dagblog - Comments for "Obama's Jobs Plan. Not Bold. Not Imaginative. All to be paid for by the Super Committee. "

[Response to Kyle Flynn

kgb999 — Sun, 11 Sep 2011 16:27:30 +0000

In reply to Obama's Jobs Plan. Not Bold. Not Imaginative. All to be paid for by the Super Committee.

[Response to Kyle Flynn upthread on the Social Security discussion]

The treasury bonds in the trust fund are assets of the Trust Fund but they are liabilities of the general fund. So from the standpoint of our aggregate national account, its a wash.

What the hell are you talking about? The Social Security trust has NOTHING TO DO WITH the aggregate national account.

From the U.S. Code:

EXCLUSION OF SOCIAL SECURITY FROM ALL BUDGETS Pub. L. 101-508, title XIII, Sec. 13301(a), Nov. 5, 1990, 104Stat. 1388-623, provided that: Notwithstanding any other provision of law, the receipts and disbursements of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund shall not be counted as new budget authority, outlays, receipts, or deficit or surplus for purposes of - (1) the budget of the United States Government as submitted by the President, (2) the congressional budget, or (3) the Balanced Budget and Emergency Deficit Control Act of 1985.

This is the ESSENCE of the battle between those who want to protect Social Security (previously Democrats, now, apparently, nobody) and those who want to eliminate it (previously Republicans, now, apparently, everyone) and steal all of the money to cover their tax-evasion-derived deficit.

You have it dead wrong. The Social Security trust is not a "part of the government" as you are characterizing it. The Social Security trust did not issue itself a bond. If even you guys can't keep that straight ... the Republicans are right, there is no way in hell we can let government enact a single-payer health program.

Yes. We the taxpaying American people who have accrued debts in our general fund will have to pay them back. ALL OF US. This is true of all of our debts. Even the ones to folks like China where the investors might actually raise a fuss and possibly shoot at us if we default (unlike, apparently, moron Americans).

By mischaracterizing the nature of the relationship between "The Government" and Social Security trust, you are saying you see it as a totally viable approach to paying these debts by defaulting on the Bonds held by American people setting aside more than needed for today's Social Security to protect the Social Security of tomorrow - under the auspice that because our government is involved we are obligated to accept being ripped off.

I am saying that the people capturing like 80% of the wealth in our nation aren't paying taxes on 99% of that income. That, to a significant extent, is where the hole in general fund revenue is coming from. You don't fix that hole by ripping me off. You fix that hole by fixing taxation and spending. If simply forcing the top earners to start chipping in again isn't enough to do it ... the other 20% may just have to get over all these bullshit tax cuts, incentives and credits and actually start paying their taxes again too (or maybe we could end these stupid wars and EVERYONE could just pay lower taxes legitimately). That $4 trillion is only going to last so long before it's gone too ... then what?

[Edit - Reply posted below so

kgb999 — Sun, 11 Sep 2011 16:19:32 +0000

In reply to We can't pretend as if this

[Edit - Reply posted below so it can be read ... too narrow]

Thank goodness there is at

kgb999 — Sun, 11 Sep 2011 16:17:30 +0000

In reply to Beautifully explained, kgb. I

Thank goodness there is at least someone else who gets it.

What the hell happened to Democrats?

We can't pretend as if this

Dan Kervick — Sat, 10 Sep 2011 21:19:47 +0000

In reply to Social Security is

We can't pretend as if this surplus does not exist, as it is crucial to the program's viability.

The surplus is not crucial to the program's viability. The treasury bonds in the trust fund are assets of the Trust Fund but they are liabilities of the general fund. So from the standpoint of our aggregate national account, its a wash. If X billion dollars of bonds mature in year Y, and those X billion dollars are to be used in year Y to pay Social Security benefits, then the taxpayers in year Y will have to raise X billion dollars to pay off the bonds. The same effect would be accomplished if there were no bonds, but the taxpayers raised their FICA taxes in year Y to produce $X billion more in revenue that year.

If the government, which has some surplus in its possession, invests the surplus in government bonds, that just means one part of the government it makes a trade with the general fund - another part of the government. It gives some dollars to the general fund - which are then presumably spent - and the general fund gives a promise to the trust fund to pay it back. The value of issuing the bonds is that the promises behind the planned payments are more secure than a mere legislative promise. It will be harder for the taxpayers in year Y to weasel out of the commitment to Social Security.

The government isn't some external party. It's you and me. If you and I purchase a 10-year bond that we ourselves have issued, then we haven't really "saved" or 'invested" anything. And the bond we possess is unrelated to our solvency or viability 10 years hence. It's not like 10 years from now we could pull out our bond in a tight pinch and say, "It's a good thing we have this bond!"

Social Security is

kgb999 — Sat, 10 Sep 2011 20:22:24 +0000

In reply to Social Security is

Social Security is essentially a pay as you go system, not a savings plan. So any talk about either "investment" or "savings" is really a bit euphemistic.

I'm not necessarily disagreeing, but I don't see your point. It is nominally conceived so that present-day contributions cover the extant pool (who's contributions serviced the previous pool). That only works if generations are roughly the same size. Hence the need to build up a surplus. We can't pretend as if this surplus does not exist, as it is crucial to the program's viability.

As far as I'm using the word investment, it is to indicate what we do with the excess revenue that is not required to service the current pool. In that regard, we are indeed investing and achieving a return in a literal sense. We don't HAVE to put it in government bonds ... we choose to.

A US Treasury Security issued by one government account and held by another government account is in effect just a promise taxpayers have made to themselves to pay a certain amount into the latter account at some point in the future.

And a US Treasury Security issued by one government account and held by a private entity is in effect just a promise taxpayers have made to someone other than themselves to pay a certain amount into the latter account at some point in the future. It seems a distinction without difference to me. Why would we treat ourselves crappier than we treat corporate investors?

Social Security is solvent to 100% benefit ... for decades, at least. It doesn't contribute to the deficit. Any way it goes, using it to balance the deficit is taking funds that were indeed set aside by me, my parents, and grandparents specifically so that they would be available to American workers upon retirement. Call it savings, call it investment, call it whatever you want ... we've been putting aside for Social Security more than required to service the contemporary benefits specifically as a plan for the future.

Today that money is really, really attractive to people who want to say they cut the deficit but also don't want to pay taxes. Fuck that. If, a few decades down the road, we still haven't addressed the economy and gotten revenue back up to speed - we may need to boost the FICA tax by as much as 20%. Yeah, it would suck to pay 7.44% instead of 6.2 ... but seriously, that's the worst possible outcome of the so-called crisis here. This whole discussion is bullshit.

And I think you are spot-on with how we need to change the way this is discussed. Absolutely that is how I view it as well. Are we seriously willing to subject our parents and grandparents (and ourselves) to a miserable end of life experience simply to save 1% on our fucking taxes?

Krugman's endorsement of the

Red Planet — Sat, 10 Sep 2011 20:08:38 +0000

In reply to But this is what Krugman

Krugman's endorsement of the plan doesn't appear to be overly enthusiastic. Basically, he says it's "a lot better than nothing." I don't disagree with that. Earlier he says it's not nearly enough, and I don't disagree with that, either.

But if his highest praise of the hiring incentives is that they "might" be productive, that's not much to go on. I'd love to understand why he thinks so.

My own experience with the way employers use hiring incentives (as an economic developer several years ago) is much more in line with the NYT article. I hope I'm wrong.

Krugman's final paragraph in that Op-Ed is important:

The good news in all this is that by going bigger and bolder than expected, Mr. Obama may finally have set the stage for a political debate about job creation. For, in the end, nothing will be done until the American people demand action.

If this speech truly marks a change in tone by the administration and an opportunity for honest discussion about job creation, then it will have been a winner. And it is time for us to demand action.

But this is what Krugman

Bruce Levine — Sat, 10 Sep 2011 19:14:22 +0000

In reply to Here's why I call it fraud,

But this is what Krugman writes immediately following the part of his column you excerpted, and here's where Krugman is ultimately coming from:

Still, the plan would be a lot better than nothing, and some of its measures, which are specifically aimed at providing incentives for hiring, might produce relatively a large employment bang for the buck. As I said, it’s much bolder and better than I expected. President Obama’s hair may not be on fire, but it’s definitely smoking; clearly and gratifyingly, he does grasp how desperate the jobs situation is.

But his plan isn’t likely to become law, thanks to Republican opposition. And it’s worth noting just how much that opposition has hardened over time, even as the plight of the unemployed has worsened.

Well Tmac, if I understand

Red Planet — Sat, 10 Sep 2011 18:31:59 +0000

In reply to Here is the deal RP, getting

Well Tmac, if I understand your "deal" it is this: if you or I have original thoughts we will not use Dagblog to discuss them. Only deference to our betters is allowed here.

Seems a strange attitude to carry into a forum such as this but if that's how you feel, then you are right, there need be no more back and forth between us.

Social Security is

Dan Kervick — Sat, 10 Sep 2011 18:29:53 +0000

In reply to Right. We've known about the

Social Security is essentially a pay as you go system, not a savings plan. So any talk about either "investment" or "savings" is really a bit euphemistic. A US Treasury Security issued by one government account and held by another government account is in effect just a promise taxpayers have made to themselves to pay a certain amount into the latter account at some point in the future.

I agree that since a person is entitled to anything they have truly earned, then switching from "entitlement" to "earned benefit" doesn't make that much of a difference. On the other hand, just because everything one has earned is something to which one is entitled, it doesn't follow that everything to which one is entitled is something one has earned. For example, someone might be entitled to a share of another person's estate simply on account of their rights under relevant inheritance laws, even if they have done nothing to earn that share. So "earned benefit" does add a little bit of appropriate specificity.

My personal preference would be to switch the focus from the recipient to the contributor in our discussions of Social Security. Rather than describe Social Security from the recipient's point of view as either a program of entitlements or earned benefits, think of it from the contributors' point of view as a program of filial community obligations.

My FICA contributions from each paycheck are not being set aside and saved for me. They go directly into making Social Security payments to the nation's retirees. Just as I send my parents a certain amount of money each month to help support their retirement, I also contribute to sending America's other retired parents and grandparents a certain amount each month. I'm proud to do so, because they are fellow Americans, and it is the duty of the young and the healthy to support the generations of elders that came before them and worked hard to build the world we all now live in. I take pride from being a responsible working adult who can fulfill his duties to others by supporting them economically.

It might take some years of progressive work to rebuild the national and social fabric, and to displace the deeply selfish and perversely individualistic habits of thought that have been promoted by contemporary conservatives, people like Paul Ryan who appeal without shame to thinkers such as Ayn Rand for inspiration. But I think we can do it.

Here's why I call it fraud,

Red Planet — Sat, 10 Sep 2011 18:11:08 +0000

In reply to It just seems to me that

Here's why I call it fraud, bslev. I should clarify that it's the kind of "wink and a nod" fraud that's often seen in politics, not the kind of fraud that people go to jail for. I expect everyone knows this these tax breaks are an incentive to employers to support the program, since the breaks put money in their pockets, but that the tax breaks will not actually incent much de novo hiring. In other words, these breaks are intended to broaden political support for the plan, with a wink and a nod to job creation.

Krugman, Dean Baker and others point out that our low employment rate stems from lack of demand. When demand for goods and services is low, what reason does a business have to add employees?

Employers appear to agree with Krugman, Baker et al. There's an interesting article in today's NYT - Employers Say Jobs Plan Won't Lead to Hiring Spur - and here are some interesting pull-quotes from the article.

"As President Obama faced an uphill battle in Congress to win support even for portions of the plan, many employers dismissed the notion that any particular tax break or incentive would be persuasive. Instead, they said they tended to hire more workers or expand when the economy improved. "

--

“You still need to have the business need to hire,” said Jeffery Braverman, owner of Nutsonline, an e-commerce company in Cranford, N.J., that sells nuts and dried fruit. While a $4,000 credit could offset the cost of the company’s lowest-cost health insurance plan, he said, it would not spur him to hire someone. “Business demand is what drives hiring,” he said.

--

"But the plan also includes incentives for companies to hire more workers, including a payroll tax cut for businesses and a $4,000 tax credit for those employers that hire people who have been out of work for six months or more.

To the extent these measures could be used, many employers said they would most likely support people whom companies were planning to hire anyway."

No employer is saying they won't accept the tax breaks. What they are saying is that the tax breaks will have only a marginal impact on their hiring decisions.

So it's a way to put money in the pockets of employers. And if employers have more money in their pockets, maybe they'll spend some of it which will provide indirect stimulus, similar to the payroll tax holiday for employees. Or maybe they will use it to pay down debt. But it is unlikely to cause much hiring that wouldn't have been done anyway.

By the way, Krugman's my hero these days, so no, I don't disagree with him. Here's the takeaway paragraph from Krugman for me (cited previously above in a response to Tmac):

O.K., about the Obama plan: It calls for about $200 billion in new spending — much of it on things we need in any case, like school repair, transportation networks, and avoiding teacher layoffs — and $240 billion in tax cuts. That may sound like a lot, but it actually isn’t. The lingering effects of the housing bust and the overhang of household debt from the bubble years are creating a roughly $1 trillion per year hole in the U.S. economy, and this plan — which wouldn’t deliver all its benefits in the first year — would fill only part of that hole. And it’s unclear, in particular, how effective the tax cuts would be at boosting spending.