How much would taxes have to go up (because spending can't go down, right?) for citizens to contribute their fair share of paying down the debt?
One thing you aren't accounting for is tax receipts going up because the economy grows. It's usually the case that spending goes up at the same time, but it doesn't have to go up.
I just know I read a lot of headlines about how government programs are underfunded. I feel like the base of a lot of Democratic candidate campaigns is about wanting to spend more money for people who need it (impoverished people, etc.)
So it seems like we have the choice of voting for left-wing politicians who run on increasing spending on new forms of entitlements, and spending will increase precipitously - or voting for right-wing politicians who run on not spending like the neocons do, then just do it anyway, and spending will increase precipitously.
https://www.ft.com/content/9ce05a54-c424-11e9-a8e9-296ca6651...
Also: A half reasonable single-payer health care system should save a lot of money over-all. The fiscal conservatives should be all over that one.
E.g., https://www.healthsystemtracker.org/chart-collection/health-...
(BTW, when talking about the overall cost, it doesn't make sense not to count the costs of employer-provided plans.)
The real question is how to we transition from the broken, hodgepodge system we have now to one of those proven better, and cheaper systems.
I think it would be worthwhile to have a pilot program of it here, say with a single small state introducing it. It could show us how it would end up working in practice.
The thing to do is to encourage many more people to do primary care.
... by borrowing from the social security trust fund.
If anything it was how weak the 2000 correction was that lead to the housing bubble.
It's also relevant because, at a certain point, the productive portion of the population will fall below that necessary to make payment on the debt at which point the shit hits the fan in a big way.
The cutoff for top 40% is around 40k/year.
PS: Numbers are 5 years old but should be a good ballpark.
Anyway, people getting Social Security should really mess with this calculation as someone could be making 150k, but up to 45k of that is from the government.
If you put 6.2% (12.4% total with employer contribution) of your income away into index funds that grew at 7% per year, at $100k/yr gross salary ($12.4k/yr) from ages 25 - 65 (40 years), you would end up with $2.6m (in today's dollars).
$2.6m converted into dividend funds with a 3% yield would be $6.6k/mo.
I don't know anybody getting $6.6k/mo from Social Security...
[0] https://www.cbpp.org/research/social-security/policy-basics-...
I wish it had, I'd love to dedicate X% of my SS check to investing in the stock market.
I know, but based on my calculations above, don't you agree that the end user (citizens) are not getting the best bang for their buck?
Social Security doesn't exist to maximize returns, it exists to protect the elderly from extreme poverty once they are no longer able to work. Because of that, the funds are invested in a very risk averse manner.
I'd certainly be open to the idea of a US sovereign wealth fund in some sense, but I don't think privatization or anything else where individuals are making decisions about their own Social Security account is a good idea, since we'll have to create another Social Security-like program to support the people who invested poorly and are unable to support themselves.
Of course you don't. The maximum benefit in 2019 is $3,770/mo for people who retire at 70. If you retire at 66, then the max is $2,861/mo. And these are only what you get if you maxed out 35 years of SS payments. Besides, SS is designed to only replace 40% of your pre-retirement income.
How much would you have had to contribute between 18-70 to achieve this number?
Ref: https://smartasset.com/retirement/the-average-salary-by-age
Am I missing something here?
Social security has less volatility and has an associated cost for that.
Social security is security: no matter how I get screwed, I'm only poor when I'm old, not poverty stricken and dead.
this seems like a weird statement. what is "fair share"? i am a middle class person with a job with fantastic benefits, yet i easily pay over 30% in taxes (probably closer to 40% if one really counts all the "hidden" taxes) and still have to put up with shit infrastructure, terrible public transportation, expensive non-public transportation, expensive insurance, etc. at what point is it considered that i and others are paying our "fair share"?
If we are intent on fairness, the generations that incurred the debts should be the ones forced to pay them off. So for the sake of argument, let's divide the populace by birth year, and institute a tax called the Debt Retirement Tax (DRT).
I took the historic debt from 1791, and divided it into 40 buckets. For each subsequent year, I charged each bucket 2% over inflation, dumped each bucket into the bucket to its left (except the leftmost), and divided the increase in debt, after interest, evenly across all 40 buckets. In years when the debt shrank, the reduction was divided evenly across all buckets with a debt balance.
This was to simulate the relative contributions to paying off and incurring more debt for working persons for each age 25-64, and all people 65 years or older. I presumed that age brackets younger than 24 have too little political power to significantly affect national debt. Scrolling down to 2018, the age 65+ bucket is now responsible for over 59% of the extant debt. Looking at the numbers over the years, and the clusters of zeroes in particular, whenever the debt is reduced, it is always the younger workers paying off the older people's debts. The eldest have never paid off their share of debt. At the 1835 minimum, the algorithm I used puts 100% of the responsibility for that last bit of debt on the age 65+ bucket. But instead of paying it off, they used their political power to charge up more debt, based on the willingness of the younger folks to work harder pay it off.
For the DRT, you could pay an income tax based on how much debt is in your age cohort's bucket, and if your year's bucket gets emptied, then you don't pay DRT the next year unless the debt goes up, and the interest charged on the other buckets doesn't cover your cohort's 1/40th share of it. The DRT can also include an inheritance tax component, so if you die with more debt in your age bucket, the state takes more out of your estate.
What is happening now is like identity theft. Elders are running up credit debt for their own benefit when their grandchildren's names are the ones on the accounts. What could possibly be "fair", when that situation is never addressed?
If I expand the number of buckets to 100, modeling for 11-year-olds up to 110-year-old and older (but mostly the dead), the responsibility for the debt in 2018 still shakes out to 20% in the 110+ bucket.
We're still paying the debts of dead people. 1846 is the last year in which the national debt could be truly said to belong entirely to the living, and 1974 was the last year we actually paid off any of the debts of the dead, rather than perpetually refinancing them.
You can't exhume dead bodies and demand that they pay more tax. And the method for allocating new debt to birthyear-based buckets is probably not in line with where the responsibility actually lies.
Most candidates are running on a platform of directing the taxes citizens pay towards services the citizens want. It's easy, and dishonest, to deride these as "free things" if you don't want them. Even the tax cut tooth fairy is supposed to be deficit neutral due to "dynamic accounting" gimmickry. The difficult lift is to discern what promises are based on flimflam and which are based on honest accounting and reasonable, time-tested assumptions.
I have more faith in modern politics that one man can veto an entire cabinet of elected officials on what to spend. Whether or not one man can influence them or ask them to keep spending, I have no doubts. But... how many elected lifetime professional politicians sign off on budgets + spending? I am going to guess it is more than "one man".
Government debt is different than private debt.
What does "fair share" mean?
https://tradingeconomics.com/united-states/government-spendi...
It has been going down since the Great Recession (44% in 2009 vs. 38% in 2016). Taxation:
https://fred.stlouisfed.org/series/FYFRGDA188S
Taxation was going up a bit relative to GDP towards the end of Obama’s term (which is why the deficit was shrinking), but taxation is now going down (hence the deficit is rising again under Trump).
In a country which prints dollars, and borrows dollars, future debt cannot constrain action.
The fear here is whether people will stop lending you dollars, but as we can see in the US we are nowhere close to that situation. (Europe/Germany, which is pathologically committed to not having debts has it even worse/better...people are paying them to take their money).
Why not? Or was that tongue-in-cheek?
Of course, they've borrowed heavily to accomplish this...
The people who pay these "everything will turn in a dine when people really understand" narratives are usually people who the markets are telling them they are wrong and cannot accept it.