Could it be any more obvious? The Morning Fishwrapper had a couple of articles on the looming debt-limit crisis. Possibly the most stunning was the graph of the national debt curve from the 1980s. The gradual upward slope increases slowly from the beginning until about the year 2000. Then it takes a turn for the heavens doubling from five to ten trillion dollars in that decade. But that isn't the vertical limit by a long shot. The curve becomes near perpendicular with the jump from ten to fourteen plus trillion in the last two and a half years. Now we are at $14.3 T and in need of legislative relief at least temporarily.
There needs to be an easing of the limit. That seems increasingly obvious. The simple knee-jerk positions of yes/no don't stand the scrutiny of where we are and what the immediate pending obligations are. We need a debt limit increase.
But that isn't a mandate for simply continuing down the profligate path. We must reduce our deficit spending. We must modify our entitlement mentality. We can't simply say, no changes and whistle in the darkness about the changing demographics and the not-so-long term viability of our programs. We've got to change spending and we certainly need tax code revisions. We need a breathing space to do that.
The distinction between revenue and tax increases is an important one. We don't want to see additional taxes or taxation rate increases. We very reasonably could use an objective examination of carve outs, deductions and special provisions for narrow segments. Elimination of those special categories would increase revenues. In fact, using rough data from Bowles-Simpson recommendations or the Gang of Six proposal you could lower tax rates, eliminate a group of deductions and get increased revenue while a large percentage of the population would experience tax cuts.
That sort of a shift requires some time to hammer out details. Ditto for adjustments to Social Security such as changes to COLA criteria or increases in retirement age. That necessitates a short-term debt-limit increase.
But that could be handled with a relatively small amount for a six-month period. That solves all the problems but one. That is where the mendacity comes in.
The debt and deficit and taxes are the nibbling rats that are chewing at the President's re-election bid. They simply must be made to disappear for him to gain another four years. His incessant demand that any debt-limit increase be at least $2.5-4 T and extend beyond Jan 2013 is not related to markets or the impending crisis. It is purely related to his political future.
Harry Reid is the loyal henchman in the Senate. This gray, pallid, marginally articulate, charisma-challenged individual mouths the litany provided for him by the White House each day but the American people are beginning to understand what this is all about.
6 comments:
The Republicans keep offering plans. The Democrats offer no plans. Need to keep hitting on that. That Pelosi and Reid merely deemed to pass a budget before the 2010 landslide and since have proposed no budgets since, in violation of the Constitution.
Meanwhile Barry gets on the airwaves to blubber about Republicans being mean. Real leadership there.
Ed, I agree with everything you say except the Social Security part. How many time has the age limit been raised already? That works out well for people that are drawing SS already, but for people such as myself in our 50s. We've already paid in for over 30 years, but it keeps looking like we'll just have to keep working until we die. Very few companies today have the retirement plans of the 60s and 70s and for many, SS is the only retirement they will have. We've been paying for all the other handouts for years, but when it comes time for us to get something back it's just not going to be there.
401k, 403b, IRA have all been viable options for self directed non-governmental hand out retirement plans for at least 10 or 15 years. SS should not be our looked to retirement income. It will be a small but nice boost in income but nothing Id want to live on. People in their 40's and lower need to plan accordingly, those in their 50's need to have some kind of reduced impact plan to be fair to them.
Hitman, when SS was established with a 65 retirement age, life expectancy was just over 68. Today it is into early 80s.
There has been only ONE extension and it has been so gradual that it still has not finished, going one month at a time for nearly twenty years now until it reaches 67.
The proposal is for an eventual rise to 70 by the year 2075! That's not going to break you as much as total collapse of the system by 2035 at the current rates.
As I'man says, 401k, 403b, Roth, etc. are all good options that will give YOU some real retirement that you have a hand in the management of.
Valid points, I agree. Although I wouldn't call something a person has paid into,with every paycheck he/she earned in 50+ years of work a "government handout" I don't want a handout, I'd just like to live to see a return on my investment.
Will we have our 401Ks? As recent as this May some in Congress were looking at them and salivating. Talking things like a lost $600billion in revenues due to how 401Ks are taxed.
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