Why do they say Social Security checks are in danger if the debt ceiling limit isn't raised, yet there is supposedly a trust fund for it?

The Trust fund doesn’t hold cash, it holds debt of the United States. To raise cash to pay the social security checks, it would require selling bonds in exchange for cash. Can’t do that if the debt ceiling isn’t raised.

Simplistically, it’s like you have a cap on your credit card and your electricity bill is automatically charged to it, but you don’t get paid until next week. Your net worth is hundreds of thousands of dollars, but it is tied into your home equity and your retirement in long term CDs that you can’t cash. You could pay the electric bill eventually, but for today your credit card is maxed out, and the charge will be rejected.

It’s political gaming to drive fear in the elderly voter block.

‘cause they’ve been “borrowing” from the Social Security trust fund for years.

The fund is nearly…eh…tapped.

@zenvelo Gotcha, thanks.

@robmandu I think you’re right also.

@SABOTEUR Based on what @zenvelo says, do you still think that?

I am now officially giving up on trying to understand all this as Obama has come out and said Professional Politicians’ Understand Debt Crisis Better Than ‘The Public.
I will go back to figuring out my grocery list.

Another thing is that if the ceiling isn’t raised, the government will have to lay off some of its workers, which might include some of the people who handle such checks.

@Cruiser Well, that’s a pretty terrible soundbite that will definitely be used against him. But I get what he means and agree. He’s saying “the majority of the public doesn’t understand much about economics, this issue included.”

@bob_ Yep. Then they’ll say his policies killed jobs.

@cockswain I almost fell out of my chair when they played it on the news this morning but if you read the whole “context” in the link, he did qualify his comment…

”“Let me distinguish between professional politicians and the public at large. You know, the public is not paying close attention to the ins and outs of how a Treasury auction goes. They shouldn’t. They’re worrying about their family, they’re worrying about their jobs. They’re worrying about their neighborhood. They have got a lot of other things on their plate. We’re paid to worry about it.””

But I’m sure all they’ll be playing on Fox News is the first part of the quote all day.

I don’t see how the qualification helps much. He’s still saying ‘don’t worry your pretty little head about such things, we know better’. The problem is they don’t, they just know what plays better politically. Well sometimes not even that.

You disagree that most people in this country are largely ignorant about economics? While there may be millions of us that aren’t, I’d guess that way more of us than that that are clueless. But sure, I’ll give you that it comes off condescending either way, and I’m sure he’d wish he hadn’t said it. But it has to be frustrating talking to such a largely dumb nation so much.

You ever notice how politicians are way better friends with each other than Americans of differing political beliefs are? Wonder why that is.

@cockswain This is me talking out of my rear end, so it means nothing whatsoever. But at different times I’ve heard mention that funds that are supposed to be designated for Social Security have been systematically redirected to other purposes. Hard to prove without documentation.

A more reasonable explanation may be that more money is coming out to pay Social Security benefits than the amount being contributed to the fund. Social Security was in trouble long before any debt crisis. It is a publicized fact that warnings were given as early as the late 50s, early 60s about the eventual collapse.

What’s really going on is probably a combination of factors with the current “debt crisis” excellerating Social Security decline.

But, like I said…I’m just speculating.

Fair enough. ¾ of what I post on this site is just speculation too.

Political gamesmanship.

@cockswain

You may be right, but I don’t think Americans are really so dumb they can’t understand it. It is more that there are few politicians willing (or able) to explain it. It just plays better to say,‘it’s way too complex for you to understand’.

Social security from the beginning has always received more in revenue than it has had to pay in payments. The excess was supposedly going into an account for future payments (the lockbox). That never happened. The lockbox contains IOUs (no money). This may be the first year that payments exceed revenues (if not this year, within the next few). When that happens the government will have to borrow (or print) money to make up the difference. In the first few years of the short fall the difference will be small. That’s why some are saying the debt ceiling will not affect Social Security payments. They’re still taking all or most of the money slated for payments.

Government has been extending the life of Social Security simply by raising the limit on Social Security earnings. They may do it again or they may remove the ceiling entirely. Either way it doesn’t fix the problem but only extends it for some period of time. Sooner or later we will need to dip into that lockbox and when we do, we’ll know the cupboard is bare.

I’ll grant they aren’t so dumb they can’t understand it. I just think the majority will sort of glaze over and start fidgeting if someone began explaining it (and the related principles) for 15–30 min. I say this because of the popularity of The Transformers movies, George Lopez, and The Bachelorette. I’m one of the very few people I know that watches C-SPAN regularly.

Everything else you’re saying makes perfect sense and is a solid answer. I think I read that in the 50s, there were 45 workers to each retiree. Now there are two. The forecast is definitely for the payments to be less than promised benefits in the next few years.

Not that there aren’t many viable solutions to the long term solvency of SS. But that’s a different question that pops up on here occasionally.

@cockswain

The long term viability of everything is tied to the deficit.

Agreed.

@Jaxk, @cockswain I would offer that long term viability is also tied to a leader that can create a vision and goal that would further real solutions to this deficit. There is blood, sweat and tears that will have to be invested on both sides of the isle and IMO that message is just not being made as crystal clear as it needs to be. Instead we have this epic finger pointing battle waging before our very eyes and nothing and I mean nothing meaningful or productive is going to get accomplished.

See above. There is no trust fund that contains money. There is only an IOU. The government has been using the Social Security revenue for other purposes for years.

@josie Where else could we go to get cash we need to “use” interest free?? Administrations have used SS as free money for ever and why not?? Is it a better idea to have to issue bonds and pay interest on money we need?? Guess what happens then?? We need more tax revenue to pay for this additional interest expense and anybody that has a credit card or mortgage or car loan know all too well what that interest does to the final cost of that “loan”! SS allows our government to use available money for free and when the time comes, it will either then borrow money or raise taxes to cover that debt.

@Cruiser
True enough. It is interest free, and as you say, what idiot would refuse free money?
Having said that, question implies that there are still folks who have been beguiled by their political “leaders” into imagining that there is a fund someplace with money in it, which is their Social Security contribution. You and I know what they, apparently, do not. That somebody has to pay the money back, and in order to do that, they will have to borrow the money. And the way things are going, the interest rate may be high and then some.

@josie There is…it is one big fat IOU and another reason that raising the debt ceiling and raising taxes to pay for it is so important to one side of the isle. It is all one big political football and who ever has the ball will try to convince the masses that this is the best and only solution to a very complicated problem.

@Cruiser

That would appear to be the case.

@Cruiser The gov should have never been dipping in to social security ever. That money is for the elderly in their latter years. Not some pork barrel projects or to cover other gov. mistakes.

@Cruiser Sure, a leader that can unite both parties and the citizens would be impressive. How likely is that to happen when being the party in power overrules all actions? I really don’t have any problem with Obama (minor ones). I’ve found Congress to be a huge clusterfuck as usual. Mitch McConnell seems particularly awful. The only way a leader can lead both sides of the aisle is if on every issue both sides have more to gain than lose. That’s not going to happen.

@cockswain

Hopefully that’s not true. It would be nice to have someone considering what’s best for the country rather than what’s best for them (call me idealistic). I don’t want to start an Obama bashing session but it would seem that we’ve had 2½ years of Obama bashing the Republicans, and/or Bush. They been told to sit down and shut up, physically locked out of the negotiating room, and blamed for every misstep in the past 100 years. I’ve done a lot of negotiating in my time and you’ll never get cooperation by calling the other guy names. Leaders don’t operate that. And I can’t remember a President in my lifetime, that has been so openly antagonistic to the other side.

Yes, I hope it isn’t true either. But the president’s power only extends so far (which is theoretically a good system). So to effect change that would truly be best for the citizens of this nation, we’d need a whole bunch of like-minded individuals from both parties to get elected to Congress, then say “haha, you’ve all been fooled. We don’t care if we get elected again, we’re going to do what needs to be done.” And as much as that would piss a lot of people off, it’s the only way I personally see something effective happening. No matter what the solution, plenty of people won’t like it.

Regarding Obama and the he said/she said political bickering, you and I are both intelligent enough (me with a slight edge obviously) to know that such stuff will never change either. If I were some sort of a mud-slinging historian I’d wager I could find plenty of crap being thrown everywhere. So much of it is just theater anyways.

@cockswain I don’t know jack about politics, but in my humble opinion, you have an impressively logical perspective of the political landscape.

Kudos.

I very much appreciate the compliment.

@cockswain

The truth is I hope you’re right. Unfortunately I don’t think it is theater. I think it is a battle of wills and we’ll all be the worst for it. Obama has rejected an extension of the debt ceiling and if we hit Aug 2 without an agreement, He will have absolute control over what gets paid and what doesn’t. I wish I had confidence that he will do the right thing rather than the political thing, but I don’t. I feel like I’m riding on a plane with the engine out and all I can do is to assume the crash position. Two days ago, I didn’t feel this way.

I think these guys are just jockeying for better standing with their constituents so they can say “look what I did” come election time. I think there is no chance the debt ceiling will not be raised. That would actually be the dumbest thing our gov’t could probably do. It would hose the planet’s economy. I think it’s a big political game of chicken and each side wants the other to blink first. Both sides see this as a great way to send a message to their bases.

I am happy it is being addressed though. It is crucial to correct this problem. It may take 50–60 years to get the debt below $10 trillion, but better that than it being $50 trillion. Who knows what will happen, but I like that it is bringing national scrutiny to a problem that should have had this sort of action 25 years ago. I’m OK with this occurring every year the vote to raise the debt ceiling occurs. Every year they need to struggle to find a way to control it. Too bad they decided not to do it in the mid 90s, but rather during the weak recovery from a terrible recession. I agree with Ben Bernanke when he says a lot of these actions would be self-defeating.

It is entirely possible that the GOP has done real good by resisting just simply voting to raise the ceiling without any cuts. I think they are being stupid if they won’t allow any tax increases. I think the Dems are stupid if they don’t allow substantive cuts of some kind.

Ideally the next thing on the agenda in Congress is reforming SS, Medicare, and defense spending. Plenty of other cuts will save hundreds of billions (redundancies, inefficiencies), but those programs are in dire need of reform.

Another random thought: I don’t like the impact of the economic uncertainty. With the fiscal future so murky, people are hesitant to invest. I know that is very obvious, but playing chicken with the world economy is not good for business.

@cockswain

I can only find fault with the assertion that we should have done it in the 90s. We did. We cut spending AND raised taxes. The result was close to a balanced budget. The environment was quite different though. I’m not sure we can do that in this economy. A lot of people talk about the double dip depression of 1937. FDR both cut spending and massively raised taxes. The result was we went back into depression. The economy could stand that double whammy. But we didn’t have the debt problem we do today either. The compromise you suggest (raising taxes and cutting spending) worries me a lot. We have increased spending by over a $trillion/yr since 2008. It seems we should be able to live without some of that new spending.

Well, this could easily become a debate on which you and Qingu are locked in an eternal struggle, both with intelligent and well-researched positions. It’s very tough to tackle this issue since I do understand the logic of both sides. What I meant about the 90s was the fact that those were the most recent prosperous times, before the .com bubble burst. I mean that it would have been a good time to take heed of the growing debt and effect change that would prevent it from growing further. Arguably the surplus during the Clinton years accomplished that in the short term, but nothing substantive was done to reform the SS, Medicare, or defense spending. It wasn’t like we didn’t know our budget was going to get tighter and tighter as the baby boomers reached retirement age. Instead we let them reach retirement age without doing squat about it.

How we should raise taxes is tough to discuss too. Clearly there are problems with the tax system when there are giant companies paying little taxes. I’m sure you’re aware of the most recent allegations. Throw some arguably unnecessary gov’t subsidies on top of those and you’ve got a really lame situation. I know the argument about raising taxes can kill jobs. I wonder if the uncertainty about whether or not taxes will be raised screws up the planning more than raising the taxes, but I’m not taking a position on that. As far as I know, Obama wants to raise taxes only on the “wealthy” (those making more than $250K), and I don’t know the specific details of what’s on the table for the current debates. I would accept the notion that that income figure should be higher. Maybe $1M, I’m not sure without more research. But there is little question in my mind that the very wealthy have more money than they need.

I’m starting a new paragraph because of that last sentence. That opens the door for all kinds of debates about liberty, rights, redistribution, and the fact that the very wealthy invest. I find a person with a satisfied mind doesn’t need lots of money to be happy, and the ones that aren’t happy that are very wealthy will not be happier people if they raise their fortunes from $100M to $200M. Very socialist of me to think this way for sure. I would personally prefer the very wealthy paid higher taxes, with much stricter laws that lawyers and accountants can’t be hired to avoid. I will continue to feel this way unless I can see some evidence that the vast majority very wealthy actually invest the money in useful, productive ways. Who determines what’s useful? I don’t know. Something that helps people in some way. I am not a fan of the stagnation of the middle class as money continues to funnel upwards.

@cockswain

It would seem there ways to solve the problem without hurting anyone. If I had my druthers, I would rewrite the 65,000 pages of tax code and get it down to something you could hold in one hand. Unfortunately that is a major rewrite and we don’t have time. But it would seem we could find a way to leave enough money in the economy to allow it to grow, cut significant spending but not so much that it kills the economy and increase revenues without raising taxes. Let me give an example.

Say we cut the tax incentive to the oil companies. We get a little more revenue but I’d be a little concerned about oil prices or exploration. So at the same time we open up ANWAR or off shore for drilling. The oil companies now have more lucrative fields to explore for drilling (read the exploration has a better cost/benefit ratio) so they don’t get hurt by the loss of tax incentives (or at least not so much) and the government gains even more revenue from the oil leases. The drilling creates jobs, the oil extracted reduces our imports, and everybody wins.

These negotiations don’t have to be a lose/lose they really can be productive.

I would be all for a simple tax code. It would drive lots of accountants out of business though, but not every single job is good just because it’s a job. Have a simple, common sense tax code. Sounds great in principle, but would tie up the courts though. Judges would get stuck sorting out every liberty someone took with the language of the code that violates the spirit of the common sense that was intended. Then the judge’s decisions would need to be added to amend the code for clarification, and voila, we have a stupidly long tax code again. Only way I can see fixing that is by coming down hard on people that are trying to violate the spirit of the common sense, simpler code. When in doubt, pay the tax rather than risk punishment. But that’s a new problem then, isn’t it? A more Draconian society?

I’m in agreement with you that there is a correct amount of taxation vs. economic growth. With all the great economists out there, there is probably a general consensus optimal range on Laffer Curve given the current economic climate. Economics can be a bit of a dark art, and the most intelligently conceived models can still be wrong, but I’d wager there are enough historic data and brilliant quants out there to give us a pretty good forecast of the ideal taxation vs. economic growth right now. But economists and scientists don’t have all the power in this country. Politicians wanting campaign contributions from lobbyists are.

Your oil example is a very good one. At least from a non-environmentalist standpoint, but no need to argue that. You are correct that these negotiations don’t need to be a lose-lose at all. These Tea Party electees are really in a bind, though. Their base screams “don’t you dare raise the ceiling.” The rest of the Republicans are warned “don’t you dare raise taxes.” And the Dems base is screaming “raise the taxes on the ultra wealthy. Stop giving the giant corporations such breaks.”

Yet the ceiling has to be raised anyways. Who is going to blink first?

@Russell_D_SpacePoet It is a very simplistic practice all administrations have done in the past where SS monies are “borrowed” interest free and a very real IOU is put in place to cover the borrowed monies. If and when the monies in the SS account are insufficient to cover the SS benefits owed…THEN the government will issue more bonds to re-fund the SS account. It’s just like borrowing $20.00 from your mom until your next paycheck.

Just think of the staggering amount of interest this “free” borrowing of money has saved our country over the years. My guess is it would be in the billions of dollars in interest payments alone.

The money may be gone but the ability to borrow money to later cover it is not….at least for the time being.

@cockswain

Actually the tea parties are screaming don’t raise the debt ceiling, they are screaming don’t raise the debt ceiling WITHOUT comparable spending cuts. A very sane point if you ask me.

And just a point of order here, simplifying the tax code does not result in more court disputes it results in less. Every time you add an exemption you created an argument to decide what qualifies for that. When you eliminate an exemption you eliminate the argument altogether.

Actually the tea parties are screaming don’t raise the debt ceiling, they are screaming don’t raise the debt ceiling WITHOUT comparable spending cuts. A very sane point if you ask me.

I think they are asking for too much too soon.

Regarding the tax code, I suppose we can’t really discuss what the nuances of a simplified version would be unless we were discussing something that was actually written. I guess in my mind I pictured that people would take liberties with the language of the simpler code, and courts would get tied up in defining vague and ambiguous terms.

@cockswain

Unfortunately we have two separate and distinct problems facing us. If we don’t raise the debt ceiling we lose our triple A credit rating. Also if we raise the debt ceiling without deficit reduction of $4 trillion we lose our triple A rating. We can get to this number without draconian cuts but if we create a plan that shows massive cuts 6–8 years out we all know they won’t happen. And I doubt anyone would be fooled by that strategy. Smaller cuts up front will reap more significant returns over the long term and could be handled. We know the war spending is winding down. Hell that hit a peak at about $180 billion, we should be able to show the reduction that is happening now and the decrease that will take place over the next few years. We know that TARP and stimulus added $1.5 trillion to the budget numbers, we should be able to show the reduction now that they are over. Hell even with reasonable growth we should be able to bring the budget down around $3.3—$3.4 trillion within the next couple of years. Hell at the 2008 level of $2.9 we were running just fine. Meat was getting inspected, mail was getting delivered, roads were being built, police were policing, etc.

As for the tax code, I’m not looking to simplify the language, I want to simplify the code. If you get rid of the farm subsidies, you don’t need to define them, list what qualifies, what percentage of the farm can be farmed, etc. You also don’t need to worry about what new hybrid may be contested for qualification, etc. If the farm subsidy goes away so does all the language pertaining to it. And all the contention over where it applies.

The problem isn’t the trust fund it is the people responsible for issuing and mailing the checks. If the government shuts down, the only way the check will be sent out is if they can talk the people responsible for payments into working for free.

Just in case anyone didn’t already know, the U.S. Government continues to receive new revenue daily from ongoing tax collections. That daily revenue exceeds the outflow of all entitlement programs (like Social Security) as well as the cost of servicing the existing debt.

So, I seriously doubt there’s any real risk of Social Security checks not being mailed out nor will we default on our loans… unless government officials (ahem, Democrats in power) choose that path.

On the other hand, if a resolution is not reached, “non-essential” services, like the U.S. Parks and Wildlife will probably shut down immediately. And I’d expect a massive hew and cry from the populace if it does.

_ Also if we raise the debt ceiling without deficit reduction of $4 trillion we lose our triple A rating._

I can’t find any info about that. Let me make sure I understand these numbers properly. The budget for 2011 is $3.7T. The 2012 budget assumes we’ll borrow $1.6T of that. Hence the deficit is $1.6T. My question is about this $4T you reference. Why would we lose our credit rating if we don’t reduce the deficit by $4T (I’m assuming you rounded the $3.7T up for simplicity)? That would mean we need to run a substantial surplus, right?

Perhaps you just misspoke though. I just want to be sure I’m clear.

About the tax code, I’m with you in principal. Obviously making the tax code simpler is wise on a number of levels. My understanding is the various plans for the debt ceiling negotiations all include tax reform, the simplest I’ve seen being to lower all tax rates and eliminate loopholes and subsidies. Not that we haven’t heard “eliminate loopholes” before. I’m not really in disagreement with you on this topic, I think we’re just talking past each other. An example of what I’m thinking would be that this “simpler” code may state “all charitable donations may be deducted from gross income.” Without expressly defining “charitable”, someone could set up a “charity” to which one transfers a lot of money. Or donates to a “non-worthy” cause. Get what I’m saying? The courts would have to litigate such definitions if the IRS perceived someone violated the good faith or common sense of the code.

Possibly that wasn’t the best example, but hopefully you see sort of what I mean. Similarly, how could you write the capital gains tax in a simple way that wouldn’t result in natural loopholes by what those attempting to game the system would call their “interpretation” of the language?

@cockswain

The deficit reduction of $4 trillion is measured over the next ten years. Credit-rating agencies Moody’s and Standard & Poor’s have in recent weeks said that they may downgrade the U.S’s gold-plated credit rating unless a deficit-reduction deal in the range of $4 trillion is reached. It really only requires a $400 billion annual cut not a balanced budget (let alone a surplus). Of course the further out the cuts, the bigger they have to be.

As for the tax code, I think we’re missing each other. When I say the tax code should fit in one hand, it doesn’t mean a single sheet of paper. But it shouldn’t take a library to house it either. All the definitions and tax rates can easily fit into a single book as long as you get rid of all the exceptions (energy credits, farm subsidies, ethanol subsidies, etc.). The charitable donations are already well defined, where we start adding complexity is where we start adding language to say if you make above X your deduction is reduced by Y and you can only deduct Z dollars. I’m at a loss as to why we want to make someone pay tax on what they donate to charity to begin with. We either want to encourage charitable donations or we don’t. If we do, they should be tax exempt. If we don’t they should be deductible. Get rid of the complexity.

Ok, thanks for the clarification. I sometimes confuse to what some of these numbers are associated, given how many numbers are floating around in all the economic discussions in the media as well as this site. I’m with you now.

For some reason I was actually picturing you meant simplifying the code to one page. Yes, I would prefer less complexity as well. I do not enjoy doing my taxes in their current form. I would find them painless if they were simpler. Larger organizations must find them exhausting. Savvy accountants must think they are stupid.

Out of curiosity, in your ideal world, what would the ballpark size of the gov’t budget be? Assuming you could eliminate any program you wanted.

@cockswain

Actually in my ideal world it would be very small, just a few pages incorporating a national sales tax. But in lieu of that, a tax book of a maybe a thousand pages would be acceptable. Something like a large encyclopedia.

And frankly savvy tax accountants love the tax code. It is fraught with opportunity and keeps them living in comfort.

@Jaxk A national sales tax would hit the poor and middle class much harder than the rich. We really really want to stay away from that tax. Additionally, it will be a tax on a tax because suppliers and manufactures pay state and sales taxes too.

We would be much better off of the federal tax was a progressive flat rate based on income and capital gains income, ranging from zero for poverty level to about 25% for the highest incomes. Throw out the whole tax code and keep it down to about two pages. Fully automate the IRS and only have audits for people that lie about their income.

Only allow legitimate businesses incorporate, do away with S-corp. and put a 50 year time limit on corporation licenses.

At least we can agree the code should be simpler.

When I said savvy accountants thought the code was stupid, I was referring to the fact that they know how to easily exploit it.

@Ron_C

A sales tax is only applied to the end user. Manufacturers don’t pay sales tax on the materials. You’re thinking of a ‘value added tax’. I would never support that. I don’t have a problem with a flat tax but frankly believe that everyone should pay some tax. Otherwise they have no skin in the game. It’s too easy to demand more services when someone else has to pay the freight.

I’m not sure how you would handle the time limit on corporations. Does the government take them over when time runs out? Apparently you’re no fan of the stock market.

I just read this editorial, asking if this is the worst Congress ever. I like the points it makes, albeit briefly supported.

@cockswain

Interesting but (I know this will come as a surprise) I tend to support the Republican position. Let me explain why.

Over the first two years of Obama’s reign there was absolutely no compromise. In all honesty, he had a super majority and felt no need to compromise. At the same time he took every opportunity to ridicule and demean Republicans even going so far as to tell them to ‘shut up and get out of the way’. If you recall the Republicans we locked out of the final health care negotiations. They physically locked the door. Any suggestion that there was compromise is disingenuous at best.

So now fast forward to the past six months. Republicans have offered several plans to fix the budget. The Ryan plan, Cut Cap and Balance etc. Obama has not changed much in any of this and continues to use the strategy of ridicule and demean to try and get his way. It was poor form at best to invite Ryan to his speech and then use the opportunity to ridicule him. All through this I have seen no real compromise on anything.

I’ll give Obama credit for the PR war however. Without offering a single plan, without defining a single cut, he has effectively painted himself as the good guy. I would love to see exactly what he was willing to cut even at the incredibly low level he discussed. Basically $100 billion/yr which could be taken from the defense budget alone. I was certainly expecting more.

It’s nothing but liberal scare tactics, but it isn’t working. People will still get their SS checks on the second, except for me, I get mine on the second Wednesday of the month.

@Jaxk Since I may still have your ear, do you agree with the numbers in this graphic?

@cockswain

In a word, No. Too much manipulation of the numbers. For instance, You want to exclude the recession incurred by Obama. I don’t have a problem with that logic but if you exclude the decline under Obama, you should exclude the decline for the 2000 recession as well. If events were beyond the control of Obama (the recession began before he took office) then events were beyond the control of Bush (the recession began before he took office). There’s another $700 billion excluded for student loans. I don’t know what or why that’s excluded. It may or may not be legitimate but I really don’t know why it’s excluded.

The $200 Billion assigned to Bush for TARP seems a bit much. I know Tarp was passed under Bush but the monies that are still outstanding were pretty much spent under Obama and spent in a way contrary to the intent of TARP (buying ownership in GM etc.). It’s a nit but worth mentioning.

The real glaring issue in this, is the cost of tax cuts. To come up with this number, you have to assume that the tax cuts had absolutely no impact on the economy. That without the tax cuts the economy would have rebounded the same way as it did with the cuts. I can’t see how any reasonable person could make that argument. We may disagree with the impact taxes have on the economy but to say that they have no impact, flies in the face of virtually any economic theory. It’s simply unreasonable.