So the budget is in, being reported as a $427 billion deficit when it is really $627 billion (because we are not only spending $427 billion more than we are taking in, we are also borrowing this year’s $200 billion surplus from the Social Security Trust Fund) . . .and it is really more than $627 billion because the budget apparently does not fully include the cost of the war in Iraq. Nor does it include the hit we would take servicing our $8 trillion debt if interest rates rose. (An extra 1% may not seem like much to you, but on $8 trillion it costs $80 billion.)
So maybe it’s a $700 billion deficit. Or $800 billion if we get unlucky. (Or $900 billion if we start borrowing to fund privatized Social Security accounts.)
And that begins to be real money.
Even so, it’s billed as a tough, $2.5 trillion budget. Standing firm, not one penny of the tax-cuts-for-the-rich will be rolled back. Tapping the rich is not an option. But 96% of the funding for Clinton’s 100,000 extra cops on the beat is being cut, along with funding for Head Start for the kids and Medicaid for the poor. It’s what Jesus would have done.
Ultimately, of course, most of these 150 programs won’t be cut. And the cuts amount to only $20 billion in the context of a $627 billion deficit anyway – nothing.
The real way to cut the deficit in half is to:
- Roll back the tax cut on that portion of your income (but only that portion) that exceeds some livable floor like $200,000 (admit it: in a pinch, in wartime, you could find a way to get by on $200,000 a year).
- Find a way to arrange our foreign policy so that our military budget need not exceed the military budgets of the entire rest of the world combined by a factor of . . . drum roll(I’m just guessing here and hope one of you will send in the accurate figure) . . . four.
YOUR RETIREMENT DOLLARS
Joel: “Kotlikoff and Burns (in The Coming Generational Storm, and in a recent Consumer Reports article) argue strongly against contributing to 401k or 403b accounts beyond the amount matched. Their main reason: increased taxation of Social Security benefits for middle-income folks due to their withdrawals from tax-deferred accounts. Assuming that one has the discipline, isn’t it wiser to contribute to tax-deferred accounts only up to the amount matched, and then put the remainder that one would have contributed (less income tax) into a broad stock index fund in a taxable account? Since most of the gains will be dividends and long-term capital gains, the rate of taxation will be lower than if one had used the tax-deferred account (all withdrawals taxed at full, ordinary income rates)?”
☞ Up to the match, it’s a no-brainer. Take your employer’s money! After that, it depends partly on tax-bracket assumptions and partly on your age (the deferral becomes more valuable the longer you have “the government’s” share of your money working for you). But once you’ve met the employer’s match, I would put the next $4,000 a year into a Roth IRA.
BEFORE YOU CROWN YOUR TWO FRONT TEETH
Mark the Tooth God (or so I gather from his screen name): “The restoration you received is certain to be great so please don’t read on expecting to have buyers remorse. But the CEREC process your dentist used is not exactly a panacea. I know it sounds great when you have a metal temporary and it takes four visits to get your crown, but here’s just a little bit more info:
1) It’s nice to be able to temporarily cement the crown to be sure the nerve is happy and healthy. With CEREC you can’t do this. The porcelain is too weak to be supported by temporary cement. This can lead to the new crown having to be destroyed if a root canal proves necessary.
2) The fit has improved with this new CEREC 3 model, but the margins (the gap where the restoration meets the tooth) are still only fair.
3) If any of the margins of the crown are below the gum line, the ability to ‘bond’ the CEREC on is greatly hampered: It is difficult to keep that area properly dry under the tissue while you bond it in.
4) While your crown is on Herbie, a tooth pretty far back in the mouth (out of what we call the esthetic zone), the esthetics of CEREC crowns are only fair compared to what a live lab tech can do. The CEREC mills from a monobloc of porcelain. This gives a single homogenous color. Most teeth have multiple shades. If it were a crown on a bicuspid, the CEREC crown is not terribly attractive for most applications. Unfortunately due to the investment made by the dentist, most will use it for nearly all crowns. [Mine said he generally uses it only for the teeth you don’t see. – A.T.]
5) The CAD CAM technology continues to improve. There is a system out there, I believe it is being completed in Israel, that will be on the market in a couple of years which has marginal integrity more like what a lab would make. The CEREC was churning out margins with gaps ranging from 80-100 microns. A really good lab gets it down to 25 microns. The Israeli machine I believe has it down to 10. Bacteria are 8 microns tall, so floss.
“All that said, most of the CEREC crowns I see in my practice, even the ones made with the earliest unit, seem to be doing OK. So no buyer’s remorse.”
Quote of the Day
Every debt is ultimately paid, if not by the debtor, then eventually by the creditor.~Jim Grant
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