Third Way has a great idea, a tax receipt, except a closer look and it's disturbing (updated)

[ProSense]

Here's the Receipt:



Why on earth is Social Security completely distorted in relation to military spending?

If you add up the military spending, which includes the lines for Veterans benefits and military retirement benefits, it comes to about $529 billion.

Seriously, compare that reciept to the NYT chart of the 2011 budget.

The receipt idea is nice, but how hard would it have been to represent the numbers accurately?

It figures that this distortion is being passed off by none other than Third Way

About Us

Third Way is the leading moderate think-tank of the progressive movement. Our aims: an economic agenda that is focused on growth and middle class success; a culture of shared values; a national security approach that is both tough and smart; and a clean energy revolution. We create high-impact products for use by elected officials, candidates and the Administration.

Co-chairs

Jane Harman
US House, California

Ron Kind
US House, Wisconsin

Joseph Crowley
US House, New York

Artur Davis
US House, Alabama

Melissa Bean
US House, Illinois

Gabrielle Giffords
US House, Arizona

Blanche Lambert Lincoln
US Senate, Arkansas

Evan Bayh
US Senate, Indiana

Thomas Carper
US Senate, Delaware

Mark Pryor
US Senate, Arkansas

Claire McCaskill
US Senate, Missouri

Mark Udall
US Senate, Colorado

This clever receipt concept with all its distortion is going to be widely circulated without explanation, giving the impression that spending on Social Security is out of control and defense spending isn't as bad as people are making out to be.

Here is the chart being pushed by Talking Points Memo and Ezra Klein and Tapped

Is the distortion intentional? This is from their Tax Receipt idea brief (PDF)

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An educated consumer is a progressive’s best customer.
With apologies to Syms clothing, progressives might have a better chance of winning greater funding levels for programs that invest in children, education, energy, environment, transportation, innovation, foreign aid, humanitarian assistance, and housing if taxpaying citizens had a better idea of how their money is spent. Most of these items represent a pittance of government spending as compared to other items in the budget.

At the same time, Americans might encourage Congress to be more fiscally responsible if they saw how much of their actual taxes went for things like interest on the national debt.

Taxpayers have a right to know.
According to the IRS website, in 2008 the median tax filer in America had an adjusted gross income of $34,140 and paid $2,790 in federal income taxes.2 Assuming that all of that income was earned through wages, this filer would also contribute $2,610 to Social Security and Medicare through FICA. That is a total of $5,400 in federal tax and FICA payments. For most people, that is an enormous sum of money—it certainly is for the median taxpayer.

Consumers can easily see detailed information on every product they buy, but the largest item that they purchase in a given year—their taxes—they get nothing. They have a right to know what they are paying for.

Voters need to know the choices in the deficit debate.

Most voters believe the budget deficit can be solved without touching Social Security and Medicare.3 Instead, they believe that government waste is the source of the deficit. In fact, entitlement spending already consumes half of the federal budget and will rise to two-thirds of the budget by 2030. Elected officials cannot offer meaningful choices about changing revenue and spending unless voters appreciate where federal dollars currently go.

THE SOLUTION
A Taxpayer Receipt

<...>

Get it: Social Security, Medicare and Medicaid are out of control; defense and wasteful spending, not so much.


Updated to add this excerpt from their Deficit Reduction Agenda (PDF)

<...>

Soak the Rich

On the left, leading intellectual and activist voices have said that we don’t have a spending problem (except for defense, of course). Even a minor reduction in spending, such as the freeze on overall discretionary spending proposed by President Obama, is taken as an affront. Former Labor Secretary Robert Reich called the Obama plan “another win for Wall Street, and another loss for Main.”9 U.C. Berkeley economist Brad DeLong labeled it “fundamental unseriousness… that will do short-term harm to the economy.”10 Behind the outrage is the implausible notion that there isn’t any domestic discretionary spending that is wasteful, not completely necessary, or in need of reform.

But that is a walk in the park compared to entitlements where there is complete denial. The New York Times columnist Paul Krugman went so far as to argue that the Social Security crisis is fabricated. “The program won’t have to turn to Congress for help or cut benefits until or unless the trust fund is exhausted, which the program’s actuaries don’t expect to happen until 2037 – and there’s a significant chance, according to their estimates, that that day will never come (emphasis added),” wrote Krugman in August.11 Among the major assumptions behind the optimistic scenario Krugman relies upon is an increase in the U.S. birth rate to levels not seen in America since 1970 and one akin to those of developing nations like El Salvador, Jamaica, and Colombia.12 Another assumption—the progress in Americans’ life expectancies suddenly and inexplicably stalls to levels not seen since before World War II.13

On the progressive side, the main thrust of budget solutions has been to increase taxes on the rich and corporations. We agree that there is room to increase taxes on wealthy Americans. But we are kidding ourselves to believe that the budget shortfall can come near to closing through taxation on high earners. Only 4% of American families have taxable incomes of greater than $200,000.14 Less than one percent have taxable incomes above $500,000.

<...>

It criticizes conservatives too, but oh my! As for taxable incomes, they should mention that 23 percent of the income is concentrated at the top.

[gateley]

1. I wouldn't necessarily consider some of those co-chairs as "moderate". nt

[Kdillard]

2. Excellent point and something I noticed but

when I saw the people behind it I was not surprised.

[ProSense]

5. How can anyone say this

in good conscience:

Most voters believe the budget deficit can be solved without touching Social Security and Medicare.3 Instead, they believe that government waste is the source of the deficit. In fact, entitlement spending already consumes half of the federal budget and will rise to two-thirds of the budget by 2030.

If you're going to cut the budget, the first thing that should go is wasteful spending.

[babylonsister]

3. Rec'd. nt

[boppers]

4. In another thread I pointed out how they broke out military costs.

229.17
192.79
74.65
32.60
= $529.21

I opted not to include NASA, but that's arguably military-related costs as well.

[ThomCat]

6. Isn't it also disingenuous to lump together stuff paid for with income tax

and stuff paid for with payroll taxes?

The money is spent differently, by law. The money can't be mingled, by law. So reporting it all together as if it is one big fund seems to be dishonest on the very face of it.

[boppers]

7. Let me know when SS isn't part of the general fund, or national debt.

Until then, all the accounting games in the world doesn't change basic math.

[ThomCat]

11. As it has been posted many times

SS doesn't add to the national debt. Ever.

Social security is 100% paid for.

It is because SS has money that is separate from the general fund our government keeps raiding that money every year and adding it to the general fund and leaving IOUs behind.

[boppers]

13. This is what I was thinking of:

"Paid-in contributions that exceed the amount required to fully fund current payments to beneficiaries are invested in securities issued by the federal government. The securities issued under this scheme constitute the assets of the Social Security Trust Fund. Because under current federal law these securities represent future obligations that must be repaid, the federal government includes these securities within the overall national debt."

http://en.wikipedia.org/wiki/Social_Security_Trust_Fund

[ThomCat]

14. Okay, so we agree, sort of.

Money paid into SS doesn't add to the debt. But once it is borrowed from social security and added into the general fund, then the general fund owes it back to social security, so then it becomes part of the national debt because it was borrowed. But that doesn't mean that SS adds to the debt, only the borrowing from SS.

[bornskeptic]

8. The items listedconstitute only about 60% of federal spending.

I added all the dollar amounts. They total $3258.51, about 60% of $5400. The Social Security and Medicare amounts are correct, as a percentage of total spending, and probably the other items listed are as well, but much is left out, including about half of Defense Department spending. It looks like they could have just added another item "Other Defense Spending," but there would still be a large chunk of expenditure missing. I don't pretend to know why they selected the items they did. They put out a previous version of this last year, in which they lumped all Defense Department spending other than Iraq and Afghanistan together.

http://content.thirdway.org/publications/109/Third_Way_Memo_-_Tax_Receipt_-_Knowing_What_You_Paid_For.pdf

[muriel_volestrangler]

9. The 'receipt' leaves out: Defense Operation and Maintenance, Procurement, Research, DoE,

and some smaller items that all appear in the defense budget in the NY Times diagram. Leaving out some of the biggest items of spending (all the big missing ones seen to be defense) and including small ones like 'funding for the arts' does look very misleading.

[boppers]

15. I like the longer format version, myself.

They were probably trying to condense it.

[w4rma]

10. Does anyone here think, anymore, that the DLC isn't just a bunch of Wall Street con-artists out for

our money?

[Milo_Bloom]

12. It is roughly accurate

BUT, very deceptive.

The amount of your overall taxes going to Social Security, Medicare and Medicaid are fairly accurate, but this is not a dollar in dollar out scenario, as it is with the other items. These items are contributed to the various funds and currently run in SURPLUS. I believe Social Security will have an 80 billion dollar surplus this year. Medicare around 50 or 60 billion, etc..

So it seems what they are doing, is, on the one hand calculating what is TAKEN OUT of your paycheck for these specific programs and then comparing it to ACTUAL spending of other programs.

They also seem to leave out some monster expenses.