Tuesday, March 09, 2010

After Financial Ruin, Plotting America's Comeback

I caught some of this on Fresh Air today, After Financial Ruin, Plotting America's 'Comeback'. "'Yes, we can do what is necessary to create a better future,' says David M. Walker, the former comptroller general of the United States. But he says it's going to take some work, and soon.

Walker, the CEO of the Peter G. Peterson Foundation, is the author of Comeback America, a book detailing his belief that if significant fiscal reforms aren't immediately enacted in the United States, interest rates on the national debt will rise, and federal taxes could easily double from current levels by 2030"

I want to read his book now.

7 comments:

Anonymous said...

I have seen and heard David Walker interviewed many times and have been less than impressed. For me, he is a wolf in sheep's clothing.

He talks about the fiscal disaster that is national debt of the United States, but proposes to fix the problem by cutting back or reforming (he's never quite explicit about specific reforms though) "entitlement programs" like social security and medicare.

From what I have heard from Walker, he and his boss, Pete Peterson (a Wall Street billionaire) are simply more sophisticated versions of the Jim Bunnings, Sarah Palins, and Glenn Becksters of the world.

The mantra being that all problems have as their root cause the federal government of the United States, and the solution to all problems is reduced federal spending and tax cuts, which disproportionately benefit the wealthy.

So nooowww they want to reduce the deficit and debt. Are they in favor of immediately rolling back the Bush Tax Cuts, and perhaps increasing the tax rates back to pre "Reagan revolution" levels when the country had a miniscule debt/deficit problem by comparison?

If so, I haven't heard about it. In fact, I believe that Walker was a prominent Washington fiscal player (Comptroller General 1998 - 2008) for the last decade or so while the country went from producing budget surpluses and a national debt of 5 trillion dollars, to annual deficits in excess of 1 trillion dollars and doubled the debt to 11 trillion dollars. There's a record to be proud of. Who wants another lost decade....hands please.

I agree, the national debt, and the liabilities of the entitlement programs are the elephant in the room that no one wishes to discuss. All I know is that I don't have 10 million dollars in the bank so I take these issues seriously. What I don't take seriously are people who want to use these looming problems to transfer even more wealth from the bottom 99% to the top 1%.

Yes, this is class warfare and the middle and working classes are losing... badly.

Enough already.

TT

Howard said...

I didn't get that sense of him from the 15 mins of the interview I heard. They mentioned he was head of the GAO and sounded warnings to cabinet members but could never get a meeting with Bush.

I heard him say that the first Bush tax cut was arguably reasonable but the next two were irresponsible. Also while the debt is a problem he's more concerned with long term than short term and that growing short term debt to fix the economy is needed. He also said the government does useful things and we have to pay for them, but for those that think we're number one, we're not in a lot of areas like healthcare, education, infrastructure and we need to improve those things and they're expensive.

So I heard some details, and was intrigued to hear more.

Anonymous said...

Walker's boss, Pete Petersen was a principal of the Blackrock Group. Blackrock is a hedgefund. Hedgefund partners/managers like Petersen are taxed at a 15% Cap Gains rate on the money that they are paid (i.e., income) by Blackrock because of a tax loophole.

They are not investing their own money, why is their compensation not subject to income tax!!!!

To make it worse, the current combined rate of Social Security and Medicare (payroll tax) is now 15.3%. So a person making say 40 Thousand dollars a year, has his wage taxed at 15.3% payroll, and on top of that has to pay a federal income tax of about 20%.

So the billionaire hedge fund manager pays an effective income tax rate of 15%, while the hard working person, making a barely liveable wage of 40K pays an effective income rate of 30% (FICA plus Fed Income).

Pete Peterson made the bulk of his fortune being taxed at 15%, while the people who actually create the wealth, through their hard work everyday, have been taxed at that twice that rate on their labor.

When Peterson decides to amend his tax returns fo the last 20 years and pay his fair share of income taxes, then I might listen to what he has to say about the budget deficits and spending cutbacks on entitlement programs.

Oh, and by the way, apparently Balckstone received special tax treatment when it went public

I think we have all suffered enough already at the hands of the "Creative Financial Genuises" of Wall Street.

TT

Howard said...

1. That's definitely guilt by association. When Peterson does something you'll listen to Walker?
2. You're saying Peterson paid what the law said (and you're just assuming since I assume you haven't audited him) and yet not his "fair share". So the association isn't even guilty of anything.

Unless there's something that actually discredits the source or the data, I'd rather look at it before passing judgement, or not pass judgement at all.

kim said...

I heard the interview as well. At first I was skeptical but Walker's points were well reasoned. He gave positive and negative comments about Republicans and Democrats. He was specific about several things: upper middle class and above shouldn't receive social security and should have to pay for medicare. i.e. means testing for both social security and medicare. Also the age social security starts at should be raised. These aren't popular opinions but I suspect they will happen in less than 10 years.

Howard said...

I managed to listen to the whole thing. I learned a number of things and agreed with everything. I want to learn more.

Anonymous said...

The age that one qualifies for full Social Security benefits has already been raised. I just got my SocSec statement and I must wait (beyond age 65) to collect full benefits (god willing) at the age of 66 years and 10 months.

So adjustments have already been made and will continue to be made. Didn't need Walker and Peterson for that.

What exactly is the means test for Medicare that Walker proposes?

Will people who have sacrificed, paid their medicare taxes faithfully year-in and year-out and saved their whole lives to have a comfortable retirement now be subject to a means test for medicare?

What would the means test be based on?......, income, assets (including house(s)), or perhaps lifetime earnings so that we don't end up paying for former hedge fund managers who lose the last bet they place.

As for me, I have been paying Social Security and Medicare taxes since 1974 (child labor) and take a dim view of anyone associated with Wall Street offering advice on how to "save the system" for the good of America. After all, they did such a fantastic job over the last 30 years growing a sound economy, especially considering that they got all the deregulation they asked for.

To put it another way, I suppose I am very sceptical when a slick fox tries to talk his way into the henhouse.

TT