[Surf n Turf]

Nmap,
Your post required that I take several pages to respond
SnT

Originally Posted by nmap

The reduction could be accomplished by changing the way benefits are calculated, increasing the retirement age
making more of the benefits taxable.
lower the income trigger that starts taxation of benefits.
change the way inflation statistics are calculated.

Obama plan removes the upper limit on social security taxation of income.
unlikely that upper income earners will receive payments proportional to their contributions.

nmap, I suspect that you are correct in all of the above. We already have a system in place to increase the retirement age, and inflation calculations have been incorrect for years. It is clear that the “upper income earners” will receive a massive tax increase when social security is taxed all the way up. I am still of the opinion that SS benefits will be “means tested”

Originally Posted by nmap

those contributions become steadily less attractive.
some to seek ways to avoid such taxes
encourage some to consider illegal tax evasion.
The underground economy is likely to become larger.

The underground / shadow economy is very large now. In an April 2005 article the WSJ claimed that it is about $970 billion, or nearly 9% that of the real economy. It could soon pass $1 trillion. I suspect that in 2008 we have now passed way beyond $1 trillion, and could be in the $2-3 trillion range. This might be one vehicle that the middle class saves itself from extinction.
http://wsjclassroom.com/archive/05ap...nderground.htm

Originally Posted by nmap

the increase in Social Security taxes is an easy way to raise a great deal of money in a manner hidden from most wage earners.
It is interesting to note the proposed increase in capital gains taxes from 15% to 20%.
I strongly suspect we will see others

The increase in Cap Gains was discussed with BHO, and he conceded that a lowering would bring more revenue into the treasury, but was opposed because in was “not fair”
The other taxes increases we will see may include letting the Bush tax cuts expire in 2010, (Death Tax, Marriage Penalty, Tax brackets, R&D credits,, etc) Higher Income Taxes, Capital Gains And Dividend Taxes, Corporate Taxes, Tax On Coal And Natural Gas, and the AMT tax.

Originally Posted by nmap

Ironically, the victims in all this are middle class people
The truly wealthy will have the means to choose other (often better) options.
The poor (however defined) will benefit from the programs.
both the wealthy and the poor can shift away from traditional paychecks to other approaches.
The middle class, however, are trapped.

I am of the opinion that the middle class will also move to the underground or non-traditional economy. There is some inquiry in congress to monitor Ebay transactions, to try and catch some citizens, but I am not sure how that would be enforced. Other craftsmen will quote two prices (one cash, and one check). The middle class will adapt.

Originally Posted by nmap

My meaning was (and for that matter, is) inflation.
As the supply of dollars increases, inflation follows.
I regard the present governmental deficit spending pattern as a prelude to future inflation.

I am in general agreement with you. However, as you discuss later, deflation is potentially a far greater problem in the short term. In the short term CASH is king, especially in the areas of “tangible” assets such as Gold, Silver (very low), land, and business acquisition. I would note that this may be a perfect time to make acquisitions in tangible assets. Your results may vary, based on region, timing, and asset.
SnT