San Francisco Sales Volume And Median Price: July 2011 (www.SocketSite.com)
Recorded home sales volume in San Francisco fell 1.8% on a year-over-year basis last month (444 recorded sales in July 2011 versus 452 sales in July 2010), down 16.7% as compared to the month prior versus an average June to July decline of 9.8% since 2004.
Over the past six years, an average of 616 San Francisco homes have sold in July with 893 recorded sales in July 2004.
San Francisco’s median sales price in July was $675,000, down a nominal 0.2% compared to July 2010, up 1.5% compared to the month prior.
For the greater Bay Area, recorded sales volume in July was up 1.7% on a year-over-year basis, down 13.9% from the month prior (6,887 recorded sales in July ’11 versus 6,773 in July ’10 and 7,998 in June ’11) as the recorded median sales price fell 7.0% year-over-year, down 1.0% month-over-month.
At the extremes, Napa County recorded a 9.5% drop in sales volume (a loss of 11 transactions) on a 23.0% decline in median sales price while Solano recorded a 7.5% increase in volume (up 42 transactions) on a 11.2% decline in median price. No county recorded an uptick in median sales price.
As always, keep in mind that DataQuick reports recorded sales which not only includes activity in new developments, but contracts that were signed (“sold”) many months or even years prior and are just now closing escrow (or being recorded).
Bay Area Housing Market Takes a Breather [DQNews]
San Francisco Recorded Sales Activity Down 7.0% In June [SocketSite]

39 thoughts on “San Francisco Recorded Sales Activity Down 1.8% In July”
  1. So, the SF median,nominally, has fallen just over 19% (20% for you rounders) from the Peak.
    Anyone care to adjust for inflation?

  2. Well,the actual fall in prices (which medians are NOT) will most likely be somwhat less than this due to mix – especially given the types of property that were skewing the median upwards in 07/08 (as was oft trumpeted on here!!)
    But what’s happened to the report on the other side of the equation..inventory..? The bi-monthly report seemed to have dropped off a cliff. Is it coming back? And, if not then why not..?

  3. “Anyone care to adjust for inflation?”
    Sure, although I don’t think medians always tell you the real story, the 2007 peak of $835K would be $909K in 2011 money because of 8.9% inflation. In comparison, the $541K for 2004 becomes $646K in 2011 money.
    Also, as REpornaddict said, any reason the inventory report hasn’t showed up for a while? It was quite helpful to calculate months of inventory.

  4. The one year apples have basically been flat. What’s disturbing is how volumes have fallen.
    The comparison with last July is a little misleading because that that was the first month without a tax credit. The tax credit was for homes purchased by April 30 and closed by June 30, 2010. They later extended the deadline to September 30, but they only extended it on June 30, so anyone who could close had closed by June 30.
    The tax credit should have pulled demand out of July and into June 2010. Thus, July 2010 had an artificially low volume.
    So now, looking at this report in light of all of the facts, it’s a disaster. This should have been the easiest July in history to beat the year prior numbers and we couldn’t even beat them.

  5. Looks like we’re getting ready for another leg down. Here are the main arguments for another drop, as I see them:
    1: Case Shiller futures predict more drops through 2012 (over 5% down–as of now), and then pretty much slowly recovering to back where we are now over the next 2-3 years or so, maybe with hopes of increases of about 5% in 2015, if one were to buy now.
    2: Conforming loan limits are dropping this fall (now, actually), putting pressure especially on those priced between .
    3: There is serious pressure to require more money down for government mortgages and a threat to take away the mortgage interest deduction. I never thought Congress would go for this but now I think it’s possible (I put the odds at about 25%). It looks like we will know more next year?
    4: Median income is remaining steady or decreasing (!) in some Bay Area communities, just as other costs like medical care and education are increasing. The job situation is better, but not good.
    5: Psychological factors that will prevent people from buying, like the president today saying we have more than a year before housing will recover and general disgust with government and a very sour economic mood. If we have another serious down slope of 5 to 10% over the next year this may permanently sour people on housing for a long time.
    The only positive I can think of that is causing upward pressure on prices would be:
    1: Rising rents in hot areas like Silicon Valley and SF.

  6. Oh don’t get me wrong, I am not endorsing medians as a solid metric. However, for a variety or reasons it is the one most often used by the industry (mostly because it comes out quickly and because it is likely to have an upward bias).
    The only reason I comment on the median is simply because of how hard the upward trend in the median was flogged by the RE industry during the boom, and even as the bust began, as an example of how wrong the RE bears were.
    I guess I was just feeling a little schedenfraudian when I looked at these figures today.
    Of course, here is hoping that RE and Construction industries can turn around soon and help drive the broader economy back into solid growth, however unlikely as that might be for the time being.

  7. oh and assuming that the 909k inflation adjsut amount is correct that means SF county has seen a 30% real drop in the median.
    I seem to remember several bears predicting exactly that (30-40% real declines as I remember it). Of course medians are NOT prices but you get the idea.

  8. Well, if you;re using medians one could argue just as easily that we are now up 15%-20% (not sure what the exact low median was) from the current cycle’s low…

  9. “The one year apples have basically been flat. What’s disturbing is how volumes have fallen. ”
    Inventory is in a mych better situation though tipster.Or, at least it was the last time it was reported. and, as you’ve said many times before,it;s the combination of sales and inventory that is so important.

  10. Falling volumes usually portend falling prices. So, you have to watch it all.
    Inventory can be an indicator, but it can be itself subject to distortion. 728 Duncan was on last year for $2.550 and is now sitting at $1.950 in a year in which prices have been basically flat.
    It was on the MLS. Was it really inventory last year? Obviously not. Nearly the whole city is probably for sale if you want to pay 25% over market. I’m seeing fewer of those types of listings this year. That could explain a big chunk of the inventory drop.
    So to me, two things can’t be distorted by much: the price of one year apples, and the number of sales. One year apples have held up pretty well, Sales, however, are in the toilet and prices usually follow not long after.

  11. Interest rates are low and not going up any time soon. The mortgage interest deduction is not going anywhere. Bay area tech sentiment is generally pretty hot right now. Inventory is low and homes priced correctly are selling. Roubini is starting to get his doom message out there and he has some credibility. The global economic issues are more likely to have the biggest impact on housing nationally / locally. Our US Government is doing everything in its power to keep the lights on and will continue to do so. Despite some global economic uncertainty and bad markets, I still don’t see the -5 to -10 drop from today happening in the next 2-3 years. Steady +/- 1-2% for the next few years is my guess.

  12. although I have long said that I forseee significnt headwinds for RE over the next year, I still am not sure I’d over-interpret these current numbers, due to the major political uncertainty.
    IMO there’s just no way to know the SF or national RE market at least until Congress yays or nays the budget from the unconstitutional super-committee
    Our leaders have announced ZIRP forever (at least for 2 more years anyway), and thus their desire to hold down borrowing costs. Depending on the risk premium going forwards, it may mean that future mortgage rates will be about where they are for some time. (increased risk premia could obviously change this quickly).
    Thus: no hurry to take advantage of current interest rates.
    Housing prices have been stagnant or falling for a while now. Thus, no hurry before one is priced out forever.
    but there are many potential big changes coming…
    -lowering of the Jumbo conforming limits
    -potential change in mortgage interest rate deduction
    -changes in overall tax policy
    -significant public awareness that prolonged economic pain is highly likely
    -fears of future job losses
    -equity market dislocation.
    this will push people to the sidelines. no reason to buy when your job is not 100% secure, the market is up or down 5% a DAY, crazy politicians are threatening Mutual Assured Destruction policies for no apparent reason…
    SF specific: as I’ve said for 8 months now I think it was a huge mistake for Twitter, Facebook, et al to not go public during QE2. They are basically advertising companies and advertising revenues don’t look great during economic dislocations.
    also SF specific: despite Tea Party solidarity I’m not sure that any big deal will happen unless there are changes in taxes. as you all likely know, it’s unlikely the taxes will focus on the uber rich/wealthy… instead it will focus on high income earners (like me, and many SFers). Thus, disposible income may change for SFers.
    ===
    I personally have been poking my nose into investment properties here in the midwest, but won’t do it until the middle of winter at earliest after I know what craziness Congress has in store for us…
    but again, there really is no hurry (yet). we just ended the largest global credit bubble mankind has ever seen. It will take years or decades to play out. IMO the best bet is a defensive bet. He who makes the least mistakes will “win”. And “winning” will really be “losing the least”.

  13. Interest rates are low and not going up any time soon. The mortgage interest deduction is not going anywhere. Bay area tech sentiment is generally pretty hot right now. Inventory is low and homes priced correctly are selling. Roubini is starting to get his doom message out there and he has some credibility.
    Exactly the same as 2008. And we all know how that turned out.

  14. To be fair, tipster, there does seem to be more dumb tech money sloshing around right now than in recent years. For example, you can’t go to an open house in Soma without hearing the realtors gush repeatedly about how someone from company X just paid X million for something nearby. I figure it has to be more than their usual spin given they seem to salivate when they talk about it these days.

  15. “also SF specific: despite Tea Party solidarity I’m not sure that any big deal will happen unless there are changes in taxes. as you all likely know, it’s unlikely the taxes will focus on the uber rich/wealthy… instead it will focus on high income earners (like me, and many SFers). Thus, disposible income may change for SFers.”
    I don’t agree at all. The Democrats are only pretending that they want to raise taxes on the rich. They don’t really want to. I wish they were serious, but they aren’t.
    It’s already very clear who will be doing the sacrificing–the middle and lower classes. They will have their Social Security and Medicare cut (and already are having it cut through no COLA adjustments). There will be promises to cut defense, but it will be ephemeral. And there will be some corporate tax loopholes that will be closed up, only to be reopened at a later date. But my prediction is
    To sweeten the merde sandwich the bottom 85% will be asked to eat, the payroll taxes will be reduced–but that will only weaken the one program the middle class will depend the most on in retirement–Social Security.
    It’s funny, because I had a similar conversation with my father-in-law who has been warning for years about an impending crisis where Congress will all of a sudden reverse over 3 decades of coddling the rich and start taxing the rich–so he’s really big on Roth investments. But I pointed out to him that it’s been a bust in his case. He put most of his money in before the Bush tax cuts when his rates were higher and now rates have been lower as he’s taking his money out–so he’s definitely paying more using a Roth.
    Anyway, it makes logical sense that Congress would raise taxes to cover a shortfall, but it ignores the reality that we have a criminal Congress that serves only the well off. SO THERE WILL BE NO RAISING OF RATES FOR PEOPLE IN THE TOP 10% OR SO. Again, both parties are criminal parties.
    In fact, what was Obama’s proposed ‘Grand Bargain’? Yep, you guessed it, a REDUCTION in the top rates so we are even more like a flat tax system. We are more likely to end up with lower taxes at the top, rather than higher. But this doesn’t really help housing because, despite the lies that people like Pelosi say, we will indeed be solving the fake debt crisis “on the backs of the middle class and elderly.” The housing market will probably depend on more people doing well than simply the top 10% to 15%.

  16. Uugh, for some reason I have a hard time editing in this forum.
    ex-SFer, I see I missed the distinction you were going for–between the top .01% and the high earners, the top 5%, or something (which is probably close to the top 1% and 15% of SF, respectively).
    I do think that Congress would be more likely to raise the income tax rates for the higher brackets than they would raise the capital gains tax–which would hurt the top .01% less than paying higher income tax rates.
    But as noted above, I think the Grand Bargain will close some corporate tax loopholes (for a bit), promise to cut defense spending (not really though), and lower the payroll tax rates for the huddles masses and then throw in a bunch of rhetoric about how Obama and the Dems are taking it to the fat cats (they really aren’t).
    To me, the main uncertainty is the mortgage interest deduction. And this really won’t hurt the top 15% as it will the middle, will it?

  17. Exactly the same as 2008. And we all know how that turned out.
    There are actually several differences from 2008 beyond the similarities in my earlier post.
    The predatory lending, outright mortgage fraud, no-doc loans, neg-am loans, zero down 1st covered by 2nd, appraisal fraud combined with general loose lending standards, fueled by hot stock market led up to 2008. Lehman collapsing, AIG nearly failing, TARP, unprecedented calamity on wall street and legitimate panic on main street pretty much ended and took out the air in the bubble in 2008. So yeah, we do know what happened.
    The 2011 situation is much different. Largely political maneuvers causing massive market shifts, weak but not dead fundamentals, job market sucks most everywhere (not SF), and some uncertainty in the global macro-economic situation all create real risk for the US economy. But I’m not seeing how this leads to a massive reduction in housing prices. Low interest rates saved the ARM reset crowd, banks are easing foreclosures onto the market at reasonable absorption rates and homes are still selling quickly for decent prices.
    One big difference is the high end, which pretty much died on the vine in 2008. It was unprecedented. You certainly weren’t seeing homes like 2440 Vallejo flying off the shelf with competitive bids at 11% over asking. FWIW, I thought the home was over priced and I’m shocked it sold for that price. Maybe the folks that lost out to 135 Locust decide to win this one. Who knows? And that is the point. No one knows.

  18. “To me, the main uncertainty is the mortgage interest deduction. And this really won’t hurt the top 15% as it will the middle, will it? ”
    Why wouldn’t it? The mortgage interest deduction is highly regressive. Many people aren’t affected by it in vast areas of the country because the combination of state tax + mortgage interest isn’t much over the standard deduction.

  19. @ Ex-SFR
    “but again, there really is no hurry (yet). we just ended the largest global credit bubble mankind has ever seen. It will take years or decades to play out. IMO the best bet is a defensive bet. He who makes the least mistakes will “win”. And “winning” will really be “losing the least”.”
    Q-
    Do you really think the credit bubble has ended? Seems to me that things have just heated up again with all the noise this time coming from Europe. Market gyrations and low interest rates are in large due to Soverign default fears. Nothing has been solved and the debt problem over there continues to snowball.
    Source Wikipedia,
    (Click on name for link)
    “This list does not include the European Union (EU), which includes four (Germany, UK, France, Netherlands) of the above states in a single economic entity. As a single economy, the EU is the largest trading partner of the US with $319.6 billion worth of EU goods going to the US and $239.8 billion of US goods going to the EU as of 2010, totaling approximately $559.4 billion in total trade”
    Forced austerity and cutbacks don’t equate to thriving economies, and since the EU is our largest trading partner the effects of austerity will be felt here as well. The interconnection continues, since a EU slowdown will have an effect on China (EU’s #1 trading partner and our #3 trading partner) as well.
    Source-
    http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_122529.pdf
    I appreciate the dialog on SS and if anyone sees it different, let me know. But I tend to see more storm clouds on the horizon..

  20. Correct. Of course the credit bubble has not ended. It is true that trillions of dollars of the junk on bank books was transferred to various governments, so they are not as zombified. But that certainly did not clear off everything. So now we have governments with overwhelming debt, the public still has overwhelming debt, and even the banks still have overwhelming debt.
    I think the verdict is still out as to whether this is 2008, or not as bad, or worse. But even with the best of these (“not as bad”) it is still a bad situation. And SF is still not immune, just as it proved not to be in 2008 – look at local unemployment stats for but one manifestation of this.

  21. “The mortgage interest deduction is highly regressive. Many people aren’t affected by it in vast areas of the country because the combination of state tax + mortgage interest isn’t much over the standard deduction.”
    Well, the deduction is limited to $1,000,000 of mortgage debt so it’s also limited in effect on the really wealthy. Those who have mortgages over $2,000,000 or so may not miss the deduction at all.
    So yeah, since the deduction may not help those with under $200,000 of mortgage debt all that much, ending the deduction would probably fall the heaviest on those higher wage earners but not materially effect those that are at the real top.
    But it would make sense if they got rid of the mortgage interest deduction at they same time they dropped the top rates to 25% or so–which is where it looks like the Grand Bargain is going.

  22. So now we have governments with overwhelming debt, the public still has overwhelming debt, and even the banks still have overwhelming debt.
    Nothing new here.

  23. @ A.T.
    I guess that’s where I was going and I hope the above post made some kind of sense in spite of my horrible formatting skills. 2008 was a (mostly) private problem and it shook the world. A few big players got spanked, but many were and are bailed out at govt expense. Fast forward to today, QE 1 & 2 plus all the other gvt programs and the end result is still +/- 10% unemployment.
    Now the big shoes are dropping, The austerity requirements of Spain ask for a reduction of total deficit spending this year to 7% of GDP AND a further reduction to only 3% by the end next year…
    (src- http://www.state.gov/r/pa/ei/bgn/2878.htm)
    Sounds fine, but the Spanish GDP is crashing, losing 134 Billion from 08 – 09. To put that in perspective the US GDP lost 250 Billion in the same period with an economy almost ten times larger. Meaning from 08 – 09 Spain saw a comparative crash over 5 times as large as ours. Currently they have 21% unemployment (I don’t know if they have a U6 number) AND they HAVE to cut spending to %7, no chance for stimulus there.
    (src-
    http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=ny_gdp_mktp_cd&idim=country:ESP&dl=en&hl=en&q=gdp+of+spain#ctype=l&strail=false&nselm=h&met_y=ny_gdp_mktp_cd&scale_y=lin&ind_y=false&rdim=country&idim=country:ESP:USA&ifdim=country&hl=en&dl=en
    http://www.google.com/publicdata/explore?ds=z8o7pt6rd5uqa6_&met_y=unemployment_rate&idim=country:es&fdim_y=seasonality:sa&dl=en&hl=en&q=current+unemployment+in+spain#ctype=l&strail=false&nselm=h&met_y=unemployment_rate&fdim_y=seasonality:sa&scale_y=lin&ind_y=false&rdim=country_group&idim=country:es&ifdim=country_group&hl=en&dl=en
    )
    I’m not bashing Spain, just trying to point out the scale of these issues. Everyone has written off the Piig bloc as a loss, but Spain has a 1.4T GDP, it is the 13th largest economy in the world and they are facing difficult times at the moment..
    And Italy, the tenth largest economy in the world @ 1.7 T GDP, is arguably as bad or even worse..
    Now compare those numbers to the poster children for this whole mess – Lehman Bros, they had a market cap of +/- 50 Billion in the good days. Of course they did not go down alone, but the fallout of them going under was pretty severe. Compare that with the problems we are seeing in the EU with whole economies, and the boots yet to fall suddenly seem very big.
    I know Spain or Italy is not going to “fail” and go into bankruptcy like people or corporations do. But what about the slack demand from said austerity measures? As I mentioned above our trade with the EU is almost $560 Billion a year. we sell them about 240B worth of American made widgets every year, within 10B of the amount that got scrubbed off our GDP, and the pain in 08 – 09. For every 1% less in exports that we sell to the EU (or anywhere else) we will feel it here in diminished GDP and lost jobs. Its hard to speculate where it could go, but we do know that in 08 we lost 2,6 million jobs.
    Real Estate is always about jobs (cash flow), and confidence in the economy (continuing cash flow).
    We will see how things develop, but it seems that every “small” drop in consumption will be felt by all other trading partners. In “normal times” it may not have mattered as much as there was always churn and other markets to enter. But with the primary effects of the great recession still lingering, its hard to imagine dodging more of the continuing fallout..

  24. Well, the deduction is limited to $1,000,000 of mortgage debt so it’s also limited in effect on the really wealthy. Those who have mortgages over $2,000,000 or so may not miss the deduction at all.
    So yeah, since the deduction may not help those with under $200,000 of mortgage debt all that much, ending the deduction would probably fall the heaviest on those higher wage earners but not materially effect those that are at the real top.
    Now you’re changing the goalposts because you had previously said the top 15%. The top 20% is at about $100K. The top 5% is at about $175K. This would certainly have a big effect for the top 5%, even if the effect is attenuated for the top 0.1%.
    The mortgage interest deduction is highly regressive even when limited to $1M/$1.1M in mortgage interest. Even with the maximum amount at 35% federal and 9.55% (or 10.55%) state, we’re talking about potentially $450K-500K, which is not chump change. That likely does affect people in the $2M range, even if they are rich foreigners, trustafarians, and Googlers, or even if it’s “oh crap, I won’t be buying that Rolls or yacht this year.”
    But it would make sense if they got rid of the mortgage interest deduction at they same time they dropped the top rates to 25% or so–which is where it looks like the Grand Bargain is going.
    I haven’t ever heard as low as 25%. Some of the proposals on the table were in the range of a 23% bracket and a 29% bracket.

  25. That math makes no sense. I meant to take 5-9% of that number to account for the actual interest, but forgot somewhere along the multiple steps. My bad.
    It should be $25K-45K ($25K in this market, up to $45K in something more normal). I’d care about that and I’m in the top 5%.

  26. sfrenegade, I’m not moving the goalposts, I’m searching for the right answer. I welcome any clarifications and corrections. Regarding your quibble with the exact tax rate for the top bracket the Gang of Six proposed, I was averaging the top bracket as the three different brackets are: 8-12%, one at 14-22%, and one at 23-29%.
    I believe the Gang of 6 proposal is obviously what Washington wants (despite Obama and the Dems pretending that they want to tax the rich and let the Bush/Obama tax cuts expire). It is being set up as the “compromise” deal that we will just have to accept.
    And you’re wrong on your math, as far as I can tell.
    The home interest deduction is limited to the interest on the first $1,000,000 of mortgage debt, right? http://www.irs.gov/publications/p936/ar02.html So on a $1,000,000 mortgage, with a 6% rate, for instance, a mortgagee/citizen would *only* be able to deduct $60,000 of mortgage interest, no? So this person would save $21,000 in income taxes, right? [plus whatever else for any HELOC and state taxes, etc.–I’m too lazy to figure out the real figure, but it’s around $2,000, right?]?
    So, let’s assume someone has over $2,000,000 in mortgage debt, and let’s further assume he is able to deduct the interest on the first $1,000,000 of debt (I don’t even know if this is possible), he would probably have to make over $500,000 a year to service a ~$2.5 million home. If this person’s income tax rate was reduced by 6% (from 35% to 29%), he would save $30,000 in income taxes. He’s only losing $23,000 or so by taking away the mortgage deduction, so he’s better off under the Gang of 6 plan–by about $7,000.
    Let’s say a high earner making $250,000 a year is stuck in a house with the max mortgage, of $1,000,000 (and is therefore stretching). Well, under the new Gang of 6 tax rates, let’s assume he saves a further 8%, he would therefore pay $20,000 less in income taxes. If he’s losing $23,000 from the mortgage deduction he would only be paying about 1-2% more in taxes.
    And then factor in the extension of 2% payroll tax on the fist $100,000 or so, and this high earner stuck in a million dollar home is pretty much in the same position as before, but the home mortgage interest deduction is gone.
    I used to think they would never touch this deduction, but now I think they are letting the air slowly out of this bubble and I totally see a Gang of 6 type plan in our future (which I totally oppose–Bah humbug). But that’s my best guess.
    And of course, this Gang of 6 plan primarily requires the middle and lower classes to do the sacrificing, as they will have their retirement money and health care cut while the high earners will do much better with cuts to Social Security and Medicare, and the super rich will make off like bandits, of course.

  27. I meant the say: the extension of the payroll tax CUT of 2%.
    I don’t think the Gang of 6 proposed this, but I see this as what Obama will trumpet as his main achievement in the negotiation, and will get in return for the lower income rates. Of course, part of the intent of these payroll tax rates is to further weaken Social Security, Medicare, and Medicaid, so it’s not a good bargain, for most people. But the high earners and the filthy rich will do okay to even better.
    And btw, people have forgotten that we have had added bottom up stimulus all year, in the form of the 2% payroll tax cut, so if they let it expire at the end of the year it will have a recessionary effect (and it’s hard to imagine the GOP raising taxes). Of course, as with my predicted outcome above, my understanding is that the the lower classes didn’t really see a cut as they had some tax credit taken away at the same time they saw payroll tax cuts.

  28. One thing which is common everywhere is people do not want to cut something which affects them:
    If you own a home – allow mortgage deduction, property tax deduction
    If you don’t own home – remove those deductions (so that home prices will fall)
    If you own a business – business related loop holes (solar, wind, rail, construction, defense)
    If you are old – Don’t cut SS & Medicare ( Even though I agree that our government screwed this up. This program was supposed to be an insurance not entitlement – same as annuities)
    If you are young – Don’t increase college tuition fees
    Eventually everyone should realize this will not sustain and we have to bite the bullet.
    My preferences would be:
    – Fair tax for individuals and corporations ( Everyone pays tax. Whatever it is 15%, 20% or 25%. If you are rich your absolute payment is more (same rate). If you are poor you pay less (but same rate). It’s only fair to ask everyone to contribute)
    – No deductions (This will eliminate all the loopholes and lobbying (at least the politicians would have to do the work, rather then some lobbyist coming up with the laws))
    – SS (Increase the retirement age to 70. Payments are proportional to the contributions)
    – Medicare (This I have no clue how to reduce costs. I would like ex-SFer to weigh in from the medical angle). This should be a long term fix: I would like government to reduce its burden by encouraging people to be healthy (E.g free YMCA/Gym membership after 50) More urgent cares than emergencies; Produce more doctors (Immigration or more colleges), 5 yr medical degrees after high school. Allow insurances to charge more depending on peoples habits/weight (Make the citizen responsible for their actions from the get go, not when they are old).

  29. I’m afraid I disagree with you in about every way SFwatcher:
    1. Cutting Social Security is a massive betrayal of the vast majority of Americans–words like “entitlement” are loaded and meant to propagandize rather than enlighten (especially Social Security where people basically get back what they put in–this is not welfare). As you note, SS is more like an insurance/annuity system, and while I would prefer a stronger retirement benefit for all citizens no matter how much one has worked in his life, we should at least get the annuity and insurance we were promised and have paid into. The government is still taking the money out of our income for our annuity, but now changing the terms. What would you say if an insurance company did this to you? And why shouldn’t people be pissed? Two thirds of American retirees will rely on this money to live! Plus, raising the age to 70 would be incredibly regressive, especially for black people whose lives are much shorter than whites. There should be no cuts to Social Security AT ALL–it’s not fair. The government just printed $16 Trillion to give to banks to meet private obligations that were incredibly speculative and often based on fraud. Private obligations! Worse case scenario, also easily raise the payroll tax on the rich to meet the far-off projected shortfall–and have plenty left over for Medicaid and Medicare to boot! The hype about it being in jeopardy is pure hype–it’s yet another transfer of wealth and power from the lower and middle classes upward.
    2. Everyone does pay a tax–and the poor and middle classes pay a higher percentage than the rich do. So you’re wrong to argue that a flat tax is “fair”. It’s only fair to the super rich and is incredibly regressive. If we wanted a more fair system we would raise rates on the rich, not lower them. The federal income tax was never meant to apply to large percentages of people. The very top take over 90% of our income and it would be more fair if they paid closer to 90% of taxes–now they pay much less than that. I see the main benefit of a progressive income tax system as regulating the top earners. We have third world, massive inequality in this country. Taking over 50% of income from the super rich is desperately needed to curb the power of this reckless and criminal class. In fact, if I were in charge, income taxes would only start at the median income, and increase more dramatically above $500,000 or so, leveling out at 60% or so. So much of this tax debate is meant to obscure the fact that the rich really aren’t paying that much and the flat tax argument is a perfect example of that trickery.
    3. Health Care. This is easy. The evidence is abundantly clear that the main issue we have with health care involve PRIVATE health care costs. http://www.businessinsider.com/actually-it-is-the-projected-growth-of-private-sector-health-care-costs-that-is-unsustainable-not-medicare-2011-4 There is plenty of evidence from around the world that only a single payer system or socialized health care can bring costs down as we need.
    Your solution involving health insurance is totally unnecessary and simply makes things worse–just as Obamacare does.
    But you are right that this is all about the different interest groups fighting it out. But, you’re forgetting one thing. The vast majority of Americans are in agreement on some of the main issues–they want to keep their Social Security the way it is, maintain their health care, and TAX THE RICH. This is all easily possible and it used to be the political system purported to represent the best interests of the majority of the people.

  30. SFHawkguy:
    “The very top take over 90% of our income and it would be more fair if they paid closer to 90% of taxes”
    You left it open as to how you would define the very top, but I will assume you meant the top 1%. Based on 2008 IRS data, this group received 20% of AGI (adjusted gross income) and paid 38.02% of taxes.
    Top 5%? Received 34.73%, paid 58.72%
    Top 10%? Received 45.77%, paid 69.94%
    Top 25%? Received 67.38%, paid 86.34%
    http://www.taxfoundation.org/news/show/250.html
    Does this mean that the top 1% or 5% are over taxed? No. I think we have room for higher taxes on this group. Just remember that the top 5% is reached with AGI of just under $160,000. Top 25% is reached with just over $67,000 in AGI and that is the group that pays 90% of the individual income taxes.
    On the issue of SS, I agree and disagree with you. I expect that in my lifetime we will see a “needs based test” regarding SS. Test 1. If your AGI (including any tax exempt income) is too high (say over $200,000), your SS payments are taxed at 100%. Test 2. If your assets (including any IRA, 401-k or trust assets) exceed a certain level (say $3 million), SS is taxed at 100%. Remember that as recently as 1983, SS payments were not taxed (at the Federal level) at all.
    This may not sound “fair,” but to those that much is given, much is expected.

  31. SFHawkguy: I agree with you on SS (as mentioned in my previous post). It was supposed to be a insurance. The problem is with the estimates. They estimated that average life expectancy would not be this high, and so now the equation is all skewed. I am not familiar with annuities, but assume they have some time limit (30 years or so). But SS can’t do that (because that will be a big social issue). What if people live longer than that???? So, the longer term fix would be raising the age appropriate to the average life expectancy
    I disagree with you on taxes. Like “JL” listed in his post, top 25% pay 90% of taxes. What happened to the responsibility of other 75%? Now, you would say let’s tax 90% of income for top 1%. Why is it fair? Do you think all their income comes from the good support of government and so they have to pay it all back? If you have same rate (e.g 25%) then a person making million will pay 250000 vs a person making 50000 will pay 12500. That is still 20X more. Progressive tax is nothing progressive. (BTW I make more closer to top 25% than top 1%). And if you add the same tax to everything (capital gains, home sales, businesses etc) government can easily raise more revenues.
    On health care – I really don’t have an answer, but I know a few of my relatives in socialized health care system. I am not entirely sure if it reduces cost, but it will definitely reduce the convenience and “CARE”. BTW, I am not a proponent of insurance. But, I am more opposed to non efficient government run programs. I dont know of any govt run good programs. And BTW, we need to also take more responsibility for our health. That would be the most effective way to get our costs down. I don’t see any of the proposals which leads us there.
    And your last comment
    “The vast majority of Americans are in agreement on some of the main issues–they want to keep their Social Security the way it is, maintain their health care, and TAX THE RICH”
    makes my original point.
    The vast majority of Americans just look after themselves.

  32. Just Looking,
    I guess I was referring to not only income but capital gains and the overall wealth of the rich. This recent PBS show on inequality was on my mind and there they point out that the top 20% has 86% of the wealth. http://www.pbs.org/newshour/bb/business/july-dec11/makingsense_08-16.html
    I guess I meant to compare the percentage of the total wealth that the rich have to the percentage of that wealth that they give back in taxes.
    Plus, the data you supplied only applies to federal income tax and does not include the much more regressive taxes like state and local sales taxes, etc. I think when viewed as either a percentage of income or percentage of wealth, the wealthy pay much less of a share than do the middle and lower classes.

  33. SFWatcher,
    Single payer and socialized health care is way more efficient than insurance based for profit health care systems. Here is a chart that shows this pretty well: http://www.correntewire.com/murder_spreadsheet
    This is one area where the free market simply does not work and the government is the most efficient. Period. End of debate (and I realize I can and should expand and support these points to fully win the debate, but I could if I had time).
    I think there is about 3% overhead in Medicare while the insurance companies are less efficient (which provide ZERO added value–think about it–these “services don’t even exist in other countries). See here: http://www.pnhp.org/single_payer_resources/administrative_waste_consumes_31_percent_of_health_spending.php
    You may not know any government programs that are more efficient than the private sector but you obviously aren’t looking very hard because the very government program we are discussing proves you wrong! And your anecdotes about other countries health care are just that–anecdotes. The fact is most Americans looooove Medicare and Social Security, especially Medicare.

  34. The French and the Germans pay way less than us in healthcare and live longer. Governments have a huge leverage on all the healthcare industry there and I agree there’s way less waste.
    Of course it means smaller mansions for surgeons and drug company execs but then again who cares.
    This is one of the few fields where collective interest is higher than personal and where government is our best friend and the most likely to defend us. Other fields: public transportation, education, infrastructure, retirement. This is the rich soil where seeds of private enterprise and individual development can thrive.

  35. “If you have same rate (e.g 25%) then a person making million will pay 250000 vs a person making 50000 will pay 12500. That is still 20X more. Progressive tax is nothing progressive.”
    That is NOT a progressive tax. That is a flat tax. If you think the person making a million should be $12,500 and the person making $50K should pay $12,500, you believe in a head tax, not a flat tax.
    If you believe in a head tax or anything between a head tax and a flat tax, you are generally quite radical (which would make you a classical liberal, not a classical conservative :p).
    Progressive tax is what we have now — if you make more money, you have a higher rate for marginal income.
    “Do you think all their income comes from the good support of government and so they have to pay it all back?”
    Yes, actually. All of this money is supported by the rule of law and defense and any number of other things. In some cases, it comes from a direct federal subsidy (banksters, farmers, oil companies, etc.).

  36. “It is about 40% for most people, no matter what their income is.”
    I’ll have to check out their methodology. It’s interesting because they included state income tax and sales tax, which it’s clear are quite regressive in nature when you look at CBO’s data on effective overall federal tax rate (including income tax, payroll tax, corporate tax, and excise tax):
    http://www.cbo.gov/ftpdocs/100xx/doc10068/effective_tax_rates_2006.pdf
    The other interesting data is the effective tax rates on the richest 400, which the IRS publishes as well:
    http://www.quickanded.com/2010/02/effective-tax-rates-of-the-richest-400-americans.html
    (note that the chart on that blog does not include state tax, payroll tax, etc. but points out that those taxes tend to be regressive, so this would skew things even more)

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