Lesson # 1:
* U.S. Tax revenue: $ 2,170,000,000,000.00
* Fed budget: $ 3,820,000,000,000.00
* New debt: $ 1,650,000,000,000.00
* National debt: $ 16,271,000,000,000.00
* Recent budget cuts: $ 38,500,000,000.00
Let's now remove 8 zeros and pretend it's a household budget:
* Annual family income: $ 21,700.00
* Money the family spent: $ 38,200.00
* New debt on the credit card: $ 16,500.00
* Outstanding balance on the credit card: $ 162,710.00
* Total budget cuts so far: $ 38.50
Got It ?????
OK now,
Lesson # 2:
Here's another way to look at the Debt Ceiling:
Let's say, You come home from work and find there has been a sewer backup in your neighborhood....and your home has sewage all the way up to your ceilings.
What do you think you should do ......
Raise the ceilings, or remove the shit?
by: gptnomoney on DailyPaul.com
And another thing...........
from CoyoteBlog.com
A bit of background: My company operates campground and other recreation areas mainly using retired people who live on-site in their own RV's. Few of my 400+ employees are under 65 and several are over 90.
There are several reasons this conversation occurs:
People look at me funny sometimes when I say the minimum wage law limits employee rights by putting a floor on what they may charge for their labor. This is an odd way of putting it for them, because minimum wage laws are generally explained in the oppressor-oppressed model, but it makes perfect sense from my experience.
* U.S. Tax revenue: $ 2,170,000,000,000.00
* Fed budget: $ 3,820,000,000,000.00
* New debt: $ 1,650,000,000,000.00
* National debt: $ 16,271,000,000,000.00
* Recent budget cuts: $ 38,500,000,000.00
Let's now remove 8 zeros and pretend it's a household budget:
* Annual family income: $ 21,700.00
* Money the family spent: $ 38,200.00
* New debt on the credit card: $ 16,500.00
* Outstanding balance on the credit card: $ 162,710.00
* Total budget cuts so far: $ 38.50
Got It ?????
OK now,
Lesson # 2:
Here's another way to look at the Debt Ceiling:
Let's say, You come home from work and find there has been a sewer backup in your neighborhood....and your home has sewage all the way up to your ceilings.
What do you think you should do ......
Raise the ceilings, or remove the shit?
by: gptnomoney on DailyPaul.com
And another thing...........
from CoyoteBlog.com
This Minimum Wage Conversation is Not a Hypothetical -- I Have It All The Time
Don Boudreax writes:Here’s a project for all unemployed young people – say, ages 18 through 21 – in America today. Go to a nearby supermarket or restaurant or lawn-care company or pet store and ask for a job at the minimum wage. If you are denied, offer to work for $4.00 per hour. The owner or manager will almost surely decline, saying that it’s against the law.I know that this is a realistic scenario because I have this conversation with employees all the time. Except in my case, applicants are generally not 18 years old but 70 years old.
“Would you like to hire me at $4.00?” you ask.
“Well yes I would” is the answer you’re likely to get in reply.
“So, hire me at that wage. I’m an adult, I’m sober, and I have no mental issues. I’m willing to work for $4.00 per hour.”
“You don’t get it, kid. I can’t hire you at that wage. I’ll get fined, or worse. Go away.”
“Ok, I’ll leave. But no one – including you – will hire me at $7.25 per hour. What am I supposed to do?”
“Look kid. That’s your problem. I’m sorry. I don’t make the laws, but I gotta follow them. Go away now.”
A bit of background: My company operates campground and other recreation areas mainly using retired people who live on-site in their own RV's. Few of my 400+ employees are under 65 and several are over 90.
There are several reasons this conversation occurs:
- As my employees get older, and perhaps sicker with various disabilities, their work slows down to the point that it falls under our productivity expectations. Employees may come to me saying they want to stay busy but they know they don't work very fast but they would be happy to work for $5 or $4 an hour if they could just keep this job they love. (There is a Federal law that allows waiving of minimum wages for disability situations. We tried it -- once. The paperwork was daunting and the approval came 7 months after the application -- 2 months after the seasonal employee had already gone home for the year).
- Many people like to stay busy but face wage caps where they begin to lose their Social Security. They want to keep their total income under the wage cap. We try to create some jobs that require fewer hours so they can get their wages down that way, but in many cases we have a limited number of on-site living spots and a fixed amount of work such that each person occupying a living spot must do a certain amount of work to make sure it all gets done. So at some point we can't give them fewer hours, and then they will ask for lower pay.
People look at me funny sometimes when I say the minimum wage law limits employee rights by putting a floor on what they may charge for their labor. This is an odd way of putting it for them, because minimum wage laws are generally explained in the oppressor-oppressed model, but it makes perfect sense from my experience.
Ok, but as much as we'd like to think it is, the federal budget isn't Kitchen Table Economics. Households don't print the reserve currency for the world, at least mine doesn't.
ReplyDeleteHow does defaulting or threatening to default on debt payments for money we already borrowed for spending that's been approved by the very folks trying to default on it help anything? Again, this isn't the Kitchen Table. The U.S. can't just declare bankruptcy, not be able to get a car loan for 7 years, and come out the other side with a clean credit slate.
Also, as I stated on a different thread, the debt doesn't have to be paid off by next week. It took decades to run up, we can take decades paying it down, as long as we do pay it down.
We, as a country, have 4 options: Default, cut spending & raise taxes, monitize, or a combo of the 2nd & 3rd.
Every economist on the planet thinks that default would be apocalyptic, not only for the U.S. but for the world economy. We may get to the point where it happens whether we want to or not, but for now let's table Default as our "option" of last resort.
89% of the federal budget currently goes to Defense, Social Security, and Medicare/aid. This is where the money is spent, this is where the cuts need to be made. The scary one is Medicare/aid. With 70 million+ aging Boomers going on/getting ready to go on Medicare, this is the real budget-buster. It is not sustainable at current obligation levels. This needs to be addressed.
Revenues need to go up. I would raise taxes across the board 1 or 2 percent to start, close some deductions, raise tarriffs to parity with our global trading "partners" (our tarriffs are hilariously out of whack with the rest of the world's), reward companies that bring jobs here with tax incentives and penalize those who export jobs. Gotta try to grow our economy if we want to try bring in more revenue.
Hey, it's a start ...
**Full List of All Taxes in ObamaCare /Affordable Care Act**
DeleteThe following list of new ObamaCare taxes collectively raise over $800 billion by 2022. Here is a complete list of new fees and taxes contained within ObamaCare:
ObamaCare Taxes That Most Likely Won't Directly Affect the Average American
• 2.3% Tax on Medical Device Manufacturers 2014
• 10% Tax on Indoor Tanning Services 2014
• Blue Cross/Blue Shield Tax Hike
• Excise Tax on Charitable Hospitals which fail to comply with the requirements of ObamaCare
• Tax on Brand Name Drugs
• Tax on Health Insurers
• $500,000 Annual Executive Compensation Limit for Health Insurance Executives
• Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D
• Employer Mandate on business with over 50 full-time equivalent employees to provide health insurance to full-time employees. $2000 per employee $3000 if employee uses tax credits to buy insurance on the exchange (marketplace). (pushed back to 2015)
• Medicare Tax on Investment Income 3.8% over $200k/$250k
• Medicare Part A Tax increase of .9% over $200k/$250k
• Employer Reporting of Insurance on W-2 (not a tax)
• Corporate 1099-MISC Information Reporting (repealed)
• Codification of the "economic substance doctrine" (not a tax)
ObamaCare Taxes That (may) Directly Affect the Average American
• 40% Excise Tax "Cadillac" on high-end Premium Health Insurance Plans 2018
• An annual $63 fee levied by ObamaCare on all plans (decreased each year until 2017 when pre-existing conditions are eliminated) to help pay for insurance companies covering the costs of high-risk pools.
• Medicine Cabinet Tax
Over the counter medicines no longer qualified as medical expenses for flexible spending accounts (FSAs), health reimbursement arrangements (HRAs), health savings accounts (HSAs), and Archer Medical Saving accounts (MSAs).
• Additional Tax on HSA/MSA Distributions
Health savings account or an Archer medical savings account, penalties for spending money on non-qualified medical expenses. 10% to 20% in the case of a HSA and from 15% to 20% in the case of a MSA.
• Flexible Spending Account Cap 2013
Contributions to FSAs are reduced to $2,500 from $5,000.
• Medical Deduction Threshold tax increase 2013
Threshold to deduct medical expenses as an itemized deduction increases to 10% from 7.5%.
• Individual Mandate (the tax for not purchasing insurance if you can afford it) 2014
Starting in 2014, anyone not buying "qualifying" health insurance must pay an income tax surtax at a rate of 1% or $95 in 2014 to 2.5% in 2016 on profitable income above the tax threshold. The total penalty amount cannot exceed the national average of the annual premiums of a "bronze level" health insurance plan on ObamaCare exchanges.
• Premium Tax Credits for Small Businesses 2014 (not a tax)
• Advanced Premium Tax Credits for Individuals and Families 2014 (not a tax)
• Medical Loss Ratio (MRL): Premium rebates (not a tax)
Is this enough of a good faith tax increase on those who actually pay taxes to consider dealing with the expenditures?
Its interesting that the top list states that individuals will not pay.... nice slight of hand here. Any cost that must be taken on by a private company must come from somewhere.... Either they eat it and take a loss to profit ( very unlikely with medical/pharma industry or any company cozied up to the government ) or it is passed on to customers.
TS, you keep addressing me like I'm in favor of the ACA. I'm not. I'm not sure why you keep pivoting toward it in our discussions.
DeleteI've said it a bunch of times before, both here & on MW: We all gotta pay more, we're all gonna get less - IF the goal truly is to pay down the debt.
Do I think it's "fair" or "good"? No, I don't. We're paying for the excesses of the Boomers - the generation that came of age during the height of the U.S.'s wealth & industrial might. The generation that sold it out/outsourced it for an extra buck per share, or polluted it and or used it up for so they could have their Viagra, their Jazzercize classes, and their McMansions.
They literally had everything handed to them but it wasn't enough. They wanted it all and wanted to pay for none of it. After 40 years of having their cake and eating it too it's time for me, my kids, and my future grandkids to pick up the tab.
So no, I don't like it, but that's irrelevant. The situation is what it is.
TS,
DeleteLoved #1 and #2. Regarding the minimum wage thing, we had seen a 60 Minutes piece a couple of years ago on American Samoa, so I searched for the results. Here is one take:
http://www.acton.org/pub/commentary/2011/07/06/minimum-wage-law-backfires-american-samoa
Jean
Pfunky, I don’t mean to be singling you out on this issue at all. My point here was that this one piece of legislation does significantly raise taxes across a broad range of services. People want a tax raise... they got one. Taxes from income to anything that looks like or effects health.. by way of income, penalties, inflation, penalties and higher costs for goods and service ... as well as a skew the profits of phama and medical services.
DeleteI know that it is quite easy to blame, as a blanket indictment, all baby boomers for this problem. While I will agree with you, this one segment of society has had it all, I don’t blame them for the distortions in our economy caused by the interference of government.
Take Social Security for instance..... It, at the time, was crammed down the throats of America much the same way Obama care was. It had walls street sales promotion and media coverage but the fact is, there was no real clamber for in.... except for a certain group of the middle class. Advertised as an insurance policy, it was and still is the most regressive tax we have. Poor workers start working at a younger age and statistically die sooner than those who earn more yet.... Middle class receive more for longer than a poor person. Boomers didn’t create this system and a large segment have never been happy with its existence. As a result it has created dependence a large segment of dependant middle class.
Insightful parents told me to always believe that social security would not be their when I retire and to plan accordingly. So I was prudent and was sold another government motivated plan... pensions and 401K’s..... I was happy being an engineer and had little care or understanding of Wall Street and it hurt me badly... had I continued to save and plan on my own I would have done much better.
What I am saying is that it is time to rethink government roll in our lives. The unintended consequences by those who are well meaning play into the hands of those who are not. Does that do any immediate good for you and your daughter... I am afraid not, but I will say this; The ‘kook’ that was Ross Perot, talked about the sucking sounds of the NAFTA trade agreement and ending conclusively deficit spending and closing all tax loopholes that allow the rich to escape the ‘advertised’ tax rate. Clinton was elected to a second term and money flowed were money flows... to opportunity. We keep electing people to fix the wrong things.... Same with Ron Paul; The media machine sold the scare story that he wanted to shut down institutions on the first day in office... did he? No... He said that would be devastating but we needed to wean ourselves off of government not grow it bigger.
I feel most sorry for the young folks have been duped into liberal arts degrees to the tune of $1trillion of non-dischargeable debt and no jobs to pay it back. Government created the trap that caused the rise in the cost of education to the point that even a diligent saver couldn’t hope to pay cash much less work your way through college.
Don’t blame the boomers..... Just like Occupy Wall Street looking at the wrong culprit... you both should be aiming your scorn at the establishment.... one created by a bunch of less than attentive hippies....
One more thing pfunky..... While the U.S has reserve currency status, just like all artificial things... like social security or food stamps... it can be changed. Just because the U.S. has successfully managed to export most of its inflation outside the US, that doesn't mean that it will always be that way ...... Because, at the end of the day, it is Kitchen table economics and to believe the myth that it is not, puts America in a more precarious position in the world every day.
DeleteI would contend that what is happening now and the interaction between the fed and the administration is exactly intended to balance the US economy with the rest of the world.... and we will fell the pain. If we don't succumb to the idea that the federal government does not need fiscal discipline, we will get our financial house in order and after a hard slog be a prosperous nation again or we can continue kicking the can and we will have our wealth stolen in countless ways..
"We, as a country, have 4 options: Default, cut spending & raise taxes, monitize, or a combo of the 2nd & 3rd."
Deletepfunky only a progressive would lay out your 4 options in this manner. Option number 2 "cut spending & raise taxes."
What about "CUT SPENDING!" as an option? Can your brain even fathom that?
1773-2009 We truly are speaking in different tongues. But I do agree that the medicare/aid entitlements, and defense spending need reform.
pfunky,
Delete"Revenues need to go up. "
It would be nice if that happened because GDP went up, yes? Why not espouse cutting useless spending?
"I would raise taxes across the board 1 or 2 percent to start, close some deductions, "
That will just cause people to reduce discretionary spending, and put it in the hands of the drunken sailors. It just might result in the opposite effect.
"raise tarriffs to parity with our global trading "partners" (our tarriffs are hilariously out of whack with the rest of the world's), reward companies that bring jobs here with tax incentives and penalize those who export jobs. Gotta try to grow our economy if we want to try bring in more revenue."
That might just raise the prices of imported items that Americans buy.
"We're paying for the excesses of the Boomers - the generation that came of age during the height of the U.S.'s wealth & industrial might. The generation that sold it out/outsourced it for an extra buck per share, or polluted it and or used it up for so they could have their Viagra, their Jazzercize classes, and their McMansions. "
Wow, you're really loading on the poor (well, maybe not so poor?)oldies :-) .
Jean
I read a good piece yesterday. The actual retirement age set for Social Security is in fact 70 years old. You can get reduced payments starting at the age of 62 but full retirement age for SS was is and always has been 70. Maybe a great start on reform of this program is requiring everyone to work until seventy as it should be unless of course you can't due to illness. That would cut a lot of payments out to people who are still able to work just don't want to. Right now I am planning on working until 70 in my career and past 70 doing something I want to do for some extra cash. TS you talk of 401K etc. I preach to my employees everyday that they need to start NOW saving towards their retirement.
ReplyDeleteNow my parents never spoke about these things. They were very poor and couldn't even dream of anything but SS. And (again we might be showing our age difference) I never had a chance to participate in a 401K until I was well along in my work life. I worked for a couple places that had some programs but at that time they were not all that good and even after 10 years at one job it only amounted to a few thousand dollars. But in the early 90's I moved into the corporate world and have been involved in two great 401K's and as I switched jobs I always took the old 401K and socked it into an IRA. In my present situation I have without the full % that gets matched plus and extra 2% as catch up. But TS even with all this planning I will still have to depend on Social Security as about 1/2 my retirement income. It's not that I didn't plan it's that the programs that are out there today just didn't exist in the 70's when I began my work life, and the program I had in a small business family owned situation just wasn't that good. Now it is a well known fact that small business creates the majority of jobs. I also know from experience that small business also doesn't afford the best benefits especially when it comes to retirement. 51 % of American non government workers work for small business. Small business understandably is generally not going to pay the wages that a large corporation does and /or offer an equality of benefits. So TS my question would be if 51% of the country's workers are lower wage, lower or no benefit workers, if we curltail Social security that each and everyone pays into weekly, just what are we going to do with these 51% of American workers who never had a chance to save properly when they can no longer work? get the killing fields going again? See everything isn't always so rosy for everyone as you like to think. Yes some are just downright ignorant and wasteful, but others work hard, try hard but just can't get it done through either lack of knowledge, or lack of opportunity, and my friend in the real world unfortunately most people fit this scenario.
I agree with you rick. I believe working past the early SS retirement age of 62 will yield approximately 8% per year. Compound that until the maximum age of 70 and you have quite a nice increase in your SS nest egg.
DeleteOf course SS was never designed as more than a supplement and backstop for old age income. Factor in inflation and the fear that the government printing presses will ultimately seize up due to massive national debt and most that have not worked and planned carefully will have a nervous time of it in their golden years.
"A new study estimates that more than 90 percent of working-age households in the U.S. are not saving enough for retirement. And about 45 percent have nothing saved.
In addition, the study by the National Institute on Retirement Security released Thursday, found that the median retirement savings of households nearing retirement is just $12,000, according to an analysis of data from the U.S. Federal Reserve.
The author of the report, NIRS research manager Nari Rhee, said families will need to save more and many people will need to work longer, but that won't be enough."
http://www.twincities.com/portlet/article/html/imageDisplay.jsp?contentItemRelationshipId=5218554
In a country as rich as ours this is a sad affair. The lack of practical education regarding retirement is a national disgrace.
Rick, you bring up very valid points about saving for tomorrow. I suppose that my parents were, in some ways exceptional. Both worked hard and both were (especially my mother) politically aware. I, like you never really saw a good opportunity to participate in a 401k until late 1980’s but prior to that I had a strong 5% savings record. This was very much instilled by my parents. I would get a dollar in allowance and was required to put away a nickel... not very difficult. So no matter what job I had, 5% went into the bank. Now I will admit that keeping it there was very difficult because I can be quite impulsive but the ability to regularly save did me well.
DeleteWilliam brings up a good point. Schools do not teach personal finance or that one day you will be old... they do not teach how or why one needs to balance a check book and never do they stress the importance of the benefits and perils of compound interest. I have, except for the deliberate use of one credit card which I use to pay bills but balance to zero every month and financing half of my last car just for a credit record, been debt free since the early 90’s.
To your point about social security. Again, my father told me to always think of social security, as Rick said, a supplement. He went so far as to say that it should be calculated as no more than 10% of the income that I would need because it, like any government program could be changed or even eliminated... good advice. Now my folks were by no means wealthy. They passed away owning a modest 1500 sqft home on a ¼ acre lot but they, even without social security could have paid their own bills.
I think that social security, like most state benefits that are, over time, engrained in our thought process as an entitlement, something to be guaranteed and depended upon, become and anchor... both to the state (or should I say the tax payers) and to the individual.
This Rick, is the single most important difference between you and I when it comes to the state. The state should get out of the way of people and if we must have state education crammed down our throat, at least they should teach people to be self sufficient... teach people that life ain’t easy... teach people that there is no such thing as a free lunch. Instead the state involves itself, in an attempt to exclude and override parents’ teachings in social matters.... not the job of the state. The state infects and inflicts damage on just about everything it touches. I know you don’t see it that way but it truly does create a nation of cradle to grave dependents.
I read an article the other day about UK means tested benefits. Apparently they had some 30 different benefits in early last year.... that were spread across and administered by 9 central government departments and 152 local authorities with no central control. Today all but about 6 which are locally administered are consolidated into 6 and cleared by one government department. The U.S. has some 80 means tested benefits that are administered by multiple departments in the treasury, HHS, immigration, education and housing. While all of these programs were conceived, at least by most of the people who passed them, as benevolent, they become an inefficiently run trap that over time sucks in more and more people... This, regardless of you view of a modern state, is not progress.
Present day, the interference of the state has compounded the problem. By interfering in the banking and housing markets, people can no longer hope to open a savings account and expect 3-4% a year compounded and they damn well can’t expect that 3-4% would even hope to pace inflation created by the feds meddling in the markets to keep an out of control government afloat... People can’t readily save for a down payment because the government intends to keep the prices that were artificially inflated, high.
I know you think I am a burn it to the ground kind of person, but until people realize the moral and financial hazard injected into our economy by the government... I must protest.
Say you have two children. It has been estimated that to pay the bills for two kids is now around $300,000 bucks by age 21. Let's see, if you make $4 bucks an hour, that means you will have to work until age 249 to pay for just one(Taxes, insurance, food, clothing etc) Forget sending a child to college on $4 or even $8 an hour. If most businesses could pay $4 bucks an hour and get away with it, they would. USSNJ
DeleteIn the military I was toll time and again when my military duties conflicted with my marriage that : ..... The government didn't issue me a wife or kids.
DeleteAlso USSNJ, you can blame a gross percentage of that $300,000 bill one the government.... meddling in housing, food, energy, health, education and just about every other thing it can stick its oar into....
DeleteUSSNJ,
DeleteIf the income earner has a $4/hour job, which seems to be rather low, perhaps s/he and spouse (or significant other) if there is one, should have considered the affordability of the children? Horrible thought, yes, putting a dollar value on children, sort of, but sometimes there needs to be a practical consideration?
Jean
rick,
Delete"full retirement age for SS was is and always has been 70."
I'm not sure it matters that much, but you might want to reread that article. For you, ummm, 'elderly gentlemen', it seems as if the full retirement age was 65 until 1972. That is now 66, soon to be 67, and who knows where it will be in the future? I've posted in the past about my thought on SS. I agree with TS, based on what I've read on the history behind it, that SS should be best treated as supplemental income. Of course, no surprise, it would appear many have either misunderstood or morphed their thinking, and expectations, and view SS as a government obligation to fully address their needs, yes? We look upon it as supplemental income, and plan accordingly. I agree with some of the comments in the article that suggest people can do much better with that 6.2%, and the employee match, than DC. And it seems to be constantly in need of being 'fixed', in terms of tax rate, 'full retirement age', and taxable earnings cap.
Jean