Just the Facts: A Look At Obama's Budget Proposal

Seemingly thousands of articles have been written over the past few days about President Obama's 2012 budget proposal. Verdicts vary greatly but are invariably opinionated. It's too big. It's not big enough. It cuts too much. It doesn't cut enough.

I looked hard and couldn't find an article that simply lays out where and how much the new budget proposes to spend. Nothing.

Well, here's just that (I also included 2007's numbers to show a pre-recession budget for comparison).                                                                                

Federal Spending (in billions)                                    

Segment

2007

2011

2012

Social Security $586 $748 $767
Defense $551 $768 $738
Unemployment Benefits/Food Stamps $366 $623 $554
Medicare $375 $494 $492
Medicaid $266 $388 $374
Net Interest $237 $207 $242
Education/Training $92 $115 106
Veterans Benefits $73 $141 $125
Transportation $73 $95 $105
Justice $41 $61 $59
Natural Resources/Environment $32 $49 $43
International Affairs $28 $55 $63
Commerce and Housing $0.5 $17 $24
Science/Space/Technology $26 $33 $32
Community/Regional Development $30 $26 $26
General Government $17 $32 $31
Agriculture $18 $25 $19
Energy ($0.9) $28 $23
Undistributed Offsetting Receipts ($82) ($90) ($100)
Total $2.7 trillion $3.8 trillion $3.7 trillion

Source: Office of Management and Budget.

This is a serious spending jump in just 4-5 years. Given. But keep in mind where the spending increases are coming from.

Break spending into three categories -- mandatory (entitlements, unemployment insurance, interest on the debt), defense, and everything else (nondefense discretionary) -- and here's what you get:

Segment

2007

2011

2012

Mandatory $1.9 trillion $2.6 trillion $2.6 trillion
Defense $551 billion $768 billion $738 billion
Everything Else $274 billion $450 billion $437 billion

Spending in every category has increased since 2007. But almost all of the total increase has come from either mandatory spending or the sacred cow of defense spending. Within nondefense discretionary spending, the difference between 2007 and Obama's 2012 proposal is $163 billion -- peanuts when dealing with a $1.6 trillion annual deficit.

Leaving aside mandatory and defense spending, Obama's current spending plans aren't drastically different from 2007's.

But therein lies the problem: It's too easy to leave aside mandatory and defense spending.

Mandatory outlays are by far the biggest contributor to the rise in spending -- largely because of increased unemployment benefits coming out of the recession, which taper off automatically as the job market recovers. The other mandatory spending monsters -- Social Security, Medicare, and Medicaid -- are creeping higher by the hundreds of billions of dollars as baby boomers begin retiring. They're a problem now and a nightmare in the years ahead. Even parties determined to slash federal spending habitually throw up their hands and surrender to the surge of entitlements. It's treated like your grandfather's senility: It's just what happens. Don't bother fighting it.

Though Congress is legally obligated to pay mandatory spending obligations like entitlements, this distinction is a copout when punting budget reform. Fed Chairman Ben Bernanke put it best in 2009: "It's only mandatory until Congress says it's not mandatory." If rules are preventing vital change, why not change the rules?

Here's one reason why not: Despite rife disgust with today's federal spending, few voters actually want entitlements cut. Last month, a CBS/New York Times poll found that "two-thirds of Americans choose higher payroll taxes for Medicare and Social Security over reduced benefits in either program." A separate CBS/Vanity Fair poll found that "just 4 percent said they would cut Medicare, and just 3 percent said they would cut Social Security" as the best way to balance the budget. And my personal favorite, from the Tax Policy Center:

Three-quarters of Americans believe that entitlement programs such as Medicare and Social Security "will create major economic problems" over the next 25 years. But two-thirds are opposed to addressing these challenges by reducing benefits, and 56 percent are against raising taxes.

More tellingly, a recent Cornell University poll found that 44% of those on Social Security and 40% of those on Medicare don't even realize they're using government programs -- let alone ones that consume a third of the federal budget.

Some of these survey results seem contradictory, but poll after poll shows a common thread: Very few actually want entitlement spending cut. It turns out people like getting checks in their mailbox, something that affects them directly, more than they like balanced budgets, an abstract concept.

And then there's defense spending. Besides the obvious draw toward defense spending -- it makes us safer (or so the logic goes; someone else can debate that) -- a major obstacle in reining in the Pentagon is how consolidated the defense industry has become. Just five companies -- Lockheed Martin (NYSE: LMT  ) , Boeing (NYSE: BA  ) , Northrop Grumman (NYSE: NOC  ) , General Dynamics (NYSE: GD  ) , and Raytheon (NYSE: RTN  ) -- have defense contracts worth more than $100 billion. As New York Times columnist Joe Nocera recently wrote, "the Pentagon simply can't allow them to get into serious financial difficulty; there are just too few of them."

Furthermore, these five spent more than $60 million lobbying in 2009. The result: when the Pentagon does find the will to cut back, the savings usually find their way back into other defense projects. Exhibit A: Last year, Defense Secretary Robert Gates announced he was gutting $100 billion in waste out of the defense budget, but that almost all of the cuts would be reinvested into "higher priority systems." It's hard to even consider cutting a budget when that's the standard for savings.

In the end, the most honest thing one can say about Obama's spending proposal is not how radical it is -- but how ordinary it is. Today's federal spending is simply following a track it's been on for the past decade. And that's the problem.

Check back every Tuesday and Friday for Morgan Housel's columns on finance and economics.

Fool contributor Morgan Housel doesn't owns shares in any of the companies mentioned in this article. The Fool owns shares of General Dynamics, Lockheed Martin, Northrop Grumman, and Raytheon. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 18, 2011, at 12:13 PM, SnowdriftFool2 wrote:

    Thanks, Morgan, for some clarity in the emotion and debate of the budget.

    Ordinary budget but maybe not so crazy.

    Bottom line is Uncle Sam's hands are largely tied. All this spending is in the end also fiscal stimulus, so part of the bet is that the US will keep growing its way out faster than the mandatory costs (mainly of borrowing at this stage as nobody's in any rush to increase the taxes). That growth will lead to fewer entitlements of the UI sort as you rightly point out.

    I guess at that stage we look back to Obama's State of the Union address and his emphasis on education and innovation. The former is a long-term investment, the latter a wake-up call for corporate america to go out into the big wide world and out-innovate everybody else. Interestingly, the defence companies you list are all pretty good at doing that innovation beyond government contracts. Commercial peace-time "spinoff" applications will continue to come from such developments (pacemakers from NASA, for example).

    Thanks again for the write-up,

    Jack

    [Long LMT, RTN and generally bullish on US innovation]

  • Report this Comment On February 18, 2011, at 12:45 PM, Borbality wrote:

    Great stuff. I have to say I really depend on Mr. Housel to make sense of the stuff I hear in the news for me.

    Keep it up!

  • Report this Comment On February 18, 2011, at 3:59 PM, TMFDiogenes wrote:

    Fantastic article, Morgan.

  • Report this Comment On February 18, 2011, at 4:57 PM, foolamok wrote:

    'Three-quarters of Americans believe that entitlement programs such as Medicare and Social Security "will create major economic problems" over the next 25 years. But two-thirds are opposed to addressing these challenges by reducing benefits, and 56 percent are against raising taxes.'

    I think this means benefits are going down *and* taxes are going up . . .

  • Report this Comment On February 18, 2011, at 5:30 PM, masterN17 wrote:

    As usual, good journalism seasoned with light commentary from Morgan. Thanks for the content.

  • Report this Comment On February 18, 2011, at 6:40 PM, jabontik wrote:

    excellent article

  • Report this Comment On February 18, 2011, at 7:40 PM, SFAmiler wrote:

    Regardless of how you spin it, you can not continue to spend money you don't have.

    If our government were a corporation, they would be out of business by now.

    It's not the government's job to keep the economy going with borrowed money that it can barely afford the interest on. Sometimes businesses need to fail. Survival promotes innovation. "Too big to fail" is a myth and a scare tactic. Sometimes markets and people need to face the hard times and emerge stronger on the other side.

    We now live in an artificial economy that is not self-sustaining.

  • Report this Comment On February 18, 2011, at 7:48 PM, TMFHousel wrote:

    "If our government were a corporation, they would be out of business by now."

    True -- but it isn't. Not to belittle the situation, but a country can run a deficit forever as long as the deficit as a percentage of GDP is less than nominal GDP growth.

  • Report this Comment On February 18, 2011, at 8:37 PM, SFAmiler wrote:

    If only TMF contributors believed Foolish principles applied to the government as well as corporations.

    Instead we have a foolish government being cheered on by TMF writers.

  • Report this Comment On February 19, 2011, at 4:01 AM, lorenzo88 wrote:

    SFAmiler -- How can you characterize Mr. Housel's analysis as cheering on foolish government? Here is his conclusion:

    "Today's federal spending is simply following a track it's been on for the past decade. And that's the problem."

    I find the article to be a very straightforward presentation that is refreshingly free of the ideological rhetoric that masquerades as journalism these days.

    It is you, Mr. Housel, that I cheer. I hope you will continue providing us with facts and objective analysis. Thank you.

  • Report this Comment On February 19, 2011, at 10:27 AM, Captain03 wrote:

    "Today's federal spending is simply following a track it's been on for the past decade. And that's the problem." Very very true.

    It's time for the budget to be a true "rule-breaker" inj the Fool sense of the word. We must reverse the spending as usual to remain a viable economy.....and country!!.

  • Report this Comment On February 19, 2011, at 11:13 AM, whereaminow wrote:

    Morgan,

    Those are the facts.

    But I would also like to point out another fact.

    There is no such thing as Mandatory Spending. All spending is either voluntary exchange or theft.

    David in Qatar

  • Report this Comment On February 19, 2011, at 11:50 AM, dave665 wrote:

    Thanks for summarizing this. I believe that if you consult the U.S. Constitution, the only spending that could be considered "mandatory" is for national defense. This is not to say that all or even most of this has been well spent, in actual practice, and I don't doubt that there is plenty of waste and corruption related to this as well. However, constitutionally, the government really has no business being involved in wealth re-distribution (entitlements). So we need to decide, as Americans, if we really still believe in the principles laid out in the constitution or not. If not, lets just admit that we don't and find compelling reasons as to why.

    The second point to make here is that most estimates of these promised government entitlements (in today's dollars, I believe) exceed $100 trillion in payouts over the next 30 years. The entire net worth of the U.S. is somewhere around $50 trillion. (Please feel free to correct me if you believe these figures are way off base). What this means is that our representatives have promised twice our net worth in terms of entitlements. Clearly, we need to admit that these promises simply cannot be kept in any realistic way.

  • Report this Comment On February 19, 2011, at 12:23 PM, JimIsbell wrote:

    I have suspected this for some time. I am no fan of Obama, but this budget isn't all that radical.

    Deficit spending causes inflation, inflation hurts if you are buying outside your own borders. That causes the buying to retreat back within our borders as a way of saving money. This reduces the foreign trade balance. If you are an investor in REAL things, inflation does not hurt as bad or at all. If you keep money in your pocket, inflation hurts a lot.

    Its almost a self correcting system....as long as the free market is allowed to work without interference from government.

  • Report this Comment On February 19, 2011, at 12:28 PM, wrenchbender57 wrote:

    Great article, thanks. My one comment is on SSI being an "entitlement". Technically, I am sure it probably is just that. But, as someone who is close to retirement and has had my payroll deducted for 40+ years it does not seem that way to me. I have not had a choice to have my pay deducted or not. Neither have my employers. I was self employed for over 20 years and as such, basically paid both halves of the SSI taxes. I will depend on SSI as a good portion of my retirement income, but certainly not all of it. So, my income happens to add up to a point that congress decides is "too much" is it fair to reduce my payments? OTOH, I also realize that our government cannot afford to pay out money it does not have. So, what is the answer?

  • Report this Comment On February 19, 2011, at 12:32 PM, steveelcpo wrote:

    Great article and so refreshing in this time of rhetoric and biased reporting. You so clearly point out the problem of entitlements and any failure to address them comprehensively is just kicking the can down the road as Congress has done for years. I'm taking the 2% that isn't being withheld in social security this year and putting it into my Roth Ira along with other investments. I don't think social (in)security is going to be around when I get there so trying to make alternative plans

  • Report this Comment On February 19, 2011, at 12:43 PM, Kenw62 wrote:

    the projection says 100% of revenues will go to service the debt by 2055 -- actually the comparision with prior years is deceptive -- the administration reclassified about 5% of the social programs that were "descretionary" as "manadatory"

  • Report this Comment On February 19, 2011, at 12:45 PM, matthunt97 wrote:

    Now what? dig a bunker? Hide? Move to Mexico, maybe Canada?.....Will this all come crashing down like some house of cards if the dollars is no longer a world class reserve currency. The debt and the cost of maintaining current budget priorities will take us to......________....? you fill in the blank.. Maybe bend over an kiss it all good bye as we now know the USA?

  • Report this Comment On February 19, 2011, at 12:47 PM, JimBretire wrote:

    How is Social Security deemed an "entitlement" when beneficiaries are only those who pay into the program and presumably receive back their "benefit" better known as investment return over time after retirement? At a total 15% employer/employee contribution (tax) the ROI for current workers is questionable enough without the immediate assumption that current contributors must receive less of a return on investment than they receive now. How is it so difficult to run a sustainable government annuity system? Insurance companies and others do it all the time.

  • Report this Comment On February 19, 2011, at 12:54 PM, ETFsRule wrote:

    Obviously people will complain about the budget no matter what he does. But it seems like the complaining is almost equally distributed from both sides of the aisle. So, I would say he is doing a pretty decent job of managing an impossible task.

    I'd like to see much bigger cuts to defense, and an increase in education spending. (maybe another 200 B cut from defense and a 50 B increase to education).

  • Report this Comment On February 19, 2011, at 12:56 PM, AustinATL wrote:

    Great straight forward article laying out the numbers.

    I have an issue with the continued "entitlement" spending, but I really can't argue with Wrenchbender; every paycheck I make a deposit into the government social security bank, knowing that there is a good chance on that being a losing investment by the time I retire.

  • Report this Comment On February 19, 2011, at 1:13 PM, EBerg13 wrote:

    Actually, if the dollar downgrades, won't our exports go up? What has been irking me to no end, is that every year in Wisconsin, we get a letter with our tax forms saying our taxes have gone down again, but so have our benefits. Personally, I'd rather pay more if I got more for it --and that is a huge "if" these days.

    Personally, I'd like to abandon all the stuff that doesn't do anything for us as Americans: cut the troops by half, kill the middle east bases that cause so much animosity in that region, stop foreign aid to shore up dicatators, stop being the cops of the world (and yes, get out of the UN, too) and start spending within our borders. If we don't wise up soon, every state will start looking like Wisconsin.

  • Report this Comment On February 19, 2011, at 1:14 PM, logiclibrary wrote:

    The entitlement spending dilemma is a great argument for limited government and limited programs. Once in place, the constituents of these programs simply refuse to give them up. They vote in politicians who will support them regardless of the consequences. We're rapidly becoming France....without the really good cheese.

  • Report this Comment On February 19, 2011, at 1:15 PM, EBerg13 wrote:

    France had, according to some very level-headed pundits, the best healthcare system in the world. It's listed as a top spot for retirees.

  • Report this Comment On February 19, 2011, at 1:27 PM, mtracy9 wrote:

    Reagan said that deficits do matter and criticized Carter for them. Of course, Ronnie would become infamous for tripling the National Debt. Cheney changed Republican orthodoxy by saying that deficits don't matter. Cheney/Bush then went on to more than double the National Debt. Now that we have a Democratic President, Republicans are returning to the old orthodoxy, saying that deficits do matter (except, of course, when tax cuts for the rich are at stake).

  • Report this Comment On February 19, 2011, at 1:34 PM, mtracy9 wrote:

    Fact:

    Social Security has a 2.6 trillion dollar surplus and is

    separate from the general budget. Furthermore, Social

    Security is solvent until the year 2037. After that it will

    be able to pay out 85% of benefits, even if no changes

    are made.

  • Report this Comment On February 19, 2011, at 1:38 PM, mtracy9 wrote:

    The decade of the 1990s, under Clinton, was much better for the middle class than the decade of 1980s

    under Reagan, with lower unemployment and a longer economic expansion. The economy under Clinton even

    produced budget surpluses, after Clinton raised the top marginal rate on millionaires/billionaires from 33 to 39

    percent. Reagan's economy, on the other hand, resulted in a tripling of the national debt -- a record. Thanks

    Ronnie.

  • Report this Comment On February 19, 2011, at 1:41 PM, matthunt97 wrote:

    France....maybe we should all move to France? yup that will fix it all...give it back to the wolves, grizzlies and such...then maybe the nations that were here before can all hunt buffalo, we can all sit in France, eat cheese, drink wine. get the entitlements we deserve, dream if the good old days, and the politicians will be doing what they can to get reelected. That is to spend money we do not have to create entitlements and placate the masses so we all vote for them. Seems to me it is some self perpetuating feed back loop.

  • Report this Comment On February 19, 2011, at 1:49 PM, SteveVaughan100 wrote:

    Great article - I liked how the author took the time to lay everything out. The NYT did an interactive piece last November just after the election. It's definitely worth checking out here: http://nyti.ms/bLo4RF

    One thing that does concern me: If we do cut federal spending, will that slow our growth and impact jobs? What's happening to Britain with their massive cuts? Is their economy contracting? I realize it's imperative that we also slash spending, but I don't know if our economy can handle losing more jobs - it could push us into a double dip recession.

    Most of the cuts Obama is pushing are just window dressing - not too much better than what the Republicans have offered. I think that while we definitely need to cut out waste and fraud, that's only a small portion of our budget (always a talk-radio favorite), the low hanging fruit are Social Security, Medicaid, Medicare, and the Military.

    Maybe we could have some means-testing, increase the retirement age, remove the $106K SS income cut-off, and look at how our military can protect us from foreign threats. Despite our foreign policy over the past 60 years, our military was never meant to remake the world in our image.

  • Report this Comment On February 19, 2011, at 1:51 PM, mtracy9 wrote:

    Teabaggers, Libertarians and other "true conservatives" like Ron Paul need to start their own country

    and show us how it's done. Oh wait !! ... they already have, in Somalia and Guatemala -- no income tax and no

    unions. Libertarians love the paradise of Somalia where there are lots of guns, no government and no health care.

  • Report this Comment On February 19, 2011, at 1:54 PM, mtracy9 wrote:

    Early in his presidency, Reagan chose as his economic advisers a group that espoused a radical economic theory called "supply-side." The supply-siders told Reagan that if he gave tax cuts to the top brackets (the wealthiest individuals) the positive effects would "trickle down" to everyone else. Tax cuts, they argued, would produce so much growth in the economy that America could simply outgrow its deficits. Reagan bought into supply-side theory, which is why in 1981 he predicted that there would be a "drastic reduction in the deficit."

    However, Reagan soon discovered that his supply-side advisers were wrong. Tax cuts, instead of reducing the deficit, caused the deficit to balloon.

    At this point, Reagan would change strategy. He would blame the U.S. Congress for the record deficits that accrued during his years in office. Reagan would say that Congress was responsible, because Congress did not slash spending enough--meaning social spending, since Reagan always championed increased military spending.

    Reagan chose to ignore the fact that his own Republican Party was in control of the Senate from January 1981 to January 1987, and that Congress actually spent less than what he originally had asked for.

    Federal deficits would continue unabated until the presidency of Bill Clinton when fiscal responsibility would finally be restored. President Clinton would achieve a balanced budget (and even record surpluses) in large measure by restoring higher taxes on the wealthy.

    http://thereaganyears.tripod.com/economicpolicy.htm

  • Report this Comment On February 19, 2011, at 1:56 PM, matthunt97 wrote:

    To - mtracy9 -

    Yes the Regan era brought deficit and other issues. It all was a response to previous fiscal policy and the Soviet Union. Over time it did produce some fruit and the Clinton era enjoyed that prosperity partly because of the previous administrations. That is not to say that Regan was perfect but he did instill confidence in the American system and we did get a crucial jump start from the dismal conditions we were in at the time (high interest etc).. I get the gut feel that people assume each administration can turn this beast of an economy in some direction with a few tweaks of social and fiscal policy immediately, but the reality is that it might take a considerable period of time (years) to even see a modest change. In the mean time we argue over stuff and get promised this and that by the politicians so they can get re-elected .

  • Report this Comment On February 19, 2011, at 2:00 PM, lowmaple wrote:

    when talking constitution, those that wrote it did not (i think) ever considered Government would ever have to support it's elders as one's family did that back then. As far as not getting what back you paid into the system, if the lower wage earners and savers don't get some entitlements you may have incur more costs to quell social unrest than you would just supporting them.

  • Report this Comment On February 19, 2011, at 2:04 PM, mtracy9 wrote:

    Scaring Americans about the solvency of Social Security is what

    the right-wing disinformation specialists are all about. That way the right-wing

    fearmongers can step in and offer their "solutions." Their "solutions"

    include handing the system over to the Wall Street money managers who would then

    turn around bilk the American people by charging fees and commissions.

  • Report this Comment On February 19, 2011, at 2:25 PM, ershler wrote:

    I believe the reason Social Security is facing funding problems in 25+ years has to do with life expectancy increasing faster than expected. It is true that that if people are living longer Social Security tax will need to be increased (the opposite of what we are doing now) or benefits will need to be delayed or reduced. The administrative expenses of Social Security are less than one percent. I think Social Security is the third best thing the US government has done in the 20th century (behind WWII & Cold War) but I am planning my retirement assuming I will receive no benefits from Social Security.

  • Report this Comment On February 19, 2011, at 2:29 PM, notgilstratton wrote:

    First, Social Security does not contribute one thin dime to the deficit. The long range funding problem can be solved by simply removing the earnings cap. That way everyone pays SSI taxes on all their earnings, This would take care of the funding well into the next century and beyond.

    Next, A quick look at the budgets and spendings of previous administrations shows that the GOP is much better at spending than the Dems. So why are they so excited about today's deficit? It really is all politics and not finance. If the GOP agreed with Obama, what would they run on in 2012? Besides, if the economy remains in resession with high unemployment it increases the odds that they will do well in 2012. If the economy gets well and unemployment goes down, Obama gets reelected. It's all smoke. As memtioned earlier, the answer to our budget problems is to grow the economy. Remember 2000, 2001?

    Oh, BTW, do the math. The interest on the federal debt (as shown above) is about 2% of GDP ($242 Bil. /$14.5 Trillion) How many families do you know who only pay 2% of their annual income in interest? My mortgage interest alone is about 6% of my annual income. How about you?

    Isn't it time we all started telling the whole truth to each other?

  • Report this Comment On February 19, 2011, at 2:45 PM, whereaminow wrote:

    @mtracy9,

    Your ignorance of Somailia is almost as bad as your ignorance of America's roots. America did not have an income tax until 1913.

    @lowmaple,

    What the framers of the Constitution had in mind was Natural Rights vs. power of the Central Government. For better or worse, they struck a balance between the two. That argument is timeless and applies to any activity taken by the federal government, even in 2011.

    David in Qatar

  • Report this Comment On February 19, 2011, at 2:51 PM, whereaminow wrote:

    And since we've moved the discussion to Social InSecurity, I'll repost some comments from another blog:

    First, let's take the example of the 84 year old granny trying to live off the pittance of her SS check. This is a classic case in economics of only seeing the bridge being built. We see the check she gets. We see how she struggles to survive. We see her buying groceries with the money and supporting her limited lifestyle. We immediately figure, heck, without that, she'd perish!

    What we don't see is the lifetime of confiscation. Not just from her but from everyone. Let's start with her. We don't see the money confiscated from her throughout her lifetime through taxes and inflation. For a person that worked their whole life, we are talking about hundreds of thousands of dollars and more. Then we have to consider the money confiscated from the whole communtiy to support the system. And how that money could have been used productively to improve everyone's standard of living.

    Basically, she's getting pennies back on the dollars that have been robbed from her throughout her life. But since we only see the pennies being given, and not the dollars being robbed, we think this is a great system.

    Finally, in order to have a Social Security system you have to increase the power of the state. A consequence of this increased power is that the state will expand its control of other aspects of your life. The burgeoning police and military domination of the globe is your trade off to make sure granny gets her pennies back. Is it worth it?: You can't have one without the other.

    So that's the full price you pay. In order to give granny pennies, you have to support a state that spends her lifetime robbing her and everyone else, expands its control of your life, and goes on constant foreign adventures.

    Doesn't sound so wonderful now.

    David in Qatar

  • Report this Comment On February 19, 2011, at 3:16 PM, Daniel7801 wrote:

    A quick question. Did you check to see if the 2007 defense spending included the two wars we are in. I seem to remember that the cost of the wars were not in the budget figures at that time and I believe they are now included in the budget.

  • Report this Comment On February 19, 2011, at 3:22 PM, georgetag wrote:

    Reagan's domestic policies recessed the US economy and re-election seemed uncertain. By November 1984, however, a pre-election recovery gave him victory by bigger margins than in 1980 and began the longest peacetime economic boom in the twentieth century. With "peace abroad and prosperity at home" Reagan seemed set to enjoy the most successful two-term presidency since Roosevelt.

    Britannica Concise Encyclopedia:

    Ronald Wilson Reagan

  • Report this Comment On February 19, 2011, at 3:42 PM, TOM48 wrote:

    The whole problem began when Congress started tapping SS funds for other projects & replacing thise with IOUs. I actually have a solution. Do away with Social Security. Those that are on SS now can either continue their monthly payment (I am on SS) or receive a lump sum up to the amount they paid in over the years. Everyone gets decide on their choice at any age, but if you are 35 or under you will be refunded the amount you have paid in. There will be no more paying in to SS by anyone. You will be getting a 7% raise plus the refund. Now there is a real stimulus. Yes I know some idiots will go and blow all their money, but then it becomes their problem. There will be no more government involved in this at all. You will be on your own as it should be. As for me, I would take the remaining amount I have coming in a lump sum & put in GABUX with a 13% dividend that pay 7 cents per share every month & it is likely I would be receiving more than I do from SS now + my principal would not be decreasing at all. And I would still have the option of doing something else with the money later if I wanted to do so.

  • Report this Comment On February 19, 2011, at 3:51 PM, jc09058 wrote:

    Great article. Well worth the read and to get a little factual truth as well.

    Now if we could get the rest of print news, TV and Radio to provide the same concise information as well. Yes, a forlorn hope at best.

  • Report this Comment On February 19, 2011, at 4:00 PM, SkiBum81 wrote:

    Daniel7801 is correct. The wartime spending is classified as "emergency spending" and is "off-budget". It is not factored into the Defense budget.

    As far as the problem being caused be Congress raiding the Social Security Trust Fund and replacing the funds with IOU's, I think that is a common misconception and a fundamental misunderstanding as to how the trust fund works. Congress can borrow from the Trust Fund to pay for other programs. But when Social Security obligations have to be paid out, the Trust Fund is repaid with interest. So the argument that Congress' tapping into Social Security is the root of the problem is simply false....as long as the solvency of the Federal Government is not in question. :)

  • Report this Comment On February 19, 2011, at 4:04 PM, TMFHousel wrote:

    Daniel7801, SkiBum81,

    The numbers here are both on-budget and off-budget.

    Thanks for the comments everyone,

    Morgan

  • Report this Comment On February 19, 2011, at 4:13 PM, SkiBum81 wrote:

    I would also add that while it has been suggested on this board that Constitutionally speaking, the only mandatory spending is defense spending, that point doesn't really add anything constructive to this debate. I'm pretty certain that the Constitution didn't call for the establishment of Social Security, Medicare, or Medicaid, however, these programs were authorized in legislation as "entitlements", ie as long as you meet conditions XYZ, you are "entitled" to the specified benefit. What makes this spending Mandatory, is the fact that authority to spend on these programs is provided in law OTHER THAN annual appropriations acts. In short, the argument that enititlements are not mandatory says that entitlement programs are unconstitutional. Good luck winning that one....

  • Report this Comment On February 19, 2011, at 8:23 PM, ershler wrote:

    David in Qatar,

    I would really like you to explain how social programs and military actions are mutually inclusive.

  • Report this Comment On February 19, 2011, at 8:34 PM, mtracy9 wrote:

    Despite all the propaganda and disinformation thrown around by the Teabaggers and assorted right-wingers, Social Security does not contribute to the deficit or national debt. It is separately funded. If Social Security was cut in half tomorrow (the dream of many a right-winger), the deficit and national debt would not go down one penny. Furthermore, SS is the greatest anti-poverty program ever created, and has freed many people from having to support their parents in their old age.

    Of course, many right-wingers spout off that we should hand the system over to the Wall Street money managers. However, the historical record of these money managers should make any sane person feel less than secure.

  • Report this Comment On February 19, 2011, at 8:41 PM, mtracy9 wrote:

    The Constitution has in it the clause that one of the

    duties of government is "to support the general

    welfare." Therefore, the argument that social

    programs are unconstitutional is specious.

  • Report this Comment On February 19, 2011, at 9:17 PM, matthunt97 wrote:

    Well now mtracy9.....guess we can all stop working tomorrow and uncle will just pitch in and help us all as it is constitutional...shall I go fishing? yup that is it, more fishing less work....sounds hunky dory now that it is constitutional to redistribute wealth the general welfare of all....

  • Report this Comment On February 19, 2011, at 10:20 PM, depsee wrote:

    We have a Congress who can vote themselves a pay raise. You idiots wonder why everything is screwed up. Amazing. Doomed.

  • Report this Comment On February 19, 2011, at 10:21 PM, MisterRogers wrote:

    As for Social Security, I would gladly give my grandmother a bed to sleep on and food to eat if I could keep another 15% of my income. I'm self-employed, and my wife is out of work. We cannot even afford health insurance for our daughter, and that 15% would make a huge difference for us. As for defense spending, I formerly worked as a military contractor. You cannot even comprehend the amount of money that is wasted nor the ways in which it is wasted. Eisenhower was right to warn us of the military industrial complex. As for Medicaid and Food Stamps, the people I know who receive these benefits hide their income and assets so as to qualify. They cannot qualify for benefits based on their income, but they cannot eat without benefits. Even if these programs were necessary, they are poorly designed and administered. The government needs to be downsized, plain and simple.

  • Report this Comment On February 19, 2011, at 11:06 PM, whereaminow wrote:

    mtracy9,

    "The Constitution has in it the clause that one of the

    duties of government is "to support the general

    welfare." Therefore, the argument that social

    programs are unconstitutional is specious."

    First you didn't know that America instituted the Income Tax in 1913. Now you have no comprehension of the purpose of the General Welfare clause. The Federalist Papers are available online. Anyone can look this topic up and see that you are incorrect. Does this bother you?

    And even more importantly, how can you presume to rule over us when you don't even understand the basics of American history?

    David in Qatar

  • Report this Comment On February 19, 2011, at 11:43 PM, jomueller1 wrote:

    well, it is not new that Americans love it complicated. The problem starts with words. Medicare, Social Security, Justice, and may be others should be zero sum activities. We pay for Medicare (which does not even cover full cost of treatment) and therefor it should not be a tax item but a membership contribution which has nothing to do with the government. It should be run like a not for profit association. The same is true for Social Security. Only in a socialist country taxes are used to pay for retirement. Justice should levy the right fines and it can pay for itself. If a case is decided that involves "punitive damages" that should not make a victim and his lawyers multimillionaires but put money into the justice department.

    The fact that the war department has a huge increase in money when wars are winding down (really?) and there is no equal enemy is total waste.

    Agriculture is supposed to be a capitalistic business. Or is it also a socialistic subsidy venture? The same is true for energy. I pay for it every month. Why does the government give handouts?

    Don't get me started on education. Results are miserable despite the fact that I pay through the nose with my real estate taxes. The colleges charge tremendous fees and the rich give grants and scholarships. Why is the federal government in this business?

    I am not a tea party guy but I want government to size down to the level that the budgets can be balanced without tax increases. If I live beyond my means I will be cut off from everything. That is the benchmark for governments.

  • Report this Comment On February 20, 2011, at 2:43 AM, mtracy9 wrote:

    David in Qatar says:

    "First you didn't know that America instituted the Income Tax in 1913. Now you have no comprehension of the purpose of the General Welfare clause."

    David obviously has no comprehension of the General Welfare clause. Indeed, even our right-wing Supreme Court has not questioned constitutionality of the income tax. Just because the income tax was not instituted until 1913 does in no way make it unconstitutional, any more than the fact that that the CIA was not established until 1947 make the CIA unconstitutional. David must have fallen asleep during civics class.

  • Report this Comment On February 20, 2011, at 2:47 AM, mtracy9 wrote:

    Some of the right-wingers had dreams of overturning the New Deal, after Republican Dwight Eisenhower was elected President. (They were the Teabaggers of their time.) Eisenhower wouldn't go for it. In 1954, he said: "Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things. Among them are H. L. Hunt (you possibly know his background), a few other Texas oil millionaires, and an occasional politician or

    businessman from other areas. Their number is negligible and they are stupid."

  • Report this Comment On February 20, 2011, at 11:12 AM, whereaminow wrote:

    mtracy9,

    You have intentionally shifted the discussion in order to avoid embarrasment. You inital comment is as follows:

    "Teabaggers, Libertarians and other "true conservatives" like Ron Paul need to start their own country

    and show us how it's done. Oh wait !! ... they already have, in Somalia and Guatemala -- no income tax"

    As i point out, America had no income tax from 1776-1913. In other words, liberty lovers did start their own country. It's called America. I said nothing about the Supreme Court, nor did you.

    Another place that has no income tax is Qatar, where I live.

    But let's stay on track. Was America founded without an income tax? Yes or no?

    David in Qatar

  • Report this Comment On February 20, 2011, at 5:42 PM, graclee wrote:

    I say it is simply time for government to get out of the way and let America be America! Small business built this country and they will undoubtedly save it provided the politicians get there dirty little fingers out of everybodies pockets. Considering at age 48 I do not expect social security to be there when I retire, I prefer they allow me to invest it the way I see fit. I say pick an age or generation and make that the cut off for future entitlement ,so that group can stop paying into it and start funding their own futures. Social security will never again fund itself so its time to end it and move on. And yes I realize the possible hardship this may cause for future generations but it is hardly comparable to what is at stake if we continue on this path. Bring in the flat tax, do away with social security, allow health insurers to operate freely across stae lines, abolish the IRS, reduce the size of government and let America return to the country our founders envisioned.My name is Lee and I'm run ning for President of the United States of AMERICA!!!

  • Report this Comment On February 20, 2011, at 6:03 PM, jfrankh57 wrote:

    Once upon a time we all shared the burdens of our country. Now, no one wants to bear any pain. I guess, like the entitlement programs that were foisted on the American public in times of dire need and left to grow like weeds during good times as a wealth redistribution method, we need to accept there is a price to pay. It isn't the top two percent of our population, the "wealthy," that will pay this bill. The longer we wait to pay, the more onerous will that deed become to all. Now, it should be all of us in it together to pay this bill in a timely manner before interest rates and inflation take off... I also believe that the Chinese Imperialist, Communists who own a large chunk of our foriegn debt and have unfettered access to our markets should be paying for that privilege. I know that we are hampered with restrictive trade regulations going in there. Yes, I said Imperialist since they have their collective eyes on Taiwan (Formosa) and will work to further their expansion beyond Tibet as they grow economically stronger and we grow weaker.

  • Report this Comment On February 20, 2011, at 6:15 PM, jfrankh57 wrote:

    mtracy9

    David in Qatar is right. Where is the justice in you and left wing politicians mandating that I as a tax payer should pay taxes to support the life style of the less fortunate. I worked for 29 years in the enlisted ranks of the military and spent two years under contract in the middle east where I finally, for the first time in my life came close to earning $100k income during a year. I have always HAD to pay taxes, even when I was a poor airman because I was single then and taxes were a higher percentage of income. I initially didn't begrudge others a share of my income, and still don't since I donate to various charities, but I wish the government wouldn't just give it away so that it is taken for granted... make people miserable in their poverty so they will work hard to escape it (This last, a paraphrased quote from Ben Franklin which I heartily agree upon).

  • Report this Comment On February 20, 2011, at 6:51 PM, PALH wrote:

    Re Defense spending:

    Are you taking into account that Bush-Cheney kept the wars off the books and relied on emergency spending bills (i.e. borrowing) to fund them while Obama-Biden has put them in the budget where they belong?

    and jfrankh57: what makes you think my paying for your 29 years in the military is any different from you paying for the ``life style'' of those ``less fortunate'' than you?

  • Report this Comment On February 20, 2011, at 7:34 PM, TMFHousel wrote:

    PALH,

    Yes.

    Morgan.

  • Report this Comment On February 20, 2011, at 7:49 PM, GenericInvestor wrote:

    Cut foreign aid handouts to Israel for their military/warcrimes - cut medicaid/foodstamps and EITC.

  • Report this Comment On February 20, 2011, at 8:51 PM, stan8331 wrote:

    The problem is exactly what Morgan describes - the American public wants spending reduced, but most citizens believe the cuts can be found in programs from which they (and their family and friends) do not benefit. It's especially instructive that 40% of Medicare recipients (and it seems a similar if not larger percentage of the general public) literally fail to grasp that Medicare is in fact "government health care".

    Until the disconnect between the public's perception of the federal budget (e.g fraud and waste, foreign aid) and reality (Social Security, Medicare, Medicaid and Defense) somehow gets bridged, it's hard to see any significant progress being made. Unfortunately, if we fail to begin making bipartisan, rationally targeted reductions soon, we're certain to face serious economic disruption at some point in the not-too-distant future.

  • Report this Comment On February 21, 2011, at 9:52 AM, JerryMandering wrote:

    "In the end, the most honest thing one can say about Obama's spending proposal is not how radical it is -- but how ordinary it is. Today's federal spending is simply following a track it's been on for the past decade. And that's the problem" - Morgan Housel

    You see Bush-haters!....Old Georgie wasn't so bad, was he?....I mean its pointed out here that Obama spends just like him - and a bunch of you like Obama, right?

    Look friends, nothing's going to get better, especially entitlement problems. Face it, there are too many stupid, conditioned Americans out there; unfortunately enough of them know how to vote. I mean, look at these fool teachers in Wisconsin....they can pay now or pay later; they choose to pay later - the old can goes sailing down the street.

    Since our woes won't be solved what it amounts to at the end is a GIANT ponzi-scheme courtesy of your old Uncle Sam Madoff.

    In the meantime just live your life like you have been....no use looking at the long term of things, right?

  • Report this Comment On February 21, 2011, at 10:30 AM, FoolSolo wrote:

    I'm late to the party, and there is a bunch of SPAM crap posted in here. I wish Fool would get rid of this.

    Anyway, I often see Social Security and Medicare are called out as being a drag on the budget, and how these so called 'entitlement' programs are burdening the economy.

    First, I find it very misleading to call these 'entitlement' programs, they are actually government 'insurance' programs. Since we all pay the mandatory insurance premiums through Social Security and Medicare payroll taxes, then they really aren't entitlements at all. It's no different from car or home owners or life insurance. You have a contract and a premium, so you would expect that the contract be honored, or your premiums should be refunded.

    What is perplexing is every article or discussion on the topic that favors eliminating these programs never talks about the tax revenue that supports these programs. So, If you cut these programs I would assume that you also cut the corresponding tax revenue generated by these programs. What would that do to the budget?

    Since this article is about Facts, here are a couple of facts to think about. Social Security not only pays for itself, it had a surplus of over $2.4 trillion a couple of years ago. And, gov't has been using the surplus to fund other programs, and putting in IOU's (federal securities), which are supposed to be cashed out if the pay-outs ever exceed the pay-ins. So, FACT IS, SS has been solvent and would be solvent for many years to come, if gov't would stop borrowing our money to pay for things that were not related to the program.

    Similarly, Medicare was self funding until about 2008. The problem there is health-care costs are rising uncontrollably in this country, and the trajectory of our health-care costs seem to be on a steeper curve than any other country.This has a lot to do with the fact that our government is opposed to group buying and pooling resources, or setting limits on the amount we pay to drug companies, like other countries do (Canada for one). So we, in effect, subsidize the cost for other countries. Shame on us.

    Let's get some of these facts into the dialog, please.

  • Report this Comment On February 21, 2011, at 10:55 AM, dagrandpoobah wrote:

    "So, FACT IS, SS has been solvent and would be solvent for many years to come, if gov't would stop borrowing our money to pay for things that were not related to the program."

    IF, is the key word. I think that as long as the government has our money in it's coffers it will continue to "borrow" from SS. Another problem I find with social security is that your money sits, and sits, not earning any money. If people could keep their money and safely store it in bonds over 30 years, their money could easily double. Anyway, people should be allowed to keep that money that their giving to SS. If they spend that money foolishly that's their fault

  • Report this Comment On February 21, 2011, at 11:04 AM, TMFHousel wrote:

    Thanks for the comments everyone,

    Regarding entitlements being self-funding and not contributing to the deficit: This is only true on a theoretical level, and only relevant to accountants. The reason: As many have pointed out, these programs may have their own taxes, but they aren't quarantined from the rest of the budget. Congress can, and does, either borrow against entitlement surpluses or fund entitlement deficits. For example, the two-year payroll tax cut passed a few months ago won't impact SS's long-term solvency because the shortfall is being funded by the General Fund.

    We could just as easily declare that all income taxes are for defense, and then say defense is self-funding and doesn't contribute to the deficit. But this would be stupid. A more reasonable way is to look at the entire budget holistically, considering all revenues and all expenditures as being part of the same pot.

    Thanks again,

    Morgan

  • Report this Comment On February 21, 2011, at 11:10 AM, MTC119 wrote:

    Thanks again for a straightforward article. Hard to find such in today' journalism.

  • Report this Comment On February 21, 2011, at 3:56 PM, FoolSolo wrote:

    @TMFhousel - Morgan,

    Social Security was in-fact supposed to be self funded when it was first established in 1935. However, at initial startup, there wasn't enough money to fund itself, so they switched to pay-as-you-go in 1939. Either way, the social security and Medicare programs have collected way more than they pay out for many decades, so we can't really blame SS or Medicare and deficits. if anything, SS surpluses have spared us from borrowing some $2.4 trillion from foreign sources.

    Regarding the funds being "general" funds, that is actually not the case as I understand it. I point you to the SS Trust Funds page for the answers:

    http://www.ssa.gov/oact/progdata/fundFAQ.html

    As I read it, it clearly indicates the SS Trust Funds are separate accounts managed by the Department of Treasury specifically for Social Security programs. The fact the government borrows from these funds to pay for other things doesn't make the SS funds general purpose. They have a very specific purpose. Moreover, when the topic is discussed in Congress, it always entails the date when the funds are depleted and net pay-outs exceed net pay-ins... again, confirming the funds are collected in surplus.

    Anyway, my point is that if the US gov't decides to terminate these programs, as some people propose, then I presume the revenue the gov't currently collects as SS and MC payroll taxes would also cease to be collected, which would drive us even further into deficits.

  • Report this Comment On February 21, 2011, at 4:09 PM, TMFHousel wrote:

    "Regarding the funds being "general" funds, that is actually not the case as I understand it"

    Unfortunately, it is the case. SS's shortfall resulting from the recent payroll tax cut is being covered by the general fund. Per the Treasury: "The Social Security trust fund will be made whole by transfers from the General Fund."

    When SS runs a surplus, the general fun borrows from it. When it runs a deficit, the general fund covers it. The distinction of it being separate is nearly irrelevant.

    To your final point, terminating the programs altogether has only been proposed by the fringe. What needs to happen long term for both SS and Medicare is a decrease in benefits coupled with either flat or increased revenue.

    Thanks again,

    Morgan

  • Report this Comment On February 21, 2011, at 4:41 PM, andyb613 wrote:

    Can anybody out there tell me WHY there is an income cap on the taxes paid ?

    I have paid taxes on 100% of my income for 40+ years. How is it that someone who makes 100 times what I make pay less ?

    Andy

  • Report this Comment On February 21, 2011, at 4:51 PM, ynotc wrote:

    Morgan, regarding your comment to a posting;

    "True -- but it isn't. Not to belittle the situation, but a country can run a deficit forever as long as the deficit as a percentage of GDP is less than nominal GDP growth."

    sounds like a Ponzi scheme. As we all know gowth like this can't and won't go on forever. As in a Ponzi scheme when the contributions from the last people in decline or dissapear the ability to pay those who were first in diminishes and then the whole thing is exposed with all of the requisite recriminations.

    the only difference between this and any other Ponzi scheme is that the government can compel contributions

    This is a failing business. We can recognize this fact and attempt to address it or put off the inevitable which only makes it worse.

    If Paulson was playing this market he would go short.

  • Report this Comment On February 21, 2011, at 6:44 PM, mythshakr wrote:

    1. "a recent Cornell University poll found that 44% of those on Social Security and 40% of those on Medicare don't even realize they're using government programs"

    Yes, well, it has become very publicly apparent that about 40% of the American public are not very bright.

    2. The phrase from the Preamble of the US Constitution reads "...insure domestic Tranquility, provide for the common defence, promote the general Welfare..." So defense spending is no more "mandatory" than the others. Unless of course you are among the above 40% who would think that "insure" and "promote" must be free.

    3. Slavery was "legal" until the civil war. Just because it was legal from 1778 until 1865 means it was OK? Just because something was the way it was is totally irrelevant today.

    4. There was really no such thing as retirement a hundred years ago. The few people who lived long enough stayed with family or in old folks homes. I for one do want to go back there. SS allowed mobility of the workforce away from that model. And neither do businesses who want a mobile workforce.

    5. I've been paying into SS for 35 years now, 10 at or above the max and have not put in any where near $100K. I have to add in the employer half to bring it over $100K. And I support removing the cap. The main reason the retirement age was increased was because the percentage of people drawing more from SS than they contributed was a significant factor in the depletion. I cannot find the cite for the specific age but I think it was between 74 and 78 at which age you are receiving benefits beyond your contributions.

    6. Although the terms did not exist at the time, this country was founded as much by socialists as anyone else. The Pilgrims and the people at the Lexington and Concord commons who stood up to the red coats all lived what today would be considered socialism, if not communism, far beyond anything today in this country.

    7. What is the difference between taxes and premiums these days for insurance these days? Can't drive a car without it, can't buy a house with a mortgage without it, companies cannot operate without it and now you have to have it for health coverage. So why are these not called taxes?

    8. We actually receive a lot from all those "discretionary" expenses. National parks, FAA, tornado warning systems, roads...

  • Report this Comment On February 21, 2011, at 7:10 PM, zephod0 wrote:

    Excuse me for not reading all the above comments. Perhaps I am redundant but I keep seeing these budget numbers without seeing the following information factored in.

    First, on my W2 there are three tax amounts reported, Federal income tax, Social Security tax and Medicare tax.

    When you talk about the budget and how its broken down, you seem to forget that we pay separate amounts of tax for these two programs and then the general fund.

    So if you report an issue with Social Security, perhaps you should first subtract out the amount that is funded by specific tax receipts for that program and talk only about the unfunded part if any. In previous years you would have had to speak of how much excess Social Security tax money was diverted to support the general tax!

    Medicare may never have paid for itself. But it is still worth looking at these as three separate tax bases and programs.

    Seems that we are over eager to go after the cash cow (Social Security) only after it may reach a point where some of the IOU's need to be paid back to it!

  • Report this Comment On February 21, 2011, at 7:13 PM, TMFHousel wrote:

    zephod0,

    Some of the comments above address your comment. I'll repost one of mine here:

    Regarding entitlements being self-funding and not contributing to the deficit: This is only true on a theoretical level, and only relevant to accountants. The reason: As many have pointed out, these programs may have their own taxes, but they aren't quarantined from the rest of the budget. Congress can, and does, either borrow against entitlement surpluses or fund entitlement deficits. For example, the two-year payroll tax cut passed a few months ago won't impact SS's long-term solvency because the shortfall is being funded by the General Fund.

    We could just as easily declare that all income taxes are for defense, and then say defense is self-funding and doesn't contribute to the deficit. But this would be stupid. A more reasonable way is to look at the entire budget holistically, considering all revenues and all expenditures as being part of the same pot.

  • Report this Comment On February 22, 2011, at 12:40 AM, subsurfacemapper wrote:

    I disagree with the "Mandatory Spending" category. Much of it is discretionary.

    Crusher

  • Report this Comment On February 22, 2011, at 2:38 AM, jfidsoa wrote:

    David in Qatar says:

    "First you didn't know that America instituted the Income Tax in 1913. Now you have no comprehension of the purpose of the General Welfare clause."

    David obviously has no comprehension of the General Welfare clause. Indeed, even our right-wing Supreme Court has not questioned constitutionality of the income tax. Just because the income tax was not instituted until 1913 does in no way make it unconstitutional, any more than the fact that that the CIA was not established until 1947 make the CIA unconstitutional. David must have fallen asleep during civics class.

  • Report this Comment On February 22, 2011, at 6:45 AM, Chromantix wrote:

    Morgan,

    Thank you for the article. Simple question from a simple mind, please forgive my ignorance:

    I thought Social Security was excluded from the federal budget. If SS does not require funding by the Congress, why is it listed above?

    Sorry, two questions: why can't Fool get rid of this spam?

    Thx

  • Report this Comment On February 22, 2011, at 8:33 AM, carjjc wrote:

    Our Social Security has been paid for by our payroll taxes. It has not used one dime from the general fund.

    We need to raise taxes on the wealthy. And we need to cut defense spending and some of the other progtams.

    Cuts that effect the middle class will result in more job losses. Increased taxes on the wealthy will not do anything except make the people who use most of the government services pay for them.

  • Report this Comment On February 22, 2011, at 8:55 AM, lctycoon wrote:

    Anyone saying to remove the cap on earnings for FICA tax - that would push the top tax bracket up to the point where Sweden looks like a tax haven. What would be the incentive for the wealthy (who create jobs) to stay in this country?

    Raising taxes on the wealthy would have the same effect. One of the biggest problems facing the USA is native capital flight. We need to reverse that and higher taxes on the wealthy won't do it. The fact is, the USA has the most progressive tax system in the world by a substantial margin.

    I also have a hard time believing that politicians won't find some other vote buying scheme to spend money on if we raise taxes.

    The income tax absolutely is constitutional. It wasn't, until the 13th amendment. Now it is. So that's a rather foolish argument, imo.

  • Report this Comment On February 22, 2011, at 10:11 AM, TMFHousel wrote:

    "Our Social Security has been paid for by our payroll taxes. It has not used one dime from the general fund."

    False. Hundreds of billions will come out of the general fund over the next two years to fund the payroll tax cut. And when SS ran a surplus, it funded the general fund.

    "I thought Social Security was excluded from the federal budget. If SS does not require funding by the Congress, why is it listed above?"

    It's part of the budget. It's a "mandatory" spending obligation, meaning Congress can't alter funding without altering the law. It has its own set of taxes attached to it, but as I've argued in several comments above, this is merely an accounting gesture.

  • Report this Comment On February 22, 2011, at 1:01 PM, ryandebb123 wrote:

    No one complained about a "spending" problem when there was enough tax revenue to pay the bills. In a family or a business, when you don't have enough to pay the bills, you either lower spending or increase income, or both. Before we have Watts-style riots in Detroit, it is time to start talking about the "elephant in the room". We need to put revenue back to responsible, sustainable levels.

  • Report this Comment On February 22, 2011, at 1:43 PM, Shaw211 wrote:

    Morgan,

    Why didn't you ever plainly state and correct the numerous posters that were posting, implying or supporting the myth that while Bush had funded the wars off-balance, Obama has put them back on books? They haven't changed the off budget war funding. The costs are still funded by supplementary spending bills. For fiscal year 2010, they were labeled "overseas contingency operations" and just like under Bush, they were not in the main Federal budget. (I saw your answers of "yes" and "The numbers here are both on-budget and off-budget.")

    I am dismayed by posters whose comments indicate they think complaining about a $1.5 trillion dollar deficit is just politics and the situation isn't really any different than Reagan's deficits in the '80's. Trillion dollar annual deficits are a sea change event. The U.S. economy will be permanently damaged if it sustains for the next decade a deficit to GDP ratio of 10% but this is about what it will average for the 2009-2011 period. As for "a country can run a deficit forever as long as the deficit as a percentage of GDP is less than nominal GDP growth," that deficit to GDP ratio of 10% should be 3 times GDP growth.

    Despite my comments, I appreciated your article. It's the best thing I've seen on Motley Fool in years.

  • Report this Comment On February 22, 2011, at 3:24 PM, TMFAseem wrote:

    test

  • Report this Comment On February 22, 2011, at 4:07 PM, boogaloog wrote:

    WOW!!!! A lot of theories out there about what will save or destroy our economy. Spend less, tax more, tax less. So I went out and read every textbook on economic theory. But in every equation, I couldn't find the following variables: greed, generosity, hate, love, brilliance, stupidity. It seems to me those (and all other human traits) are what make any economic policy succeed or fail.

    P.S. I didn't actually read any textbooks

  • Report this Comment On February 22, 2011, at 4:27 PM, FoolSolo wrote:

    Morgan,

    I beg to differ on your points about funding Social Security. I don't have the most current numbers, but based merely on intake vs. output, the SS trust fund was owed over $2.4 Trillion just a couple of years ago, and likely more than that now. The notion that the general fund will now cover the SS Trust fund shortfall is, to use one of your own terms, merely an "accounting gesture", and simply just BS!

    Recent tax cuts may have created a temporary reversal where benefit pay-outs exceed SS revenue, but that is peanuts compared to the $2.4 Trillion owed to the fund.

    Call it accounting practice, or whatever you like, but revenue collected over the life of the SS program still exceeds the benefits that have been paid. As such, you can't possible count SS as being a drag on current deficits unless you project past the point when revenues fall below the benefits paid, and the $2.4 Trillion is paid back to the SS trust fund. However, that will never happen because congress will simply raise taxes or adjust the benefits so revenues will always exceed benefits, and they can have a slush fund for Capitol Hill parties.

  • Report this Comment On February 22, 2011, at 4:31 PM, TMFHousel wrote:

    FoolSolo,

    "based merely on intake vs. output, the SS trust fund was owed over $2.4 Trillion just a couple of years ago."

    That's absolutely true. And why does the govt owe SS $2.4t? Because they borrow from it. Back to my point: SS isn't quarantined from the rest of the budget. When there's a surplus, congress borrows from it.

    " The notion that the general fund will now cover the SS Trust fund shortfall is, to use one of your own terms, merely an "accounting gesture", and simply just BS!"

    You don't have to believe it if you don't want to, but it's a fact. It's not really a point of debate: The general fund will be writing a check for ~$200 billion to SS to cover the shortfall caused by the payroll tax cut. It's a fact, not an opinion.

  • Report this Comment On February 22, 2011, at 4:39 PM, TMFHousel wrote:

    "you can't possible count SS as being a drag on current deficits unless you project past the point when revenues fall below the benefits paid"

    Coincidentally, this is happening now. SS *is* running a deficit:

    http://www.npr.org/2011/01/26/133253327/cbo-social-security-...

  • Report this Comment On February 22, 2011, at 6:12 PM, michnow wrote:

    How about the added cost of all the regulations this admin just loves to pile on business and individuals. Just another way nobama makes the USA non competitive in the world of trade.

  • Report this Comment On February 22, 2011, at 8:11 PM, whereaminow wrote:

    jfidsoa,

    Those are two separate statements unrelated to each other.

    But you still don't get the General Welfare clause. It doesn't provide for a CIA or Social Security or any other scheme you can imagine.

    I stress that the Federalist Papers are online. Anyone can look them up and search for conversations relating to the General Welfare clause.

    I know how the Supreme Court (whatever winger court you like to point out) has interpreted it. I'm not disputing that.

    The conversation was about the origins of America and how a country is built. Not how one is destroyed.

    If you're curious as to how America was built, please check out the Federalist Papers. (And the Anti-Federalist Papers as well.)

    David in Qatar

  • Report this Comment On February 23, 2011, at 5:25 AM, skater9 wrote:

    Wack the Defense budget 2/3rds and fix the johns in the Newark airport, so I don't feel like I'm coming home to the third world.

    Fix the pot holes and let the military plant daises and teach school.

  • Report this Comment On February 23, 2011, at 6:20 AM, Mipsang wrote:

    End Weapons WELFARE!! Our defense budget is out of control Congress ordered planes the secretary of defense said we didn't need. We are buying weapon systems we don't need after paying for the research to create them just because we want to prop up the Defense Industrial Base. Our defense budget is a true Welfare system with no Economic stimulus affect or morale underpinning. HOW DARE WE CONTINUE THIS AND CLAIM WE CAN'T AFFORD EDUCATION OR HEALTH FOR OUR CITIZENS.

  • Report this Comment On February 23, 2011, at 3:24 PM, JPDemers wrote:

    According to the IRS, the top 400 individual tax returns filed in 2009 reported an average gross income of $358 million. That's the average, for each individual. The average amount of tax paid on this income: 17%.

    Doubling this to a more rational 34% would bring in $250 billion over ten years. That's a quarter of a trillion dollars, from rationally taxing only 400 "taxpayers" (I use the term loosely). I'm sure we could get a few dollars from the 400 next-richest people as well.

    It's time for the Republicans to start dealing with reality, and abandon their preposterous fantasy that America's billionaires desperately need every additional billion they manage to rake in. The only jobs created with these bloated piles of private wealth are for butlers, gardeners, chauffeurs, and tax accountants. (Oh, and lobbyists, and GOP campaign workers.)

  • Report this Comment On February 23, 2011, at 8:01 PM, Shaw211 wrote:

    Apparently, Morgan thought my question was a rhetorical one.

    JPDemers,

    The majority of those "top 400 individual tax returns filed in 2009" voted for Obama in 2008 and are not Republicans. Senator John Kerry's wife, Teresa Heinz, reported an income of $51.9 million in 2003 and paid 12.9% taxes on it. Except for dropping the Bush tax cuts which would raise the long-term capital gains tax rate from 15% to 20%, there hasn't even been a discussion among legislators about raising taxes on any of the superwealthy's forms of income. The general public is so ignorant that it thinks raising taxes on those earning over $250,000 affects the truly wealthy but it doesn't affect even 1% of the money you referenced. And if it did, they'd just do like Bill Gates, and set up an endowment, aka charity, and pay a 0% tax rate.

  • Report this Comment On February 23, 2011, at 10:01 PM, JBKirkpatrick wrote:

    I'm thinking "mtracy9" decided David had a point.

    Good job, David. I was following your thoughts easily and was struggling to follow Mr mtracy9's arguments.

    J

  • Report this Comment On February 24, 2011, at 5:31 AM, encyclopedia64 wrote:

    I understand that good legitimate arguments have 2 sides to the story but why does 1 side of the tale have to come across as "know-it-all" and ignorant at the same time? If this was in front of a courtroom, there would be 1 side already kicked out...do I really have to point out who...isn't it apparent?

    But anyways, kudos are in order for the article.

    I think when explaining the taxing of the wealthy, think of Ictycoon's statement and 1 other thought...the wealthiest individuals CAN and WILL leave the country for "friendlier waters" in other countries (taking any jobs they create with them) ... but I have never heard the low or middle class ever talking about the same thing...OR AM I WRONG?

    P.S. its because they cannot afford to do it

    *God, let us pray for the U.S.A., we need some help*

  • Report this Comment On February 24, 2011, at 5:55 AM, encyclopedia64 wrote:

    And furthermore, all this talk back and forth about spending more or less in every department of the government...some already realize that the country is in bad shape and getting worse...the cure is like others put it "run the U.S. like a business"...if we throw money into ANY program, make sure you get what you are paying for...without that idea we will CONTINUE down the path of destruction {ex: schools not using their funding properly and children losing a proper education, not being taught RIGHT from wrong (NOT liberal views from wrong-like how most educational institutions like to think) and how to think for themselves}

    I regret one thing in this day and age that we haven't kept up a truly moral and PATRIOTIC mindset through all these years (we should look to the past and support those NOW who follow values the founding fathers set out for us)

    Calling those people "Teabaggers" is plain ignorant and if you continue to explain this about those individuals you will soon realize that in this "Politically Correct" that you created, you are breaking your own rules in order to prove a point... A VERY BAD one might I add

    *God pray for the U.S.A. we need some help*

  • Report this Comment On February 25, 2011, at 12:34 AM, WillyMiller wrote:

    Sorry to point out that the figures in the graft do not come close to the OMB figures the President's Budget Proposal for 2012. The item that caught my eye was the Veterans Affairs budget claimed to be proposed as $125 billion. The Budget document lists the poposed ticket as $61.85 billion. Now doubling that ticket item for effect does not give to credibility for the author even if he claims the figures are from the OMB..

  • Report this Comment On February 25, 2011, at 1:24 AM, imsnilloc wrote:

    Clear report. Put the numbers in perspective.

    One point I would like to add: the Baby Boom generation may be putting a burden on the SS system, but the generation coming up probably won't make it till retirement age. The medical issues that seem to be afflicting the younger generation due to obesity is astounding. I read a mortality and morbidity report that said if this current young generation doesn't change the way it eats and lives, it will be the first time the life span drops, to 57. Conspiracy theorists discuss.

  • Report this Comment On February 25, 2011, at 8:12 AM, TMFHousel wrote:

    WillyMiller,

    Thanks for comments.

    Nothing is "doubled for effect." For Veteran's affairs, the $61.85 billion figure you note is only for medical benefits. There's another $63 billion for disability comp and education benefits. The numbers presented here are accurate, and come straight from the OMB.

    Thanks,

    Morgan

  • Report this Comment On February 25, 2011, at 12:27 PM, jrj90620 wrote:

    Never better said.Thanks!!

  • Report this Comment On February 25, 2011, at 1:30 PM, jbmaine wrote:

    The Unified Federal Budget was enacted under Lyndon Johnson to conceal the cost of the Vietnam War from the American people.

    As an individual taxpayer I pay two taxes: income tax and a Social Security tax.

    I suggest you would have a more honest accounting if you split the two budgets. Your 'mandatory' item confuses all this.

    The result is that as a taxpayer it is impossible to see what is being done with my two taxes. Its a well-known shell game many Presidents have played on us.

  • Report this Comment On February 25, 2011, at 3:16 PM, jsmunson wrote:

    On the polls which say does the government spend to much and would you like your benefits cut, the answers yes and no are very predicable. The question which should be asked is would you support a solution to our current situation which involved raising the retirement age in 30 plus years, support indexing the current wages subject to SS tax to inflation and support limiting future increases in SS payments to inflations vs. wage increases?

    I have an interest in all three groups, I received my first social check this month (paid in the max for 37 years), I have a son who pays the max (doing quite well) and three grandchildren one who is now in the first grade. I favor a solution that reasonably meets the needs of all three groups.

    Joe

  • Report this Comment On February 25, 2011, at 5:31 PM, BifBoswell wrote:

    This subject seems to have sparked a nice debate.

    All info from the GPO's website: http://www.gpo.gov/fdsys/browse/collectionGPO.action?collect...

    I noticed a few problems with the numbers however:

    (1) 2007, 2010 and 2012 were poor choices; the writer stated that 2007 was the last pre-recession budget; this is incorrect; the current recession started in December, 2007; the 2008 budget was submitted by President Bush in February, 2007 (the US fiscal year is October 1 to September 30).

    A better choice of (fiscal) years would have been 2008, 2009 (the last Bush budget) and 2010 the first Obama budget); total spending in these years was $2.982 trillion, 3.517 trillion and 3.456 trillion.

    As an aside, the Bush haters and Obama haters might notice that the big jump in spending took place from 2008 to 2009 (last Bush Budget); the first Obama budget, in 2010, was down slightly, 1.8%, from 2009).

    (1) Supplemental spending (primarily defense) is not the same as off-budget spending; off-budget spending is from the trust funds (primarily SS and Medicare); on budget spending is everything else, discretionary and a few mandatory programs. Defense spending is located in the DOD, Veterans Affair, International Affairs (partial) and the Department of Homeland Security (partial); defense spending in 2007 was probably closer to $675 billion.

    (2) The line item: Unemployment insurance/Food Stamps is mislabeled; it should be labeled Income Security (unemployment/food stamps totaled $90 billion in 2007).

    (3) Total on and off-budget spending was used everywhere except for Net Interest; total interest in 2007 was $451 billion (trust fund interest totaled $191 billion).

    As a final aside, On February 22, 2011, at 4:31 PM, TMFHousel wrote: "You don't have to believe it if you don't want to, but it's a fact. It's not really a point of debate: The general fund will be writing a check for ~$200 billion to SS to cover the shortfall caused by the payroll tax cut. It's a fact, not an opinion".

    Hate to break it to you pal, but it doesn't work that way. The military, federal employee, Medicare and SS trust funds, by design, invest only in US treasury instruments. They receive interest payments just like a holder of any US bill, bond or note. This was probably a bad design but in order for your statement to be true money would have to be infungible; its not of course, the money the SS trust fund receives is no different than money other note holders receive, SS recipients receive or the SS tax fund receipts. Its all fungible unless you have some how repealed common sense.

  • Report this Comment On February 26, 2011, at 12:02 PM, gerrymad wrote:

    This is a bit mis-leading. So defense spending is the bad guy here? Everything else increased from 274 to 437 billion a difference of 163 billion (59%) and defense went from 551 to 739 a difference of 187 (34%). Defense is an easy one to point fingers at, but perhaps we should look at why the everything else category is going up at an even faster rate than defense. Time to put everything on the table for review - mandatory, defense and everything else. In my world $163 billion is hardly peanuts.

  • Report this Comment On February 26, 2011, at 9:38 PM, Gildell wrote:

    One criticism: the inclusion of Social Security in this discussion of the is a bit mis-leading. Social Security is paid out of a separate trust fund, and in terms of assets and income, remains solvent at least until the mid 2020s. Social Security does not contribute to the deficit. Including it in this discussion of the Federal Budget contributes to the false notion that it does. In addition, simply extending the ceiling on wages taxed would eliminate the problem that does emerge in the future. An increase that would effect only the highest few % of wage earners, and would not materially effect their economic behavior as spenders or investors (I'm one of them.)

    And responding to gerrymad, if you look carefully at the numbers, nearly $52B is in increases in Veterans spending, driven by 2 unfunded wars (all paid for with borrowed money and therefore probably explaining some of the increases in interest costs as well - also part of "everything else") Moving Veterans expenses to Defense, Defense increases 44% and "everything else" increases by 40% so there is nothing suspicious going on there. Interestingly, if you leave out the increase in unemployment spending, Mandatory spending rose only 26%

    But I'm not saying these are not big numbers or a concern. But, the real problem we face is both an expense issue and a revenue issue, and if we don't look at both parts of the equation we can't get an honest answer. The biggest portion of the current deficit results from the bank bailout (arguable as to its appropriateness) and the Bush tax cuts which were recently extended, and which squandered the budget surplus that Bush inherited.

  • Report this Comment On February 27, 2011, at 7:07 PM, Harley117 wrote:

    The one thing your article does not talk about is the the waste. The federal government is one of the most inefficient institutions that exist. It grows like a cancer without cost benefit analysis and without purging those employees, functions or regulations that don't add value. The Obama administrations has added thousands of new employees and thousand of new regulations. It does not matter how you classifly the spending.

  • Report this Comment On February 27, 2011, at 7:10 PM, Harley117 wrote:

    By the way Bush tax cuts have nothing to do with the 40% increase in spending since 2007.

  • Report this Comment On February 27, 2011, at 11:17 PM, Glycomix wrote:

    According to the IRS, the Total taxable income of everyone in the US is $5.6T and the total income of the US from taxes is $1.0T. http://www.irs.gov/pub/irs-soi/08fallbulintax.pdf

    Mr. Obama’s proposed budget is $3.7T while the US income is only $1T. Simple arithmetic suggests a $2.7T deficit this year and next. Using the IRS’s numbers above, this is equivalent to adding debt every year equal to 50% of the taxable income of everyone in the US!

    If we pay this shortfall now to avoid interest, we’d face a 300% increase in taxes. Could you afford to have your taxes increased by 300% by next year? If not, contact your representative or senator to balance the budget.

    May I suggest one tax increase to balance the Medicare budget and programs cuts that congress didn’t pay for or which severely damage the economy and people’s lives..

    1) REPEAL $10.3T NEW WELFARE PROGRAMS PASSED IN 2009 unpaid with taxes. The CBO said that these programs would add $9.1T in deficits in by 2018. (Multiples thereafter)

    http://www.washingtonpost.com/wp-dyn/content/article/2009/08... http://www.heritage.org/Research/Reports/2009/09/Obama-to-Sp...

    2) PAY 100% OF THE MEDICARE BENEFIT IN TAXES. TRIPLE MEDICARE PAYROLL TAX from 2.9% to 8.7%. This fully pays for the Medicare benefit, eliminating $2trillion/ yr in Medicare Debt and will pay back $40T Medicare debt acquired since 2002.

    In 2003, congress doubled the Medicare benefit without increasing the tax from 2.9% to 5.8%(a). Consequently, 50% of the Medicare benefit goes directly to debt. This 50% shortfall causes $2T in Medicare debt to be added every year. ($8.5T in additional debt from Feb 2005- May 2009 . (c) $37.7T- $29.2T(b)/2.25 yrs= $8.5T/2.25yrs= $2T/yr )

    (a) http://abcnews.go.com/ThisWeek/Politics/transcript-alan-gree...

    (b)2009_Medicare_debt: http://online.wsj.com/article/SB124268737705832167.html ] (c) 2005 Medicare debt http://www.ncpa.org/speech/medicare-now-and-in-the-future

    3) REPEAL "AFFORDABLE HOUSING" WELFARE MORTGAGES. By law, Fannie and Freddie guarantee loans to people who can't afford to pay them back. http://www.law.cornell.edu/uscode/html/uscode12/usc_sec_12_0...

    “Affordable Housing mortgages” have lost US jobs by damaging the economy. and they cost the taxpayer or the banking system $11.2T since 2005. In 2005, Greenspan asked congress to decrease Fannie& Freddie “Affordable Housing” welfare-mortgage share of the mortgage market to 5%: Banks in the US are capitalized at only 5% of loans while subprime loans fail at 50% rate. Instead to increase patronage, the Democrats forced the GSE administrator to Fannie & Freddie “Affordable Housing” welfare-mortgages percentage of the welfare market as a whole[c]. Federal Housing Finance Agency Administrator, James Lockhart, admitted that affordable Housing Goals caused Fannie and Freddie’s executives to guarantee unsafe loans: “HUD goals were too aggressive”.

    Te pressure to make more welfare more and more subprime mortgages caused pressure to approve which caused more defaults. Housing Wire reported: “Standard and Poors now expects the default rate on subprime loans issued in 2005, 2006 and 2007 to be 11 percent, 30 percent and 49 percent respectively” [e]

    (c) http://schumer.senate.gov/new_website/record_print.cfm?id=28...

    (d) (http://www.c-spanvideo.org/program/281353-101) [17:13 (58 seconds

    (e) http://www.thetruthaboutmortgage.com/subprime-default-rate-a...

    Source of the $11.15T “Affordable Housing” welfare-mortgage deficit in 5 years:

    - $2.8T in subprime mortgages bankdefaults (f);

    - $1.8T GSE bankruptcy declared by William Poole in 2007.(g)

    - $5.3T Fannie (2007-08) Freddie-Debt at Bankruptcy [called ‘conservatorship’](h;

    - $1.25T new public Fannie/Freddie welfare mortages securities bought by Fed. (i):

    Sources:

    [f] http://www.reuters.com/article/idCNL554155620091105?rpc=44 [g]http://research.stlouisfed.org/publications/review/07/05/Poo...

    [h] (http://www.c-spanvideo.org/program/281353-1 ;

    [i] http://www.parkerlending.com/Federal+Reserve+to+end+mortgage...

    Dividing the Welfare Mortgage Pie: Fannie &Freddie required to dole out welfare mortgages(h) that gives 50% to group (A) Poor (~$15-$21K), 35% to group (B) (<$23K) who live in Minority Ghettos ; and 15% to group (C) Very Poor who pay no taxes; IRS says that lowest 30% below median pays no taxes: [If they don’t have enough to pay taxes, how will they repay mortgages?]. (i)

    SOURCES: [h] http://www.law.cornell.edu/uscode/html/uscode12/usc_sec_12_0... ) [i] http://www.huduser.org/portal/datasets/GSE/gse2007.pdf ) In Table 2 note 1.

    Instead of Welfare Mortgages with high default rates that destroy banks and the economy, congress could support commercial micro-loans to poor entrepreneurs based upon Muhammed Yunnis model. HIs Grameen bank has a 98% repayment rate. http://www.gdrc.org/icm/grameen-yunusbio.html

    Grameen Bank’s commercial micros-loan applications are taken from cooperatives of five small businesses. The business cooperative votes on which ONE business gets the loan. When the first business repays 100% of the loan, that amount goes to the second business, and so on until each business receives a loan. The cooperative’s commitment to each other brings about the very high repayment rate without requiring collateral.

  • Report this Comment On March 04, 2011, at 7:06 PM, mtracy9 wrote:

    "There's class warfare, all right, but it's my class, the rich class, that's making war,

    and we're winning." --Warren Buffett, CNN Interview, May 25 2005,

    in arguing the need to raise taxes on the rich

  • Report this Comment On March 04, 2011, at 7:06 PM, mtracy9 wrote:

    The American economy never did so well as it did after

    President Clinton raised the top marginal income tax rate

    for those making more that $250,000/yr. from 33% to 39%. It

    even produced record budget surpluses.

  • Report this Comment On March 04, 2011, at 7:08 PM, mtracy9 wrote:

    Scaring Americans about the solvency of Social Security is what

    the right-wing disinformation specialists are all about. That way the right-wing

    fearmongers can step in and offer their "solutions." Their "solutions"

    include handing the system over to the Wall Street money managers who would then

    turn around and bilk the American people by charging fees and commissions.

  • Report this Comment On March 05, 2011, at 11:37 PM, ershler wrote:

    David in Qatar,

    I've read the Federalist Papers before because a coworker kept going on and on about how important it was. He didn't think it was funny when I told him I thought it was like a machine design textbook from the same era; a very interesting piece of history and about as useful. He couldn't explain why I should use a 200+ year old document as the end-all for my political decisions. Why you are explaining that maybe you can also explain how social programs and military action are mutually inclusive since you didn't answer it the first time but you have replied multiple times to other items.

  • Report this Comment On March 07, 2011, at 12:18 AM, AllInItTogether wrote:

    Harley117 wrote:

    "The Obama administrations has added thousands of new employees and thousand of new regulations."

    Those new employees were census takers for the 2010 census. They're no longer employed by the government, for obvious reasons. The size of government has not otherwise increased.

    As for regulations (and the regulators who enforce them), I don't know about you, but I sure wish there'd been a few more of both around to prevent the debacles at Bear Sterns, Lehman, Countrywide, AIG, etc. Anyone on this site should appreciate that. Unregulated markets succumb to greed. It's just human nature.

    Thanks to all for an interesting discussion, based for the most part on facts and not the usual media propaganda.

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