I raise the alarm constantly about the US’ financial state because historically the kind of deficits and debt we have are associated with the end of benevolent periods in the life of a nation. The US is likely past a tipping point from which it can recover and it just keeps getting worse. The primary reason is excessive spending on “entitlements”, with the secondary reason being absurd tax breaks for rich people, mostly the private foundation scam. No one should be entitled to anything and the obvious reason for why we bail out rich people from paying taxes is that they own the politicians under our current system. (ZH Post)
A recent post at Zero Hedge highlights how distorted our system is. An astounding 19% of all income in this country is represented by transfers from government–welfare, Social Security, Medicaid, Medicare, food stamps and a plethora of other programs. What these programs really are is taking money from one group in the form of taxes and borrowing money to give it to others. Many of the recipients in all honesty are simply slackers–people who don’t want to work; people who make up “disabilities”, usual mental health related, to get on welfare or Social Security disability.
Unless this is addressed we will not fix our financial problem and really we won’t fix the social problem, which is a complete lack of any sense of personal responsibility and a real feeling of “entitlement” in many of our citizens. We need to completely review everyone on the welfare-type programs and use much stricter standards for eligibility. Anyone who is capable of doing any kind of work, however menial, needs to be working or get nothing. The age for Social Security retirement has to be raised and it will be sooner or later. The same with Medicare. People who can fully fund their own retirement and medical needs should get nothing from the government. The private foundation and other billionaire tax scams should be ended. Then we have a chance of stopping the deficit train and maybe even reversing the debt level.
You say, “People who can fully fund their own retirement and medical needs should get nothing from the government.” What is your threshold for annual income or “net worth” for either an individual or married couple to forgo receiving SS and MC benefits? How about all the $$ those people contributed to SS and MC during our working years? Do “People who can fully fund their own retirement and medical needs” forfeit these benefits without compensation? What % of total annual SS and MC benefits actually go to the upper 10%, 5%, 1%, or 0.1% of the population to estimate how much would be saved by those income/wealth brackets “getting nothing”?
In addition, you ignore the Federal (and sometimes State) taxes most “upper” income people pay on their SS benefits (in our case 85% of our gross SS benefit). In our case SS is taxed at the 22% rate, since all our SS benefits are at the “marginal rate.” In addition, upper income people pay more from their SS benefit to cover MC costs.
Perhaps Elon Musk should recommend eliminating the electric vehicle tax tax credit, which has been estimated to be $180B/10 yrs? Don’t you think buyers of these mostly expensive cars might be able to cover the $7,500 tax break on their own dime? Ditto for PV/battery residential systems. Your thoughts?
no easy answers to the issue of what to do. I am fully in favor of eliminating all tax breaks that subsidize any business activity and certainly anything supporting the badly misnamed “renewable energy” crap. Social Security and Medicare are partly funded by a “tax”, not contributions. So that tax is no different than any other tax. What is funded with the tax some people benefit from and others don’t. I personally like the Social Security privatization idea but the last time it was brought up it went no where. That would clearly make it your money. I think anyone with $500,000 in annual income is perfectly capable of handling their own retirement and paying the full Medicare premium. And really the limit could be lower. You would be surprised how many people over 65 meet that criteria.
Larry makes good points. Sure, retirees making $500K a year can get along without Social Security or Medicare, but they probably don’t get more than a percent or two of the total benefits, especially if you take into account the thousands they pay each year for Medicare. Once those programs are no longer universal, they start to turn into welfare; it becomes easy to lower the cutoff, and then support for the programs gets undermined.
Of course, that is fine if you want to gut Medicare and Social Security. But doing so has very little support. Much better to cut as much fraud as possible. Maybe one can tinker around the edges of those programs, but it makes more sense to focus cuts on all the really stupid spending the government does.
Has any country gotten out of a deep debt hole by means of austerity, without strong economic growth? I think probably not. Cuts have to be calibrated so as to not cripple economic growth.
I consider this to be the optimistic take. If the reason we cannot afford our entitlement programs is fundamentally about waste and fraud, then there is a viable path to solve the problem, but I do not believe this to be the case.
> People who can fully fund their own retirement and medical needs should get nothing from the government.
The problem with this is that several of the systems depend on current workers buying into the idea that they will receive a payout themselves. If you implement “means tested benefits”, most of the people who are currently supporting the system will exit. Remember, “social security taxes” are technically optional.