Paul Ryan's budget proposal

• fan_from_texas

  My concern with the Paul Ryan plan is that it eliminates the mortgage interest deduction. As I've pointed out elsewhere on here, eliminating the mortgage interest deduction benefits people who have paid off more of their mortgage, e.g. older people. This is a change that would disproportionately hurt young people while benefiting old people. It likely would drive down home prices, and it certainly would be disastrous for us personally (and would cost us somewhere on the order of an extra $800-1,000/mo.).
• ptown_trojans_1

  

  believer;736787 wrote:This is the type of political cowardice on the part of DC politicians that will eventually doom the country to complete financial chaos and relegate this great country to second-class rather than world-class status for future generations.

  
  If it took us nearly to shutdown the government and a deal in the 11th hour over small portions of a 5 month budget, I honestly do not see both parties coming to any agreement on any of the large measures in the Ryan budget. Just my realistic outlook.
  
  And honestly, I don't subscribe to the "sky is falling" chicken little theory. We'll be fine, we'll find a way out of this, we always have. It will just be a long, slow haul.
• believer

  

  fan_from_texas;736846 wrote:My concern with the Paul Ryan plan is that it eliminates the mortgage interest deduction. As I've pointed out elsewhere on here, eliminating the mortgage interest deduction benefits people who have paid off more of their mortgage, e.g. older people. This is a change that would disproportionately hurt young people while benefiting old people. It likely would drive down home prices, and it certainly would be disastrous for us personally (and would cost us somewhere on the order of an extra $800-1,000/mo.).

  I agree with you on this part. If the mortgage interest deduction is eliminated I believe it will trigger a whole new round of foreclosures causing another mortgage meltdown. Some people count on that deduction to stay above water financially.
• stlouiedipalma

  If the mortgage interest deduction is all that stands between someone and economic doom, they are already dead.
  
  
  And running around crying about how the country is going to be second class or inferior is another example of chicken little thinking.
• jhay78

  

  ptown_trojans_1;736941 wrote:If it took us nearly to shutdown the government and a deal in the 11th hour over small portions of a 5 month budget, I honestly do not see both parties coming to any agreement on any of the large measures in the Ryan budget. Just my realistic outlook.

  
  I don't see the two parties agreeing on large portions of the Ryan budget either. I honestly think he's setting things up for 2012. In fact, he alluded to that after the recent agreement to avert the govt shutdown:
  

  Let’s keep this in perspective and focus on the big picture, which is trillions of dollars of debt that are oncoming, not tens of billions for the rest of this fiscal year…We are in divided government, we are not going to be able to dictate the terms of everything by just controlling the House of Representatives…We can define ourselves with our actions, we can make great proposals, but we’re deluding ourselves to think that everything we want is going to pass into law with Harry Reid in the Senate and Barack Obama in the presidency. What we can do is make proposals and define ourselves with actions that show where we want to go in this country and then give the American people a real choice in 2012…So let’s not sweat tens of billions, let’s look at trillions and see where we’re headed.

  http://www.nationalreview.com/corner/264322/re-youre-kidding-right-andrew-stiles
  

  And honestly, I don't subscribe to the "sky is falling" chicken little theory. We'll be fine, we'll find a way out of this, we always have. It will just be a long, slow haul

  So if Obama had proposed a $10 Trillion dollar budget, would things still be fine because we've always found a way out of messes before? At what point do we have to sober up and make tough decisions to avoid disaster? Where is that proverbial line for you between "things will be OK" and "Crap, we better get this debt and spending under control, like, yesterday"?
  
  If I'm not mistaken, there are several independent, objective sources out there (don't have time to search and post links) who might not be saying the sky is falling, but aren't exactly saying "We'll be fine" either.
• Manhattan Buckeye

  stlouiedipalma;737194 wrote:If the mortgage interest deduction is all that stands between someone and economic doom, they are already dead.
  
  
  And running around crying about how the country is going to be second class or inferior is another example of chicken little thinking.

  
  It isn't just one person, it is the entire industry. We drop the mortgage deduction tomorrow and we can see home values fall another 20-30%, in other words an entire nationwide collapse - that isn't chicken little, it is reality.
  
  Any type of mortgaget interest reform would have to be phased in a 15-20 year period.
• believer

  

  Manhattan Buckeye;737209 wrote:It isn't just one person, it is the entire industry. We drop the mortgage deduction tomorrow and we can see home values fall another 20-30%, in other words an entire nationwide collapse - that isn't chicken little, it is reality.
  
  Any type of mortgaget interest reform would have to be phased in a 15-20 year period.

  Agreed. Eliminating the deduction cold-turkey (chicken-little?) would easily trigger another round of mortgage meltdowns that could make stloiuie's political friends at Fanny Mae and Freddie Mac blush by comparison.
• fan_from_texas

  stlouiedipalma;737194 wrote:If the mortgage interest deduction is all that stands between someone and economic doom, they are already dead.

  That's not true. Eliminating the mortgage interest deduction would dramatically affect high-earning young professionals who recently bought a home, regardless of how well they planned. We've taken a look at the numbers: eliminating the mortgage interest deduction (and the related property tax deduction) would cost us on the order of $800-1,000/mo. I think losing a thousand bucks a month would screw up most people's budgets, regardless of how well they planned. And eradicating the deduction would cause home prices to drop further, which means that people like us who suddenly got hit with an extra $1,000/mo. in taxes would be further underwater and not able to sell. This would likely push many young professionals who just bought homes into foreclosure, even if they were otherwise in pretty good shape before.
  
  What percentage of Americans could see a tax hike of $1,000/mo. and not be in dire straights? People on here B&M about a 10-cent gas hike that costs them a few bucks a month. That pales in comparison to the implications of eliminating these deductions.
• believer

  

  fan_from_texas;737466 wrote:I think losing a thousand bucks a month would screw up most people's budgets, regardless of how well they planned. And eradicating the deduction would cause home prices to drop further, which means that people like us who suddenly got hit with an extra $1,000/mo. in taxes would be further underwater and not able to sell. This would likely push many young professionals who just bought homes into foreclosure, even if they were otherwise in pretty good shape before.

  Exactly...myself included. Basically I'm doing OK financially but if the MD were eradicated in one fell swoop, just about my only option would be to give the house back to the bank and take the credit hit. I obviously don't want to do that but I won't hesitate to do it and won't feel the slightest bit guilty in doing so.
  
  I have a hunch there are a lot of people in similar positions.
  
  Eliminating the MD may sound like a quick fix to some of the gubmint's financial issues but I sincerely believe they'll have a much larger financial and political issue on their hands if they play games with the deduction.
  
  Perhaps an incremental reduction over time (10-15 years?) might be better policy.
• gut

  It is a good start. So what if it shifts some burden to the states? That's probably how it should be.
  
  The alarming thing here is it reduces the debt by $4.4trillion but still leaves us a long ways away. The reality is this probably doesn't go far enough (not making big cuts to military, for example). But it's a start.
  
  The liberal media and Dem view is unsurprising. "Defending the little guy" is a time tested source of votes and, in the former case, readership. Defend the little guy at any and all costs - literally - is key for these people retaining their power and own income.
  
  We DO have a spending problem. I sense the wealthy are not opposed to paying higher taxes, perhaps significantly higher (more like 5-10% and not 50% though) IF AND ONLY IF Washington shows it can spend responsibly, balance the budget and then use tax increases to start paying down the debt.
• gut

  believer;737491 wrote:Exactly...myself included. Basically I'm doing OK financially but if the MD were eradicated in one fell swoop, just about my only option would be to give the house back to the bank and take the credit hit. I obviously don't want to do that but I won't hesitate to do it and won't feel the slightest bit guilty in doing so.
  
  I have a hunch there are a lot of people in similar positions.
  
  Eliminating the MD may sound like a quick fix to some of the gubmint's financial issues but I sincerely believe they'll have a much larger financial and political issue on their hands if they play games with the deduction.
  
  Perhaps an incremental reduction over time (10-15 years?) might be better policy.

  That's a complete non-starter IMO, and only economic buffoons would support it. You eliminate the MD and home prices, at least those below $1M (I think the deduction is phazed out after $1.3M or so), MUST adjust downward by some 20-25%. If you can't deduct that interest, then you aren't capable of the same monthly payment, which means home prices have to fall. That would be disastrous for the economy, as we've already seen in the housing bubble. Additionally, given that for most people their home is their largest single source of savings and this would be a huge destruction of wealth further adding to the medicare and SS burden for these people in retirement (think about the retiree with a home worth $200k and you've just taken $50k out of their retirement nest egg).
  
  Now a more reasonable approach I've heard is a cap (or reduction of the cap) to $400k, or perhaps phasing out the deduction based on income. Much more practical as certainly the higher-end homes haven't been as affected in the bubble. That would, again, be a relatively massive tax on the wealthy. And I think if you put pencil to paper the better approach would be to leave the deduction alone and phase out or eliminate the exclusion of gain on a sale. Leave the deduction alone, not hurting values, and then tax the $500k gain when they sell it.
  
  I won't even get into the wonky effects of rents and how that makes the rent vs. buy decision that much more complex. The MD was created primarily as an incentive for people to save, and I don't see that as a bad thing. You can get the taxes elsewhere there's really no need to go meddling in asset prices.
• believer

  

  ^^^All valid points. Suffice to say that eliminating the MD would be a disaster and would initiate another round of massive foreclosures.
• gut

  I Wear Pants;734242 wrote:Really surprising that he doesn't make any worthwhile cuts to defense.
  
  What's funny is cuts to entitlements will hurt red states more than blue states contrary to what people generally think.

  
  It's just funny to see CA as an example of a "non-welfare" state. Basically that chart shows a redistribution of wealth/GDP from wealthier states to poorer/less densely populated states. And if you look at the overall financial health of the states, you might see those charts flip substantially. To me that's a fairly clear argument from removing the govt teet and let states do more from themselves. My suspicion is, despite what that chart may indicate, is that CA would be hurt more by such a shift than, say North Dakota. You can have very wealthy tax payers inflating the federal contribution and still have a huge and disproportionate number of poorer people gettings handouts. And states like CA and NY already have pretty high state taxes.
  
  I also wonder if this chart isn't including corporate taxes, which would be a real tricky way to manipulate the point.
• believer

  

  gut;737897 wrote:I also wonder if this chart isn't including corporate taxes, which would be a real tricky way to manipulate the point.

  I was thinking pretty much the same thing when I looked at this chart. Figures don't lie but liars figure.
• tk421

  

  So, they finally agreed on a "compromise" to cut 38.5 Billion from the budget? You know what is hilarious and sad at the same time about our Congress acting like children over around a 1% cut from the budget? They borrowed more in that week to 10 days or so that they were arguing than they agreed to cut from the entire budget for this year. Outrageous, and pathetic the lack of leadership on both sides.
  
  This country is doomed fiscally. If they bitch and moan and act like this over 1% of the budget, there is no way they will be able to balance a budget, let alone find a way to pay down our debt.
• jhay78

  

  tk421;739564 wrote:So, they finally agreed on a "compromise" to cut 38.5 Billion from the budget? You know what is hilarious and sad at the same time about our Congress acting like children over around a 1% cut from the budget? They borrowed more in that week to 10 days or so that they were arguing than they agreed to cut from the entire budget for this year. Outrageous, and pathetic the lack of leadership on both sides.
  
  This country is doomed fiscally. If they bitch and moan and act like this over 1% of the budget, there is no way they will be able to balance a budget, let alone find a way to pay down our debt.

  
  I agree somewhat- the whining/crying/demagoguery was to be expected from the one party that's had sole possession of the credit card with no limit the past 2 years. I'm not excited about the figures, but to me it's more symbolic of a change of direction. Some people are acting like Boehner was supposed to repeal Obamacare, cut $500 Billion from the budget with Reid and Obama going along with it, and find a cure for cancer all at the same time.
  
  I didn't exactly see the Republicans popping champaigne and playing "We are the champions" either. They're setting their sights on bigger things to come.
• believer

  

  tk421;739564 wrote:This country is doomed fiscally. If they bitch and moan and act like this over 1% of the budget, there is no way they will be able to balance a budget, let alone find a way to pay down our debt.

  Exactly. There are a few on OC who have posted, "I'm not buying-in to the doom & gloom nonsense. We'll find a way out. We always do." I've used this argument myself on some issues OTHER THAN government over-spending.
  
  We have a bunch of supposedly grown-up men & women in DC who play "we gonna shutdown the gubmint if we don't git our way" eleventh hour horse shit to claim they've done great things by cutting spending 1%. Then we learn that we actually had to go into MORE debt than we allegedly saved in the cuts to keep Big Ass Government running.
  
  You don't need an MBA in finance or head the Federal Reserve to see the writing on the wall folks. The clowns on both sides of the political aisle lack the courage and the brains to do the right thing.
  
  National bankruptcy is not a matter of if anymore but when.
• BGFalcons82

  

  I agree believer. I think they all know what steps to take to fix what ails us, they just don't have the political will nor courage to do the right things. This is what happens when the entitlement society takes over.
  
  On another note, since Paul Ryan took the first shot to putting a plan out there, Belly's public servant is taking his do-over this afternoon. Somehow, after submitting his budget stinker a couple months ago, he gets to submit another one now. "Oops, sorry guys...I wasn't serious the first time, so give me a Mully and I'll try harder this time." Watch closely as he does his very best to become Slick Willie, Jr. and convince Americans he's not a big spending liberal idealogue. I wonder if he'll tell us that the era of big government is over?
• jhay78

  

  believer;739997 wrote:Exactly. There are a few on OC who have posted, "I'm not buying-in to the doom & gloom nonsense. We'll find a way out. We always do." I've used this argument myself on some issues OTHER THAN government over-spending.
  
  We have a bunch of supposedly grown-up men & women in DC who play "we gonna shutdown the gubmint if we don't git our way" eleventh hour horse shit to claim they've done great things by cutting spending 1%. Then we learn that we actually had to go into MORE debt than we allegedly saved in the cuts to keep Big Ass Government running.
  
  You don't need an MBA in finance or head the Federal Reserve to see the writing on the wall folks. The clowns on both sides of the political aisle lack the courage and the brains to do the right thing.
  National bankruptcy is not a matter of if anymore but when.

  
  I disagree. Boehner and the Republicans had to deal with the 2011 budget because the Democrats didn't deal with it last year. Any cuts whatsoever from the 2011 budget should be looked at as a bonus, as technically it wasn't "our" budget to begin with (from a Republican perspective). And they can't keep debating and passing CR's into infinity- there are bigger fish to fry coming soon (debt ceiling, 2012 budget, etc.).
  
  What were we hoping to accomplish under the circumstances- a) last year's budget, with new budget debates on the table and b) Republicans having control of one House of Congress?
  
  And it looks like Tea Party members of Congress may not fall in line with the $38 Billion this week anyway . . .
• believer

  

  jhay78;740068 wrote:I disagree. Boehner and the Republicans had to deal with the 2011 budget because the Democrats didn't deal with it last year. Any cuts whatsoever from the 2011 budget should be looked at as a bonus, as technically it wasn't "our" budget to begin with (from a Republican perspective). And they can't keep debating and passing CR's into infinity- there are bigger fish to fry coming soon (debt ceiling, 2012 budget, etc.).
  
  What were we hoping to accomplish under the circumstances- a) last year's budget, with new budget debates on the table and b) Republicans having control of one House of Congress?
  
  And it looks like Tea Party members of Congress may not fall in line with the $38 Billion this week anyway . . .

  Well....let's hope your theory is correct. The last time the Repubs had control of Congress they spent like Dems. Tea Party or not, one House of Congress or not, I do not have much faith in the ability of our elected officials to do the right things.
• I Wear Pants

  Republicans just want to cut some areas and increase spending in others while telling your they're morally superior for it. Democrats want to cut some areas and spend in others while telling you their smarter for it.
  
  Both make me sick.
• jhay78

  

  I Wear Pants;740628 wrote:Republicans just want to cut some areas and increase spending in others while telling your they're morally superior for it. Democrats want to cut some areas and spend in others while telling you their smarter for it.
  
  Both make me sick.

  
  I'm curious what areas the Republicans want to increase spending in . . . And don't say "tax cuts for the rich".
• stlouiedipalma

  I haven't seen any specific spending increases from the R's. Most of their talk has been about cutting spending and revenue.
• believer

  

  jhay78;740633 wrote:I'm curious what areas the Republicans want to increase spending in . . . And don't say "tax cuts for the rich".

  ....or "defense spending."
  
  

  stlouiedipalma;740640 wrote:I haven't seen any specific spending increases from the R's. Most of their talk has been about cutting spending and revenue.

  You mean making the Bush tax cuts permanent? It's revenue in the private sector; taxes in the public realm.
• believer

  

  stlouiedipalma;740640 wrote:I haven't seen any specific spending increases from the R's. Most of their talk has been about cutting spending and revenue.

  You mean making the Bush tax cuts permanent? It's revenue in the private sector; taxes in the public realm.