.

When 'Sharing' Becomes Confiscation

Even 100 percent of all taxpayer income would not cover the current spending, the debt reduction and unfunded liabilities.

The convention speeches are full of empathetic phrases underscoring our need to “take care of those who need it” and to “share” what we have.

The government's spending spree “taking care” of us has created a tax burden that is impossible to pay. There aren't enough taxpayers left in the whole country to pay for all the things we need as a nation, plus support half the nation's families. President Obama would have to take 100 percent of all income in taxes from everyone earning more than $60,000 to maintain the government's spending. (American Thinker)

All taxpayers in America earn a combined $5.6 trillion of taxable income. $4 trillion in spending represents over 71 percent of the total taxable income of U.S. taxpayers. That $4 trillion doesn't include paying down the $16 trillion in debt or covering the $25 to $70 trillion in unfunded liabilities. Even 100 percent of all taxpayer income would not cover the current spending, the debt reduction and unfunded liabilities.

The Buffett rule would pay for 11 hours of government spending in 2013.

If I give my time and money to homeless teens, that is “sharing.” If the government demands that I give more money to it so that it can create more dependency, that is confiscation, not “sharing.”

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Finrod September 11, 2012 at 08:42 PM
Like most liberals trying to avoid the point, you're counting the 2009 budget as W's, when it was passed by Congressional Democrats and signed by Obama, 5 months late and over a month after W left office. The national debt has increased by more than a trillion dollars every year Obama has been in office. By comparison, it took from George Washington to Ronald Reagan for the national debt to hit 1 trillion in the first place. Also, look at a graph of national debt as a percentage of GDP sometime. It's back up to 100+ percent, a level it hasn't been at since World War II.
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Byron Rangitsch September 12, 2012 at 04:14 PM
Fin, I'm a fiscal conservative. That's my problem with current Republican party. Deficit spending under Reagan was a good policy at the time, but it ceased to be good policy once the economy had recovered and it was a devastating policy when W came to office. Secondly. US Fiscal budgets run from October-October, so O's budget went into effect October 2010. Stimulus spending early on controlled the great recession. We were losing 780k jobs/month, early spending stabilized the economy by most analyses. It was a necessary evil. The national debt in absolute dollars is less meaningful than Debt/GDP. The US can carry more debt when it makes more money. The huge spike in the national debt is due to the Republican's lack of fiscal conservatism and responsibility. They drove up the debt, reduced revenues, and increased spending. Those things fail the math test. When Obama came in office, we were in a great recession and had our backs to the wall. The debt was high, but borrowing bridged the gap and stabilize the economy. I believe the Republicans borrowed for political expedience and Obama borrowed to stop the recession. That makes a big difference to a fiscal conservative, like me. I absolutely agree that we should use the Debt/GDP ratio at the end of WW2 as guidance. We should revisit the policies and role of government that reduced the debt AND grew the US into an economic superpower between WW2 and 1982. Historical perspective and context are very important.
Roy Campbell September 12, 2012 at 05:29 PM
B. Rangitsch, you are spot on! The record over the last 30 years tells it all. "The Republicans borrowed for expediency, and Obama borrowed to stop the recession..." I like the reference to "free Somolia" too.
Michael J. Collins September 12, 2012 at 05:31 PM
He was making a point about what it WOULD TAKE to maintain current spending, not suggesting that Obama is going to levy a 100% tax. Though I wouldn't be surprised to see a 75% suggestion(i.e. demand) from this administration, since socialist leadership in France thought it was a good idea.
Ernest Campbell September 12, 2012 at 06:05 PM
Byron, responding to your several thoughts, Reagan/HW did not quadruple the debt. That was done in a concerted way by Congress. Reagan asked that Income Tax Rates be reduced and that Military spending be increased. Look up the great interview with Dan Rostenkowski (after prison) where he proudly explains how the Democrats created the Reagan Deficits. There were multiple recessions in 70-80. The 81-82 Recession is considered to be caused by the Fed's severe monetary policy to squeeze out the 12+% inflation rate. Inflation-adjusted, the entire 70s was a recession. I certainly agree that in the last 20+ years, Congress (all parties) has been fiscally irresponsible. Lastly, the US, coming out of WWII, had the only viable economy in the World!!! Over the next 20 years, if it was made in the world, we made it. We paid off our debts because we had no competition. We were able to payoff our debts and expand our lifestyles because we were rolling in money. In the 60s, we lost the monopoly in Steel. In the 70s, we lost the monopoly in Autos. And so on So, I'm afraid that the policies that allowed us to pay off our debt then, probably won't be successful now. Its already evident that the solution will include a significant reduction in government services and lifestyle. Yep, 1945-1970 was the good old days. I wish everybody had been around to enjoy it.
Frank Jones September 13, 2012 at 04:17 AM
Alexander...Nobody on the left or right wants to support lazy bums! And as you stated, no one has an issue with supporting the "truly handicapped and unable to work". That said, many on the "right" keep calling the 50% who pay zero in income taxes "lazy bums", "leaches" and other derogatory terms. Keep in mind, that many of them are retirees and have already paid their fair share. Keep in mind, that many of them are single parents and working poor who quite simply don't make enough to live. Keep in mind, that many people receive EBT eventhough they work (they simply make too little). Keep in mind, that EBT/Food Stamps/WIC is primarily for families with disabled members and for the chiildren. Lastly, there are many people on the "right" who call social security an "entitlement" with a derogatory tone. SS has been a promise by us (the people/the gov't) that if you work and contribute, that the people/the gov't will provide a return in the future. It's an annuity, a promise. Many on the "right" want to break that promise. Join me in rejecting those that think of SS as welfare, those that want to break that promise.
Frank Jones September 13, 2012 at 04:34 AM
Janet...You're right in that the current retirees (and their parents) are drawing more from SS and Medicare than they contributed. There are many reasons for this situation including: longer life spans, underfunding from day one, additional added benefits, and lower population growth rate. The system was originally set up as a "pay as you go" system whereby the initial beneficiaries paid virtually zero into the system yet received benefits for decade(s). In the beginning there were 150 workers for each beneficiary and thus little was needed from each worker. Over time, that ratio has decreased to 3 to 1. The idea behind SS remains noble. It recognizes that if you worked and contributed to society that you shouldn't starve or be homeless in retirement. The issue isn't that SS is bad. The issue is how to fund SS. The funding method is broken. Easy solutions include: 1. Increasing the tax rate 2. Increasing the compensation subject to SS/Medi 3. Combination of 1 and 2 4. Decreasing the rate and subjecting all income (at least more income) to SS/Medi 5. Applying a "means" test (i.e. wealthy need not apply) 6. Breaking the promise by cutting benefits and/or eliminating the programs. My opinion...1 through 5 above. Problem solved.
J. Alexander September 13, 2012 at 11:44 AM
Frank - wealthy need not apply? They pay into SS all of their lives and then can't apply at age 65? Who gets the money they contributed? Surely you jest. You're the one who wants to turn SS into an entitlement by taking what the successful have contributed and give it to others. What needs to happen is to make SS optional and not mandatory. The liberals will find any method they can to suck off the hard workers who have made a few bucks, and your comments are proof.
Frank Jones September 13, 2012 at 01:42 PM
Alexander...As I mentioned, SS was established as a pay-of-you-go system whereby it has never been fully funded. From the beginning and through today, current workers pay for the benefits of the older generation. Their isn't nor has their ever been a trust fund with sufficient assets to pay future claims. Why? Because it was never set up that way. Those of you who think that SS should be optional and not mandatory fail to realize one key fact...The fact that if people decide to opt out and not pay into the system, there isn't money there to pay the promised made to the existing beneficiaries. The system would run out of money very quickly and then a decision would have to be made: 1. Kill the program for all existing beneficiaries (i.e. promise broken), or 2. Roll the program into the general budget and implement general tax increases to raise revenue to fund existing beneficiaries, or 3. Simply borrow money and increase the debt to cover the costs of current beneficiaries. Under #1 above, we break our promise to the elderly and many won't be able to care for themselves or have to re-enter the workforce if they're able. Under #2 above, we remove a vital social safety net and continue to fund SS via general taxation. Under #3 above, we do exactly the opposite of what "right" is currently proposing -- we deficit spend, borrow money and increase the debt. Options 1-5 remain the best solution!
janet h russell September 13, 2012 at 07:42 PM
J Alexander- I don't think that SS should be need based. But here is another thought: why does the nonworking spouse (usually women) get SS based on her spouse's contributions? I just got my statement and if I had a spouse he would be entitled to a tidy sum. Let's assume , he never worked, never paid a dime and I got to write him off as a tax deduction for the length of our marriage. Why is the spouse entitled to anything if they didn't contribute? Same for Medicare? And why would children below the age of 18 be entitled to SS when their parents reach the age to collect SS. I know of a man who is 64, going to collect his SS, getting a divorce and the soon to be exwife will get child support from him for his young children (3rd marriage for him) and SS because of his age. This is crazy. Just a few thoughts on why SS has some problems. And I am sure if you check, there are just as many spouses who are conservative collecting from their husbands or wives SS as their are liberals.
Ernest Campbell September 13, 2012 at 10:55 PM
First, do you know that the maximum monthly Social Security Payment this year is $2513.00. So, whether the "Rich" get it or not is not a big impact. Second, "Social Security" contains a number of different things. Only one of which is the Old Age, Survivors and Disability Fund which seems to be under discussion here. It is fairly solvent and works well. The other segments...not so much. So when we discuss these matters, its important to be specific. I find Wikipedia and even the Social Security Website to be very explicit and specific. Now, Pay-As-You-Go is not what is inferred. PAYGO mean that this years liabilities will be paid out of this years inflow. But, the excess, and there is tremendous excess and has been since its inception, is invested in US Bonds which have always earned more than inflation. Politicians love to flail each other and incite the Public with Urban Myths regarding this system. They too often have effect because "We the People" don't take the 15-30 minutes to discover the facts.
Jimmy September 14, 2012 at 12:16 AM
With all due respect Ernest, as valuable a reference as Wikipedia often is, it isnt always right...'Pay as you' go is exactly how SS works...the 'trust fund' exists only as a pile of IOUs from the treasury...The money collected from working people this year is paid out to SS recipients this year. Since the '60's, surpluses have been transferred to the general fund and an IOU placed in the 'trust fund' along with an IOU for the interest at treasury bond rates...as you previously noted, the interest rate peaked at 12% (very briefly) in the late '70's (when all the other interest rates peaked) but historically it is aound 6%... When SS began, there were about 16 workers per retiree...as of this year that ratio has declined to about 2.5 workers per retiree. As boomers retire in greater numbers, and live longer than previous generations, that ratio will continue to drop. Eventually, the number of retirees will outnumber the workers, and the treasury will have to start making good on those IOUs. Last I heard, that day will come in the next 20 yrs. According to Social Security, in 2012 that unfunded liability is currently about $8.6 Trillion... The only solution I can see is a phased withdrawal of the program...Anybody over 55 gets the full ride they were promised. 55 and younger get percentages less until you get to maybe 35 yrs. Those folks have enough working life in front of them to make up the difference. And yes, I fall into that age category.
Ernest Campbell September 14, 2012 at 02:37 AM
Several things. Don't take my word for these things. Go to www.socialsecurity.gov or the actually law (42 U.S.C. § 401(a)) and read what its really about. The "IOUs from the Treasury" are called US Government Bonds. They are backed the same as US Dollars bills. If those bonds fail, the Dollar fails. If that happens, we're down to canned goods - really. For perspective, the National Debt is over $16 trillion (all in US Bonds). The Social Security Trust Fund is a small $2.2 trillion portion of this debt. If the US defaults on these, China and all of the other countries of the world will come to collect. So, you better gets some ammunition to go with those canned goods. The FICA deduction is a math calculation of how much money must be invested to provide an expected yield. Its a Simple Annuity. Money is paid in, its grows and subsequently is paid out. If the payout is low enough, they can continue forever. It has never been determined as a ratio of workers to payees. Finally, excess contributions have been invested in US Bonds since, day one, 1937. Its in the original law.
Ernest Campbell September 14, 2012 at 04:34 AM
To reinforce my comments above about getting facts, here are a couple of links to SSA that shine a bright light. Trust Fund Data: http://www.socialsecurity.gov/OACT/STATS/table4a1.html Investment........: http://www.socialsecurity.gov/cgi-bin/transactions.cgi These and many more facts are available right on the website.
J. Alexander September 14, 2012 at 12:36 PM
Ms. Russell, Your SS ideas sound interesting/controversial, but many women stayed at home with young children as was/is still an acceptable and honorable profession. Many did/do valuable volunteer work at their children's schools and in our churches and local charities. You need to take this up with them. Sounds like an anti-woman stance to me, but I see your point. My bigger issue is the deadbeats on EBT cards who are perfectly able to work but won't because they prefer to abuse the rest of us.
janet h russell September 14, 2012 at 04:31 PM
J. Alexander I believe that staying at home and caring for young children is an honorable profession. I have been an active feminist since college and those two sentences are not in conflict with each other. I just happen to think that if you put 2 piggy banks on the dresser and for 40 years you put money into one of them and nothing into the other when you break them open, one of them is going to be empty. And it is impossible to get money from that bank. So if women want, need , prefer to stay at home (and I am good with that- I work hard for women to have that choice among other choices in their lives), then perhaps we need to require women to deposit money into that piggy bank over the course of their lives so that they can withdraw it later. They are a tax deduction in the joint tax return so they are given some sort of dollar value. I have volunteered in our community for over 39 years. , And while it has made my life a rich one qualitatively it has not enhanced my quantitative bank account. My job and self employment has done that for me. As for deadbeats on EBT cards etc I agree with you. However, I think that you will find that the percentage of abusers on assistance is quite low and that the system serves a useful role in our society.
Ernest Campbell September 14, 2012 at 07:37 PM
Janet, if you look at the numbers, this SSA Spouse, Children payout is not as large in dollars as it seems to be in principle. Check out the link to Spousal Benefits at SSA - http://www.ssa.gov/retire2/yourspouse.htm and the subsequent link(s) regarding children etc. and the data on the different benefits paid. This is the "Insurance" portion of SS, that sees Husband and Stay-at-Home Wife as a family unit which is earning income, paying FICA and raising children. I think that that's the principle you refer to. The above SSA page shows that the non-money earning spouse can get up to 50% of the money-earning spouses benefit upon that spouses retirement, disability or death. And, children age 18 or less get benefits. However, the most that a family (husband, wife, children) can get, in total, is 150% (may go up to 180% with disabled children). And, the children fall off at ~18. I, personally, don't have a problem with that. Except, that spreading 100% of the workers benefit (instead of 150%), in principle, makes more sense. But, did you know that every spouse (10 years of marriage of more) of that wage earner is entitled to half the wage-earners benefit amount starting when the wage-earner can/does retire. So, someone gets married/divorced every 10 years and each of those spouses can get 50%. These are some of the real issues that nibble away at SS. Good point.
Byron Rangitsch September 14, 2012 at 07:38 PM
Ernest, It's obvious that many of us color commentators have put 100X more thought into this topic than the original cut-n-paste blogger. It's too bad we honor his shoddy blog with 140+ comments. I went digging into most of your comments. I can't find the Rosty video you speak of, and I mostly came across Rosty calling on debt/deficit reduction. I don't think you're lying, and I don't think the Democrats were in a conspiracy. So, what's the truth? Each side is good at spin and marketing. The origins of trickle down, the "win-win" of tax cuts, and "starve the beast" make me think these runaway deficits were acceptable damage on the part of the last 3 Repubs in exchange for the tax cut "win". It's possible that "starve the beast" was a short-term tactic where cutting taxes first forces spending cuts to control debt rather than a sinister long-term strategy that landed us in debt trouble. Regardless, it is clear that cutting taxes first will not force spending cuts no matter who is in Congress. Perhaps if Romney reversed the order of his approach, he would be more believable. For now, I see the same old, same old coming down the pipe. My point about WW2 was that there was a lot of government involvement and taxes which makes me think that the tax rhetoric today greatly overstates the negative effects. The tech monopolies don't convince me that government doesn't have a very useful role to play because we've replaced steel with IT, high-tech, and finance, to name a few.
Ernest Campbell September 14, 2012 at 08:38 PM
Byron, glad to see people digging in, questioning, doing research and not just echoing the unending Urban Myth emails that arrive in our mail boxes everyday. First, this is not a blog. This all started with a simple, limited article by Mike Lowry. We've turned it into a blog. I'm really surprised that its not been closed-for-comment. Thanks Patch. I could not find the Rostenkowski video either. I will continue to look. I should have left it out without the hard link. But, that was not specifically my point; which was, Congress makes all laws and allocates all money - not the President. The most effective mechanism for controlling Government Finances is VOTING. As the Republican and Democratic Parties failed to produce any fiscally-responsible candidates, the "Tea Party" rose and worked to elect a number of hopefully fiscally-responsible congressman. And I hope that they are effective. (No I'm not a Tea Partier). And I agree, Governments are needed. Why else would "We the People" create them or allow them to survive. But, "We the People" need to keep watch on them so they don't get off-task.
Ernest Campbell September 14, 2012 at 09:51 PM
Diane, aren't you proud to live in a country where citizens have a right to assemble, even in public buildings paid for by taxpayers which include those same Tea Party members. I certainly don't mind and I feel that its a good use of my taxes, (and the buildings - I think they have to pay something - so we pay less tax for the building maintenance). Someday you may want to rent time/space in such a place for some of your efforts. Go right ahead! That's the American Way!!!
Jimmy September 15, 2012 at 12:36 AM
Ernest, if you're going to stake your claim 'on facts', it would be a really good idea for you to look at all of them, not just the ones that FDR fed to you and others 80 years ago...I've read the original law and am also aware that it has had dozens of changes over the years- not the least of which have added people to the SS rolls for disability or other reasons, changed the funding and payout mechanisms or re-directed surpluses...you can read about some of the major changes here: http://www.ssa.gov/history/pdf/crs9436.pdf When you're done with that, you can go learn what the term "unfunded liability" means. While your 'trust fund' contains $2.7 Trillion in IOUs, it also has hanging over its head nearly $9 Trillion in UNFUNDED liabilities. http://www.ssa.gov/oact/TR/2012/tr2012.pdf see page 14+ for details... To save time, lets just say that 'unfunded' means THERE IS NO MONEY THERE. (Caps for emphasis, I'm not shouting at you). That means there is no vault in the basement of the SS building that is stuffed full of government bonds that can be redeemed as needed, regardless of your interpretation of the original 1937 law. There is nothing there except an IOU from the Treasury, and currently you and your family owe that trust fund some $73,000... If you want further confirmation, you can read what the US Chamber of Commerce says about it : http://www.uschamber.com/issues/retirementpension/socialsecurity/trust-fund-myth
Jimmy September 15, 2012 at 12:42 AM
And if you're feeling really masochistic, since you like wikipedia so much, read what they have to say about the 'pay as you go' concept: http://en.wikipedia.org/wiki/Social_Security_Trust_Fund See the section titled 'History'...
janet h russell September 15, 2012 at 12:44 AM
Ernest, I don't see how any spouse should get 50% of someone's earnings just for being a spouse.. If you don't put the money into the account, it's not there to take out. Just go to a bank or credit union and tell them that your spouse has say 100k in an account and you would like 50k in an account just because you are married to them. After the laughter calms down, they will offer you a way to the door. Same for minor kids. Disabled children is a completely different story and are covered by a different plan. As for a 10 year spouse, that is no longer applicable but does apply to spouses from many years ago. It has since been discontinued (or so I have been told by some). Too many people living longer and having multiple marriages of 10 years or slightly more then over due to death or divorce.
Frank Jones September 15, 2012 at 01:00 AM
Janet...The reason that a spouse can draw off of the other spouse is that Congress deems the money earned by one as earned by both for SS purposes. Let's assume for a moment that the was no SS. The working spouse could save that money and when he/she died, the surviving spouse would get that saved money. SS works in a similar fashion. As to surviving children, the same general principle applies. The parent paid into the system and the system will help support the surviving child until age 18. This benefit was added well after the creation of SS.
Ernest Campbell September 15, 2012 at 01:36 AM
Welcome to the club Jimmy. Now that you see the actual Law and SSA's own evaluations of itself contained in these documents, you can see how messed up it is specifically. Stunning isn't it? Now, we can have a real, hopefully constructive discussion of these specifics. For example, in a separate sub-thread, Janet noted that divorced wage-earners get 100% SS benefits and their divorced spouses get another 50%. Its even more messed up. If the wage-earner had multiple spouses (10+ year marriage) then each can receive an additional 50% of that benefit when the wage-earner retires or dies. One wage-earner could result in a 300% liability. Now, that's something specific that we can fix. And as you've learned from your reading, nothing like that was in the original law and, when it was changed, no effective adjustment in contribution or distribution - hence one of the many Unfunded Liabilities. As you read, there is page after page of this. It is not hidden. it is not obscured. It is right there in black and white. Each one needs to be reviewed and satisfactory adjustment made else that "Projected Unfunded Liability" will become "Unfunded Social Security Retirement Check". It wasn't correctly done to begin with; the time to fix it is now. So, pick something specific and tell me how you think we ought to fix it.
Ernest Campbell September 15, 2012 at 02:18 AM
From Wikipedia, Social Security Trust Fund / History that you referenced: "The Social Security system is primarily a pay-as-you-go system, meaning that payments to current retirees come from current payments into the system." In the paragraph immediately above, it says: "The trust funds run surpluses in that the amount paid in by current workers is more than the amount paid out to current beneficiaries. These surpluses are given to the U.S. Treasury (...) in exchange for special U.S. government securities, which are deposited into the trust funds." Further, "Pay-as-you-go" is a hot link to Wikipedia's page on PAYGO which says "PAYGO is the practice in the United States of financing expenditures with funds that are currently available rather than borrowed." From SSA's page titled "Ponzi Schemes vs. Social Security" at http://www.ssa.gov/history/ponzi.htm, look down the page to Pay-As-You-Go for their explanation. Specifically, in 2011, SSA received $698+ billion. Of that, they paid $603+ billion in benefits. The difference of $95+ billion was put into the Social Security Trust Fund which then contained $2,524+ billion (ie $2.524 triilion). Almost all of which is invested in US Bonds which you call "IOUs". And they are IOUs. That's what a mortgage or a car loan is. With a country though, if they default on their bonds, their currency is destroyed also - e.g. Greece now, Germany 1920s. Lets not let it get there!
Ernest Campbell September 15, 2012 at 04:05 AM
I totally agree Janet. Jimmy found a history of SS at http://www.ssa.gov/history/pdf/crs9436.pdf that details its changes through time. You can search out changes for spouses, etc. that are specific to the questions at hand. And then, you can determine exactly how you would have it if you ruled the world. BTW, the 10+year requirement for a Divorced spouse is still in effect so says http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/299/~/qualifying-for-divorced-spouse-benefits. Also, prior to 1977, it was 20 years.
Jimmy September 15, 2012 at 01:28 PM
I guess I misread something you wrote earlier and took it for a defense of the current system...I've been in 'the club' for many years...I knew SS was screwed up 30 years ago and would gladly have opted out of it then if I could have... I think I mentioned my idea for fixing it...start pro-rating benefits according to age, eventually weaning everybody off the system. The federal government has no business in the retirement business.
Ernest Campbell September 15, 2012 at 09:47 PM
Thanks Jimmy. I agree that throwing out many of the current ideas are necessary; but, I don't think that we need to throw out everything. If I ruled the world, I'd establish a system starting as follows (though its negotiable). 1 Pay-As-You-Earn System - must be. Almost all people don't have the discipline to save first. The amount and how/who might hold/invest the funds are separate questions. 2. Old Age, Death or Disability - only available then. Its focused on this (as it is now). Funds to do other things can be established separately So far, these ideas are no different than Social Security then or now. So, help me out. What would you (anybody) add to the above list or change in the current Social Security. Here's something suggested by Janet. 3. One Account/One Amount. The value of the account is fixed by the Wage-Earner and all claimants must divide this among themselves. None of this "you get 100% of the whole, they get 50% and so do some others". If this subsequently creates hardships, then "they" need to apply to the hardship programs. Wha'cha think?

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