US 'could be going bankrupt'

U.K. Telegraph ^ | 7-14-06 | Edmund Conway

[DakotaRed]

As long as we have the Democrats and RINO's in Congress, the US cannot go bankrupt. Well, the government, that is. All they will do is keep raising taxes buying votes and bankrupt the citizenry instead.

Yes, it's sarcasm.

[rb22982]

Well the 2nd part I would agree with. But I do not agree with you that raising the SSRA from 65 to 67 is dishonest as the purpose of SS was to help the elderly and as humans live longer, the age of the elder will continue to climb.

[GodGunsGuts]

This guy is absolutely correct. Got gold???

[scott7278]

We can start by keeping some of the "poor" on Medicaid out of the emergency room for their customary twice a week trip. I work in a pharmacy, and I'm not exaggerating. We have the usual suspects we get to know.

That, and eliminate $0.00 copays for their medicine. There's no incentive for them to exercise restraint under the current system, and they're not held accountable like those with private insurance would be (I've heard of insurance companies sending "cease-and-desist" letters of sorts to emergency room violators).

We had a lady come in the other day with an emergency room prescription for a cream because her kid had a minor rash. Most people would just drive to a 24-hour drug or grocery store and pick up something there. But then again, they'd have to pay for it.

Now I'm seeing $0.00 copays on over-the-counter medicines, and there's no end in sight. I've had people complain that they have to pay $2.00 for their higher-cost medicine. I stop them by telling them that my copay is $45.00 for the same thing, and thus I have no sympathy (I don't say that, though).

A lady came in the other day and paid $5.00 for $850.00 worth of prescriptions. Of course, she complained. It's just out-of-hand.

Call me cold-hearted, but if you saw the junk I have to deal with, you would push to revamp Medicaid immediately.

[Pelham]

Obviously the author does not understand that history has shown that tax cuts increase returns to the Treasury,

Then that would put him in agreement with President Reagan's economists, who didn't believe it either. What they did say is that tax cuts wouldn't lose as much revenue as static analysis predicted. Growth recovered about 2/3 of each dollar cut, which is line with their predictions.

[Pelham]

SS is a pass-through system, always has been. The goal has been to achieve a balance between payments and withdrawals. A surplus in the Social Security fund acts as a drag on the economy.

[Pelham]

The Laffer Curve is real! The professor either doesn't admit it or get it.

He gets it. But since he reads economic studies he's aware that the only tax cut that 'paid for itself' was the capital gains reduction of 1978. The other cuts achieved the goal of stimulating the economy, but at some reduction in Treasury revenue. Treasury revenues aren't solely affected by tax cuts. Defecit spending, the business cycle, and the natural growth path of the economy also contribute to increases in Treasury revenue, and are accounted for in any study other than the "everybody knows" versions that get endlessly repeated here.

[patton]

And, do you think we have a balance between payments and withdrawels?

[Pelham]

I haven't paid attention recently. For a time we were running a surplus, and that excess was 'invested' in Treasuries created to sop up the surplus, and this permitted Congress to spend that excess.

If I recall correctly, during Johnson's Presidency there was a surplus and the solution then was to lower SS taxes so that excess money wasn't taken from working incomes in the first place. It's a strange world when LBJ's era looks more conservative than the present time when the GOP is in control of Congress and the WH. It speaks volumes about what passes as "conservative" today.

[Pelham]

This report looks like it agrees with the premise of The Great Reckoning from a few years back. A good book for a broad view of some economic trends that could spell trouble.

[patton]

Ah. Well. I am 43 years old, and in every year of my life, the SS admin has collected more than it has paid out. The surplus was promptly spent by congress.

43 years - never once has a dime been set aside.

In fact, to anyone but a moron, the idea that congress is collecting advance payments is a joke. They are just collecting more money, to spend, today.

Again, there is no SS trust fund.

[GodGunsGuts]

Just imagine what will happen to interest rates when foreigners realize what bad shape we are in and stop buying US bonds and treasuries (and all that that implies).

[Pelham]

I think we are already seeing the beginning of that. The dollar has been weakening for some time. Some central banks are looking to use the Euro as a reserve currency alongside or instead of the dollar.

[Pelham]

You're either a tail-end 'boomer or a post-boomer- either way you are indeed screwed.

Save what you can, invest for your retirement. Times could be pretty tough when you look to retire.

[television is just wrong]

Ronald Reagan said he wasn't worried about the national debt, it was big enough to take care of itself.

[Pelham]

'Setting aside' of SS funds doesn't really work, anyway. That's a sort of money-illusion- stacks of dollars are too vulnerable to losing their value through inflation, especially in the post-Breton Woods monetary regime. What you need is money invested in something that will provide you income when you retire, and you need to be planning for that yesterday. IRAs, 401k's, mutual funds, rental property, there's a number of options, and a lot of sources to educate yourself on how to do it.

[Pelham]

I'd be curious to see that claim sourced- I doubt its accuracy. I recall Reagan chastising Carter for increasing the debt.

[BlackVeil]

I propose we put such funds in something I like to call a "lock box".

That is what Prime Minister Pitt did in England, after the Napoleonic wars. Britain had hopeless debts, which was addressed by what was called a 'sinking fund' - taxes for that debt only. So they got out of it, over a generation. Nations which repudiated their debts, such as Spain, ended up in penury.