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70% of U.S. Government Spending Is Writing Checks To Individuals
An anonymous reader writes with this excerpt from Investor's Business Daily:"Buried deep in a section of President Obama's budget, released this week, is an eye-opening fact: This year, 70% of all the money the federal government spends will be in the form of direct payments to individuals, an all-time high. In effect, the government has become primarily a massive money-transfer machine, taking $2.6 trillion from some and handing it back out to others. These government transfers now account for 15% of GDP, another all-time high. In 1991, direct payments accounted for less than half the budget and 10% of GDP. What's more, the cost of these direct payments is exploding. Even after adjusting for inflation, they've shot up 29% under Obama." It's very hard to lay blame on only one part of the U.S. government, though; as the two largest parties are often fond of pointing out when it suits them, all spending bills originate in the House.
"Individual" in this case does NOT mean "person".
If you download the spreadsheet you can see that they classify total spending as either "direct" or "grants", of which the vast bulk is "direct". Everything that is not a grant must be being paid to an entity of some kind, whether an actual person, a company, a non-profit or something. You can verify this is the total Federal spending using the Monthly Treasury Statements at https://www.fms.treas.gov/mts/... - I recommend the PDF versions.
As for the percentage going to veterans, I expect the number of veterans isn't growing very much, whereas the Federal budget is. So a constant amount in a larger total is going to be a smaller fraction.
Bottom line, this article is FUD and should not be taken serious by anyone.
Graham
Just fill this out and you get an ITIN - which is as accepted as a Social Security number. It's even the same 3-2-4 type of number as a SSN, so it works great for illegal aliens to use for opening bank accounts, getting benefits, etc. And yes, a past girlfriend of mine (Thai national) had overstayed her visa about 8 years and used her ITIN for everything. At least she earned a living doing nails at a local nail salon, but it was a cash business (she "leased" her nail station). Never had a problem filing a tax return or getting benefits when she needed them... ITIN to the rescue!
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
I worked at the IRS for eight years in a program that checked all income sources reported by employers and others (1099s, W2s, etc) against income reported on individual tax forms.
If you had a hispanic last name the odds were good someone illegal was using your identity for a job. We'd get 20 or more W2's reported for some people who only had one or two jobs. That means illegal workers are paying withheld taxes, SS & Medicare into the system, with no hope of recieving benefits.
I saw thousands of these cases, and I was only one person of about a hundred working this program in a 5 state area. The amount paid into these programs by illegal immigrants is huge.
The entire argument about "passing the tax along" is bullshit. By the same logic, personal income tax is "passed along" to corporations, as people purchase less. It's disingenuous to focus on one particular link in the circular wealth transfer that is a functioning economy, and claim that taxing at that particular link is somehow unfair, while taxing all the others are fair.
As for "getting back at them rich", we just need to start taxing capital gains same as regular income (or better yet, more - it's only fair that "sweat of the brow" earnings are taxed less than collecting rent).
It would change America's mindset. If suddenly the "freeloaders" and system "cheaters" couldn't extract cash from an ATM with their foodstamp card, then they would have to go about it a different way.
There are plenty of cases where people live in gov't funded housing, get food stamps, slang drugs and have more than I do as professional. Take away the gov't funded housing, and suddenly they have some skin in the game... makes fuckin' sense to me. Maybe they find other avenues of illegitimate income, but maybe they don't. Either way, if we keep closing loopholes, eventually they have to do it the way I am.
Yeah, let's get rid of the freeloaders and cheaters.
From FTA:
http://news.investors.com/0310...
The 1% Handouts
Instead, a surprisingly large amount of federal money is handed out to wealthy Americans through Social Security, Medicare, farm subsidies, unemployment benefits, conservation programs, disaster payments and other programs.
An IBD analysis found that the richest 1% of Americans, in fact, receive roughly $10 billion each year in federal checks.
Outgoing Sen. Tom Coburn, R-Okla., who exposed these vast payment programs available to the rich, said "this reverse Robin Hood-style of wealth distribution is an intentional effort to get all Americans bought into a system where everyone appears to benefit."
The rich pay most of the taxes and pay a higher percentage of income on taxes than everyone else.
I know that right-wing talking point and I've checked it out before. Don't forget the footnote:*
_________
*Footnote: "Taxes" are defined to exclude FICA, which is the largest payment most middle-class and working people pay.
Percentagewise, the rich pay roughly 30%, the same as the middle-class, although those that can put everything into investment income like Mitt Romney pay about 15%.
That's why Warren Buffet pays less than his secretary.
Investing money in securities is typically about as useful to the economy as stuffing it in a mattress.
Umm, no.
When I buy $100 in Google stock, that money just vanishes as far as the economy is concerned (well, modulo the 30% broker fee, of course)
Again, this is wrong. For one thing, note that broker fees are on the order of fractions of a percent, not 30%.
When you buy Google stock from Google (i.e. during an IPO or subsequent public offering), that money goes to the company so that it can invest the cash in growth -- that means buying equipment, facilities, real estate, hiring and paying employees, etc. That money is most definitely in circulation.
Of course Google isn't selling stock right now because it has plenty of cash to fund growth and doesn't need to raise capital. So if you buy Google stock right now, you're buying it from someone else who bought it from Google (or from someone who did; the chain can be arbitrarily long). But the point is that you're buying it from someone. As it happens, I just sold a non-trivial (for me) chunk of Google stock; there's a check waiting at home for me which I'm going to spend on building a house (well, on covering some of the early incidentals; I'll get a loan for the bulk of it). That money will buy building materials, pay constructor workers, etc. That money is also definitely in circulation.
But what if you buy your stock from a big investment firm rather than from someone like me? Is it out of circulation then? Nope. The investment bank will take your cash and put it into something else... something, in fact, that it believes will be more productive than Google. At least that's true of the value-investing portion of the investment industry, obviously there are other segments that focus on arbitrage. The money managed by those segments is more debatable, but they do contribute significantly to liquidity, which translates to your ability to buy or sell Google stock on a whim.
There are some issues with the velocity of money in the US, which is a measure of how quickly it circulates. It's at the lowest point in decades. The fed has been pumping massive amounts of new money into the system, and it's not helping. I'm not enough of an economist to really understand the issues here, but the most sensible explanation I've seen is that circulation is reduced because people are using the money to pay down debt. We had a massive explosion of velocity fueled by an extravagant credit boom, but it was unsustainable. That unsustainability was a big part of the housing crash and the recession, but we still have excessive debt and the correction isn't over yet, so velocity stays low.
Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
No, the politicians had fairly low control for most of the history, most of the time it has been tied to the gold standard. Lincoln went off the gold standard with the Greenbacks but he was punished whenever he drifted to far (IIRC the Greenback at one point trade $.25 to the dollar). FDR weakened the link but it was Nixon who cut it.
The wealthiest individuals do not pay income tax because they don't have income. Their "income" is actually long term capital gains with the highest rate paid at 20%. They don't pay SSI, Medicare or Medicaide and even if they did they are capped at $125,000 in income. Because of this Mitt Romney had to pay extra taxes for his effective rate (the actual taxation rate) to be 15%.
For a wage slave to pay an effective rate of 15% they would need to make less than $10,000 per year. Warren Buffet has noted that he has paid less taxes (as a percentage of income) than his secretary since Regan was in office. Most of the 1% in fact avoid almost all taxes, including sales and others by using their wealth to exploit different state level taxation rates (such as keeping a home in a zero income tax state and a home in a zero sales tax state then spending part time in each state with sufficient time spent to eliminate both income and sales tax).
Properly executed with a good accountant the 1% have paid less than 10% in taxes by careful manipulation of their long term capital gains. It's possible to not only make money on a stock but claim an overall loss. And the best part about capital gains is that, baring dividends, no gains are realized until there is a transaction. This makes is possible to sink 100's of millions into a trust that appreciates in value but never pay taxes on it because a sale of shares never takes place. Then when money is needed a paper loss equal to the 20% tax is realized at the same time to eliminate the liability. This is so common now that the rich like Mitt Romney are forced to pay extra to hit net tax rates of 15%.
Only the middle class and upper middle class pay high taxable percentages, once you reach a certain asset threshold your taxation rate begins to drop substantially. The middle and upper middle class are the ones getting hosed, all so the richest among us can pay super low rates.