Who repays the debt???

[Embar Angylwrath]

California may be the model for how and what to cut.

The voters here rejected a bunch of weird reveneue generating schemes, leaving California with about a $23 billion dollar deficit. So now, the only way for California to balance the budget is through cuts. No program is off the table. It will be interesting to see how California approaches this, and also see how much the cuts will affect the citizenry.

By the way, this is also not well understood by most. California is the ONLY state in the union that requires a 2/3 majority to increase budgets by 5% or more. California's Prop 13 also does not allow for increases in property tax by more than 1%. Therefore, it's hammered by the double whammy of the land speculation dropping the bottom out of revenue and it requiring a supermajority to increase the budget during lean parts. As Lurker says, in rough times (New Deal is the best example), growth comes from the government. Unfortunately, California does not allow it's government to do the growing it needs in a recession.

Go ask people in California - the vast majority don't want services cut. They understand that government has to grow. But as long as more than a third of the gerrymandered Legislature says no, there is no way for California to deal with it. California is the solution to a question that no sane person would be asking.

I live in California...

You have an incomplete understanding of the issues. The prop 13 thing isn't the lodestone you think it is, since the property tax rate gets reset everytime the residence is sold. Most residences turn over every 5 years or so, and in the housing boom, they were flipped like pancakes. The only residences that have a drag on property tax revenue are the ones that were bought in the late 70s and still have the same owners in them. Those are very, very few.

Also, the 2/3 vote on the budget is for any budget. Also, the California Constitution requires a balanced budget. Dig a little deeper, and you'll find the process for that budget process is Byzantine. Maybe you're confusiong the California requirement for a 2/3 affirmative vote to raise taxes?

[Partha]

Well, Embar, there's only two ways to raise the revenues to continue government in a state like California - cut services or raise taxes.

Whatever else you may think about government, the increase in population alone points towards a greater need for government services and infrastructure investment. Now how are you gonna get that if tax increases are off the table?

The whole process is deliberately stupid, and for one reason and one reason only: To break down government.

[Kulaf]

An increase in population means an increase in revenue more people......more taxes collected. They can easily cut services because there was a max exodus from CA to OR, WA and AZ.

[Lurker]

Kulaf has that right. As the population increases the tax base increases and you get more tax revenue assuming that there is healthy economic growth. Look at how revenues were higher in 1988 than they were in 1980 even though there was a slight rate decrease during that period. Morons falsely point to that as proof that tax cuts increase revenues (above the cost of the tax cuts), but that's another issue.

All bets are off in a demand recession though, and there needs to be more flexibility to deficit spend or raise tax rates than the rules in California provide.

Edit: All that assumes that the population growth isn't limited to the poor. If the middle class isn't growing then population increase isn't going to increase the tax base enough. And we did next to nothing in the last eight years to grow the middle class.

[Fobbon Lazyfoot]

Who repays the debt???

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[Klast Brell]

You need to research that Madison quote some more. It had nothing to do with Federal spending on American citizens.

I am aware. It had to do with money for foreign aid. I do not see the relevance of your snarky elitism. The quote still applies. Benevolence is benevolence no matter how applied.

OK. We can start by cutting off all the foreign aid to Israel. How would you feel about that?

Secondly, make Social Security untouchable. Every account should be individualized and each person should be able to track their investment online. It should earn a minimum return of 4%.

Nice one there. That sounds brilliant. If my investment returns less than 4%? Then what. Will you be happy to pay more taxes to make up my shortfall?
Do you want Washington denying you the choice to invest your money where and how you want? Do you want Politicians to interfere with the broker investor relationship? Then you better make this an extremely unregulated system. In the mean time I will take all my money and invest it in my wife's home business. She will pay herself the full amount as salary, then sadly go out of business. My investment will be wiped out. But thanks to the government guaranteeing my retirement account, your tax dollars will fill that back up. So I will be ready to invest all that money in my wife's new in home business.

Thirdly we need to untie health care insurance from employment. A mixture of price regulation and tort reform is needed to rein in out of control costs.

Businesses have HR departments to fully research health insurance companies and plans. Individual consumers do not. They would fall prey to the same spinning and twisting that you see with every other service out there that is sold direct to consumers. Ever try and get help with that extended warranty you got at Best Buy?
Price regulation? You must be disconnected from the rest of your brain. Insurance companies are businesses. If you regulate the prices they will need make up their profits somewhere. If they cant charge you more they will have to give you less. Remember what you said about the budget deficit?
Tort reform? Tort accounts for less than 2% of your health care costs. The insurance companies love the idea of tort reform. They can pad their profits that much more and reduce the quality of your care as well because they don't have to fear getting sued for denying your mom a kidney transplant.

[Fallakin Kuvari]

Well, Embar, there's only two ways to raise the revenues to continue government in a state like California - cut services or raise taxes.

Or cut spending tax dollars on educating, treating and jailing illegals.

[Trollbait]

OK. We can start by cutting off all the foreign aid to Israel. How would you feel about that?

I would rejoice. What a waste of money that is.

Nice one there. That sounds brilliant. If my investment returns less than 4%? Then what. Will you be happy to pay more taxes to make up my shortfall? Do you want Washington denying you the choice to invest your money where and how you want? Do you want Politicians to interfere with the broker investor relationship? Then you better make this an extremely unregulated system. In the mean time I will take all my money and invest it in my wife's home business. She will pay herself the full amount as salary, then sadly go out of business. My investment will be wiped out. But thanks to the government guaranteeing my retirement account, your tax dollars will fill that back up. So I will be ready to invest all that money in my wife's new in home business.

Your investment will not return less than 4%. You do not get control of your investment. It will be controlled by the Social Security Administration. Politicians will not interfere with Broker/Investor relationships since there will be no such relationship. You assume that I meant change how and by whom the money is controlled. I meant there needs to be a change in how the money is invested. It still comes out of checks on a mandatory basis. It still goes to the Social Security Administration. The entire fund must make a 4% or greater return or a change of investment is made.

Businesses have HR departments to fully research health insurance companies and plans. Individual consumers do not. They would fall prey to the same spinning and twisting that you see with every other service out there that is sold direct to consumers. Ever try and get help with that extended warranty you got at Best Buy?
Price regulation? You must be disconnected from the rest of your brain. Insurance companies are businesses. If you regulate the prices they will need make up their profits somewhere. If they cant charge you more they will have to give you less. Remember what you said about the budget deficit?
Tort reform? Tort accounts for less than 2% of your health care costs. The insurance companies love the idea of tort reform. They can pad their profits that much more and reduce the quality of your care as well because they don't have to fear getting sued for denying your mom a kidney transplant.

Insurance will be removed from employment meaning an individual will not have to be employed to be insured. I am for a universal healthcare system with price controls. Tort reform is necessary to protect doctors from frivolous lawsuits not legitimate malpractice claims.

[Partha]

Well, Embar, there's only two ways to raise the revenues to continue government in a state like California - cut services or raise taxes.

Or cut spending tax dollars on educating, treating and jailing illegals.

Ok, now you have a whole bunch of illegals roaming your streets. What do you do with them, given that deporting them all won't work and you'll spend more trying to deport them than you're spending right now?

[Partha]

Your investment will not return less than 4%. You do not get control of your investment. It will be controlled by the Social Security Administration. Politicians will not interfere with Broker/Investor relationships since there will be no such relationship. You assume that I meant change how and by whom the money is controlled. I meant there needs to be a change in how the money is invested. It still comes out of checks on a mandatory basis. It still goes to the Social Security Administration. The entire fund must make a 4% or greater return or a change of investment is made.

Given how investing has gone the last year, how are you going to promise a guaranteed rate of return of 4%?

[Klast Brell]

Tort reform is necessary to protect doctors from frivolous lawsuits not legitimate malpractice claims.

the courts are there to offer that protection. Frivolous claims get bounced out pretty fast on summary judgment.

[Embar Angylwrath]

Your investment will not return less than 4%. You do not get control of your investment. It will be controlled by the Social Security Administration. Politicians will not interfere with Broker/Investor relationships since there will be no such relationship. You assume that I meant change how and by whom the money is controlled. I meant there needs to be a change in how the money is invested. It still comes out of checks on a mandatory basis. It still goes to the Social Security Administration. The entire fund must make a 4% or greater return or a change of investment is made.

Given how investing has gone the last year, how are you going to promise a guaranteed rate of return of 4%?

Diversification of risk over time.

[Trollbait]

Given how investing has gone the last year, how are you going to promise a guaranteed rate of return of 4%?

Diversification of risk over time.

Exactly so. Given the long term nature of Social Security investments and any 20 year snap shot of the market there is no reason not to meet a 4% threshold. In fact that is a fairly pessimistic number and the actual rate of return will likely be higher.

the courts are there to offer that protection. Frivolous claims get bounced out pretty fast on summary judgment.

Some do. A lot do not. Settlements for such claims are as bad as faulty judgements.

[Ddrak]

The only way to fix torts properly is to channel the punitive damages somewhere other than the plaintiff. That removes the jackpot nature of torts where you can reasonably lose 100 frivolous claims to get that 1 big win. Capping the punitive damages simply shifts the equation back to one of calculating risk vs. reward on legal matters - not something you ever want to encourage.

Actual damages are there to pay the plaintiff what they actually suffered.
Punitive damages are there to punish the defendant and have no business being sent to the plaintiff.

Dd

[Trollbait]

Punitive damages are there to punish the defendant and have no business being sent to the plaintiff.

Bingo

[Embar Angylwrath]

Who pays for the debt?

Well... it seems the VAT is back on the table, a national sales tax. Washington isn't left with much else. Some on the Hill are floating the idea now. There are only so many rich people, smokers and drinkers it seems. A rate of about 15%-20% on every sales transaction (service or goods) seems to be the target. Its about time, too. Spend more, pay more. Spend less, save more. Consumers drive the economy and tax revenues. They are in complete control of their tax burden.

[Lurker]

Links please.

Nothing is nuttier than the VAT or flat tax solutions that have been proposed in the past. Well, I take that back. Scrapping our current revenue system and replacing it with one that is extremely unpredictable and either guts revenue or greatly increases the tax burden on the lower class (it has to do one of those two things) is much nuttier.

[Embar Angylwrath]

Links please.

Nothing is nuttier than the VAT or flat tax solutions that have been proposed in the past. Well, I take that back. Scrapping our current revenue system and replacing it with one that is extremely unpredictable and either guts revenue or greatly increases the tax burden on the lower class (it has to do one of those two things) is much nuttier.

http://www.washingtonpost.com/wp-dyn/co ... 09_pf.html

[Lurker]

That discusses adding a VAT specifically to pay for health care. Where did you get the 15-20% number or the idea that they were talking about eliminating federal income taxes?

[Embar Angylwrath]

That discusses adding a VAT specifically to pay for health care. Where did you get the 15-20% number or the idea that they were talking about eliminating federal income taxes?

25%, my bad.

And in a paper published last month in the Virginia Tax Review, Burman suggests that a 25 percent VAT could do it all: Pay for health-care reform, balance the federal budget and exempt millions of families from the income tax while slashing the top rate to 25 percent.