Thursday, June 17, 2010

Cruising the Web

Surprise, surprise. Chris Matthews comes up with a very biased documentary on the "New Right." Would we expect anything more from Matthews and MSNBC?

Stuart Rothenberg pokes
holes in the thesis that this is an anti-incumbent year. Yes, some incumbents have lost primaries, but there were special circumstances for those elections. In general, most incumbents cruised to easy victories in their primaries. He concludes that this year will not be an anti-incumbent year, but a Republican wave election.

Phyllis Chesler
and Mark Steyn note the relative silence in the MSM about honor killings against women in the western world. For shame on the media.

It cost a lot of money to rescue Abby Sunderland from her ill-conceived attempt to sail around the world, but that is the price that countries pay to rescue those in trouble at sea. Countries in the Southern Hemisphere end up spending a lot more than those in the Northern Hemisphere because they have so much more ocean to cover.

Timothy Carney has the dismaying statistics about which interest group is spending the most to sway public policy.
Government employee unions — through their employees and political action committees — have contributed more money to congressional candidates this election than all the PACs, executives and employees of the entire oil industry, according to data from the Center for Responsive Politics. Because 92 percent of public-employee union money goes to Democrats, President Obama’s party has raised more money from these unions this cycle than Republicans have raised from Wall Street.

Along the same lines, local and state governments have spent more on lobbying this year than the health insurance industry or defense contractors.

By any measure, local and state governments and public sector unions are an entrenched special interest. By any measure, they are also the prime beneficiary of President Obama’s latest $50 billion spending proposal.
Isn't it sweet that these broke state and local governments still spend big bucks to make sure that the federal government gives them even bigger bucks.

John Fund has more questions
about why the President won't suspend the Jones Act.

The Obama administration is planning to push through
its energy cap-and-tax bill in a lame duck session after the election when Democratic senators might not be so worried about jeopardizing their reelection because they will have already lost. Jim Geragthy suggests that voters try to pin down those Democrats now about how they'd vote on the bill. Oh come on. As if any promise made during the election would bind these people after the votes are in, especially ones who had been voted out and could vote their liberal proclivities.

Gosh, South Carolina is adding a lot of fun to this year's election. Jon Stewart is quite funny on the Alvin Greene story.
Alvin Greene Wins South Carolina Primary
The Daily Show With Jon StewartMon - Thurs 11p / 10c
www.thedailyshow.com
Daily Show Full EpisodesPolitical HumorTea Party
His ridicule pinpoints the stupidity of the allegation that the GOP engineered the whole Al Greene candidacy. As if the South Carolina GOP could engineer anything - they're too busy trying to torpedo Nikki Haley's candidacy for governor. And why would they even bother doing anything in the Democratic primary to pick a patsy to be roundly defeated by Jim DeMint who is going to cruise to victory this November. All the Democrats were doing was picking who was going to be rolled over by the DeMint victory parade. Why shouldn't it be an unemployed guy living with his parents who can't even figure out why he spent $10,000 to get into the race? Did the Democrats have anyone better? Apparently not.

68 comments:

ic said...

It cost a lot of money to rescue Abby Sunderland...

C'mon, nobody died. In the old days, knights risked their lives to rescue damsels in distress from the most vicious fire breathing dragons.

She's so pretty, she's worth rescuing. Unfortunately, none of the white knights could claim her hand, nor a teensy-weensy kingdom from her non-kingly father.

Pat Patterson said...

Maybe the voters of SC thought they were voting for Al Green. Couldn't do much worse.

http://www.youtube.com/watch?v=jfWPDGWP568

Tacitus Voltaire said...

Chris Matthews comes up with a very biased documentary on the "New Right."

i'm interested to know what you guys think.:

first of all, if you want to reform the republican party, i guess you have to get tea party candidates on the ballot. how many tea party candidates, as opposed to the regular republican candidates, have made it on to senatorial or congressional ballots so far?

there seems to be some disagreement as to whether "paulistas" are real tea party members. do you think rand paul and ron paul are "real" tea party members?

if the republican party ends up in charge of one or both houses of congress next year, what do you want or expect to happen that would fulfill or advance your agenda? i mean specifically, like bills and such, not vague goals.

Tacitus Voltaire said...

tfhr

"...current spending and entitlements are unsustainable and must be corrected or the whole house collapses. Left unchecked, that may take less than five years..."


1. all the estimates i've seen say that ss could run into trouble about the year 2035. the HCR reform bill is supposed to have rolled back the same estimate for medicare and medicaid (thanks for noticing my mispelling before) to the late 2020s

2. have you ever asked yourself who gets all this money, and what would happen to the economy if it stopped flowing?

3. do you know of any other countries that have a lower level of social services than the united states that you could use as an example of how you would like this country to function? no, it is not true that there is no income tax in switzerland or that it does not require health insurance

Rick Caird said...

TV, you misunderstand the Social Security problem. To get to 2035 or any similar estimate means retrieving all that money that was "invested" in special Treasury Bonds. Unfortunately, that is an accounting myth. That money has all been spent. So, starting this year, money has to come out of the general fund to pay a portion of Social Security. It is the same with Medicare. Medicaid is something entirely different.

Starting right around now, though, rather than using the Social Security and Medicare surpluses will no longer reduce the deficit, but rather the amounts required over the amounts collected will increase the deficit.

2. Those who get the money are mostly those, like me, who have paid into the fund since 1968 and were promised those benefits. I suspect if the federal government attempted to renege, you would see armed rebellion. I once figured that if we took both sides of the Social Security tax and assumed both the maximum each year and an 8 -10% return, it would be worth in the vicinity of $1.5 million. As an annuity, with a 5% growth rate and 30 year payout, it would amount to about $92,000/yr. That is a far cry from the $18,000 or so from Social Security.

Government always, always lies and treats people with contempt when they don't need their votes.

Pat Patterson said...

Half right. There is no income tax in Switzerland but there are taxes on profits, a VAT and some of the cantons have individual VATs. But no income tax. It also has compulsory healthcare insurance but that is through private companies. And continuing practice completely irrelevant to the thread.

Tacitus Voltaire said...

Pat Patterson said...
Half right. There is no income tax in Switzerland


incorrect, as i told you. i took the trouble of looking it up before opening my mouth:

Switzerland Income Tax

This tax is levied at federal, cantonal and communal level. Personal income tax is progressive in nature. The total rate does not usually exceed 40% and in most cases, the maximum tax rate is much lower than this. For example, in the Canton of Schwyz, the top rate, inclusive of federal, cantonal/communal tax is approximately 22%.

The basis of assessment is as follows:

Residents are taxable on their worldwide income other than the income arising from enterprises and real estate located abroad;
Non-residents are taxable on income arising on permanent establishments and real estate located in Switzerland, but the rate of tax is based on the individual's world-wide income.
Personal income tax rates are progressive, rising to a maximum of 11.5% for incomes over SFR664,300 at federal level, and approximately twice that at cantonal level. There is considerable variation between cantons. Municipal rates are usually a small fraction of cantonal rates.


http://www.lowtax.net/lowtax/html/jswpetx.html

Tacitus Voltaire said...

Rick Caird said...
TV, you misunderstand the Social Security problem. To get to 2035 or any similar estimate means retrieving all that money that was "invested" in special Treasury Bonds.


no, i don't "misunderstand" it any more than you do. tfhr has been declaring ss a "ponzi scheme", his phrase, and i just quoted him as saying that he thinks it might collapse in less than five years.

wikipedia:

According to most projections, the Social Security trust fund will begin drawing on its Treasury Notes toward the end of the next decade (around 2018 or 2019), at which time the repayment of these notes will have to be financed from the general fund. At some time thereafter, variously estimated as 2041 (by the Social Security Administration[80]) or 2052 (by the Congressional Budget Office[81]), the Social Security Trust Fund will have exhausted the claim on general revenues that had been built up during the years of surplus - at current levels of taxation. At that point, current Social Security tax receipts would be sufficient to fund 74 or 78% of the promised benefits, according to the two respective projections. The Social Security Trustees suggest that either the payroll tax could increase to 16.41 percent in 2041 and steadily increased to 17.60 percent in 2081 or a cut in benefits by 25 percent in 2041 and steadily increased to an overall cut of 30 percent in 2081

other people seem to disagree with your assessment that the money will start to come out of the general fund "starting this year". your sources for this?

also, as you see, the result is projected to be a shortfall, starting in about 30-40 years, not a collapse.

Rick:

I once figured that if we took both sides of the Social Security tax and assumed both the maximum each year and an 8 -10% return, it would be worth in the vicinity of $1.5 million. As an annuity, with a 5% growth rate and 30 year payout, it would amount to about $92,000/yr.

i don't know very much about the stock market, but i tend to think that your estimate of 8 - 10% return is optimistic. is that what you are making on your 401k?

what i do know is that ss funds are generally invested in t-bills, for the very good reason that this is considered the most reliable investment possible. thus, of course, the ss fund is shielded from devastating stock market crashes like the one we experienced only a few years ago. if the government had been investing ss in the regular market, as you seem to suggest, you can imagine what the result would be!

as for your other numbers, actually, according to what the government tells me, i should be getting 36k/yr, not 18, if i wait until i turn 70 to draw on them. i can't say i know anything about annuities, but perhaps you could tell us which annuities can be guaranteed to have a 5% growth rate, and how much money you would have to put into them to result in 92k/yr

Tacitus Voltaire said...

Starting right around now, though, rather than using the Social Security and Medicare surpluses will no longer reduce the deficit, but rather the amounts required over the amounts collected will increase the deficit.

apparantly not, as above. also, recall that the "general fund" has been borrowing billions from the ss trust fund for decades, and therefore this payout from the regular tax reciepts will be in the nature of paying back an IOU for quite some time

Tacitus Voltaire said...

I once figured that if we took both sides of the Social Security tax and assumed both the maximum each year and an 8 -10% return, it would be worth in the vicinity of $1.5 million. As an annuity, with a 5% growth rate and 30 year payout, it would amount to about $92,000/yr

let's see... first, you are assuming that if the citizen were to be able to invest the part of his paycheck that now goes into the ss trust fund, that he or she would also be able to get the part that the employer is now required to pay. would the government require them to pay it to you? i don't think so!

perhaps you could tell us more about how annuities work, but for any other investment, if you want to get 92k/yr out on a 5% annual growth, your capital would have to be $1,840,000. you could, i suppose, accumulate that much over 40 years if you put aside $46k per year, each and every year of your working life from the age of 20 to the age of 60, but since the median household income of americans is now about 50k/yr, i doubt very much that most people would have that much money from the ss portion of their income.

but i don't know anything about annuities. please, explain to us how much money you would need to put in to an annuity and under what terms to get it to pay out $92k/yr. i've got a little cash on hand and i've been trying to find an investment that absolutely guarantees %5 return, but it seems t-bills are down to nearly nothing at the moment

Pat Patterson said...

Yep, I read the description incorrectly and assumed that only the cantons withheld but that is not the case. But some cantons have reduced the income tax to 1% and the last time the tax was voted on it failed and might just be overturned in the next year or so.

Tacitus Voltaire said...

ok, some facts are in order

first of all, i went to some annuity sites on the web, and, lo and behold, annuities are not magic income generators! darn! the 'annuity calculator' programs confirmed that my calculation that you would need about $1,840,000 investment to get an annuity of $92k/yr turns out to be correct

secondly, um, exactly how much money can a person put into ss out of their paycheck? currently, ss contributions are %6.2 of gross income up to a limit of $106,800

http://ssa.gov/pubs/10003.html

you are not taxed for ss for income above that amount, as you will notice toward the end of the year when they stop taking it out and your check gets bigger

so, let's do the math

max yearly amount you could possibly pay into ss today:
106,800 * .062 == $6,621.60

max amount you could possibly pay in a lifetime if you made at least $106,800 a year every year from the age of 20 to the age of 65:
6,621.60 * 45 (yrs) == 297,972.00

amount you would make per year if you invested it all at 5%:
297,972.00 * .05 (5% interest) == $14,898.60

of course, if you invested your $6,621.60/yr for 45 years at compound interest, you'd have more capital at the end - depending on your interest rate. my bank ain't paying me %5 right now, i can tell you that

them's the facts, kids. teh math don't lie

tfhr said...

TV,

First of all, let me say that I've read your remarks throughout this particular thread and I have to compliment you on the effort you've made to keep your comments civil. What a refreshing change - I hope you will keep with it. Really - I mean that.

I would have preferred that you issue your response to my fisking of your comments made in the Wednesday, June 16, 2010, "Afternoon Web-Cruising" in that particular thread, but since you managed to be civil, I don't want to let that rare opportunity pass.

So here we go:

1. When unemployment and under-employment continue at current levels and so many Americans have actually stopped seeking employment, then Social Security funding will suffer. Those predictions you are hedging your bet on are from what year? What employment figures are they pegged to and what sort of economy? What is the source that backs up 2035 and what happens in 2036? Are Social Security and Medicare something we should leave in a steaming pile after we've gone? "I got mine kid, you figure out what to do with the unfunded liability".

One other Social Security item: I'm not sure why you think Rick Caird's estimates are generous when you KNOW there is no "LOCKBOX" and that the monies we've all been paying in the name of FICA have been redirected elsewhere. I'd much rather have that money where I can control it's use. That money is spent. It is gone. There is no interest or added revenue derived from your FICA contributions. You say you don't know much about the stock market but you don't have to in order to see that it has continued to grow decade after decade, despite peaks and valleys. A thousand dollars invested in Apple at IPO is worth what compared to a thousand thrown to FICA at the same way-point? Money spent is money spent, regardless if you spend it or the government spends it. It's gone. If it was actually invested in something, like an index fund, we could say, "Yes, my retirement income is based on growth in the economy". Do you really want your financial security based on growth in the government, an entity that in itself produces nothing, or the American economy?

2. "have you ever asked yourself who gets all this money, and what would happen to the economy if it stopped flowing??

What I ask is this: "What would happen if people were allowed to keep more of the money that they earn? How would they spend it and where in The Constitution does it say that it is our government's place to determine such priorities?" TV, our economy toils under the weight of notoriously inefficient and cumbersome government influence. Consumers bear the cost of inefficiency, gratuitous litigation, and excessive regulation. I'm fine with government stepping up to protect citizens against fraud and corruption but we see so much of that in government itself, along with waste and abuse, that I'm much more comfortable placing my trust in the free market rather than a government controlled economy.

To answer your question about what happens when the money stops "flowing", I need only ask you where you think it comes from in the first place.

Finally, your measure of social services as an indicator is baffling. Greece certainly offers more than the United States in that arena but would you like to change places? I'll ask you about Spain soon, so prepare for that. By the way, did you know that "Ponzi" is the same in Greek as it is in Spanish as it is to Bernie Madoff?

Jason said...

them's the facts, kids. teh math don't lie

Er, tv, your math does take out the effect of compounding interest, which is, quite frankly, huge.

550$ a month at a 5% yearly rate over 45 years actually gives you about $1.1M. The equation I used in Excel can be found below if you wish to check (or play around with it).

=FV(5%/12,12*45,550)

That being said, an average return rate on an investment (vice a savings account) tends to be the 8-10% over the long term (obviously subject to fluctuations). An average return rate of 8% gets you almost $3M at the end of the period.

Tacitus Voltaire said...

550$ a month at a 5% yearly rate over 45 years actually gives you about $1.1M.

do you know of someplace where i can get a guaranteed 5% interest rate for 45 years? stocks rise and fall, and t-bills and bank interest are somewhere south of 1% at the moment

if you know of such an guaranteed 5% investment, and you can afford to set aside $550/mo every month for 45 years, i'm sure that would be a great thing to do.

since the median family income is currently about $50k/yr, half of american families would be paying $275/mo or less into ss. a more realistic interest rate would vary between 1% and %4.5 percent. since you have the compound interest equation under your fingers, perhaps you could give us, e.g., the calculation for $275/mo at an average estimated 2.5% interest over 45 years.

the 5% comes from rick's incorrect claim that ss donation could be put into a 5% annuity and yield $92k/yr

seriously, if you know of an investment with guaranteed 5% interest, i have some cash that i'd dearly love to make that kind of rate on

Rick Caird said...

TV, you seem to be as stupid as we think. If Social Security income is less than the outgo, it is in deficit now. You ask for my source? It was the story you were responding to. Are you so unaware of what a deficit is that you cannot see it when it stares you in the face?

I love it. Social Security cannot be in deficit because they projections don't allow it. I know that because Wikipedia told me so. Sheesh.

Thanks for the laugh.

Tacitus Voltaire said...

these are expenditures that are handled through government in all civilized society. privatizing military operations has proven more expensive than managing it within the government. my opinion is that this experience gives you a good idea of inefficient government running something as opposed to inefficient, profit-driven private enterprise running something

the fact that there are inefficiencies, that the whole thing doesn't work perfectly, that there's a lot of waste, fraud, and abuse, doesn't mean that overall it's necessary and good

and, listen - i have worked in private industry my entire life, including big corporations, and if you think that they are more efficient than government, you are fooling yourself. the "invisible hand" is AWOL most of the time

Finally, your measure of social services as an indicator is baffling.

i'm not sure where i said that, but i'll take it. yes, social services are a very important component and a good measurement of the overall health of a nation, an obvious fact which is not contradicted by the fact that most countries are not nearly as nice as the united states

Tacitus Voltaire said...

tfhr
Are Social Security and Medicare something we should leave in a steaming pile after we've gone?


i'm glad to see you taking this attitude - i certainly agree that we should do everything to keep ss and medicare on a sound footing, and this means figuring out now what our options are to keep it healthy over the next 40 years. are you now in favor of fixing it? your earlier remarks led me to believe that you wanted to eradicate it

Do you really want your financial security based on growth in the government, an entity that in itself produces nothing, or the American economy?

government does not produce nothing - you just spent the last 20 years or so as a government employee, Betsy is a government employee, and you are now living on a government, taxpayer funded pension.

all civilized modern nations have government managed pension funds. they do this because business managed pension funds are either mostly non-existent, or have been mismanaged into oblivion by poor stock market investing - these kinds of failures have been all over the news for the past 30 years at least. ss is managed for the best investment security possible, not the big market pop. i'm sure you might make a bundle in the stock market with your ss contribution, but you might also lose it all, or simply spend it - most people don't have the extra cash to invest, and would certainly just spend it on food, clothing, and heating bills

the best option for retirement, as any investment advisor will tell you, is variety - savings, 401k investments, and the backstop of ss. that's how i manage my retirement funds. definitely, we should invest in private enterprise as part of retirement, but it would be foolish to put all your money in one risky basket

To answer your question about what happens when the money stops "flowing", I need only ask you where you think it comes from in the first place.

this is not answering the question. first of all, the way a modern economy works, money doesn't do anybody any good unless it moves around. that's why we have investment in the stock market - "putting your money to work"

our tax money is spent by the federal government, largest chunks to smaller chunks, in 1) health care spending - hospitals, doctors, medical equipment, medicines, 2) ss (pensions) which are spent by the recipients on food, shelter and clothing - in other words, all ss dollars paid out go right back into the economy, mostly to small business owners - isn't this obvious?, 3) military - soldier pay, your pension, military hardware, 4) contracts to build things like highways and dams etc, and 5) other

we have decided as a nation - unless you think that this is not a democracy - to collect taxes and spend the money on these things, and the fact that we do this keeps a large part of the nation, including you personally, clothed and fed. people have talked about cutting government spending back massively for decades, but they always run into the same issue - do we pull the plug on doctors and hospitals? soldiers? military contractors? schools? (local government, but same question) highways? who? where?

Tacitus Voltaire said...

By the way, did you know that "Ponzi" is the same in Greek as it is in Spanish as it is to Bernie Madoff?

a lot of very wealthy people, not to mention private pension funds, thought bernie madoff was a perfectly good investment. their money, of course, is now gone

you could very easily have put all your ss money there

that's why ss puts its money in t-bills

Tacitus Voltaire said...

Rick Caird said...

TV, you seem to be as stupid as we think. If Social Security income is less than the outgo, it is in deficit now


yet another person who has no idea of how a pension fund operates

how does ss make money?

Rick Caird said...

Uh TV, Pension plans have been based on an 8% return for years. That is the historical return of the stock market. Do not equate today with the past 30 years. You do continue to show us your mental ability and detailed knowledge of business, finance, and economics.

Rick Caird said...

No, TV. Social Security puts the money into T-bills since it is then available for the government to spend. LBJ did that in the late 60's to hid ethe cost of the Vietnam war.

Madoff claimed to be using some advanced trading scheme to insure a steady income stream. Just like Congress, he lied abut what was happening. BTW, the SEC was warned abut him. They ignored the warnings. Great regulation system you got there.

Tacitus Voltaire said...

Rick Caird said...
Uh TV, Pension plans have been based on an 8% return for years


most of these stock market based private pension funds have gone broke. 8% is a fictitious number which you might or might not achieve. have you? returns on investments of any kind are not guaranteed - remember?

That is the historical return of the stock market

you really believe that, eh? can you wrap your mind around the fact that when you invest in the stock market you are not guaranteed that you'll make any money at all. even if you have a nice balanced investment plan, and wait out the short term variations by keeping your money there for 10, 20, or 30 years - you can still lose money in the end. it is not guaranteed. am i making myself clear?

as for your misconception about ss, i'll be a nice guy and explain it to you:

it is predicted that this year, ss income from taxes will be less than payouts (actually, the prediction is that this will not occur again until 2017). however, ss investments are predicted to make up this shortfall, now and for a long time to come. however, it is predicted that this might not be the case anymore as early as 2036

pay attention to the word prediction. this refers to things that might or might not happen in the future

Rick Caird said...

TV,

"yet another person who has no idea of how a pension fund operates".

What is that supposed to even mean? The discussion was that Social Security is in deficit. You are going to great lengths to avoid acknowledging that.

In the case of Social Security, it does not make money. It collects taxes, spends what it must,and gives the rest to the general fund. the general fund produces a book entry claiming it owes Social Security the amount it spends, it might even credit some mythical interest, but it makes no provision to ever pay back anything. There is no sinking fund to retire the debt. There is no interest payment There is nothing at all. When the time comes, as it has this year, the special treasury bond is redeemed by treasury selling a real bond to someone and then the deficit goes up and the Social Security payment is made.

Is this really all a mystery to you?

Rick Caird said...

TV,

If there is one thing you are not, it is a nice guy. I understand far better than you how the stock market and pension funds work. Never, anywhere did I claim there was a guarantee. I did say that pension funds were operating on the idea of an 8% return and I did say that was the historical return of the stock market over long periods of time. I will also add that the quest for yield is what allowed the MBS's to get the traction they did. We won;t even talk about the damage the Keynesian economics of Krugman and Geithner (which Europe has just given the finger to) has harmed this country. Near zero interest rates lead to misallocation of investment capital as well as harming seniors who have saved for retirement.

No, corporate pension plans have not gone broke. The public employee plans are mostly broke, but that is because the various governments did not make their required contributions. They underpaid. Years ago federal law was changed to make private companies fully fund their pensions. Governments, no. Second, private companies have pretty much gone to defined contribution plans rather than defined benefits.

Forget the predictions on Social Security. They are out the window for two reasons. One is unemployment is around 17%. That reduced Social Security income because that income is based on total W2 and 1099 wages. Those are now significantly less than projected. Second, the unemployment rate and difficulty of early baby boomers finding jobs is creating a larger number of people claiming Social Security than was projected.

So, thanks for trying to help. But, your help is only good for lowering the IQ of the general population and, lord knows, we don't need any more of that. I did find it amusing that you still don't understand that the "prediction" you offer is incorrect. The projections have been that Social Security will run out of the money the general fund has "borrowed" by the late 2030's. It will be running a deficit (that is revenue - expenses) much earlier. The projections were not for as soon as this year, but it happened. I am glad you are so confident that unemployment will drop very soon and GDP will pick up in a "V" shaped recovery very soon. I am not so sanguine. In fact, I predict it will be years and if Obama gets his way with taxes, health care, and cap and trade, it may never happen.

Tacitus Voltaire said...

Rick Caird said...
In the case of Social Security, it does not make money. It collects taxes, spends what it must,and gives the rest to the general fund...There is no interest payment ...


so you really have no idea of how ss operates, i see

8% return for years. That is the historical return of the stock ma

it seems you actually think that this means that if you put money into the stock market and leave it there for 10 - 30 years, you will make at least 8% a year on it. this is just naive

see: statistics, how to lie with

Tacitus Voltaire said...

BTW, the SEC was warned abut him. They ignored the warnings. Great regulation system you got there.

glad to see that you are in favor of better government regulation of investments. better tell your party about this keen new idea, okay?

Rick Caird said...

TV says:

"glad to see that you are in favor of better government regulation of investments. better tell your party about this keen new idea, okay?".

Only you, TV, could take an example of the failure of regulation and think it means I am in favor of increased regulation. Clearly, my point is that regulation is essentially and ultimately unsuccessful.

Sadly, it is not difficult for you to try to act dumb. When, you are up to it, we can talk about why regulation fails and why it will always fail.

Rick Caird said...

TV says:

"so you really have no idea of how ss operates, i see".

Typical lefty. I explained exactly how Social Security operates, but rather than offer a counter argument, you offer an ad hominem. I also pointed out your misunderstanding of Social Security deficits vs when it will run out of money. You offer no counter argument to that either.

I also said the historic return of the stock market is 8%. Do you disagree? Do you have a counter argument or will you simply content yourself with name calling as your sole rebuttal?

Rick Caird said...

TV says:

"privatizing military operations has proven more expensive than managing it within the government."

Where did you get that idea? History is replete with privateers and mercenaries. Governments decide to keep standing armies and they control them. It is not an expense saving item. In fact, I could contract more cheaply and expand and contract the force more easily. The big deal now is the cost of weapons system. I cannot imagine someone like Blackwater being able to develop tactical nuclear missiles.

TV says: "the "invisible hand" is AWOL most of the time". You need to go back and actually read Adam Smith. Your example and experience have zero to do with the "invisible hand".

TV says "social services are a very important component and a good measurement of the overall health of a nation". What? The only possible relationship is wealth. If you want to measure a nation based on wealth, you then need to take the next step and measure whether that is individual's wealth or government's wealth. In a communist society, all wealth belongs to the government. The government is also responsible for social services. Are you sure you want to go down that path?

I am also curious. How did you come up with a handle that consists of a Roman historian (who went by his last name) and a French philosopher. They hardly seem like a fit.

Tacitus Voltaire said...

Rick Caird said...
TV,

If there is one thing you are not, it is a nice guy. I understand far better than you how the stock market and pension funds work. Never, anywhere did I claim there was a guarantee.


well, see, this is the whole point. we put in up to $6,621.60/yr and the government guarantees us a pension of up to $3k/mo for the rest of our life from the age of 70. this, like anything else, might eventually stop working, but the full faith and credit of the united states government has been rock solid so far. this is the backstop for retired people that has been put in place by every civilized nation in the modern world. obviously, it may take some adjustment in the future to keep it working, but a large majority of americans want it at this point in time, and in this country we decide things by majority rule. the people in charge of estimating its health tell me that it probably won't fall short until 2036 at the earliest, but this depends on a lot of factors and the future is uncertain. i might add that the demographic issue of baby boomers should ease at around just this date since if we can predict anything, it is that people don't live forever

everybody, if they can manage it, ought to have diversified investments in the stock market, treasury bills just like ss, savings, and anything else you can manage. but not everybody can afford mutual fund investments

so what are we arguing about, exactly? are you telling me that when the analysts that the government puts in charge of estimating the health of ss tell us that it is good until at least 2036, that they are wrong and you are right - because why? i hear them when they tell us that the finances of ss are on a downward trend, so it is clear that by 2030 we will have to see what things look like then and do what we did in the 1980s - come up with an adjustment in its finances. on the other hand, nobody knows what things will look like then

so, the stock market is for gambling and ss security is a backstop. americans like it that way and aren't about to change it. your figures for annuities turn out to be bogus, and it seems that you realize that the difference between the current system and investing it in the stock market is the difference between guaranteed medium returns backed by the full faith and credit of the united states government and gambling for higher stakes, so your statement "I once figured that if we took both sides of the Social Security tax and assumed both the maximum each year and an 8 -10% return, it would be worth in the vicinity of $1.5 million" has to be conditioned by the realization that it might also very well be worth zero. which, again, is why we have ss

so you tell me you could have tons more money if only you were allowed to invest it yourself, but then you admit that you could also lose it all. i'm sure you want to be able to have the freedom to ruin yourself, but in this country and all other civilized countries we've decided to institute a backstop to keep this from happening. if you want to change it, you'll have to convince the majority of americans, eh?

so, what are we arguing about?

Tacitus Voltaire said...

Rick Caird said...
TV says:

"privatizing military operations has proven more expensive than managing it within the government."

Where did you get that idea?


blackwater

TV says "social services are a very important component and a good measurement of the overall health of a nation". What? The only possible relationship is wealth. If you want to measure a nation based on wealth, you then need to take the next step and measure whether that is individual's wealth or government's wealth. In a communist society, all wealth belongs to the government.

since the phrase in question was "health of a nation", i take it from this that your only idea of "wealth" or the health of society is money. talk to your priest or minister or something about this issue.

I also said the historic return of the stock market is 8%. Do you disagree?

this is an advertising phrase based on vast overall averages that has no relevance to actual individual investing. it's purpose is no more than to convince people to give brokers more money. i've had 401k investments in mutual funds for many decades now, and if i tried to apply this advertising slogan to reality, the mutual fund managers, being good salesmen, would manage to not laugh in my face

since you love to tell us how sophisticated and knowlegeable you are, please tell us about your experience investing in the stock market over the past 30 years. i would love to hear which mutual funds i could invest in to get an average annual increase of 8%.

Tacitus Voltaire said...

How did you come up with a handle that consists of a Roman historian (who went by his last name) and a French philosopher

finally, somebody asked me!

"tacitus" means silent one. "voltaire" could be interpreted as being from vouloir taire, to wish to be able to shut up, although in fact it turns out to be a place name

i talk to much. i choose these names as an ironic comment on that failing

because, you see, i try hard to be aware of my faults and to make sure that i don't think a lot of myself

try it sometime

Rick Caird said...

I can see you have never really looked at the Social Security annuity. For the younger generation, now, the return is negative. It could get even worse. You make the assumption that no one can do as well as the government. However, I could have bought T-bills every year or a deferred annuity and would have done substantially better than Social Security and its T-Bills. I am a big believer in private accounts. Social Security is theft. There is no guarantee and there is no contract. The Supreme Court has already ruled on that.

You still do not understand that the only way Social Security can be good until 2037 is by getting repaid by the general fund. I don't know another way to get this point across to you. There is no money in the bank. There is no lockbox. There is no contract. There is no guranteed annuity. If you wish to continue to delude yourself, well, go for it. We would all be far better off if we had private accounts and some kind of targeted life multual fund. Social Security is now a net negative. In other words, we put more into it than we will get out. And, if you are black or another minority, it is even worse.

Unfortunately, you do not seem to understand investing. I cannot give you a crash course. I nevver admitted I could lose it all. Nowhere did I say that. Are you taking strawman lessons from Obama? That is not the first time you have claimed I have said something I have not said. If I want a backstop, I can put everything in treasuries. I do not understand your fixation on the stock market. But, let me warn you of hyper inflation. When the Fed does QE, they are printing money. So far, the forces of deflation due to the plethora of debt is holding that at bay. My fear is Bernancke will monetize the debt at the urging of Congress, the White House, and Krugman. That will wipe out private saving, particularly saving in cash and treasuries. If you don't understand that, and further discussion is hopeless.

Pat Patterson said...

I always thought Tacitus Voltaire named himself after a hole in the ground on the surface of the moon and the notorious anti-Semitic French writer.

Plus the first time he explained what the pseudo meant he said the Roman general and historian and the French philosoper. I see his Wiki skills have improved but not his understanding.

Rick Caird said...

TV says "Blackwater". You continually make things up when you don't understand. The Pentagon hired Blackwater for bodyguard duty because it was cheaper than using its own highly trained soldiers. The Pentagon invests a lot of money in training these guys to handle the advanced electronics and all the other parts of modern warfare.

So, you want to measure the "health" of the nation by some subjective measurement that requires a priest or a minister to define for you. Wrong. How can we begin to agree on what that subjective measurement should be? You seem to have defined some circular logic that claims social services define the health of a nation, but I should talk to a priest or a minister to get that definition. No cigar because it is not even a nice try. It it typical nebulous BS we have learned to expect from the left. We will have a "healthy society" when TV decides social services are up to snuff. Riiiiiiight....... he said bemusedly.

Then, I give you a verifiable fact of an 8% return and you tell me it is an advertising phrase. No. If you had invested in any S&P 500 fund, and reinvested dividends, or got into SPY, you would have seen roughly 8% over that time frame. That is verifiable fact. I don't use mutual funds. I have done better than the S&P 500 over the past 10 years and way better over the last 2.5. You, on the other hand, better stick to index mutual funds or the T-bills. I saw yesterday the one month note was at 5 bips. I am sure you can get rich that way (but only if we go into serious deflation).

Tacitus Voltaire said...

June 2, 2009
Five Years of Corporate Pension Plan Funding Gains Gone in Market Collapse
The top 100 U.S. corporate pension plans saw their funded status drop by nearly 30 percentage points in 2008, giving up all gains of the previous five years, according to a review of annual reports conducted by Pensions & Investments, a sister publication of Workforce Management.

The plans had an aggregate funding deficit of $198.9 billion in 2008, based on projected benefit obligations, a sharp reversal from surpluses of $111.1 billion in 2007 and $37.3 billion in 2006.

That’s the worst since 2002, when the top 100 plans had an aggregate deficit of $151 billion.

Gains of the previous five years were erased by plunging markets and declining corporate bond yields, with the average actual return on plan assets at -30.7 percent.

Only three plans saw positive actual returns, two of which—General Mills Corp. of Minneapolis and FedEx Corp. of Memphis, Tennessee—have fiscal years that ended last May, well before the market’s collapse. The third, Prudential Financial of Newark, New Jersey, had an actual return on plan assets of $334 million, or 3.4 percent of plan assets.

The average actual return on plan assets was 9.4 percent in 2007 and 11.7 percent in 2006.
...


“The crisis we are clearly going to see is that people will not have sufficient assets to retire. It’s possible that companies will revisit this when people are ‘retired on the job,’ ” Wagner said.


read the whole thing:

http://www.workforce.com/section/00/article/26/46/27.php

Rick Caird said...

I was having trouble finding the word to describe someone calling themselves Tacitus Voltaire. I was going to say "arrogant", but that is not the right word. But, I have decided the right word is "pretentious".

Tacitus Voltaire said...

You still do not understand that the only way Social Security can be good until 2037 is by getting repaid by the general fund

as i said, that would only be fair since the general fund has borrowed billions from it over the years. see: lockbox, never happened

There is no money in the bank

incorrect

wikipedia:

According to most projections, the Social Security trust fund will begin drawing on its Treasury Notes toward the end of the next decade (around 2018 or 2019), at which time the repayment of these notes will have to be financed from the general fund. At some time thereafter, variously estimated as 2041 (by the Social Security Administration[80]) or 2052 (by the Congressional Budget Office[81]), the Social Security Trust Fund will have exhausted the claim on general revenues that had been built up during the years of surplus - at current levels of taxation. At that point, current Social Security tax receipts would be sufficient to fund 74 or 78% of the promised benefits, according to the two respective projections. The Social Security Trustees suggest that either the payroll tax could increase to 16.41 percent in 2041 and steadily increased to 17.60 percent in 2081 or a cut in benefits by 25 percent in 2041 and steadily increased to an overall cut of 30 percent in 2081

the treasury notes are the money in the bank. the ss taxes have been invested there for decades, less the money "borrowed" by the rest of the federal budget. there's a lot left, although it seems by the end of the decade we'll begin to eat the seed corn

any S&P 500 fund

thanks. i'll look into it, and see if it makes sense to shift some of my 401k money there

So, you want to measure the "health" of the nation by some subjective measurement that requires a priest or a minister to define for you. Wrong

certainly not by money alone. that should be obvious

TV says "social services are a very important component and a good measurement of the overall health of a nation". What? The only possible relationship is wealth

the real health of a nation is the well being and happiness of the people that live there. what other measurement could there possibly be? please talk to your priest, minister or rabbi about the real meaning of life and things like that

and take a deep breath. you sound upset and bothered

Tacitus Voltaire said...

Pat Patterson said...
I always thought Tacitus Voltaire named himself after a hole in the ground


flattery will get you nowhere

:-)

Rick Caird said...

I can see I am having trouble getting some concepts through to you. I will try one more time before I give up. There is no Social Security money in the ban k or in T-Bills. There are only bookkeeping entries. the general fund is running deficits in the range of $1.6 trillion annually. When Social Security comes and asks for their money back, the government will either not do something, borrow the money, or print it. But, the major point you need to understand is that when that happens, Social Security will not be reducing the annual deficit as it is now, it will be increasing the deficit. Now, if I buy a CD from a bank, the bank has assets, or should have, to pay back that CD. That is not true of the government. they plan to borrow the money or print it. If I buy an annuity from an insurance company, they have asset's to pay that annuity when the time comes. That is not true of the government. They plan to borrow the money or print it. In either case the federal deficit will get larger because of Social Security not smaller as it has for the past 50 years. If you do not understand this, I cannot help you any more. This is elementary.

I absolutely agree with the Wikipedia entry. That is exactly what I am trying to tell you. The money will have to come from a general fund which is already $1.6 trillion in deficit. Would you want to lend someone money who is already running a huge deficit and expect to get paid back? Never. Gonna. Happen. Hello, printing press. Hello inflation.

Rick Caird said...

I am not sure you understood what you read in your reference. Many companies are still over funded or close to 100% funded. Some like Delta are way under funded. What that means is the companies will have to make larger contributions to their pension funds. When funds are growing by 15-17%, no contributions at all are required.

The reference also talked about discount rates. If you don't understand what that means, that is the expected return. The discount rates are coming down, but 8%+ is still too high, in my opinion. BTW, it was the pension funds chasing the yield of the lower rated tranches of the MBS's that not only caused a lot of those losses, but also sustained the real estate bubble. If the pension fund is expecting 8% return and interest rates are at 1% for T-Bills, they needed to look elsewhere. Expect discount rates to fall over the next few years.

Tacitus Voltaire said...

Rick Caird said...
I was having trouble finding the word to describe someone calling themselves Tacitus Voltaire. I was going to say "arrogant", but that is not the right word. But, I have decided the right word is "pretentious".


i believe you took note of it when i used exactly that word to describe myself a few days ago. i added "annoying", also

now, i have a few things i could say about you, but i am really too old and too bored with this kind of thing to participate in pissing contests. please feel free, however, to vent in my general direction if that makes you feel better

so, rick, i make a living as a software engineer. pat is a high school teacher, Betsy (whose blog this is) is an AP high school teacher, and tfhr was career army, ending up as a military intelligence analyst until he retired a little while ago (please correct me if i got any of that wrong). i haven't heard from our resident latinist, professor weevil, for a couple of weeks, and the machine, another army person, hasn't spoken up in quite a while. perhaps you could tell us what you do for a living

Tacitus Voltaire said...

They plan to borrow the money or print it

the government funds itself by borrowing money (the way george bush financed the iraq/afghanistan wars) or by collecting it in taxes. i suppose by "printing money" you mean to say you think they are going to expand the money supply to pay ss funds, but i think that would definitely not be the way it will be handled

you may have noticed that because of the budgets that reagan and congress produced in the 1980s, the share of the federal budget spend in debt service rose for a few years as high as 10% before subsiding to a more normal amount, around 5 or 6%. huge, mind blowing debts are nothing new in government or, for that matter, ordinary big business. you seem very alarmed about something about ss, but since you agree on the accuracy of the wikipedia account, i'm not sure exactly what it is that puts you into such a panic.

tfhr said...

TV,

Government spends other people's money. It produces no wealth of it's own and requires ever growing sums of wealth to function. Can we agree on that much?

I used the example of Greece - a wake up call for Europe and the rest of us - because California is not far behind. What happens when California defaults, TV? The state is paying out more than it brings in and cannot continue to do so for much longer. For reasons I cannot understand, you seem to think the United States is immune from that reality.

The Constitution requires that our government provide for our defense, not our retirement, not our health care. We always hear the same threats of laying off cops and teachers but then the next round of pork is awarded and PRESTO: The new Yogurt Museum is magically funded and Robert Byrd gets another lane and a cloverleaf added to the Grand Kleagle Memorial Highway. Fraud, waste and abuse, as well as ineptitude, are legion in our federal government. Look at Fannie and Freddie. Why should anyone have confidence that the Social Security system is run any better. The demographics certainly don't support it's continued operation. The full faith and credit of the United States Government depends on us - the tax payers - to make good on government failures but this time the numbers are truly daunting.

Take a look at this graphic:

http://www.usdebtclock.org/

Pay special attention to Social Security and Medicare Liabilities and the total listed under "US Unfunded Liabilities".

Over $109 TRILLION and counting because our government, with the best intentions of many, made promises that it can no longer keep.

Tacitus Voltaire said...

The average actual return on plan assets was 9.4 percent in 2007 and 11.7 percent in 2006.

The top 100 U.S. corporate pension plans saw their funded status drop by nearly 30 percentage points in 2008, giving up all gains of the previous five years

the average return of these top pension funds, by the math, is clearly not 8% over the past 10 years. QED

Rick Caird said...

TV,

You keep building these straw men. Nobody has ever said (or guaranteed) any stock market returns over 10 years. What I have said, and others have said, is that the historical return of the stock market is 8%. If you are funding a pension, or anything else, you need to assume some return. So, you pick the best one you can. Even zero is a projected return.

The only QED you have supplied is your own lack of understanding of business and finance; QED.

Tacitus Voltaire said...

Rick Caird said.
TV, You keep building these straw men. Nobody has ever said (or guaranteed) any stock market returns over 10 years. What I have said, and others have said, is that the historical return of the stock market is 8%.


well, i have to thank you for your honesty in conceding points that you can't defend. it makes for a rational argument that can be carried forward. now, i was responding to your original statement in your very first post:

I once figured that if we took both sides of the Social Security tax and assumed both the maximum each year and an 8 -10% return, it would be worth in the vicinity of $1.5 million.

my response was that ss guarantees a return on the investment, in as far as anything can be guaranteed, even on the full faith and credit of the united states government, and that guarantee has been good for 80 years now and is projected to be good for another 25 years at least.

my point is that we have the ss system as a backstop against the uncertainties of income and investments. that's the way americans like it, obviously. you want to change it.

so, tell me again why you want to get rid ss?

The only QED you have supplied is your own lack of understanding of business and finance; QED.

no, my QED was that despite your repeating this fictitious advertising slogan of an average 8% return, the top 100 pension funds in this country have not had an 8% return over the past ten years, and you, when asked, did not show that you had made that either. 8% is a fiction, a projection, a broad average no more applicable to individuals than the statement that the average lifespan of a person today is 67 years. and i don't see any evidence that even as a broad average, it's true

reality is what i am interested in, and, as we see, reality has not lived up to the advertising slogan. QED

the other fantasy that you keep on promoting is that ss is "broke". i have yet to see any proof for this assertion, just more assertions. let's see some proof. just saying that the ss fund and t-bills are imaginary doesn't make it so

Tacitus Voltaire said...

tfhr said...
TV, Government spends other people's money. It produces no wealth of it's own and requires ever growing sums of wealth to function. Can we agree on that much?


no, government spends my money. your money. our money. we can all vote for what the government spends our money on. if we don't like it, we vote for people who promise to change it the way we want. all of our votes have the same value. that's the system. what the government does with our money has not been imposed on you by force any more than it has been imposed on me by force. you are an american and live in a democratic republic - be a patriotic american and own it! the system is, if you don't like it, vote against it - right?

the function of government is not to "produce wealth". it is to provide the services that all governments provide. what were you doing when you worked for the government for 20 years? what is government doing now when it pays your pension? governments provide services, and, despite massive waste, fraud, abuse, and incompetence, it provides them fairly well


Over $109 TRILLION and counting because our government, with the best intentions of many, made promises that it can no longer keep.


the rest of your argument is all about the notion that now we have reached the limit of our finances, and government is about to go broke. i told you, but i guess you don't remember, that 25 years ago it was us "liberals" who were on this side of the argument

by the late 90s we had to concede that we had lost this argument because ronald reagan proved that "deficits don't matter". david stockman eventually explained the economics behind ronald reagan's debt policies, and he turned out to know what he was talking about

i guess you don't remember the origin of the "debt clock". it was started by us "liberals" because ronald reagan had come into office putting forth this proposition: he was going to be able to increase military spending, cut taxes radically, and not damage social spending, because of the supply side theory that cutting taxes enough would cause tax revenues to go through the roof. we "liberals" reacted by declaring this an evil plot to cause such an incredible deficit that the hand of the government would be forced, and we would lose ss, medicare, and any other "social spending".

so, ronald reagan got his tax cuts and military spending increases, but the congressional democrats refused to cut back on ss and medicare, and other "social spending" (altho ss and medicare/medicaid are so huge that looking for significant savings in non military expenditures outside of them is an exercise in frustration)

i spent a lot of time in the 1980s , like a lot of other democrats, arguing passionately, just like you are doing now, that these deficits were unprecedented, overwhelming, outrageous, and that we would surely face financial ruin very soon unless something was done

so what happened? first, the laffer curve is fiction. cutting taxes can indeed have a short term stimulative effect on the economy, and jfk famously enacted tax cuts on just that premise, but this is a limited effect. ronald reagan's tax cuts did not, as some people went so far as to predict at the time, lead to an explosion of wealth so huge that there wouldn't even be deficits anymore

secondly, the unprecedented deficits resulting from the 1980s budgets did indeed for a while push to 10% the portion of federal expenditures spend on interest for this huge debt - but after that it began to go down again. this is because, in an inflationary universe, all debts and interest payments grow smaller over time that's why it makes sense for you to get a 30 year mortgage and take on a debt equal to several years of your income, as i guess you have found out personally
(continued...)

Tacitus Voltaire said...

...

now, what's the bottom line here, tfhr?

we have governments because we need governments. government expenditures are always in huge scary numbers, but when it comes down to actually making significant cuts in u.s. government spending, the argument always stops at specifics

above thread i asked you for specific cuts, but you didn't respond

the federal government is not going to go belly up and have to get bailed out like greece. california is not going to go belly up and go out of business. the bailout and stimulus debts will get paid off or digested over the long term. there are always financing crises and cutbacks in state budgets, and this is a bad one, but i have faith that the california economy is strong and we are not michigan, much less greece.

how can we decide whether you or i are right? the proof is in the pudding. if the united states government or california goes belly up in the next ten years, i'll concede that you were right - ok?

Rick Caird said...

Then you say: "so, tell me again why you want to get rid ss"

Great, you created another straw man. I have lost count of how many that is. No, I never said I wanted to get rid of Social Security. I have merely pointed out to you that it is financially insolvent because it relies on the general find for repayment and the general fund is insolvent. I have also said that will increase the deficit since it will be drawing from the general fund. If you do not understand that yet, it is impossible to make it clear enough for you to understand. I did say I like private accounts, meaning private Social Security accounts because then it is much harder for the government to renege by robbing peter to pay Paul, but that is a far cry from getting rid of it. Is your reading comprehension so poor, you cannot grasp that?

No, you are not at all interested in reality. You are interested purely in fantasy. I have told you time and again the historic return of the stock market is 8%. You have not, nor can you, contradict that. All you can say is that it has not been true for the last ten years, but I never said it has been. I will also categorically tell you that the stock market did not achieve 8% returns between 1929 and 1939. That, however, has no bearing on my claim of 8% historical returns. But, my provable 8% number implies much higher than 8% returns in other decades. I leave that as a simple exercise in averages for you to work out.

It is fine with me if you want to think Social Security is not broke because it is owed money by the general fund. As the US approaches a deficit to GDP ratio of 10% and a total debt in excess of 100% of GDP (and I won't even clutter your mind with the unfunded liabilities of Social Security and Medicare), your world will not be the same as it has been. But, bear in mind the US cannot keep the promises it has made. You clearly do not understand that. You clearly do not understand that what cannot continue, will not continue. The US, as are most of the first world countries, must reduce its debt without completely destroying the economy. That will be very difficult, but I won't even try to explain that to you. If you cannot grasp the simple problem Social Security has, this will be well beyond you.

TV, you simply do not know enough to be equipped to discuss business, finance, equities, social security, and finance. You are one of the those people who has no idea of what you do not know. So, you run around making foolish statements and creating straw men due to your lack of understanding. As I said in the first sentence, you are just too obtuse and unknowledgeable to engage in a substantive discussion. It is a waste of my time and yours. Enjoy your fantasies while they last.

Rick Caird said...

TV,

Do you work at being obtuse or is it your natural predilection? I conceded nothing. I simply said the same thing I have said all along: the stock market has historically returned 8%. You are now treating it as some kind of new news.

Next, Social Security guarantees nothing. As I have told you, SCOTUS has already ruled you have no contract or guarantee with Social Security. Not only does it not guarantee a return, it doesn't guarantee to be in existence or to ever pay you anything.

http://en.wikipedia.org/wiki/Social_Security_Act#Creation:_The_Social_Security_Act

"The Supreme Court has established that no one has any legal right to Social Security benefits. The Court decided, in Flemming v. Nestor (1960), that "entitlement to Social Security benefits is not a contractual right". In that case, Ephram Nestor, a Bulgarian immigrant to the United States who made contributions for covered wages for the statutorily required "quarters of coverage" was nonetheless denied benefits after being deported in 1956 for being a member of the Communist party."

I don't know how I can make it any clearer to you that there is no guarantee at all. Congress can take it away from you whenever they wish. That makes one very poor backstop. If you continue not to face facts, I cannot help you. In fact, I grow weary of trying to actually teach you anything. You are incapable of learning.

tfhr said...

TV,

You highlighted my comment that government spends other people's money and attempted to refute that by saying, "no, government spends my money. your money. our money."

OK. Please explain how my statement was incorrect.

You don't refute that the government does not produce wealth, but don't seem to understand that it simply cannot pay for everything it has obligated itself to cover.

Our government is responsible to defend this country. It is obligated to raise and maintain a military capable of doing so but where in The Constitution do we find out why our government is paying for school lunches with our tax money?

The right to life, liberty and the pursuit of happiness does not extend to free medical, free lunches, or a bankrupt retirement scam called Social Security. Why not government funded clothing, housing, and transportation for all? Where does it stop, TV? Hint: When the money runs out and were getting perilously close.

You wanted specific cuts - go to this site for a nice long list:

http://republicanwhip.house.gov/YouCut/

I particularly like the cuts and reforms that target Fannie and Freddie. Requiring collection of unpaid taxes from federal employees is another good one and non-compliance would certainly be an easy way to reduce the federal payroll. Speaking of payrolls, checkout the proposal to cut the federal employee pay raise for FY 2011. Make sure you click on the links.

Here's a few of my own, though many have suggested them already: We could certainly do away with the Department of Education. I'd give the Director of National Intelligence the axe. It's just another layer of wasteful bureaucracy. I'd prohibit the construction of further intelligence community infrastructure in the DC area. The cost of living here keeps payrolls needlessly high and the concentration of assets in one geographic area makes us vulnerable.

Here's an easy one: Cut our "contributions" to the UN drastically.

PBS gets the axe. Either they find a way to be commercially viable or they can kiss their tax-payer funded behinds good-bye.

There are so many wasteful programs and so much bureaucracy that could be cut. It isn't a mystery. It's a lack of political will.

There's something else lacking here:

"all debts and interest payments grow smaller over time"

You said that TV. Please explain how that happens when the funds needed to reduce the debts and interest are insufficient. Maybe you could use Michigan as an example in your explanation, and in doing so, explain how California can't be like Michigan.

Tacitus Voltaire said...

tfhr and rick, i summarize your two main points this way:

1. the united states government is dead broke and some ginormous humongous devastating fiscal crisis (you haven't described what it will be) is about to happen. "it can't meet its obligations" and we will soon become greece

2. the stock market has historically produced an average 8% returns except in reality, when it hasn't

thanks for clearing that up for me!

:-)

Tacitus Voltaire said...

rick
your world will not be the same as it has been. But, bear in mind the US cannot keep the promises it has made. You clearly do not understand that. You clearly do not understand that what cannot continue, will not continue


perhaps, oh great rick the magnificent, you will condescend to describe to us mere mortals how the "world will not be the same as it has been"!

in specifics instead of your glittering generalities, please

in other words, you talk big about how much you "know" about the future. make some specific predictions and we'll see whether you know what you are talking about or not

TV, you simply do not know enough to be equipped to discuss business, finance, equities, social security, and finance

this is a poor argument! people who are frustrated that they can't support their points often turn to insults. i think you have made many mistakes in this thread, and have conceeded a number of points

i asked you for proof for your repeated assertion that ss is "broke", but you evade the question

Tacitus Voltaire said...

tfhr
You don't refute that the government does not produce wealth, but don't seem to understand that it simply cannot pay for everything it has obligated itself to cover.


i see my little history of the politics of huge deficits in american politics in the last 30 years was wasted on you. if you want to continue to the discussion, i would appreciate it if you would read it - it was my response

as for the first part, please tell me where in the constitution it says that the government is supposed to "produce wealth"

as for the specific cuts - you left out the part where you add up all the money you would save and see how much progress you've made in balancing the budget. please do that - it's important!

please, show us the numbers!

then, the next step is to convince the rest of us 330 million americans to cut all the things you want to cut, and to get the bill through congress. good luck!

remember, you aren't the only person to decide what to do around here! you are only one of 330 million or so american citizens who have an equal right to make decisions about the future of this country as you do

Rick Caird said...

I have evaded no questions. I have simply pointed out to you multiple times that this year, nearly a decade earlier than projections, Social Security is paying more out than it is receiving in taxes. In other words, revenue - taxes is a negative number. You have countered that the US treasury owes Social Security money on the bonds. I have pointed out, as anyone who has looked at Social Security knows, that money has been spent. Further, we all know the US general fund is running a $1.5 trillion dollar, or higher, deficit. Further, in the near future total US debt will reach $14 trillion. You seem to think that is not a problem. I assure you it is a problem. Obama is planning on a total of debt of around $20 trillion. Let me put that in perspective for you. At 5%, the interest on that debt will be $1 trillion annually. Today's budger is about $3.3 trillion. So, we will be looking at interest rates alone being close to 1/3 of the budget. I claim that will make it quite difficult t squeeze money out to pay back the Social Security. You seem to believe a little magic pixie dust along with the "full faith and credit of the US" will make that whole problem go away. Are you sure you have been not in banking these past few years? Maybe, you have been originating sub prime mortgages?

Most people only bring a knife to a gun fight once. You do it on a regular basis. I now deem you the black knight of Betsy's blog or BK for short. (BK is also an abbreviation for bankruptcy). To refresh your memory:

http://www.youtube.com/watch?v=dhRUe-gz690

We will leave you yelling threats into the wood.

Tacitus Voltaire said...

"all debts and interest payments grow smaller over time"

You said that TV. Please explain how that happens


in an inflationary universe (god help us if we ever have serious deflation!!!), fixed interest payments become, effectively, cheaper over time. this is just elementary finance, as david stockman, ronald reagan's budget directory, explained it to congress in the 1980s

when the funds needed to reduce the debts and interest are insufficient.

haven't you ever noticed that the united states has never paid down the debt? i wonder when we are going to start. it just accumulates. as for being able to pay the interest, we always have been and my opinion is that we will continue to be able to

please keep in mind that you are expressing opinions, and that your opinions are as good as mine. i think you state too many opinions as if they were fact. there's a difference!

Maybe you could use Michigan as an example in your explanation, and in doing so, explain how California can't be like Michigan

sigh. california's economy is so productive that it is often said that if it were an independant country, it would rank 8th in gross national product among the world's nations. the software, electronics, movie, and farm industries here are alive and thriving. currently, i am working in the telecom (cellphone) industry here, which happens to be really popping at the moment. apple computer is headquartered in california. nobody is making any predictions that the above industries are in any kind of trouble - quite the contrary!

on the other hand, the auto companies have seen fit to outsource the major sources of employment in michigan to other places. michigan is a wonderful place, but they only had one major industry

i guess you haven't lived in california long enough to become familiar with its recurrent budget crises. this one is the worst yet, but we are now on the other side of it, and the prediction of economists, in as much as anybody, even you and rick in your infinite wisdom, can predict anything about economies, is that the worst is past and revenues will be back on the upswing for the next few years

i think, tfhr, you need to learn the difference between problems and the imminent end of the world

Rick Caird said...

TV,

You said:

"the stock market has historically produced an average 8% returns except in reality, when it hasn't".

I have never known anyone before who could not grasp the concept of an average. Most of us got that in 4th grade. Your grasp of mathematics is too weak to continue.

Rick Caird said...

TV said:

"in an inflationary universe (god help us if we ever have serious deflation!!!), fixed interest payments become, effectively, cheaper over time. this is just elementary finance, as david stockman, ronald reagan's budget directory, explained it to congress in the 1980s"

You missed a couple of things here. Fixed interest payments only become effectively cheaper, if your income increases during the inflation. For the most part, though, people's income lags behind inflation and if you are retired and on a fixed income, those interest payments become more onerous because your whole income buys less. You must not have been around in the the 70's when that was true in spades.

Deflation, on the other hand, rewards cash rather than debt. Today, the Fed and Congress are trying to engineer inflation, but they have not been very successful. We are on the cusp of deflation and you can see it in the grocery stores on certain items. There are more 2 for 1 sales for example. We can talk about debt deflation, but look carefully at this chart:

http://market-ticker.denninger.net/uploads/2010/Jun/debt-80onward.png

The only debt that is expanding is government debt and almost all of that is federal. That is why GDP is stuck and why we cannot attain the GDP growth. As long as the economy is deleveraging, we will have little to no growth.

I would prefer deflation. In that case, cash is king, but investment is seriously reduced. That is the tale of the great depression.



Deflation

Tacitus Voltaire said...

well, rick, you have finally made a specific prediction: the amount of the federal budget owed on debt service will soon be 30%. by the way, would you like to predict the year that this will happen in? how many years we will owe 30% of the federal budget in debt service? in the early 90s it was briefly 10%, but due to inflation and other factors, it went back down to its usual 6% or so pretty soon

you also seem to say that at that point, it will no longer be possible for ss to be paid out at promised levels. this is also a testable prediction

now we can all wait to see if you are correct

Tacitus Voltaire said...

I have never known anyone before who could not grasp the concept of an average. Most of us got that in 4th grade. Your grasp of mathematics is too weak to continue.

this isn't much of an answer, rick. since we have agreed that most investors haven't made 8% in the past ten years, and that returns, even overall in sweeping averages, can't be guaranteed, what's the point in clinging to your little slogan?

you realize, don't you, that it is perfectly possible that 8% average returns are a thing of the past, and we might never see them again?

in any case, individuals don't make or lose money by any overall average, even ones that are accurate for some period in the recent past. this means that the 8% figure has very poor 'predictive power'. think that is the point that you are missing, rick.

Rick Caird said...

I have always been careful to say "historic return". What part of "historic return" do you consider predictive?

Actually, individuals do make or lose money by overall average. As I have told you already, if you invested in an index fund, you would receive the average less the maintenance fee.

So, in this post, you have one strawman and one erroneous assumption while getting nothing correct. That seems to be about your average.

Rick Caird said...

Another strawman from TV. I said that given a 5% interest rate and a debt of $20 trillion, the cost of servicing that debt would be $1 trillion per year. I understand that difficult computation taxes your mathematical ability, but I assure you it is mathematically correct. I also said projections from the CBO were a total debt of $20 trillion. I did not say when interest rates would be 5% nor did I say that is the upper limit.

Your very poor reading comprehension also leads you to another strawman. Nowhere did I say interest payments would be 30% of the budget. What I said, which obviously confused you, is that $1 trillion in interest is nearly 1/3 of TODAY's budget.

You can check that for yourself, but I doubt you will.

So, two more straw men in this post. This has to be a modern record for even the Black Knight. it is merely another flesh wound....

Tacitus Voltaire said...

Actually, individuals do make or lose money by overall average. As I have told you already, if you invested in an index fund, you would receive the average less the maintenance fee.

which, over the past ten years, was not 8% and may never be again

Nowhere did I say interest payments would be 30% of the budget

so then what is your point? just saying 'wow, we sure did borrow a lot of money' is not a very interesting point. i was able to read about it myself without your 'help'

you seem to be predicting some horrible disaster, but you don't seem to be able to say what it might actually be. this doesn't make for much of a discussion

Rick Caird said...

TV,

"which, over the past ten years, was not 8% and may never be again"

Straw man. I never said it would. It may be higher.

"so then what is your point? just saying 'wow, we sure did borrow a lot of money' is not a very interesting point. i was able to read about it myself without your 'help'"

But, clearly the implications of $1 trillion annually in debt service has eluded you. We have already learned you can read, but not comprehend. It is not a "wow", babes. It is an "OMG".

If you do not understand the implications of excessive debt, perhaps you might want to see Greece, Spain and the rest of the PIIGS. You might want to wonder what debt service of $1 trillion will do the ability of the general fund to repay Social Security. You might want to wonder what that would mean for government funding of health care. Or, you could continue your current path of "la la la, I can't hear you".

BTW, how is that Keynesian economics working out for you? Great stimulus. Where were those "shovel ready" project Pelosi was lying about? Where is that 8% unemployment we were promised? Where is that self sustaining private sector Krugman was pushing?

tfhr said...

TV,

Businesses are leaving California, are they not? It is more difficult and costly to start a new business in the Golden State than in many other states. California is having a very difficult time meeting the payroll of it's state and municipal employees, especially with regard to pensions. Am I correct?

There's certainly more to the story than unions but the strength and political affiliation of unions did nothing to help Michigan deal with it's problems and I see a striking similarity with California.

How long can California stay afloat and then what? Here's an interesting article on the topic: http://tinyurl.com/yk9ka86

tfhr said...

TV,

You asked me for specific cuts and I provided them for you. I also provided you with a link that lays out dollar figures. Go back and click on the link and do some reading.

The rest of your commentary is really just a whiny complaint about how Congress won't do the cuts anyway. Well that's the problem, isn't it. TOO MUCH SPENDING. See, you do understand.