7 ms·

How Washington Really Redistributes Income

38 points by fjk 13y ago

al2o3cr 13y ago
Shorter hedge fund toolbag: "HEY KIDS - look at those old crabs over there, climbing towards the top of the bucket! PULL THEM DOWN! Pay no attention to me, sitting on top of a pile of money I stole from you via the tax code!"
RandyH 13y ago
The Republican Party needs to kick out these guys who lie about how bad things would be if the U.S. were late on its sovereign debt payments. They are in the same category as the birthers. You can't have crazies in your party. They just cause the sane people to leave, then one day you wake up and the crazies are the majority of your party, and then you are in real trouble.
- jbigelow76 13y ago
  This is the result of primaries decided as a result of gerrymandering. All aboard the crazy train!
  - irons 13y ago
    Gerrymandering probably isn't as dominant a factor as people think: http://www.bloomberg.com/news/2013-10-09/gerrymandering-didn-t-cause-the-shutdown.html http://www.bloomberg.com/news/2013-10-09/gerrymandering-didn... That story is based on 2009 research: http://www.jstor.org/stable/25548144?seq=2 http://www.jstor.org/stable/25548144?seq=2 Admitting that gerrymandering isn't the problem puts the solution further out of reach, unfortunately. Generational change is slow and painful.
    - jbigelow76 13y ago
      I didn't feel the article really refuted the problem of gerrymandering. The Ted Cruz and Cravaack/Nolan shifts weren't cited as examples of where gerrymandering failed to produce the desired result. Gerrymandering might not be a problem when viewed in the context of a single legislative session but the lasting impact will be felt over many sessions. But the article does make good points of self selected voting districts resulting from people moving in and out of communities.
    - js2 13y ago
      See also http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/17/redistricting-didnt-win-republicans-the-house/ http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/17/r... which argues it being due to incumbency and the Democrats "wasting" votes due to being more highly concentrated in urban areas.
    - deleted 13y ago
      [deleted]
- anonymoushn 13y ago
  Why would the U.S. choose to default? Its debt service costs much less than it collects in tax revenue.
  - cpleppert 13y ago
    Because the treasury probably doesn't have the statutory authority to withhold payments to appropriated programs. Even if it did, that would mean cutting social security or medicare payments while waiting for an interest payment. So you are certainly hurting people who are depending on those programs(a political nightmare) in the expectation that there will be no debt limit raise. If you think that missing an interest payment will be a catastrophe you paradoxically have no incentive to order these social programs cut to make an interest payment because no one would be so irresponsible as to allow that to happen.
  - mbetter 13y ago
    Because fuck hostage takers, that's why.
- mikeash 13y ago
  I think that "one day" happened some time ago now.
- cpleppert 13y ago
  "debt limit denial" is only a small part of the problem. The other half is the expectation that 1) threatening something that hurts the country(which he admits) is a good thing if you can pass your political program and 2) the other party will simply fold and its members will pass your program 1 simply denies that the opposing party should be able to represent itself in the democratic process but 2 is simply bizarre. No one is going to help their opponents pass their agenda on the basis that if they don't the other party will cause the economy to collapse. If that worked, the Soviet Union would have threatened to start a nuclear war anytime they wanted something and would expect the United States to back down. The line of reasoning that validates such a tactic is just totally bizarre. Even if you can get some type of leverage over the other party you will never get enough concessions to justify the economic damage. Economic damage occurs in the present while entitlement spending cuts occur in the future. Even if the economic damage is minimal it seems quite a stretch to assume that statutory changes today are the only way to stop a future congress from overspending. This hypothetical future congress would be perfectly capable of cutting spending on its own.
cylinder 13y ago
I'm not sure that Social Security and the like for older people is such a bad thing, it seems logical. You can't expect people to work in old age and nobody would want to insure their healthcare without government support. Young people have their youth, energy and the ability and time to work for themselves and save money. Old people do not. I see nothing extravagant about the size of SS payments. Medicare does need to be reigned in, of course. I would say add asset tests to SS, but those are so easily skirted that they'd be unenforceable. The real ripoffs of the young generation: * The cost of education caused by free-flowing credit to students * Housing price inflation by foreign and domestic cash investors, mortgage tax deductions, 30-year mortgages, federal reserve actions creating asset bubbles (not US exclusive, in fact the problem is worse in commonwealth countries like Australia thanks to negative gearing and lack of property taxes) * Obscenely low taxes on wealth and capital gains * Absurd amount of defense spending Young people also bear responsibility to: * Manage money better * Live within means * Encourage discussion of serious issues like those above on social media without being labeled as "crazy" for doing so; stop sharing useless BuzzFeed garbage and burying yourselves in Instagram all the time. * Stop going so far in debt for clearly useless degrees and then wondering why the world is so unfair when you can't make money with it * Don't glorify urban living to a fault, blowing money at bars for binge drinking well after college, spending too much on rent to be in a "trendy" area. You shouldn't have an iPhone, iPad, and MacBook and spend $1500/mo to live with 4 roommates, latte for breakfast ($4), buy all your lunches ($10), get dinner at the Whole Foods hot bar ($15) when you make $40k, then complain when you're 30 with a negative net worth!
- mangala 13y ago
  > Don't glorify urban living to a fault, blowing money at bars for binge drinking well after college, spending too much on rent to be in a "trendy" area. You shouldn't have an iPhone, iPad, and MacBook and spend $1500/mo to live with 4 roommates, latte for breakfast ($4), buy all your lunches ($10), get dinner at the Whole Foods hot bar ($15) when you make $40k, then complain when you're 30 with a negative net worth! No one making $40k a year is spending $1500 on rent. This is such a yuppie NYC/SF perspective. Try sitting in actual $40k shoes for a second.
  - 13y ago
chrismealy 13y ago
Social Security is simple: we take 4% of GDP and cut checks to old people. Whatever the economy's like 40 years from now, you can always take 4% and cut checks to old people. Nobody ever worries about paying for the military 40 years from now. As for health care costs, all America has to do is copy literally any other rich country's health care system. They all cost half as much or less per capita.
- sp332 13y ago
  >all America has to do is copy literally any other rich country's health care system This sounds incredibly smug, and it's not helpful.
  - mangala 13y ago
    Plain truth shouldn't be interpreted as smug.
    - d23 13y ago
      How about it's a silly, shallow argument. Want to fix any problem? Copy another country's solution! It completely ignores the cultural and political hurdles that are involved.
    - fjk 13y ago
      It's not an apples to apples comparison though. The US can't "just implement" the same health care systems that are up and running in other nations because we differ from a those nations in a lot of ways. PBS NewsHour sums up a few reasons here[1]. That being said, our current health care system is broken and needs to be addressed. I'm not convinced ObamaCare is a good solution, but at least the issue is being tackled. [1] http://www.pbs.org/newshour/rundown/2012/10/seven-factors-driving-your-health-care-costs.html http://www.pbs.org/newshour/rundown/2012/10/seven-factors-dr...
  - chrismealy 13y ago
    No, it is helpful, because it's true. http://en.wikipedia.org/wiki/Not_invented_here http://en.wikipedia.org/wiki/Not_invented_here
unclebucknasty 13y ago
This guy is independent, maybe, but definitely right-leaning. And, I don't know that I have heard anyone on the right put forward the ideas of taxing capital gains as normal income and doing away with corporate taxes. They normally want to do the latter, without the former. In other words, they want a no-holds barred tax holiday for the wealthiest (which will eventually trickle down, of course). But, what he is saying might be workable. I am curious to know how much additional revenue the government would raise by taxing capital gains at normal income rates vs. how much they'd lose by not taxing corporations. Anybody have a reliable source on that? Because, in some respects, C-corps would then become more like S-corps, in that a significant amount of untaxed income would flow through as dividends to shareholders where it would now be taxed at the normal income rate.
- saosebastiao 13y ago
  The problem with the corporate income tax is that it is so easy to avoid...because you avoid it by having expenses. Luxury hotel rooms and corporate jets are legitimate business expenses, where they aren't deductible for personal income. I have no problem believing that tax collections would increase by taxing capital gains as income and removing the corporate tax. And it would certainly be more fair than the current setup, with corporate taxation's terribly regressive incidence. The only kink is that they would have to have foreign investors paying income tax in the US, which might be hard to accomplish.
- jandrewrogers 13y ago
  Short-term capital gains are taxed at income rates. And long-term capital gains are taxed at lower rates to compensate for the fact that they have substantial losses due to inflation that are not deductible. You are taxed on the inflation in addition to the gains and can incur a substantial tax bill even if you lost money on your investment in real terms. The net effect of greatly increasing tax rates on long-term capital gains is that risky long-term capital investments that may take a long time to pay off, such as tech startups, become much less attractive. Expected returns matter a lot to investors, and factors like taxation rates, inflation, risk, and liquidity factor into that calculus. Eliminating corporate income taxes would actually encourage companies to realize and distribute profits to shareholders in ways that would generate substantial tax revenue from the individual shareholders, so I don't see it as much of a loss. At a minimum it would eliminate a lot of the incentive to engage in complex financial structuring games to minimize the amount of double taxation shareholders are faced with.
yetanotherphd 13y ago
Here's my take on the two main issues: Social Security: he is probably right. The most obvious social security system (ignoring welfare) is that you save money yourself, or the government saves it for you, and you get it back when you retire (this is Australia's system). Some clever economists figured out that since the total value of everything produced for the rest of time is infinite, you can make every generation better off by having each generation "borrow" from the next one. This results in the US PAYG (pay as you go) system where our generation is taxed to pay the last generation. PAYG allows people to receive a higher rate of returns on their "savings" than the market would provide. However, because demographics aren't growing at constant rate like in mathematical models used to justify PAYG, this is extremely expensive. This is how I interpret his statements about boomers who expect our generation to pay a higher tax rate than they did. In short: demographics broke the PAYG model and so it's reasonable that current retirees get less than they might have expected under the original promises of the social security system. On capital gains tax: he is wrong. If all capital gains were people investing in the stock market at arms length, then capital gains should be 0% because they are just a way to shift money forwards in time. A person who invests has more money in the future, but it is worth less to them because it is in the future. The reason we tax capital gains is that some kinds of capital gains are really income in disguise, like people who own 90% of a company and do a lot of work to increase its value. This should be taxed at the income tax rate. So the current system is a hack, putting the capital gains tax between 0% and the income tax rate. But it is not a subsidy for people who have more wealth, it is a subsidy for people who can disguise income as capital gains.
- dragonwriter 13y ago
  Capital gains are income, pure and simple; insofar as there is a justification for taxing long-term capital gains less than other income, its because it is income earned over period of greater than one year, which would thus be over-taxed in a progressive tax system if it were simply taxed as income in the year it is realized. Of course, a flat lower rate for long-term capital gains results in them being under taxed compared to other income; a simpler and fairer solution is to tax capital gains as normal income in the year realized, but to allow taxpayers to optionally recognize gains (or, really, any income) for tax purposes in advance of realizing it.
rayiner 13y ago
I think the phenomenon he mentions will have an important political ramification. The current Democratic Party, with its awkward alliance of socially liberal young people with teachers and union workers is going to fragment. Right now, young people are getting a bad shake, between skyrocketing tuition and bad job prospects. Yet, in a few years when they finally have jobs, their taxes will skyrocket to support rising healthcare costs and underfunded pensions. I bet you will see a resurgence of republicanism among young people, though it'll look very different from what the party looks like today.
- redthrowaway 13y ago
  Socially liberal young people are an even worse fit with the rich and white or white, old, and socially conservative Republican coalition than they are with the Democrat's immigrant, urban, and public sector coalition. The phenomenon described in the article is one of the interests of the elderly being in direct opposition to those of the young, and the GOP has only further entrenched itself in favour of the former and against the latter. The only large demographic shift I can see happening in American politics is if the GOP sheds its anti-immigrant elements and embraces a browner base than it currently enjoys. Immigrants tend to be more entrepreneurial, more distrustful of government, and more socially conservative than the average American, and so it would be a good fit if the GOP can shake the veiled racism expressed by many of its louder members.
  - philwelch 13y ago
    Even the Republicans are a shaky coalition of big business, religious nuts, and quasi-libertarians, along with the racists (though the generation that swung with the Southern Strategy is aging, and most of the segregationists are out of Congress now, thankfully).
  - AnthonyMouse 13y ago
    What I find interesting is that people who are, essentially, libertarian-leaning are consistently found attempting to make the Republicans more socially liberal and almost never found attempting to make the Democrats more fiscally responsible. The Republican demographic skews older than the Democrats. I would have thought the younger demographic would be more inclined to support sensible reforms of social security, like converting it to a basic income for everyone eligible to vote.
Nutella4 13y ago
Druckenmiller is lumping Social Security and Medicare together, which is obviously wrong. Medicare is definitely a problem that needs to be fixed with more health care reform so we're no longer paying double what every other first world country pays for health care per capita. Social Security is fine for current and future generations. Means testing for either of them is idiotic, unless your goal is to kill them slowly by converting benefits for everyone to a welfare program. He is trying to distract people from worsening income distribution that benefits 1%-ers like himself with sleight of hand to make a class war look like a generational war. If he really gave a shit about the economic plight of young people he'd be talking about solving the student loan clusterfuck.
adventured 13y ago
There have been all sorts of unusual and immense wealth redistributions to boomers recently. For example: the Fed stealing purchasing power - by devaluing the dollar - from the poor who can least afford to lose it, and giving it to middle and upper class home owners in the form of trillions worth of housing bailouts (by buying up toxic mortgages and dramatically reducing inventory; bailing out Fannie, Freddie etc; using QE to hold down interest rates and thus keeping mortgage rates artificially hyper low - all of which have massively and completely artificially increased the value of housing assets). And that doesn't even touch on the trillions in stock market value that has been re-inflated by the Fed's policy of intentionally creating asset bubbles to fake a wealth effect (again). Most of the people benefiting from all this money chasing risk are the middle class and the rich, and they're disproportionately boomers. Of course, then comes the (at least) equal but opposite reaction.
jellicle 13y ago
Right-wing billionaire advocates for elimination of social security and lower taxes on the rich. Color me surprised. Only interesting thing about it is that he's trying a message he hopes will resonate with young people.

38 points by fjk 13y ago

Shorter hedge fund toolbag: "HEY KIDS - look at those old crabs over there, climbing towards the top of the bucket! PULL THEM DOWN! Pay no attention to me, sitting on top of a pile of money I stole from you via the tax code!"

RandyH 13y ago

The Republican Party needs to kick out these guys who lie about how bad things would be if the U.S. were late on its sovereign debt payments. They are in the same category as the birthers. You can't have crazies in your party. They just cause the sane people to leave, then one day you wake up and the crazies are the majority of your party, and then you are in real trouble.

jbigelow76 13y ago
This is the result of primaries decided as a result of gerrymandering. All aboard the crazy train!
- irons 13y ago
  Gerrymandering probably isn't as dominant a factor as people think: http://www.bloomberg.com/news/2013-10-09/gerrymandering-didn-t-cause-the-shutdown.html http://www.bloomberg.com/news/2013-10-09/gerrymandering-didn... That story is based on 2009 research: http://www.jstor.org/stable/25548144?seq=2 http://www.jstor.org/stable/25548144?seq=2 Admitting that gerrymandering isn't the problem puts the solution further out of reach, unfortunately. Generational change is slow and painful.
  - jbigelow76 13y ago
    I didn't feel the article really refuted the problem of gerrymandering. The Ted Cruz and Cravaack/Nolan shifts weren't cited as examples of where gerrymandering failed to produce the desired result. Gerrymandering might not be a problem when viewed in the context of a single legislative session but the lasting impact will be felt over many sessions. But the article does make good points of self selected voting districts resulting from people moving in and out of communities.
  - js2 13y ago
    See also http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/17/redistricting-didnt-win-republicans-the-house/ http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/17/r... which argues it being due to incumbency and the Democrats "wasting" votes due to being more highly concentrated in urban areas.
  - deleted 13y ago
    [deleted]
anonymoushn 13y ago
Why would the U.S. choose to default? Its debt service costs much less than it collects in tax revenue.
- cpleppert 13y ago
  Because the treasury probably doesn't have the statutory authority to withhold payments to appropriated programs. Even if it did, that would mean cutting social security or medicare payments while waiting for an interest payment. So you are certainly hurting people who are depending on those programs(a political nightmare) in the expectation that there will be no debt limit raise. If you think that missing an interest payment will be a catastrophe you paradoxically have no incentive to order these social programs cut to make an interest payment because no one would be so irresponsible as to allow that to happen.
- mbetter 13y ago
  Because fuck hostage takers, that's why.
mikeash 13y ago
I think that "one day" happened some time ago now.
cpleppert 13y ago
"debt limit denial" is only a small part of the problem. The other half is the expectation that 1) threatening something that hurts the country(which he admits) is a good thing if you can pass your political program and 2) the other party will simply fold and its members will pass your program 1 simply denies that the opposing party should be able to represent itself in the democratic process but 2 is simply bizarre. No one is going to help their opponents pass their agenda on the basis that if they don't the other party will cause the economy to collapse. If that worked, the Soviet Union would have threatened to start a nuclear war anytime they wanted something and would expect the United States to back down. The line of reasoning that validates such a tactic is just totally bizarre. Even if you can get some type of leverage over the other party you will never get enough concessions to justify the economic damage. Economic damage occurs in the present while entitlement spending cuts occur in the future. Even if the economic damage is minimal it seems quite a stretch to assume that statutory changes today are the only way to stop a future congress from overspending. This hypothetical future congress would be perfectly capable of cutting spending on its own.

cylinder 13y ago

I'm not sure that Social Security and the like for older people is such a bad thing, it seems logical. You can't expect people to work in old age and nobody would want to insure their healthcare without government support. Young people have their youth, energy and the ability and time to work for themselves and save money. Old people do not. I see nothing extravagant about the size of SS payments. Medicare does need to be reigned in, of course. I would say add asset tests to SS, but those are so easily skirted that they'd be unenforceable. The real ripoffs of the young generation: * The cost of education caused by free-flowing credit to students * Housing price inflation by foreign and domestic cash investors, mortgage tax deductions, 30-year mortgages, federal reserve actions creating asset bubbles (not US exclusive, in fact the problem is worse in commonwealth countries like Australia thanks to negative gearing and lack of property taxes) * Obscenely low taxes on wealth and capital gains * Absurd amount of defense spending Young people also bear responsibility to: * Manage money better * Live within means * Encourage discussion of serious issues like those above on social media without being labeled as "crazy" for doing so; stop sharing useless BuzzFeed garbage and burying yourselves in Instagram all the time. * Stop going so far in debt for clearly useless degrees and then wondering why the world is so unfair when you can't make money with it * Don't glorify urban living to a fault, blowing money at bars for binge drinking well after college, spending too much on rent to be in a "trendy" area. You shouldn't have an iPhone, iPad, and MacBook and spend $1500/mo to live with 4 roommates, latte for breakfast ($4), buy all your lunches ($10), get dinner at the Whole Foods hot bar ($15) when you make $40k, then complain when you're 30 with a negative net worth!

mangala 13y ago
> Don't glorify urban living to a fault, blowing money at bars for binge drinking well after college, spending too much on rent to be in a "trendy" area. You shouldn't have an iPhone, iPad, and MacBook and spend $1500/mo to live with 4 roommates, latte for breakfast ($4), buy all your lunches ($10), get dinner at the Whole Foods hot bar ($15) when you make $40k, then complain when you're 30 with a negative net worth! No one making $40k a year is spending $1500 on rent. This is such a yuppie NYC/SF perspective. Try sitting in actual $40k shoes for a second.
- 13y ago

chrismealy 13y ago

Social Security is simple: we take 4% of GDP and cut checks to old people. Whatever the economy's like 40 years from now, you can always take 4% and cut checks to old people. Nobody ever worries about paying for the military 40 years from now. As for health care costs, all America has to do is copy literally any other rich country's health care system. They all cost half as much or less per capita.

sp332 13y ago
>all America has to do is copy literally any other rich country's health care system This sounds incredibly smug, and it's not helpful.
- mangala 13y ago
  Plain truth shouldn't be interpreted as smug.
  - d23 13y ago
    How about it's a silly, shallow argument. Want to fix any problem? Copy another country's solution! It completely ignores the cultural and political hurdles that are involved.
  - fjk 13y ago
    It's not an apples to apples comparison though. The US can't "just implement" the same health care systems that are up and running in other nations because we differ from a those nations in a lot of ways. PBS NewsHour sums up a few reasons here[1]. That being said, our current health care system is broken and needs to be addressed. I'm not convinced ObamaCare is a good solution, but at least the issue is being tackled. [1] http://www.pbs.org/newshour/rundown/2012/10/seven-factors-driving-your-health-care-costs.html http://www.pbs.org/newshour/rundown/2012/10/seven-factors-dr...
- chrismealy 13y ago
  No, it is helpful, because it's true. http://en.wikipedia.org/wiki/Not_invented_here http://en.wikipedia.org/wiki/Not_invented_here

unclebucknasty 13y ago

This guy is independent, maybe, but definitely right-leaning. And, I don't know that I have heard anyone on the right put forward the ideas of taxing capital gains as normal income and doing away with corporate taxes. They normally want to do the latter, without the former. In other words, they want a no-holds barred tax holiday for the wealthiest (which will eventually trickle down, of course). But, what he is saying might be workable. I am curious to know how much additional revenue the government would raise by taxing capital gains at normal income rates vs. how much they'd lose by not taxing corporations. Anybody have a reliable source on that? Because, in some respects, C-corps would then become more like S-corps, in that a significant amount of untaxed income would flow through as dividends to shareholders where it would now be taxed at the normal income rate.

saosebastiao 13y ago
The problem with the corporate income tax is that it is so easy to avoid...because you avoid it by having expenses. Luxury hotel rooms and corporate jets are legitimate business expenses, where they aren't deductible for personal income. I have no problem believing that tax collections would increase by taxing capital gains as income and removing the corporate tax. And it would certainly be more fair than the current setup, with corporate taxation's terribly regressive incidence. The only kink is that they would have to have foreign investors paying income tax in the US, which might be hard to accomplish.
jandrewrogers 13y ago
Short-term capital gains are taxed at income rates. And long-term capital gains are taxed at lower rates to compensate for the fact that they have substantial losses due to inflation that are not deductible. You are taxed on the inflation in addition to the gains and can incur a substantial tax bill even if you lost money on your investment in real terms. The net effect of greatly increasing tax rates on long-term capital gains is that risky long-term capital investments that may take a long time to pay off, such as tech startups, become much less attractive. Expected returns matter a lot to investors, and factors like taxation rates, inflation, risk, and liquidity factor into that calculus. Eliminating corporate income taxes would actually encourage companies to realize and distribute profits to shareholders in ways that would generate substantial tax revenue from the individual shareholders, so I don't see it as much of a loss. At a minimum it would eliminate a lot of the incentive to engage in complex financial structuring games to minimize the amount of double taxation shareholders are faced with.

yetanotherphd 13y ago

Here's my take on the two main issues: Social Security: he is probably right. The most obvious social security system (ignoring welfare) is that you save money yourself, or the government saves it for you, and you get it back when you retire (this is Australia's system). Some clever economists figured out that since the total value of everything produced for the rest of time is infinite, you can make every generation better off by having each generation "borrow" from the next one. This results in the US PAYG (pay as you go) system where our generation is taxed to pay the last generation. PAYG allows people to receive a higher rate of returns on their "savings" than the market would provide. However, because demographics aren't growing at constant rate like in mathematical models used to justify PAYG, this is extremely expensive. This is how I interpret his statements about boomers who expect our generation to pay a higher tax rate than they did. In short: demographics broke the PAYG model and so it's reasonable that current retirees get less than they might have expected under the original promises of the social security system. On capital gains tax: he is wrong. If all capital gains were people investing in the stock market at arms length, then capital gains should be 0% because they are just a way to shift money forwards in time. A person who invests has more money in the future, but it is worth less to them because it is in the future. The reason we tax capital gains is that some kinds of capital gains are really income in disguise, like people who own 90% of a company and do a lot of work to increase its value. This should be taxed at the income tax rate. So the current system is a hack, putting the capital gains tax between 0% and the income tax rate. But it is not a subsidy for people who have more wealth, it is a subsidy for people who can disguise income as capital gains.

dragonwriter 13y ago
Capital gains are income, pure and simple; insofar as there is a justification for taxing long-term capital gains less than other income, its because it is income earned over period of greater than one year, which would thus be over-taxed in a progressive tax system if it were simply taxed as income in the year it is realized. Of course, a flat lower rate for long-term capital gains results in them being under taxed compared to other income; a simpler and fairer solution is to tax capital gains as normal income in the year realized, but to allow taxpayers to optionally recognize gains (or, really, any income) for tax purposes in advance of realizing it.

rayiner 13y ago

I think the phenomenon he mentions will have an important political ramification. The current Democratic Party, with its awkward alliance of socially liberal young people with teachers and union workers is going to fragment. Right now, young people are getting a bad shake, between skyrocketing tuition and bad job prospects. Yet, in a few years when they finally have jobs, their taxes will skyrocket to support rising healthcare costs and underfunded pensions. I bet you will see a resurgence of republicanism among young people, though it'll look very different from what the party looks like today.

redthrowaway 13y ago
Socially liberal young people are an even worse fit with the rich and white or white, old, and socially conservative Republican coalition than they are with the Democrat's immigrant, urban, and public sector coalition. The phenomenon described in the article is one of the interests of the elderly being in direct opposition to those of the young, and the GOP has only further entrenched itself in favour of the former and against the latter. The only large demographic shift I can see happening in American politics is if the GOP sheds its anti-immigrant elements and embraces a browner base than it currently enjoys. Immigrants tend to be more entrepreneurial, more distrustful of government, and more socially conservative than the average American, and so it would be a good fit if the GOP can shake the veiled racism expressed by many of its louder members.
- philwelch 13y ago
  Even the Republicans are a shaky coalition of big business, religious nuts, and quasi-libertarians, along with the racists (though the generation that swung with the Southern Strategy is aging, and most of the segregationists are out of Congress now, thankfully).
- AnthonyMouse 13y ago
  What I find interesting is that people who are, essentially, libertarian-leaning are consistently found attempting to make the Republicans more socially liberal and almost never found attempting to make the Democrats more fiscally responsible. The Republican demographic skews older than the Democrats. I would have thought the younger demographic would be more inclined to support sensible reforms of social security, like converting it to a basic income for everyone eligible to vote.

Nutella4 13y ago

Druckenmiller is lumping Social Security and Medicare together, which is obviously wrong. Medicare is definitely a problem that needs to be fixed with more health care reform so we're no longer paying double what every other first world country pays for health care per capita. Social Security is fine for current and future generations. Means testing for either of them is idiotic, unless your goal is to kill them slowly by converting benefits for everyone to a welfare program. He is trying to distract people from worsening income distribution that benefits 1%-ers like himself with sleight of hand to make a class war look like a generational war. If he really gave a shit about the economic plight of young people he'd be talking about solving the student loan clusterfuck.

adventured 13y ago

There have been all sorts of unusual and immense wealth redistributions to boomers recently. For example: the Fed stealing purchasing power - by devaluing the dollar - from the poor who can least afford to lose it, and giving it to middle and upper class home owners in the form of trillions worth of housing bailouts (by buying up toxic mortgages and dramatically reducing inventory; bailing out Fannie, Freddie etc; using QE to hold down interest rates and thus keeping mortgage rates artificially hyper low - all of which have massively and completely artificially increased the value of housing assets). And that doesn't even touch on the trillions in stock market value that has been re-inflated by the Fed's policy of intentionally creating asset bubbles to fake a wealth effect (again). Most of the people benefiting from all this money chasing risk are the middle class and the rich, and they're disproportionately boomers. Of course, then comes the (at least) equal but opposite reaction.

jellicle 13y ago

Right-wing billionaire advocates for elimination of social security and lower taxes on the rich. Color me surprised. Only interesting thing about it is that he's trying a message he hopes will resonate with young people.