Marginal Economist

How do you know that the $1 that was not taxed has a factor of 1.84? It could be lower, it could be higher. I don't have time to research that right now. I'd guess we'd need to look at the savings rates for an incremental dollar of income for those who pay taxes and what the velocity of money is for general purchases. It could me much higher than 1.84. Remember when they were proposing that every automotive job created 5-10 supporting jobs? I'm not advocating food stamps, farm co-ops, or subsidies. But the 94-95% efficiency on the SNAP program is not bad. Add in another 0.5% for tax collection from the IRS and it would still be more efficient than most charities.

I don't think the efficiency is horrible. In 2010 they had 3.6B in costs for 64.7B in benefits - SNAP costs You can look at the 1.84 2 ways. If a SNAP recipient was going to buy $150 worht of groceries, and has $120 in food stamps, the buyer can now spend that $120 on additional goods or services. You could also look at a velocity of money angle and say that the money that was taxed would have gone into a savings accoount at a bank and not be lent out, creating no additional economic value. The question is would the $1 that was not taxed been spent in a way that would have created more than economic activity than the money put into SNAP.

I don't think subsidies affect the price of food. I think the reason that politicians say they give subsidies is to help the family farmer. I don't think that subsidies end up in family farms. I do think they end up in the hands of giant agricultural corporations. The question was would a giant co-op that could change market pricing for family farmers be better than a subsidy system? If the farmers could pool their goods and sell then for 20% more than the market would that help sustain American farming? The money that was given in subsidies could be redistributed through food stamps or lunch vouchers.

I'd guess July-Aug 2012.

If they formed a co-op they could set a price floor for crops and require certain levels of food be purchased. As the economy grows, they could increase the pricing. The co-op could purchase health insurance as a group so that individual farmers and their families don't have to pay so much for individual plans on the open market. The could take some of the increased margins and put it into a slush fund to help when their is a bad crop season or if a farmer is sick or injured. They could raise their prices 20% to companies like General Mills and Kroger. Put 5% into a slush fund under the non profit co-op so they don't have to pay taxes and collect the additional 15% as profit. If we increase the income of farmers, they are more likely to stay in business. If they can make more money farming, they are less likely to sell their land to commercial and residential developers. This will help raise the prices of existing homes or at least raise the pricing on new construction.

Quick thought on food subsidies and the independent farmers - could they form a giant co-op? They could use their capital and numbers to create a higher price floor for their crops and increase margins. Prices may go up marginally, but likely the supermarkets couldn't raise prices much - they would just have to have smaller markups. Would this work and is it a good idea?

I love that quote - and I think this is where the major differences are between the political parties. To correct this imbalance, both taxes are going to have to give.

Thanks for the observations. I would have to agree with it. I live in an area where housing prices have been hit very hard, and the housing talk is discussed at least 2x a week. The home 2 doors down has been foreclosed on twice in the last four years. Construction has virtually stopped. My daughter is supposed to be in a new elementary school building, but the construction has haulted due to budget. I don't know on the politics side. I know I'd like to see a politician who came out and said he only wants 1 term. I want someone who is not worried about paying back favors but gets the job done. I do think the economy will be the major theme of the election, with a huge focus on jobs and housing.

How long do you want the money to last? IIRC, most of the money that was taken from SS was in the form of SS purchasing T-Bills. I think they now hold $5T or so. I'll look for a link. Long term, the problem is generally that we don't have enough workers to support retirees going forward. Here is the trustee report - 2011 SSA: Status of the Social Security and Medicare Programs .

Thanks for the info - this was great. New Zealand may be a country I pay more attention to.

You can dislike them all. Most do. I want to see a Mr. Potato head politician, where you can take the parts of the ones you like and put them together in a way that makes you not want to punch them in the face.

Agree on a lot of this as well. It looks like the last debt ceilign deal whacked $200B initially from defense, and could take out another $400B if some agreements aren't reached. We need to reduce the size of our military and modernoze the equipment to allow our military to be more flexible and tactical. The days of giant tanks and month long mobilizations are over. We need to be able to quickly respond to 2-3 different theatres in the world within 48 hours. We need to be less involved in a lot of area all over the world. At the same time, do we want to add more 18-40 year olds to the job pool?

I don't think our current federal financial system is what the founding fathers invisioned. Leaving the gold standard, the creation of the federal reserve, GSE, Social Security, Medicare - these are all 20th century ideas. "Starving the Beast" doesn't work because we can keep going to the capital markets and get more cash. At some point we may find the cupboard bare and we really won't have an option. At that point taxes will have to rise dramatically and services will have to be cut dramatically. That is the point of this thread. The sooner we do both, the less severe it will have to be.

We can't keep doing the same thing. The discussion will soon by on the terms of our creditors instead of US citizens. See Greece, soon Italy. Again, the root causes of the issues go back at least 30 years. Throw a rock in the air, you are bound to hit someone guilty. A. Kitty food is underated. B. I wish there was a thread or two where we could talk about the idiocy of the other party.

I'd like to address in reverse order. Washington may not be able to print more money for much longer. We print money mainly by selling treasuries. At some point, the interest required to sell treasuries will go up and existing holders of treasuries (China, private investors) may not want to hold on to our debt obligations. The rest of the world is not happy with our quantitative easing and having the dollar as the dominant currency in the world. Wall street wasn't always the center of the financial world, and within 50 years it will likely be in Asia. I agree with ljcdad, this isn't a strong or weak decision. Difficult choices need to be made on a lot of issues, and the role of government (federal, state, and local) all need to be considered. A rise in prices would hurt the economy overall, especially the lower and middle class. Groceries already hold a larger % of a families budget in a low or middle class economy. A guy making 300K doesn't eat 6x more calories than a guy making 50K. To see what effect a subsidy has, we'd need to look at who is recieving the subsidy and historical pricing on similar goods without subsidies. Right now, it does not feel like the local family farm is getting a lot of subsidy. I think they belong to co-ops who can bargain like the big corporate food giants. I think there is some elasticity and substitutes in food pricing - if beef goes up I buy more chicken or pork. A subsidy only work if we have a price ceiling as well. If the gov't pays a farmers $1 for a pound of wheat, what is to stop the farmer from charging $8 or $10 for that same wheat? How do we know that subsidies are keeping prices down on groceries? As usual, I have many more questions than I have ideas..

I read most of the article - the appendicies seem to have some good info without the spin from the article. Most of the issues seem to be from how they expense their operations. LIFO accounting is not a oil industry exclusive, and if each project is required to use the same accounting method I don't see an issue. The inventory costs should be on a curve and should even out over the long run. In some instances it seems like they let oil companies take standard deductions instead of itemizing. If the numbers are close, I'm not sure the extra work in itemizing would make a big difference vs the additional costs. Most of the pieces look like depreciation schedules and R&D credits. I'm OK with losing R&D credits - they should have to invest if they want to profit. I don't know if most of the financial problems are going to come from discretionary spending and tax items. The interest on the debt and entitlement programs are much bigger than all discretionary spending combined.

1st - thanks for the variety of links. I never thought I'd see you post something from Cato. I haven't looked very hard at farm subsidies. From what I recall reading, there are twice as many farmers over age 65 than under 35. The top 2% of US farms produce 50% of the food. Most of the corporate subsidies are for 5 crops, including wheat, corn, and cotton. Very little if any subsidies go to meat or veggies. Things I'd like to know - how do our grocery prices compare to other countires? Can individual farmers as a Co-op produce the same efficiencies of scale as a corporation - Monsanto or Archer Midland? What percentage of our food do we export and are the subsidies in effect lowering the price for foreing countries? If we held back subsidies to agricultural and increased food stamps or other food aid, would that be more or less beneficial to the poor and middle class? Farming seems to be following manufacturing in the US, and this is probably not good. World population is growing exponentially and there will be limited food supplies. How we address pricing and supply going forward could be much more improtant in the coming years.

Agreed. Health care costs are currently about 20% of our GDP. There needs to be a way to reign in costs while providing quality, needed services to more people. Here is a link to an article on the passing of the Vermont single pay bill - Vermont governor signs single-payer health law I think it is too early to determine if it will cut costs as - a. it appears that they have not figured out how to fund it. b. it may not be legal with current federal law - they'll need a waiver. I do like the idea of individual states providing solutions as opposed to the federal government. I'd also like to see the Green Mountain Care as an option in a market exhcange of private choices that individuals from Vermont could choose from. If the gov't can provide more care for less money, I think it is a great option. If they need to raise taxes more than the offset in savings, it does not seem like a sustainable plan. I do think the single payer in Vermont will create more conversation which should be good. I don't think health care needs to be brought up again before more job creation issues are addressed. I think everyone would prefer to see revenue raised from more people working and less people collecting unemployment and food stamps.

Most of our core issues go back at least 30 years. Many much further. Pointing fingers isn't going to solve the issues. I think there may be a couple other threads that discuss partisan politics in this forum.

I pulled an invoice for a 2011 Explorer that stickered at 45345. A plan is 40841.07

The goal is to keep partisan politics out of the thread. Your last statement added no value to your post. Here is a link to an Economist article on MID - "Don't defend this deduction" Please ignore the comments that Pelosi is against the removal of MID that Boehner proposed. It appears that removal of the MID would not have a great impact on housing prices for the majority of the market. Any effect would likely be psychological.

Mortgage interest deductions are an interesting topic. I've questioned them for may years, especially when compared to CAFE laws in the auto indsutry. We charge a gas guzzler tax to vehicles like a Dodge Viper due to the amount of fuel they use. We likely give a larger subsidy to someone who buys a 5000 sqft home than a 1500 sqft home, and the 5000 sqft home likely costs 2x as much to heat, cool, and light. Why the disconnect in energy policy? How do we get away from the mortgage interest subsidy without crushing home prices further? Do we set a level like the FHA with jumbo mortgages or allow the first "X" amount to be deductible? If housing values drop further, will the decrease in property taxes offset any gains from the mortgage interest?

You brought up many good points. The agricultural subsidies reminded me off this couple who made a documentary on trying to live on $50 week but wanted to have nutritious food. Food Stamped They mentioned the government subsidiezed certain crops - Corn, Wheat, Rice- which end up being made into low cost but unheathy junk foods. The gov't then provides a limited subsidy through food stamps to purchase these foods. There are options, but if you only have $40 in food stamps you are going to look at calorie dense food. These choices are leading toward increases obesity and increased health costs, which again are subsidized by the government. Is our national food policy creating more obesity? 45.8 million Americans used food stamps in May. The average benefit was $133.80 per person. Chicago Tribune Link

Historical tax rates for a family of 4 In 2010, a family of 4 making $38251 had a tax rate of -.39% In 2010, a family of 4 making $76502 had a tax rate of 12.33% In 2010, a family of 4 making $153004 had a tax rate of 18.42% All levels are much lower than those of the 1980's, 1990's, and 2000's.

Tax Policy Link - revenue and expenditures In 2010 the US collected 2.16 Trillion dollars. In 2016, the US is projected to collect 3.82 Trillion dollars - a 77% increase. We'll still be nowhere near a balanced budget. Considering GDP rose at 1.3% annual rate in the 2nd quarter, and a .4% rate in the 1st quarter, there will need to be increased rates just to get to the projected numbers. Hopefully the OMB wasn't overly optimistic with the economic recovery when they set their projections, or else we'll be worse off than projected. bea link - GDP data