Monday, April 5, 2010
Sunday, April 04, 2010
This year Social Security will hit its budget crisis, seven years ahead of schedule. In 2010, the wizards in Washington will have to pay out more to beneficiaries than we’re paying in via our payroll taxes.
During the Bush years, in the wake of proposals to set up private, individual retirement accounts — and not run Social Security as a huge Ponzi scheme — politicians seemed to stand together on one foothold of common ground: 2017 (the prophesied year of redness) was a long way off.
Critics of the administration’s proposal did more than suggest that Bush was out to ruin Social Security. But, ahem, now the crisis is here.
Politicians did think they had some time. The first year of running into the red was thought, then, to be more than a decade away.
Decades just aren’t what they used to be.
It’s obvious to those with common sense (may I say, especially to readers of my Common Sense e-letter?) that timing is important. Hit the brakes before impacting the wall. You prevent disasters, don’t wait for them to happen, and then “heroically” step in.
Enter stage Left: Democrats’ support for their just enacted and signed-into-law medical reform package.
Wise counsel would have them fix existing entitlement programs before inventing new ones. But to excite their base for this year’s congressional elections, the Democrats fiscal fix was to apply for a new credit card, max it out on new spending, and let older debt lurch closer to default.
The new medical industry reforms, meanwhile, will almost certainly INCREASE future outlays by government and medical costs all around -- just when more funds will be needed to meet Social Security problems.
Over and over, we are being told that the new health care system will "cost us less." But the chief evidence given for this, that I’ve seen, is the brain-dead point that "out-of-pocket costs" will be less. By this proponents mean: What you have to pay when you visit the doctor or hospital. The government cannot mean that those new services won’t be paid, that costs won’t go up.
But careful analysis of the rhetoric surrounding "health care reform" is not really necessary. Common sense tells you what history shows: Entitlement spending projections have ALWAYS been dwarfed by the enormity of future growth. Medicare hospital insurance proved nearly eight times more expensive than predicted at time of enactment; Medicare as a whole has proved over nine times more expensive. The Medicare DSH program costs 17 times more than originally touted.
Here at last we have President Obama deliver on "hope" . . . for hope is all he has. Evidence? None.
When I was a kid, such federal government fiddling with an industry smacked of socialism, and was called “red.” Thanks to the late Tim Russert, “red” now stands for conservatism and “blue” stands for “progressivism.“ The color chart has changed.
But not in accounting. This year, Social Security’s accounts go red. And that doesn’t mean anything different than it did 50 years ago. Red is the color of insolvency. And, yet Social Security payments will continue; the money will come from somewhere.
Congress spent the surpluses since the last Social Security fix, giving the Social Security Administration some nicely printed IOUs in the form of non-negotiable bonds. But this doesn’t mean that Congress has the money to pay off the billions needed this year, much less the whole $2.5 trillion borrowed since Alan Greenspan “fixed” Social Security last time. (Greenspan was head of the famous study group that Ronald Reagan set up, and whose advice Congress took in the ’80s.) Congress has already outspent its previous records, putting the federal government into a depressingly dangerous financial condition. Adding this Social Security debt service to the trillions already owed doesn’t make things look better.
Alan Greenspan, now, says that when “the level of the trust fund gets to zero, you have to cut benefits.” Yeah, sure. Of course. Congress has already raised retirement ages a bit, to reflect our increased longevity. That was about time, in more ways than one. But that hasn’t been enough.
My problem with Greenspan’s statement is not the cutting (that’ll be Congress’s problem — you don’t get re-elected by cutting services, political wisdom has it) but that term “trust fund.” The so-called “trust fund” isn’t a fund, and there’s no trust. It is just simple cash-flow accounting.
Beyond that, there are just those IOUs. And there’s no money there. It’s $2.5 trillion on paper. Congress doesn’t have it. To make good those nicely engraved bonds, Congress will have to sell of assets, raise taxes, or go into further debt . . . or engage in deliberate inflation.
Of these, only asset liquidation would not likely hurt American citizens now (taxes) or later (inflation devalues everything, and is the notorious “hidden tax”; debt, to be paid back in future taxes). We could start by selling off some BLM land.
Courtesy of Congress and a succession of bad presidents, we are speedily approaching the worst case scenario now. And if the incumbents in Congress wanted to see another meaning of “red,” they will get their chance. Expect discussions of an “anger index” soon, coming to a bankrupt country near you.
Note to Doctors: Now I'm "Entitled" To Your Services
Sunday, April 04, 2010
Vice President Joe Biden did it again.
He reiterated what was once a central theme of Barack Obama’s presidential campaign, and what has been a central tenet of our government since Mr. Obama became President. And the idea is, simply, this: when government takes wealth away from certain individuals and groups, and gives it to certain other individuals and groups, such actions are NOT to be called “economic re-distribution.” Such actions are to be described as “fairness.”
Biden, of course, has been a government employee for nearly forty years, earning a six-fugure salary paid for with our tax dollars. He has also earned a reputation of embarrassing public gaffes. And crude as his behavior is at times, it is nonetheless difficult to dispute the entertainment value generated when the Vice President utters the “f-word” into an open microphone (as he did during the recent White House “healthcare bill” signing ceremony), or when he proclaims somebody’s mother to be dead when she’s actually still alive (as he did with the Prime Minister of Ireland during a White House visit last month).
But during his recent sit-down interview with the journalists at Yahoo! Finance, Biden behaved like a Vice President should, and expressed ideas that are supportive of, and consistent with, the President that he serves. The problem, however, is that the economic irrationality of the entire Obama Administration is an endangerment to American freedom. Thus Biden’s remarks served to further advance a very destructive agenda.
Responding to claims that President Obama’s “healthcare” agenda is a matter of economic re-distribution, Biden stated "it's a simple proposition to us: Everyone is entitled to adequate medical health care. If you call that a 'redistribution of income' -- well, so be it. I don't call it that. I call it just being fair -- giving the middle class taxpayers an even break that the wealthy have been getting."
The broader implications of this “fairness” theme are the crux of the matter. But let’s look carefully for a moment at these specific remarks.
It sounds compassionate for a politician to say “everyone is entitled to adequate medical health care,” but stop and consider the implications of this statement. Vice President Biden – along with President Obama and the majority of the members of the U.S. Congress – have confirmed in the minds of at least some portion of the American public that they are “entitled” to the services of another human being.
Those “other” human beings are, of course, Medical Doctors, people who invest huge chunks of their time and energy and often delay gratification of their personal lives for a decade or more and frequently incur enormous personal debt just earning the right to practice their craft. And now the U.S. federal government says that “the rest of us” are entitled to a piece of these individuals. In previous generations, the idea of being entitled to the services of another person was called “slavery.” Can we really call this “fairness” today?
And notice how easily Vice President Biden, all within two sentences, seeks to sell the idea of Obamacare, with the implication that is balanced on the backs of “the rich.” By implying that somehow “rich people” have been getting an “unfair” advantage, he suggests that Obamacare gives “tax breaks” to the “middle class.”
Of course, this is also a bunch of falsehoods. The richest of Americans already pay the majority of our nation’s taxes. And Obamacare is loaded with new taxes that will impact all Americans, not just "rich" folks– new taxes on personal income, new taxes on medication and medical device purchases, even new taxes on wheelchair purchases (apparently the wheelchair-bound population is small enough that it is politically “safe” to punish them).
But thinking about this situation more broadly, one has to ask “what is fair?” Is it “fair” that wheel-chair bound Americans – some of whom presumably are living on fixed incomes – are now being forced to help pay for other people’s “entitlement?” Is it “fair” that Barack Obama and Joe Biden and Nancy Pelosi and Harry Reid and every elected member of Congress and their respective staff members and members of the United Auto Worker’s union are all exempt from the heavy handed mandates of Obamacare, while the mandates are imposed on the millions of the rest of us? Is this the “change” we were “hoping” for?
And what politician is so “moral,” so pure, so just, so good, that they, alone, can determine what is “fair” for everybody? Would it be Joe Biden himself? Or Barack Obama? Or does that elusive arbiter of fairness exist elsewhere in the world today – maybe Hugo Chavez, the dictator of Venezuela , or Mahmoud Ahmadinejad of Iran ?
The founders of our great nation recognized that, after a few thousand years of civilization and multiple, painful attempts by governmental leaders to create “fair” societies, the best hope for humankind was to construct a society of freedom, where individuals can freely chose to do business with one-another (or choose not to). This characterization of freedom and “fairness” runs counter to the type of governmental constructs that Barack Obama grew-up with in Indonesia , and bares little resemblance to the world he knew in Chicago , but it is, nonetheless, distinctly American.
I suspect that President Obama has no interest in this type of freedom and “fairness.” And I’m beginning to believe that Vice President Biden has never contemplated such things. They are both, however, peddling a type of “fairness” that America simply cannot afford.
Posted by Brett at 12:12 PM