Third Party & Independents: Archives

David

Entitlements. Need we say more?

Look at your charts.

In 1965 we spent 27% on entitlements. Now it is 54%.

We will be spending 25% of our entire GDP on SS, Medicare and Medicaid. That is more than the TOTAL Federal budget.

We have to address entitlements. Nothing else really matters. We can control ALL the other spending. We can cut defense spending to zero. We can close all the parks. And we still cannot solve the problem unless we can control entitlements.

We will probably have to ration health care at some point. Let’s be smart about it. Everybody dies eventually. How much is one more year worth?

BTW - we really got no place to go. The U.S. is relatively well off re entitlements. Our ratios are better than other industrial countries. The whole world is in this swamp. You best bet it to head for the hills, without a phone and when the Lord calls, just go without making trouble.

Posted by: Jack at April 10, 2006 11:09 PM

I am not an economist, but I knew there had to be some correlation between the economy and the growing deficit, and that it wasn’t good.

Thanks for the info.

Posted by: womanmarine at April 10, 2006 11:10 PM

It’s just this trend that we’ve been seeing since the 70’s that prompted Harry Chapin to write the song ‘Danceband on the Titanic’. I recommend everyone get a hold of a copy and check it out…

Posted by: Rhinehold at April 10, 2006 11:26 PM

Jack:

I never can tell when you are being honest in your opinions or trying to ruffle feathers.

You post the most outrageous things.

We have to address entitlements. Nothing else really matters.

How much is one more year worth?

You best bet it to head for the hills, without a phone and when the Lord calls, just go without making trouble.

What a load of crap, probably one of the worst things I’ve seen you post.

Posted by: womanmarine at April 10, 2006 11:27 PM

Jack, your one sided answer is not quite as bad as doing nothing, but close. Your answer is to cut entitlements. Cutting entitlements can be one part of the answer. But, there are many other actions that must be taken as Mr. Walker pointed out. He stated unequivocally that NOT allowing the tax cuts to sunset is as grave an action as the passing of the Rx drug plan. Remember, Jack, Walker is talking in terms of present value dollars. The one dollar cut in tax today results in 400% loss in balancing revenues for the future obligation/revenue equation 20 years from now.

The goal is to preserve quality of life in America. Your solution of just cutting entitlements simply brings the future recession and loss of quality of life to the present post haste. He talked about reinstating pay-go rules for tax cuts and spending, he talked about taking radical steps to move Americans to fund their own futures in part, making the sacrifices today that are needed to insure quality of life tomorrow.

Yes, there is no question some entitlement cuts will have to be born now, or later. And they will be far more painful and injurious to our economy later. But, cutting entitlements can be surgical causing least pain.

A good beginning would be to eliminate Soc Sec benefits for the very well off. Their FICA taxes will be an investment in their children’s future for living in a society which has not fallen prey to recession, depression, or revolution against the wealthy. The wealthy should consider it an insurance policy for their kids safety walking the future streets of America.

There is no question that estate taxes must be adjusted and kept in place to insure against accumulation of wealth into so few hands that it results in seismic losses of consumerism in the future. A great many expensive programs cut today will yield much larger savings in the future like NASA spending. Joint space endeavors with other nations and shared costs must become the rule. We cannot afford to fund an independent space program.

World cop initiatives which have already cost us a half trillion in Iraq, cannot remain our foreign policy position if we want to salvage our economic future.

Tax deductions of all kinds constitute a huge opportunity cost in future dollar value. They need to be reviewed and adjusted downward.

The simple answer of cutting entitlements alone is just hastening the future loss of quality of life to become present. Cut entitlements, but, progressively and surgically, and along side the many other measures listed above, and more. Then, and only then, will politicians have a chance of surviving reelection challenges while at the same time seriously and responsibly addressing our future path of economic calamity.

Stop looking at the problem from Republican eyes, and start looking at it from a parent’s eyes, and a grandparent’s eyes. The Republican answer is as woefully inadequate as the Democrats. Saving our economic future will require sacrifice by all, today, and in small but progressive annual measures. It is a math problem in the end, not a political philosophy problem. Take the partisan blinders off and open yourself to the realm of many steps that can be taken from increasing taxes, cutting entitlements, ending no bid contracts, ending pork spending, ending unlimited political spending, educating the public toward savings and rewarding them for it, and make investemnts and savings through employers truly portable for life. These measures and more together present a math solution which carries with it hope.

Simple singular approach solutions like increase taxes or cut entitlements will fail politically, and therefore, will fail the nation and her future, because mathematically, they are woefully insufficient solutions.

Posted by: David R. Remer at April 10, 2006 11:40 PM

Rhinehold, Chapin is one of my favorites. It’s not hard for bright folks to read the handwriting on the wall. What’s hard is getting everyone else to slow down, read it, and understand it too!

Posted by: David R. Remer at April 10, 2006 11:46 PM

David good article. Even better follow-up to Jack.
You wrote:
“The Republican answer is as woefully inadequate as the Democrats.”

This however seems a bit unfair to me. All Democrats are not the same. Some have great ideas and have proven themselves to be serious and sincere on the topic of fiscal responsibility.
Feingold is one such Democrat — and he is a true Liberal as well.

Posted by: Adrienne at April 11, 2006 12:06 AM

Adrienne, the Democrats left this nation with over 5 Trillion dollars in national debt in the early 1990’s and if they had their way, it would have grown much higher. Newt’s Republicans brought Clinton around, and halted that climb by 2000.

So, I say to you the same as I said to Jack, take the partisan blinders off and address the math. Follow the link in the article, read what Walker has to say, pull out your calculator and crunch a few numbers, and realize the politicians en masse have brought us here, and they are as yet unwilling to act to reverse this course of the Titanic.

I respect Feingold on the debt, and I respect McCain on the debt. But they are ineffective. They are not turning the wheel. To turn the wheel to avoid the berg will require a mass layoff of incumbents, forcing politicians to equate their reelectability with fixing our nation’s broken rudder. Allowing incumbents to return simply rewards their short sighted political greed for reelection.

Posted by: David R. Remer at April 11, 2006 12:16 AM

David R. Remer wrote: [David Walker said]: America is on a path to depression and bankruptcy, and the politicians to date, refuse to act to prevent it.

I hope not, but it is not hard to fathom. Not at all. Not if you consider the growing number of pressing problems that congress talks about all the time, but never resolves. These many pressing problems certainly won’t make recovery from the next recession (which occur every 2 to 11 years for the last 46 years) easy. Sadly, it is easy to see how it could easily turn into the next Great Depression (or worse).

Mr. Walker said, the public has not been educated to accept responsibility for the viability of our nation’s future.

Sad, but true. They are lazily slumbering or looking for a handout.

Education is the first step to understanding the human factor (laziness) that fuels corruption, and the right mix of the six (6) fundamental components needed to maintain a healthy society. It requires the proper mix of Power, Education, Transparency, Accountability, and Responsibility. Otherwise, Corruption prevails.

[David Walker said]: The bottom line I took from his speech is this. If you can acquire great wealth over the next 20 to 30 years, do it.

I’m not sure we have that much time. Neither do several other economists, such as Harry S. Dent, who predicts a depression starting about 2010, and lasting for a decade or longer.

• Looking at historical norms, %Debt to GDP has never been higher since WWII.
• National %Debt to GDP is 68% (up from 33% in 1980)
• The $8.4 trillion National Debt (adjusted for inflation) has never been higher (true, there has been growth in GDP too, but we can ‘t grow enough to outgrow the debt).
• The National Debt would take 140 years to pay down if we started (now) paying back $1 billion per day, and stopped borrowing $1 billion per day. But we can’t (or won’t). The debt is growing by over $2 billion per day;
• The size of the government has never been higher. There are more jobs in government than all of manufacturing.
• Median incomes have been falling for 6 consecutive years.
• Foreclosures have been climbing for the last 14 consecutive months.
• interest rates are climbing.
• inflation is climbing.
• energy vulnerability; fuel prices are rising fast.
• the trade deficits have never been higher.
• foreign competition has never been stronger;
• entitlement systems are in trouble; Social Security is $12.8 trillion in the hole; Medicare is unknown trillions in the hole;
• the PBGC and pensions are over $450 in the hole;
• The amount of wealth belonging to the wealthiest top 1% of the population has never been higher since the Great Depression of 1929.
• And, foreign competition has never been higher (and increasingly better educated). Global Corporatism has never been higher.
• The troubled entitlement systems and dependency on government has never been worse.

Posted by: d.a.n at April 11, 2006 12:27 AM

I agree with all you said but this call for a third party is asinine. You work with the Government you have and it is clear the present Republican one is full of idiots.

The priority is to replace the GOP Majority. Vote Democrat. To do anything else is to support Bush.

Posted by: Aldous at April 11, 2006 12:49 AM

D.a.n, the quote at the beginning of your comment is mine, not Walkers.

Also, “The bottom line I took from his speech is this. If you can acquire great wealth over the next 20 to 30 years, do it.” is also my quote as indicated, not Walkers.

Where Walker is quoted or summarized I say so explicitly.

It could come as soon as 2010, but, Walker sees the crest of baby boom retirement wave in 2020 as the primary trigger and if I recall him correctly, that point in time when our obligations exceed our revenue capacity by enormous sums.

Posted by: David R. Remer at April 11, 2006 12:53 AM

Screw incumbent Democrats, Aldous, they haven’t learned their lesson yet, either. By all means vote Democratic if you wish but, don’t vote for a Democratic incumbent if their record reflects they are part of the problem instead of the solution. In fact, if your incumbent hasn’t already stirred up tremendous controversy trying to put Congress on the right track, the odds are they don’t deserve to be reelected. So, if you don’t know where your incumbent stands on these issues, they haven’t been working to make the changes necessary, and you are safe voting them out of office and doing your country and her children the best of all possible favors.

Posted by: David R. Remer at April 11, 2006 12:56 AM

I agree with all you said but this call for a third party is asinine. You work with the Government you have and it is clear the present Republican one is full of idiots.

The priority is to replace the GOP Majority. Vote Democrat. To do anything else is to support Bush.

The republicans are already using that angle. Sounds like an election year.

http://www.foxnews.com/story/0,2933,191253,00.html

Posted by: Amani at April 11, 2006 01:42 AM

Adrienne, the Democrats left this nation with over 5 Trillion dollars in national debt in the early 1990’s and if they had their way, it would have grown much higher.

Bollocks! Clinton ran Budget Surpluses for the last 7 of his 8 years, and actually managed to Pay Down The National Debt in two of the eight!

Now, I’m going to post some Links to some very informative Graphs here, but since the WatchBlog LinkNazi Paranoiabot will kill the entire post if I list more than *two*, you will have to copy-and-paste everything to the right of “http://” into your browser Address-Bar:

img.photobucket.com/albums/v11/fredcdobbs/USNationalDebt2.gif

img.photobucket.com/albums/v11/fredcdobbs/USNationalDebt1.gif

img.photobucket.com/albums/v11/fredcdobbs/PresidentialYearlyAverage.jpg

img.photobucket.com/albums/v11/fredcdobbs/WhiteHouse1.jpg

img.photobucket.com/albums/v11/fredcdobbs/RevenuesVSExpenditures.gif

img.photobucket.com/albums/v11/fredcdobbs/BurLabStat2.jpg

img.photobucket.com/albums/v11/fredcdobbs/BurLabStat1.jpg

img.photobucket.com/albums/v11/fredcdobbs/ClintonA.gif

img.photobucket.com/albums/v11/fredcdobbs/ClintonB.gif

img.photobucket.com/albums/v11/fredcdobbs/BushSr.gif

img.photobucket.com/albums/v11/fredcdobbs/BushSrB.gif

img.photobucket.com/albums/v11/fredcdobbs/BushJrA.gif

img.photobucket.com/albums/v11/fredcdobbs/BushJrB.gif

Any serious analysis of these graphs, which come from such sources as the Bureau of Labour Statistics, the White House, and the Treasury Department, will reveal the Truth to you: Clinton Good - Bush Bad; Democrats Good - Republicans Bad.

And that is throughout history, mind you! From Hoover vs. F.D.R. to Clinton vs. The Bushes: the economy does better under Democrats than it does under Republicans.

Imagine that.

Posted by: Betty Burke at April 11, 2006 02:10 AM

I agree with Jack that entitlements need to be addressed. You cannot look at those charts and not conclude that. It is interesting to note that social security is flat. It isn’t something that needs to be “fixed”.

An interesting number relationship to look at would be the cost of healthcare as a percent of GDP. You will find that even though utilization has remained relatively constant, costs have risen well above other CPI factors.

What does this mean? Record profits for the Health and Insurance industries. Follow the money and you begin to recognize who is screwing who. I think research is something that should be promoted, but first you take care of those that need treatment.
Rationing of Healthcare? It has to be, even in the private sector.

Nationalizing Healthcare is the only real solution that offers to resolve this profiteering with out screwing over the general population. It can be done by making providing basic healthcare as defined by some moving medical definition, a cost of being in the healthcare business. If you can also finance a privately funded,with out cost shifting, higher end service, more power to you. Real consequences for malpractice and fraud, and incentives to also develop new technology.

Then you’d have true free market conditions in Healthcare. Today we have a fraud based, cost shifting, profit lead instead of medically responsible, boondogle-like mix of private and public monies.

Massachusetts has begun a program that may well be a national model, that keeps its in the private sector.

Posted by: gergle at April 11, 2006 04:35 AM

If you can’t amass great wealth, consider raising your children in another country whose economic future is not a sinking ship like that of the United States.

Not that easy, David. If the US goes down, the rest of the world goes with it. Everything’s connected. And that’s why Bush is counting on China not to pull the plug on us by calling in our debts to them.

Jack, if Republicans were serious about reforming entitlements like Social Security, they wouldn’t have insisted on the private accounts which are revenue neutral (minus the $2 tillion initial expense). They would have proposed something that actually reduced the cost of entitlements.

Posted by: American Pundit at April 11, 2006 04:57 AM

gergle:

I have reservations about the Massachusetts health proposal because I haven’t heard the specifics of what financial benefits will be available to subsidize insurance costs paid by people who get partially subsidized insurance through work.

While I am sympathetic to the plight of the uninsured, as someone who paid over $200 a month for insurance through work, I am leary of giving insurance to everyone else for free. I believe they propose some aid to persons with job related health coverage, but it the heat of political debate and economic realities, my group is likely to be the first excluded to save money. If that is the case, this program won’t be different from any of the previously proposed give-away programs to insure the poor.

Posted by: goodkingned at April 11, 2006 04:59 AM

It isn’t just the uninsured getting screwed,Ned, it’s everyone. As long as you see it as a them or me problem, you are only helping the thieves operate.

I’m not sure Massachusetts Plan will work, either, no plan will work if not executed properly. This at least. appears to be a step in a sane direction.

Posted by: gergle at April 11, 2006 05:55 AM

Jack, if we can control all of this spending (parks, defense, etc.) how come we are not doing it?

I agree completely with David here. It seems my viewpoint does not differ at all here.

Something I would like to add though, my generation (currently still in school) will most likely pay all the way for social security, but not get it. I have a very strong feeling about this. It is only a prediction, but we are now basically giving the government money to fuel its own problem.

I am hoping that in the 2008 election that things like this finally spark up in the American mind. People have to realize the danger that America is headed in during the next decade.

I also would like to remind everyone, that despite how much I do not like Clinton, he balanced the budget. Bush, well, didn’t.

Posted by: Ethan Poole at April 11, 2006 07:18 AM

I respect Feingold on the debt, and I respect McCain on the debt. But they are ineffective. They are not turning the wheel. To turn the wheel to avoid the berg will require a mass layoff of incumbents, forcing politicians to equate their reelectability with fixing our nation’s broken rudder. Allowing incumbents to return simply rewards their short sighted political greed for reelection.

Yes, but we need to make sure the people running against them are willing to do something about the debt. We seem to have failed at this too.

Posted by: TheTraveler at April 11, 2006 07:49 AM

D.a.n, the quote at the beginning of your comment is mine, not Walker’s.

Ooops. I am sorry. I really confused who said what.

It could come as soon as 2010, but, Walker sees the crest of baby boom retirement wave in 2020 as the primary trigger and if I recall him correctly, that point in time when our obligations exceed our revenue capacity by enormous sums.

Well, I hope it never happens, and we have to do something very soon to stop the decay. But it is looking more and more inevitable. Our many ignored problems just keep growing worse and worse, making it hard to see how it can’t end badly.

The thing is, when things go bad, they have a strange way of accelerating. Bad feeds more bad. Our nation and economy is large, but not invincible.

If it wasn’t such a sad and serious topic, I’d say we should start a pool. But, we don’t want to fuel a self-fullfilling prophecy.

We might make to 2026 or 2036, and it is amazing how long it takes things to play-out.

Ofcourse, no one knows, which is why the current policy of “(1)spend, (2)borrow, (3)print-money, (4)return to step (1)” seems even more irresponsible. But, if I had to guess, we will not make it to 2026 or 2036. My guess is that the following factors will be the catalyst that triggers a total economic melt-down:

It will eventually catch up with us.
There will be consequences.
There are dozens of factors , but the biggest five factors will be the following:
_______________

• [1] FISCAL and MORAL BANKRUPTCY: $8.4 National Debt and $40.2 total nation-wide debt, decreasing options, lost opportunities, falling dollar (not backed up by real value), potential inflation, trade deficits, and the failure stop the debt from growing ever larger. Also, the PBGC and pensions are $1.6 trillion in the hole.


• [2] GENERATIONAL STORM: 77 million aging baby boomers (that all vote), making less, spending less, pay less tax, expecting to draw from already troubled Social Security, Medicare, Medicaid, & welfare; while Social Security is currently $12.8 trillion in the hole now, these entitlement problems could culminate since Medicare, Medicaid, and Welfare are already in huge trouble, now;
  
• [3] ENTITLEMENT

SHORTFALLS: The looming Social Security shortfalls are hard to ignore, but Medicare, Medicaid, & welfare deficits and short falls are already here. And in time, the decreasing number of tax-payers per entitlement recipient will only get worse. We can’t possibly grow, tax, spend, or immigrate enough to change that.
[4] LIMITED GROWTH & INCREASING FOREIGN COMPETITION: The limited capacity for growth due to declining quality of education, a generally less educated population failing to develop new technologies, coupled with a steady increase of foreign competition.

• [5] ENERGY VULNERABILITY: Of all the responsible, insightful things government could have done, bought-and-paid-for incumbent politicians failed miserably to research and foster alternate energy sources, more energy efficient homes, automobiles, etc.

Posted by: d.a.n at April 11, 2006 09:56 AM

I see this as a money making situation. The problems others create provide great financial opportunities for anyone who is able to seize them.

Of course, it is because most people will be in financial trouble that this holds true, but at least it’s a (small) bright side.

Posted by: Zeek at April 11, 2006 09:56 AM

David
“The priority is to replace the GOP Majority. Vote Democrat. To do anything else is to support Bush”

“reveal the Truth to you: Clinton Good - Bush Bad; Democrats Good - Republicans Bad”

I think these quotes, and the exact opposite of each, pretty much sums up why “vote out all incumbents” will never be successful. We are a divided nation, one where party has become more important than country.

While I’m sure our country will go the way Mr. Walker has expressed and I will not sit back and do nothing.
Our country deserves better and we Americans deserve better.
Give Washington DC a flush and lets start a new chapter with new characters. The path we are on now is not working so what do we have to lose?
In 06 and 08, I will not vote for one incumbent.

Posted by: kctim at April 11, 2006 09:59 AM

Zeek,

True. Some wealthy will get wealthier.
Land and hard assets are usually sold off cheap.
It’s really a shame to see people foreclosed on, but voters really have themselves to blame for all of it. This sort of pain and misery is necessary if we are to ever learn.

I’m preparing now … paid off the house and all loans (zero debt), diversified investments, and will liquidate quickly and buy hard assets, such as you suggested above (real-estate), before losing a huge majority of it as many did in 1999 to 2002.

There is one more silver lining.
When inflation grows out of control, people’s debt ( $40.2 trillion nation wide ) will practically disappear. Unfortunately, so will their savings, pensions, stocks, and bonds.

BTW, the PBGC and pensions are already $450 billion in the hole now.

A war is brewing.
A generational storm.
Those paying into Social Security and Medicare their entire life are not going to be happy when they denied their entitlements, but there is no way to get around the simple math. We have massive debt. We can’t grow, print money, borrow, or immigrate enough to solve the problem. Spending cuts will occur whether anyone likes it or not, because the money will simply not exist. You can’t get blood out of a turnip. They are screwed, and we are already bankrupt, but simply don’t realize it or refuse to admit it.

As hard as some try to paint a rosy picture, it’s really hard to see how this can’t end badly.

kctim, you may be right. It may never work in our lifetime. But it is the only thing that will ever work, some day. Everything else simply pushes that day further into the future.

Parties are not the problem or the solution.
Think outside of the box.
Don’t be seduced into the petty partisan warfare.
That is a tactic to distract and fool voters.
Don’t allow yourself to be manipulated any longer.
Take off the partisan blinders.
Stop wallowing in the petty partisan warfare.
Grow wise and learn how to spot those clever tactics.
Don’t listen to those that promote mediocrity.
Don’t accpet the status quo.
America should be the first to take the next step to a higher level.

• We have tried this party, and that party.


• We have tried conservatives, moderates, and liberals.


• We have wallowed in the partisan warfare, and despised those that fuel it.


• We have tried power and corruption, and we have forgotten transparency and accountability.


• We have tried to live at the expense of everyone else, but complain about the danger of the growing deficits and National Debt.


• We have tried to reduce waste and pork-barrel, but keep voting for those that bring the pork home, and bribe voters with the voters’ own money.
  
• We have tried to ask government to provide for us from cradle to grave, but complain that bloated government meddles too much in our lives.


• So, after we have tried everything else, why don’t we finally try the one simple, common-sense, no-brainer, non-partisan, honest, and responsible thing we were supposed to do all along?




Vote out all irresponsible incumbents, always, every election, until:


• no more irresponsible incumbents exist,


• government finally agrees to pass the many badly-needed, common-sense, responsible reforms that incumbent politicians have refused to pass for many decades,


• and our many pressing problems are finally addressed, instead of being ignored and allowed to grow in number and severity, threatening the future and security of the nation.

_________________________________________
Stop Repeat Offenders.
Don’t Re-Elect Them !
_________________________________________

Posted by: d.a.n at April 11, 2006 10:24 AM

my generation (currently still in school) will most likely pay all the way for social security, but not get it.

You’ll get it Ethan. The baby boom “crisis” is a bubble. It’s the pig in the snake. Americans are having fewer kids and after the baby boomers all kick the bucket there will no longer be a solvency problem with Social Security — if there is one to start with, and many economists don’t believe there is. Fiscal projections are made on absolute worst-case assumptions, and things just aren’t that bad.

The best thing that could happen is we stop throwing hundreds of billions of dollars a year into unnecessary wars and irresponsible tax cuts that only benefit the wealthiest elite.

The middle class tax cuts (ending the marriage penalty, the child tax credits, and expanding the 10% bracket) — the tax cuts credited with boosting the economy — were all made permanent in 2004. The tax cut extensions the GOP is looking at now (three quarters of the entire tax cut package) are for people who derive most of their wealth from stock dividends, capital gains, and who own estates worth over $4 million.

Posted by: American Pundit at April 11, 2006 10:40 AM

David,
You and me have discussed the National Debt problem in depth (2004) before on this site so I would like to take this time to address what I see IMHO is the problem established by the Democrats and Republicans stand on the Issue of the “Working Poor” in America and what a Demo-Publican political party could do to direct America toward a Politically Unalienable Correct solution to the problem of Foreign Owned Debt.

Therefore IMHO, VOID.org needs to address the Ancient Argument of how to keep “The Poor” poor so that they will serve “The Rich” and the Social Elite of Society and still keep Civil Peace among the Ignorant of the Law I think would be considered Politically Correct if one was to summarize the stance taken by both Political Parties back in the 70’s. For if I am not mistaken it was Our Parents that fell for the line that “We are here to serve Society.” Yes, God forbid if “The Poorest Consumer” was able to have a job so that they could pay for what they need to live the Simple Productive Life demanded from them by Society. How would that make them different from the “Silver Spoons” and effect the “Royal Bling-Bling” long associated with the Kings and Queens of the World. What about Social Class standings that has always been a part of Society? Yet, why in the 21st Century of the Human Race are “We the People” fighting a War over a few Rapitalistic People of Society who believe that by blowing up the world they have the ultimate Power over others is a “Better World” than making the “Poorest Human on Earth” who is willing to live a simple productive Life and obey the Intent of the Law of the Land economically viable and financially Independent which is Established Law.

For as you and I have discovered, the Wealth of the Average American is not in them serving Society, but the Freewill and Knowledge of what Investing in the Individual’s own Inherent Best Interest and that is “We the People.” Sure President Bush could of saved America by asking the American Public to buy “Terrorist Bonds” to finance the Future of “We the People” instead of telling the general public to “Go Shopping” in defense of your Country like he did right after 9/11. Sure, the Immigration problem could be addressed by the raising of wages to curve demand just as the Oil Companies are doing with gas prices; however, we both know that is politics and “We the People” must live with the Right and Wrong of Our Elected Officials. Nevertheless, the Politically Unalienable Correct thing for Congress to do is to establish a Federal Elective Pre-Payroll Program that would allow Americans to invest a part of their Employer/Employee Payroll Tax into United States Federal Reserve “Special Treasury Notes” and reap the reward of the Interest paid by our Federal Government as they build the Unlimited Sustainable Global Economy that is an American Birthright.

Now, I am not saying that my 20/7/40 plan is politically right for America, but I do know that the Founding Fathers would stand up and cheer that the American People finally figured out how to use Compound Interest to their own Inherent Best Interest instead of that of a Wealthy few. Yet, I must in all good Faith and Honor believe that the Global ramifications of Intelligently Designing, Creating, and setting into motion a Societal Movement that will yield every Citizen of America and Humanity’s Nations of Law the ability to become Economically Viable and Financially Independent in a Society where Rapitalistic Nature of Man is kept in check would not only pay tribute to those Americans that have walked before Us, but send a Clear and Present message to Washington and the Rest of the World Leaders that Humans are not as Dumb as they Think. Because after all, Knowing will always beat Thinking in the Battle for the Mind and Soul of the Human Physic.

If America is going to survive in the 21st Century as a Leader of Nations than it is the Duty and Responsibility of Everyone who truly believes in Freedom and Freewill is to VOID Washington until Our Civil, Political, and Religious Leaders comes to term with the Principles & Standards established by the word Consume and it’s root word Upanishads which mean the Teaching of Knowledge through the Spirit of American Law found in the Peace Maker and Constitution of the Six Nations of Iroquois because that is exactly were Thomas Jefferson built America’s Liberty Tree and The Founding Fathers placed the Faith of this Nation in. Any argument about a level playing field?

Posted by: Henry Schlatman at April 11, 2006 12:21 PM

American Pundit wrote: … after the baby boomers all kick the bucket there will no longer be a solvency problem with Social Security — if there is one to start with, and many economists don’t believe there is. Fiscal projections are made on absolute worst-case assumptions, and things just aren’t that bad.

Sorry, AP, but I have to disagree.
The insolvency problem can not be resolved quite so easily.

Social Security is already $12.8 trillion in the hole (source: CATO Institute, FAQ # 2). The lock-box is full of I.O.U.s .

And, you should look at the whole picture. Social Security, Medicare, Medicaid, Welfare, Iraq, $8.4 trillion National Debt, PBGC $450 billion in the hole, high costs of illegal immigation, trade deficits, corporatism, rising inflation, rising interest rates, rising foreclosures for 14 months, falling median wages for 6 years, etc., can not be considered individually. All are managed (or, more accurately, mismanaged) by one irresponsible entity. Democrats can’t fix it. Republicans can’t fix it. Voters could, but won’t fix it. So, saying it is merely a bubble is very optimistic indeed. If I didn’t know better, I think some imposter from the rose-colored column hijacked your handle.

Just take one thing; such as the $8.4 National Debt. It is growing by $2 billion per day! Interest on the debt is crushing us. Government has already started printing too much money to reduce that debt. The problem is, the price of a loaf of bread goes up. Your savings fall in value.

Anyway, if we started today paying down the $8.4 trillion National Debt, by paying back $1 billion per day and cease borrowing $1 billion per day, it would take 140 years. But, it gets worse. Social Security and Medicare are already in trouble. Those shortfalls are not even part of the $8.4 trillion National Debt yet. Deficits are forecast from decades. %Debt to GDP is already 68% (up from 33% in 1980). It’s going to get worse. Either spending cuts or complete failure will occur. Americans don’t understand the magnitude of the problem. They hear one economist say everything is rosy, and believe what they want to hear.
Research it yourself.
Look at the data.
Then decide for yourself.
Also, check out those strange theories (at rodgermitchell.com) that say we can never go bankrupt, your children will never pay back the debt, Social Security and Medicare will never go bankrupt, etc. Some people really believe this stuff. Note: the book is called “FREE MONEY” (but the book is not free).

True, tax reform is needed too, but no reforms will ever come about until voters figure out what it was they were supposed to be doing all along. I fear they’ll have to learn the hard way again and again.

No, it’s not a pretty picture, no matter how you look at it.
It is not difficult at all to see how it can very easily lead to an economic meltdown
_________________________________________
Stop Repeat Offenders.
Don’t Re-Elect Them !
_________________________________________

Posted by: d.a.n at April 11, 2006 01:33 PM

David:
“So, I say to you the same as I said to Jack, take the partisan blinders off and address the math.”

Uh, I was agreeing with you — and the math. Guess you just can’t take yes for an answer, eh? :^/

“Allowing incumbents to return simply rewards their short sighted political greed for reelection.”

The point I was trying to make is that people can actually remain loyal to their political viewpoints by keeping the responsible incumbents in their parties, yet still vote out the ones who have brought us to this bleak and dismal point.

Posted by: Adrienne at April 11, 2006 02:14 PM

Woman

It will come down to that. We can keep people alive indefinitely, but not with a quality life and not at an acceptable cost. The bioethics problem is significant. Until not long ago, we could always be on the side of life because we knew our efforts were limited. Now we have to make a choice at some point. It sounds very bad, but honestly, is it worse than keeping someone alive such as Terry Scheivo?

People ask a question, “what if it was your child who needed the care?” Of course, if it was my child, I would spend the whole GNP. So would others. That is why we cannot make it an option.

You would be enslaving the whole society to support the needs of a terminal few.

David (& Ethan)

You can cut the world cop thing out completely and you still cannot pay for entitlements if they continue to grow as they have. The deficit is small potatoes compared to entitlements. Interest on the deficit is 7% of the budget (about half of what it was in 1985) and the entire Federal government consumes around 20% of GNP today. At their current growth, entitlements alone will consume 28% of GNP by around 2060. It is on your charts and in your report. And it doesn’t stop growing even there. You can’t have it. There will not be enough money in the U.S. to pay for it even if you tax all the money from the rich.

We will cut entitlements before that. No matter what anyone says. I am sure there will be a clever way to hide it.

I have said many times, and it is true, that only current producers can support current consumers. Unless you are living off a basement full of canned goods and dried fruit, you are living off what someone produced THIS YEAR. This will happen in the future too. No matter what the accounting procedure or how it looks on paper.

If I am still around in 2060, I will certainly be among those needing extra care. Don’t give it to me. Life is sweet, but there comes up time for all of us to shuffle off this mortal coil and keeping our current piece of protoplasm alive for a couple more years is not worth it.

Ethan

If nothing changes, your generation would be better off investing in lottery tickets than SS. AP is right that the baby boom is a bubble (1946-1960), but given current and expected life expectancies that bubble will persist for around 50 years. After that, you will still have medicare problems and you will never again have the large working populations supporting the small group of retirees we had through the 1990s.

SS is around 7% of your pay. You and your employer pay around 15%. That percentage will grow. Don’t count on seeing it again.

Posted by: Jack at April 11, 2006 03:10 PM

Adrienne, agreed. Took your last comment for me to recognize that we are on the same page. My apology.

Posted by: David R. Remer at April 11, 2006 03:24 PM

Jack,
Entitlements and other such things as electiciy for our Federal Buildings can be eliminated by using Our Brains for more than following the Status Quo. By pushing forawd an Economic Plan that sees the Poorest of Society able to invested in their own Inherent Best Interest, America can change he World without the need to double Taxes. Unless, the ideology of the Republicans are still to Oppress the Consumer in 2006 & 2008.

Short of making every American a potential Ecomically Viable and Financially Independent through opportunity’s and education the Market will always go Bust. No, the true path to making oneselve rich is by making everyone else around them rich. In that manner the Beast of Nature “I the Consumer” does not have to use his Rapitalistic Nature and take that which was not given to him.

Posted by: Henry Schlatman at April 11, 2006 03:42 PM

Henry

We can talk all we want about what we should do. The fact is that entitlements grow and have grown without regard to administration or political party since the 1960s. Most of the people who will be getting entitlements in 2050 are already born today and so are the people that will be supporting them. We can count and project with near certainty and if we don’t change, we cannot support it.

Posted by: Jack at April 11, 2006 04:12 PM

Okay, let’s take a global view. The “entitlements” are the problem. These “entitlements” include Medicare (one of the most effective downward pressures on health care costs until the Republican Congress mandated that they not negotiate with drug companies to lower drug costs), SS, etc. So these entitlements will go to pay for actual health care and living expenses for retirees that paid into the government for years using the regressive tax structure of FICA and CMS. Now, somewhere, somehow, society has find the money to pay these costs, whether from the individuals incurring them or some other source of funds. The problem is made more acute as legacy employers strip their retirement funding obligations and pass them along to the individuals or, in all likelihood, the government.

So it seems to me that the conservative beef is that these expenses come from tax coffers, rather than directly from the individuals. Of course, this is grossly unfair, as the tax structure has tilted further away from the rich and more toward the middle class. There ought to be a special tax on all of us who have made money off the backs of the working class to pay for these expenses. Yes, I wish they would have saved more, but then our economic expansion would have been less and our deficits and debt even greater (Clinton would have failed, for example, to create surplus revenue). But I am happy to pay what it takes to ensure that the retirees live in dignity and health, as long as everyone does their share. And by that, I mean they pay proportionately to their benefit. And by that, I mean their aggregated wealth, not just their income that they couldn’t find a way to shelter.

Posted by: mental wimp at April 11, 2006 05:59 PM

“But I am happy to pay what it takes to ensure that the retirees live in dignity and health, as long as everyone does their share”

Thats everybodys “share” according to what YOU think it is, right?

Posted by: kctim at April 11, 2006 06:04 PM

David, good blogpost as usual. Keep up the good work.

I might suggest a slightly more apt analogy to our situation, being the frog in a pan of water gradually being heated on the stove burner; the heat is rising so gradually he does not even realize he’s being cooked until it’s too late. (Disclosure: I plagiarized this analogy)

I have to believe when the Titanic hit that ‘berg, at least a barely perceptible tremor passed through the ship causing some concern among those who didn’t see the shaved ice all over the deck.

But when the proverbial waste matter hits the universal distributor in our current economic situation, it’ll be all over but the crying for anyone holding paper assets, including cash.

The situation has, IMHO, little per se to do with this federal program or that federal service… It has everything to do with the citizen who just does not care. And unfortunately, it just may take a severe depression or hyperinflation to get people caring about what the government does again.

Posted by: wanna_be_jack at April 11, 2006 06:12 PM

Jack,
America was founded on the idea of every Citizen being able to become Self-sufficent. In Todays World that means it is the Duty and Responsiblity of The Individual and Society to have the Knowledge and Opportunity to become Economically Viable and Financially Independent to the Lifestyle of their Self-Nature.

Now, I want to hear from a Republican explain just why it is ok for the “Rich” to invest in Treasury Notes and Bonds, but somehow it would be wrong for “The Poor” to be able to invest in these same funds. Certainly the Idea of your fellow Americans holding your National Debt would be safer than the UAW’s of the World. Would it not?

No, being Economically Viable and Financially Independent is the first step in building a Righteous Nation and the need of National Treasury has never been higher if America is going to win the War on Terror. Cry opppress the “Poor of the World” if you want, but just remember that at NO Time in Written History has the “Rich” every won out over “The Poor” in this Race to Equality and Fairness that is taught by The Human Teachings of Man.

Posted by: Henry Schlatman at April 11, 2006 07:22 PM

Henry

My fellow Americans can and should invest. Their government cannot invest for them. If the government buys its own debt it is like you writing a check to yourself. You can have a big pile of checks in your bathroom cabinet, but you cannot cash them with real money unless you have money in the bank.

The government has only one way to pay off its obligation - tax current Americans. The Americans of 2006 can promise themselves anything they want. They can promise that the American of 2060 will pay them at that time. But the Americans of 2060 must do the paying and they will decide whether or not to do so and in what way. And they will be the ones to be able to pay or not.

In 2060 - according to David’s charts - entitlements will make up 28% of GNP. That is not 28% of the budget. That is 28% of all the goods and services produced in the United States. For comparison the WHOLE Federal government today takes about 20% of the GNP. So entitlements alone will be costing more than everything the Federal government now spends.

Cut out Iraq. Cut out all military. Cut out the State Department, Cut out Interior. Fire every civil service employee and you still don’t have even half of this.

Do you really think this is possible or sustainable. I know some people want to tax the rich etc, but if you restored ALL the tax cuts you would not get 1% of the money you need. If you doubled taxes on everybody, you still would not have enough money to pay entitlements and reasonable government expeditures.

David is right about the Titanic analogy. I - the optimist - am one of the only people to understand this and what it means. The rest of you think you can someone avoid the pain just by raising the taxes on the rich. Good luck to all of us if we don’t face reality.

Posted by: Jack at April 11, 2006 08:13 PM

wannabejack and Jack, thank you for your contributions. I agree with you both. Taxing our way is as insufficient as spending cuts. Both, and a number of other things must happen in a comprehensive plan to turn the ship before the boomers crest in 2020 and ride that wave for another several decades.

It is time to put the partisan philosophies and bickering aside and address the problems wholistically, and both parties must be willing to say lobbyists, donors, and special interests be damned. The entire future of the nation depends upon taking modest but rapidly increasing more substantial steps to raise revenues where they can be and still maintaing economic activity, cut entitlement spending without prematurely killing Americans whose lives depend on them, and educate, educate, educate the public that savings is crucial to their future, belt tightening time is here regardless of which party has control, and sacrifices have to be made, symbolic and real from the President and Congress down to the janitors and maids.

Can we do it? Glad I am not a betting man.

Posted by: David R. Remer at April 11, 2006 08:36 PM

Henry, savings is a crucial leg of the 3 legged stool that can support our future. Raising revenues and cutting spending being the other two. Now who with the power to make it so, will step up to the plate?

Check this out though! “Consumer credit outstanding rose to $2.164 trillion in February, rising at an annual rate of 1.8 percent from a slightly revised $2.161 trillion in January. The revision in January’s gain was mostly due to a downward revision in the December total to $2.155 trillion.”

Divide 150 million workers into 2.164 Trillion. The result is a nightmare. Who is going to save at 2.5% interest when they have debt with interest rates ranging from 8 to 28%. There is no savings to be had by this public which is leveraged to the hilt. Scary stuff, this.

Posted by: David R. Remer at April 11, 2006 08:41 PM

David R. Remer

This is central to the point I was trying to make. The costs will be there, it’s a question of how, as a society, we intend to meet them, given how big that cost will be and how dire our debt situation it. Any attempts to just shift the source of funding from one group to another, especially from those with a lot of resources to those with little, is rearranging the deck chairs and fighting over lifeboats, folks. Either the money will be there or there will be carnage.

Clearly, cutting the costs of medical care is one necessary step, and that will take a revamping of how we approach the idea of health as a private benefit or a public good. I tend toward the latter and think that approach will make the costs go down precipitously, much like the public health approach to drinking water has made the costs of water-borne disease plummet over the past century (and, no, it isn’t because of antibiotics; that’s propaganda).

But encouraging saving while our government policies are driving down real incomes and preventing debt-laden individuals from starting over to the benefit of the already wealthy (no, those savings will not go into the consumers pockets; that’s a fairytale told by an idiot) is a cruel joke. It is important to understand that the consumer debt belongs to the middle class, the ones who in the past have been self-sufficient in retirement. The choice we have now is between the currently fashionable political philosophy being pushed by those who welcome a return to the days of the robber barons and wish to dismantle the New Deal apparatus that led to the unprecedented growth of the middle class, against the more nuanced philosophy that regards some redistribution of wealth as a necessary counterweight to the inexorable flow of wealth and power to those who already possess them. I know it doesn’t fit the dogma of a vocal segment of our political classes, but I’m afraid it is vitally important.

Posted by: mental wimp at April 11, 2006 09:26 PM

Can we do it? Glad I am not a betting man.

I think it’s already past the point where we can do anything about it. The economy is already on life support; the only thing keeping it from keeling over is federal deficit spending and easy credit.

IMHO, if federal spending is reduced enough to make a difference with the deficit or if credit becomes tight enough to encourage saving, we’re looking at a recession or depression. Ben Bernanke has already promised (threatened?) to dump baskets of cash out of helicopters if that’s what it takes to avert a depression. How many dollars do you think that loaf of bread will cost you when helicopter Ben starts up?

I’ve seen several remarks along the lines of “_______ has some good ideas but I don’t see them doing anything to turn the ship.” Needless to say, not trying to be pedantic, what we have is 535 people just in the legislative branch each trying to turn the ship in their particular favorite direction. Some want tax cuts, some want to tax more, some want to provide incentives for particular behavior, some want to provide incentives for other particular behaviors, etc. Some seem to simply want to exert and consolidate their power for personal gain and for the benefit of their patrons, with no particular concern for the common good.

We started out over 200 years ago having a government for the common good. Somewhere we took a detour to this weird place where the good of certain individuals has taken the place of the common good.

I think the wrong turn occurred at about the point when politicians realized that they could spend their entire adult life in Congress and get rich in the process.

The only hope I see is for strict term limits and draconian campaign financing regulation. But since these laws would have to be enacted by incumbents, it isn’t going to happen.

Posted by: wanna_be_jack at April 11, 2006 09:30 PM

wanna_be_jack, the idea of term limits and reform is wonderful. However, it is currently a pipe dream. You are right that incumbents won’t do any thing to cange this. I began reading David R and D.A.N’s posts a while ago and believe they have the answer. I think VOID is the right idea, if we hold elected officials feet to the fire for an election cycle or 10 they will have to concern themselves with what we want. It would be nice if they bothered with our concerns more than at election time, if only a few “safe districts” start to fall consistantly we could wrest government back from lobbies, corporations and large $ intrests.

Posted by: Ted at April 11, 2006 09:57 PM

Mental Wimp, thanks for the comments. I agree entirely that our ship is already sunk if we continue to allow the accumulation of wealth to accrue into so few hands, because as the ship sinks, guess where that wealth will go? Yep! Overseas along with many who made their wealth here if depression, chaos, and civil strife mark the sinking. Those counting on the majority of the wealthy to bail out the sinking ship are dreaming.

Redistribution of wealth is essential, but in a manner which leaves investors investing, and businesses surviving, and workers working. The irony is, research shows most of the wealthy would gladly give up tax cuts if they would help secure the nation’s financial future. But, they have no faith in that happening if Congress won’t take the responsibility to end the deficits and chart a plan for zero debt growth through the baby boom retirement years. And Congress won’t assume that responsibility until their careers are put on the line if they don’t. That is where Voting Out Incumbents comes in. It really is up to the voters whether partisan power and politics governs legislative outcomes, or saving the nation’s future does.

VOID has generated a growing number of supporters for the concept - many hundreds. But, at this rate, holding Congress to account might occur after barnacles have consumed the sunken ship for a few decades at the bottom of the ocean. Spreading the Vote Out Incumbents solution is going to take real commitment of money and time and energy by its supporters to hasten the spread of its logic.

And with our without VOID, the voters are going to have to exercise their common sense in November and demonstrate a show of strength to the anti-incumbent sentiment all on their own. If the anti-incumbent logic does not become commonplace by the 2008 elections, I am not sure time will be left to avoid the berg.

On a lighter note, a lady emailed me today telling me her precinct captain told her there is no box on the ballot for voting out the incumbent. I explained as diplomatically as I could, that voting out the incumbent means voting for a challenger to that incumbent. But, I don’t know who any of the challengers are, she said.

Common sense, it is not as pervasive as most of us would like to think.

Posted by: David R. Remer at April 11, 2006 10:41 PM

wannabejack, I do understand your sense of Catch-22 frustration. My perspective is this. Either I invest my time, money, and energy to make the difference that must be made, or I leave this nation to sink without me, or I stick around to sink with her.

The latter two are less appealing to me to than the first. Your mileage may vary.

Posted by: David R. Remer at April 11, 2006 10:44 PM

Ted, thanks for the reflections. Glad to see another citizen acknowledge where the hope lies.

Posted by: David R. Remer at April 11, 2006 10:45 PM

SS [Social Security] is around 7% [6.2%] of your pay. You and your employer pay around 15% [actually, 15.3% = 2(6.2% + 1.45%)]. That percentage will grow. Don’t count on seeing it again. Posted by: Jack at April 11, 2006 03:10 PM

I don’t. Especially since:

• Social Security is $12.8 trillion in the hole.


• Medicare is in worse shape (trillions in the hole).


• National debt is $8.4 trillion.


• PBGC is $450 billion in the hole.

That picture isn’t pretty at all.

Recovery from the next inevitable recession (predicted to be any time between now and 2013) will not be easy.

I’ve been watching things for decades grow worse and worse. The thing we need right now is highly unlikely. Voters could force government to be responsible and accountable , and they may some day, but it’s probably too late now.
They will probably have to learn the hard way.
There is a method right there under the voters’ nose, but they can’t ever get it together to do the right thing. And, it’s getting hard and harder as millions of illegal aliens are also voting in our elections.

These problems will solve themselves, since inept government can’t and slumbering voters won’t.

The problem is, no one is going to like the default solution.

Posted by: d.a.n at April 11, 2006 10:51 PM

Jack,
So your solution to the problem of National Debt is to leave it for your Children’s Childen in 2060. Gee, what kind of present would of been left to us if Our Forefathers did not have the foresight to leave us Nature? No, the National Debt is not a problem of raising taxes or selling America’s asses such as our ports. Americans in your life have walked among us that saw the United States own 75% of the World’s Gold. Now, does the Political Parties of the 60’s have the Courage to do what is right or will the American Youth of the 21st Century seek a new political party that can take them to the Promise Land?

To borrow a phase from the 60’s, Times; they are a changing and the 21st Century Rat Race will not be a Race to the Bottm, but a Race to defy “The Sky is the Limit” imposed upon the American Socieyu due to their Ignorance over what Right and Wrong is. Please read the Republican report that says Today’s Collage Students trive off that debate.

BTW, yes investing in the Federal Reserve Special Treasury Notes is like allowing each American to write their own check almost. Good Credit and a friendly Financial Advisor can show you how to borrow up to 80% of those funds and invest it into a nice nest egg without paying a dime. Ben Franklin put it best when he said “Thank God for Compound Interest.”

David,
Part of taking back control of Washington and thus by defualt America is for the American Public to own more of Our National Debt than any other enitiy. Yes, a few Trillion Dollars may seem like alot of money; however, if it is “We the People” that own that debt than the Debate over what to do with it is a Family Matter not a weapon that can be used by other Nations to influence the Political Will of “We the People” in the Halls of Congress.

Currently, I am working on such a plan that I call 20/7/40 and hopefully in the next few months can demonstrate to you and others the Knowledge and Wisdom that can be found from Our Grandparents of The Great Depression and how through the purchase of War Bonds in WWII the Collective Wealth of America grew to the point that our Leaders are able to run up a National Debt of over 40 Trillion Dollars.

Posted by: Henry Schlatman at April 11, 2006 11:02 PM

d.a.n, don’t give up hope. Soc. Sec. can be saved still with modest adjustments in 2008, 9 and or 10. Social Security is not the problem, it is salvageable. If the government can show Americans that giving up a little sooner can save the program through the boomer event, they will climb on board and make accept the adjustments, gladly for the most part. A safety net for retirement is a very, very important item for most Americans.

The killer is health care. Not just entitlements but the inflation rate of health care costs. That is a tougher one to solve, and there may be no solution that will preserve an adequate health care system as we know it today. But, that does not mean their aren’t alternatives that could work. Examples: 1) Move away from the doctor centered model of health care to a Physician’s assistant and nursing centered health care system. I don’t know what the stats are, but, it is safe to say that the vast majority of visits to a doctor could be handled by PA’s and nurses. That would cut the Doctors out of the cost chain, and dramatically lower health care costs. 2) Tax cosmetic and elective surgical procedures to offset the rising costs of Medicare. This would lower the demand for health care procedures and with lower demand comes lower rate of inflation, plus increased federal revenues. 3) Establish health care courts run by a judge, and health field professionals WHO ARE NOT in health care delivery for a profession. These courts could screen out obvious frivolous laws suits against health care providers, and handle small dollar cases to settlement through in court arbitration. 4) Halt federal subsidies to medical research and development. Until the baby boom generation has passed, the government should not be funding extending lifespan through R&D. That is just plain economic suicide. 5) Allow states to determine physician assisted suicide laws for terminally ill patients under court review. 6) Open Rx imports from nations with clearly high standards. Pharmaceutical companies be damned.

These measures off the top of my head and others, could go a long way toward reducing the health care cost impact upon our economy and federal debt. There are solutions, the trick is to force politicians to do their homework and produce results. This game of stalling because we are too busy getting reelected is what will eventually sink the ship, as you and I both well know.

Posted by: David R. Remer at April 11, 2006 11:26 PM

Henry

I am saying just the oppostite. We have to restructure entitlements. We cannot save for it. I don’t want to leave debt for my kids.

Your compound interest example doesn’t work when the government invests in itself. It just moves debt from one pocket to another.

Here is the question. If the government invests in the government debt, and the debt matures in 20 years, who pays the debt?

Again, the simple example is you, a piece of paper and a pen. Each month, you write yourself and IOU for $100 and you grant yourself 10% interest. At the end of 20 years, you want to retire. You take all your IOUs out and find you have a$1 million in IOUs. What are they worth? It is monopoly money. You say you owe yourself a million. If you have a million you can pay yourself off. But have you become richer by paying yourself? If you don’t have a million dollars, are your IOUs worth anything at all?

The government creates the money and the debt. It owes itself. It has only the money it gets form current taxpayers.

We should cut government spending. But no amount of cuts and no amount of taxes can pay for entitlements if they reach 28% of GNP.

If we don’t restructure entitlements, future taxpayers will either go broke or default. I prefer default.

Posted by: Jack at April 11, 2006 11:48 PM

There are solutions, the trick is to force politicians to do their homework and produce results. This game of stalling because we [incumbents] are too busy getting re-elected is what will eventually sink the ship, as you and I both well know.

Yes, that one fundamental change (vote out irresponsible incumbents, always) is a prerequisite, and the prerequisite step to that is education.
Of course, giving up is not an option, since that accomplishes nothing.

Posted by: d.a.n at April 11, 2006 11:54 PM

David:

I used to buy “doomsday” finacial books at garage sales and use them for my financial seminars.

Here are some titles:

The great depression of 1990.

Bankruptcy 1995

The coming economic earthquake, (written by Larry Burkett in about 1990).

All of them use exactly your premise. Your thoughts are very old, and have been expoused and proclaimed for at least the last 20 years, and I even remember books like this from the 1970’s, but I am alas getting old and cannot remember the titles. The books from the 70’s were about high inflation and the oil crisis that was going to ruin America.

I have at least in my memory four decades of thoughts and publications of thought tracts like these here.

What is ironic is that in the late 1980’s early 1990’s it was the religious right the was preparing for the collapse of our economy. I remember a woman pulling all her money out of her IRA’s paying the tax and penalty to pay off her mortgage. This was in about 1992.

One of the errors I see from your side of the argument is that debt numbers are almost never put inside a context of assets. For instance in the last 5 years or so, American Net Household Worth has increased by as much as the national debt. That is networth!! Assets minus debt.

When we look at fiscal spending and say it has a present value debt of $40 Trillion, that is so misleading because you fail to calculate the net present value of Net worth. the $40 Trillion is based on todays dollars and size of economy.

Are there going to be problems and issues? Of course. We cannot have 80 million people get sick and die without feeling the effects. As we go through the years watch the economy shift.

Watch:

1. Retirees take on part time jobs.
2. Immigration increased.
3. More aggressive taxation on Estates.
4. A major change in how health care is delivered.

Let me stop on #4 for a minute. An assumption from your end of the argument is that we will continue to deliver Heatlh services has we have. We wont. How do I know that? The health care system is dominated by care for the elderly. (My parents age). Every single institution our generation has touched has be transformed and recreated. We are watching our parents in health care, and we are going to demand changes.

When I was a kid, church has an organ and a piano and a choir. Drums and electric guitars were of the devil. Now I can’t find a church without drums and electric guitars. My church meets in a school. (We want to spend money on something other than buildings!!).

Health care isn’t a good “deal”. It’s too expensive for the health it provides. It’s going to change.

On number two (sorry for wandering) Don’t you think legalizing 8 million illegals has something to do with paying for Social Security? Nothing wrong with Social Security that immigrating a hundred million young folks wouldn’t cure!!

5. Innovation. Even in financial products.

Did you know for instance that on the AARP website is a way that is guarunteed for reverse mortgages, to allow seniors to use their homes in effect as a pension? They can never loose their homes. Add the present value of that new pension sourse to the equations for corporate pensions. It is actuarily sound. Now imagine using that wealth against the $40 Trillion net present value of our health care. With innovative estate taxation, it can happen.

I see the problems you and others have presented the last fourty years. But I also believe our system will create solutions as we approach these issues, and invent solutions that may not be doable (politically) or seeable at this time.

In the end, like I have said through out many debates, doomsday is not going to come, and the economy will continue to grow at or nearly at historical growth rates. There may be a slow down, such as Japan went through, but hardly doomsday. I could see our economy mirroring Japan, but actually not as severely. Ours system is far more flexible.

By the way, did you know that Corporate profits have risen in this recovery faster than any recovery in the post WWII era? Not bad huh? Corporate profits as a percentage of GDP are near 45 year highs. (looking for a place to tax?).

Craig

Posted by: Craig Holmes at April 12, 2006 12:10 AM

Craig Holmes,

American Net Household Worth has increased by as much as the national debt. That is networth!! Assets minus debt.

Hmmmmmm. They put it into homes, but it won’t mean much when they are foreclosed on, and the real estate values plumment. That networth could disappear very quickly.

Speaking of foreclosures, they have been rising for 14 months, and median wages have been falling for six years.

BTW, I’ve seen many of those books. I didn’t believe them then. Now is different. But, things take a long, long time to play out.

The important thing is the not one thing (such as debt, Social Security, immigration, trade eficits, etc.). The warning sign is the large number of serious problems, culminating all about the same time. Many things are piling up worse than ever now.

Corporate profits as a percentage of GDP are near 45 year highs.

I’m not sure Americans are thrilled by that, since median wages have fallen for 6 consecutive years.

Craig,
You know, even though all those books were wrong, it does not mean a depression can’t happen. Don’t be lulled into a sense of false security.

Also, I’m not sure our federal government could find their butt with both hands, much less a way out of the mess we’re in now. That’s a very serious factor. Solutions are useless if corrupt, inept, FOR SALE government won’t ever implement any of common-sense reforms.

No reforms (including immigration reform) are possible until one fundamental change is made first. All voters need to do is the one simple, common-sense, no-brainer, non-partisan, safe, peaceful, inexpensive, and responsible thing voters were supposed to be doing all along:

Vote out (or recall) all irresponsible incumbents, always, every election, until no more irresponsible incumbents exist, and government finally agrees to pass the many badly-needed, common-sense, responsible reforms that incumbents have refused to pass for so many decades.

: )

Posted by: d.a.n at April 12, 2006 02:04 AM

A note on term limits:

I see a danger of being able to implement long term policies if term limits were instituted. Some problems require consistent application of a policy to effect change. Educational reform, infrastructure overhauls, environmental conservatism and intergenerational poverty are examples of problems that can’t be solved with a short term shotgun approach.

The legislative attention span is already too short with few legislators willing to support unpopular, yet necessary, programs during an election year. Without sponsors to shepard multi-initiative programs through congress, many legislative issues would wither on the vine.

Posted by: goodkingned at April 12, 2006 02:48 AM

Jack,
Securing the Borders and Ports, Reconstruction of Infrastructure for Commerce and Security, and Iraq are being paid for by who? China? Now how is allowing them to hold that Note for Twenty Years in the Hope that the Wealth of America will grow or me having enough faith in my fellow citizens that some how some way The Children of the American Spirit can learn from the mistakes of Our Parents so that “We the People” can build that “Better World” which the Democrats and Republicans could only dream about 40 years ago.

Invest, be Taxed, or allow America to go down in Written History like every other Nation that has made it to the ranking of the World’s only Super Power. Sorry, but as a Proud American I do believe that the politically unalienable correct way to solve the argument over Entitlements is to make Every American willing to live a simple productive life that adds positively to the function of society Economicailly Viable and Financially Independent. Because at that point you are no longer a Burden to Society and Society is no longer a Burden to You. Therefore, tell me How and Why Society owes you more than that? Can you give me a better idea for a Social Insurance Program?

Yes, “We the People” holding the Fat Side of America’s National Debt so that the Federal Reserve can generate the necessary funds in the World to allow “We the Consumers” to come together and work with the American Business World to bring on line the technology and advancements required to take America into the 22nd Century. While Rome was not built over night, the idea that America’s Economy is doing so good should say that building up the weak link which is the Federal Reserve just makes Common Sense. Now what would be Politically Perfect is the Power to take such a Fund and with the Roll of the Dice be able to assist the Invisable Hand of Society move America and Humanity’s Nations of Law away from the Rapitalistic Side of Man. After all, the last 40 years has shwon us that it is not the Strongest that survive, but the Smart, Quick, and Lucky who through Hope and Risk ensure the forward motion of Society.

Posted by: Henry Schlatman at April 12, 2006 04:21 AM

I agree with Jack that entitlements need to be addressed. You cannot look at those charts and not conclude that.

Actually, you cannot look at those Charts and not conclude that the Economy will be fine as long as it’s not left to Spencerian Trickle-Down Corporate-Welfare Hogs!

Case In Point: if the cost of the unnecessary Iraq War were all fed into the Social Security programme - as it exists now, with no changes - Social Security would be able to function for over 75 Years without coming close to running out of money.

Case In Point: under Bill Clinton’s Trickle Up economics, the U.S. not only ran Federal Surpluses (beginning one year before Newt Gingrich and his Contract Killers took office), but actually was able to pay down the National Debt for two years running! (And, had Al Gore not been replaced in the Coup Of 2000, we would have continued to see Budget Surpluses and pay down the National Debt.)

Take the blinders off! Those figures do not lie!

Posted by: Betty Burke at April 12, 2006 05:51 AM

BTW: in the above post, I meant to highlight the Charts I posted links for. I’m going to try to see if I can set them as Images below. `Hope this works…

National Debt #1

National Debt #2

Presidential Year Average

From The White House

Revenues vs. Expenditures

From The Bureau Of Labour Statistics #1

From The Bureau Of Labour Statistics #2

Under Clinton #1

Under Clinton #2

Under Bush, Sr. #1

UNder Bush, Sr. #2

Under Bush, Jr. #1

Under Bush, Jr. #2

Posted by: Betty Burke at April 12, 2006 06:04 AM

Ahhhhhhh…

The truth, crushed to earth, shall rise at last.

Posted by: Betty Burke at April 12, 2006 06:05 AM

I don’t think the pessimism is warranted, or useful. Sure we may have a big problem here, but we can’t just sit down and do nothing.

People are right that growing out of this is not an option. They are wrong, though, if they don’t think restoring tax revenues is a necessity. A balanced budget is essential for getting this problem under control.

We need to get down to barebones essentials, though, and get rid of the billions and billions of dollars of tax breaks and subsidies that distort the market from sustainable practices and add to the deficit. Cut out the pork. I think voters will understand if the Rich Campaign Contributor Memorial Rest Stop or the Museum of State Bird Droppings doesn’t get built. What’s led us to this point is this “We’re screwed here, so we might as well splurge anyways” attitude, where fiscal responsibility is simply seen as nitpicking.

We don’t need to wait for some big disaster or stock crash to bitch-slap us before we get our act together. We can’t avoid the hard times this crap is going to bring to pass, but we sure as hell can wise up and do better.

Posted by: Stephen Daugherty at April 12, 2006 10:14 AM

Jack, So your solution to the problem of National Debt is to leave it for your Children’s Childen in 2060.

Henry,
It is more like our children’s childrens’ childrens’ childrens’ childrens’ childrens’ children ( 2010 to 2150 ).

99% of Americans don’t fathom the magnitude of the problems (combined).

Observe the foreign nations that are starting to reduce their exposure to the falling U.S. dollar.
Too bad we gave control (via debt due to massive borrowing) of the dollar over to foreign nations.

While our problems, growing fast in number and severity, haven’t been felt yet (things take a long time), and they have not yet created an economic meltdown, has lulled too many Americans (and dumbass politicians who should know better) into a false sense of security.

That is unwise.
Recessions come and go every 2 to 11 years.
The last recession was about 5 years ago.
The following have the potential to change things drastically. These five main things could easily turn a recession into a depression:

• FISCAL IRRESPONSIBITY: $8.4 National Debt and $40.2 total nation-wide debt, decreasing options, lost opportunities, falling dollar (not backed up by real value), potential inflation, trade deficits, and the failure stop the debt from growing ever larger, and increasingly corrupt government too incompetent to deal with it;


• GENERATIONAL STORM: 77 million aging baby boomers (that all vote), making less, spending less, pay less tax, expecting to draw from already troubled Social Security, Medicare, Medicaid, & welfare.


• ENTITLEMENT SHORTFALLS: The looming Social Security, Medicare, Medicaid, & welfare deficits and short falls, and decreasing number of tax-payers per entitlement recipient.


• LIMITED GROWTH & INCREASING FOREIGN COMPETITION: The limited capacity for growth due to declining quality of education, a generally less educated population failing to develop new technologies, coupled with a steady increase of foreign competition.


• ENERGY VULNERABILITY: Of all the responsible, insightful things government could have done, they failed miserably to research and foster alternate energy sources, more energy efficient homes, automobiles, etc.

Posted by: d.a.n at April 12, 2006 11:01 AM

Betty Burke,
Fantastic research!
I learned a lot from that !
If I may add to that, notice that %Debt to GDP is now over 68% (up from 33% in 1980).
But, it is on target to reach 100% within a few years !
National Debt is now quadruple what it was after WWII.

It’s not a pretty picture.
But, don’t worry.
Some tell me everything is “very good”, “good”, or, at least, “OK”.
Don’t worry ! Be Happy !

Posted by: d.a.n at April 12, 2006 11:10 AM

Actually, you cannot look at those Charts and not conclude that the Economy will be fine as long as it’s not left to Spencerian Trickle-Down Corporate-Welfare Hogs!

… as evidenced by Corporate profits (as a percentage of GDP) are near 45 year highs, while median incomes have fallen for 6 consecutive years, and foreclosures (nationwide) have increased for 14 consecutive months.

Posted by: d.a.n at April 12, 2006 11:35 AM

Gee!

I wish I could copy and paste reams and reams of stuff over and over and over again on every posted article on watchblog!

Posted by: womanmarine at April 12, 2006 01:47 PM

Wow, great discussions and comments (all around), and the graphs are extremely helpful! Good work, you guys.

Posted by: Adrienne at April 12, 2006 02:02 PM

One thing that is evident from the charts posted above by Ms. Burke is that it is bad for the US economy to have a terrorist attack on the heart of our financial industry.

All the graphs indicate that the economic situation went to hell in late 2001. It is only reasonable to conclude that the attack on September 11th was the cause of the downtown.

Further examination of the deficit numbers indicates that tax revenue is disrupted by a terrorist attack and the resulting societal upheaval. Based on the above information we can also conclude that waging war is expensive.

The information provided above on job creation and unemployment only extends to 2004 therefore includes none of the job gained in ‘05 and ‘06. I don’t know the number of jobs excluded from the analysis above, but I do know that the job recovery didn’t gain steam until after the 2004 election. I’m sure everyone is aware that the unemployment rate is now about 4.5%, lower than the rate achieved in any of the years charted on the graph.

To sum up, we have learned that domestic terrorist attacks and the resulting aftermath are bad for the economy in terms of tax revenue, job creation, and deficit spending. What an amazing statement of the obvious. The only new information implied by this data is that it takes four to five years to affect a significant recovery from this sort of national event.

Posted by: goodkingned at April 12, 2006 02:43 PM

Gookingned,
In 2001 the President and Congress had the opportunity to cut the Payroll taxes for All Americans instead of the across the board cut. Considering that We had a surplus recession, Common Sense should of told all the Republican Business People that by increasing Wages without the heavier burden of higher payroll taxes would of allowed not only the bottom line of business grow, but would of increased the revenue of the Government through the sell of the surplus goods.

As I told a business person, would you like the government to give you a tax rebate of $100,000.00 or would you rather the goverment give you 100,000 new potentially Economically Viable and Financially Independent Customers?

Posted by: Henry Schlatman at April 12, 2006 03:22 PM

11-Sep-2001 hurt us terribly.
But, the economy actually started sliding in 1999.
Stocks started tanking in 1999.
Things got worse in 2000,
and even worse in early 2001.

11-Sep-2001 hastened the decline.
Despite a few good cherry picked stats (e.g. low, but rising interest rates; low, but rising inflation; low, but stagnant job creation), we are still in bad shape.

No one thing by itself is harmful.
It is the combination of many things, culminating almost simultaneously, that has the potential to turn the next inevitable Recession into the next Great Depression.

• median incomes have been falling for 6 consecutive years.
• foreclosures have been rising for 14 consecutive months (nation-wide);
• the total nation-wide debt is now at an all time high of $40.2 trillion. National Debt is now $8.4 trillion. The interest on $8.2 trillion represents another $38 trillion in interest alone if we started paying it down now, which would require us to stop borrowing or printing $1 billion per day, and also pay back $1 billion per day, and 139 years to do it, and that is if interest rates don’t go any higher than now.
• $8.4 trillion National Debt, highest Debt to GDP percentage since WWII
• Debt to GDP percentage is now 68% (up from 33% in 1980)
• Trade deficits have never been hihger.
• Troubled entitlement systems have never been in worse shape; Medicare has all time high looming shortfalls; Social Security is $12.8 trillion in the hole (source: cato.org)
• The PBGC and pensions have an all time high shortfall of $1.6 trillion; many pensioners are also being ripped off by greedy corporations;
• Interest rates are rising (not at a historical high)
• Inflation is rising (not at a historical high)
• The wealth gap has never been larger since the Great Depression of 1929 ;
• We still continue to lose manufacturing to foreign competition
• Never has foreign competition been higher.
• Foreign competition is increasingly better educted, while we are not;
• There is a brain drain, and it will grow worse as the economy grows worse. And technology won’t save us with the decreasing quality and sky rocketing cost of education;
• We have a nation that graduates more lawyers than engineers and scientists, where lawyers are in league with bought-and-paid-for government that are perverting the laws to do the very things they were originally supposed to prevent
• the size of government is at one of the all time highs, and growing fast to nightmare proportions;
• There is an increase of legal plunder; just from 1998 to 2002, there have been over 10,000 cases of nation-wide eminent domain abuse, and the Supreme Court cleared the way
• Tax Payers are being ripped off and the tax system is severely abused; Do you wonder why Congress likes it the way it is ? Wonder why they refuse any type of tax reform ?
• Future American generations are being ripped off and burdened with 140 years of massive debt.
• Bought-and-Paid-For governments are pandering to corporations, giving rise to the ugly side of capitalism and elitist government;
• government is fiscally and morally bankrupt
• We have lost untold number of opportunities due to crushing national and private debt, reducing our options, even threatening national security
• It may already be too late, but that’s no reason to hasten it, making it worse for us and future generations, or making recovery from the next recession more difficult;
• We can not grow, immigrate, or tax our way out of the debt or pressing problems that are growing in number and severity, and increasingly ignored by bought-and-paid-for incumbent politicians, who are constantly trying to distract us from their miserable behavior.

Posted by: d.a.n at April 12, 2006 03:39 PM

Here’s a radical idea: make the entitlement problem the baby boomers problem today.

I always hear with a smirk from baby boomers how younger generations are screwed social security and medicare-wise but that the boomers will be ok.

To me, the boomers elected these politicians over the course of their lifetime that mismanaged their social security and medicare, and the boomers - not the next generations - should be the ones who fix it or suffer the consequences. Their benefits should be threatened immediately in order to get them to use their political power to elect politicians that fix the long term problem.

If you break it (be it purposely or for lack of paying attention) you should be the one to fix it or suffer, not your children.

What the hell is wrong with these people? They take take take and when they can’t afford their wants, they run up the national credit card and plan to leave it to their children to inherit.\

We need some UNcompassionate fiscal conservatives to be elected. Finding a fiscal conservative nowadays is a hard thing to do, the Republicans since Reagan have been far worse than Democrats.

Posted by: Redlenses at April 12, 2006 03:48 PM

Posted by: Ted at April 11, 2006 09:57 PM … if we hold elected officials feet to the fire for an election cycle or 10 they will have to concern themselves with what we want. It would be nice if they bothered with our concerns more than at election time, if only a few “safe districts” start to fall consistantly we could wrest government back from lobbies, corporations and large $ interests.

Ted, I agree!. We’ve tried everything else. Why not, finally, try the one simple thing we should have been doing all along?

David R. Remer at April 11, 2006 wrote:

Common sense, it is not as pervasive as most of us would like to think.

Either that, or a conflict-of-interest.
Self-interest that is.
The irony of our microscopic self-interest is that it sabotages our macroscopic goals.
Microscopically, we instinctually and logically know our desire for security and proseperity.
Macroscopically, we are unable to do the most simple, common-sense, non-partisan, inexpensive, responsible thing that is right under our nose, for the improvement of us all.

Voters have the right to vote, but fail to see that very thing that is right under their nose to peacefully force government to be responsible and accountable too. Education is the key.

Then, hopefully, someday, we will understand why and how we keep shooting ourselves in the foot.
______________________________

… the boomers ; not the next generations ; should be the ones who fix it or suffer the consequences. Their benefits should be threatened immediately in order to get them to use their political power to elect politicians that fix the long term problem. If you break it (be it purposely or for lack of paying attention) you should be the one to fix it or suffer, not your children.

Redlenses,
Something has to give somewhere.
That is what they mean when they talk about the “Generational Storm”. There is going to be a struggle. Young people are growing resentful of the entitlements. Especially as the ratio of younger tax payers to entitltements recipients grows smaller and smaller, and the tax burden becomes larger and larger. Several have written books about this coming “Generational Storm”. It’s not hard to fathom.

I would forfeit everything I’ve paid into Social Security and Medicare over the last 34 years if they would stop making me pay into it now. But, that is the very microscopic viewpoint mentioned above. The boomers paid into Social Security and Medicare all their life. Should they be denied the benefits? No. However, since it has been so terribly mismanaged, along with dozens of other things for so many decades, the problem will most likely solve itself the hard, painful way.

Posted by: d.a.n at April 12, 2006 04:17 PM

BINGO! We are allowing our enemies in, handing them our sword and laying our collective heads on the block. We are even apologizing for not being capable of beheading ourselves so they won’t have to be bothered with the chore.

As Ann Coulter so aptly put it, go to France or Mexico or the Middle East or any OTHER FREAKIN’ COUNTRY ON EARTH and try this crap with them. They’ll be no apology, or amnesty, just a good buttkicking, jail and deportation back home, IF you are lucky. We have become too chicken-s#*t to defend our freedom or our security, and we now deserve neither. I am sad for my country and for the world, it will be worse off without us.

Posted by: David C. at April 12, 2006 10:48 PM

Entitlements the problem? No, financial mismanagement is at the root: as a nation, we’ve failed to master simple addition and subtraction. We spend much more than we take in. Period. No fancy economic formulas needed.

Any Republicans who claim to be “conservative” are either stubbornly deluded or simply perverse. The Republican Party is the party of radical and libertine irresponsibilty and ineptitude. Whatever we thought of Mr. Clinton personally, his administration could at least balance a budget. Alas, the nation voted in the current administration, which is reckless to such a degree that an objective observer could be forgiven for assuming it is intentionally striving to destroy the economic stability of the richest nation on earth.

My theory? The only possible answer left in a world gone mad: George W. as Manchurian Candidate.

Posted by: Reed Sanders at April 12, 2006 10:53 PM

Reed Sanders wrote: Entitlements the problem? No, financial mismanagement is at the root: as a nation, we’ve failed to master simple addition and subtraction. We spend much more than we take in. Period. No fancy economic formulas needed.

Thank you!
Now, wasn’t that simple?
I couldn’t agree more.

The only possible solution (which is a long shot), is to educate voters how it all works.
A picture is worth a thousand words.

It seems people have no common sense (some don’t).
But, what most people lack is education.
People have a microscopic viewpoint.
People understand their own desire for security and prosperity.
People do not understand the macroscopic (big) picture.
People do not see how they are shooting themselves in the foot, because they do not understand what they need to do to help themselves.
People have been given the right to vote, but they lazily squander it by pulling the party lever (i.e. straight ticket).
People have got to stop being lazy, stop pulling the party ticket lever, and start doing what voters were always supposed to be doing all along.
Voters can keep re-electing irresponsible incubments,
keep empowering incumbents irresponsible behavior,
keep letting incumbents ignore problems growing in number and severity,
keep letting corruption grow (as it always does if allowed),

… Or simply do what voters were always supposed to do: vote out all irresponsible incumbents, always, stop re-electing repeat offenders, and stop shooting ourselves in the foot.

Eductation will lead to demands to make things Transparent, which will lead to Accountability,
which will lead to Responsibilty.

Posted by: d.a.n at April 12, 2006 11:30 PM

Dan,
Can you produce the same picture above only with the names on the doors changed? IMHO it would make a great sign for what VOID Voters need to do in 2006 & 2008.

Posted by: Henry Schlatman at April 13, 2006 12:46 AM

Wow!
That’s a great idea, Henry.

Posted by: d.a.n at April 13, 2006 01:57 AM

Now put 2004 vs. 2006 and I think we might have a good picture for VOIDNOW.org

Posted by: Henry Schlatman at April 13, 2006 04:45 AM

Here are some ideas for fixing Social Security:

1) Eliminate the cap of $90,000 that is tax eligible. However, to ensure that the middle class isn’t hit with an enormous tax hike the tax should be progressive. Like 2.5% for any income exceeding $90,000 but below $150,000, and 5% for income above $150,000 and below $200,000, and the usual rate for any income over $200,000.

2) Tie the retirement age to a percentage (I would suggest 90%) of the average life expectancy determined with each census. So if the life expectancy for men and women averaged about 77 years in 2000, then the retirement age would be about 69.

3) In most projections Social Security is set to take in more revenue than it has to pay out for the next 10-15 years. The government has used this money for years on other programs, leaving nearly $13 trillion in I.O.U.’s. I suggest using the surpluses over the next decade or so to give out low interest mortgages for first time home buyers. The Social Security surplus for the year 2005 was about $270 billion, the government could have used that money to give out 1.35 million 30 year mortgages averaging $200,000 each at 5% interest. In 15 years all the money will have been repaid, and in 30 years they will have doubled their money.

Posted by: bushflipflops at April 13, 2006 07:16 PM

bushflipflops:

I think you will see something like that. (probably watered down.

Fortunately our country is in great shape economically. American industry is lean and mean, and very capable of adapting in the future. They ahve record amounts of cash on hand, and profits as a percentage of GDP are near post WWII records.

I think the doomsdayers are flat wrong.

The pattern to all their thought is to use geometric progression on the bad stuff (debt) and linear progression on the good stuff (assets) and then show that doomsday is coming.

For instance in the current article of discussion, the figure of $40 Trillion of debt is used as a present value for entitlements. What isn’t meantioned is a present value of the economy over the same period of time. Since the nominal economy doubles usually every twelve years or so we need to see the Present value of the economy next to the present val