Kamala’s $5 Trillion Tax Plan is Scary

I was reading IRA needed to be dealt with over 5 years for people not of retirement age. Perhaps I read an old article.

 

If an IRA is left directly to an estate, to go through the will, and did not otherwise have named designated beneficiaries, then it has to be distributed in 5 years. If there are designated beneficiaries, as there would typically be, then the default is 10 years, but “eligible designated beneficiaries” including spouses, disabled heirs, heirs less than 10 years younger than deceased, and children under 21 get an extended stretch beyond 10 years. Much of this was created in the secure act of 2018.

 

TY for the clarification!

 

Need both sides of the coin. Raising taxes is fine. Cutting spending is fine. Do both. Balance the budget.

Now for my rant…

We spend too much money funding debt and paying interest, which is out of control at 10% of the 6.1T budget.

We spend too much money on health. 1.6T. The medical industry and insurance is an inefficient use of money. Health care administration is a racket. Get private equity out of medicine. Get medicine back to private practice physicians and healthcare workers that actually do things. Health insurance companies should be for catastrophic health needs. Employers should pay for their employees health, not the taxpayers. Medicare, Medicaid — $848 billion for seniors over 65… well that is a lot of payments to a bunch of hospital administrators for some average results for seniors. Put doctors back in the front lines and cut all the waste.

Federal government’s mandate is to protect our boarders [sic ]. They have done a piss poor job. What have we got for our trillions post 9/11 other than a pat down and a cheep feel? Need to eliminate the TSA and DHS and reign in the spending.



https://www.cbpp.org/research/feder...llects taxes,amount was financed by borrowing.

 

I think history has shown us the Employer model doesn’t work.
When everyone stayed with one company it sort of worked.
Changing jobs, corporate mergers, corporate bankruptcy, etc,

It just doesn’t hold water. Coverage for all is the only thing that makes since, as much of a paradigm shift as it is.

Now all the middlemen, grifters, etc, absolutely

 

Is VA so dark green because of it's proximity to DC? Maybe they get the most federal help because of all the federal services that bleed into the state.

 

Republicans like Tom Cotton are out there saying, "Kamala wants to kick you off your employer plan." Such a load of horse poop.

 

What spending would you cut and how much?

 

I have gone full circle on this issue. I think healthcare is important for society at large, but I also see a massive private sector subsidy with single payer. The private sector profit on the backs of taxpayer funded education and healthy population. The capitalists should take care of their employees because that is the right thing for their business and competition for skilled labor. Is it perfect? No. Is government health care better? No.

 

If you feel so strongly that spending has to be cut, I would think you would be able to support that at least from the top level.

I asked the question because most people screaming for spending cuts really have no clue of what makes up the budget. Unless you are willing to materially cut social security, Medicare Medicaid and defense, you really aren’t going to move the needle much.

 

Defense in 2000 was 3.11% of GDP, today it's 3.75%. 820B, 13% of the budget. Needs to be lower, but it won't. Policing the world for everyone isn't cheap. Thats for sure.

Federal Appropriations for FY24 | Bloomberg Government (bgov.com)

 

The amount we spend on defense can be directly related to the threat level against the U.S. and U.S. interests overseas. In 2000, the Russians were not a threat. Their military had partially collapsed along with the Soviet Union in 1990 or so, and was not fully funded until after Vlad Putin came into power and started eyeballing the countries around him. Also, in 2000, China was not much of a threat. They had a large army, but it was not modernized, and their navy and air force were well behind the times. Now, China is a threat, just like Russia is. They want their neighbors' territory, and have been increasing military spending as part of a plan to get it. If we let Russia take over Ukraine, our defense budget will go up again, unless we stick our heads in the sand and wait to see the civilized world crumble around us.

Policing the world is certainly not cheap, but it is better than not doing so, if no one else out there is willing or able to do it. As the world's largest and most integrated economy (with a global currency), we benefit the most from free trade with the rest of the world. If we give that up (and republicans definitely seem willing to do so) and become an isolationist nation again, we will lose that economic benefit. We will also lose the ability to control and/or influence conflicts around the world until they become too big for us to ignore. That's how we got involved in WWI and WWII, by the way. A businessman with a background in real estate would likely not have a full understanding of this, and therefore should not be entrusted with the presidency of the world's most powerful country.

 

Build back better didn’t pass. I was vocal on here at the time because it was not budget neutral. There were some good things in it, but it contained a year or two of extending refundable child tax credit, funded by 10 years of taxes. Thankfully Manchin helped squashed it.

What came about instead was the IRA, which was much better and at least closer to being truly budget neutral. I am not of the opinion that the solution to everything is “cut government spending”. Much of the stuff in the IRA, Chips Act and Infrastructure bill were investments, and some of those investments are paying off. It wasn’t a perfect law, I think the electric car subsidies were excessive, but on balance good. There has been a lot of positive economic activity from these pieces of legislation.

There is investment spending and consumption spending. Investment spending is intended to have a long term payoff - consumption, which in government terms are mainly transfer payments, not as much.

Businesses borrow and invest all the time. The difference is they use accrual accounting. They don’t look at the purchase of property plant and equipment as “expenses”, like the government does.

Government spending as a percent to GDP is 22%.

Federal Net Outlays as Percent of Gross Domestic Product

That really isn’t out of line with history running just over 20%, considering the increase in debt service and higher interest rates plus an aging population that increases entitlement spending.

So what was the projection of spending % of GDP in 2024, from the CBO 2018 forecast?

https://www.cbo.gov/system/files/2019-04/53651-outlook-2.pdf

22%.

It’s exactly where it was projected to be, except we have added these new investments, yet the total is still the same as was expected in 2018.

Looking at taxes, currently at 16.3%, running less than the 2018 projection of 17.4%.

Now let’s go back and look at the revenue projections of 2017 - before the Trump tax cuts.

https://www.cbo.gov/sites/default/files/115th-congress-2017-2018/reports/52370-breakout-chapter1.pdf

Taxes were projected to be 18.2%. So the Trump tax cut reduced revenue, but spending overall is coming in exactly as expected, and actually lower considering higher interest costs and the added spending of the various Biden bills.

I am really hoping you will digest this and come back with a substantive and intellectually challenging response.

 

Why has the federal budget exploded since 2020? Sure covid needed extra spending but it’s not gone back to pre covid levels. Not even close. Yes a % is to service the debit that has gone up due to higher interest costs but no where near all of it.

 

Spending as a percent to GDP is almost exactly where it was forecasted to be in 2024 from 2017 and 2018.

Compare 2017 forecast for 2024 to 2024 forecast.

2017:

https://www.cbo.gov/sites/default/files/115th-congress-2017-2018/reports/52370-breakout-chapter1.pdf


2024:

https://www.cbo.gov/system/files/2024-02/59710-Outlook-2024.pdf

Summary

______2024v2017______2024v2024
discretionary …5.5……….6.2
Mandatory…14.4……..13.9
Interest…2.4…………..3.1
Total…..22.3………23.1

discretionary spending is higher - which makes sense, given Biden legislation. Mandatory spending is lower, probably due to slower medical expense growth than expected. Interest is higher.

Going back to 2017, the

______2024v2017______2017v2017
discretionary …5.5………6.3
Mandatory…14.4……..13.0
Interest…2.4…………..1.4
Total…..22.3………20.1


______2024v2024______2017v2017
discretionary …6.2………6.3
Mandatory…13.9……..13.0
Interest…3.1…………..1.4
Total…..22.3………20.1

Comparing 2017 to 2024, the increase has been mostly in interest - higher rates and higher debt, but also in mandatory spending which has grown but actually less than expected.

I am sure this blows up a lot of narratives, but it’s the truth.

 

I hear ya. I bet there's still easy 10% of waste in that budget. It is the gov afterall.

 

Because we have tied healthcare to an employer, despite our national mythos about small businesses, we are the developed country with the lowest percentage of small businesses. I haven't looked in a while, but we were the only OECD country with more than 50% of our employment being through large businesses. The countries with thriving small businesses all had healthcare available outside of employers.

If we truly wanted small business to drive our economy, we would find a way to make universal healthcare work.