAT expression? You should because you do it frequently. Obviously anonster is NOT suggesting that we “follow the Greek example and train everyone that the government owes them and they owe nothing in return.” That is a “STRAW MAN” that you built as a caricature of her position, a straw man easy for you to knock down.
And your idea, whether conscious or not, is to imply that there isn’t a gigantic spectrum of other reasonable positions between those extremes.
Okay?
Geoff, it only costs money when you buy a vowel. Anonster is getting all her consonants for free.
I think that by now all we’ll ever get from Geoff is his great concern for the suffering of the wealthy. He cares not for the fact that the wealthiest in the USA are part of the big casino that makes our financial infrastructure, and they’re the house. They’ll always win, and so will their legacied progeny.
For example, the corporate raiders such as Icahn, Pickens, and the scum who raided and destroyed Harry and David’s. These people game the system, pick businesses clean, and leave behind unemployment and broken dreams. They apprently need a tax break, too, while they scam the system.
As long as the embedded and legacied wealthy enjoy most of the fruits of this country’s (former) bounty, we will continue to descend into third world status. Libraries will disappear, schools will become further debilitated, people will get sicker, and our water and air will be toxic.
But all we get from Geoff and his ilk is the same old crap–whining about the poor not paying enough. Sick is right. And other terms too, including immoral, treasonous, and loathesome.
Both of you Left and Right are moron mongoloids.
That is why we are in trouble.
There is no side to lean on!
“Income and wealth are not directly related” Geoff Willis
The tax code pegs tax basis of labor as -0-, that is why you pay a wage income tax.
Every year you must pay your labor tax on the amount you have received that year, even if you are still working.
Why doesn’t the capital/wealth pay a yearly tax on those increases? (Cause the wealthy don’t pay taxes)
You can argue all you like about the difference in tax between the labor tax on a poor person vs. the labor tax on someone who make a great deal more. That is a real neat trick the wealthy has pulled on you.
military.industrial.complex
See the reference to “Luckie Duckies” & “HINTS – High Income No Taxes”.
http://www.huffingtonpost.com/2011/06/28/46-percent-of-americans-e_n_886293.html
Why can’t we have congress remove the 16th amendment and get rid of the income tax (on labor) and the payroll tax (on labor) and go back to the original corporate and property taxes (on wealth)?