http://www.alternet.org/story/145725/obama_pick_for_budget_commission_is_a_very_ominous_sign%3B_a_social_security-medicare_slasher
Obama Pick for Budget Commission Is a Very Ominous Sign; A Social Security-Medicare Slasher
By Roger Hickey, Blog for Our Future
February 19, 2010
http://www.alternet.org/story/145725/
On Thursday, President Obama signed an executive order creating a National Commission on Fiscal Responsibility and Reform.
This commission is based on an idea promoted by two Senators, Kent Conrad (D-N.D.) and Judd Gregg (R-N.H.). Senate Finance Committee Chairman Max Baucus warned that the Conrad-Gregg legislative version of the deficit commission would have “painted a big red target on Social Security and Medicare. That's what this commission is all about. It's a big roll of the dice for Social Security and Medicare."
President Obama pushed to get the Senate to pass the Conrad-Gregg commission, which would have required the Congress to vote on its budget-cutting recommendations in a “fast-track,” undemocratic up-or-down vote with no amendments and little opportunity for debate. Senate Republicans, some of whom sponsored the legislation, refused to vote for it – so Obama is doing something similar by executive order.
So what should the 60 organizations and many concerned citizens who opposed the Conrad-Gregg version of this commission (because they heeded Sen. Baucus’s warnings) think about the Obama version?
One very bad sign: The President announced that the Republican co-chair of this bipartisan commission would be former Senator Alan Simpson, who hated defenders of Social Security and Medicare so much that he tried as Senator to attack and intimidate AARP, holding hearings that could have affected the senior groups tax status. A May 4, 1995 AP story reported then-Representative (now Senator) Ron Wyden called Simpson’s behavior “'classic scapegoating' and said Simpson is trying to cover up Republican efforts to cut Medicare by discrediting AARP.”
Bill Scher's post yesterday about the Simpson pick refreshes our memories about the aggressive role that then-Senator Simpson played in pushing for cuts to Social Security -- and attacking AARP. All over Washington today organizations that care about the elderly are warning that this commission could easily turn into a "runaway train" that could do great damage to Social Security and Medicare. The appointment of Alan Simpson gives no relief to those concerns.
Now before I get pegged as a liberal who doesn’t care about the fiscal health of my nation, let me make it clear that I am in favor of getting the deficit under control. As many recent studies have shown, that deficit (and resulting debt) are due to the profligate tax cuts for the wealthy under George Bush, the Medicare Part D program and two wars that were launched with no worry about paying for them. And the massive recession has hit tax revenues while requiring that Obama launch a crucial stimulus program that kept the world from plunging into a second Great Depression.
Yesterday, President Obama reiterated how important that stimulus spending has been. And he made the case for spending more money (without balancing it with program cuts or tax increases) to get unemployment down and jobs growing again. One problem is that premature focus on deficits chokes off economic recovery.
So, things to worry about: the Obama Commission takes up the Simpson and general conservative fixation on cutting Social Security and Medicare – even though Social Security is now paying for itself and providing extra funds to finance the deficit. Even though the Obama administration is rightly trying to reform the whole health care system which is driving Medicare costs – and they are working to reform Medicare without cutting benefits – conservatives like Simpson want to slash benefits.
Progressives who agree that the deficit is a long-term problem can and must make the case for protecting and improving Social Security and Medicare benefits, while demanding that the nation and this Obama commission focus on reforming the health care system.
There is another job progressives need to take up: defending the original Obama vision for expanded public investment to make the economy prosper for everyone, including unemployed workers.
Here’s the big danger: the Obama deficit commission could find enough budget cuts and revenue just to get the deficit down to their 3 percent of GDP target over time. But that would leave nothing for the Obama investment agenda. Despite Obama's campaign rhetoric, it is pretty clear that this deficit commission will prioritize any new revenues and spending cuts for deficit reduction.
We need to make the case for that more expansive strategy: finding the appropriate revenues (and defense cuts) to both reduce the deficit and expand the investments in good, green jobs, public infrastructure, job training and the next generation of energy-efficient technologies that candidate Obama talked about so eloquently on the campaign trail.
So if we want them to protect and strengthen Social Security and Medicare and expand public investment to build a productive economy, we are going to need a collective effort to make the case very forcefully.
Is President Obama on our side in this effort?
Yesterday, he went beyond defending the stimulus, to remind Americans of his original vision for the economy.
Progressives, read this presidential speech and get to work fighting for THIS vision of a federal budget that works:
We knew when we came into office that it wasn't enough simply to solve the immediate crisis before us. We knew that even before the crisis hit, we had come through what some people are calling the "lost decade" -– a period where there was barely any job growth, and where the income of the average American household declined. This is before the recession, over the course of the decade, the average American household, they saw their incomes decline even as the cost of health care and college tuition were skyrocketing, had reached record highs. The prosperity was built on little more than a housing bubble and on financial speculation -- people maxing out on their credit cards, taking out home equity loans.
We can't go back to that kind of economy. That's not where the jobs are. The jobs of the 21st century are in areas like clean energy and technology, advanced manufacturing, new infrastructure. That kind of economy requires us to consume less and produce more; to import less and export more. Instead of sending jobs overseas, we need to send more products overseas that are made by American workers and American business. And we need to train our workers for those jobs with new skills and a world-class education.
Other countries already realize this. They're putting more emphasis on math and science. They're building high-speed railroads and expanding broadband. They're making serious investments in clean energy because they want those jobs.
And America cannot stand still in the face of this challenge. We can't afford to put our future on hold. So that's why a big part of the Recovery Act has been about investing in that future. Yes, it created jobs now. Yes, it created business opportunities now. But more importantly, it's laying the foundation for where we need to go.
So instead of just pouring more money into America's schools, regardless of their performance, we launched a national competition between states that only rewards success and reform -- reform that raises student achievement, and inspires students to excel in math and science, and turns around failing schools -- failing schools that steal the future of too many young Americans.
We're also making sure that our nation has an infrastructure that's built to compete in the 21st century. So we now have projects in 31 states that are laying the ground for the first high-speed rail network in the United States of America. I mean, for years, Japan and Europe have had high-speed rail. China has got about 40 times as many projects that have been going on, on this front. We're playing catch-up; we shouldn't be.
The Recovery Act has made possible over 12,500 transportation construction projects, from rebuilding highways to improving our airports. And today we announced funding for over 50 innovative transportation projects across America –- everything from railroads in Appalachia to a new passenger terminal in New Orleans.
These projects will put hundreds of thousands of Americans to work. And in many cases, they already have. That's part of the reason that Chuck is here today -- he's the president of a construction company in Pennsylvania, and the Recovery Act will fund about a third of the work his paving company will do this year. That's allowed him to hire two engineers and about a hundred employees. So in case people are wondering whether or not the Recovery Act has created jobs and opportunity for businesses, talk to Chuck. (Laughter.)
The new equipment he's ordered to help pave these roads will save an additional 40 jobs on an assembly line out in California. These are well-paying, long-lasting, private sector jobs that wouldn't be possible without the Recovery Act. They’ll be doing the work that America needs done to stay competitive in a global economy.
In no area is this more important than in energy. Because of the Recovery Act, we have finally jumpstarted the clean energy industry in America, and made possible 200,000 jobs in the clean energy and construction sectors.
Just take one example: Consider the investment that we've made in the kind of batteries used in hybrid and electric cars. You've heard about these, right? Before the Recovery Act was signed, 98 percent of the world's advanced battery production was done in Asian countries. The United States did less than 2 percent of this advanced battery manufacturing that's going to be the key to these high-mileage, low-emission cars.
Then we invested in new research and battery technologies, and supported the construction of 20 battery factories that will employ tens of thousands of Americans -– batteries that can make enough -- factories that can make enough batteries each year to power half a million plug-in hybrid vehicles. So as a result, next year -- next year, two years after the Recovery Act -- the United States will have the capacity to produce nearly 20 percent of the world's advanced batteries -- from less than 2 percent to 20 percent. And we’ll be able to make 40 percent of these advanced batteries by 2015 -- an entire new industry because of the Recovery Act.
This kind of progress is happening throughout our clean energy sector. Yesterday I announced loan guarantees to break ground on America's first new nuclear power plant in nearly three decades -– a plant that will create thousands of construction jobs and 800 permanent jobs in years to come. There's the manufacturer in Philadelphia who makes energy-efficient windows. He used to be skeptical about the Recovery Act until he had to add two more shifts just to keep up with the new business it's created.
And Blake at Namaste Solar -- it's based in Boulder, Colorado. One year ago, Blake gave us a tour of one of his company's solar installations, on top of a museum in Denver, right before I signed the Recovery Act into law. And at the time, Blake was pretty sure that the recession would force him to lay off about half of his staff. One year later, because of the clean energy investments in the Recovery Act, he has instead added about a dozen new workers, and expects to hire about a dozen more by year's end. His company continues to install solar panels all over Colorado, from the Governor's Mansion to the Denver Museum of Natural -- Nature and Science.
So that's our future. That's what's possible in America. You can argue, rightly, that we haven't made as much progress as we need to make when it comes to spurring job creation. That's part of the reason why the Recovery Act is on track to save or create another 1.5 million jobs in 2010. That's part of the reason why I expect Congress to pass additional measures as quickly as possible that will help our small business owners create new jobs; give them more of an incentive to hire.
But for those skeptics who refuse to believe the Recovery Act has done any good, who continue to insist that the bill didn't work, I'd ask you to take that argument up with Blake and his employees. Take that argument up with Chuck and his construction workers. Take it up with the Americans who are working in those battery plants, or building those new highways, or teaching our children new skills -- all because the Recovery Act made it possible.
So our work is far from over, but we have rescued this economy from the worst of this crisis. And slowly, in new factories and research facilities and small businesses, the American people are rebuilding a better future. And we will continue to support their efforts. We will leave our children an economy that is stronger and more prosperous than it was before.
Roger Hickey is co-director of the Campaign for America's Future and leads its Social Security campaign. He is also co-author of "The Next Agenda Blueprint for a New Progressive Movement."
Saturday, February 27, 2010
Friday, February 26, 2010
Why Growing Numbers of Baby Boomers and the Elderly Are Smoking Pot
By Daniela Perdomo, AlterNet
February 26, 2010
http://www.alternet.org/story/145808/
Earlier this week, an AP wire article picked up a lot of buzz in the news-cycle, with a title and premise meant to shock the mainstream: "Marijuana Use by Seniors Goes up as Boomers Age." The article played on the conventional wisdom that as younger generations slowly replace the old, conservative social traditions are jettisoned. This may be true for issues such as gay marriage, where there are clear divisions among younger and older voters, but when it comes to marijuana reform, the evidence indicates that simplistic divisions of opinion along age lines don't apply for pot.
The AP article was pegged to a December report released by the Federal Substance Abuse and Mental Health Services Administration (SAMHSA). It revealed that the number of Americans over 50 who had reported consuming cannabis in the year prior to the study had gone up from 1.9 percent to 2.9 percent in the period from 2002 to 2008.
This is supported by earlier polling results. In February 2009, a Zogby poll found that voters aged 50 to 64 were almost equally divided in their support for marijuana legalization at 48 percent. In that same poll, young voters aged 18 to 29 were the cohort who most enthusiastically supported legalization, at 55 percent. But overall support among all ages came in at 44 percent.
So who brought the average down? Don't lay the blame on the elderly. In fact, as early as 2004, an AARP poll found that 72 percent of its members (all 50-plus, with the lion's share over 65) supported marijuana for medical purposes, indicating their understanding of the benefits of legal cannabis availability.
Some expert observers in the marijuana reform movement believe that the bulk of marijuana detractors are made up of 30- and 40-somethings -- adults of parenting age. And as more of the 65-and-over crowd is populated by Baby Boomers, it appears that in the not-too-distant future every age demographic including the elderly will approve of marijuana reform more than Americans in their 30s and 40s.
"These are people who have had children, and whether they used marijuana in the past or not, they've become very concerned that young children will have access to it," says Paul Armentano, deputy national director of National Organization for the Reform of Marijuana Laws (NORML). "They've been swayed by prohibition and are leery of the option to end it, even though controlling and regulating marijuana would provide less access to children."
In the breakdown of the 2009 Zogby poll -- which NORML allowed AlterNet to review -- 38.7 percent of respondents 65 and older approved of taxing and regulating marijuana for adults. A low number, but compare it to the group aged 30 to 49, who approved it at 38.2 percent. Nearly the same, but still lower. And it ought be noted that in an earlier Zogby poll, commissioned by NORML in 2006, 30-49 year-olds stood out even more starkly, opposing marijuana legalization at 58 percent, while the 65-plus crowd opposed it at 52 percent; approximately two-thirds of the young adult and boomer cohorts approved.
And just as children are the reason many younger parents are against marijuana reform, offspring (or the lack thereof) may also be behind why greater numbers of aging Boomers are embracing marijuana -- most or all of theirs have left the nest.
This makes sense to George Rohrbacher, a 61-year-old cattle rancher in Eastern Washington state who smokes weed every day. When his kids -- now 25 to 35 -- were growing up, marijuana was something he had to keep a secret.
"Children under 18 don't need to be high on anything other than life," Rohrbacher says. His wife Ann espouses the same belief and quit marijuana just before 1976, when they had their first child. She later became a school superintendent.
Although Rohrbacher didn't give up the herb except for small stretches of time -- such as when he served in the Washington state senate -- it wasn't something he shared with his kids. "I didn't want them to have to defend me in the DARE program at school," he says. "But when my youngest son was 19 and off to college, I went from completely undercover to the opposite of that."
An advocate for marijuana legalization today, Rohrbacher speaks to many Baby Boomers who, like his wife, gave up pot. "Due to career choices, family-raising choices, they've not imbibed in years and they tell me they can't wait until they get to that spot in their career or family lives when they can go back to smoking pot," he says.
SAMHSA's study showed that past year marijuana use among those aged 55 to 59 tripled from 1.6 percent in 2002 to 5.1 percent in 2008. Nearly 9 percent of men aged 50 to 54 admitted to using marijuana in the past year, bringing that demographic's level of cannabis use to nearly the same 10 percent rate that the general U.S. population is estimated to consume pot. While SAMHSA has jumped to the alarm on this trend, suggesting that "by the year 2020, the number of persons needing treatment for a substance abuse disorder will double among persons aged 50 or older," the reality of the matter is that may more realistically apply to aging Americans who use harder drugs like cocaine or meth -- not cannabis consumers.
Boomers' enthusiasm for weed is likely due to their being the first generation to experience widespread marijuana use in their youth. Nearly everyone smoked it or knew someone who did. And if what Rohrbacher has observed is true, many of them gave it up not because they didn't like it anymore, but because they felt it might interfere in their efforts to raise families and maintain jobs where drug testing is a concern. After all, legal and salary ramifications are much more significant once you have a family to raise and support.
And as the nation's 78 million Boomers go grayer, they will go also return to pot to soften the pains of aging. "I played a lot of sports when I was younger and I have aches now -- plain old aches from sleeping wrong or doing something wrong -- and those aches are as bad as various moments on the football field years ago," Rohrbacher said. "And I'd rather smoke marijuana than reach for a pharmaceutical."
Rohrbacher isn't alone. Though pharmaceuticals are marketed heavily to aging Americans, among all adults over 50 who admitted to using some kind of illegal substance in the previous year -- 4.3 million adults, or 5.7 percent of adults in that age range -- 44.9 percent admitted to using marijuana, compared to 33.4 percent who'd used prescription drugs for non-medical use.
And in addition to lessening the pain brought on by common ailments -- like joint pain and menopause -- one study found that cannabis might prevent osteoporosis in the elderly. (Interestingly, it might weaken bones in younger people.)
Americans, as a whole, are trending toward marijuana legalization. By mid-last year, a few polls showed that the taxing and regulating of cannabis had support from a majority of Americans for the first time ever. The majorities are slim, but they're majorities nonetheless.
And with an enormous aging population that is more accepting of pot legalization, that more clearly understands its benefits and the downsides to its prohibition, that majority may grow to be a decisive one in the public debate, even if today's -- and tomorrow's -- parents might be the last ones to be dragged on board.
Daniela Perdomo is a staff writer and editor at AlterNet. Follow her on Twitter. Write her at danielaalternet [at] gmail [dot] com.
© 2010 Independent Media Institute. All rights reserved.
View this story online at: http://www.alternet.org/story/145808/
February 26, 2010
http://www.alternet.org/story/145808/
Earlier this week, an AP wire article picked up a lot of buzz in the news-cycle, with a title and premise meant to shock the mainstream: "Marijuana Use by Seniors Goes up as Boomers Age." The article played on the conventional wisdom that as younger generations slowly replace the old, conservative social traditions are jettisoned. This may be true for issues such as gay marriage, where there are clear divisions among younger and older voters, but when it comes to marijuana reform, the evidence indicates that simplistic divisions of opinion along age lines don't apply for pot.
The AP article was pegged to a December report released by the Federal Substance Abuse and Mental Health Services Administration (SAMHSA). It revealed that the number of Americans over 50 who had reported consuming cannabis in the year prior to the study had gone up from 1.9 percent to 2.9 percent in the period from 2002 to 2008.
This is supported by earlier polling results. In February 2009, a Zogby poll found that voters aged 50 to 64 were almost equally divided in their support for marijuana legalization at 48 percent. In that same poll, young voters aged 18 to 29 were the cohort who most enthusiastically supported legalization, at 55 percent. But overall support among all ages came in at 44 percent.
So who brought the average down? Don't lay the blame on the elderly. In fact, as early as 2004, an AARP poll found that 72 percent of its members (all 50-plus, with the lion's share over 65) supported marijuana for medical purposes, indicating their understanding of the benefits of legal cannabis availability.
Some expert observers in the marijuana reform movement believe that the bulk of marijuana detractors are made up of 30- and 40-somethings -- adults of parenting age. And as more of the 65-and-over crowd is populated by Baby Boomers, it appears that in the not-too-distant future every age demographic including the elderly will approve of marijuana reform more than Americans in their 30s and 40s.
"These are people who have had children, and whether they used marijuana in the past or not, they've become very concerned that young children will have access to it," says Paul Armentano, deputy national director of National Organization for the Reform of Marijuana Laws (NORML). "They've been swayed by prohibition and are leery of the option to end it, even though controlling and regulating marijuana would provide less access to children."
In the breakdown of the 2009 Zogby poll -- which NORML allowed AlterNet to review -- 38.7 percent of respondents 65 and older approved of taxing and regulating marijuana for adults. A low number, but compare it to the group aged 30 to 49, who approved it at 38.2 percent. Nearly the same, but still lower. And it ought be noted that in an earlier Zogby poll, commissioned by NORML in 2006, 30-49 year-olds stood out even more starkly, opposing marijuana legalization at 58 percent, while the 65-plus crowd opposed it at 52 percent; approximately two-thirds of the young adult and boomer cohorts approved.
And just as children are the reason many younger parents are against marijuana reform, offspring (or the lack thereof) may also be behind why greater numbers of aging Boomers are embracing marijuana -- most or all of theirs have left the nest.
This makes sense to George Rohrbacher, a 61-year-old cattle rancher in Eastern Washington state who smokes weed every day. When his kids -- now 25 to 35 -- were growing up, marijuana was something he had to keep a secret.
"Children under 18 don't need to be high on anything other than life," Rohrbacher says. His wife Ann espouses the same belief and quit marijuana just before 1976, when they had their first child. She later became a school superintendent.
Although Rohrbacher didn't give up the herb except for small stretches of time -- such as when he served in the Washington state senate -- it wasn't something he shared with his kids. "I didn't want them to have to defend me in the DARE program at school," he says. "But when my youngest son was 19 and off to college, I went from completely undercover to the opposite of that."
An advocate for marijuana legalization today, Rohrbacher speaks to many Baby Boomers who, like his wife, gave up pot. "Due to career choices, family-raising choices, they've not imbibed in years and they tell me they can't wait until they get to that spot in their career or family lives when they can go back to smoking pot," he says.
SAMHSA's study showed that past year marijuana use among those aged 55 to 59 tripled from 1.6 percent in 2002 to 5.1 percent in 2008. Nearly 9 percent of men aged 50 to 54 admitted to using marijuana in the past year, bringing that demographic's level of cannabis use to nearly the same 10 percent rate that the general U.S. population is estimated to consume pot. While SAMHSA has jumped to the alarm on this trend, suggesting that "by the year 2020, the number of persons needing treatment for a substance abuse disorder will double among persons aged 50 or older," the reality of the matter is that may more realistically apply to aging Americans who use harder drugs like cocaine or meth -- not cannabis consumers.
Boomers' enthusiasm for weed is likely due to their being the first generation to experience widespread marijuana use in their youth. Nearly everyone smoked it or knew someone who did. And if what Rohrbacher has observed is true, many of them gave it up not because they didn't like it anymore, but because they felt it might interfere in their efforts to raise families and maintain jobs where drug testing is a concern. After all, legal and salary ramifications are much more significant once you have a family to raise and support.
And as the nation's 78 million Boomers go grayer, they will go also return to pot to soften the pains of aging. "I played a lot of sports when I was younger and I have aches now -- plain old aches from sleeping wrong or doing something wrong -- and those aches are as bad as various moments on the football field years ago," Rohrbacher said. "And I'd rather smoke marijuana than reach for a pharmaceutical."
Rohrbacher isn't alone. Though pharmaceuticals are marketed heavily to aging Americans, among all adults over 50 who admitted to using some kind of illegal substance in the previous year -- 4.3 million adults, or 5.7 percent of adults in that age range -- 44.9 percent admitted to using marijuana, compared to 33.4 percent who'd used prescription drugs for non-medical use.
And in addition to lessening the pain brought on by common ailments -- like joint pain and menopause -- one study found that cannabis might prevent osteoporosis in the elderly. (Interestingly, it might weaken bones in younger people.)
Americans, as a whole, are trending toward marijuana legalization. By mid-last year, a few polls showed that the taxing and regulating of cannabis had support from a majority of Americans for the first time ever. The majorities are slim, but they're majorities nonetheless.
And with an enormous aging population that is more accepting of pot legalization, that more clearly understands its benefits and the downsides to its prohibition, that majority may grow to be a decisive one in the public debate, even if today's -- and tomorrow's -- parents might be the last ones to be dragged on board.
Daniela Perdomo is a staff writer and editor at AlterNet. Follow her on Twitter. Write her at danielaalternet [at] gmail [dot] com.
© 2010 Independent Media Institute. All rights reserved.
View this story online at: http://www.alternet.org/story/145808/
Saturday, February 20, 2010
Obama appoints panel to slash social programs
http://www.wsws.org/articles/2010/feb2010/pers-f19.shtml
19 February 2010
President Barack Obama’s establishment by executive order of a bipartisan commission on deficits on Thursday is the latest step in his administration’s attack on health care and retirement programs upon which millions of Americans depend.
The 18-member panel will propose measures to slash government spending on Medicare, Medicaid and Social Security. It will also consider a series of regressive taxes, including a consumption or value added tax, to force the working class to pay for the budget deficit. Its aim, according to the White House, will be to reduce the deficit from its current level of over 10 percent of gross domestic product to 3 percent by 2015.
Speaking on Thursday, Obama repeated a theme that has been a constant refrain of his administration—that partisan divisions between Democrats and Republicans are blocking the implementation of policies deemed necessary by the financial and corporate elite. “For far too long, Washington has avoided the tough choices necessary to solve our fiscal crisis,” he said.
“Everything is on the table,” he added.
Obama’s selection of the panel chairs—Republican Alan Simpson and Democrat Erskine Bowles—is an indication of the far-reaching attack that is being prepared.
As a senator from Wyoming between 1979 and 1997, Simpson served as the top Republican on the Senate Finance Committee’s Subcommittee on Social Security. He was among the most fervent advocates of cutting Social Security benefits by reducing their annual growth rate. His position was often to the right of Reagan administration, which he criticized for not moving quickly enough to cut social programs.
In an interview with the Washington Post on Tuesday, Simpson made clear his opposition to the very idea that retired workers should have guaranteed pension benefits. “How did we get to a point in America where you get to a certain age in life, regardless of net worth or income, and you’re ‘entitled’? The word itself is killing us.”
As chief of staff under Bill Clinton in 1997-1998, Erskine Bowles was involved in discussions between the White House and the Republican congressional leadership—particularly House Speaker Newt Gingrich—on budgetary issues. Toward the end of Clinton’s presidency, Bowles reportedly reached agreement with Gingrich on plans to partially privatize Social Security and increase the retirement age. These proposals were not implemented at the time, and Bowles left the White House declaring that the most important unresolved problem was “dealing with the long-term problems of Medicare and Social Security.”
Obama’s choice of Bowles is a deliberate affront to popular anger over bank bonuses. Bowles sits on the compensation committee of the board of directors of Morgan Stanley, one of the top Wall Street investment banks and a recipient of government bailout cash. Morgan Stanley recently paid out billions of dollars in 2009 bonuses to its top traders and executives.
The establishment of the commission further exposes what has been the central aim of Obama’s health care overhaul from the beginning—the imposition of major cuts in government spending through the reduction of health care services for tens of millions of Americans.
The Obama administration has been called on to carry out long-standing aims of the American ruling class. The economic crisis that erupted in September 2008 was seized on as an opportunity to implement an agenda of slashing so-called entitlement programs as part of a vast redistribution of wealth from working people to the financial elite. The coffers of the state have been opened for looting by the banks, to be paid for through the gutting of social programs.
In the run-up to the 2008 election, particularly after the eruption of the financial crisis in September of that year, a consensus emerged within the ruling class that Obama would be better able than his Republican opponent, John McCain, to implement major attacks on the working class. Well aware of popular hatred for Bush and a general discrediting of the Republicans, leading factions of the financial and corporate elite calculated that a Democrat and the first African-American president would be able to exploit popular illusions to politically disorient and disarm the population.
Obama, moreover, could count on various middle-class “left” organizations, which campaigned for his election largely on the basis of identity politics, to continue to promote him as a “progressive” proponent of social reform. It has not taken long for the cynicism of this operation to be exposed.
As part of his ever more open march to the right, Obama has expanded his calls for bipartisan compromise, a refrain of his administration from the outset. His incessant appeals for Republican support in the aftermath of the Democratic debacle in January’s Massachusetts Senate election reflect the ruling class consensus that the class-war measures being prepared can best be implemented by establishing a political framework based on the unity of major sections of the two big business parties.
In seeking Republican support, Obama has chided the opposition party for placing short-term political calculations over the need for united action to carry out “tough” policies.
The 2008 elections have been exposed as a complete fraud. Running on slogans of “hope” and “change,” and appealing to popular hatred of the Bush administration, Obama came to power to continue and expand the right-wing policies of his predecessor. The experience of the Obama administration has underscored the impossibility of defending the interests of working people and effecting any positive change within the framework of the two-party system.
The capitalist crisis that erupted in 2008 is far from over. Despite talk of a recovery, the restructuring of class relations has only begun, in the United States and internationally. The continuation of the capitalist system—the domination of the financial and corporate elite over all aspects of social and political life—means endless war and continual attacks on the working class, including on social programs once considered untouchable.
Popular opposition—outside of and directed against the existing political framework—is not only necessary, it is inevitable. The critical question is the development of socialist consciousness and the construction of a revolutionary leadership capable of uniting the working class and establishing its political independence from all sections of the ruling elite.
19 February 2010
President Barack Obama’s establishment by executive order of a bipartisan commission on deficits on Thursday is the latest step in his administration’s attack on health care and retirement programs upon which millions of Americans depend.
The 18-member panel will propose measures to slash government spending on Medicare, Medicaid and Social Security. It will also consider a series of regressive taxes, including a consumption or value added tax, to force the working class to pay for the budget deficit. Its aim, according to the White House, will be to reduce the deficit from its current level of over 10 percent of gross domestic product to 3 percent by 2015.
Speaking on Thursday, Obama repeated a theme that has been a constant refrain of his administration—that partisan divisions between Democrats and Republicans are blocking the implementation of policies deemed necessary by the financial and corporate elite. “For far too long, Washington has avoided the tough choices necessary to solve our fiscal crisis,” he said.
“Everything is on the table,” he added.
Obama’s selection of the panel chairs—Republican Alan Simpson and Democrat Erskine Bowles—is an indication of the far-reaching attack that is being prepared.
As a senator from Wyoming between 1979 and 1997, Simpson served as the top Republican on the Senate Finance Committee’s Subcommittee on Social Security. He was among the most fervent advocates of cutting Social Security benefits by reducing their annual growth rate. His position was often to the right of Reagan administration, which he criticized for not moving quickly enough to cut social programs.
In an interview with the Washington Post on Tuesday, Simpson made clear his opposition to the very idea that retired workers should have guaranteed pension benefits. “How did we get to a point in America where you get to a certain age in life, regardless of net worth or income, and you’re ‘entitled’? The word itself is killing us.”
As chief of staff under Bill Clinton in 1997-1998, Erskine Bowles was involved in discussions between the White House and the Republican congressional leadership—particularly House Speaker Newt Gingrich—on budgetary issues. Toward the end of Clinton’s presidency, Bowles reportedly reached agreement with Gingrich on plans to partially privatize Social Security and increase the retirement age. These proposals were not implemented at the time, and Bowles left the White House declaring that the most important unresolved problem was “dealing with the long-term problems of Medicare and Social Security.”
Obama’s choice of Bowles is a deliberate affront to popular anger over bank bonuses. Bowles sits on the compensation committee of the board of directors of Morgan Stanley, one of the top Wall Street investment banks and a recipient of government bailout cash. Morgan Stanley recently paid out billions of dollars in 2009 bonuses to its top traders and executives.
The establishment of the commission further exposes what has been the central aim of Obama’s health care overhaul from the beginning—the imposition of major cuts in government spending through the reduction of health care services for tens of millions of Americans.
The Obama administration has been called on to carry out long-standing aims of the American ruling class. The economic crisis that erupted in September 2008 was seized on as an opportunity to implement an agenda of slashing so-called entitlement programs as part of a vast redistribution of wealth from working people to the financial elite. The coffers of the state have been opened for looting by the banks, to be paid for through the gutting of social programs.
In the run-up to the 2008 election, particularly after the eruption of the financial crisis in September of that year, a consensus emerged within the ruling class that Obama would be better able than his Republican opponent, John McCain, to implement major attacks on the working class. Well aware of popular hatred for Bush and a general discrediting of the Republicans, leading factions of the financial and corporate elite calculated that a Democrat and the first African-American president would be able to exploit popular illusions to politically disorient and disarm the population.
Obama, moreover, could count on various middle-class “left” organizations, which campaigned for his election largely on the basis of identity politics, to continue to promote him as a “progressive” proponent of social reform. It has not taken long for the cynicism of this operation to be exposed.
As part of his ever more open march to the right, Obama has expanded his calls for bipartisan compromise, a refrain of his administration from the outset. His incessant appeals for Republican support in the aftermath of the Democratic debacle in January’s Massachusetts Senate election reflect the ruling class consensus that the class-war measures being prepared can best be implemented by establishing a political framework based on the unity of major sections of the two big business parties.
In seeking Republican support, Obama has chided the opposition party for placing short-term political calculations over the need for united action to carry out “tough” policies.
The 2008 elections have been exposed as a complete fraud. Running on slogans of “hope” and “change,” and appealing to popular hatred of the Bush administration, Obama came to power to continue and expand the right-wing policies of his predecessor. The experience of the Obama administration has underscored the impossibility of defending the interests of working people and effecting any positive change within the framework of the two-party system.
The capitalist crisis that erupted in 2008 is far from over. Despite talk of a recovery, the restructuring of class relations has only begun, in the United States and internationally. The continuation of the capitalist system—the domination of the financial and corporate elite over all aspects of social and political life—means endless war and continual attacks on the working class, including on social programs once considered untouchable.
Popular opposition—outside of and directed against the existing political framework—is not only necessary, it is inevitable. The critical question is the development of socialist consciousness and the construction of a revolutionary leadership capable of uniting the working class and establishing its political independence from all sections of the ruling elite.
US: States short $1 trillion to fund retiree benefits
http://money.cnn.com/2010/02/18/news/economy/public_pension_gap/
US: States short $1 trillion to fund retiree benefits
Tami Luhby
CNNMoney.com
Sat, 20 Feb 2010 20:00 EST
Just as they are contending with massive gaps in their operating budgets, states and localities must also deal with a $1 trillion deficit in public employees' retirement benefits' funds, a new report found.
The shortfall amounts to more than $8,800 for every household in the nation, according to the Pew Center on the States, which published its findings Thursday.
States largely got themselves into this mess by failing to make annual contributions while also enhancing benefits, the study found. Now, they are behind by a total $452 billion in their pension accounts and $555 billion in their retiree health funds, as of the end of fiscal 2008, which ended June 30 for most states.
The deficit is likely even more severe because the report did not take into account the crumbling of the stock market in the latter half of 2008. The typical pension plan lost 25% of its value in 2008.
States must find ways to make up these gaps because retiree benefits for public workers are largely guaranteed by union contract. And they are funded through contributions from both employees and state employers, as well as investment returns.
So when gaps appear, states must ask their residents to make up the difference, usually through property tax or income tax hikes.
"Ultimately, taxpayers could face higher taxes and cuts in services," said Stephen Fehr, one of the report's authors. "You can't ignore the problem. It's just going to be more serious budget trouble for states down the road."
To be sure, the bill isn't due all at once and no state is in danger of default. These benefits are paid out over decades. Still, the deficits must be addressed sooner than later or the gaps will simply balloon more.
In the most trouble
The consequences of the shortfall could be severe. It comes at a time when states are wrestling with a cumulative $180 billion budget gap for fiscal 2011.
Eight states are in the most dire shape, according to the Pew report. These include: Alaska, Colorado, Illinois, Kansas, Kentucky, Maryland, New Jersey and Oklahoma.
Two of these states -- Illinois and Kansas -- have less than 60% of the necessary assets on hand to meet their long-term pension obligations.
Only four states -- Florida, New York, Washington and Wisconsin -- had a fully funded system in 2008, down from just over half at the beginning of the decade.
Overall, state pension systems are 84% funded.
Many states have been lax about funding their pension systems, even during more prosperous times earlier this decade. Some 21 states failed to contribute at least 90% of the required amount during the past five years.
Retiree health care and other non-pension benefit accounts are in even worse condition. Only about 5% of their total liabilities are funded. States generally paying these bills as they come due, rather than setting aside money in advance.
Also, some states sweetened their retiree benefits during the 1990s and earlier this decade, reducing employee contributions or providing cost-of-living increases. But they didn't allocate money to pay for these changes.
What's being done
Recognizing the seriousness of the situation, states have begun to act. Fifteen states passed legislation reforming their pension systems in 2009 and 16 are looking at making changes this year.
Since it's tough to make changes to union contracts, most states apply the new rules to incoming employees only.
Several states, including Kentucky, Nevada, New Jersey, New York, Rhode Island and Texas, have reduced benefits offered to new employees or raised the retirement age. Some are also asking workers to contribute more to their pension accounts or retiree health benefits. And a few have created 401(k) style plans to go alongside their traditional pensions.
In Nevada, for instance, those hired in 2010 and beyond will have to wait until age 62 to retire, instead of age 60. They will also have a less generous funding formula: Their years of service will be multiplied by 2.5, rather than 2.67, to derive the percentage of salary being replaced by pension benefits.
In New York, new hires can't retire until age 62, instead of age 55, and they will have to work for 10 years instead of five.
"A growing number of policy makers recognize that their states' fiscal health depends on how well they manage the bill coming due for public sector retirement benefits," said Susan Urahn, the center's managing director. "We are seeing more and more states explore policy reforms aimed at putting their systems on stronger fiscal footing."
The study looked at 231 state-administered pension plans and 159 state-administered retiree health care and other non-pension benefit plans, which include some localities' and teacher plans.
US: States short $1 trillion to fund retiree benefits
Tami Luhby
CNNMoney.com
Sat, 20 Feb 2010 20:00 EST
Just as they are contending with massive gaps in their operating budgets, states and localities must also deal with a $1 trillion deficit in public employees' retirement benefits' funds, a new report found.
The shortfall amounts to more than $8,800 for every household in the nation, according to the Pew Center on the States, which published its findings Thursday.
States largely got themselves into this mess by failing to make annual contributions while also enhancing benefits, the study found. Now, they are behind by a total $452 billion in their pension accounts and $555 billion in their retiree health funds, as of the end of fiscal 2008, which ended June 30 for most states.
The deficit is likely even more severe because the report did not take into account the crumbling of the stock market in the latter half of 2008. The typical pension plan lost 25% of its value in 2008.
States must find ways to make up these gaps because retiree benefits for public workers are largely guaranteed by union contract. And they are funded through contributions from both employees and state employers, as well as investment returns.
So when gaps appear, states must ask their residents to make up the difference, usually through property tax or income tax hikes.
"Ultimately, taxpayers could face higher taxes and cuts in services," said Stephen Fehr, one of the report's authors. "You can't ignore the problem. It's just going to be more serious budget trouble for states down the road."
To be sure, the bill isn't due all at once and no state is in danger of default. These benefits are paid out over decades. Still, the deficits must be addressed sooner than later or the gaps will simply balloon more.
In the most trouble
The consequences of the shortfall could be severe. It comes at a time when states are wrestling with a cumulative $180 billion budget gap for fiscal 2011.
Eight states are in the most dire shape, according to the Pew report. These include: Alaska, Colorado, Illinois, Kansas, Kentucky, Maryland, New Jersey and Oklahoma.
Two of these states -- Illinois and Kansas -- have less than 60% of the necessary assets on hand to meet their long-term pension obligations.
Only four states -- Florida, New York, Washington and Wisconsin -- had a fully funded system in 2008, down from just over half at the beginning of the decade.
Overall, state pension systems are 84% funded.
Many states have been lax about funding their pension systems, even during more prosperous times earlier this decade. Some 21 states failed to contribute at least 90% of the required amount during the past five years.
Retiree health care and other non-pension benefit accounts are in even worse condition. Only about 5% of their total liabilities are funded. States generally paying these bills as they come due, rather than setting aside money in advance.
Also, some states sweetened their retiree benefits during the 1990s and earlier this decade, reducing employee contributions or providing cost-of-living increases. But they didn't allocate money to pay for these changes.
What's being done
Recognizing the seriousness of the situation, states have begun to act. Fifteen states passed legislation reforming their pension systems in 2009 and 16 are looking at making changes this year.
Since it's tough to make changes to union contracts, most states apply the new rules to incoming employees only.
Several states, including Kentucky, Nevada, New Jersey, New York, Rhode Island and Texas, have reduced benefits offered to new employees or raised the retirement age. Some are also asking workers to contribute more to their pension accounts or retiree health benefits. And a few have created 401(k) style plans to go alongside their traditional pensions.
In Nevada, for instance, those hired in 2010 and beyond will have to wait until age 62 to retire, instead of age 60. They will also have a less generous funding formula: Their years of service will be multiplied by 2.5, rather than 2.67, to derive the percentage of salary being replaced by pension benefits.
In New York, new hires can't retire until age 62, instead of age 55, and they will have to work for 10 years instead of five.
"A growing number of policy makers recognize that their states' fiscal health depends on how well they manage the bill coming due for public sector retirement benefits," said Susan Urahn, the center's managing director. "We are seeing more and more states explore policy reforms aimed at putting their systems on stronger fiscal footing."
The study looked at 231 state-administered pension plans and 159 state-administered retiree health care and other non-pension benefit plans, which include some localities' and teacher plans.
Social Security Will Fall To Obama Before The Taliban Do
http://www.opednews.com/articles/Social-Security-Will-Fall-by-Paul-Craig-Roberts-100218-425.html
February 18, 2010
Social Security Will Fall To Obama Before The Taliban Do
By Paul Craig Roberts
Hank Paulson, the Gold Sacks bankster/US Treasury Secretary, who deregulated the financial system, caused a world crisis that wrecked the prospects of foreign banks and governments, caused millions of Americans to lose retirement savings, homes, and jobs, and left taxpayers burdened with multi-trillions of dollars of new US debt, is still not in jail. He is writing in the New York Times urging that the mess he caused be fixed by taking away from working Americans the Social Security and Medicare for which they have paid in earmarked taxes all their working lives.
Wall Street's approach to the poor has always been to drive them deeper into the ground.
As there is no money to be made from the poor, Wall Street fleeces them by yanking away their entitlements. It has always been thus. During the Reagan administration, Wall Street decided to boost the values of its bond and stock portfolios by using Social Security revenues to lower budget deficits. Wall Street figured that lower deficits would mean lower interest rates and higher bond and stock prices.
Two Wall Street henchmen, Alan Greenspan and David Stockman, set up the Social Security raid in this way: The Carter administration had put Social Security in the black for the foreseeable future by establishing a schedule for future Social Security payroll tax increases. Greenspan and Stockman conspired to phase in the payroll tax increases earlier than was needed in order to gain surplus Social Security revenues that could be used to finance other government spending, thus reducing the budget deficit. They sold it to President Reagan as "putting Social Security on a sound basis."
Along the way Americans were told that the surplus revenues were going into a special Social Security trust fund at the U.S. Treasury. But what is in the fund is Treasury IOUs for the spent revenues. When the "trust funds" are needed to pay Social Security benefits, the Treasury will have to sell more debt in order to redeem the IOUs.
Social Security was mugged again during the Clinton administration when the Boskin Commission jimmied the Consumer Price Index in order to reduce the inflation adjustments that Social Security recipients receive, thus diverting money from Social Security retirees to other uses.
We constantly hear from Wall Street gangsters and from Republicans and an occasional Democrat that Social Security and Medicare are a form of welfare that we can't afford; an "unfunded liability." This is a lie. Social Security is funded with an earmarked tax. People pay for Social Security and Medicare all their working lives. It is a pay-as-you-go system in which the taxes paid by those working fund those who are retired.
Currently these systems are not in deficit. The problem is that government is using earmarked revenues for other purposes. Indeed, since the 1980s Social Security revenues have been used to fund general government. Today Social Security revenues are being used to fund trillion dollar bailouts for Wall Street and to fund the Bush/Obama wars of aggression against Muslims.
Having diverted Social Security revenues to war and Wall Street, Paulson says there is no alternative but to take the promised benefits away from those who have paid for them.
Republicans have extraordinary animosity toward the poor. In an effort to talk retirees out of their support systems, Republicans frequently describe Social Security as a Ponzi scheme and "unsustainable." They ought to know. The phony trust fund, which they set up to hide the fact that Wall Street and the Pentagon are running off with Social Security revenues, is a Ponzi scheme. Social Security itself has been with us since the 1930s and has yet to wreck our lives and budget. But it only took Hank Paulson's derivative Ponzi scheme and its bailout a few years to inflict irreparable damage on our lives and budget.
Years ago with stagflation defeated and a rising stock market, I favored privatizing Social Security as a way of creating a funded retirement system and producing greater savings and larger incomes for retirees. At that time Wall Street was interested, not for my reasons, but in order to collect the fees from managing the funds.
Had Social Security been privatized, I doubt that Wall Street would have been permitted to deregulate the financial system. Too much would have been at stake.
After the latest crisis brought on by Wall Street's dishonesty and greed, trusting Wall Street to manage anyone's old age pension requires a leap of faith that no intelligent person can make.
Wall Street has got away with its raid on the public treasury. Now, pockets full, it wants to pay for the heist by curtailing Social Security and Medicare. Having deprived the working population of homes, jobs, and health care, Wall Street is now after the elderly's old age security.
Social Security, formerly an untouchable "third rail of politics," is now "unsustainable," while the real unsustainables--a pre-1929 unregulated financial system and open-ended multi-trillion dollar Global War Against Terror--are the new untouchables. This transformation signals the complete capture of American democracy by an oligarchy of special interests.
February 18, 2010
Social Security Will Fall To Obama Before The Taliban Do
By Paul Craig Roberts
Hank Paulson, the Gold Sacks bankster/US Treasury Secretary, who deregulated the financial system, caused a world crisis that wrecked the prospects of foreign banks and governments, caused millions of Americans to lose retirement savings, homes, and jobs, and left taxpayers burdened with multi-trillions of dollars of new US debt, is still not in jail. He is writing in the New York Times urging that the mess he caused be fixed by taking away from working Americans the Social Security and Medicare for which they have paid in earmarked taxes all their working lives.
Wall Street's approach to the poor has always been to drive them deeper into the ground.
As there is no money to be made from the poor, Wall Street fleeces them by yanking away their entitlements. It has always been thus. During the Reagan administration, Wall Street decided to boost the values of its bond and stock portfolios by using Social Security revenues to lower budget deficits. Wall Street figured that lower deficits would mean lower interest rates and higher bond and stock prices.
Two Wall Street henchmen, Alan Greenspan and David Stockman, set up the Social Security raid in this way: The Carter administration had put Social Security in the black for the foreseeable future by establishing a schedule for future Social Security payroll tax increases. Greenspan and Stockman conspired to phase in the payroll tax increases earlier than was needed in order to gain surplus Social Security revenues that could be used to finance other government spending, thus reducing the budget deficit. They sold it to President Reagan as "putting Social Security on a sound basis."
Along the way Americans were told that the surplus revenues were going into a special Social Security trust fund at the U.S. Treasury. But what is in the fund is Treasury IOUs for the spent revenues. When the "trust funds" are needed to pay Social Security benefits, the Treasury will have to sell more debt in order to redeem the IOUs.
Social Security was mugged again during the Clinton administration when the Boskin Commission jimmied the Consumer Price Index in order to reduce the inflation adjustments that Social Security recipients receive, thus diverting money from Social Security retirees to other uses.
We constantly hear from Wall Street gangsters and from Republicans and an occasional Democrat that Social Security and Medicare are a form of welfare that we can't afford; an "unfunded liability." This is a lie. Social Security is funded with an earmarked tax. People pay for Social Security and Medicare all their working lives. It is a pay-as-you-go system in which the taxes paid by those working fund those who are retired.
Currently these systems are not in deficit. The problem is that government is using earmarked revenues for other purposes. Indeed, since the 1980s Social Security revenues have been used to fund general government. Today Social Security revenues are being used to fund trillion dollar bailouts for Wall Street and to fund the Bush/Obama wars of aggression against Muslims.
Having diverted Social Security revenues to war and Wall Street, Paulson says there is no alternative but to take the promised benefits away from those who have paid for them.
Republicans have extraordinary animosity toward the poor. In an effort to talk retirees out of their support systems, Republicans frequently describe Social Security as a Ponzi scheme and "unsustainable." They ought to know. The phony trust fund, which they set up to hide the fact that Wall Street and the Pentagon are running off with Social Security revenues, is a Ponzi scheme. Social Security itself has been with us since the 1930s and has yet to wreck our lives and budget. But it only took Hank Paulson's derivative Ponzi scheme and its bailout a few years to inflict irreparable damage on our lives and budget.
Years ago with stagflation defeated and a rising stock market, I favored privatizing Social Security as a way of creating a funded retirement system and producing greater savings and larger incomes for retirees. At that time Wall Street was interested, not for my reasons, but in order to collect the fees from managing the funds.
Had Social Security been privatized, I doubt that Wall Street would have been permitted to deregulate the financial system. Too much would have been at stake.
After the latest crisis brought on by Wall Street's dishonesty and greed, trusting Wall Street to manage anyone's old age pension requires a leap of faith that no intelligent person can make.
Wall Street has got away with its raid on the public treasury. Now, pockets full, it wants to pay for the heist by curtailing Social Security and Medicare. Having deprived the working population of homes, jobs, and health care, Wall Street is now after the elderly's old age security.
Social Security, formerly an untouchable "third rail of politics," is now "unsustainable," while the real unsustainables--a pre-1929 unregulated financial system and open-ended multi-trillion dollar Global War Against Terror--are the new untouchables. This transformation signals the complete capture of American democracy by an oligarchy of special interests.
Friday, February 19, 2010
Republicans Propose to Eliminate Medicare and gut Social Security
http://blogs.alternet.org/truthinessblog/2010/02/11/republicans-propose-to-eliminate-medicare-and-gut-social-security/
Posted by Brad100
February 11, 2010
Americans have been wondering aloud for the past year about the existence Republican ideas related to topics such as entitlement reform, especially as it applies to our national health care debate. Republicans, for their part, have been characterized, perhaps unfairly, as the party of “NO” ideas. It turns out that some Republicans have now come forward with their reform proposals in opposition to the Democrat ideas. George Will recently wrote an article entitled, “How to get the country to solvency on entitlements.”
Will gives gushing support to the theories of Indiana Governor Mitch Daniels and Wisconsin Representative, Paul Ryan. A link to his column is included below. These men are two of the rising stars in the Republican party. In fact, George waxes poetic about the day when Daniels ascends to the Presidency, while Ryan takes the number two spot. High praise indeed. Both gentlemen have been involved in various Republican think tanks that are trying to come up with ideas that are consistent with Conservative values and are policies that Republicans can support in opposition to current Democratic proposals. Daniels, in fact, wrote Roadmap for America’s Future. A link to that article is imbedded in Will’s article.
http://www.washingtonpost.com/wp-dyn/content/article/2010/02/05/AR2010020503475.html
George is a talented writer and his advocacy makes Daniels’ and Ryan’s ideas sound very appealing. Conservatives who desire less government are enthusiastic about these guys. Will writes,
“Ryan would eliminate taxes on interest, capital gains, dividends and death. The corporate income tax, the world’s second-highest, would be replaced by an 8.5 percent business consumption tax. Because this would be about half the average tax burden that other nations place on corporations, U.S. companies would instantly become more competitive — and more able and eager to hire. ”
These ideas resonate with lots of folks who believe that you can expand the economy by cutting taxes to large corporations. Ryan leaves unanswered, however, the question of how to make up the revenue gap created by this proposal. Apparently, the economy would expand, some money would trickle down to everyone, and that would make up for the shortfall.
Let’s assume Ryan’s numbers are accurate, which is, at best, a leap of faith. Ryan, “proposes tax reform. Masochists would be permitted to continue paying income taxes under the current system. Others could use a radically simplified code, filing a form that fits on a postcard. It would have just two rates: 10 percent on incomes up to $100,000 for joint filers and $50,000 for single filers; 25 percent on higher incomes. There would be no deductions, credits or exclusions, other than the health-care tax credit.”
This is the flat tax idea that Conservatives love. Complete your taxes on a postcard! Get rid of the IRS? Once again the idea is proposed without any CBO scoring of it’s potential revenue implications. This proposal also raises a philosophical question. If higher incomes earners pay 25% of their income and lower income earners pay 10%, isn’t that redistribution of wealth? Isn’t that what Conservatives have criticized the current administration for?
I’m just asking.
Inconvenient details aside, what could be better than a simplified tax code, tax cuts for multi-national corporations, and a rejuvenated economy? The plan has something for everyone. We all know, however, that entitlements are the key to our future. Entitlements currently consume over $.50 of every Federal $1.00. How does Daniel and Ryan handle the 800 lb. Gorilla in the room?
“Medicare and Social Security would be preserved for those currently receiving benefits or becoming eligible in the next 10 years (those 55 and older today). Both programs would be made permanently solvent. Universal access to affordable health care would be guaranteed by refundable tax credits ($2,300 for individuals, $5,700 for families) for purchasing portable coverage in any state. As persons younger than 55 became Medicare-eligible, they would receive payments averaging $11,000 a year, indexed to inflation and pegged to income, with low-income people receiving more support. Ryan’s plan would fund medical savings accounts from which low-income people would pay minor out-of-pocket expenses. All Americans, regardless of income, would be allowed to establish MSAs — tax-preferred accounts for paying such expenses. ”
Health care is portable. Medicare and Social Security is solvent. Where do we sign up? Wait a minute. Currently health care costs run about $11,000 a year for a husband and wife. Family plans have even higher costs. Experts have predicted that under the current system Health care costs will double by 2020. How do individuals pay that expense with a $5700 a year credit? There is another problem. The Republican proposal is a tax credit. You have to spend the money first, then get reimbursement later when you file your taxes? What if you don’t have the money up front?
There is other problems with this plan. Let’s use a 45 years old male as an example. Under the Republican plan he will receive $11,000 a year. Great! What happens if our 45 year old need quadruple bypass surgery at 55, or a knee or hip replacement? In other words, what if the surgery amount greatly exceeds the MSA? Those procedures today would easily cost more than the $110,000 accumulated in the MSA account? Future costs are even more problematic. This proposal does not address out of control medical costs down the road? Ryan is silent on that issue. Apparently that is too much government interference for him.
“Ryan’s plan would allow workers younger than 55 the choice of investing more than one-third of their current Social Security taxes in personal retirement accounts similar to the Thrift Savings Plan long available to, and immensely popular with, federal employees. This investment would be inheritable property, guaranteeing that individuals will never lose the ability to dispose of every dollar they put into these accounts. ”
This sounds really attractive. Individuals keep their money and control their own assets. If an individual dies early, their family get the money. What would happen, however, in the event of a market crash, like the one we recently experienced? What if that personal account was suddenly wiped out? Additionally, what happens to Social Security if it suddenly receives 1/3 less funding than in the past? It’s a fact that most companies no longer offer a retirement plan. If people lose their nest egg and have no safety net, what then? Ryan apparently does not offer an answer for that either.
“Ryan would raise the retirement age. If, when Congress created Social Security in 1935, it had indexed the retirement age (then 65) to life expectancy, today the age would be in the mid-70s. The system was never intended to do what it is doing — subsidizing retirements that extend from one-third to one-half of retirees’ adult lives.”
It’s not clear how many actually live to 130 years old. Well, nobody really, but it sounds good. Ryan wants to raise the retirement age at a time when baby boomers are reaching their golden years. Boomers paid taxes their entire life with the promise that they would have a supplemental income in retirement. Many planned their retirement accordingly. Moving the retirement age to 75 would not be supported by this group. First of all, could a person in their 70’s meet the physical demands of their job? Secondly, would their employers still want them? Older workers are generally the most highly compensated employees. What about the group under 55. Are they willing to forego Social Security entirely or at a seriously diminished amount and pay for older Americans? If private accounts fail, what is Plan B?
So we now know have the Republicans plan. It is clear they are not the party of “No” ideas as many thought. They have, with this Roadmap for America’s Future provided the Conservative vision for the overhaul of entitlements in the 21st century. These ideas, supported by Conservatives like George Will, include scrapping Medicare and Social Security. Are these really new and different ideas or simply a rehash of traditional Republican policies? When you think about it, this is the classic Republican approach with different packaging. Republicans have tried to overturn Democrats efforts to provide a social safety net for Americans for over 50 years ago. Unfortunately the same philosophical weaknesses that existed 50 years ago, continue to haunt Republicans today. The Republicans philosophy of less government intervention keeps them from offering real solutions to the real problems that individual Americans face.
Republicans have no answer to the problems they will create for the millions affected by the loss of Medicare and Social Security. If our citizens lost Social Security, many would lose a large percentage of their retirement income. There is no mechanism to help these people recover the income that is necessary for their basic survival. If our government killed Medicare, millions would find themselves without the means to pay for their health care. To understand a potential Republican response, look at the Republican response to middle class Americans who loss health care coverage. Our current health care system has left millions uninsured. Millions more have declared personal bankrupsey because of overwhelming medical debt. Addressing these inequalities would require government intervention which is antithetical to the Republican philosophy. Conservatives like George Will, choose to dismiss this problem by arguing that the numbers of these people without coverage are smaller than liberals claim or non-existent. That is the same response you could expect from Republicans if Medicare ceased to exist.
George Will misses the real issue involving Medicare and Social Security. The real issue is people. We need to rein in entitlement spending AND continue to provide a safety net for our citizens. Most agree that Social Security can be made solvent with some minor reforms. Medicare is more difficult. The problem with Medicare is run away health care costs caused by a system critically in need of reform. Insurance companies currently enjoy a monopoly and hide behind anti-trust exemptions. We need to repeal the anti-trust and end the monopoly. We need to promote competition in all areas of the system. Use the power of the government to obtain volume pricing, rein in excess insurance company profits, and aggressively root out fraud and abuse within Medicare itself with better systems and more investigators.
How will all of this fall out? Why is the Republican party not trumpeting these proposals and fighting for public support? The most pressing problem Republicans face in implementing their ideas is their own constituency. Many so called Conservatives love to say they support less government. Those same Conservatives, however, also love their safety net. Republicans draw a large amount of their support from older Americans. Most older Americans would not support the repeal of Medicare or Social Security and would revolt against any political party that tried.
The answer to the entitlement question is not to scrap the entitlement. That is the easy response to a difficult problem. Clearly, the funding of these programs need reform. Fraud and abuse within the system itself needs to addressed. Price gouging by private business and monopolistic practices needs reform. The programs themselves, however, need to endure.
Medicare and Social Security was started to help older Americans survive their elder years with dignity. They need to endure.
Posted by Brad100
February 11, 2010
Americans have been wondering aloud for the past year about the existence Republican ideas related to topics such as entitlement reform, especially as it applies to our national health care debate. Republicans, for their part, have been characterized, perhaps unfairly, as the party of “NO” ideas. It turns out that some Republicans have now come forward with their reform proposals in opposition to the Democrat ideas. George Will recently wrote an article entitled, “How to get the country to solvency on entitlements.”
Will gives gushing support to the theories of Indiana Governor Mitch Daniels and Wisconsin Representative, Paul Ryan. A link to his column is included below. These men are two of the rising stars in the Republican party. In fact, George waxes poetic about the day when Daniels ascends to the Presidency, while Ryan takes the number two spot. High praise indeed. Both gentlemen have been involved in various Republican think tanks that are trying to come up with ideas that are consistent with Conservative values and are policies that Republicans can support in opposition to current Democratic proposals. Daniels, in fact, wrote Roadmap for America’s Future. A link to that article is imbedded in Will’s article.
http://www.washingtonpost.com/wp-dyn/content/article/2010/02/05/AR2010020503475.html
George is a talented writer and his advocacy makes Daniels’ and Ryan’s ideas sound very appealing. Conservatives who desire less government are enthusiastic about these guys. Will writes,
“Ryan would eliminate taxes on interest, capital gains, dividends and death. The corporate income tax, the world’s second-highest, would be replaced by an 8.5 percent business consumption tax. Because this would be about half the average tax burden that other nations place on corporations, U.S. companies would instantly become more competitive — and more able and eager to hire. ”
These ideas resonate with lots of folks who believe that you can expand the economy by cutting taxes to large corporations. Ryan leaves unanswered, however, the question of how to make up the revenue gap created by this proposal. Apparently, the economy would expand, some money would trickle down to everyone, and that would make up for the shortfall.
Let’s assume Ryan’s numbers are accurate, which is, at best, a leap of faith. Ryan, “proposes tax reform. Masochists would be permitted to continue paying income taxes under the current system. Others could use a radically simplified code, filing a form that fits on a postcard. It would have just two rates: 10 percent on incomes up to $100,000 for joint filers and $50,000 for single filers; 25 percent on higher incomes. There would be no deductions, credits or exclusions, other than the health-care tax credit.”
This is the flat tax idea that Conservatives love. Complete your taxes on a postcard! Get rid of the IRS? Once again the idea is proposed without any CBO scoring of it’s potential revenue implications. This proposal also raises a philosophical question. If higher incomes earners pay 25% of their income and lower income earners pay 10%, isn’t that redistribution of wealth? Isn’t that what Conservatives have criticized the current administration for?
I’m just asking.
Inconvenient details aside, what could be better than a simplified tax code, tax cuts for multi-national corporations, and a rejuvenated economy? The plan has something for everyone. We all know, however, that entitlements are the key to our future. Entitlements currently consume over $.50 of every Federal $1.00. How does Daniel and Ryan handle the 800 lb. Gorilla in the room?
“Medicare and Social Security would be preserved for those currently receiving benefits or becoming eligible in the next 10 years (those 55 and older today). Both programs would be made permanently solvent. Universal access to affordable health care would be guaranteed by refundable tax credits ($2,300 for individuals, $5,700 for families) for purchasing portable coverage in any state. As persons younger than 55 became Medicare-eligible, they would receive payments averaging $11,000 a year, indexed to inflation and pegged to income, with low-income people receiving more support. Ryan’s plan would fund medical savings accounts from which low-income people would pay minor out-of-pocket expenses. All Americans, regardless of income, would be allowed to establish MSAs — tax-preferred accounts for paying such expenses. ”
Health care is portable. Medicare and Social Security is solvent. Where do we sign up? Wait a minute. Currently health care costs run about $11,000 a year for a husband and wife. Family plans have even higher costs. Experts have predicted that under the current system Health care costs will double by 2020. How do individuals pay that expense with a $5700 a year credit? There is another problem. The Republican proposal is a tax credit. You have to spend the money first, then get reimbursement later when you file your taxes? What if you don’t have the money up front?
There is other problems with this plan. Let’s use a 45 years old male as an example. Under the Republican plan he will receive $11,000 a year. Great! What happens if our 45 year old need quadruple bypass surgery at 55, or a knee or hip replacement? In other words, what if the surgery amount greatly exceeds the MSA? Those procedures today would easily cost more than the $110,000 accumulated in the MSA account? Future costs are even more problematic. This proposal does not address out of control medical costs down the road? Ryan is silent on that issue. Apparently that is too much government interference for him.
“Ryan’s plan would allow workers younger than 55 the choice of investing more than one-third of their current Social Security taxes in personal retirement accounts similar to the Thrift Savings Plan long available to, and immensely popular with, federal employees. This investment would be inheritable property, guaranteeing that individuals will never lose the ability to dispose of every dollar they put into these accounts. ”
This sounds really attractive. Individuals keep their money and control their own assets. If an individual dies early, their family get the money. What would happen, however, in the event of a market crash, like the one we recently experienced? What if that personal account was suddenly wiped out? Additionally, what happens to Social Security if it suddenly receives 1/3 less funding than in the past? It’s a fact that most companies no longer offer a retirement plan. If people lose their nest egg and have no safety net, what then? Ryan apparently does not offer an answer for that either.
“Ryan would raise the retirement age. If, when Congress created Social Security in 1935, it had indexed the retirement age (then 65) to life expectancy, today the age would be in the mid-70s. The system was never intended to do what it is doing — subsidizing retirements that extend from one-third to one-half of retirees’ adult lives.”
It’s not clear how many actually live to 130 years old. Well, nobody really, but it sounds good. Ryan wants to raise the retirement age at a time when baby boomers are reaching their golden years. Boomers paid taxes their entire life with the promise that they would have a supplemental income in retirement. Many planned their retirement accordingly. Moving the retirement age to 75 would not be supported by this group. First of all, could a person in their 70’s meet the physical demands of their job? Secondly, would their employers still want them? Older workers are generally the most highly compensated employees. What about the group under 55. Are they willing to forego Social Security entirely or at a seriously diminished amount and pay for older Americans? If private accounts fail, what is Plan B?
So we now know have the Republicans plan. It is clear they are not the party of “No” ideas as many thought. They have, with this Roadmap for America’s Future provided the Conservative vision for the overhaul of entitlements in the 21st century. These ideas, supported by Conservatives like George Will, include scrapping Medicare and Social Security. Are these really new and different ideas or simply a rehash of traditional Republican policies? When you think about it, this is the classic Republican approach with different packaging. Republicans have tried to overturn Democrats efforts to provide a social safety net for Americans for over 50 years ago. Unfortunately the same philosophical weaknesses that existed 50 years ago, continue to haunt Republicans today. The Republicans philosophy of less government intervention keeps them from offering real solutions to the real problems that individual Americans face.
Republicans have no answer to the problems they will create for the millions affected by the loss of Medicare and Social Security. If our citizens lost Social Security, many would lose a large percentage of their retirement income. There is no mechanism to help these people recover the income that is necessary for their basic survival. If our government killed Medicare, millions would find themselves without the means to pay for their health care. To understand a potential Republican response, look at the Republican response to middle class Americans who loss health care coverage. Our current health care system has left millions uninsured. Millions more have declared personal bankrupsey because of overwhelming medical debt. Addressing these inequalities would require government intervention which is antithetical to the Republican philosophy. Conservatives like George Will, choose to dismiss this problem by arguing that the numbers of these people without coverage are smaller than liberals claim or non-existent. That is the same response you could expect from Republicans if Medicare ceased to exist.
George Will misses the real issue involving Medicare and Social Security. The real issue is people. We need to rein in entitlement spending AND continue to provide a safety net for our citizens. Most agree that Social Security can be made solvent with some minor reforms. Medicare is more difficult. The problem with Medicare is run away health care costs caused by a system critically in need of reform. Insurance companies currently enjoy a monopoly and hide behind anti-trust exemptions. We need to repeal the anti-trust and end the monopoly. We need to promote competition in all areas of the system. Use the power of the government to obtain volume pricing, rein in excess insurance company profits, and aggressively root out fraud and abuse within Medicare itself with better systems and more investigators.
How will all of this fall out? Why is the Republican party not trumpeting these proposals and fighting for public support? The most pressing problem Republicans face in implementing their ideas is their own constituency. Many so called Conservatives love to say they support less government. Those same Conservatives, however, also love their safety net. Republicans draw a large amount of their support from older Americans. Most older Americans would not support the repeal of Medicare or Social Security and would revolt against any political party that tried.
The answer to the entitlement question is not to scrap the entitlement. That is the easy response to a difficult problem. Clearly, the funding of these programs need reform. Fraud and abuse within the system itself needs to addressed. Price gouging by private business and monopolistic practices needs reform. The programs themselves, however, need to endure.
Medicare and Social Security was started to help older Americans survive their elder years with dignity. They need to endure.
Wednesday, February 10, 2010
20 reasons Global Debt Time Bomb explodes soon
http://www.marketwatch.com/story/story/print?guid=98105012-8C05-444F-99C1-CB1F8D95870A
Feb. 2, 2010, 12:01 a.m. EST
20 reasons Global Debt Time Bomb explodes soon
Commentary: Which trigger will ignite the Great Depression II?
By Paul B. Farrell, MarketWatch
ARROYO GRANDE, Calif. (MarketWatch) -- Retire? You can fuggetaboutit if the new Global Debt Time Bomb is detonated by any one of 20 made-in-America trigger mechanisms.
Yes, 20. And yes, any one can destroy your retirement because all 20 are inexorably linked, a house-of-cards, a circular firing squad destined to self-destruct, triggering the third great Wall Street meltdown of the 21st century, igniting the Great Depression II that George W. Bush, Ben Bernanke, Henry Paulson and now President Obama have simply delayed with their endless knee-jerk, debt-laden wars, stimulus bonanzas and bailouts.
Deficit as national-security threat?
WSJ's Jerry Seib previews his column in tomorrow's Journal in which he writes the federal budget deficit has become so large, it's time consider it a natural-security threat. Plus, the News Hub provides a February market outlook and also discusses the findings of a new autism study.
Wow, what an epic Hollywood blockbuster this will make: You know the drama, can't miss the warnings. The financial press is flooding us with plot lines ... a Forbes cover story focuses on a "Global Debt Bomb: How It Could Wreck Your Life" ... Leaders at the World Economic Forum on Swiss Mt. Davos fear another global meltdown will trigger mass rebellions ... The Economist calls the plot a "Global Asset Bubble," with cheap money fast driving up asset prices.
Plus, Bloomberg BusinessWeek is adding jet fuel to the ticking time-bomb in: "After the Stimulus Binge, a Debt Hangover: Trillions of dollars have been spent keeping the global economy afloat. But now fears about the Great Recession are giving way to worries about something else: The Great Reckoning" when massive debts come due. Then the debt bomb explodes "and the results won't be pretty for investors or elected officials."
Forbes discovered the trigger mechanism in "This Time Is Different: Eight Centuries of Financial Folly," by economists Carmen Reinhart and Kenneth Rogoff: The "90% ratio of government debt to GDP is a tipping point in economic growth." For 800 years "you increase it over and beyond a high threshold, and boom!" Well guess what? "The U.S. government-debt-to-GDP ratio is 84%." Soon, Ka-Booom! Depression. Kiss your retirement goodbye.
Who knows? Forbes? Bloomberg BusinessWeek? The Economist? Davos-World Economic Forum? True, they're all looking at the same plot line for a Hollywood blockbuster about the "Global Debt Time Bomb."
But the financial press navigates in a fog. There's not just one, but many triggers, all linked in a lethal network. We've reported on it for years. Now you tell us: What triggers this firestorm?
Poll: 20 economic weapons of mass destruction triggering ticking Global Debt Time Bomb
1. Federal Budget Deficit Bomb. The Bush/Cheney wars pushed America deep into a debt hole. Federal debt limit was just raised almost 100% with Obama's 2010 budget, to $14.3 trillion vs. $7.8 trillion in 2005. The Congressional Budget Office predicts future deficits around 4% through 2020. Get it? America's debt at 84% of GDP will soon pass that toxic 90% trigger point.
2. U.S. Foreign Trade Bomb. Monthly deficits actually dropped from $50 billion per month to roughly $35 billion. But the total continues climbing as $400 billion is added each year. Foreigners now own $2.5 trillion of America, with China holding over $1.3 trillion in Treasury debt.
3. Weakening U.S. Dollar as Foreign Reserve Currency Bomb. Fear China and other currencies will replace dollar as main foreign reserves. The dollar's fallen: The main index measuring dollar strength has gone from 120 at the Clinton-to-Bush handoff to below 80 today.
4. Cheap Money Bomb: Credit Ratings Down, Rates Up. Economists at S&P, Fitch and Moody's were totally co-conspirators of Fat Cat Bankers, misleading investors before meltdown: Soon, debt up, ratings down, interest rates soar.
5. Global Real Estate Bomb. Dubai Tower, new "world's tallest building" is empty. BusinessWeek warns that China's housing collapse could be worse than America's. Plus the U.S. commercial real estate bubble is now $1.7 trillion, a "ticking time bomb" bloating 25% of bank balance sheets.
6. Peak Oil and the Population Bomb. China and India each need 500 new cities. The United Nations estimates world population exploding 50% from 6 billion to 9 billion by 2050: Three billion more humans demanding more automobiles, exhausting more resources to feed their version of the gas-guzzling "America Dream."
7. Social Security Bomb. We have no choice; eventually we must either cut benefits or raise taxes. Politicians hate both, so they'll do nothing. Delays worsen solutions. Without action, by 2035 Social Security and Medicare benefits will eat up the entire federal budget other than defense.
8. Medicare: A Nuclear Bomb. Going broke faster than Social Security. Prescription drug benefit added an unfunded $8.1 trillion. In 5 years estimates rose from about $35 trillion to over $60 trillion now.
9. Health-care Insurance Bomb. Burden increasingly shifted to employees. Costs rising faster than inflation. Recent Obamacare plan would have cost $90 billion annually, paid to Big Pharma and insurers.
10. State and Local Government Budget Bombs. Deficits of $110 billion in 2010, $178 billion in 2011on top of more that $450 billion in underfunded state and municipal employee pension funds.
11. Underfunded Corporate Pensions Bomb. From $60 billion surplus in 2007 to $409 billion deficit in 2009. And a whopping 92% of the pension plans of companies are now underfunded. Defaults are guaranteed by taxpayers.
12. Consumer Debt Bomb. Americans are still living beyond their means. Even with a downturn, consumer debt rose from about $2.3 to $2.5 trillion. Fat Cat Bankers love it -- yes love making matters worse by gouging cardholders and mortgagees, blocking help in foreclosures and bankruptcies.
13. Personal Savings Bomb. Before the 2008 meltdown savings rate dropped from about 10% in the early 1980s to below zero. Now it's increasing, slowing retail recovery. Today, government's the big "unsaver."
14. War and Military Defense Deficits. Costs of Iraq and Afghanistan wars -- $200+ billion annually, $3 trillion minimum, with massive long-term costs for veteran medical care, equipment renewal, recruitment.
15. Homeland Insecurity Bomb. Security at airports, seaports, borders, vulnerable chemical plants all increase budgets.
16. Fed/Treasury Bailout Bombs. Tax credits, loans, cash and purchase of toxic assets from Wall Street banks estimated at $23.7 trillion as new debt was shifted from too-big-to-fail Fat-Cat banks to taxpayers.
17. Insatiable Washington Lobbyists Bombs. Paulson, Goldman, Geithner, Morgan and Wall Street banks, through their lobbyists and former employees working inside now have absolute power over government spending. Democracy and voters are now irrelevant in America's new corporate-socialism.
18. Shadow Banking: The Derivatives Bomb. Wall Street wants no regulation of this $670 trillion, high-risk, out-of-control casino that's highly leveraged versus the $50 trillion total GDP of all nations. We forget that derivatives almost destroyed global economies in 2008-09, finally will by 2012.
19. Dysfunctional Two-Party Political Bomb. Polarized partisanship increasing: Every day both parties show zero interest in cooperating for the public good. Instead they fight viciously, resisting everything and anything proposed by opponents. Only goal: Score political points, make the other side look bad.
20. The Coming Populous Rebellion Bombs. Nobody trusts anyone in authority. For good reason. So immediate gratification, short-term betting and a lack of long-term perspective wins for individual investors, consumers and taxpayers as well as Washington, Wall Street and Corporate America CEOs. Today: "Doing what's right for the common good and country" is just empty political rhetoric.
Forbes. The Economist. Davos-World Economic Forum. Bloomberg BusinessWeek. All one voice, one loud, lonely chorus echoing that famous Beatles tune: "Head in a cloud ... The fool on the hill, sees the sun going down ... a thousand voices talking perfectly loud. But nobody ever hears him, or the sound he appears to make ... And the eyes in his head, see the world spinning 'round ...ooh, round and round and round."
Historians and behavioral economists tell us most investors are blind optimists. Investors cannot see bubbles from inside their bubble. Nor Fat Cat Bankers from inside their mega-bonus-bubble. Nor politicians from inside the beltway bubble.
Why? The optimist's brain filters out bad news. They know their dreams of prosperity will come true. Then, when they finally do see that the proverbial light at the end of the tunnel is an oncoming train, it's always too late.
I will say it again, gently: A new meltdown is coming. The Great Depression II is coming, soon. And yet, I know your mental filters are working, blocking warnings of a bomb. I can even hear you calling me "the fool on the hill who sees the sun going down, the world spinning round" ... sees you kissing your retirement goodbye.
Feb. 2, 2010, 12:01 a.m. EST
20 reasons Global Debt Time Bomb explodes soon
Commentary: Which trigger will ignite the Great Depression II?
By Paul B. Farrell, MarketWatch
ARROYO GRANDE, Calif. (MarketWatch) -- Retire? You can fuggetaboutit if the new Global Debt Time Bomb is detonated by any one of 20 made-in-America trigger mechanisms.
Yes, 20. And yes, any one can destroy your retirement because all 20 are inexorably linked, a house-of-cards, a circular firing squad destined to self-destruct, triggering the third great Wall Street meltdown of the 21st century, igniting the Great Depression II that George W. Bush, Ben Bernanke, Henry Paulson and now President Obama have simply delayed with their endless knee-jerk, debt-laden wars, stimulus bonanzas and bailouts.
Deficit as national-security threat?
WSJ's Jerry Seib previews his column in tomorrow's Journal in which he writes the federal budget deficit has become so large, it's time consider it a natural-security threat. Plus, the News Hub provides a February market outlook and also discusses the findings of a new autism study.
Wow, what an epic Hollywood blockbuster this will make: You know the drama, can't miss the warnings. The financial press is flooding us with plot lines ... a Forbes cover story focuses on a "Global Debt Bomb: How It Could Wreck Your Life" ... Leaders at the World Economic Forum on Swiss Mt. Davos fear another global meltdown will trigger mass rebellions ... The Economist calls the plot a "Global Asset Bubble," with cheap money fast driving up asset prices.
Plus, Bloomberg BusinessWeek is adding jet fuel to the ticking time-bomb in: "After the Stimulus Binge, a Debt Hangover: Trillions of dollars have been spent keeping the global economy afloat. But now fears about the Great Recession are giving way to worries about something else: The Great Reckoning" when massive debts come due. Then the debt bomb explodes "and the results won't be pretty for investors or elected officials."
Forbes discovered the trigger mechanism in "This Time Is Different: Eight Centuries of Financial Folly," by economists Carmen Reinhart and Kenneth Rogoff: The "90% ratio of government debt to GDP is a tipping point in economic growth." For 800 years "you increase it over and beyond a high threshold, and boom!" Well guess what? "The U.S. government-debt-to-GDP ratio is 84%." Soon, Ka-Booom! Depression. Kiss your retirement goodbye.
Who knows? Forbes? Bloomberg BusinessWeek? The Economist? Davos-World Economic Forum? True, they're all looking at the same plot line for a Hollywood blockbuster about the "Global Debt Time Bomb."
But the financial press navigates in a fog. There's not just one, but many triggers, all linked in a lethal network. We've reported on it for years. Now you tell us: What triggers this firestorm?
Poll: 20 economic weapons of mass destruction triggering ticking Global Debt Time Bomb
1. Federal Budget Deficit Bomb. The Bush/Cheney wars pushed America deep into a debt hole. Federal debt limit was just raised almost 100% with Obama's 2010 budget, to $14.3 trillion vs. $7.8 trillion in 2005. The Congressional Budget Office predicts future deficits around 4% through 2020. Get it? America's debt at 84% of GDP will soon pass that toxic 90% trigger point.
2. U.S. Foreign Trade Bomb. Monthly deficits actually dropped from $50 billion per month to roughly $35 billion. But the total continues climbing as $400 billion is added each year. Foreigners now own $2.5 trillion of America, with China holding over $1.3 trillion in Treasury debt.
3. Weakening U.S. Dollar as Foreign Reserve Currency Bomb. Fear China and other currencies will replace dollar as main foreign reserves. The dollar's fallen: The main index measuring dollar strength has gone from 120 at the Clinton-to-Bush handoff to below 80 today.
4. Cheap Money Bomb: Credit Ratings Down, Rates Up. Economists at S&P, Fitch and Moody's were totally co-conspirators of Fat Cat Bankers, misleading investors before meltdown: Soon, debt up, ratings down, interest rates soar.
5. Global Real Estate Bomb. Dubai Tower, new "world's tallest building" is empty. BusinessWeek warns that China's housing collapse could be worse than America's. Plus the U.S. commercial real estate bubble is now $1.7 trillion, a "ticking time bomb" bloating 25% of bank balance sheets.
6. Peak Oil and the Population Bomb. China and India each need 500 new cities. The United Nations estimates world population exploding 50% from 6 billion to 9 billion by 2050: Three billion more humans demanding more automobiles, exhausting more resources to feed their version of the gas-guzzling "America Dream."
7. Social Security Bomb. We have no choice; eventually we must either cut benefits or raise taxes. Politicians hate both, so they'll do nothing. Delays worsen solutions. Without action, by 2035 Social Security and Medicare benefits will eat up the entire federal budget other than defense.
8. Medicare: A Nuclear Bomb. Going broke faster than Social Security. Prescription drug benefit added an unfunded $8.1 trillion. In 5 years estimates rose from about $35 trillion to over $60 trillion now.
9. Health-care Insurance Bomb. Burden increasingly shifted to employees. Costs rising faster than inflation. Recent Obamacare plan would have cost $90 billion annually, paid to Big Pharma and insurers.
10. State and Local Government Budget Bombs. Deficits of $110 billion in 2010, $178 billion in 2011on top of more that $450 billion in underfunded state and municipal employee pension funds.
11. Underfunded Corporate Pensions Bomb. From $60 billion surplus in 2007 to $409 billion deficit in 2009. And a whopping 92% of the pension plans of companies are now underfunded. Defaults are guaranteed by taxpayers.
12. Consumer Debt Bomb. Americans are still living beyond their means. Even with a downturn, consumer debt rose from about $2.3 to $2.5 trillion. Fat Cat Bankers love it -- yes love making matters worse by gouging cardholders and mortgagees, blocking help in foreclosures and bankruptcies.
13. Personal Savings Bomb. Before the 2008 meltdown savings rate dropped from about 10% in the early 1980s to below zero. Now it's increasing, slowing retail recovery. Today, government's the big "unsaver."
14. War and Military Defense Deficits. Costs of Iraq and Afghanistan wars -- $200+ billion annually, $3 trillion minimum, with massive long-term costs for veteran medical care, equipment renewal, recruitment.
15. Homeland Insecurity Bomb. Security at airports, seaports, borders, vulnerable chemical plants all increase budgets.
16. Fed/Treasury Bailout Bombs. Tax credits, loans, cash and purchase of toxic assets from Wall Street banks estimated at $23.7 trillion as new debt was shifted from too-big-to-fail Fat-Cat banks to taxpayers.
17. Insatiable Washington Lobbyists Bombs. Paulson, Goldman, Geithner, Morgan and Wall Street banks, through their lobbyists and former employees working inside now have absolute power over government spending. Democracy and voters are now irrelevant in America's new corporate-socialism.
18. Shadow Banking: The Derivatives Bomb. Wall Street wants no regulation of this $670 trillion, high-risk, out-of-control casino that's highly leveraged versus the $50 trillion total GDP of all nations. We forget that derivatives almost destroyed global economies in 2008-09, finally will by 2012.
19. Dysfunctional Two-Party Political Bomb. Polarized partisanship increasing: Every day both parties show zero interest in cooperating for the public good. Instead they fight viciously, resisting everything and anything proposed by opponents. Only goal: Score political points, make the other side look bad.
20. The Coming Populous Rebellion Bombs. Nobody trusts anyone in authority. For good reason. So immediate gratification, short-term betting and a lack of long-term perspective wins for individual investors, consumers and taxpayers as well as Washington, Wall Street and Corporate America CEOs. Today: "Doing what's right for the common good and country" is just empty political rhetoric.
Forbes. The Economist. Davos-World Economic Forum. Bloomberg BusinessWeek. All one voice, one loud, lonely chorus echoing that famous Beatles tune: "Head in a cloud ... The fool on the hill, sees the sun going down ... a thousand voices talking perfectly loud. But nobody ever hears him, or the sound he appears to make ... And the eyes in his head, see the world spinning 'round ...ooh, round and round and round."
Historians and behavioral economists tell us most investors are blind optimists. Investors cannot see bubbles from inside their bubble. Nor Fat Cat Bankers from inside their mega-bonus-bubble. Nor politicians from inside the beltway bubble.
Why? The optimist's brain filters out bad news. They know their dreams of prosperity will come true. Then, when they finally do see that the proverbial light at the end of the tunnel is an oncoming train, it's always too late.
I will say it again, gently: A new meltdown is coming. The Great Depression II is coming, soon. And yet, I know your mental filters are working, blocking warnings of a bomb. I can even hear you calling me "the fool on the hill who sees the sun going down, the world spinning round" ... sees you kissing your retirement goodbye.
USA Today's Social Security Scaremongering
http://www.fair.org/index.php?page=4013
2/9/10
Under the headline "Social Security Races to 'Negative': Rash of Retirements Push Fund to Brink," USA Today's February 8 front page presented an alarmist view on a story that is regularly misreported in the corporate media (Extra!, 7-8/95, 1-2/05; FAIR Action Alert, 10/19/07).
Reporter Richard Wolf leads with this warning: "Social Security's annual surplus nearly evaporated in 2009 for the first time in 25 years." But several paragraphs later, readers are told that the program has been "accumulating a $2.5 trillion trust fund"--which certainly sounds less ominous than the headline's warning about being on a "brink." And by a "nearly evaporated" surplus, USA Today means that Social Security "took in only $3 billion more in taxes last year than it paid out in benefits."
The story tries to justify the alarm nonetheless by pointing out that "because the government uses the trust fund to pay for other programs, tax increases, spending cuts or new borrowing will be required to make up the difference between taxes collected and benefits owed." Two "experts" are quoted to endorse that view, Rep. Paul Ryan (R-Wisc.) and Committee for a Responsible Federal Budget's Maya MacGuineas, a former adviser to the McCain campaign.
Actually, the fact that Social Security would begin paying out more in benefits is neither alarming nor particularly surprising. In the 1980s, Social Security taxes were raised and benefits cut in the name of covering the retirement of the Baby Boomers--and, not incidentally, so that the system could loan its surplus to the Treasury Department to cover for Reagan's income tax slashing (Extra!, 1-2/88; Nation, 3/2/09). That money was to be paid back with interest, just like the U.S. Treasury's debts to China, Japan, private U.S. citizens and everyone else who owns Treasury bonds. If Social Security fails to collect the money that is owed to it by the Treasury, that would amount to a massive fraud and transfer of wealth, as trillions of dollars specifically collected to pay for workers' retirement benefits would never be used for that purpose, and instead would merely transfer the general cost of government from progressive income taxes to the regressive payroll tax (Center for Economic and Policy Research, 1/27/05).
The money borrowed from Social Security is currently scheduled to be paid back by 2037, at which point the program will have an actual deficit. But many experts have argued for years that this projected future shortfall is not a short-term crisis, and can be addressed with minor changes like eliminating the cap on taxable income, so that the wealthy would pay the same percentage of their income as middle-income and poor workers (Social Security: The Phony Crisis, 1999).
A story that presents Social Security as on the "brink," then, is giving readers a decidely skewed perspective on an important matter of public policy. As economist Dean Baker noted recently on his Beat the Press blog (2/8/10): "If nothing is ever done to change the program, the projections still show that it will be able to pay close to 80 percent of scheduled benefits. This will still provide future retirees with a benefit that is considerably larger than what current retirees receive."
If USA Today were to present these less-alarming facts, the headline might read, "Social Security Continues to Pay Benefits as Expected." That would be much less alarmist--and more accurate.
ACTION: Ask USA Today why it presented such a one-sided report on Social Security. Encourage the paper to include experts who would disagree with the notion that Social Security is in some sort of crisis.
CONTACT:
USA Today
Brent Jones, Standards Editor
Phone: 1-800-872-7073
accuracy@usatoday.com
2/9/10
Under the headline "Social Security Races to 'Negative': Rash of Retirements Push Fund to Brink," USA Today's February 8 front page presented an alarmist view on a story that is regularly misreported in the corporate media (Extra!, 7-8/95, 1-2/05; FAIR Action Alert, 10/19/07).
Reporter Richard Wolf leads with this warning: "Social Security's annual surplus nearly evaporated in 2009 for the first time in 25 years." But several paragraphs later, readers are told that the program has been "accumulating a $2.5 trillion trust fund"--which certainly sounds less ominous than the headline's warning about being on a "brink." And by a "nearly evaporated" surplus, USA Today means that Social Security "took in only $3 billion more in taxes last year than it paid out in benefits."
The story tries to justify the alarm nonetheless by pointing out that "because the government uses the trust fund to pay for other programs, tax increases, spending cuts or new borrowing will be required to make up the difference between taxes collected and benefits owed." Two "experts" are quoted to endorse that view, Rep. Paul Ryan (R-Wisc.) and Committee for a Responsible Federal Budget's Maya MacGuineas, a former adviser to the McCain campaign.
Actually, the fact that Social Security would begin paying out more in benefits is neither alarming nor particularly surprising. In the 1980s, Social Security taxes were raised and benefits cut in the name of covering the retirement of the Baby Boomers--and, not incidentally, so that the system could loan its surplus to the Treasury Department to cover for Reagan's income tax slashing (Extra!, 1-2/88; Nation, 3/2/09). That money was to be paid back with interest, just like the U.S. Treasury's debts to China, Japan, private U.S. citizens and everyone else who owns Treasury bonds. If Social Security fails to collect the money that is owed to it by the Treasury, that would amount to a massive fraud and transfer of wealth, as trillions of dollars specifically collected to pay for workers' retirement benefits would never be used for that purpose, and instead would merely transfer the general cost of government from progressive income taxes to the regressive payroll tax (Center for Economic and Policy Research, 1/27/05).
The money borrowed from Social Security is currently scheduled to be paid back by 2037, at which point the program will have an actual deficit. But many experts have argued for years that this projected future shortfall is not a short-term crisis, and can be addressed with minor changes like eliminating the cap on taxable income, so that the wealthy would pay the same percentage of their income as middle-income and poor workers (Social Security: The Phony Crisis, 1999).
A story that presents Social Security as on the "brink," then, is giving readers a decidely skewed perspective on an important matter of public policy. As economist Dean Baker noted recently on his Beat the Press blog (2/8/10): "If nothing is ever done to change the program, the projections still show that it will be able to pay close to 80 percent of scheduled benefits. This will still provide future retirees with a benefit that is considerably larger than what current retirees receive."
If USA Today were to present these less-alarming facts, the headline might read, "Social Security Continues to Pay Benefits as Expected." That would be much less alarmist--and more accurate.
ACTION: Ask USA Today why it presented such a one-sided report on Social Security. Encourage the paper to include experts who would disagree with the notion that Social Security is in some sort of crisis.
CONTACT:
USA Today
Brent Jones, Standards Editor
Phone: 1-800-872-7073
accuracy@usatoday.com
Sunday, February 7, 2010
Next in line for a bailout: Social Security
http://money.cnn.com/2010/02/02/news/economy/social_security_bailout.fortune/index.htm
Alan Sloan
Fortune
Thu, 04 Feb 2010 22:07 EST
Don't look now. But even as the bank bailout is winding down, another huge bailout is starting, this time for the Social Security system.
A report from the Congressional Budget Office shows that for the first time in 25 years, Social Security is taking in less in taxes than it is spending on benefits.
Don't look now. But even as the bank bailout is winding down, another huge bailout is starting, this time for the Social Security system.
A report from the Congressional Budget Office shows that for the first time in 25 years, Social Security is taking in less in taxes than it is spending on benefits.
Instead of helping to finance the rest of the government, as it has done for decades, our nation's biggest social program needs help from the Treasury to keep benefit checks from bouncing - in other words, a taxpayer bailout.
No one has officially announced that Social Security will be cash-negative this year. But you can figure it out for yourself, as I did, by comparing two numbers in the recent federal budget update that the nonpartisan CBO issued last week.
The first number is $120 billion, the interest that Social Security will earn on its trust fund in fiscal 2010 (see page 74 of the CBO report). The second is $92 billion, the overall Social Security surplus for fiscal 2010 (see page 116).
This means that without the interest income, Social Security will be $28 billion in the hole this fiscal year, which ends Sept. 30.
Why disregard the interest? Because as people like me have said repeatedly over the years, the interest, which consists of Treasury IOUs that the Social Security trust fund gets on its holdings of government securities, doesn't provide Social Security with any cash that it can use to pay its bills. The interest is merely an accounting entry with no economic significance.
Social Security hasn't been cash-negative since the early 1980s, when it came so close to running out of money that it was making plans to stop sending out benefit checks. That led to the famous Greenspan Commission report, which recommended trimming benefits and raising taxes, which Congress did. Those actions produced hefty cash surpluses, which until this year have helped finance the rest of the government.
But even then, it was clear the surpluses would be temporary. Now, years earlier than projected, Social Security is adding to the government's borrowing needs, even though the program still shows a surplus on paper.
If you go to the aforementioned pages in the CBO update and consult the tables on them, you see that the budget office projects smaller cash deficits (about $19 billion annually) for fiscal 2011 and 2012. Then the program approaches break-even for a while before the deficits resume.
Social Security currently provides more than half the income for a majority of retirees. Given the declines in stock prices and home values that have whacked millions of people, the program seems likely to become more important in the future as a source of retirement income, rather than less important.
It would have been a lot simpler to fix the system years ago, when we could have used Social Security's cash surpluses to buy non-Treasury securities, such as government-backed mortgage bonds or high-grade corporates that would have helped cover future cash shortfalls. Now it's too late.
Even though an economic recovery might produce some small, fleeting cash surpluses, Social Security's days of being flush are over.
To be sure -- three of the most dangerous words in journalism -- the current Social Security cash deficits aren't all that big, given that Social Security is a $700 billion program this year, and that the government expects to borrow about $1.5 trillion in fiscal 2010 to cover its other obligations, about the same as it borrowed in fiscal 2009.
But this year's Social Security cash shortfall is a watershed event. Until this year, Social Security was a problem for the future. Now it's a problem for the present.
Alan Sloan
Fortune
Thu, 04 Feb 2010 22:07 EST
Don't look now. But even as the bank bailout is winding down, another huge bailout is starting, this time for the Social Security system.
A report from the Congressional Budget Office shows that for the first time in 25 years, Social Security is taking in less in taxes than it is spending on benefits.
Don't look now. But even as the bank bailout is winding down, another huge bailout is starting, this time for the Social Security system.
A report from the Congressional Budget Office shows that for the first time in 25 years, Social Security is taking in less in taxes than it is spending on benefits.
Instead of helping to finance the rest of the government, as it has done for decades, our nation's biggest social program needs help from the Treasury to keep benefit checks from bouncing - in other words, a taxpayer bailout.
No one has officially announced that Social Security will be cash-negative this year. But you can figure it out for yourself, as I did, by comparing two numbers in the recent federal budget update that the nonpartisan CBO issued last week.
The first number is $120 billion, the interest that Social Security will earn on its trust fund in fiscal 2010 (see page 74 of the CBO report). The second is $92 billion, the overall Social Security surplus for fiscal 2010 (see page 116).
This means that without the interest income, Social Security will be $28 billion in the hole this fiscal year, which ends Sept. 30.
Why disregard the interest? Because as people like me have said repeatedly over the years, the interest, which consists of Treasury IOUs that the Social Security trust fund gets on its holdings of government securities, doesn't provide Social Security with any cash that it can use to pay its bills. The interest is merely an accounting entry with no economic significance.
Social Security hasn't been cash-negative since the early 1980s, when it came so close to running out of money that it was making plans to stop sending out benefit checks. That led to the famous Greenspan Commission report, which recommended trimming benefits and raising taxes, which Congress did. Those actions produced hefty cash surpluses, which until this year have helped finance the rest of the government.
But even then, it was clear the surpluses would be temporary. Now, years earlier than projected, Social Security is adding to the government's borrowing needs, even though the program still shows a surplus on paper.
If you go to the aforementioned pages in the CBO update and consult the tables on them, you see that the budget office projects smaller cash deficits (about $19 billion annually) for fiscal 2011 and 2012. Then the program approaches break-even for a while before the deficits resume.
Social Security currently provides more than half the income for a majority of retirees. Given the declines in stock prices and home values that have whacked millions of people, the program seems likely to become more important in the future as a source of retirement income, rather than less important.
It would have been a lot simpler to fix the system years ago, when we could have used Social Security's cash surpluses to buy non-Treasury securities, such as government-backed mortgage bonds or high-grade corporates that would have helped cover future cash shortfalls. Now it's too late.
Even though an economic recovery might produce some small, fleeting cash surpluses, Social Security's days of being flush are over.
To be sure -- three of the most dangerous words in journalism -- the current Social Security cash deficits aren't all that big, given that Social Security is a $700 billion program this year, and that the government expects to borrow about $1.5 trillion in fiscal 2010 to cover its other obligations, about the same as it borrowed in fiscal 2009.
But this year's Social Security cash shortfall is a watershed event. Until this year, Social Security was a problem for the future. Now it's a problem for the present.
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