Out There

the broad solution to the debt ceiling budget shortfall groundhog day crisis!

Posted in Uncategorized by Pete on November 20, 2013

Every few months we all get treated to another round of debt ceiling freakouts by our elected leaders.  When “…the question on everyone’s lips (their chapped lips!) is:” will we default and plunge off some sort of metaphorical cliff like Phil and the groundhog (Don’t drive angry!), or will they make a deal?  A compromise.  A deal like the one proposed by Simpson & Bowles way back in 2010, which enjoyed a modicum of bipartisan support, but apparently not enough to make legislation actually happen.

A story from last month that appeared shortly after the last edge-of-the-cliff temporary agreement is here.  Its a good primer on the recent history of the debt ceiling problem, and gives a depressing commentary on how far the 2 parties are apart on the issue.  So I figured that what the country needs is for a random blogger with zero readers or influence to come up with a plan to fix things, ha ha.  But surely this isn’t that difficult.  The problem seems to be much more about pride and influence and self interest than it is about the actual logistics or the complexity of the problem itself.  As opposed to, say, the problem of systemic, generational poverty.  So without further ado, here is Pete’s super-easy fix to the debt ceiling / budget deficit issue, aka the “make everyone crazy” plan.

First you raise all taxes across the board by 5%.  Note for you non-mathy types, this doesn’t mean you go from a bracket of 15% to 20%.  It would be from 15% to 15.75%.  Or from 20% to 21%.  Or 30% to 31.5%.  This will whip the conservatives into a white-hot, burn him in effigy, I-can-only-put-this-in-writing-because-I-live-in-far-away-western-Alaska-where-there-is-no-conservative-talk-radio, apoplectic rage.  Then you serve up a slice of budget cuts, a 10% cut across the board, from every department and program without discrimination.  No wrangling over which ones lose how much money.  Easy peasy.  This is the part where those of a liberal bent are reduced to seething, incoherent gibberish as they blow their top, hit the roof, lose their chips, insert your favorite cliche here, etc etc.  OK.  Now who haven’t we upset?  Just to be sure to get everyone involved, we top this meal off by raising the retirement age to 66 for everyone who is currently between the ages of 36 and 50, 67 for those ages 20 to 35, and 68 for everyone who is under 20.  This by itself would go a long way toward preserving social security solvency.  #4 is to eliminate the mortgage interest deduction on mortgages that exceed $1M.  This obviously wouldn’t affect most Americans, and wouldn’t make that much economic difference but I just had to include it as a nod to the fine people and classic podcast at Planet Money.  That’s it!  Four bullet points (in paragraph form!).  Now was that so difficult?  Of course you can quibble with the numbers.  Maybe its a 4% tax increase and 8% budget cut, whatever, you get the basic idea.

We’ve tried to find something that makes everyone happy.  We’ve tried for years.  It hasn’t worked.  So if it makes everyone mad…can’t that be fair too?  I had this revelation several years ago when Alaska endured the Frank Murkowski regime (a far bleaker time in Alaska politics, I feel, than when Sarah Palin was govnuh), when the state house and senate in Juneau were led by the most absurdly, SNL-esque over-the-top partisan leaders.  Millionaire banker Murkowski proposed helping to balance the budget via the POMV, which was maybe sort of a gateway drug to raiding the PFD, which would amount to a massively regressive tax on the poor.  Opponent Fran Ulmer proposed an income tax, but only if the state savings account fell to a certain predetermined level.  Murkowski called for the “Council of Alaskans” to decide, and nothing was decided.  Then it occurred to me that if everyone hates it, its probably fair!  Don’t do the GOP plan.  Don’t do the democrat plan.  Do both.  In this case you might even end up with a surplus and reduce the national debt.

Yes I know, it could never happen, this is a democracy where people need to get elected (and re-elected), blah blah blah.  Impossible in today’s polarized political climate.  Maybe tomorrow, but not today.

Take it away Phil.  “Well what if there is no tomorrow?!?  There wasn’t one today!”

the art of compromise

Posted in Uncategorized by Pete on August 20, 2012

The looming insolvency of the social security administration has been this giant political doomsday topic for what seems like most of my 30-something years.  I read this story today and was struck for the umpteenth time how dumb it is when our national politics are so polarized and intransigent.  The article states:  “…the trust funds that support the program will run dry in 2033.”  Yet the focus of the article, and the focus of our public servants, is not on how to actually solve the social security problem, but on how Romney’s selection of a running mate who supported some degree of social security privatization in the past might affect the presidential election this fall.  As in “In 2010 Mitt Romney’s running mate supported allowing 35% privatization for workers under the age of 55 so I can’t vote for Romney.”

I’m not much of a Romney fan.  I don’t think I’ll vote for him.  But I’m going to go out on a judgmental limb and say that if the above is your reason for not voting for him, that’s ridiculous.  The senior who is trying to get by on a fixed income who worries about losing that 35% on the stock market needn’t fear, because this hypothetical plan from 2 years ago that never got off the ground would have only affected workers under 55.  The ultra conservative 54-year-old investor can put the money in treasury bills or municipal bonds or other instruments that are 99.9% safe bets.  And actually the article says that the 2010 plan would “allow younger workers to divert more than one-third of their Social Security taxes into personal accounts that they would own and could will to their heirs.”  So it sounds like it wasn’t even a required thing, just a voluntary thing where you could choose to divert some of the money going to the social security fund to your own private retirement account.

Note that the Romney campaign isn’t talking about any plan like this.  At all.  So it’s really absurd to bring this up as a reason to vote against him.  The funny thing is I actually like some of that plan.  Here are the positions of Romney and Obama as described in the article.

Romney, in his book, “No Apology,” said he liked the idea of personal accounts. But, he wrote, “Given the volatility of investment values that we have just experienced, I would prefer that individual accounts were added to Social Security, not diverted from it, and that they were voluntary.”

Romney’s current plan for Social Security doesn’t mention personal accounts. Instead, he proposes a gradual increase in the retirement age to account for growing life expectancy. For future generations, Romney would slow the growth of benefits “for those with higher incomes.”

Romney says tax increases should be off the table, and current beneficiaries and those near retirement should be spared from cuts.

I’m totally with him on all of this, except for the tax increases being off the table. Boo!  I’ve encountered so many people who would seemingly rather sacrifice their firstborn than suffer a 1% tax increase, no matter what it might be used for.  In all seriousness, a couple of these folks I could ask them hypothetically if they would vote for a 1% tax increase if it meant a complete end to world hunger forever and they say no with a straight face.  Strange and sad.  And stupid.  Which is a big part of why I haven’t voted with that party lately nearly as often as I did when I started voting 20 years ago.

Anyway, what is Obama’s position on the social security problem?

During the 2008 campaign, Obama said he wanted to improve Social Security’s finances by applying the payroll tax to annual wages above $250,000. It is now limited to wages below $110,100, a level that increases with inflation.

Obama also pledged to oppose raising the retirement age or reducing annual cost-of-living adjustments, or COLAs. “Let me be clear, I will not do either,” Obama said at the time.

Last year, however, Obama put on the table a proposal to reduce annual COLAs during deficit-reduction talks with House Speaker John Boehner, R-Ohio. The talks ultimately failed and nothing came of the proposal, but it raised questions about whether Obama would honor his 2008 pledge.

“We must do it without putting at risk current retirees, the most vulnerable or people with disabilities, without slashing benefits for future generations and without subjecting Americans’ guaranteed retirement income to the whims of the stock market,” Obama said in the speech.

Hmmm, clear as mud.  Takes a lot of guts to be specific before the election.  At least on a thorny, divisive issue like this one.  So this is way too long already, but what I thought when I read this was “How hard would it be to just meet in the middle on this stuff?”  

1.  Age at retirement.  It seems like common sense to raise the age at which you can start receiving SS benefits.  We are all living a LOT longer than we used to.  Phase it in slowly. This is not that hard.  For example everyone 45 and over can still retire at the same age.  Those who are currently 35-44 can retire 1 year later.  25-34 year olds can retire 2 years later, and those who are currently under 25 can retire 3 years later and let it go back another year every 20 years or so afterward.

2.  Payroll taxes are currently limited to wages below 110k and Obama proposed taking it to 250 and he was vilified for it.  How about we go to 170k or so?

3.  Accept Romney’s idea of reducing the benefits for people who very obviously don’t need it.  Anyone worth tens of millions at retirement age does not need their social security checks.  

Boom, solved.  You take an important part of each side’s proposal, each of which is absolute poison to the other side, combine them into one plan, and you have something that works.  If everyone is mad about it, then you’re probably getting somewhere, and it is probably closer to fair than anything either party could come up with.

So what I really want to know is, why is noone saying anything like this?  “Well if a politician says this he’ll never get elected.”  OK, lame, whatever.  But I don’t even hear anyone, anywhere, (media?  barber shop?) making proposals like this.  Is it because its a stupid idea?  Or….?  I’m really asking because I’m neither a genius nor a political junkie at all but every time I read anything about politics these days the need for compromise just seems really glaring.  There is so much room in between, it looks like low hanging fruit, and I don’t know why people aren’t pursuing it.  You know, for the good of…the world?