Thursday, April 28, 2016

The Sky Really Is Falling on Social Security

(click through title link to see video)
 You've been bombarded with a lot of information over the past year about a lot of issues, a lot of which really are not that important to the vast majorities of people living in America today when it all comes down to it.

Politics tends to default to the lowest common denominator in terms of highlighting issues that prey on people's emotions to get them to vote for one side or the other on Election Day. You see it all the time from all sides of the political spectrum and that has been the case in American politics since Jefferson and Hamilton and Adams were hammering each other.

Social Security is not one of those lowest common denominator issues. It is probably one of only 2 federal programs (Medicare being the other) everyone in this country either pays directly into (in the form of payroll taxes) and/or benefits from financially if you live long enough to participate in either program in retirement.

Therefore, you need to know all you can about the facts and figures of Social Security as well as all the 'myths' that surround the program mainly because of its massive size and complications.

The Committee for Fiscal Responsibility has produced this comprehensive document, 'Nine Social Security Myths You Shouldn't Believe' which should provide you with as much information as you could ever want to consume to be knowledgeable about the current state of Social Security so you can converse with your friends and colleagues and hopefully edify and educate them as well.

  • Myth #1: We don’t need to worry about Social Security for many years.
  • Myth #2: Social Security faces only a small funding shortfall.
  • Myth #3: Social Security solvency can be achieved solely by making the rich pay the same as everyone else.
  • Myth #4: Today’s workers will not receive Social Security benefits.
  • Myth #5: Social Security would be fine if we hadn’t “raided the trust fund.”
  • Myth #6: Social Security cannot run a deficit.
  • Myth #7: Social Security has nothing to do with the rest of the budget.
  • Myth #8: Social Security can be saved by ending waste, fraud, and abuse.
  • Myth #9: Raising the retirement age hits low-income seniors the hardest.

We won't go into much detail here other than to show you the key charts and graphs below that highlight the refutation of the myths mentioned above. Hopefully, these charts will either interest or alarm you enough to force you to read the entirety of the 10-page CFRB report so you will become fully versed in the gravity of the situation now facing us in Social Security 'insolvency' or at least 'severe shortfall'.

Just to give your heart a little palpitation today, consider Myth # 6:

Myth #6: Social Security cannot run a deficit.

Fact: Social Security is running a cash deficit today, and it will keep running deficits until its trust funds run out. (Figures 4&5 below)
Social Security is legally barred from going into debt; in other words, it cannot spend more than it takes in (or has transferred in) over the life of the program. However, the program can (and does) run annual deficits. In 2016, for example, Social Security will run a cashflow deficit of about $70 billion.
Over the next decade, the Trustees project cash-flow deficits of $1.5 trillion, and CBO projects deficits of $2.2 trillion.7 Even including interest income, the program is projected to begin running deficits by 2018 or 2020.
2018 or 2020. That is right around the corner, ladies and gentlemen! Have you heard even a peep out of our Chief Executive, President Barack Obama about this looming crisis? Nope. Not a word.

Everyone 'presumes' that since Social Security is funded by its own separate payroll tax, that it is always going to be funded solely by those revenues.

What is happening now is that Social Security essentially is dipping into the same general pot of revenue the government receives every day from taxpayers that has been used to pay for defense, homeland security, transportation and environmental protection programs.

What most people do not realize is that that same general revenue pot of money is currently ALSO funding close to 85% of the entire Medicare budget in the country and 100% of all the Medicaid budget funded by the federal government nationwide.

What happens when Social Security, Medicare, Medicaid and interest on the national debt consume 100% of federal tax revenues paid into the US Treasury each year and the majority of SS funding comes from general tax revenue, not just the dedicated payroll tax?

Nothing else will get funded unless we borrow THE ENTIRETY of our defense, transportation, homeland security, welfare, environmental protection, foreign aid, science and tech, housing and education budgets from overseas sources.

If you are a young working person out there today, you can be enamored all you want by the promises of Bernie Sanders or Hillary Clinton but just realize that nothing he/she promises you is likely to ever happen under him or her or any other President to follow in your lifetime.

The cash shortfalls in Social Security pretty much insure that the days of an expanding welfare state in America are over and done with.

You can't expand what you can't pay for. And you young people are going to find it very difficult to fund even the Social Security promises made to your grandparents and parents in the next 10 years when the vast majority of the Baby Boom population start drawing Social Security checks directly out of your FICA or payroll taxes every single month.*

Unless dramatic changes are made to all of our entitlement programs under the next President and Congress that is.

The 2017-2018 115th Congressional session could be the most impactful session of Congress in your young lifetimes.

You better hope the right people get elected for your future.

 *(side-note: When SS started, there were almost 42 workers to help pay for the benefits of every single retiree because there were so few retirees eligible at the time and so many workers. Today, the ratio is about 2.5 workers to pay for every retiree on SS. So good luck on that.)

Sunday, April 24, 2016

‘Black Male Lives Matter’ ...Therefore We Need Social Security Reform

first appeared in North State Journal, 4/24/2016 page A7

One of the more egregious inequities in the US federal budget is the way African-American males are treated by Social Security.

How is that you say? ‘Social Security was passed by Franklin Delano Roosevelt to help every older person regardless of race survive in their golden retirement years!’ you can hear defenders of Social Security start to shout.

Consider this:

If you, or an African-American, or a Hispanic or any person who has worked during your lifetime, male or female, die 5 minutes before you become eligible for Social Security benefits, now at about 66 years of life, you will receive exactly $0 for all of those hard-earned dollars and cents you religiously paid in payroll taxes every tax period, whether you liked it or not and whether you even knew it or not.

Your surviving spouse will be eligible for benefits after your death. But it will be nowhere near what it could have been had Social Security been set up as a defined contribution program similar to a 401k program or IRA that takes your hard-earned dollars and puts them in a dedicated investment plan with only your name on it, to grow through the miracle of compound interest and dividends over the years of your working career.

So why does this matter if someone is white versus African-American or Hispanic or any other ethnicity?

The General Accounting Office (GAO) recently published a report, Shorter Life Expectancy Reduces Projected Lifetime Benefits for Lower Earners which sounds obvious except when you delve into the numbers and see that disproportionately high numbers of African-American males are affected.

Average life expectancy for African-American males in the United States now is about 72 years. White males can expect to live over 79 years. Everyone is living longer nowadays due to better nutrition and advances in medical breakthroughs and technology beyond the wildest dreams of people even 25 years ago.

However, when you consider that the eligibility age for Social Security is 66, a fair number of African American males will not live long enough to receive one dollar of any of the Social Security payroll taxes they paid into the system over their lifetimes.

The truly only ‘fair way’ to rectify this injustice is to transition to a private investment system for each and every person. Instead of receiving nothing in benefits in the case of the African-American male mentioned above, had such a system been in place since 1980, even at a low-wage scale, his estate would have had perhaps several hundred thousand dollars in it that could be used to pay off the mortgage, pay for someone’s higher education or generally take care of his surviving spouse in a more comfortable fashion.

The current Social Security system can be considered the bare minimum, ‘The Minimum Wage’-version of what a retirement plan could look like.

With a new system that uses direct investment vehicles for each and every person, at least when a person dies, his or her family could receive a lump-sum payment far in excess of any amount of SS benefits they could have ever received during the working partner’s lifetime.

It is one major way millions of lower-income and African-American males can help their families and generations-to-follow better off financially as they build wealth for the future. Black male lives matter just as much as every other working person’s lives matter.

We should change Social Security to make it happen.

Maybe we can get some of the political candidates running for any office, say, those running for President, to start discussing matters of importance such as this with the American people.

Do You Want Better People to Run for Public Office?
Support the Institute for the Public Trust Today

Visit The Institute for the Public Trust to contribute today

Sunday, April 17, 2016

Should President Obama Apologize for Hiroshima?

There has been speculation that President Obama is seeking an opportunity during the upcoming G-7 Conference in Japan to go to Hiroshima to apologize in some manner for the United States dropping atomic bombs on Hiroshima and then Nagasaki to end World War II in the Pacific in 1945.

It would be the coda to his 2 terms in the White House where seemingly every injustice in the world can be traced to 'American Imperialism!' or 'American Capitalist Greed!'. From his very first world trips, they have been described as 'apology tours' designed to make friends with everyone, including our enemies, and the world will all come together and sing 'I'd Like To Buy The World A Coke!' or something. (click through the title link if you can not see the video below)

President Obama has repeatedly 'bowed' to foreign leaders, both friendly and non-friendly during his two terms in the White House. Not just figuratively speaking but in actual physical practice.

American Presidential tradition has been to not bow to foreign leaders ever since George Washington defeated the Redcoats under King George III. Think President Washington would have ever bowed or curtsied to His Majesty and Queen had he ever met them in person? (which he didn't)

With this presidential campaign season upon us, we thought it might be interesting to speculate on what an accurate and more realistic presidential address to the world would look like when it came to America 'taking responsibility' for our actions on the world scene over the past 246 years:

'Dear Citizens of the World:

The Great American Experiment will never grow old or die.

We were founded on the predicate that every person is endowed and created with certain inalienable rights such as life, freedom and the right to pursue whatever endeavor you so choose during your life here on earth.

We believe in freedom and democracy so much that we have engaged not only in a major civil war on our own soil to free millions of people from oppression, where more Americans died fighting for that freedom than in any and all wars combined since, we have entered into wars on foreign soil to help free hundreds of millions of people from destruction, death and vile oppression from sadistic, mad leaders the world over.

For that, we will never apologize.

We will never apologize for helping to liberate Europe from the madman Adolf Hitler who murdered over 6 million Jews for the 'crime' of not fitting his idealized notion of what an Aryan Nation should look like.

We will never apologize for bringing to a close the communist darkness that was known as the Soviet Union whose very own leaders, Josef Stalin as the worst of them, murdered or imprisoned over 100 million of its own citizens before the USSR died on Christmas Day, 1991 of all blessed days.

We will never apologize for bringing to an end the murderous, ruthless and ultimately mindless leadership of the Emperor of Japan who caused the death and brutal destruction of perhaps tens of millions of Chinese and southeast Asian people prior to and during World War II.

We will not apologize for ridding the world of ISIS and Al Qaeda one day soon in the near future when we can all stand together and say we did.

We hope and pray that we will never again see wars waged on a scale of the world war that ended with the unleashing of nuclear weapons on the face of this earth. Our collective survival depends on keeping nuclear weapons out of the hands of madmen and mad states who would seek to do otherwise.

We wish we would see the days where walls of cities and enemies such as the Midianites were brought down solely by loud trumpets and faith.

But until we do, we Americans will never stop defending freedom, promoting democracy, advancing free enterprise and protecting innocent people and then returning home after insuring their security and leave the people of each new free nation to live their lives in peace.

You have our word and solemn promise on that.’

Think we will see anything like that from President Obama later this summer in Japan? Such an address would be far more 'truthful' than trying to pin America as being a net detriment to humanity on a regular basis during our relatively short 227-year existence.

Wouldn't it be nice to see a US President talk about how great America is and has been in world history once again?

Do You Want Better People to Run for Public Office?
Support the Institute for the Public Trust Today

Visit The Institute for the Public Trust to contribute today

Tuesday, April 12, 2016

'Zero. Point. Zero'

When we started this blog in February, 2009, soon after President Barack Obama was sworn into office as the 44th President of these United States of America, we thought we might write 20 or so postings about the basics of the federal budget with some thrown in on taxes and health care policy for good measure.

Since they were all integrally tied-in with each other.

This is the 591st publication of such ruminations out of 658 that have been written over that 7.1 year period. 67 that we started writing bored even us upon second thought or were so poorly-written or thought-out, we thought the better part of valor was to just let them die on the shelf.

Still, roughly close to 85 ruminations have been published each year since 2009.

And you know what?

Nothing on the federal spending, budget, tax or even the healthcare side of things has gotten appreciably better since President Barack Obama was elected in 2008.

In fact, it could be argued that things have gotten far worse under President Obama during those 7 years.
  1. We have accumulated another $10 trillion in national debt under his term in office. More than the accumulated amount of federal debt that occurred under any President dating back to George Washington on a nominal basis at least.
  2. The federal budget is not balanced.
  3. When President Obama leaves the White House next January 20, 2017, the federal deficit is expected to balloon once again.
  4. If interest rates even start to approach the more 'normal' range they have been in for the past 50 years in America, say 5%, the federal deficit will explode as we have to service the then-$21 trillion in national debt at 5%+ (or far more) instead of the current 2% we pay now in interest costs.
    This will mean over $1 trillion in net interest costs will be going out the door each year under the next President no matter who it is; left, right, socialist or whatever. That would be close to 23% of the federal budget each year for those of you counting at home.
  5. Tax rates are higher under President Obama than they were before he took office. Taxes imposed on business and individuals such as the plethora of new taxes imposed under the ACA are a major reason why the economy is still stuck in neutral, or worse, and has been for the past 6 years at least.
  6. As noted in a previous post, we would have all been FAR better off had President Obama and the Democrats 100% in charge of Congress and the US Senate in 2009-2010 just focused on expanding Medicaid under the ACA and just left the private markets alone. There are so many distortions and contradictions and contortions in the private health insurance market today that many of the ACA co-ops are collapsing; health insurers are leaving states right and left and refusing to carry any ACA policies any longer and many people have just given up trying to find a good policy any longer and just pay the ACA fine or ignore it altogether.
Take a look at this article which pretty much sums up the total 'success' (sic)  of the Obama White House years when it comes to financial, fiscal and economic matters: 'Obama is Pleased With Yellin As Economy Shows Signs of Slowing'.

'Signs of SLOWING'?

If the US economy was a submarine, the captain would be screaming: 'FULL STOP!"

From the Bloomberg article: 'Some economists last week cut their tracking estimates for growth in first-quarter gross domestic product to near zero..'

'Near-zero' means 'zero' especially when you take into account that we still have some inflation in our system.

Do you young people have any earthly idea what 'zero economic growth' means for you and any and all of your friends who have graduated from college in the last 6 years?

It means that the economy is not even growing fast enough to absorb all of the graduates entering the work force beyond what it takes to replace the people who retire or die and otherwise leave the workforce.

It means that recent graduates are probably working at below-normal salaries and wages because in a non-growing economy, businesses do not need to hire any additional employees, especially when such hires means enormous additional costs such as imposed by the ACA and increased regulations over the past 7 years.

'A zero rate of economic growth' means that wages will be stagnant for as long as the economy stays weak. It means chances for rapid escalation through the work force in your chosen industry is nil.

'University of Chicago Economics Professor Dean Wormer' perhaps would say it best on CNBC when confronted with the abysmal economic record of the Obama Administration: (if you can't see the video in the email sent via distribution, click on the title link above and scroll down to this section to view)

Young people of America: You deserve to experience the full benefits of a thriving, growing, dynamic job-creating America.

Those of us who are about to go on Social Security and Medicare (and send you the enormous bills to pay for out of your weekly, bi-weekly or monthly paychecks forever it will seem to you) at least had the chance to live through 2 of the greatest economic explosions America has ever experienced: 1982-1988 under President Ronald Reagan and 1995-2000 under President Bill Clinton.

A 'President Bernie Sanders' would produce an economy that undershoots even that of the Obama White House. A 'President Hillary Clinton' would continue the same economic policies of President Obama that has produced 0.0 GDP growth as she has repeatedly vowed on the campaign trail time and time again.

Use the left-side of your bright young brains to analyze all the data, facts and figures before you vote this fall. It is all well-and-good to vote for a single issue or for a certain personality because you 'like' them or 'like' their Facebook page or on some other social media

However, none of that will mean a thing to you if you and your friends: 1) can't find a good, high-paying job; 2) can't move up the economic ladder of success as fast as you want to or 3) even buy a starter home and begin a family.

Otherwise, you will be voting for 'Zero.Point. Zero' economic growth. Again. After 2 previous elections already.

Remember how Dean Wormer said it. That is all you need to know about your future.

Do You Want Better People to Run for Public Office?
Support the Institute for the Public Trust Today

Visit The Institute for the Public Trust to contribute today

Friday, April 8, 2016

What Is The Truth About The ACA?


We would have ALL been better off had the Obama White House and the Democratic Congress in 100% of all legislation been honest and just proposed a massive expansion of Medicaid in 2009-2010 and left the private health insurance markets alone.

Because that is essentially what the ACA has done more than anything else: expanded coverage by Medicaid programs across the nation by over 34 million people.

'In 2013, the CBO projected that 34 million people would be on Medicaid or CHIP (the Children's Health Insurance Program) in 2016. The CBO now says that 68 million people will be on Medicaid or CHIP in 2016—double its earlier estimate.'*

Remember the numbers that were bandied about about the number of 'uninsured' before the ACA was passed?

Anywhere from 35-40 million people were estimated to not have medical coverage at the time. Based on those numbers, the Medicaid expansion efforts supposedly have cleared up that uninsured number pretty much by now.

Lawmakers and many states have figured out how to game the system once again to the detriment of future taxpayers and debt-payors, namely our sons and daughters and grandchildren. Not current taxpayers.

How so?

The Obama Administration, in their attempt to basically 'bribe' states into expanding their Medicaid programs, offered to pay for the entire Medicaid expansion costs by 100% by the federal government, not the states, for a period of 5 years. Then the match drops to 'only' 90%. Forever, supposedly, without further Congressional action taken.

So what does this mean?

It does not mean that the federal government is raising federal taxes to pay for this increase not in the least bit. It DOES mean that the federal government is either borrowing MORE money from the Chinese or foreign sovereigns to pay for the expansion OR the Fed will monetize the debt somehow by creating more money out of nowhere based on nothing else other than the 'full faith and credit' of the United States of America.

Not even at the state government level does the taxpayer have to pay for any of the Medicaid expansion costs for the first 5 years and then only very little after that.

(However, after that first 5 years, even a 10% state match for the costs of Medicaid expansion can be crippling when states have to balance their budgets and they have pressing needs to pay for such as teachers pay and better roads and safer communities through public safety programs)

We no longer live in a 'real-world' PAYGO (Pay-As-You-Go) world when it comes to government spending.

We are now cavorting about in the dream world of 'Don't-Pay-As-You-Pass-Along-The-Bills-To-Your-Kids' (DPATBTYK) world and digging a deeper fiscal hole for them with each passing day.

There. Doesn't that make you feel better about things already?

Read the links to the 2 stories about Medicaid noted in the article above to discover how the ACA has also resulted in fewer people being enrolled in the now far more expensive private health plans for companies or individual plans.

If they are still in them, that is.

The ACA is going to have to be HR1 when the next Congress convenes and we are going to need a President who will sit down with leaders from both the House and the Senate to be realistic about the failures of Obamacare and work to fix all of the problems it has caused this country.

*from Weekly Standard

Do You Want Better People to Run for Public Office?
Support the Institute for the Public Trust Today

Visit The Institute for the Public Trust to contribute today

Wednesday, April 6, 2016

Socialism vs Capitalism: What Works Best?

'I guess to make a broader point, so often in the past there’s been a sharp division between left and right, between capitalist and communist or socialist. And especially in the Americas, that’s been a big debate, right? Oh, you know, you’re a capitalist Yankee dog, and oh, you know, you’re some crazy communist that’s going to take away everybody’s property. And I mean, those are interesting intellectual arguments, but I think for your generation, you should be practical and just choose from what works. You don’t have to worry about whether it neatly fits into socialist theory or capitalist theory — you should just decide what works.'
President Obama was speaking to a group of Argentinian young leaders after his trip to Cuba (where 'socialism' has worked so well (sic) that Cuba is still mired in the 1950's, not the 21st century) when he essentially said there is no substantive difference between socialism and capitalism so 'you young people of Argentina should just pick and choose what works' between the two and 'roll with it' in essence.

Enid, The Church Lady
Well, as The Church Lady would say: 'Isn't that special?'   

That would be all well and good if capitalism and socialism started out with the same moral equivalence and ended up with the same results over history.

They haven't. For the most part.

Take a look at recent quotes from Russian chess grandmaster Garry Kasparov recently:
'Capitalism is the greatest destroyer of poverty in world history and socialism its greatest creator, rivaling war'
'Socialism, where everything is free except you!'
'I'm enjoying the irony of American Sanders supporters lecturing me, a former Soviet citizen, on the glories of Socialism and what it really means! 
Socialism sounds great in speech soundbites and on Facebook, but please keep it there.
In practice, it corrodes not only the economy but the human spirit itself, and the ambition and achievement that made modern capitalism possible and brought billions of people out of poverty
Talking about Socialism is a huge luxury, a luxury that was paid for by the successes of capitalism.
Income inequality is a huge problem, absolutely. But the idea that the solution is more government, more regulation, more debt, and less risk is dangerously absurd'

As with most anything in life, 'talking about' something is usually far different from 'living' or 'actually experiencing' that something, isn't it?

Why would Garry Kasparov know more about the dangers and spirit-sapping emulsification of socialism than, say, President Barack Obama of the United States of America?

Because he lived under the iron rule of the former Soviet Union for 28 years of his life before witnessing the fall of communist rule in Moscow in 1991, which started with the enhanced defense posture of President Ronald Reagan in 1981, resulting in the freedom of millions of Russians and other ethnic citizens from central heavy-handed, non-creative, oppressive,rule.

Kasparov was fortunate; he survived. 60 million to 100 million people were murdered under the Stalinist regime all in the name of making the Soviet Union 'safe' for communism.

No western political leader such as President Obama or Democratic presidential candidate such as Bernie Sanders could ever hope to understand the vast differences between socialism and capitalism until and unless, of course, either of them actually was forced to live under such oppressive regimes as did Mr. Kasparov.

Then both would most likely be singing an entirely different tune.

Granted, America has adopted some federal programs that are ‘socialist’ in nature. Social Security, Medicare and Medicaid are the most prominent federal programs in America that are designed to be a 'shock absorber' of sorts when it comes to providing a social safety net that is designed to be more of a trampoline than a hammock goes the old analogy.

As Kasparov points out, however, even these are paid for by capitalism in one form or another. We make money and pay taxes so these social welfare programs can be funded. Or at least paid for by borrowing with the promise of repayment from taxes paid in the future.

Don’t make the mistake of equating the freedom of capitalism with the spirit-sapping nature of socialism as Garry Kasparov pointed out.

The upcoming election is more than just choosing between personalities or political parties. The fall election is about whether America continues down the path towards more socialism as espoused by President Obama for the past 7 years or whether we head back towards free enterprise capitalism so eloquently advocated by President Ronald Reagan during his 8 years in office.

New jobs net of population growth soared under President Reagan. Not so under President Obama’s two terms as you can see from the following chart.

You get to choose which outcome you want for the next 8 years. Choose wisely.

Do You Want Better People to Run for Public Office?
Support the Institute for the Public Trust Today

Visit The Institute for the Public Trust to contribute today