Wednesday, June 29, 2011
And We Don't Have Two Election Cycles
We can't implement the provisions of the health care reform act - we don't have the money to do it, and if we were to try to cut Medicare reimbursements as scheduled, most non-wealthy Medicare recipients would have increasing difficulties getting access to health care. No one at the CBO is willing to use the official plan as a basis for economic forecasts, because it is nonsense. Holtz-Eakin isn't alone in this.
The states don't have the money to spend on their portion of Medicaid, which is the chief mechanism for covering more people under the act. The private sector doesn't have the money to spend on insurance, so the public subsidy is scheduled to be much higher than theorized.
And even if it weren't for health care reform, the pressure of the retirement crunch is just beginning to build and is going to place so much stress on state and local governments that massive changes are necessary there. The only way to balance the budget is through mechanisms like President Obama's reform commission came up with, and there a large part of the contribution comes from a rise in middle-class taxation.
One of our worst problems is the green energy drive. For the most part, the strategy is not just a failure but a remarkable failure that will undercut the global trends which would tend to support a slow resurgence of US manufacturing.
Much of our federal deficit problem over the long term derives from a vast expansion of federal spending on health care. CBO blog post on the issue:
1) ...if the government’s programs and activities are maintained in their current form, spending for everything other than interest will rise to between 23 percent and 25 percent of GDP in 2035, compared with an average of 18.6 percent of GDP experienced over the past 40 years.
2) ... if current laws remained in place, spending on the major mandatory health care programs (Medicare, Medicaid, the Children’s Health Insurance Program, and the health insurance subsidies that will be provided through insurance exchanges) alone would grow from less than 6 percent of GDP today to about 9 percent in 2035 and would continue to increase thereafter.
3) Social Security and the major mandatory health care programs already account for about 46 percent of federal noninterest spending. Under current laws, that percentage will grow to nearly 60 percent by 2021 and to 67 percent by 2035, CBO projects.
You can't fool much with Social Security payments, because most Social Security recipients get very modest Social Security checks already, and reforms to CPI calculations have tended rather to diminish the real benefit over time. So the reform has to be to health benefits.
In another post, CBO addresses the long-term forecast by substituting their own more realistic assumptions on health care payments rather than the faked-up Pelosi deal:
The unthinkable has happened in NJ, because NJ had to reform. The unthinkable had better happen at the federal level very quickly.
Nonsense. Increase eligibility age by 3 months per year (or whatever it takes to stay strictly *ahead* of increases in lifespan by at least a month or two per year)... forever. By 2035 the eligibility age would be increased by 6 years.
Isn't it plain that a great deal of the problem is the insistence that government can take care of the "unlucky" and that we should no longer use fossil fuels. A rather arrogant attitude that our wealth is inexhaustible and nothing we can do will exhaust it.
There is a new report out about the collapse of the USSR in 1991. The surprise to many so-called wise soviet observers was how unexpected it was and how quickly it happened. Since 1997 I have gained more familiarity with Russia and the Russian economy through being in Russia, knowing missionaries who are in Russia, and quite a lot of reading on the subject. Based on that knowledge, my question is, "How could anyone have expected any other result?"
Russia and the former USSR are/were potentially the most prosperous countries in the world. They have everything in the way of natural resources, agriculurural lands, and hardy, hard-working people. The missing ingredients: A reasonably honest representative government and the right to own private property backed by courts. They had a corrupt government that was authoritarian and the state owned everything. We now know (at least I hope most people know) this is a prescription for economic failure.
Theoretically they should be doing better now, but they're not. They still have a corrupt, authoritarian governmment and now the oligarchs own everything. I predict they will remain in near poverty as long as things stay the same.
Read about the collapse here:
Why do I belabor this issue? Because I am wondering if the collapse here may be less like the stuttering, slow death of Argentina and more like the "unexpected" collapse of the USSR. Naw, never happen here, would it?
Delaying retirement means greatly increased disability retirements, or greatly expanded early retirements at a much lower level of benefits, which often will qualify the beneficiary for more in the way of other social benefits than the foregone SS money.
You can't save money that way.
Currently full retirement age is 67 (not for some of the people retiring now, but it starts for people who are around 50 now). Most people will not be able to work full time until then and will take early retirement by a few years.
If you really believe that most people will be able to work 40 hours a week until about 73, you're nuts. That's not the way it would work. If you kept early retirement at 63, then many would go out on disability before then, but more would go out on early retirement by 65/66. And because their benefits would be reduced, most would be eligible for food stamps, Medicaid, etc.
If you delay early retirement until say 66, then you get a bunch of disability retirements at higher levels of income plus early Medicare. That's far more expensive.
What happens is that stress tells much more sharply on older bodies, so many people who would be pretty healthy if they retired early would develop severe conditions from trying to work, so they wouldn't be working.
There is no end to the lunacy.
That is not caused by "biological reality" -- that is just more government wealth distribution nonsense. In *ADDITION* to phasing out SS as I prescribed, phase out those others too. NO MORE THEFT!
"If you really believe that most people will be able to work 40 hours a week until about 73, you're nuts."
What I believe is that people should retire on their own savings (or via private insurance plans). They should not be relying on the THEFT of the fruits of my or anyone else's labor.
In case you don't get it (which would mean you ignored the word "forever" in my first post), my suggestion is *NOT* a way to "save" SS, it is a plan to phase it out entirely. Those that can't or prefer not to work would have to bridge the ever-increasing time between when they stop working and when they tell the gov "OK, I'm retired now please start stealing for me" by their own means.
"And because their benefits would be reduced, most would be eligible for food stamps, Medicaid, etc."
Bla, bla, bla. Phase out all of the theft. PERIOD.
"If you delay early retirement until say 66, then you get a bunch of disability retirements at higher levels of income plus early Medicare. That's far more expensive."
All this "I'm entitled to your money" aka "you are my slave" crap is hosing our economy up N ways to Sunday. Oh, and there's that whole thing about it being THEFT. End it!
"And Foo, the health care reform idiocy has placed even greater incentives for early retirement on older workers."
I want ALL wealth transfer/theft systems to be ended. You don't need to convince me that Obamacare is a ridiculously bad idea!
The real question here is why you think all of these OTHER ridiculously bad ideas are good. Why is theft good? How can it EVER be good? Why is it OK for the majority to enslave the minority? If 2 guys approach you and the 3 of you have a vote and the outcome is that the 2 guys will relieve you of all your cash, is that OK because majority wins? Do you even believe in rights?
Life, liberty and the pursuit of happiness. (Well, not the first two -- we own you and you'll do what we want. Surely that will help immensely with the happiness part.)
That was my story. I was one of the "lucky" ones. Reached retirement with a decent pension and a retirement nest egg to boot. Real estate, stocks and bonds had, for the most part, multipied my savings. There were lots of ups and downs along the way, though nothing like we have seen in the last ten years. (Though the 70s were not good years for investors either.) My first job out of college was in 1954. 39 years later I was retired. That was 18 years ago and since I retired my old company went bankrupt and dumped their pension on PBGC. Yes, my pension was reduced. They also dumped retiree healthcare, so now I'm on Medicare. S**t happens to everyone, but I still feel fortunate because I was able to save and invest enough that the setbacks are not going to put me in the street. I have former co-workers who have not been as fortunate. We have a retiree organization that takes up collections and helps those that we can. The Social Security I get helps, but is not my main source of funds. I expect to pay even more tax on it or lose it entirely in the not too distant future. I knew things were not going to go well for SS when LBJ took the money out of the special fund that once existed and mixed it in with the all government revenues. I have never voted for a democrat because I have never believed they knew how to handle money. In recent years Repubs have joined them, unfortunately. But I have tried to be engaged and vote for fiscally sane government. It hasn't worked very well
Anyway, I have a daughter who is 43, who has her own business. She is living well, but she will never be able to put away the kind of money I did and her 401ks are in bad shape from the last ten years of crappy stock market returns. It pains me to realize that she will struggle to retire. Fortunately, her busines does not require long hours on her feet and she can probably continue to work into her 70s if she can stand the mental stress. She is probably better off than many people her age, but I wonder how many people in her age group who have paid into SS will ever get a dime of it.
The days when most people could do what I have done - retire comfortably - are slipping away. But that needn't be the case if we become a country that pursues the creation of wealth in every avenue possible. That, of course, requires a government that crafts policies to get out of the way. We don't have that now.
to be left alone
to live in peace
as I still breathe
as vultures peck
only endless hunger
for others' lives
soon there will be
nowhere to turn
but on each other
they will wonder
whence this injustice came
even then not realizing
it is they
Both history and that unknown G_d say that no society survives without charity.
But I think your basic point is well-taken. We have created a situation in which we converted charity to a "right", which is not of course a right, because it cannot be delivered. So we have a created a situation in which everyone will feel ill-used, and then politicians (both parties) run around roiling up those feelings for temporary advantage.
No one has the right to assets another uses to produce goods. Such a right would be a right that destroys the future. And charity may be both a moral and a historical necessity, but the allocation to charity historically has been from surplus.
In short, if people bothered to read the Old Testament they'd have a more workable foundation. When tithing is defined as one-tenth of one's increase, it's clear that the definition always leaves the farmer enough stock or seed to have an even greater increase the following year.
That is workable, because the poor will do better and the producer will always have an incentive to create those greater crops.
Now we have replaced that with the bald assertion that we should just take money away from rich people because they "have too much". The necessary results should be clear to everyone with half a brain - future surpluses will be less, and those who need charity will get less.
Half the problem with home values is the massive escalation in property taxes in many areas - the taxation rates are too high for people to be able to live in the houses once they have paid off the mortgages. And we don't realize that!!!!
Our problems are self-inflicted to an astonishing degree.
Foo, there is no such thing as a property right when people are starving. Thus the necessity for charity. But the socialist state has failed - European societies are facing the same problems as we are. A redistributionist culture is, it seems, apparently inherently unstable. Rome failed when it became a bread line. If we do not retreat from our current position we too will fail.
You either have property rights, or you do not. You cannot have property rights only some of the time, otherwise the exemptions will grow and grow until there are no property rights. (and those exemptions may not be generally agreed upon, either).
Having said that, the tithing from the OT was laid upon people as a duty by the organization of that day. I personally would have no problem with tithing to the organization of our day (government) *if* they confined themselves to 10% of my gross income, and *if* they refrained from using that money to enrich themselves, their hangers-on, and also refrained from using it to bribe their constituency. And that doesn't even take into account the creation of new redistributive programs to soak up all the extra taxation instead of paying down debt or securing SS.
Since they don't refrain from these things, and don't restrain themselves in the amounts that they take, taxation has become unjust.
I personally am now working just enough to pay for my family's needs, and no more, since I would lose too much to taxes. Let's see how many of Gen X, Y and Z do the same thing rather than go out of their way to support the greedy boomers who have caused all this mess. Boomers can outvote our generations by sheer force of their numbers, true, but they can't make us produce a surplus to fund what they are voting for.
Even if they are ABLE, the market generally won't employ them anyway. Few startups will hire people in their 60's unless they have highly specialized skills. I know people in their late 50's right now who keep getting offered buy-outs and after consideration they won't take the offer - the buyout sum will last them 3 years at best but they won't be able to collect retirement money for 8 years. Push that out to 13 years and the buyout offer would get laughed at - where is a 58 year old store manager going to get work at even half his present compensation?
People would gladly do that except that the Fed/Treasury/Congress steal the savings via devaluation of the dollar (inflation). Not to mention increased property taxes which don't stop once one retires. Sell the house? HA! There's another nest egg whittled away.
The Enemy is NOT freeloading retirees.
No one has a right to the assets of another, PERIOD.
You could come up with all manner of wealth transfer/theft systems that might be less onerous and more preferable to what we have now. But that would not make any of them right. People like myself may go along with and even push for such changes -- but only as a step in the right direction and not as a final solution. (E.g., throw in sound money and that 10% cap on taxation sounds about an order of magnitude better than what we have now. Of course, without the sound money part a 10% cap on taxation would almost certainly mean eventual hyperinflation via debt expansion and total loss of confidence in the dollar.)
"I personally am now working just enough to pay for my family's needs, and no more, since I would lose too much to taxes. Let's see how many of Gen X, Y and Z do the same thing rather than go out of their way to support the greedy boomers who have caused all this mess."
I've been in "go slow" mode for quite a while now. I'm not going to respond to being used as a slave by being "a good little slave". In the words of Captain Malcolm Reynolds: I aim to misbehave.
And it's important to ask the question: Why not?
Could it have something to do with the effectively government-mandated transfer of power whereby health insurance is taxed if you buy it but not taxed if your employer buys it, so most employers end up providing it (and under a group plan where everyone must participate), and old people will push up their rates?
Could it have something to do with the government-mandated unemployment "insurance" program where if they end up having to let them go they will see their rates go up?
Could it have something to do with that if they're a little slower in their old age and not quite worth minimum wage to the employer the government won't let them pay any less and thereby makes some people unemployable?
There are some valid business reasons to avoid people near end-of-work-life (e.g., if you have an otherwise low turn-over rate and expensive training requirements and will therefore get less return on your training investment if the person is not around long enough). But government seems to be doing its part to help make sure older people have even less employment opportunities.
(Anyways, this is kind of OT because the real issue is whether or not people have the right to steal, and I don't think the "nobody wants them" argument changes the answer to that question.)
"People would gladly do that except that the Fed/Treasury/Congress steal the savings via devaluation of the dollar (inflation)."
And I am against ALL of the theft. End it ALL. (I have posted here plenty of times on the evil of inflation and the fed!)
It may be desirable to impose ordering and gradual phase-outs on this process in order to avoid excessive disruption, but the process has to start and has to make reasonable progress. Otherwise it is CLEAR that there is no intent to EVER end the theft. And you can't just blame the government and let the voters off the hook -- many voters vote the way they do because they WANT the theft to continue -- at least they want THEIR theft to continue. They often blithely ignore the rest of the theft because to look at it too closely, to be too critical of other theft might force them to consciously acknowledge that their own theft is ALSO wrong.
"Not to mention increased property taxes which don't stop once one retires."
If you don't like your local tax system, I suggest you take it up with your local government. That local taxes may be unfair/excessive/wasted/whatever in some county in WA is not a valid justification to steal from someone living in a completely different state -- the victim of that theft doesn't even have any representation in the county in question. You may recall that someone in history once proclaimed: No taxation without representation!
"The Enemy is NOT freeloading retirees."
People who condone theft, who call out for the continuation of theft rather than its end, each and every one of them has CHOSEN to be an enemy of liberty and therefore my enemy.
If their speech and actions are directed towards getting rid of the fed, returning to sound money and stopping the theft that is inflation, so that we can then get on with phasing-out the theft that is SS, that is one thing. But if they want SS to continue regardless, or if they collect SS and take no action to stop the theft, then they are simply a willing thief.
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