Tuesday, January 31, 2012

The Gordian Knot of Medicare

We saw an interesting article asking what would happen if a person wanted to leave Medicare and got to wondering:

'Is it 'constitutional' to force everyone who is aged 65 or older into and then stay on Medicare even if they don't want to or can afford their own non-government-run and paid-for health care coverage?'

(You can choose to dis-enroll from Medicare Part B whenever you want to but you are automatically enrolled in Medicare Part A and B when you turn 65. You can not dis-enroll from Part A, and for reasons cited below, you may never want to either)

We think any time you can get 50%+1 of both the House and the Senate to agree on a package that the President doesn't veto is pretty much as 'constitutional' as you will ever get.

If you really want to get picky about it, add in the 27 Amendments to the US Constitution we have passed over these last 223 years that all passed Congress by 2/3rd's majority and were sent to the states where 3/4's of them had to ratify it as well in their state legislatures (except for the 21st Amendment that was ratified by 3/4's of the state conventions)

Those are the two 'constitutional ways' to change things in America.  It is a slow, very deliberate and difficult process.  Just like Mr. Madison and Mr. Jefferson wanted it to be.

The 'constitutional' way to overturn Obama Care is through the same process:  Congress and the White House. Elect enough new people to overturn Obama Care if you don't like it, that is the way to do it.  It requires gutsy candidates and lots of money but that is the way to do it, not wait on the decision of 9 people on the high court.

For that reason, we don't put too much stock in the argument that the Supreme Court will overturn Obama Care because of the individual mandate issue.  It passed Congress with the requisite number of votes and was signed into law by the President.

What can be more 'constitutional' than that?

But getting back to the question at hand: Should a senior be able to leave Medicare if he/she wanted to and had their own private health insurance or were 'self-insured', in effect, because they were super-duper wealthy like Warren Buffett, let's say, or Bill Gates?

Take a very close look at the chart below:

Medicare (A+B) Sources of Income as Percentage of Total Income
                                                                 Part B
Year   Payroll Taxes    Tax on Benefits    Premiums      State Transfers     General Revenue
2010      38.9%                  2.9%                 13.2%               0.9 %                     44%

What this chart is screaming out to the American public, even though most people don't want to see it, hear it or believe it, is this:  'Medicare is one of the largest 'welfare' programs now run in America'.

(Merriam-Webster dictionary definition of 'welfare':
  • aid in the form of money or necessities for those 'in need' 
  • an agency or program through which such aid is distributed 
If you have a problem with the definition of 'welfare', take it up with the intellectual descendants of Noah Webster who developed this line of dictionaries in America. But Medicare qualifies on every word in this definition except for these two: 'in need')

Medicare is not targeted towards just to those 'in need'; the poverty-stricken; the poor or even the-close-to-being-near-poor! There are millions and millions of upper-income and very wealthy people now on Medicare simply because they know they have one of the best deals in the history of mankind!

Having Warren Buffett and Bill Gates on any sort of federal subsidy program is just plain wrong, wouldn't you have to agree?

Let's think on this for a second:

Out of all of the $520 billion spent by the federal government on all Medicare services in 2010, all but $68 billion or so of the funds to pay for it all came from other people than the senior retirees.  Seniors on Medicare Part B pay roughly $320+/month through premiums for physician services but virtually zero for the Part A hospital costs which account for about 50% of Medicare expenditures annually.

13.2% of the total was paid by roughly 44 million seniors currently on Medicare.  13.2%.

Who pays for the 'rest' of Medicare?

You do, silly.

In the form of FICA payroll taxes from your work (38.9% of the total).  Or in the form of general revenue taxes you pay (or what the government obligates your children to pay through more debt to the Chinese, that is, or 44%)

Taxes on wealthy seniors accounts for 2.9% of the total and .9% is a transfer from the states for some reason which hardly seems worth the effort, does it?

So, where does that leave us?

Since Medicare is almost all paid for (84%) by the general taxpayer anyways today, why don't we just go ahead and make it all 'free' to every senior citizen?

That is right. FREE.  As in a 'Free Ben & Jerry's Ice Cream Cone' or 'Free Lunch at the Snappy Lunch in Mayberry, NC!'

With the following compromise, that is. (There is always a deal to be made in Washington if you listen closely enough)

In return for making Medicare 'free' for eligible seniors, the following changes/reforms will be made to Medicare this year:
1. The Medicare eligibility age will start to rise at the end of 2012 in annual 4-month increments from age 65 to age 70 over the next 15 years. After all, if you reach age 65 in the year 2020, you can expect to live another 15 years if you are a man and perhaps 18 if you are a woman.
In many ways (besides eating too many Twinkies), we are the 'healthiest' generation of Americans who have ever lived. And unless you have been doing manual labor all your life instead of flying a desk or driving a computer mouse all day, you are probably in pretty good health relative to our parents and grandparents who worked and sweated their way through the Great Depression AND then were 'rewarded' with the 'booby prize' behind Door #3, World War II.
2. Every senior citizen who is either very wealthy or ridiculously wealthy will no longer be eligible for Medicare (or SS for that matter).
They have done exceptionally well in life and the payroll taxes they did pay over their lifetimes went to the retirees who were living then, not into a trust fund or ERISA-protected benefits plan where those contributions could have then built wealth over time.

And they don't 'need' or even 'want' 'welfare' from the other American people. Do they?

Some estimates run as high as $70 billion per year that could be saved (or debt averted) annually from here on out if entitlement programs were truly 'means-tested'.  That would be over $1 trillion between today and 2022 alone.

It would 'cost' the taxpayer 'only' the $68 billion or so per year in lost Part B premium payments, probably starting in the year 2020, adjusting for inflation and phasing up as the current senior generation expires.

But the 'means-testing' (it is not a bad word in this deal, is it?) would yield close to $70 billion in savings from both Medicare and Social Security. PLUS the structural budget trend-lines in future Medicare costs would start to crumble somewhat as the age eligibility component is factored into projections.

People who are currently on Medicare would continue in the current system until they die which would keep the $68 billion+/year coming in for at least a little while as the age cohort ages.

On a very simple marginal cost/benefit analysis, we would save multiples of whatever amount of revenues we would lose in the 'lost' Part B premiums that would no longer be paid once the current senior generation expires. Maybe on the order of 10-1 over the long-term.

The people who need federal help the most would be protected and then we could focus on the other factors that are still driving up health care costs such as defensive medicine, liability insurance, tort law, third-party payors and the granddaddy of them all...getting people to take care of themselves and stop eating so many Twinkies, smoking and drinking excessively and generally being a couch potato the size of the couch.

What do you think? Would you take this 'deal' if you thought it would help get us out of this budget and economic ditch in which we seem mired?

Maybe you should talk with your kids or grandkids about it as well before you answer that question.

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Thursday, January 26, 2012

If You Want 'Smaller Government', Use The Threat of Higher Taxes on Everyone To Get There

It is a truism in business, conservative circles and general human common knowledge that if you want more of something to be used, give it away 'for free' and voila!....more of it will in fact be consumed.

How 'self-evident' is that? We are surprised that was not put in the Declaration of Independence or the US Constitution.

Many conservatives won't go to Ben & Jerry's any longer because of their liberal views and donations to liberal causes.

Except when they give away free ice cream cones all day long in April each year, that is. Then they line up like every other person who wants what?  A great ice cream cone that tastes even better when it is given away for 'free'.

So why don't conservative small government advocates use the same logic when it comes to trying to reduce the size of government they say they want to do so badly?

'If you want more government, we are going to support raising taxes on everyone, not just a select few such as the rich or the importers or the consumers of carbon, etc. etc. etc.'

The converse would be true as well: 'If you want less government, we will tax everyone less by a proportionate amount.

Right? Isn't that what is supposed to be done in a society where everyone has an equal vote in the matter? Shouldn't everyone also have an equal amount of 'skin in the game' in terms of exposure to paying for all the services government provides, including when these programs are increased in cost?

We think that over the past 50 years in America, the inherent tension between paying for the government we all seem to want has been completely decoupled and broken.  The more that politicians such as President Obama seek to play the 'class warfare' card in this high-stakes game of poker, the more dissolved we become as a nation in terms of having a collective stake in the game, i.e. paying taxes for our collective good.

As a result, we seem to believe as a society that all we have to do is pass new laws which increase the cost of our government and 'someone else will pay for it'.

Who the hell is that supposed to be?

Does 1 person get more protection from our wonderful national defense military and homeland security teams than any other person? Nope.

Does one class of citizens, such as the top 1% of income-earners, get more than 1% of the total protection offered by the same defense teams?  Nope. Rich people and poor people were slaughtered on an equal opportunity basis when those planes slammed into the Twin Towers and the Pentagon on 9/11.

We are either all protected or not protected at all.  That is the way it goes in a democratic republic supposedly.

For just one example of what happens when 'someone else pays for it', consider the current 'third party payor' system in the otherwise truly wondrous health care system in America.

Medicare is at least 50% paid for by 'other' younger taxpayers; Medicaid is totally supported by other people who pay taxes; and employer-paid health care plans are paid 'by my boss and company who pay 50-75% of my health care premium each month'.

We will all go get multiple opinions from different doctors if we don't like the first one we get when we are feeling bad and want to feel better, won't we? As long as we don't have to pay for the full cost of any of the visits or procedures or drugs, we will get as much of it as we possibly can even if the malady is minor or not life-threatening.

That is just standard human nature, isn't it? Nothing insidious about that fact. It is just the plain honest truth.

In ancient Greece, the Athenians did not have the benefit of a beneficent Federal Reserve to print up money or just 'make it up out of thin air' whenever they had to raise an army and navy and pay soldiers and hoplites to go to war to protect their freedom and interests around the known world at the time as they did in the 30-year Peloponnesian War from 431-403 BC.

Guess what they had to do?  They had to raise money the old-fashioned way: from their own pockets, in chunks of gold, silver or talents and put it in the hands of the Athenian treasury so the state could pay the costs of war.

How did they do that? They held humongous town meetings out in the open square to discuss the advantages of going to war versus not going to war. As in 'becoming slaves' to the Spartans or Persians or suffering outright annihilation.

Once they decided to go to war, they had to decide how to pay for the soldiers, hoplites, boats and armaments to win the war. So they assessed 'taxes' on every citizen in some fashion or another.

They also usually voted to conscript every able-bodied man to go to war as well. Not many draft-dodgers back then we don't think.  It was a total battle for survival and every person knew it.

Talk about a 'participatory democracy'!

But think of how difficult it must have been to make these collective decisions.  If you had to pay higher taxes immediately to support a war, hypothetically speaking, of course, in Iraq, let's say, in 2003 AND you had to go to battle as long as you were an able-bodied man, would we have taken that momentous step as a nation?

No, of course not! But as long as 'someone else' was paying for it and 'I' didn't have to actually join the military and go fight the Iraqis for real, then 'that is OK by us!'

The Greeks 'participated' in every major decision by voting for services to be rendered by the government (entitlements, defense, road construction); they 'participated' by paying for those services with their taxes and the men were told to take up arms and go to war to defend their freedom.

We have lost sight of that direct connection between taxation and spending in America. Completely.

Returning to the tension between taxes and spending at the federal government level just might be the constraining factor that Alexander Hamilton referred to when he said that a consumption tax contains within itself a self-limiting limit on the size of government. (see Hamiltonian Federalists)*

So why not bring back that aspect of the Greek system to the modern American democratic republic in the 21st century to a new political party should it ever emerge?

It would look something like this: 'If Congress votes for more government spending, taxes will rise on EVERY US taxpayer in order to pay for it, not just the rich. That would include prescription drug benefits; going to war, homeland security, and building a 'Bridge to Somewhere' in Moosehide, Montana.'

Right now, 50% of the American taxpaying public have zero threat of their federal income taxes ever going up to pay for any increase in federal government spending for any purpose. Both political parties never tell any of these citizens to pay even $1 in federal income taxes to pay for anything above what they pay for Social Security and Medicare benefits in payroll taxes.

Most people don't even think of SS and Medicare FICA taxes as being 'taxes' anyway. They think they are actually making 'defined contributions' to their own private retirement and health savings plan in some way that 'just has to be' like what they do in the private sector.

They are sadly 'mistaken' and deliberately misled on that score.

So what do they care about how Congress spends money on anything outside of SS and Medicare?  They could care less if Congress wants to build a 'Bridge to Nowhere' or a 'Tunnel to Somewhere' or go to war in Zimbabwe or put money into a Solyndra-like green energy project that goes under.

We think the moment every US citizen feels they have a stake in paying for any new federal program as in new taxes to be imposed on them, the historic political tension between taxes and spending will return to the process and once again put a damper on rampant, unchecked spending.

Even the threat of a $1 tax hike per head on everyone would reintroduce the balance between taxation and the size and scope of our federal government. And the harder it is for a politician to raise taxes on everyone to pay for more government, the harder it will be for them to keep increasing the size and cost of government at warp speed like we have been doing for the past decade or more.

*'It is a signal advantage of taxes on articles of consumption that they contain in their own nature a security against excess. They prescribe their own limit; which cannot be exceeded without defeating the end proposed, that is, an extension of the revenue.'- Alexander Hamilton
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Wednesday, January 25, 2012

What is True 'Tax Fairness' Anyway, Mr. Obama?

Don't you just love the theatre of politics?

President Obama gave a great speech last night for the State of the Union.  He's a great speaker, what can anyone say about that?

But the backdrop of the SOTU speech was clearly outlined by the release of Mitt Romney's tax returns the previous day which showed that he paid 'only' an effective tax rate of 15%, 'lower than the tax rate of Warren Buffett's secretary yada, yada, yada'.

One of President Obama's campaign tactics will clearly be 'class warfare'.  Call it whatever you want but his political handlers obviously see trends in national polling that tell them that 'running against the rich' and talking about disparity in income might help him win re-election in November.

The sleight-of-hand in his delivery is what bothers us more than anything.  Sure there are different tax 'rates' in the tax code but those were passed by Congress over the years for different reasons. Long-term invested capital has been determined by Congress (which is the constitutional way to do it) to be 'more valuable' since it helps create jobs in the long-run and if you tax less of it, the natural human tendency is to do more of it.

That just stands to reason, doesn't it?

But to even come close to asserting that Mitt Romney paid 'less' taxes in any way, shape, form or fashion than Warren Buffett's secretary is mental gymnastics on LSD, crack cocaine and crystal meth to the nth degree. No national figure should be able to make such an absurd assertion without full disclosure.  Which is why President Obama deserves to be chastised for doing so last night.

Mitt Romney pays about $3 million in taxes each year.  That is one single American taxpayer among 140 million households who wrote a check to Uncle Sam at the US Department of Treasury for 3 million smackers.  3 million of legal US tender greenbacks.

Have we gotten your attention yet, class?  $3 million is $3 million from 1 single person!

All we would need is 866,667 other taxpayers just like Mitt Romney paying $3 million per year...and then no one else, including Warren Buffett's secretary, would have to pay one thin dime in income or payroll taxes or corporate income taxes or excise taxes or estate taxes next year!

Now we have your attention, don't we class?  Not a single other solitary person in the entire country! Wouldn't you like to not have to write any more checks to the IRS or have that niggling 'FICA' tax deducted from your paycheck every other week?

Heck!  President Obama has got it all wrong!  Why not try to find a way to get 866,666 other Americans out of 140 million taxpaying households to make so much money that they just fund our entire government for the rest of us?

Of course, we are being facetious...up to a point.

Our main fear has long been that as we seek to drop more and more people off of the tax rolls, our democracy gets 'weaker' as the tension between 'paying taxes' and 'receiving the benefits' of what those said-same taxes provide for you (defense, education, roads) diminishes.

We know enough about history to fear when a very concentrated few very wealthy people or single individual controls the purse-strings to any country.  (See the Oligarchs in ancient Athens)

We also think it is very healthy for EVERYONE to contribute something to the national treasury in the form of taxes because that makes their vote really 'count' each and every time they cast it during an election cycle.  (more on that in the next posting)

So take this 'the rich don't pay their fair share' malarkey with a huge block of salt.  It is just pure political posturing and gamesmenship played by professional consultants who have one goal and one goal only:  'Get my man re-elected in November.'

These guys would tell the President to promise each one of you a peanut butter-and-jelly sandwich every day for the rest of your lives if their polling told them that it would work and you would vote for Obama based on that delicious promise.

So be careful what you tell any pollster when they call your home.  You might just get it.

We will explain further in our next post why we think the trick to getting smaller, more efficiently-spending and spendthrift government is to threaten to raise taxes on everyone if we want more government.

It is just common-sensical human nature at work as well.

Tuesday, January 24, 2012

'So, Mr. Lincoln, Will You Show Us Your Tax Returns And Did You Ever Sleep With Barnyard Animals'?

'Umm, the primary issue in this campaign of 1860 is whether the Union will survive or not, Brian with all due respect.'

Don't you just wish the media would actually ask questions of these presidential candidates that are important to us as a nation?

Honestly, what net effect does the release of Mitt Romney's tax returns for the past decade have on whether you will ever get a job again or your business will succeed?

And, (pardon the French), who the hell really cares whether Newt Gingrich ever 'consulted' or 'lobbied' for Freddie Mac?  (Answer:  Companies don't hire people with legislative experience to teach them history about the Crimean War or the impact of the Whiskey Rebellion on the young United States.)

We have much bigger problems than either of those two questions, Brian Williams and John King, with all due respect.

We decided to go back in the Wayback Machine to see just how ridiculous most of modern-day journalism has gotten with these seemingly interminable debates, especially when we are confronted with the greatest economic challenges since: 1) The Great Depression and 2) any of the economic depressions that followed the Civil War, in that order.

John King, American Telegraph: 'Mr. Lincoln, did you actually get paid by Illinois Central Railroad for the legal work you did for them when they were becoming a big bad giant railroad company?'

Honest Abe: 'Well, why yes I did, Mr. King.  I am a lawyer.  And a darned good one at that I might add'.

Brian Williams, News Courier Services: 'Mr. Lincoln, is it true that you have actually slept in the same bed with other men during your travels about the Midwest?

Lincoln: 'Mr. Williams, there are many times when there is only one straw bed in the hotel and 5 men will sleep in the same bed after a long journey on horseback.  It is 1860, you ninny!  Now can we get back to what the real problems are in this country, namely keeping this Union together and what to do about the issue of slavery and state's rights?

Now, of course, the press was just as mean and insolent back in antebellum days as they are today in 21st century America.  Abraham Lincoln was routinely called a 'baboon' and a big dumb backwoodsman from Illinois by his opponents and columnists alike.

But don't you wish that for just once, we could have a debate with these following questions, mainly because they get at the root of what our problems are as a nation today?

  1. Would you veto every spending bill that comes to your desk in the Oval Office regardless of whether it comes from a GOP or Democrat-controlled Congress unless it actually reduced spending each year?
  2. Would you sign a bill to repeal Obama Care, assuming it was passed by Congress?
  3. If you repealed Obama Care, what would you propose to Congress to take its place so that everyone could have access to affordable health care insurance?  (trick question..'insurance' is different from having access to 'health care'. see 'Do You Have Gutter Insurance?')
  4. Would you respect the Constitution and defer to the wishes of the majority of Congress or do things by executive order?
  5. Do you presume you and you alone can 'create' millions of new jobs in America or do the American people do that with their own ingenuity and sweat and investment given the right conditions to do so?
  6. Will you lead the charge to help reform Medicare, Medicaid and Social Security, the Triple Towers of our problems in the federal budget?
  7. Will you propose a consumption tax in lieu of every existing federal tax to get rid of all the loopholes, deductions and exemptions that make the current tax code a complete farce?
  8. Do you think we should keep cutting taxes regardless of the debt and deficit outlook as some advocate to stimulate the economy?
  9. Will you support a strong and vigorous national defense program and does that include keeping a naval fleet in the Straits of Hormuz to insure safe shipping lanes so we can keep importing more oil from the Middle East?
  10. How do you plan to defeat President Obama in November?  Please be specific.
  11. Do you actually still believe there is intelligent life on this planet?
(We threw that last one in to see if you were paying attention.  We wonder sometimes if all intelligent life has not just vanished from the modern media and modern political scene, though)

Let's hope future reporters will actually get their heads screwed on straight before asking any more questions to these candidates, one of whom will be trying to unseat President Barack Obama in November.

The list of questions we want answered are above and very simple to ask.  Send them along to John King and Brian Williams, et. al. if you know them.  They will be doing the American Republic a great favor if they will focus on questions that actually mean something to our future.

Saturday, January 21, 2012

What Do James Madison's Views On Constitutional 'Checks and Balances' Have To Do With The South Carolina Primary Today?

Here's the quaint little diagram most textbooks have taught American schoolchildren over the last century about the so-called 'checks and balances' in the American democratic republic system.

Looks simple, right? It almost looks like a 'peace-and-love' symbol from the early 1970's.

It is also vastly 'wrong' when considering just exactly what sort of government James Madison and his good friend, Thomas Jefferson, were trying to establish in 1787, even though Mr. Jefferson was in Paris, France busy trying to establish trade treaties and beg for money to help pay the debts of the newly-minted young American Republic.

France and Holland were the Chinese money-lenders of the time. America hasn't learned much about borrowing in 223 years, have we?

Here's why these simplified school charts are so 'wrong': James Madison, Thomas Jefferson and even Alexander Hamilton for the most part had zero intention of creating any system where the legislative branch did not reign supreme.  As in having every single last card to play whenever it came to making public policy changes in America.

A better way to consider what our Founders really wanted in the new democratic republic would be to consider the words to one of The Rolling Stones' greatest hits, 'Under My Thumb' in 1966 and think of them in terms of what the Founders were trying to do back then:

'The squirmin' dog who's just had her day...The way she does just what she's told. Down to me, the change has come. She's under my thumb.'

The 'squirming dog' back then was the King of England who had just lost his total monarchical power over the former colonies. For good reason. He was too oppressive, too capricious and too over-bearing in his demands of the American taxpayers.

Who would be the 'squirming dog' today in modern-day America should Messrs. Madison and Jefferson come back from the dead to lead us again? Or better yet, some modern-day Madisons and Jeffersons with a pretty solid understanding of their constitutional genius and ability to lead our nation again?

The omnipotent and over-reaching President of the United States and the Executive Branch of our government. All of which have been fed and fueled by the sometimes coherent (but mostly not) decisions of our elective representatives for the past 80 years but for the most part, the past 20 and certainly the past 10 years with almost a childlike reckless abandon.

This is not a direct slam at President Barack Obama, although we believe he has taken the control of the executive branch and taken it to the extreme in off-the-constitutional-backroad-driving contest.  This is a direct slam at the proclivity of the once-free nation of the United States of America that seemingly has defaulted its right to be a self-governing nation where 50%+1 of their number in Congress got to choose how we were run as a nation.  Not the President and his minions.

Take a look at this 'revised' chart of Constitutional checks-and-balances that we think more realistically reflects the intent of the framers of the Constitution in 1787: (You may have to click on the chart to open it in a more clear and easier to read new window)

We think Mr. Madison and the other Founders 'stacked the deck', deservedly so, in Philadelphia in 1787 so that Congress, not the President, and certainly not the Supreme Court, would be the ultimate arbiter in all things relating to the conduct of the affairs of this nation.

Sure, they wanted a 'single voice' to speak for the nation when it came to foreign affairs and being the Commander-in-Chief of our armed forces.  But they also reserved the right to 'declare' war to Congress so that we didn't have some modern-day Alexander The Great gallivanting all over the globe extending his imperialistic dreams everywhere with the blood of American citizen-soldiers instead of just focusing on defending our borders and interests around the world when necessary. (as in World War II as a prime example)

The 1787 Constitutional Convention was so vague about the scope and range of the Supreme Court and the judicial branch that the words 'judicial review' never even show up in the vaunted language of the US Constitution.

The power to overrule another branch of government did not occur for the Supreme Court until the 1803 Marbury vs. Madison ruling, 14 years after the founding of the Republic. And in another strange twist, President Jefferson sent a budget to the US Congress asking for $0 to fund the entire judicial branch around about the same time 'because the courts had gotten too political'.

Imagine that.

Why does any of this matter today, of all days?

The South Carolina primary takes place today and with it goes the next step in determining who the nominee will be for the Republicans to challenge the incumbency of President Barack Obama who wants to serve another 4 years as our Chief Executive of this great nation of ours.

With the fall presidential elections coming up, we also get one more quadrennial chance to decide what sort of Republic we want to have:  Do we want to continue building an ever-expanding and expansive government built on executive privilege and prerogative?

Or do we really and truly want to progress to a day when a normally-functioning, sentient and coherent Congress will meet to discuss our problems in a sane and rational manner and actually come to some reasoned conclusions based on compromise where at least 50%+1 of the Members of Congress and Senate vote 'Aye' to save the Republic?

You know, like the Founders really wanted us to do.  Forever.

Monday, January 16, 2012

'You Might Be A Small Government Conservative If You....

...are for Raising the Ages of Eligibility for Medicare and Social Security!' as described in a recent CBO blog by the Director of the CBO.

We have always enjoyed the comedy of Jeff Foxworthy of 'You Might Be A Redneck' fame.  (You know who you are.  We went to school with you when you bragged about being a redneck!)

But what we are really having difficulty figuring out is who is really and truly for 'less government'.   The book would be pretty small if it was called 'You Might Be A Small Government Conservative If....'

Would it be the GOP?  'You might be a small government conservative if you cut spending and balanced the budgets every now and then!'

Raucous laughter in the audience.

Is it the Tea Party?  If so, perhaps they will adopt the age 70 retirement age as a solid plank in their platform going forward.  Has anyone seen any Tea Party advocate do this?  If so, please steer them our way.

Is it President Obama and the current Democratic Party?  (Sorry. In the interests of fairness we just had to ask full well knowing the answer is a resounding 'No!')

Raising the retirement ages almost immediately to 70 (the Early Retirement Age would have to be raised precipitously as well) would flush out the 'true conservatives' from all the pretenders it seems to us.

Reason #1 is the fact that 'true conservatives' supposedly don't want government programs and certainly not 'welfare'.  (SS and Medicare are not trust funds or any sort of 'actual' investments when funds are invested to grow and be taken out later for each individual)

Every SS $ received by you will be just a dollar taken out of your children's tax payment to Washington every other week; a dollar taken from another trillion or so borrowed from the Chinese in more debt or from money just 'made up out of thin air' by the Fed if the dollar is still in currency in 2025 or so.

#2 is the fact that 'true conservatives' want smaller government and balanced budgets. Right?  Is that still correct?  We are asking.

Raising the retirement age is a triple, if not a home run, for 'true conservatives' then!

Raise your hand if you are willing to adopt that as a critical plank in the new political majority that is budding out there.

Implementing the higher age thresholds for both Medicare and Social Security on a phased-in basis will solve close to a minimum of 16% of the long-term budget deficit problem just by doing those two things alone by 2035. Accelerating the hike to age 70 in both Medicare and SS in the next 10 years may solve close to 50% of our structural deficit problems.

People will say: 'You can't make everyone wait til 70 to retire!'

Ok, you are right.  Offer exemptions due to physical and mental health conditions. You are most likely going to have to work to age 70 anyway due to the financial losses incurred over the past 4 years in your retirement plans.

Honestly, who in the later Baby Boom Generation and younger has ever really believed Social Security was going to be there for them anyway when they retired?  Many people have long planned for zero Social Security benefits in retirement.

Take a look at what the CBO Director has to say about this important issue.  We have reprinted it below to make it extremely easy for you to read and not ignore.  It is a big deal.

'Raising the ages at which people can begin to collect Medicare and Social Security benefits would be one way to lower federal outlays, raise revenues, and reduce long-term fiscal imbalances. A CBO issue brief released today reviews how ages of eligibility affect beneficiaries under current law and how delaying eligibility would affect beneficiaries, the federal budget, and the economy. (CBO has explored this issue in other publications, most recently in March 2011 in Reducing the Deficit: Spending and Revenue Options.)

Policy Option
Long-Term Budget Impact
Implications for Beneficiaries
Raise the Medicare eligibility age from 65 to 67
Medicare spending declines by about 5 percent
Access to Medicare would be delayed for most people; many of the affected people would pay more for health care
Raise the full retirement age for Social Security from 67 to 70
Social Security spending declines by about 13 percent
People would face reduced benefits over a lifetime
Raise the early eligibility age for Social Security from 62 to 64
Social Security spending changes little
Access to Social Security benefits would be delayed for many people, but their monthly benefit amounts would increase

Raising any of the ages of eligibility would cause some people to work longer, thereby increasing the size of the workforce and the economy. Although the magnitude of those effects is difficult to predict, CBO estimates that:

Raising Social Security’s early eligibility age to 64 or the full retirement age to 70 would, in the long term, boost the size of the workforce and the economy by slightly more than 1 percent.

Raising Medicare’s eligibility age to 67 would also boost the size of the workforce and the economy, but by a much smaller amount.

Effects of Raising the Medicare Eligibility Age (MEA) from 65 to 67

Medicare provides health insurance to almost everyone who is 65 or older. If the eligibility age was raised above 65, fewer people would be eligible for Medicare, and outlays for the program would decline relative to those projected under current law. CBO expects that most people affected by the change would obtain health insurance from other sources, primarily employers or other government programs, although some would have no health insurance. Federal spending on those other programs would increase, partially offsetting the Medicare savings. Many of the people who would otherwise have enrolled in Medicare would face higher premiums for health insurance, higher out-of-pocket costs for health care, or both.

CBO estimates that raising the MEA would reduce Medicare outlays, net of premiums and other offsetting receipts, by $148 billion from 2012 through 2021. By 2035, Medicare’s net spending would be about 5 percent below what it otherwise would be—4.7 percent of GDP rather than 5.0 percent under current law. A rise in the MEA would cut by a larger percentage the number of years during which the average person would receive Medicare benefits, but the percentage reduction in outlays would be smaller because the people affected would be the youngest beneficiaries, who tend to be the healthiest and thus to require the least costly health care.

Effects of Raising the Full Retirement Age (FRA) for Social Security from 67 to 70

The FRA under Social Security—the age at which participants are eligible to receive full benefits—is currently 66 but is scheduled to increase to 67 for people who were born after 1959. Beneficiaries may choose to begin collecting benefits before the FRA, but then they receive less per month. Therefore, raising the FRA would result in a reduction in lifetime benefits relative to what people would receive otherwise.

On average, raising the FRA would induce people to work longer to offset the lost income. Moreover, the amount of additional work would probably be greater than would occur if an equivalent benefit reduction was implemented without changing the FRA because more people would be inclined to claim benefits later.

The reduction in monthly benefits for some beneficiaries would lower average income and increase poverty rates in the future among the elderly. The increase in the FRA would be particularly burdensome for people with low income, who tend to rely heavily on Social Security benefits, and especially for those who could neither qualify for Social Security Disability Insurance nor adjust their work patterns.

CBO has estimated the effects of one option for gradually increasing the FRA to age 70 by two months per year. The result would be to shrink federal outlays by $120 billion through 2021. By 2035, the option would reduce Social Security outlays by about 4 percent relative to what would occur under current law. The effect of the changes would continue to grow; by 2060, outlays would be reduced by about 13 percent.

Effects of Raising the Early Eligibility Age (EEA) for Social Security from 62 to 64

Currently, more than half of nondisabled beneficiaries who receive Social Security benefits based on their own work history claim benefits at 62, and almost 60 percent claim before 64. Therefore, if the EEA for Social Security was increased from age 62 to age 64, many people would be forced to claim benefits later than they otherwise would. They would receive larger benefits each month for fewer months overall, but currently those factors would approximately balance and an average beneficiary would receive roughly the same total benefits over a lifetime.

However, people with lower earnings would tend to experience a greater percentage reduction in living standards than would people with higher earnings. That difference would arise in part because people with lower earnings tend to have fewer assets, to have shorter lifespans, to have less in retirement savings and private pension benefits, and to be less likely to have health insurance through former employers.

Federal outlays would decline in the short term—by $144 billion through 2021, slightly more than 1 percent of projected Social Security spending—because people would have to wait until they were older to apply for Social Security benefits. Outlays would continue to be slightly lower than under current law until about 2035 and would be slightly higher thereafter, as higher subsequent monthly benefits would offset an increasing share of the savings from delayed eligibility.

Effects on Labor Supply and the Economy

Because the experience of changes in the eligibility ages is limited, CBO’s estimates of the effects of such changes on work decisions are highly uncertain. CBO estimates that increasing the EEA by two years would induce people who would have claimed benefits at age 62 or 63 to work an additional 11 months, on average. Once the new EEA or FRA applied to all people close to retirement, the policy change would increase the size of the labor force by slightly more than 1 percent and increase GDP by slightly more than 1 percent. Raising the MEA to 67 would result in an additional month of work per worker, on average, and would increase the size of the labor force and GDP by about 0.1 percent.

Effects of Simultaneously Raising the Ages of Eligibility for Medicare and Social Security

In the absence of evidence on how to project behavioral responses to simultaneous increases in all three eligibility ages, CBO assumes that the effects of simultaneous increases in the eligibility ages would equal the sum of the effects of increasing each age separately. CBO estimates that by 2035, the set of increases just described would cause outlays for Social Security and Medicare to fall by 0.4 percent of GDP and federal revenues to rise by around a half percent of GDPleading to a reduction in the budget deficit of nearly 1 percent of GDP, not including the effects of lower interest outlays. Altogether, by 2060, the federal budget deficit would be reduced by about 1¾ percent of GDP.'

Wednesday, January 11, 2012

Why Are There No 'True' Hamiltonian/Federalists Any Longer?

We had such fun and a good response with our last posting about what a 'true' conservative is nowadays that we thought we would try to figure out what a true 'Hamiltonian Federalist Concentrated Government Power' advocate would be like in the 21st century.

We hasten to guess they would be as rare to find as a 'true conservative' along the Jeffersonian-Madisonian lines we discussed previously.

Both species have become virtually extinct just like the dodo birds, the carrier pigeon and the Carolina parakeet (which was beautiful by the way).  It is like the DNA of both has been lost in the wild somehow, the Hamiltonian Federalist chromosomes lost to the modern-day Democratic Party and the Jeffersonian/Madisonian chromosomes to the Republican Party.

First of all, Alexander Hamilton probably could not process in his mind the extent to which his goal of concentrated government power has become in modern-day 21st century America.

Any of these Founders might come back from the Great Beyond and just shake their head and say: 'Is this what has happened to our American Republic that we founded on the bedrock principles of liberty and freedom 223 years ago?'

Let's take a look at a few of Mr. Hamilton's words regarding debt and government:*

  • 'The creation of debt should always be accompanied with the means of extinguishment.'
Apparently, even though Mr. Hamilton wanted the federal government to pay off all the debts incurred to win the Revolution, he also thought that any debt assumed should also have a set schedule under which it would be paid off with revenues collected by the government.  In 1789, that would have been predominately the imposition of import taxes on all products shipped into the new United States of America.

He would have a field day today trying to figure out how we are going to pay off this massive $10 trillion of 'real' debt now owed to private investors and foreign sovereign nations who now own this debt. (the intragovernmental debt allegedly 'owed' to the Social Security Trust is ephemeral and chimerical. The CBO has determined that such 'trust fund debt' has no intrinsic value and is merely an accounting entry on paper alone that serves to highlight just how much financial malfeasance has actually gone on in Washington over the years)

Let's see...if we just took every single dollar of current federal income, corporate, payroll, excise and estate taxes to the tune of about $2.4 trillion that comes into the federal treasury each year, it would 'only' take 4 years to pay off this 'real' debt. Mr. Hamilton's keen sense of debt retirement would be pleased.

But we would not be able to pay one thin dime for anything else. Defense, education, homeland security, nothing. Without starting all over again and borrowing it all from the Chinese, the Saudis and anyone else crazy enough to keep lending to us.
  • 'It is a signal advantage of taxes on articles of consumption that they contain in their own nature a security against excess. They prescribe their own limit; which cannot be exceeded without defeating the end proposed, that is, an extension of the revenue.'
Mr. Hamilton probably would agree with a move back towards replacing the cumbersome corporate and individual tax system with a consumption tax.  After all, the Founders could have made income taxes the very fount of the revenue stream for the new Republic way back in 1789...but they didn't.  They had just fought a war against capricious taxation without representation under King George III and they sure as heck didn't want to give the new Congress the ability to tax income which always leads to class warfare and more factionalism.

Now all we have is 'taxation with representation'!

But Mr. Hamilton certainly understood that a consumption tax would proscribe the amount of taxes that could be collected and hence, the size of the government that could or should be funded. We really should be funding a government that is paid for by current revenues collected and not passing on the costs, both explicit and implicit, in the debt we are accumulating to our children and grandchildren.

It is just plain immoral and blatantly unfair to them.

Mr. Hamilton, of all people, understood that perhaps the only time to borrow massive amounts of money was when the nation was at war.  Certainly not when we have been at relative peace for the past 60 years relative to the Revolution, the Civil War, WWI and certainly WWII, the granddaddy of all world wars in history.
  • 'If mankind were to resolve to agree in no institution of government, until every part of it had been adjusted to the most exact standard of perfection, society would soon become a general scene of anarchy, and the world a desert.'
Mr. Hamilton would recoil at the current antics of everyone in Washington today from President Obama to Members of the House and Senate from both political parties where neither side can come to any suitable compromise on anything.  He would recoil in shock and horror just like Mr. Jefferson and Mr. Madison would as well.

They all realized, along with the other Founders that the foundation of our democratic republic was the ability to think together, reason together and then 'compromise' or cut a deal for the good of the nation, not to save their political lives or careers. They would either 'hang together or assuredly we shall all hang separately' as Benjamin Franklin intoned at the signing of the Declaration of Independence in 1776 which certainly forced a great deal of compromising among themselves in order to survive those early days fighting together.

Our conclusion, based on this posting and the previous one on Jeffersonian/Madisonian limited government, is that there are virtually no Hamiltonian Federalists left in our society just like there are hardly any true Jeffersonian/Madisonian 'small government' people left around either.  

Hamiltonian Federalists would at least have the guts to raise the taxes needed to pay for any new debt incurred by the federal government and not rely on ever-increasing amounts of debt to pay off old debt and never retire it ever.  They would also recognize that taxes should be broad-based (consumption tax) because if everyone does not have to bear a share of the burden, they will never fully care about or appreciate the cost of providing for things such as our collective national defense, maintenance of the interstate road system or a common shared public education system.

In short, both Hamiltonian Federalists and Jeffersonian/Madisonian Democratic Republicans would realize that balancing the budget is paramount; debt should be paid off by the same generation that incurs it and extended periods of excessive debt and ever-escalating interest payments can have long-term deleterious effects on the soundness of the currency and economic health of our nation.

All the things that modern-day Democrats and Republicans have failed to do or even fully understand and appreciate.

So maybe all the officially registered Independents and Unaffiliateds are looking for a new political party banner to unite under.

How about the 'Federalist Democratic Republican Party' for a start?

*From David Frum's 'Frum Forum' post by Ben Silber on April 19, 2011.

Sunday, January 8, 2012

Just ‘Who’ Is a ‘True’ Conservative Anyways Any More?

The GOP debate in New Hampshire, which might have been one of the best educational lessons on political philosophy and constitutional interpretation you may see this year, repeatedly brought up the question of: ‘Who is the TRUE conservative?’ in this bunch.

To answer that question, we think you have to go back to the Founders. Again. Of course.

Who were the ‘true’ conservatives back in 1787 when they sat down in Philadelphia to write the hallowed US Constitution that even George Stephanopoulus seemed to have trouble understanding and articulating in his cumbersome question to Mitt Romney about banning contraception in any state or something like that?

First, all the Founders were united in their opposition to the King of England, George III and the concentration of power embodied in him and his office of authority over the colonies. We think they would be horrified at the concentration of power in the Executive Branch today when they drew up our US Congress as being the epitome of self-governance.

Thomas Jefferson also wrote about how he opposed the concentration of power in the hands of few leaders in the House and the development of ‘factions’ because they tend to thwart the ‘good of all the nation’ when issues of importance are considered.

And then Mr. Jefferson founded the second ‘factional’ political party in American history, the Democratic-Republican Party in the early 1790’s to counteract the ‘factional’ Federalist Party founded by Alexander Hamilton. So go figure how a people can stage a bloody, costly revolution for 5 years, (1776-1781); hammer out a Constitution (1787); take 2 years to ratify it (by 1789)…and then less than 5 years later start bickering again amongst themselves.

Mr. Jefferson and Mr. Madison argued for ‘limited’ government with power to be disbursed throughout the nation down to the lowest level possible, mainly the states and localities where people knew where their legislators lived, and could get to their home whenever they wanted.

Mr. Hamilton did not. He argued for a strong central government located in Washington, DC with powers to regulate and maintain a central banking system and provide a working relationship with their former rulers, the British.

Based on the way America has developed over the past 80 years, and especially over the last 50 and really in the last 10 years, it is fair to say that Mr. Hamilton has ‘won’ that debate. Hands-down.

Guess what level of federal spending relative to GDP was in America for the vast majority of our history?

1% or less from 1789 to about 1920 or so. That is 130 years out of our 222-year history or about 60% of our nation’s history.

Federal spending was only about 3% of GDP when the ‘First Big Bang’ of economic calamities really hit the US in the Great Depression (GD). This Big Bad Economic Retrenchment we are still working our way through is chicken feed compared to that economic conflagration.

Go ahead. Ask any of your grandparents or parents who lived through the GD and see what they have to say about their struggles growing up.

You’ll be glad we are going through this one instead by comparison.

FDR came along with his New Deal and by 1940, guess what his ‘massive’ expansion of federal spending had taken us to relative to GDP?

10%. By comparison to current levels of government involvement in our economy, that looks like a veritable steal if you are a 'small government conservative' of today.

Federal government spending is close to 25% of GDP today. (although it is a little bit distorted because of the lack of economic growth since 2007. See 'Lies')

So which of the GOP candidates last night really and truly are in the mold of Mr. Jefferson and Mr. Madison by being the ‘true’ small government conservative in the strictest sense of their definition circa 1787?

None really except perhaps Ron Paul who has been willing to show his cards and propose massive spending cuts to the tune of $1 trillion in his first year as President.

His foreign policy isolationism, however, would throw him right in the face of Thomas Jefferson himself who sent the US ‘Navy’ such as it was in 1801 without an official declaration of war against the Barbary Pirates operating out of Tripoli. Which is really the reason why so many Reagan-era ‘conservatives’ and people who grew up and cut their teeth on his brand of conservatism are not supporting Mr. Paul. The world is a mean place and the US President has to be realistic and practical to defend our ‘national strategic interests’ (whenever you see this phrase, translate it to ‘oil’) whenever the need arises.

Most modern-day ‘conservatives’ are really the ‘Charles Barkley’ version of Big Government, you know, since he claims to have lost 50 pounds on Weight-Watchers. He is still ‘huge'; he is just not as ‘huge’ as he used to be.

Same with many modern-day ‘conservatives’. 'We are for (slightly) less government than those guys....and they are Beezelbub and Satan's Spawn to boot!'

Here are the questions to ask yourself to see if you qualify to be a ‘true’ Jeffersonian/Madisonian ‘small government conservative’ nowadays: (we'll have to have a 'true' Hamiltonian/FDR/LBJ/Obama 'large government quiz one day as well)

  1. Will you take a Social Security check paid mostly by your children and their co-workers when you turn 66?
  2. Will you demand Medicare benefits to the tune of at least a 50% federal taxpayer subsidy when you retire at age 65?
  3. Will you support an increase in the retirement age to age 70 to be more in line with the actuarial tables of life expectancy on an adjusted basis from age 65 that was decided as the ‘official’ retirement age in 1935?
  4. Will you support a complete elimination of special tax breaks for US corporations AND individuals including the mortgage interest deduction, charitable donations and employer-paid health insurance premiums in return for lower marginal tax rates?
  5. Will you support the elimination of any special federal spending program or tax break that does not benefit the entire nation as a whole such as certain critical defense programs (there’s waste there too by the bushel load); transportation, bridges and canals and airports and certain education programs? (Jefferson said we needed a public education system because an uneducated electorate will not support democracy for too long so let's not find out if he is proven right)
  6. Or are you mainly a ‘social conservative’, more concerned about the lack of moral, ethical and religious principles in America and want to limit abortion, gay rights?
  7. Maybe you want to send all of the 3-10 million (the number varies depending on which report you read) illegal immigrants back to Latin America in which case you better get used to not having your landscaping done, your kids nannied, your house cleaned or your addition being built for about 50% of what it would cost with legal labor.
This is the state of American conservatism right now which is why you see so many people saying that ‘Mitt Romney is not a ‘true’ conservative!’ or ‘Rick Santorum/Newt Gingrich is a big government conservative!’

It might also help explain why close to 35% of the people in two of the largest counties in North Carolina are now officially registering as Independents/Unaffiliateds. We don’t know if they are all Jeffersonian/Madisonian small government conservatives. We have run into tons of them who are self-described social libertarians/fiscal conservatives though and they are fed up with the current system and demanding change in 2012.

Who is going to give this new 'change' to them?  And does America even want 'small government' which means more 'freedom' (risk) any longer?

Mitt Romney said this 2012 election is going to be about the 'soul' for America.  He will be channeling the Jeffersonian/Madisonian DNA for the rest of this campaign as the presumptive nominee after Saturday night's debates in New Hampshire.

Federalist/New Deal/Great Society President Obama has no intention of slowing down his drive for more government and higher taxes; he has said as much recently.

Where will you line up on this debate this year?

Monday, January 2, 2012

'Lies, Damned Lies and Statistics'

Mark Twain gets attributed this great quote although he tried to say he got it from Benjamin Disraeli, the great British Prime Minister and statesman of the middle 19th century.

But no one can find that quote for sure in any of Disraeli's writings so so much for attribution and and chalk up another one for literacy license.

Heading into a new year is always a good time to reset your attitudes and perspectives on life so we thought we would try to reset our brain and yours on the harsh budget realities that now face us in America.

We acknowledge that much of what we have published here has not been 'great' news'. There has not been a lot of it, we grant you on that score over these past 2.9 years and counting.

We have always tried to provide you with the hardcore, base, raw data and information you need to know about directly from the readily-available-but-never-read-or-published-without-distortion from resources such as the CBO or OMB or any one of the hundreds of other budget related blogs or archives we have brought to your attention over this time.

We hope it has been helpful and informative and at times, perhaps even a bit interesting and amusing.

We are actually more optimistic now than at any time since 2007 for many reasons, most of which is the upsurge in the number of good people we know who are running for public office or planning to do so in a very short time.  That is the only way our democratically-elected republic is going to 'cleanse' itself: by replacing virtually every single incumbent now in public office across this great land with men and women of higher intelligence, experience and reasoning capacity.

You know, like the Founders Jefferson, Madison, Adams, Washington, Franklin and the others who sacrificed so much to give us a chance to live in the greatest and most free nation ever.

So here's some more information to throw into your brain this morning and let ferment some, just to get your mind around the immense scope of not only our federal government's size but the dynamism of the American economy that when unleashed, can help solve a lot of ills that currently infect us:

Take a look at this startling CBO projection as of FY 2005, as in January, 2005 when they do these types of things in Washington. (You may have to click directly on the chart below to get a more easily-readable, clear image to study to your heart's content)

(Click here to see the current FY 2011 projections)

You will see that current FY 2011 federal spending ($3.6 Trillion) is about $455 B per year MORE in 2011 than what CBO and most economists assumed it would be way back in 2005 ($3.142 Trillion).

That is not ideal and reflects a 14% hike over projections from 7 years ago.  It is still 'way too high' for the very few true Jeffersonian/Madisonian small government conservatives that still exist in this nation (they are far fewer than you really think)...but it is not apocalyptical in and of itself.

The difference between the income coming in from federal tax revenues and the spending outlays that go out every day, week, month and year CAN become apocalyptical if we don't rebalance the two very soon. The 2005 projections expected us to be in a $71 Billion SURPLUS!! by 2012 and start paying down our enormous projected debt then of $6.012 trillion in debt held by the public (not the $10+ Trillion and rapidly growing debt that now actually exists)

See? We just can not be completely Pollyanna-ish running around with rose-colored glasses with Dr. Pangloss, now can we?

You will also see that the CBO 2005 projections of current nominal GDP in 2012 would be about $17.250 Trillion. It is now hovering just around $15 trillion and still holding where it has been for the past 3 years now and running.

So despite ALL the handwringing about the wars in Iraq and Afghanistan AND the W Tax Cuts AND the entitlement spending that is out-of-hand (which is still true!)....given any normal sense of economic health over the past 5 years that would have us anywhere near the projected $17.25 Trillion hoped for and expected in 2005, we would would be in pretty darned decent shape.

Even at Obama-inflated levels of government spending, the level of guvmint spending to a GDP of $17.25T would be 'only' 20.8%. Most Republicans and fiscal conservatives would gator in the streets as long as they thought federal government spending was heading anywhere near the historical average of 18.5% of GDP.

At the 2005 projected level of spending of $3.3 trillion in 2012 in an economy at $17.25 trillion in size, the level of federal guvmint spending would be 'only' 19.1% or something like that which even a hardcore troglodyte small government conservative could swallow...for a little while at least.

The bottom-line in this little saga?  The complete corporate and financial malfeasance and wreckage brought upon by the gross negligence of our leaders on Wall Street; in the banking and financial services system; in the speculative real estate markets in mostly Florida, California and Las Vegas and fueled by lax oversight by those who have served in Congress over the past ten years has led not only to a federal fiscal budget disaster of biblical proportions but it has also led to a shaving off potential GDP in America by over 13%.

That is over $2.25 trillion in lost economic capacity which translates directly into millions of lost jobs, destroyed plants and equipment, empty homes and commercial real estate and diminution of retirement plans and 401k plans.

So whenever someone tells you that 'all we gotta do is raise taxes on the rich so they will pay their 'fair share', or 'all we gotta do is bring back all the troops from overseas and we will balance the budget!' or 'all we gotta do is stop paying any more 'feriegn aid' to anyone overseas!', just show them these charts and tell them to go read more of Disraeli or Twain or even the comic books.

L'il Abner will make more economic and fiscal budget sense than they will.