Obama's debt reduction plan:

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**Melissia**

http://money.cnn.com/2011/09/19/news/economy/obama_debt_plan/index.htm

Obama to unveil $3 trillion in debt cuts
By Jeanne Sahadi @CNNMoney September 19, 2011: 10:20 AM ET

NEW YORK (CNNMoney) -- President Obama will unveil a plan on Monday to cut the national debt by roughly $3 trillion over the next decade.

Obama's plan reflects his vision for how best to put the country on a more fiscally sustainable course, so it is different in nature than the kind of legislative compromise he was trying to broker this summer during the debt-ceiling debate, a senior administration official said.
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A driving principle behind the proposal is that high-income individuals and corporations should pay more in taxes than they do currently so that they will bear some of the burden of debt reduction going forward.

Indeed, in remarks on Monday morning, the president will make clear he'll veto any debt-reduction legislation that takes "one dime away from Medicare benefits without asking the wealthy to pay their fair share," the official said.

Obama will even introduce the "Buffett Rule" for millionaires -- named after investor Warren Buffett, who has frequently argued that the very rich are not taxed enough.

The president's debt reduction proposal is likely to placate -- at least a little -- those in his Democratic base who have been adamant that they want the rich to pay more and they don't want Medicare or Social Security benefits hit. (Read: National debt: What you need to know)

The White House said last week the president's plan will not include any Social Security reform proposals. And another senior administration official noted Sunday that the plan will not call for raising the Medicare eligibility age, which fiscal experts have recommended.

But the Obama plan is unlikely to draw much support from Republicans, who have been adamant about not wanting to raise anyone's taxes. (Read: Where left and right actually agree)

The plan Obama will release includes some $3 trillion in savings on top of the nearly $1 trillion already signed into law under the debt ceiling deal enacted in August.

Of that, however, close to $500 billion would have to be used to pay for the American Jobs Act, which Obama proposed last week. (Read: Cutting now could hurt economy, CBO says)

All told, the administration says the president's plan would reduce debt to 73% of the size of the economy by 2021, well below the nearly 91% it's on track to hit without any budgetary changes. The White House estimates the annual deficit that year would fall to 2.3% of GDP, down from the 5.5% currently projected.

Here's how Obama's proposed savings break down.

Mandatory spending cuts: $580 billion.

Of the total cuts in mandatory spending, $248 billion will come out of Medicare. And about 90% of those savings will come from reducing overpayments in the system, a senior administration official said. He added that any changes to Medicare benefits won't kick in before 2017.

Another $72 billion will come from Medicaid and other health programs.

The plan also includes $250 billion in savings from other mandatory programs. They include $33 billion in savings from farm subsidies; $42.5 billion from federal worker benefit programs, including those for civilian workers and military personnel; and $92.2 billion the administration estimates it can save from "restructuring government operations and reducing government liabilities."

Tax revenue: $1.5 trillion.

Of the total revenue raised by tax changes, $800 billion would be realized by letting some of the Bush-era tax cuts expire for high-income households -- something Obama has called for repeatedly.

Another $400 billion would result from capping the value of itemized deductions and other exemptions for high-income households.

Opinions?

**halonachos**

Why can't we tax everyone? If you make money you should be taxed because you're getting support from the country regardless. Everybody needs to pull their own weight, poor and rich.

**Melissia**

Everyone IS being taxed. It's just that because of our government basically being run by rich white Christian males, its tax code is very much biased towards rich white Christian males.

Everyone being taxed at the same rates would actually be quite unequal, because ten percent of ten thousand s far more important to the poor man's life than ten percent of a a million to a rich man.

**biccat**

Indeed, in remarks on Monday morning, the president will make clear he'll veto any debt-reduction legislation that takes "one dime away from Medicare benefits without asking the wealthy to pay their fair share," the official said.

As always, the campaign rhetoric makes an appearance. Yes, the "wealthy" should pay their "fair share," but what does he mean by "wealthy" and what does he mean by "fair share"? It's an open-ended call to increase taxes.

Second, according to the Washington Post:

About $1 trillion in savings is also expected from winding down the wars in Iraq and Afghanistan.

I don't think that scaling down the wars in Afghanistan and Iraq should be viewed as a "debt reduction" measure. Plans are already underway to draw down troops, so this is simply taking credit for an action that already in the works. It doesn't reflect a real change in spending habits, which are the problem.

The president's debt reduction proposal is likely to placate -- at least a little -- those in his Democratic base who have been adamant that they want the rich to pay more and they don't want Medicare or Social Security benefits hit.

Left unsaid is the $500 billion raid of Medicare earlier in his term.

All told, the administration says the president's plan would reduce debt to 73% of the size of the economy by 2021, well below the nearly 91% it's on track to hit without any budgetary changes. The White House estimates the annual deficit that year would fall to 2.3% of GDP, down from the 5.5% currently projected.

...and it still doesn't solve the problem.

My biggest problem with this proposal is that it perpetuates the problem and kicks the can down the road to be dealt with later (yes, Republicans do it too). This proposal doesn't suggest any real cuts to spending, it's all in reduction in the growth of future spending. And future congresses and presidents aren't bound by these changes, so if they want to increase spending, they're free to do so.

**Frazzled**

Melissia wrote:Opinions?

This thread will be filled by lots of liberal handwringing, attacks against Republicans, and cries thats its all Bush's fault. Obama will be hailed as a living saint, suffering the slings and arrows of outrageous fortune, or alternatively a commie pinko socialist hellbent on destroying the US. Biccat will counterattack and get flamed. Frazzled will post nonsense or something about wiener dogs. Dogma will argue about word choices. Cannerus may or may not post about important matters of the heart, and motorcyle repair. If Malf posts, lots of socks will mysteriously disappear.

But then again this is more of a prediction than an opinion isn't it.

Edit: already zoinked by Biccat/halo/Melissia. I must be getting slow.

**Melchiour**

Everyone regardless of income should pay same tax rate. Flat tax. Don't penalize people who make more money simply because they make more money. On the same note, don't give the wealthy loop holes to avoid taxes.

**halonachos**

Melissia wrote:Everyone IS being taxed. It's just that because of our government basically being run by rich white Christian males, its tax code is very much biased towards rich white Christian males.

I don't think being christian has anything to do with it, unless of course you make donations to a church which can be counted as charity and give a tax deduction. People who donate to charities are given tax breaks so while Warren Buffet can complain about how many tax breaks he gets its probably because he's claiming those deductions.

Mutliple home owners get tax deductions because they're supposed to take care of the huge expenses in the houses they live in as well as any that they rent. A person who is poor and rents a house calls the owner if the water heater goes out or if the fences come down and the owner is responsible to pay for those repairs while the renter is not.

If a person is "rich" then they often make contributions to the "poor" by taking expenses that the poor do not have. By renting out a house the rich give the poor a reasonably priced place to live where the poor doesn't have to worry about paying for large and expensive home repairs. That's where a lot of deductions come from, because the rich are often paying for something that the poor typically are not.

If you want someone who truly believes in reducing the debt then get rid of tax deductions, just know that if you get rid of tax deductions a lot of people are going to suffer. The rich will suffer because they're paying for the large repair bills and they get no compensation for it which means the rent may increase and the poor family may not be able to afford that rent and in effect lose that house.

Then again you have people who "don't" pay taxes because they get enough tax deductions to get everything back, this includes 50% of the US population according to most sources. I say we make tax applicable to all people and find ways to get rid of deductions.

If a rich man has two kids then that was his choice to have two kids, why should he get a tax break? If a poor man has two kids then it was his choice to have two kids and he doesn't deserve a tax break either. If a rich man decides to rent out his old house then why does he deserve a break, if a poor man is a renter why does he deserve a break?

All in all there are very few people who actually deserve their tax breaks, wounded veterans and people who are disabled deserve benefits because they most likely did not choose to become disabled.

**Frazzled**

Melchiour wrote:Everyone regardless of income should pay same tax rate. Flat tax. Don't penalize people who make more money simply because they make more money. On the same note, don't give the wealthy loop holes to avoid taxes.

Now would you tax people on gross income or net income?

How would you tax capital gains?

How would you tax interest and dividends?

**Melissia**

Melchiour wrote:Everyone regardless of income should pay same tax rate. Flat tax. Don't penalize people who make more money simply because they make more money. On the same note, don't give the wealthy loop holes to avoid taxes.

Proportionally to need, taxing 30% of 30,000 is far, far bigger of a hit to the budget than taxing 30% of 3,000,000.

**halonachos**

Frazzled wrote:
Melchiour wrote:Everyone regardless of income should pay same tax rate. Flat tax. Don't penalize people who make more money simply because they make more money. On the same note, don't give the wealthy loop holes to avoid taxes.

Now would you tax people on gross income or net income?

How would you tax capital gains?

You tax them on purchases they make, get rid of any sort of rate taxes or make the rate consistent for everyone regardless of income level. If a rich man pays 10% in tax then the poor man pays 10% in tax as well. Get rid of deductions that are related to choices a person makes, donations, renting, children, etc. Get rid of income level deductions.

In fact, as I said before tax people through their consumer purchases. Get rid of income tax and replace it with a larger sales tax. This way everyone in the country will be paying taxes and getting no deductions for it, if you buy a pair of sneakers for $100 you'll pay $25 in sales tax regardless of your income level for example.

**Melissia**

So basically anyone who can afford to save gets more benefit from saving than from spending thus encouraging people not to spend? Hm.

**halonachos**

Melissia wrote:So basically anyone who can afford to save gets more benefit from saving than from spending thus encouraging people not to spend? Hm.

But, there is no income tax so that means people get everything that they earn from income. That means there is more money available to spend, but it also means that if you can't afford $100 shoes you won't be buying $100 shoes if you don't need them.

It also means that anyone who is rich will be paying more in taxes than the poor still. The rich man will buy the $100 shoes and pay $25 in taxes. The poor man will buy the $30 shoes and pay $7.50 in taxes. Its all fair Melissia, you may not like the idea of having everyone contribute to the society that supports everyone but I sure do.

**Melissia**

halonachos wrote:But, there is no income tax so that means people get everything that they earn from income.

Right, they're merely penalized for spending in the first place. Seeing as those with less money tend to spend more of a percentage of it than those with more, this is basically the same as a regressive tax scheme.

If a rich person wanted a low tax rate under your scheme, they'd just save the money instead.

**Albatross**

Who NEEDS $100 shoes?

Well, apart from professional athletes, most (if not all) of whom get them for free.

**Zyllos**

Well, I am all up for budget deficit reduction. I am also all up for revenue increases. Fixing tax loopholes should have been priority one ages ago. Why try to balance a budget with tax revenues when your unsure if how the current tax rules might apply to it's citizens?

The Buffett Rule...I am not quite sure to make of this. I understand that lowering taxes on job producers helps them reinvest to create jobs but that does not seem to be happening at the moment. Of course, a lot of this might be resolved with fixing the current loopholes in the tax code, regarding to the Buffett Rules.

No Social Security reforms might be a mistake but considering the current status of the nation, I think this could be moved aside for more pressing matters.

Not raising the age eligibility for Medicare, I think might be a mistake but this could be due to my age (26) thus not understanding the complete picture. $248 billion savings from reducing the overpayments. I was really unaware that Medicare paid substantially more than what is needed so I think this is a good move.

$33 billion in farm subsidaries. Good but not good enough in my opinion. Really they should just completely remove this and either figure out a new way to go about this or just stop subsidizing of farms all together.

$42.5 billion in federal worker benefit programs. Wonder what exactly this entails but seems a step in the right direction. $92.2 billion in "restructuring government operations and reducing liabilities" is also a step in the right direction but need more information on what exactly this is refering to.

The $500 billion for basically infrastructure focused jobs is not a bad idea but not a new idea. But it is money well spent if a lot of the bridges, roads, and other state/federal infrastructure actually sees that money for reconstruction efforts.

Overall, I think this is a good bill. It looks like a compromise, unlike how the Republicans seem to not be providing.

**halonachos**

Melissia wrote:
halonachos wrote:But, there is no income tax so that means people get everything that they earn from income.
Right, they're merely penalized for spending in the first place. Seeing as those with less money tend to spend more of a percentage of it than those with more, this is basically the same as a regressive tax scheme.

If a rich person wanted a low tax rate under your scheme, they'd just save the money instead.

And if a poor person wanted a low tax rate then they would do the same. Just because the poor buy more things doesn't mean they can't cut back and live within their means, my family does and always has. When we lived in a trailer for the first five years of my life we lived within our means, when my dad earned enough to be considered "rich" we moved to another house that was well within our means(the banks said they could give us a loan for a house up to $650,000, instead of going for that we went with a house that was $400,000).

People can save money regardless of their income level and if a person spends themselves into bankruptcy its their own damn fault.

**Da Boss**

If you stop subsidising farms, be prepared to pay a lot more for produce, or see really horrendous conditions in rural areas as small farmers can no longer get by.

On the tax thing, there's a counter argument. The $30 pair of shoes will not last as long as the $100 pair of shoes, forcing the poorer worker to fork out more over time than the rich worker. This argument can be extended into all sorts of fields.
As for "earning", well, I dunno that the super rich "earn" their money in the way I was raised to believe that word works, but they sure seem to be successful at manipulating us all into thinking they do.

Edit: People cannot save "regardless" of income level, what a blinkered thing to say. There are people out there starving or barely surviving with long term ailments and other problems that they can't get treated. That was a very poor generalisation.

**AlmightyWalrus**

halonachos wrote:
Melissia wrote:
halonachos wrote:But, there is no income tax so that means people get everything that they earn from income.
Right, they're merely penalized for spending in the first place. Seeing as those with less money tend to spend more of a percentage of it than those with more, this is basically the same as a regressive tax scheme.

If a rich person wanted a low tax rate under your scheme, they'd just save the money instead.

And if a poor person wanted a low tax rate then they would do the same. Just because the poor buy more things doesn't mean they can't cut back and live within their means, my family does and always has.

And suppose that said person can't cut down on anything non-essential. Then what? "Feth them, they brought poverty upon themselves"?

**ineptus astartes**

Frazzled wrote:
Melissia wrote:Opinions?

This thread will be filled by lots of liberal handwringing, attacks against Republicans, and cries thats its all Bush's fault. Obama will be hailed as a living saint, suffering the slings and arrows of outrageous fortune, or alternatively a commie pinko socialist hellbent on destroying the US. Biccat will counterattack and get flamed. Frazzled will post nonsense or something about wiener dogs. Dogma will argue about word choices. Cannerus may or may not post about important matters of the heart, and motorcyle repair. If Malf posts, lots of socks will mysteriously disappear.

But then again this is more of a prediction than an opinion isn't it.

Edit: already zoinked by Biccat/halo/Melissia. I must be getting slow.

the irony and hypocrisy of this remark is killing me.

**Zyllos**

Da Boss wrote:If you stop subsidising farms, be prepared to pay a lot more for produce, or see really horrendous conditions in rural areas as small farmers can no longer get by...

I see this get said a lot about farm subsideries but doesn't most of the money go to the largest farms instead of the smallest farms? Also, doesn't farm subsideries depress global food prices thus keeps small farmers from making enough money to make ends meet globally?

**Da Boss**

Yes, but the alternatives aren't a whole lot better.

**The Foot**

The thing that frusterates me is these things won't hit for so long by the time they do all of us won't remember when they were voted in. I would like to see the people on capitol hill take a pay cut since they have been doing a really bad job. You can't lead people but put yourself and only what you want first without screwing something up. Mostly though I see a lot of politicians looking like this.

Please don't attach non wargaming images to Dakka.

**Rented Tritium**

I want someone to explain to me clearly how having a large national debt hurts us.

As in, I want someone to explain mechanically the bad things it does to us.

**Frazzled**

halonachos wrote:
Frazzled wrote:
Melchiour wrote:Everyone regardless of income should pay same tax rate. Flat tax. Don't penalize people who make more money simply because they make more money. On the same note, don't give the wealthy loop holes to avoid taxes.

Now would you tax people on gross income or net income?

How would you tax capital gains?

You tax them on purchases they make, get rid of any sort of rate taxes or make the rate consistent for everyone regardless of income level. If a rich man pays 10% in tax then the poor man pays 10% in tax as well. Get rid of deductions that are related to choices a person makes, donations, renting, children, etc. Get rid of income level deductions.

In fact, as I said before tax people through their consumer purchases. Get rid of income tax and replace it with a larger sales tax. This way everyone in the country will be paying taxes and getting no deductions for it, if you buy a pair of sneakers for $100 you'll pay $25 in sales tax regardless of your income level for example.

So you're not actually talking about an income, but instead a sales tax variant?

Automatically Appended Next Post:

Rented Tritium wrote:I want someone to explain to me clearly how having a large national debt hurts us.

As in, I want someone to explain mechanically the bad things it does to us.

Easy example. Wait ten days. Look what happens to Greece.

**Rented Tritium**

Frazzled wrote:

Rented Tritium wrote:I want someone to explain to me clearly how having a large national debt hurts us.

As in, I want someone to explain mechanically the bad things it does to us.

Easy example. Wait ten days. Look what happens to Greece.

No. I asked for a mechanical explanation, not a flippant post about a wildly different economic situation. Try again.

How does merely having a debt damage the economy? Greece got their debt above the point where they can pay the interest reasonably, that's an indisputably bad thing to do. I'm asking why we should bother REDUCING a debt whose interest payments are reasonable rather than simply slowing the growth of the debt such that the debt as a % of GDP stays stable.

It seems remarkably silly to cut off your own ability to spend to the edge of your purchasing power on things which increase GDP by a rate higher than the debt you are creating. This is tried and true economic policy.

**Frazzled**

Rented Tritium wrote:
Frazzled wrote:

Rented Tritium wrote:I want someone to explain to me clearly how having a large national debt hurts us.

As in, I want someone to explain mechanically the bad things it does to us.

Easy example. Wait ten days. Look what happens to Greece.

No. I asked for a mechanical explanation, not a flippant post about a wildly different economic situation. Try again.

How does merely having a debt damage the economy? Greece got their debt above the point where they can pay the interest reasonably, that's an indisputably bad thing to do. I'm asking why we should bother REDUCING a debt whose interest payments are reasonable rather than simply slowing the growth of the debt such that the debt as a % of GDP stays stable.

The current budget discussions are not designed to reduce the debt, merely reduce the growth of the debt.
Its not flippant. You asked for an example of what happens. Greece, Argentina, are excellent examples of that.
To be clear-tailspin of the economy, with recovery that happens after (maybe) a decade. Extreme fiscal austerity to get the economy going again.
Else rampant inflation.

**Rented Tritium**

Frazzled wrote:
Rented Tritium wrote:
Frazzled wrote:

Rented Tritium wrote:I want someone to explain to me clearly how having a large national debt hurts us.

As in, I want someone to explain mechanically the bad things it does to us.

Easy example. Wait ten days. Look what happens to Greece.

No. I asked for a mechanical explanation, not a flippant post about a wildly different economic situation. Try again.

How does merely having a debt damage the economy? Greece got their debt above the point where they can pay the interest reasonably, that's an indisputably bad thing to do. I'm asking why we should bother REDUCING a debt whose interest payments are reasonable rather than simply slowing the growth of the debt such that the debt as a % of GDP stays stable.

The current budget discussions are not designed to reduce the debt, merely reduce the growth of the debt.
Its not flippant. You asked for an example of what happens. Greece, Argentina, are excellent examples of that.
To be clear-tailspin of the economy, with recovery that happens after (maybe) a decade. Extreme fiscal austerity to get the economy going again.
Else rampant inflation.

Again, I asked for a mechanical explanation. I did not use the word example anywhere.

Your post seems full of assumptions. "extreme fiscal austerity to get the economy going again". How? Explain how austerity gets the economy going again. Austerity=Growth needs to be established, you can't treat that like it's an accepted premise.

I hope I'm not coming off as arguing too aggressively, I'm not sure what the standard around here for that is.

**Da Boss**

You're pretty much arguing the standard level buddy, don't worry.

**Zyllos**

Rented Tritium wrote:I want someone to explain to me clearly how having a large national debt hurts us.

As in, I want someone to explain mechanically the bad things it does to us.

Well, a debt is money owed. If money owed > money made, then debt increases if you continue to borrow. If debt > some number, loaners will not give money. Therefore, expenses must be decreased to make money owed = money made to pay the payments.

What happens is that the US government will not be able to give/spend money on vital functions that government provides. It works just exactly the same for individuals who are borrowing money.

**The Foot**

Rented Tritium wrote:
Frazzled wrote:
Rented Tritium wrote:
Frazzled wrote:

Rented Tritium wrote:I want someone to explain to me clearly how having a large national debt hurts us.

As in, I want someone to explain mechanically the bad things it does to us.

Easy example. Wait ten days. Look what happens to Greece.

No. I asked for a mechanical explanation, not a flippant post about a wildly different economic situation. Try again.

How does merely having a debt damage the economy? Greece got their debt above the point where they can pay the interest reasonably, that's an indisputably bad thing to do. I'm asking why we should bother REDUCING a debt whose interest payments are reasonable rather than simply slowing the growth of the debt such that the debt as a % of GDP stays stable.

The current budget discussions are not designed to reduce the debt, merely reduce the growth of the debt.
Its not flippant. You asked for an example of what happens. Greece, Argentina, are excellent examples of that.
To be clear-tailspin of the economy, with recovery that happens after (maybe) a decade. Extreme fiscal austerity to get the economy going again.
Else rampant inflation.

Again, I asked for a mechanical explanation. I did not use the word example anywhere.

Your post seems full of assumptions. "extreme fiscal austerity to get the economy going again". How? Explain how austerity gets the economy going again. Austerity=Growth needs to be established, you can't treat that like it's an accepted premise.

I hope I'm not coming off as arguing too aggressively, I'm not sure what the standard around here for that is.

Basicly the global economy loses faith in your currency and it becomes de-valued. They can do this since money isn't worth any more than people precieve it to be and if other countries see our money as worthless then it becomes such. Then we become Greece some time down the road.