Some potentially good proposals here, but saying “America can’t cut its way to growth” might be going too far. Aside from the usual points on higher gov spending, a program like social security is quite costly to growth by substituting savings.
I think there's room for cuts--always!--in making the government operate better and serve Americans better. We can also incorporate much smarter design into our social welfare programs and handle the cost drivers, like our broken health insurance system, rather than how they manifest for the government's bottom line, like in Medicare costs.
And the idea that Social Security displaces private savings is stronger than the evidence behind it, which has always been mixed to weak. Truly, America is not a saver country and we tend to only get high savings rates through automatic vehicles like 401ks. Of course those are gatekept by employers, a problem totally separate from anything related to Social Security.
Social Security is way overdue for reform because, speaking to Kathryn's point about the young, it represents a transfer from young to old, from workers to retirees, and from low income to high income individuals and families. Moreover, since future benefits are tied to payment of the tax on payrolls, the program saddles future generations with increasing debt. My answer is to eliminate the payroll tax and fund all earned benefits from income taxes - targeting the wealthy via radical reduction to tax expenditures (deductions from taxable income) and increasing taxes on unearned income (including capital gains) for the wealthy.
What do you think about taxing stock trades? Unlike sales tax, when people buy/sell stocks, they pay no tax. If people paid a reasonable tax when they buy/sell stocks, what impact would that have on the stock market? Might it improve the stock market by contributing to returning it to a virtuous cycle?
The market has become a casino that is subsidized primarily by artificially low interest rates that give savers little choice but to feed the beast. In my view, the only way we get back to a free market is to keep interest rates above inflation. I'm not sure taxing transactions would have much effect on traders, and if it was high enough to raise a significant amount of revenue, it may have a chilling effect on regular investors.
You could do that but at the cost of the benefits still substituting savings, lowering fertility and now, through capital gains, taxing future consumption higher than present consumption.
I do agree however that the program currently is structured as a regressive transfer.
The cost of benefits is a horse that has already left the barn; we owe what we owe and the best we can do is to raise taxes on benefits paid to those with higher incomes who don't rely on them. Eliminating the payroll tax will provide relief to low income workers and small businesses, enabling them to control their savings.
Growth is more a problem than a solution; that's what got us into this mess. I think we need to be neutral on that and especially on fertility. I think Kathryn is saying, more or less, to get off the backs of the young so they can manage what we've already dumped in their laps. That means reducing debt.
As for capital gains, I would tax them at the same rate as ordinary income. I don't see how that introduces bias against saving. It just eliminates the loophole that favors equity vs. debt investments, which as indicated in my reply to DC Policy Geek, forces ordinary investors into feeding the stock exchange casino.
With so many in the US living paycheck-to-paycheck or not even that well, how are they going to save? The cost of housing, food, health insurance, transportation -- basic necessities -- exceed wages/earned incomes. Also, Social Security provides benefits to people under the qualifying retirement age for those who are disabled (which is actually very difficult and time-consuming -- usually takes at least 18 months to a few years -- to qualify for) and dependent spouses and children of those who've retired, become disabled and qualified for SSDI and/or who've died (e.g., former Rep. Eric Cantor).
There’s tremendous common sense in taking this approach of supporting, resourcing, and incentivizing more people to work, rather than ignoring the coming problem, or treating our older generations poorly which is what our current administration is attempting to do.
The economic literature is pretty bullish on population growth as a key, if not the main key, to prosperity. Economic growth is driven by people discovering new ideas and more people means more ideas.
Some potentially good proposals here, but saying “America can’t cut its way to growth” might be going too far. Aside from the usual points on higher gov spending, a program like social security is quite costly to growth by substituting savings.
I think there's room for cuts--always!--in making the government operate better and serve Americans better. We can also incorporate much smarter design into our social welfare programs and handle the cost drivers, like our broken health insurance system, rather than how they manifest for the government's bottom line, like in Medicare costs.
And the idea that Social Security displaces private savings is stronger than the evidence behind it, which has always been mixed to weak. Truly, America is not a saver country and we tend to only get high savings rates through automatic vehicles like 401ks. Of course those are gatekept by employers, a problem totally separate from anything related to Social Security.
Social Security is way overdue for reform because, speaking to Kathryn's point about the young, it represents a transfer from young to old, from workers to retirees, and from low income to high income individuals and families. Moreover, since future benefits are tied to payment of the tax on payrolls, the program saddles future generations with increasing debt. My answer is to eliminate the payroll tax and fund all earned benefits from income taxes - targeting the wealthy via radical reduction to tax expenditures (deductions from taxable income) and increasing taxes on unearned income (including capital gains) for the wealthy.
What do you think about taxing stock trades? Unlike sales tax, when people buy/sell stocks, they pay no tax. If people paid a reasonable tax when they buy/sell stocks, what impact would that have on the stock market? Might it improve the stock market by contributing to returning it to a virtuous cycle?
The market has become a casino that is subsidized primarily by artificially low interest rates that give savers little choice but to feed the beast. In my view, the only way we get back to a free market is to keep interest rates above inflation. I'm not sure taxing transactions would have much effect on traders, and if it was high enough to raise a significant amount of revenue, it may have a chilling effect on regular investors.
You could do that but at the cost of the benefits still substituting savings, lowering fertility and now, through capital gains, taxing future consumption higher than present consumption.
I do agree however that the program currently is structured as a regressive transfer.
The cost of benefits is a horse that has already left the barn; we owe what we owe and the best we can do is to raise taxes on benefits paid to those with higher incomes who don't rely on them. Eliminating the payroll tax will provide relief to low income workers and small businesses, enabling them to control their savings.
Growth is more a problem than a solution; that's what got us into this mess. I think we need to be neutral on that and especially on fertility. I think Kathryn is saying, more or less, to get off the backs of the young so they can manage what we've already dumped in their laps. That means reducing debt.
As for capital gains, I would tax them at the same rate as ordinary income. I don't see how that introduces bias against saving. It just eliminates the loophole that favors equity vs. debt investments, which as indicated in my reply to DC Policy Geek, forces ordinary investors into feeding the stock exchange casino.
With so many in the US living paycheck-to-paycheck or not even that well, how are they going to save? The cost of housing, food, health insurance, transportation -- basic necessities -- exceed wages/earned incomes. Also, Social Security provides benefits to people under the qualifying retirement age for those who are disabled (which is actually very difficult and time-consuming -- usually takes at least 18 months to a few years -- to qualify for) and dependent spouses and children of those who've retired, become disabled and qualified for SSDI and/or who've died (e.g., former Rep. Eric Cantor).
There’s tremendous common sense in taking this approach of supporting, resourcing, and incentivizing more people to work, rather than ignoring the coming problem, or treating our older generations poorly which is what our current administration is attempting to do.
The economic literature is pretty bullish on population growth as a key, if not the main key, to prosperity. Economic growth is driven by people discovering new ideas and more people means more ideas.