MaxedOutMama
Wednesday, April 27, 2005
Important Stuff
First, this post at Redhunter about the federal investigation into flight 327. This is the flight that Annie Jacobsen was on, the one that terrified her and other passengers so much that she wrote an article about it:, and here is her latest update:
Second, Dr. Sanity comments on Social Security, the Galveston plan, and the Chile plan. These are good links and it is an important and pressing issue. Regardless of Pelosi's clueless statement about 2050, the problem with both Medicare and Social Security is terribly real and will become evident about 10 years from now, shifting into near-disaster about 15 years from now.
We are going to be making big changes to both programs from necessity. Social Security will have to change - we must save instead of spend. We could do that through government programs (such as the Federal employees have themselves) or through private programs, but the sooner we start to save instead of spend the better the position we will find ourselves in 2020 becomes. Unless you are over 75 today this discussion is highly relevant to you. If you are doing well load up on your private saving plan and mentally write off social security income for your retirement. If you are one of those scrabbling Americans actually (gasp) raising children, you need to climb into this dicussion and inform yourself NOW.
You might also want to take a look at the Trustees' report. The press release is available here. The report itself is available here (in text and pdf ). Anyway, the trustees report that Social Security starts running a deficit in 2017 (one year earlier than last year's estimate). This will continue to creep back as older Americans who have lost their jobs and medical coverage continue to retire at the first possible moment. Health insurance is the inexorable force accelerating this financial disaster.
Even worse yet, Medicare is already in deficit. You can read the combined summary for Medicare and Social Security here:
However, the real effect of what we are going to experience is not reflected in the graph above. We have been using Social Security taxes to fund general expenditures, and this will inflict a double whammy on our national finances. To continue these programs as they now stand, the trustees estimate that we would need to increase Social Security taxes right now by 15% and increase Medicare taxes by 107%. (An immediate increase of payroll taxes from 15.3% to about 20.5%)
Since these taxes are regressive and anti-competitive, this seems unlikely to be successful, especially if the public can't be assured that these taxes will be saved instead of spent, because even this tax increase doesn't solve the cash flow problem. They will spend it instead of saving it. One way or another (whether we tax ourselves by saving privately or tax ourselves by saving by public policy) we are going to have to start saving.
Look at this graph to see how quickly costs are expected to exceed income from taxes:
We should all be kissing complacency goodbye right now. This is not a political battle. This is reality. We can have a legitimate and lively debate about how to provide for our future, but people like Pelosi who don't believe there is an immediate problem should be sent back to kindergarten and made to learn how to count with colored blocks. They are either lying conniving deceivers or incredibly stupid people happily telling lies they believe; either way they should be ignored for the purposes of this debate.
For a bipartisan discussion of the situation, try the Concord Coalition. If you find yourself still stroking the lamp of the trust funds like Krugman in the childlike faith that a genie will appear with money, try this article. Reality hurts, but not as much as finding yourself paying 25% of your wages in Social Security and Medicare taxes in 6 or 7 years, plus paying income tax on that money you didn't receive:
I'm the only person in the country unperturbed by all this, because I don't have to worry about my retirement and I've already got my funeral covered. So I can afford to be honest, just like the Congressional Budget Office. Scroll down to nearly the bottom of this chapter, and you will see the projected impact of trust fund transfers on the budget. In 2004 it was about -192 billion. In 2005, it will be about -491 billion. We are talking about an additional negative impact on the budget of about 300 billion a year in ten years. That includes SS, Medicare, and federal retirement/medical trust funds. It is this number you must watch and this number that determines your future. You come up with that additional cash, or additional debt is sold to cover it.
Oh, and by the way - you will never see economists discussing how much in the hole we are to fund the retirement and medical care for federal government employees. But it is time to discuss that as well.
The four federal agents showed up exactly on time, in a rented green mini-van, carrying briefcases and wearing suits (it was 75 degrees). They came to discuss the events of Northwest flight 327, the now notorious Detroit-to-Los Angeles plane trip I took last June....They interviewed her for over 4 hours. This isn't over yet, and everyone needs to be alert. If everyone who had seen something suspicious leading up to 9/11 had reported it, the story of that day might have turned out differently. Stay alert for suspicious behavior and report it.
On the telephone, the agents explained to me that the Department of Homeland Security, Office of the Inspector General, has been investigating flight 327 and flying DHS agents around the country to talk to various parties -- the flight attendants, pilots, federal air marshals and the passengers. They had saved me for last.
Second, Dr. Sanity comments on Social Security, the Galveston plan, and the Chile plan. These are good links and it is an important and pressing issue. Regardless of Pelosi's clueless statement about 2050, the problem with both Medicare and Social Security is terribly real and will become evident about 10 years from now, shifting into near-disaster about 15 years from now.
We are going to be making big changes to both programs from necessity. Social Security will have to change - we must save instead of spend. We could do that through government programs (such as the Federal employees have themselves) or through private programs, but the sooner we start to save instead of spend the better the position we will find ourselves in 2020 becomes. Unless you are over 75 today this discussion is highly relevant to you. If you are doing well load up on your private saving plan and mentally write off social security income for your retirement. If you are one of those scrabbling Americans actually (gasp) raising children, you need to climb into this dicussion and inform yourself NOW.
You might also want to take a look at the Trustees' report. The press release is available here. The report itself is available here (in text and pdf ). Anyway, the trustees report that Social Security starts running a deficit in 2017 (one year earlier than last year's estimate). This will continue to creep back as older Americans who have lost their jobs and medical coverage continue to retire at the first possible moment. Health insurance is the inexorable force accelerating this financial disaster.
Even worse yet, Medicare is already in deficit. You can read the combined summary for Medicare and Social Security here:
The fundamentals of the financial status of Social Security and Medicare remain problematic under the intermediate economic and demographic assumptions. Social Security's current annual cash surpluses will soon begin to decline and will be followed by deficits that begin to grow rapidly toward the end of the next decade as the baby boom generation retires. The Medicare Hospital Insurance (HI) Trust Fund that pays hospital benefits had negative cash flows in 2004 and annual cash flow deficits are expected to continue and to grow rapidly after 2010 as baby boomers begin to retire. The growing deficits in both programs will lead to exhaustion in trust fund reserves for HI in 2020 and for Social Security in 2041. In addition, the Medicare Supplementary Medical Insurance (SMI) Trust Fund that pays for physician services and the new prescription drug benefit will require substantial increases over time in both general revenue financing and premium charges. As the reserves in Social Security and HI are drawn down and SMI general revenue financing requirements continue to grow, the pressure on the Federal budget will intensify. We do not believe the currently projected long run growth rates of Social Security and Medicare are sustainable under current financing arrangements.Talk about the trust funds is a red herring, because the trust funds are only promises to pay. When either program runs a deficit, it is funded out of general revenue. If the trust fund did not exist, the same would be true. So, for purposes of a reasoned debate, the "trust fund" chimera should be allowed to evaporate gently into the ether from which it was summoned. What the trustees are reporting is that the portion of the deficit related to these programs is slated to grow inexorably and rapidly as far as the actuarial eye can see. This is the projected graph of expenditures against GDP:
However, the real effect of what we are going to experience is not reflected in the graph above. We have been using Social Security taxes to fund general expenditures, and this will inflict a double whammy on our national finances. To continue these programs as they now stand, the trustees estimate that we would need to increase Social Security taxes right now by 15% and increase Medicare taxes by 107%. (An immediate increase of payroll taxes from 15.3% to about 20.5%)
Since these taxes are regressive and anti-competitive, this seems unlikely to be successful, especially if the public can't be assured that these taxes will be saved instead of spent, because even this tax increase doesn't solve the cash flow problem. They will spend it instead of saving it. One way or another (whether we tax ourselves by saving privately or tax ourselves by saving by public policy) we are going to have to start saving.
Look at this graph to see how quickly costs are expected to exceed income from taxes:
We should all be kissing complacency goodbye right now. This is not a political battle. This is reality. We can have a legitimate and lively debate about how to provide for our future, but people like Pelosi who don't believe there is an immediate problem should be sent back to kindergarten and made to learn how to count with colored blocks. They are either lying conniving deceivers or incredibly stupid people happily telling lies they believe; either way they should be ignored for the purposes of this debate.
For a bipartisan discussion of the situation, try the Concord Coalition. If you find yourself still stroking the lamp of the trust funds like Krugman in the childlike faith that a genie will appear with money, try this article. Reality hurts, but not as much as finding yourself paying 25% of your wages in Social Security and Medicare taxes in 6 or 7 years, plus paying income tax on that money you didn't receive:
The key point is that the same trust fund “assets” are a future liability for the Treasury. So while it may be comforting to think of the trust funds accumulating trillions in federal government bonds over the next twenty years, in reality that just means the government will owe itself a lot of money....From you, of course. That's where it must come from. One way or another, you are going to pay. You have already paid for your retirement in the form of the surplus SS taxes, but none of that money was stored or invested for the future. Now you are going to have to dig deep and come up with it again. Congratulations! This was what happened while we weren't paying attention. We probably should learn our lesson and start paying attention, especially to what is going on in Galveston and Chile.
Thus, when the Trustees say that Social Security is “solvent” until 2042 they are only saying that the program will have sufficient claims on the Treasury (i.e., taxpayers) to pay full benefits until that date. The more important issue is how much paying off the IOUs is going to cost and whether it is affordable. When the time comes for the trust fund balances to be converted into benefit payments, the relevant question will be: where does the money come from?
I'm the only person in the country unperturbed by all this, because I don't have to worry about my retirement and I've already got my funeral covered. So I can afford to be honest, just like the Congressional Budget Office. Scroll down to nearly the bottom of this chapter, and you will see the projected impact of trust fund transfers on the budget. In 2004 it was about -192 billion. In 2005, it will be about -491 billion. We are talking about an additional negative impact on the budget of about 300 billion a year in ten years. That includes SS, Medicare, and federal retirement/medical trust funds. It is this number you must watch and this number that determines your future. You come up with that additional cash, or additional debt is sold to cover it.
Oh, and by the way - you will never see economists discussing how much in the hole we are to fund the retirement and medical care for federal government employees. But it is time to discuss that as well.
Comments:
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OK I am an airline pilot and have followed flight 327 as best as I can. I guess the best way to express it is the crew that operated that flight never thought there was any danger and I have not seen anything anywhere to make me think they missed something. I can honestly say I don't fear another 9/11 type event, but that a lot of that is simply because a lot of the passengers are watching just like Ms. Jacobsen was that day. As far as lawyers being available before talking to the FAA, any crew member that is willing to talk to them without a lawyer present should have their license immediately revoked for stupidity. That organization....
I have no information but I suspect (at least I hope, as that is where the problems really exist) the investigation is oriented to the events that occurred on the ground. I also think (hope) there is an effort to encourage involvement like Ms Jacobsen took, and that some of the actions are oriented towards making sure people understand their involvement is wanted.
I have no information but I suspect (at least I hope, as that is where the problems really exist) the investigation is oriented to the events that occurred on the ground. I also think (hope) there is an effort to encourage involvement like Ms Jacobsen took, and that some of the actions are oriented towards making sure people understand their involvement is wanted.
# posted by 
: 7:41 PM
: 7:41 PM
Owwwww! MoM, you make this SS thing sound so complicated and it's not. I got this explanation right from the horse's mouth:
From The White House News Releases (http://www.whitehouse.gov/news/releases/2005/02/20050204-13.html I finally get an answer I can relate to. This Social Security thing has been on my mind, both in terms of how it's going to work for me and more importantly, my children. I just needed it clarfied.Yesterday Bush was explaining it to some of his Florida constituency and now that I own a home in Florida, well... from His lips to my ears:
Q -- I don't really understand how is it the new plan is going to fix that problem?
THE PRESIDENT: Because the -- all which is on the table begins to address the big cost drivers. For example, how benefits are calculate, for example, is on the table; whether or not benefits rise based upon wage increases or price increases. There's a series of parts of the formula that are being considered. And when you couple that, those different cost drivers, affecting those -- changing those with personal accounts, the idea is to get what has been promised more likely to be -- or closer delivered to what has been promised.
Does that make any sense to you? It's kind of muddled. Look, there's a series of things that cause the -- like, for example, benefits are calculated based upon the increase of wages, as opposed to the increase of prices. Some have suggested that we calculate -- the benefits will rise based upon inflation, as opposed to wage increases. There is a reform that would help solve the red if that were put into effect. In other words, how fast benefits grow, how fast the promised benefits grow, if those -- if that growth is affected, it will help on the red.
Okay, better?
From The White House News Releases (http://www.whitehouse.gov/news/releases/2005/02/20050204-13.html I finally get an answer I can relate to. This Social Security thing has been on my mind, both in terms of how it's going to work for me and more importantly, my children. I just needed it clarfied.Yesterday Bush was explaining it to some of his Florida constituency and now that I own a home in Florida, well... from His lips to my ears:
Q -- I don't really understand how is it the new plan is going to fix that problem?
THE PRESIDENT: Because the -- all which is on the table begins to address the big cost drivers. For example, how benefits are calculate, for example, is on the table; whether or not benefits rise based upon wage increases or price increases. There's a series of parts of the formula that are being considered. And when you couple that, those different cost drivers, affecting those -- changing those with personal accounts, the idea is to get what has been promised more likely to be -- or closer delivered to what has been promised.
Does that make any sense to you? It's kind of muddled. Look, there's a series of things that cause the -- like, for example, benefits are calculated based upon the increase of wages, as opposed to the increase of prices. Some have suggested that we calculate -- the benefits will rise based upon inflation, as opposed to wage increases. There is a reform that would help solve the red if that were put into effect. In other words, how fast benefits grow, how fast the promised benefits grow, if those -- if that growth is affected, it will help on the red.
Okay, better?
# posted by : 7:56 PM
: 7:56 PM
I don't understand the Dems commitment to this sinking ship (Soc.Sec.). Even Pres. Clinton recognized it's pending doom. Like so much else, I think they are against Pres. Bushs' proposal simply because it was advanced by him. This partisanism is getting old. Notice they haven't come up with any alternatives?
Tommy,
I hope they are encouraging people watching too. The stuff about the visas having expired is not really that good. As to your thought (or hope), it is very rational, but I wonder if this isn't a form of CYA rather than public relations.
But I do agree that people need to be watching and alert.
Vicki, call me confused, but somehow I thought both the CBO and the SS/Medicare reports were clearer. I laughed at that citation. You can only call that a worthy dolt making an honest effort to communicate.
What he is suggesting is what we are probably going to do anyway, which is to change the calculation for SS benefits based on a different index. But it doesn't solve the problem. The real problem is still that we need to save for retirement.
Sure, we can cut people's social security benefits. But given that their medical premiums is going to rise sharply, that will leave the poorest older Americans in a terrible bind. They'll have much less left out of their check once they pay their premiums than they do now. We really need them to be getting higher benefits than now.
So we will still need to put money aside to supplement those benefits. Saving money will result in higher returns so it will help - but we still need to get extra money going into the system.
The only fair way to do this is to evaluate several plans looking at sample cases and then let the public decide. On average, people aren't stupid.
I hope they are encouraging people watching too. The stuff about the visas having expired is not really that good. As to your thought (or hope), it is very rational, but I wonder if this isn't a form of CYA rather than public relations.
But I do agree that people need to be watching and alert.
Vicki, call me confused, but somehow I thought both the CBO and the SS/Medicare reports were clearer. I laughed at that citation. You can only call that a worthy dolt making an honest effort to communicate.
What he is suggesting is what we are probably going to do anyway, which is to change the calculation for SS benefits based on a different index. But it doesn't solve the problem. The real problem is still that we need to save for retirement.
Sure, we can cut people's social security benefits. But given that their medical premiums is going to rise sharply, that will leave the poorest older Americans in a terrible bind. They'll have much less left out of their check once they pay their premiums than they do now. We really need them to be getting higher benefits than now.
So we will still need to put money aside to supplement those benefits. Saving money will result in higher returns so it will help - but we still need to get extra money going into the system.
The only fair way to do this is to evaluate several plans looking at sample cases and then let the public decide. On average, people aren't stupid.
ljimcinnis,
I sure do. But there are Democrats who do recognize the problem. It seems to be the current leadership that is intent on denying it.
I sure do. But there are Democrats who do recognize the problem. It seems to be the current leadership that is intent on denying it.
Thanks for the plug, Mama.
What has always struck me about Annie Jacobson's story is how liberals/leftists go out of their way in attempts to 'discredit' her story. They still don't get it regarding terrorism. It has also convinced me that Snopes is completely worthless.
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What has always struck me about Annie Jacobson's story is how liberals/leftists go out of their way in attempts to 'discredit' her story. They still don't get it regarding terrorism. It has also convinced me that Snopes is completely worthless.
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