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Economics Discuss Trump's Second-Term Plan For Social Security: Starve The Beast at the Political Forums; Donald Trump won’t say it, but Republicans in the Senate will: Social Security and Medicare would be on the chopping ...

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Old 08-24-2019, 07:48 PM
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Default Trump's Second-Term Plan For Social Security: Starve The Beast

Donald Trump won’t say it, but Republicans in the Senate will: Social Security and Medicare would be on the chopping block in a second Trump term. Pointing to rising deficits, Republican senators have all but promised to gut entitlements if Trump gets four more years.

Sen. John Thune (R-SD), the second-ranking Senate Republican, expressed hope to the New York Times that Trump would be “interested” in reforming Social Security and Medicare. Sen. John Barrasso (R-WY) was even more optimistic. “We’ve brought it up with President Trump, who has talked about it being a second-term project,” Barrasso said. Senate Leader Mitch McConnell (R-KY) has made no secret of wanting to cut Social Security.

In using deficit fears to target entitlement programs, many Republicans are hoping to use Trump's second term to cut Medicare and Social Security. First, expand deficits through tax cuts, then declare that spending must be slashed. The chief target of these proposed cuts is Social Security, which historians have noted the mainstream Republican party has long sought to diminish, privatize, or both.


“Starve the beast”

Senate Republicans’ talk of entitlement cuts come in the context of new estimates from the Congressional Budget Office, which predicts the deficit will climb to $1 trillion in 2020. By 2029, the deficit relative to GDP is slated to reach the highest levels since World War II—an unprecedented deficit level for an economic expansion, when deficits tend to shrink.

Since past behavior is a good predictor of future behavior, and many Republicans are signaling they want to, Republicans will likely argue for cuts to Social Security and Medicare when a recession inevitably hits. This can be seen as a reprise of the tactic known as “starve the beast.”


“Starve the beast” is a political two-step that first generates deficits through tax cuts and, second, points to the alarmingly high deficits to attack government spending and reduce entitlements. Credited to an unnamed Reagan administration official in 1985 and long associated with Reagan economic guru David Stockman, the notion of “starve the beast” emerged from around the time of Reagan’s 1981 tax cuts, which were not paired with simultaneous spending reductions.

Reagan held that higher deficits would naturally lead to budget reductions: “We can lecture our children about extravagance until we run out of voice and breath. Or we can cure their extravagance by simply reducing their allowance.”

Today, you can see the “starve the beast” tactic clearly in the 2017 tax cuts—the main cause of the projected record deficits—to future spending cuts. Trump’s top economic adviser Larry Kudlow, a veteran of the Reagan administration, has made this argument himself. He explicitly invoked “starve the beast” in a 1996 Wall Street Journal op ed:

"Tax cuts impose a restraint on the size of government. Tax cuts will starve the beast… Specifically, tax cuts provide a policy incentive to search for market solutions to the problems of Social Security, health care, education and the environment."

It would be no surprise to learn that Kudlow, who now heads Trump's National Economic Council, is pursuing the same course today.

The quest to privatize Social Security

In his 2016 campaign, Donald Trump said bluntly, “I’m not going to cut Social Security like every other Republican.” Despite reports from fellow Republicans like Thune and Barrasso that Trump may, indeed, be just like every Republican in a second term, some on the right think it’s best that he keep that promise.

Among those urging caution is longtime Republican strategist Grover Norquist, famous for his libertarian credo, “I don't want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.” After the 2017 tax bill passed, Norquist cautioned Trump that Social Security and Medicare should be “off the table” in future spending reductions.

But to follow Norquist’s advice would go against the momentum of a conservative movement that has been gaining steam since the 1980s in their quest to cut or privatize Social Security.

Republican opposition to Social Security goes back to the program's earliest days. In the 1935 vote to create Social Security, just 4% of Democrats voted against the bill, compared to 16% of Republicans. The contemporary Social Security privatization movement originates in the conservative Cato Institute, which in 1980 sponsored a book that advocated for privatization. The book's author, Peter Ferrarra, went on to serve in the Reagan administration.

Advocates for dismantling Social Security knew they faced an uphill climb. In the 1980s, Cato and the Heritage Foundation published a paper, "Achieving a 'Leninist' Strategy," which promoted "guerrilla warfare against both the current Social Security system and the coalition that supports it" by creating "a focused political coalition" against Social Security advocates.

Cato’s Social Security privatization efforts have long been supported by Cato affiliate José Piñera, a former official under Chilean dictator Augusto Pinochet and the architect of Chile’s pension privatization. Forty years after that policy experiment, massive protests erupted in Chile demanding a better retirement system.

Influenced by Cato and other groups, Republican presidents have repeatedly attempted to cut or privatize Social Security. Reagan’s efforts stalled in the face of public opinion. George W. Bush vowed in his second term to expend political capital on the initiative, aiming to cut benefits by partially privatizing Social Security through the introduction of “voluntary personal retirement accounts.” Although it was his top domestic priority, Bush too fell short.

But this history of failures hasn’t stopped today’s Republicans from pushing Trump to go after Social Security, the linchpin of the U.S. retirement system.

Saving Social Security

Cutting Social Security benefits in the face of severe shortfalls in retirement income would hurt most Americans. As my colleague Tony Webb recently pointedout in an episode of my podcast Reset Retirement, one-third of retirees are dependent on Social Security for 90% or more of their income, and over 60% depend on the program for more than half of their income.

As Social Security expert Nancy Altman recently testified, Social Security is essential to the American retirement system. It is the base on which we all secure our retirement incomes. As Altman pointed out, “Social Security made independent retirement a reality. Prior to its enactment, the verb ‘retire’ did not mean what it means today.”

Preserving and expanding Social Security isn’t just an economic issue—it’s a civil rights issue, as Maya Rockeymoore Cummings and Meizhu Lui have argued. Due to the racial wealth gap, as well as the fact that minority workers have worse jobs and relatively lower employer pension coverage, non-white workers have a unique reliance on their Social Security benefits in retirement.

Given the dimming outlook for many American retirees, we must expand Social Security, not cut or privatize it—no matter what the deficit is. The greatest irony in Republican’s “starve the beast” mentality is that Social Security does not even affect the deficit. So perhaps it’s not really about the deficit after all.


All you need to know right there.


https://www.forbes.com/sites/teresag.../#4ebc50d03794
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Old 08-25-2019, 09:07 AM
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Default Re: Trump's Second-Term Plan For Social Security: Starve The Beast

An economics professor ignorant of how social security is funded and it's future prospects but full of venom for Republicans. Perfect to preach to the Resistance choir a toxic mix of hatred and fear.

Social security is treated as mandatory meaning it has first call on general revenue tax funds. It is among a group of social welfare programs that are funded even before Constitutional mandates like defense.

So-called discretionary spending is left with whatever mandatory spending leaves behind. So, claiming SS has no impact on the deficit is nonsense. And, it's going to get much worse as more baby boomers retire. The ratio of worker contributors to recipients has been declining, meaning their is a growing and probably irreversible gap between SS revenues and outflow for payments which will claim an increasing share of general fund tax revenue.

Mostly Democrats have engaged in such rabid fear mongering about pushing grandma over the cliff by any SS reform any President attempting reform must wait until the second term and then risk destruction of the rest of their agenda.
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Old 08-25-2019, 09:39 AM
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Default Re: Trump's Second-Term Plan For Social Security: Starve The Beast

What a load of nothing. Why should I read past this?

Trump's Second-Term Plan For Social Security: Starve The Beast
Donald Trump won’t say it, but Republicans in the Senate will: Social Security and Medicare would be on the chopping block in a second Trump term. Pointing to rising deficits, Republican senators have all but promised to gut entitlements if Trump gets four more years.
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Old 08-28-2019, 10:20 AM
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Default Re: Trump's Second-Term Plan For Social Security: Starve The Beast

What a dumb, false thread.
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Old 08-28-2019, 10:29 AM
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Default Re: Trump's Second-Term Plan For Social Security: Starve The Beast

Why does the left always think that tax cuts decrease tax revenues? Can't they see the extra spending that goes along with it?

Spending money and paying taxes on purchases increases, and there are no loop holes to get out of paying those taxes, isn't that a good thing for revenue?

Or is that not how it works?
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Old 08-28-2019, 11:29 AM
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Default Re: Trump's Second-Term Plan For Social Security: Starve The Beast

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Originally Posted by Dog Man View Post
Why does the left always think that tax cuts decrease tax revenues? Can't they see the extra spending that goes along with it?

Spending money and paying taxes on purchases increases, and there are no loop holes to get out of paying those taxes, isn't that a good thing for revenue?

Or is that not how it works?
Because it doesn't fit their narrative.
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Old 08-28-2019, 12:08 PM
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Default Re: Trump's Second-Term Plan For Social Security: Starve The Beast

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Originally Posted by saltwn View Post
Donald Trump won’t say it, but Republicans in the Senate will: Social Security and Medicare would be on the chopping block in a second Trump term. Pointing to rising deficits, Republican senators have all but promised to gut entitlements if Trump gets four more years.

Sen. John Thune (R-SD), the second-ranking Senate Republican, expressed hope to the New York Times that Trump would be “interested” in reforming Social Security and Medicare. Sen. John Barrasso (R-WY) was even more optimistic. “We’ve brought it up with President Trump, who has talked about it being a second-term project,” Barrasso said. Senate Leader Mitch McConnell (R-KY) has made no secret of wanting to cut Social Security.

In using deficit fears to target entitlement programs, many Republicans are hoping to use Trump's second term to cut Medicare and Social Security. First, expand deficits through tax cuts, then declare that spending must be slashed. The chief target of these proposed cuts is Social Security, which historians have noted the mainstream Republican party has long sought to diminish, privatize, or both.

“Starve the beast”
The hypocrisy of the Republicans is evident in the irony of the fact that Social Security/Medicare has never contributed one dime to the deficit spending or national debt of the United States. Social Security/Medicare are funded by the FICA/Payroll tax that has generated more revenue than expenditures and that literally "owns" part of the national debt. The deficits are all due to Republican cuts to taxes like the income tax for wealthy households and corporations that provide revenue to the general fund. Wealthy households and corporations have never needed tax cuts.

Future revenues for Social Security/Medicare will not be enough to maintain the surplus in the Social Security Trust Fund so Republicans claim that the benefits must be cut. Wrong. A minor adjustment in the FICA/Payroll taxes that fund Social Security/Medicare will fully fund both Social Security and Medicare beyond the year 2100.
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Old 08-28-2019, 12:19 PM
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Default Re: Trump's Second-Term Plan For Social Security: Starve The Beast

Quote:
Originally Posted by Dog Man View Post
Why does the left always think that tax cuts decrease tax revenues? Can't they see the extra spending that goes along with it?

Spending money and paying taxes on purchases increases, and there are no loop holes to get out of paying those taxes, isn't that a good thing for revenue?

Or is that not how it works?
It depends on who receives the tax cuts.

The lower the income the higher the percentage of income that's spent on consumption (the purchase of goods and services) and that expands the economy, increases the GDP, results in job growth to provide the additional goods and services, and increases overall taxable activity.

Higher incomes don't increase consumption if they have more income. They invest it and investments don't purchase goods and services, they don't expand the economy, they don't generate job growth because they're not spending the money on consumption, and don't increase the overall taxable activity of the nation.

Reducing the taxation of those that spend the money for consumption (i.e. lower income households) is called "supply side economics" because the government is supplying more money for consumption which created demand.

Republican tax cuts for the wealthy is called Trickle Down Economics but it doesn't trickle down and doesn't increase the tax revenues because it doesn't increase consumption.
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Old 08-28-2019, 08:04 PM
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Default Re: Trump's Second-Term Plan For Social Security: Starve The Beast

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Originally Posted by ShivaTD View Post
It depends on who receives the tax cuts.

The lower the income the higher the percentage of income that's spent on consumption (the purchase of goods and services) and that expands the economy, increases the GDP, results in job growth to provide the additional goods and services, and increases overall taxable activity.

Higher incomes don't increase consumption if they have more income. They invest it and investments don't purchase goods and services, they don't expand the economy, they don't generate job growth because they're not spending the money on consumption, and don't increase the overall taxable activity of the nation.

Reducing the taxation of those that spend the money for consumption (i.e. lower income households) is called "supply side economics" because the government is supplying more money for consumption which created demand.

Republican tax cuts for the wealthy is called Trickle Down Economics but it doesn't trickle down and doesn't increase the tax revenues because it doesn't increase consumption.
Right, giving accross the board tax cuts allows people who are successful in business to invest more in creating new businesses or expanding existing ones which in turn creates more jobs and pay checks. If we target success with higher taxes it discourages investment which in turn stunts economic growth.

The Keynesian approach of stimulus by robbing the future taxpayers and punishing success with punitive taxation just produced the slowest economic recovery since the Great Depression along with a massive increase in the debt. Brilliant.
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Old 08-29-2019, 08:30 AM
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Default Re: Trump's Second-Term Plan For Social Security: Starve The Beast

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Right, giving accross the board tax cuts allows people who are successful in business to invest more in creating new businesses or expanding existing ones which in turn creates more jobs and pay checks. If we target success with higher taxes it discourages investment which in turn stunts economic growth.
False. Increased demand results in the expansion of enterprise to meet the demand. If the demand exists then the funding for expansion exists based upon the gross profits of the enterprise. Reinvestments in the enterprise are tax deductible while tax cuts only address net profit after the expansion is paid for.

Quote:
Originally Posted by AZRWinger View Post
The Keynesian approach of stimulus by robbing the future taxpayers and punishing success with punitive taxation just produced the slowest economic recovery since the Great Depression along with a massive increase in the debt. Brilliant.
Keynes did not propose paying for a stimulus by taxing after the stimulus. Keynes proposed taxing during economic expansion so that a "rainy day fund" would exist when a recession eventually materialized. Instead of a $22 trillion national debt right now we should have a $10 trillion surplus in the Treasury because of our expanding economy that started under the Obama administration.

If Bush hadn't cut taxes and doubled the national debt during his eight years in office the Obama Administration wouldn't have had to borrow money for the recovery in 2009-2010.
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