Feeds:
Posts
Comments

Posts Tagged ‘Deficit’

The corporate news pounced on the latest report issued by the Board of Trustees of the Social Security Trust Fund. CNBC News interviewed Michael Tanner of the Koch Brothers funded Cato Institute. Tanner was dumb enough or dishonest enough to say, “Every bond redeemed from the Social Security Trust Fund has to come out of the general revenue, so we’re actually increasing the federal deficit in order to pay off social security.” What a lie, and in many ways.

20046712_10211899706460813_3970402639122158449_n.jpg

The Social Security Trust Fund has a $2.6 trillion surplus. The Trust Fund purchased US Treasury bonds and collects about $160 billion in interest a year. Bonds are loans. The US government borrowed the $2.6 trillion from the Trust Fund, and it will soon be time to pay that money back to the Trust Fund. That will not add to the deficit at all since the Trust Fund did not need to invest in the bonds, but it was a prudent thing to do to collect the interest. But lets get to Tanner’s lie; the US government issues and sells new bonds to pay for any bonds coming due. Only interest is paid from the general funds unless there is a budget surplus that allows for paying down the total deficit. The folks at CNBC News made certain not to question Tanner’s lie. That’s because they want to keep us ignorant.

Second, the Chinese government has trillions of dollars invested in US treasury bonds, as does Wall Street. When the US treasury bonds held by the Chinese or Goldman Sachs, or US hedge funds come due, nobody says that by paying its debt, the US government is adding to the deficit. Why is a different standard applied to Wall Street and Chinese investors on the one hand, and the Social Security Trust Fund on the other hand? The answer, of course, is CNBC wants to keep us ignorant. The Social Security Trust Fund has not contributed a penny to the US deficit, but they don’t want us to know that.

The Trustee report mentioned the coming of a deficit for the Trust Fund in 2034, which will result in payment reductions for retirees of approximately 16 percent, unless something is done to plug the gap. Ethan Wolff-Mann, reporting for Yahoo News, claimed “A root cause for the financial woes for Medicare and Social Security is the aging baby boomer population.”

That’s another lie meant to distract you from reality. Tens of millions of US jobs that paid into the social security trust fund have been exported to low wage nations such as China. The difference between the old US wages and the new Chinese, Vietnamese, Pakistani, and Mexican wages have all gone into the pockets of the rich via higher corporate earnings, rising dividends, and surging share prices. Capital gains from the sale of assets (such as corporate stocks and bonds), and dividends are exempt from social security taxation. The rich, in other words, are not paying social security taxes on the trillions of dollars they have stolen from the rest of us. That’s why there is an impending deficit in the Trust Fund.

So the easiest way, and morally Jesus Christ way, to offset these government policies that have stolen from the Trust Fund is to have a graduated Social Security tax on dividends, as well as on capital gains derived from the sale of stocks and bonds. Of course, a Social Security tax on stock and bond transactions could also achieve the desired effect.

In either case, or in both cases should they be legislatively enacted, the Social Security Trust Fund would be solvent into infinity and most likely a significant raise can be provided to beneficiaries, which would then strengthen the US economy by increasing the demand for goods and services.

Steve Ruis has pointed out, “Note that the SS Trust Fund didn’t choose to buy US Treasuries, it is required to invest all excess funds in US Treasuries by an act of Congress! Some critics have referred to those treasuries as “worthless paper” when trying to undermine the SS system. Amazing!”

Advertisements

Read Full Post »

Read Full Post »

The members and the congress people of the Tea Party were quite happy to destroy the Bill Clinton surpluses by creating the George W. Bush federal deficits, but nowadays they’re mad at President Obama for presiding over the federal deficit they created. Perhaps the Koch Brothers, creators of the Tea Party, are angry because the money the government borrows to cover the deficit isn’t going to the corporate welfare that goes into their pockets. Who knows?

Read Full Post »

By Joshua Holland

 Sometime in the next week, Congress will either get it together to pass a new budget resolution or the government will shut down (all but essential services). Two weeks after that, the federal government will reach its debt limit. If it is not raised, nobody really knows what will happen. The only sure thing is that it would roil the financial markets and cause some damage to the global economy.So, we have another fiscal cliff. This contrived crisis is even more irrational than those of the past few years because Republicans in Congress have not only taken a hostage that they can’t shoot, but are demanding that Democrats ditch their signature achievement of the Obama presidency: the Affordable Care Act.

Here are seven things you need to understand about how wacky all of this really is.

1. The plan …

Political observers expect to see some serious kabuki theater in the next few weeks. Speaker John Boehner (R-OH) caved in to tea party pressure and passed a budget resolution last week that includes a measure “defunding” the act.

Senators Ted Cruz (R-TX) and Mike Lee (R-UT) have been attacking House Republicans for not passing such a bill. In all likelihood, they will now filibuster the bill they have been begging for in order to try to block Senate Majority Leader Harry Reid (D-NV) from stripping out the defunding language, which he can do with a simple majority.

Because many Republican senators think this is all crazy – John McCain referred to Cruz as a “wacko-bird” a few months back, and Senate Minority Leader Mitch McConnell, R-Kentucky, said he won’t support the effort — the filibuster will only be a delaying tactic. In the final days or hours before the government shuts down, the Senate will send a budget to the House. At that point, Boehner will either attract enough Republican votes by promising a showdown over the debt limit in a couple of weeks and pass the budget with a bunch of Democratic votes or let the government shut down.

Then there’s the debt limit. Boehner has promised his members that they will get another bite of the Obamacare apple, but he faces a big problem: Obama’s insistence that it is Congress’ duty to pay the bills it ran up, and his refusal to negotiate on the matter.

The Washington Post’s Paul Kane reports that Boehner may hold a vote this week on a bill laden down with conservative goodies — including the approval of the Keystone XL pipeline, Medicare means testing, tax reform and a one year delay of all the health care act’s provisions — in order to get his caucus to raise the debt limit through 2014, but it is not clear whether any debt limit hike can attract 218 Republican votes, especially one that would be dead on arrival in the Senate.

2. Everyone knows this is all a scam …

Everyone in Washington knows that these budget shenanigans have zero chance of success because the vast majority of the funding for the health care act is “mandatory spending,” which means that a shutdown will have no effect. Only a bill passed by the (Democratically controlled) Senate and signed by Obama could defund the health care law, which is about as likely as the Loch Ness monster singing the national anthem at this year’s World Series.

But as The Washington Post’s conservative blogger Jennifer Rubin notes, the outside groups pushing the effort — Freedomworks, the Heritage Action Committee and the Senate Conservatives Fund – are raising big bucks from all this drama. In fact, according to The Huffington Post, the Senate Conservatives Fund “raised its largest-ever monthly total for a non-election year this August.” Democrats are reportedly getting in on the action as well.

3. Plan B …

Ted Cruz offered an alternative this week when he urged the House to continue sending bills funding various elements of government to the Senate. “If Harry Reid kills this bill in this Senate, I think the House should hold its ground and begin passing smaller continuing resolutions one department at a time,” Cruz told Fox News this week. “It should start with a continuing resolution focused on the military. Let’s see if Harry Reid is willing to shut down the military just because he wants to force Obamacare on the American people.”

As Roll Call noted, the House approved a defense authorization bill back in July.

4. “Clean” budget isn’t that clean …

The goal here is to get a “clean” budget resolution through both chambers of Congress and onto the president’s desk. But largely missing from the discussion is the fact such a budget would maintain the crushing cuts of the sequester, representing a significant victory for conservatives.

Democratic congressional staffers told The Washington Post’s Greg Sargent that they would not pick a fight over the sequester-level funding because the budget resolution is temporary — it will only keep the government afloat for three months — and they do not want to shift blame away from Republicans if a shutdown or default occurs.

5. Republicans are deluding themselves about the public’s opinion of Obamacare.

“The American people don’t want the government shut down, and they don’t want Obamacare,” John Boehner said after the House passed its bill. “The House has listened to the American people.” This is a common refrain from Republicans who support the effort to defund the law, and it is a product of being stuck in the conservative media bubble.

The truth is that while Americans are divided on the health care law – with slightly more opposing it than supporting it – poll after poll shows that large majorities disapprove of the effort to defund it by threatening a shutdown or messing with the credit of the US government.

6. No leverage.

John Boehner has all but begged the White House to enter into negotiations to raise the debt limit. But he has no leverage, for two reasons. First, he is on record saying that not raising the debt ceiling would lead to “a financial disaster, not only for us, but for the worldwide economy.” And second, because more than twice as many Americans would blame Republicans in Congress for that disaster than would blame the president.

It’s a weak hand. But he is really caught between a rock and a hard place: He has got little control over his caucus but is set up to be the fall guy if it all goes badly. It is no wonder that it has been widely rumored that he is not interested in another term as speaker.

7. Not raising the debt limit in a timely manner will increase the national debt …

Former Senator and Senate Finance Committee Chair Judd Gregg, R-N.H., explained this irony in an op-ed urging Republicans not to play “Russian Roulette with all the chambers of the gun loaded”…

A default would lead to some level of chaos in the debt markets, which would lead to a significant contraction in economic activity, which would lead to job losses, which would lead to higher spending by the federal government and lower tax revenues, which would lead to more debt.

Federal Reserve Chairman Ben Bernanke said last week that games over the budget and debt ceiling are already hurting the economy.

This article, Seven Things You Should Know About the Wackiest “Fiscal Crisis” Yet, is syndicated from Moyers & Company and is posted here with permission.

Read Full Post »

The Social Security Trust Fund has grown every year since 1983, thanks to President Ronald Reagan and the adjustments to funding that he initiated. It even grew last year and the year before despite the cut in payroll taxes from 6 to 4 percent.

However, the corporate press will only let you know about about the Social Security Trust Fund deficit between the taxes it takes in and the money it pays out even though the system is sitting on a $2.7 trillion surplus that collects about $120 billion in interest per year. When you count the interest, there has always been a surplus, at least since 1983.

Take a look at part of the report from the trustees of the Social Security Trust Fund from 2012. Italics and bold are mine.

“Social Security’s expenditures exceeded non-interest income in 2010 and 2011, the first such occurrences since 1983, and the Trustees estimate that these expenditures will remain greater than non-interest income throughout the 75-year projection period. The deficit of non-interest income relative to expenditures was about $49 billion in 2010 and $45 billion in 2011, and the Trustees project that it will average about $66 billion between 2012 and 2018 before rising steeply as the economy slows after the recovery is complete and the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers. Redemption of trust fund assets from the General Fund of the Treasury will provide the resources needed to offset the annual cash-flow deficits. Since these redemption’s will be less than interest earnings through 2020, nominal trust fund balances will continue to grow. The trust fund ratio, which indicates the number of years of program cost that could be financed solely with current trust fund reserves, peaked in 2008, declined through 2011, and is expected to decline further in future years. After 2020, Treasury will redeem trust fund assets in amounts that exceed interest earnings until exhaustion of trust fund reserves in 2033, three years earlier than projected last year. Thereafter, tax income would be sufficient to pay only about three-quarters of scheduled benefits through 2086.

A temporary reduction in the Social Security payroll tax rate reduced payroll tax revenues by $103 billion in 2011 and by a projected $112 billion in 2012. The legislation establishing the payroll tax reduction also provided for transfers of revenues from the general fund to the trust funds in order to “replicate to the extent possible” payments that would have occurred if the payroll tax reduction had not been enacted. Those general fund reimbursements comprise about 15 percent of the program’s non-interest income in 2011 and 2012.”

Read Full Post »

US 2012 Fiscal Budget Deficit Falls Sharply

The US budget deficit fell sharply in just-ended fiscal 2012 to $1.1 trillion, but remained at an uncomfortably high ratio to the size of the economy, the Treasury reported Friday.

The fiscal shortfall topped $1 trillion for the fourth straight year, but dropped from $1.3 trillion in 2011, as the Obama administration answered deep pressure to narrow the shortfall.

Government receipts for the year through September 30 were up 6.4 percent to $2.45 trillion, the largest gains made from higher payroll deduction returns and a better corporate tax take.

Read Full Post »

The differences between Barack Obama and Mitt Romney on all aspects of economic policy are considerable, and they will have significant consequences for the US and the global economy. Tax and spending is at the heart of the matter. The link below illustrates the significant differences between the two on such issues as taxing, spending, entitlements, trade and several other issues. Remarkably, the battle between Romney and Obama is one between two Wall Street factions.

On the other hand, this is really a battle over who will be chosen as the leader in income redistribution from the 99 to the 1 percent. This process has been going on since 1981. The winner will continue to wage war against the middle class on behalf of the 1 percent, and the big difference between the two is who will do it at faster rates than the other. Obama is likely going to do it slower, Romney more rapidly. This the article below does not cover. The 1 percent feels almost to a person that it is entitled to these redistribution programs, such as free trade treaties, privatization and deregulation scams. See the link below in the Related Stories section on how these redistribute income from the 99 to the 1 percent.

Obama Vs. Romney: Is it Mostly a Battle Over Taxation and Spending?–Guardian UK

Related Story

Eight Key Charts About the Growing Income Inequality in the USA Perpetrated By Democrats and Republicans

Read Full Post »

Older Posts »