2010-02-22

Closing the Social Security Deficit; Socionomics explains Obama's ratings

Social Security is already running deficits due to reduced payroll taxes. The government needs to find a way to plug this hole, but if they open up a public debate about the deficit in Social Security right now, it's likely to add massive fuel to the widespread anger over government spending. Instead:
Protect the Social Security Trust Funds. The President’s Proposal provides that, if necessary, funds will be transferred to the Social Security Trust Funds to ensure that they are held harmless by the Proposal.
Why does the spending for health benefits kick in two years after the bill and tax increases pass? It's to plug the massive financial hole in the U.S. budget that could create a "Greek-lite" scenario for U.S. Treasuries. The government assumes that in two year's time, the economy will pick up and the revenue raised from the taxes can be directed for healthcare.

Elsewhere, President Obama has reached a new low in his approval ratings. Healthcare is hurting the President, but I believe it is the social mood that is most responsible. Right now, the bailouts, stimulus programs (cash-4-clunkers, first time homebuyer credit) and Federal Reserve efforts have managed to inflate the stock market. Presidential approval ratings are not inflated, and I expect the stock market to converge with the ratings, rather than the other way around.

No comments:

Post a Comment