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Who's in the mood for a little thought exercise today? Because I came across this Bloomberg piece that claims Wall Street banks get an $83 billion annual taxpayer subsidy and, when you look at it the way they do, it's hard to disagree. The piece further states that the 10 largest banks in America wouldn't even break even without it, so essentially all the comp from bottom to top is a taxpayer handout.

There are a couple of things you have to accept for this to make sense. First, you must acknowledge that Too Big To Fail is enshrined in our policy now, thereby eliminating the vast majority of risk to bank bondholders. Obviously, with minimal risk comes a decreased borrowing cost (or government subsidy, if you will) which the IMF has pegged at 80 basis points.

When that discount is applied to the total liabilities of the 10 largest American banks, it results in an $83 billion taxpayer subsidy (because the banks' safety net is the implied backstopping by US taxpayers). Put another way, without this subsidy America's top banks would barely break even, and some would even lose money.

I realize this is a bit of monkey math (It's not like the banks are getting a check for it from the Treasury. It isn't 2009 after all.). But don't rush to dismiss it, because there is definitely something there.

If you go to buy a car after being on your first job for 60 days, you're going to pay a monster interest rate if they don't laugh you off the lot to begin with. You get your parents to co-sign on the loan, however, and it's a whole other ballgame. It saves you thousands over the life of the loan.

Essentially the US taxpayers are the fretting parents co-signing the loan for the teenage banker's monster truck.

Neither bank executives nor shareholders have much incentive to change the situation. On the contrary, the financial industry spends hundreds of millions of dollars every election cycle on campaign donations and lobbying, much of which is aimed at maintaining the subsidy. The result is a bloated financial sector and recurring credit gluts. Left unchecked, the superbanks could ultimately require bailouts that exceed the government’s resources. Picture a meltdown in which the Treasury is helpless to step in as it did in 2008 and 2009.

With all the news about the sequester flying around right now, I could see cutting off this implicit subsidy becoming a popular notion with the general public (and, frankly, anyone with a love of free markets and an ounce of decency). What I think a lot of folks will fail to realize, however, is that it wouldn't actually save the government any money. On the other hand, it would certainly right an egregious wrong, so that's reason enough to do it in my book, but those well-paid bank lobbyists and scumbag politicians would never let that happen.

Anyway, I'd like to hear what you guys think. Is this an actual subsidy or more just a product of a think tank's need to justify its budget?

Comments (100)

  • diverse_kanga's picture

    You forgot to mention all of the millions of deposit holders (i.e. creditors) of the big banks who likewise benefit from the surety of federal government backing. So therefore essentially you have taxpayers 'backstopping' their own accounts. Sounds a lot like one giant insurance policy to me.

  • BigSwingingDave's picture

    Yes, it is a subsidy. I sure as hell wouldn't co-sign a deadbeat friends loan for nothing in return.

    However, I don't think anything can really be done about it though, the government likes to use the banks when necessary, like making loans to poor people to make them feel wealthier so they can get elected. Also, the banks make great scapegoats. Why would the politicians want to get rid of one of their favorite whipping boys? Get rid of the banks then people might actually blame them.

  • In reply to diverse_kanga
    Edmundo Braverman's picture

    diverse_kanga:
    You forgot to mention all of the millions of deposit holders (i.e. creditors) of the big banks who likewise benefit from the surety of federal government backing. So therefore essentially you have taxpayers 'backstopping' their own accounts. Sounds a lot like one giant insurance policy to me.

    Completely different scenario. The FDIC guarantee is insurance that depositors pay for. Not a freebie.

  • SirTradesaLot's picture

    How exactly would you cut off this implicit subsidy? If JP Morgan or Bank of America got in trouble, the overwhelming odds are that the gov't would step in and backstop them. Even if the gov't says "we're not going to backstop banks anymore", few investors would believe that statement.

    adapt or die:
    What would P.T. Barnum say about you?

    MY BLOG

  • duffmt6's picture

    Just some more context:

    Matt Levine's response to the methodology:
    http://dealbreaker.com/2013/02/why-should-taxpayer...

    Bloomberg's response to ML clarifying methodology:
    http://www.bloomberg.com/news/2013-02-24/remember-...

    "For I am a sinner in the hands of an angry God. Bloody Mary full of vodka, blessed are you among cocktails. Pray for me now and at the hour of my death, which I hope is soon. Amen."

  • TNA's picture

    Bloomberg has been slowly disappointing me for some time now. If borrowing costs went up so would lending costs. The banks wouldn't eat it. And all the big banks were profitable before TBTF entered into our vocabulary. So while this means TBTF banks can unfairly borrow at lower costs because of a government backstop, this isn't the same as the government giving direct hand outs.

    I'm sorry, but an academic paper is not going to be synthesized down to a BB opinion piece without taking some huge liberties. This is a great example of it.

  • MFFL's picture

    I do think it is a subsidy, but I question the 80 bps number, especially because they are applying it to ALL liabilities, many of which don't require interest payments like Minority Interest.

    It also includes depositor balances, which are covered by FDIC anyways so the safety of the bank itself isn't too much of a concern. Even if it were a concern, I think checking / savings accounts are pretty interest-rate-inelastic for the majority of people with bank accounts. Did any of you choose Bank XYZ because they paid 11 basis points on savings accounts rather than the 9 basis points of their competitors? It is basically assuming that everyone that uses the bank would demand an additional 80 bps per year on their savings accounts if it weren't for TBTF, which I don't think it realistic. I think it is a foregone conclusion for most people that you earn nothing on checkings / savings accounts, and it has nothing to do with TBTF.

    Just for some reference, I looked up JPM and saw they have about $2 trillion in total liabilities. But if we exclude the stuff like Accounts Payable, Minority Interest, and Customer Deposits, which wouldn't realistically pay 80 bps higher without TBTF and look at just long term debt (and its current portion), they have about $685 billion in borrowed money. 80 bps of this would be about $5.5 billion, and after accounting for the tax shield of debt interest payments, this is about $3.5 billion.

    This $3.5 billion is a lot of money, but considering the bank had net income of $19 billion in 2011, I would hardly say they would be scraping by without this "subsidy."

    The article also assumes that the banks would operate the same without the subsidy, which I don't think is realistic either. I don't think the banks would take out as much debt if they had to pay 80bps more, and I think they would charge more interest across the board as well. The banks provide a necessary service, if their costs went up, they would just increase their prices. The demand for loans, checking, and savings accounts is never going to go away, it just might stall from time to time in poor economic environments.

    "Well that's even more than less than unhelpful." - Jack Sparrow

  • TheKing's picture

    Break up the big banks so that they are small enough to fail without consequence.

  • n4ver's picture

    Well the too big to fail effect on banks (read hidden subsidies) was already investigated in 2012. The researcher estimated, between 2007 and 2010, simply being too big to fail saved America’s biggest banks a combined $120 billion.
    Google for "JPMorgan's $10 Billion Subsidy" and read the businessweek article (sorry, I cannot post the direct link as chimp).

  • In reply to TNA
    NorthSider's picture

    TNA:
    Bloomberg has been slowly disappointing me for some time now. If borrowing costs went up so would lending costs. The banks wouldn't eat it. And all the big banks were profitable before TBTF entered into our vocabulary. So while this means TBTF banks can unfairly borrow at lower costs because of a government backstop, this isn't the same as the government giving direct hand outs.

    I'm sorry, but an academic paper is not going to be synthesized down to a BB opinion piece without taking some huge liberties. This is a great example of it.

    Exactly what was going through my head.

    Banks make money on the spread. It's not as if the spread would just close up if the government stopped giving them discounted borrow, they would just shift the spread upwards. All of the bank's clients benefit from this subsidy as well (not that I think that's a good thing).

    "For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."

  • In reply to TheKing
    NorthSider's picture

    TheKing:
    Break up the big banks so that they are small enough to fail without consequence.

    Step 1: Take the large banks out from under their shield of bureaucratic red tape that makes building a small financial franchise next to impossible.

    "For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."

  • DCDepository's picture

    Bloomberg definitely puts forth an incomplete argument on its behalf and ignores some basic principles of banking (as already mentioned--spread). That said, the way Wall Street and Washington, D.C. operate is the argument for smaller and/or limited and/or Constitutional government. No matter if conservatives or liberals, Republicans or Democrats are in office, the form of governance we have with the revolving door of D.C. bureaucrats and Wall Street executives and with Wall Street money and Congressional politics is inevitably corrupting. This is why I never understood the Occupy Wall Street movement. It targeted the rational players--high finance and finance lobbying to reap excess profits--instead of the big government crony capitalist system that legally entices rational business players.

    If you reduce the influence of government on the market then you will inevitably reduce the ability of rich New Yorkers from receiving tax payer subsidies. As a banker myself, the idea that there isn't enough government in banking is breathtaking. We literally have entire departments dedicated to government compliance. Whether the "true subsidy" is $830 million or $830 billion, every penny of that subsidy is made possible through the bureaucracy, much of it the unelected bureaucracy.

  • In reply to NorthSider
    UFOinsider's picture

    NorthSider:
    TheKing:
    Break up the big banks so that they are small enough to fail without consequence.

    Step 1: Take the large banks out from under their shield of bureaucratic red tape that makes building a small financial franchise next to impossible.


    http://www.politixcartoons.com/wp-content/uploads/...

    Get busy living

  • In reply to NorthSider
    DCDepository's picture

    NorthSider:
    TheKing:
    Break up the big banks so that they are small enough to fail without consequence.

    Step 1: Take the large banks out from under their shield of bureaucratic red tape that makes building a small financial franchise next to impossible.

    Agreed with this 110%. It's EXTRAORDINARILY difficult to start and/or operate a small bank in this regulatory environment. Just on the surface level, without FDIC insurance no bank could prosper; however, obtaining FDIC insurance is like getting into Harvard. Then to keep FDIC insurance and to meet consisent regulatory body oversight, a banking institution has to undergo monster efforts and hire a very expensive compliance staff or department.

    There really is little incentive for small bankers to go into business. As a part owner in a bank, I often wonder what the hell it is that I'm doing. I can see that there can be some amazing payoffs, but the likelihood is very small for the typical investment group that would want to start a bank.

  • In reply to NorthSider
    Edmundo Braverman's picture

    NorthSider:
    TheKing:
    Break up the big banks so that they are small enough to fail without consequence.

    Step 1: Take the large banks out from under their shield of bureaucratic red tape that makes building a small financial franchise next to impossible.

    Agreed. Made me think of this, which is a really entertaining watch and all the episodes are on YouTube. And it's a true story to boot:

  • Gomez Addams's picture

    "Others may come up with different numbers, but the conclusion is the same: Banks get a very big subsidy from taxpayers. This subsidy distorts markets and encourages banks to become a threat to the economy."

    That conclusion still holds water, even if the method has some flaws. There is no doubt that we are propping up the banking industry.

  • In reply to Gomez Addams
    DCDepository's picture

    Gomez Addams:
    "Others may come up with different numbers, but the conclusion is the same: Banks get a very big subsidy from taxpayers. This subsidy distorts markets and encourages banks to become a threat to the economy."

    That conclusion still holds water, even if the method has some flaws. There is no doubt that we are propping up the banking industry.

    The question is, who is "we"? Half of American adults don't pay federal income taxes.

  • TNA's picture

    Government created this problem and is not blaming banks so there can be more "regulations" - aka bigger government.

    Roll back GS (thanks Bill Clinton for repealing it). Allow banks to fail. Shrink government.

    Done and Done.

  • In reply to UFOinsider
    NorthSider's picture

    UFOinsider:
    NorthSider:
    TheKing:
    Break up the big banks so that they are small enough to fail without consequence.

    Step 1: Take the large banks out from under their shield of bureaucratic red tape that makes building a small financial franchise next to impossible.


    http://www.politixcartoons.com/wp-content/uploads/...

    FWIW, I hate both the Republicans and the Democrats.

    "For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."

  • In reply to Gomez Addams
    NorthSider's picture

    Gomez Addams:
    That conclusion still holds water, even if the method has some flaws. There is no doubt that we are propping up the banking industry.

    With esoteric regulations that prevent new entrants. It's not as if there is no demand for banking and the industry would go under without the support of government. We are just so obsessed with keeping banks more heavily regulated than any other industry.

    "For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."

  • In reply to DCDepository
    UFOinsider's picture

    DCDepository:
    The question is, who is "we"? Half of American adults don't pay federal income taxes.

    Most of the people who pay neither federal income tax nor payroll taxes are elderly and living on a fixed income, unable to work due to a serious disability, or students, most of whom subsequently become taxpayers. In years like the last few, this group also includes a significant number of people who have been unemployed the entire year and cannot find work. Only 4.1% of the population is on welfare and considering that in 40 states welfare pays more than an $8 per hour job, I'm frankly surprised that number isn't a whole lot higher.

    Just putting a stake in the heart of that one once and for all because I'm tired of hearing it.

    Get busy living

  • In reply to UFOinsider
    TNA's picture

    UFOinsider:
    DCDepository:
    The question is, who is "we"? Half of American adults don't pay federal income taxes.

    Most of the people who pay neither federal income tax nor payroll taxes are elderly and living on a fixed income, unable to work due to a serious disability, or students, most of whom subsequently become taxpayers. In years like the last few, this group also includes a significant number of people who have been unemployed the entire year and cannot find work. Only 4.1% of the population is on welfare: considering that in 40 U.S. states welfare pays more than an $8 per hour job, I'm frankly surprised that number isn't a whole lot higher.

    Where do you get your stats?
    http://www.washingtonpost.com/blogs/wonkblog/wp/20...

    7% who don't pay taxes are poor.

    10.3% are elderly.

    The rest because of a combination of earned income tax credits and other deductions.

    Eliminate deductions, allow the bottom 25% to not pay taxes and have a progressive tax system. Done.

  • In reply to UFOinsider
    DCDepository's picture

    UFOinsider:
    DCDepository:
    The question is, who is "we"? Half of American adults don't pay federal income taxes.

    Most of the people who pay neither federal income tax nor payroll taxes are elderly and living on a fixed income, unable to work due to a serious disability, or students, most of whom subsequently become taxpayers. In years like the last few, this group also includes a significant number of people who have been unemployed the entire year and cannot find work. Only 4.1% of the population is on welfare and considering that in 40 states welfare pays more than an $8 per hour job, I'm frankly surprised that number isn't a whole lot higher.

    Just putting a stake in the heart of that one once and for all because I'm tired of hearing it.

    Payroll taxes DON'T contribute to the federal budget. That's a person paying into his or her future benefits--that's not a citizen paying for the general welfare or national defense of the nation. So let me put a stake in the heart of your tired bullshit leftist argument.

  • TNA's picture

    Yeah. Whenever someone talks about Federal Income taxes the "well they pay payroll taxes" comes out. Apples and Oranges.

    Edit - I am sorry. My response was on topic, but off discussion. I thought we were staying on topic and I was rebutting anyone who falsely claims that the majority of people who don't pay Federal Income taxes are poor/old.

  • Newspeak's picture

    I agree that there is an implicit subsidy and it's wrong, but if the implicit subsidy were gone as a result of legislation that ensured that TBTF wouldn't happen again, wouldn't they just take out less debt/make fewer loans? The optimal balance of deposits/loans would be different in that scenario so I doubt they would be breaking even or going negative in that scenario, although profits would definitely be lower.

  • In reply to DCDepository
    evan1482's picture

    DCDepository:
    UFOinsider:
    DCDepository:
    The question is, who is "we"? Half of American adults don't pay federal income taxes.

    Most of the people who pay neither federal income tax nor payroll taxes are elderly and living on a fixed income, unable to work due to a serious disability, or students, most of whom subsequently become taxpayers. In years like the last few, this group also includes a significant number of people who have been unemployed the entire year and cannot find work. Only 4.1% of the population is on welfare and considering that in 40 states welfare pays more than an $8 per hour job, I'm frankly surprised that number isn't a whole lot higher.

    Just putting a stake in the heart of that one once and for all because I'm tired of hearing it.

    Payroll taxes DON'T contribute to the federal budget. That's a person paying into his or her future benefits--that's not a citizen paying for the general welfare or national defense of the nation. So let me put a stake in the heart of your tired bullshit leftist argument.

    Those future benefits you just mentioned (SS, Medicare / caid) make up ~45% of the federal budget every year. You are saying that just because the payroll tax pays for one half of the budget, the half which you politically disagree with, and not the other half (military spending, interest on debt used to pay for pointless wars) which it sounds like you have a raging hard-on for, it doesn't count.

    Payroll taxes accounted for 35% of federal tax income in 2012. Income tax accounted for 46% of the total. Please don't bring your bullshit argument that one counts and not the other, you cannot cherry pick your facts to fit your biased opinion.
    http://en.wikipedia.org/wiki/File:U.S._Federal_Rec...
    http://en.wikipedia.org/wiki/File:U.S._Federal_Spe...

  • In reply to TNA
    UFOinsider's picture

    TNA:
    allow the bottom 25% to not pay taxes and have a progressive tax system. Done.

    Agree

    Also, per point 7 in your link "Over their full lifetime, the vast majority of workers end up paying income taxes and federal taxes". All I was getting at was that the 50% number is technically true but evokes a somewhat innacurate interpretatio of things. Most people pay taxes during their life (almost 90%) but at various points, for various reasons, don't. ...but there is no half of the population that does all the work and supports the other half for the duration, as GOP rhetoric likes to imply LOL

    And yeah, that's off topic.

    Get busy living

  • In reply to UFOinsider
    NorthSider's picture

    UFOinsider:
    Also, per point 7 in your link "Over their full lifetime, the vast majority of workers end up paying income taxes and federal taxes". All I was getting at was that the 50% number is technically true but evokes a somewhat innacurate interpretatio of things. Most people pay taxes during their life (almost 90%) but at various points, for various reasons, don't. ...but there is no half of the population that does all the work and supports the other half for the duration, as GOP rhetoric likes to imply LOL

    Also, there is no half of the population that is permanently "stuck" in the middle class, with no opportunity for upward mobility and no "working poor" who just can't get a break.

    Both parties are corrupt, stupid and full of empty rhetoric.

    "For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."

  • In reply to evan1482
    DCDepository's picture

    evan1482:
    DCDepository:
    UFOinsider:
    DCDepository:
    The question is, who is "we"? Half of American adults don't pay federal income taxes.

    Most of the people who pay neither federal income tax nor payroll taxes are elderly and living on a fixed income, unable to work due to a serious disability, or students, most of whom subsequently become taxpayers. In years like the last few, this group also includes a significant number of people who have been unemployed the entire year and cannot find work. Only 4.1% of the population is on welfare and considering that in 40 states welfare pays more than an $8 per hour job, I'm frankly surprised that number isn't a whole lot higher.

    Just putting a stake in the heart of that one once and for all because I'm tired of hearing it.

    Payroll taxes DON'T contribute to the federal budget. That's a person paying into his or her future benefits--that's not a citizen paying for the general welfare or national defense of the nation. So let me put a stake in the heart of your tired bullshit leftist argument.

    Those future benefits you just mentioned (SS, Medicare / caid) make up ~45% of the federal budget every year. You are saying that just because the payroll tax pays for one half of the budget, the half which you politically disagree with, and not the other half (military spending, interest on debt used to pay for pointless wars) which it sounds like you have a raging hard-on for, it doesn't count.

    Payroll taxes accounted for 35% of federal tax income in 2012. Income tax accounted for 46% of the total. Please don't bring your bullshit argument that one counts and not the other, you cannot cherry pick your facts to fit your biased opinion.
    http://en.wikipedia.org/wiki/File:U.S._Federal_Rec...
    http://en.wikipedia.org/wiki/File:U.S._Federal_Spe...

    No, that's not what I'm saying. FICA (payroll) taxes are for an individual's FUTURE benefit. INCOME TAXES are for the general fund, which pays for the established authority of government, such as defense, infrastructure, regulatory bodies, etc. Payroll taxes do NOT cover these items. They cover an individual's future "insurance" benefits. There's a HUGE difference between those taxes. If you aren't paying federal income taxes then you aren't subsidizing dick with regard to the banks--you have no right to complain about what government spends its money on.

  • In reply to evan1482
    NorthSider's picture

    evan1482:
    Those future benefits you just mentioned (SS, Medicare / caid) make up ~45% of the federal budget every year. You are saying that just because the payroll tax pays for one half of the budget, the half which you politically disagree with, and not the other half (military spending, interest on debt used to pay for pointless wars) which it sounds like you have a raging hard-on for, it doesn't count.

    Payroll taxes accounted for 35% of federal tax income in 2012. Income tax accounted for 46% of the total. Please don't bring your bullshit argument that one counts and not the other, you cannot cherry pick your facts to fit your biased opinion.
    http://en.wikipedia.org/wiki/File:U.S._Federal_Rec...
    http://en.wikipedia.org/wiki/File:U.S._Federal_Spe...

    I'm not getting into this debate of who does or doesn't pay taxes, but I sense that the point of bringing up people who don't pay income taxes is to point out that the top 1% of the population pays almost as much in taxes as the bottom 95% combined.

    Also, I would the entire government budget (military, welfare, education, etc.). The only reason people focus on welfare is because the growth in welfare spending is unconscionable. Military spending is way too high as well, but at least it hasn't exhibited the same growth trajectory. Please limit the government by whatever means possible.

    "For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."

  • DCDepository's picture
  • In reply to DCDepository
    evan1482's picture

    DCDepository:
    No, that's not what I'm saying. FICA (payroll) taxes are for an individual's FUTURE benefit. INCOME TAXES are for the general fund, which pays for the established authority of government, such as defense, infrastructure, regulatory bodies, etc. Payroll taxes do NOT cover these items. They cover an individual's future "insurance" benefits. There's a HUGE difference between those taxes. If you aren't paying federal income taxes then you aren't subsidizing dick with regard to the banks--you have no right to complain about what government spends its money on.

    Look, I don't want to get into a pissing match here, so let's just please look at the facts. This whole 50% of people don't pay taxes and just live off the government thing is basically saying that 50% of people don't pay into medicare / medicaid / SS becuase they don't pay income tax, but they still get a "handout" from the government from these programs. That is categorically false.

    The 47% comment was not made in regard to bank bailouts. It was made in regards to 47% being "takers" because they don't pay INCOME tax. Yet the tax they do pay (payroll) is going directly to the programs that are funding the benefits they receive in the future.

    Now, in regards your question of who the "we" are, you stated that [quote=DCDeposotory] Half of American adults don't pay federal income taxes {/quote]. This is just bad math. 47% of all Americans don't pay federal income tax, yes, but the denominator in this equation includes children (most will pay federal income taxes eventually) and the elderly (most paid income taxes pre-retirement). If you look only at the proportion of working-age adults who pay no income tax, it falls to ~60MM of 240MM working age adults.

    Let's do the math: 6/24 = 25% who pay no federal INCOME tax (although most do pay payroll tax, so they do pay for the entitlements they receive)

    There you go, there is the "we" you are looking for ... 75% of working age adults and 80% of the total population.

  • In reply to NorthSider
    UFOinsider's picture

    NorthSider:
    the top 1% of the population pays almost as much in taxes as the bottom 95% combined.
    Since we're bandying rhetoric, given they kind of own a controlling stake of pretty much everything, I'd say that's about par for the course.
    NorthSider:
    Military spending is way too high as well, but at least it hasn't exhibited the same growth trajectory.

    LOL oh hell no. Military spending is out completely out of control, and the "clean up" of veterans benefits and medical claims are a guaranteed future charge. Observe:
    http://www.project.org/images/graphs/Spending_by_C...

    NorthSider:
    Please limit the government by whatever means possible.

    I guess. Sure. Honestly it seems more straightforward to just focus on where each good solution is, whether that means making the government smaller, or making it work better.

    I do laugh at the notion of TBTF: we already have a national central bank and any of these other businesses are expendable. Part of me thinks that if such banks needed a bailout then the gov't should be allowed to dismantle them. The other part of me kind of agrees with current policy: the gov't has their back, but they're getting rid of the high risk stuff and making a few demands of their own. Nothing is free?

    Get busy living

  • TNA's picture

    Half this country doesn't pay Federal Income tax. The banks were bailed out using Federal funds.

    Real simple. Stop injecting payroll taxes into this because that is not what we are talking. Everyone that works pays payroll taxes.

    And the whole point about SSI insolvency is that payroll taxes won't cover outlays.

  • TNA's picture

    Smaller government is always the correct answer. Military spending as a % of GDP is very low and lower than in the past.

    We need to cut entitlements as they are going to go exponentially.

    Also, why is the fact that the rich "control" everything an excuse.

    1) That is just an airball statement

    2) Everyone benefits from this country. The roads, the laws, etc. Yet this country is funded by shrinking portion of the populace. Wrong and wrong.

  • In reply to UFOinsider
    NorthSider's picture

    UFOinsider:
    LOL oh hell no. Military spending is out completely out of control, and the "clean up" of veterans benefits and medical claims are a guaranteed future charge. Observe:
    http://www.project.org/images/graphs/Spending_by_C...

    That would be an impressive graph, if it even held a candle to the growth in welfare spending. Observe:

    Look, I agree with you: military spending is egregious, much higher than what is justified by our present situation. I don't have any argument with you here. But the fact that you aren't concerned with the growth in welfare spending is worrisome, to say the least.

    I guess. Sure. Honestly it seems more straightforward to just focus on where each good solution is, whether that means making the government smaller, or making it work better.

    There is no such thing as a "well-working" government. History has proven this point again and again. There is only one solution: limitation.

    I do laugh at the notion of TBTF: we already have a national central bank and any of these other businesses are expendable. Part of me thinks that if such banks needed a bailout then the gov't should be allowed to dismantle them. The other part of me kind of agrees with current policy: the gov't has their back, but they're getting rid of the high risk stuff and making a few demands of their own. Nothing is free?

    They shouldn't have bailed them out in the first place, plain and simple.

    "For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."

  • In reply to NorthSider
    evan1482's picture

    NorthSider:

    That would be an impressive graph, if it even held a candle to the growth in welfare spending. Observe:

    Look, I agree with you: military spending is egregious, much higher than what is justified by our present situation. I don't have any argument with you here. But the fact that you aren't concerned with the growth in welfare spending is worrisome, to say the least.

    Where the fuck do you guys get this shit? You literally live in your own universe, where facts have no sway in shaping your opinion. Observe:
    http://upload.wikimedia.org/wikipedia/commons/a/ac...
    http://en.wikipedia.org/wiki/File:Welfare_Benefits...

    If we are talking about welfare, i.e. TANF, these are the facts. The TANF budget was $17BNin 2011, not +$700BN. This is not a matter of opinion.

  • In reply to evan1482
    NorthSider's picture

    evan1482:
    Where the fuck do you guys get this shit? You literally live in your own universe, where facts have no sway in shaping your opinion. Observe:
    http://upload.wikimedia.org/wikipedia/commons/a/ac...
    http://en.wikipedia.org/wiki/File:Welfare_Benefits...

    If we are talking about welfare, i.e. TANF, these are the facts. The TANF budget was $17BNin 2011, not +$700BN. This is not a matter of opinion.

    Who in god's name defines welfare solely as TANF? You honestly think welfare spending in the United States is $17 bn in totality?? Is this a serious post?

    "For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."

  • evan1482's picture

    You can't have a discussion about federal taxes and then cite benefits taxed and paid out on the state level. TANF is the federal welfare program. If you want to talk about state taxes, who pays and doesn't, and state welfare benefits, that is a different topic.

    Seriously, who has a discussion about the federal government then cites payouts by states as a reason for limiting the growth in the federal government. This is why you have no credibility in the eyes of the majority of americans, or the world for that matter.

  • In reply to evan1482
    TNA's picture

    evan1482:
    You can't have a discussion about federal taxes and then cite benefits taxed and paid out on the state level. TANF is the federal welfare program. If you want to talk about state taxes, who pays and doesn't, and state welfare benefits, that is a different topic.

    Seriously, who has a discussion about the federal government then cites payouts by states as a reason for limiting the growth in the federal government. This is why you have no credibility in the eyes of the majority of americans, or the world for that matter.

    Dude, you don't understand the topic you are discussing. I suggest you read up on it before you continue making yourself look like a clown.

  • In reply to TNA
    evan1482's picture

    TNA:
    evan1482:
    You can't have a discussion about federal taxes and then cite benefits taxed and paid out on the state level. TANF is the federal welfare program. If you want to talk about state taxes, who pays and doesn't, and state welfare benefits, that is a different topic.

    Seriously, who has a discussion about the federal government then cites payouts by states as a reason for limiting the growth in the federal government. This is why you have no credibility in the eyes of the majority of americans, or the world for that matter.

    Dude, you don't understand the topic you are discussing. I suggest you read up on it before you continue making yourself look like a clown.

    Great argument, sound use of facts and reasoning.

  • In reply to evan1482
    NorthSider's picture

    evan1482:
    You can't have a discussion about federal taxes and then cite benefits taxed and paid out on the state level. TANF is the federal welfare program. If you want to talk about state taxes, who pays and doesn't, and state welfare benefits, that is a different topic.

    Seriously, who has a discussion about the federal government then cites payouts by states as a reason for limiting the growth in the federal government. This is why you have no credibility in the eyes of the majority of americans, or the world for that matter.

    Dude, you have no idea what you're talking about. Federal spending on Food Stamps alone was $78 billions. That's not state-level benefits, that's federally funded welfare...

    "For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."

  • TNA's picture

    I posted facts above. Are food stamps for the poor? If so then it counts. $75B annual for food stamps. Is Medicaid for the poor? Then it counts.

    Simply because your are myopic and do not understand what you are talking about doesn't excuse you. We are discussing aid for the poor, or broadly described as "welfare". TANF is but one part of it.

    But continue displaying your lack of being informed on this topic which you attempted to interject yourself into.

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