Today we hear quite a lot about the U.S. debt ceiling or debt limit. So in this article I try to draw upon Internet news, political news, and economic news for sources to examine this situation. Before deciding about the politics of the debt limit, one must understand it – what it is, from where it came, and how Congress uses it.
Debt Ceiling ORIGIN, Composition, and Purpose
A statutory ceiling on federal debt was established in 1917 under the ‘Second Liberty Bond Act.’
The debt is the total outstanding liability owed by the US Federal Government to:
- U.S. Citizens
- Corporations
- Foreign Governments
The debt can be classified into two general categories:
- Public accounts, consisting of treasury bills, bonds, and notes
- Government accounts, owed by the federal government to itself, consisting primarily of Social Security and similar trust funds
The debt ceiling’s original purpose was an instrument established by Congress to limit the Treasury Department’s ability to borrow, but it has increasingly lost its effectiveness. It has been waived ten times in the last decade. And a vote to increase the debt limit has often been tied to “must pass” spending increases.
Debt Ceiling MYTHS
Here are some myths about the debt ceiling:
- Failure to pass a debt ceiling increase means defaulting on our debts – Refusing to raise the debt limit does not mean defaulting on our debts. The U.S. Treasury currently takes in more than enough revenue to pay both the interest and the principal on the debts we currently owe. The government would have to prioritize its expenditures – for example, sending out checks for the troops’ pay and Social Security first.
- Failure to pass the debt-ceiling increase on time would be unprecedented – Both the administration and the media sound as if we are at the edge of economic Armageddon if we have not raised the debt ceiling. That’s not quite so.
- It’s always a “clean bill” – The administration is insisting that it would be shocking for Congress to add any conditions to the debt-ceiling increase. But such conditions are far from unprecedented.
- This is not about future spending – The administration insists that raising the debt ceiling is just about paying for spending that’s already occurred. Depending on how high it is raised, it may be about paying only for spending that is already authorized – or much more. Authorized and spent are not the same thing.
- Only Republicans oppose raising the debt ceiling – The media and the administration want to turn this into a partisan fight. The ongoing narrative is that radical Republicans in thrall to the Tea Party want to wreck our finances, while Democrats responsibly want to pay our bills.
Debt Ceiling SCARES
Here are some scares that the administration and MSM try to promulgate:
- Treasury Secretary Timothy Geithner has warned that failing to lift the debt ceiling would have “unthinkable” consequences.
- Timothy Geithner said, [not raising the debt ceiling will] “shake the basic foundation of the entire global financial system.”
- Joshua Green, a senior editor at The Atlantic, wrote, “If Congress fails to raise the federal debt limit, the government will default, which all parties agree would have catastrophic effects on the economy.”
- The Associated Press reported that if “borrowing slams up against the current debt limit ceiling of $14.3 trillion and Congress fails to raise it, ‘the resulting’ damage would ripple across the entire economy, eventually affecting nearly every American.”
- When Democratic Senator Mark Warner of Virginia asked at a hearing what would happen “if we were to default and not raise that debt ceiling,” Federal Reserve Chairman Ben Bernanke replied ominously: “It would be an extremely dangerous and very likely recovery-ending event.”
When/If the Debt Ceiling IS raised, what happens?
In a release this afternoon (2 Jun 11), the Moody’s ratings agency said it would put the U.S. credit rating under review if Congress and the Obama administration don’t make progress on increasing the debt limit. “If the debt limit is raised and default avoided, the Aaa rating will be maintained. However, the rating outlook will depend on the outcome of negotiations on deficit reduction.”
The United States is at risk of having its pristine credit rating lowered if politicians in Washington cannot agree on a plan to bring down the nation’s deficits over the long term, ratings agency Standard & Poor’s said Monday (18 Apr 11). This means that there is a one-in-three chance that S&P could downgrade the nation’s “AAA” credit rating within two years. S&P said its outlook change was based on the growth of the United States’ deficits over the last several years as a percentage of gross domestic product, the broadest measure of economic activity.
Back in April, Standard & Poor’s threatened to reduce America’s top-shelf credit rating. Now another investment agency, Moody’s, has issued a similar warning. In fact, Moody’s is more urgent. S&P spoke of a one-in-three chance that our credit rating would take a hit within the next two years. Moody’s is talking about downgrading our AAA credit rating within the next few weeks. There is also a difference in the stated reasons both agencies gave for issuing their warnings. S&P was explicitly worried about our mounting national debt, while Moody’s is worried that we won’t make it bigger. This is an important warning shot fired by the credit market. Standard & Poor’s used a rifle, while Moody’s used a pistol. Raising the debt ceiling without budget reforms in place means we would dodge the Moody’s pistol shot and run smack into the S&P rifle bullet, which was fired to warn us of much more serious, long-term danger.
When/If the Debt Ceiling is NOT raised, what happens?
The United States has hit its debt limit on 16 May, 2011, and the world hasn’t come to a screeching end, the sky isn’t falling, and no one is really talking about it. The Obama Administration and Geithner have continually warned about a “double-dip recession,” yet, America is still in a recession and hasn’t gotten out of it. “Recovery Summer,” in fact was the opposite, the economy hasn’t recovered.
If Congress fails to raise the debt limit by August 2, the Treasury has only two options: It can default on its debt – meaning, stop paying its creditors around the world – or continue to pay creditors but halt any other federal spending above what the government collects in taxes. In effect, that would mean an overnight spending cut of about 40 percent. Here are six consequences if the Treasury is forced to choose one of those options:
- Cut $125 Billion Per Month – The federal government must borrow an additional $125 billion each month to finance all of its commitments. If the Treasury chooses to continue to pay creditors but stop all other federal spending, the government will have to begin reducing its spending by $125 billion every 30 days.
- Treasury Bonds Collapse – If the government defaults on its debt, economists say that prices for Treasury bonds would collapse and interest rates would probably soar to record highs.
- Cut Medicare and Social Security – To reduce spending by $125 billion a month, the government would have to make deep cuts to the two giant entitlement programs.
- Stock Market Plunge – Wall Street generally agrees with Geithner that it would be a disaster if the U.S. defaulted on its debt.
- Government Furloughs or Mass Layoffs – The federal government would most likely turn to furloughs or mass layoffs to immediately cut spending.
- Sky-High Mortgage and Interest Rates – If the government defaults, interest rates on mortgages would shoot up.
Dilemma and Debate
Current spending growth is unsustainable. The Government Accountability Office estimates entitlement spending on Social Security, Medicare and Medicaid alone will amount to more than 20 percent of GDP by 2080, if current policies are unchanged. Excessive government spending and high tax rates reduce economic freedom and thus the range of choices open to individuals. When government runs large deficits and adds to the national debt, private investment can be crowded out. Today, the gross federal debt is approaching 100 percent of GDP. In addition, unfunded liabilities of Social Security and Medicare total more than $100 trillion. Studies by leading economists Kenneth Rogoff and Carmen Reinhart have shown that when sovereign debt exceeds 90 percent of GDP, real growth tends to slow.
China, and others holding U.S. sovereign debt, will suffer huge losses if the United States cannot get its fiscal house in order and return to constitutionally limited government. By undervaluing the yuan against the dollar, China has accumulated more than $3 trillion in foreign exchange reserves, with a substantial amount invested in U.S. government securities.
For most of America’s history, adherence to the framers’ “Constitution of Liberty” did limit government spending, and the private sector flourished. Whether that ethos of liberty returns will determine the future path of U.S. fiscal and monetary policies.
Two of the biggest companies to warn of fallout from the debt-ceiling fight are life-insurance giant MetLife and private-equity powerhouse KKR. MetLife is brief in its warning, which appears in the quarterly report it filed May 10. It’s wrapped into a broader “risk factor” disclosure about “difficult conditions in the global capital markets and the economy,” and warns of market and economic volatility more generally. KKR is more specific. With its quarterly report filed on May 5, it added an entirely new section to its risk factors, warning of potential harm from a “failure or the perceived risk of a failure to raise the statutory debt limit of the United States…”
Financial firms aren’t the only ones worried about the debt ceiling. Hansen Medical, a small maker of medical robots in Mountain View, Calif., warns about the debt ceiling debate in its May 10 quarterly report. Seattle Genetics, a biotech company focusing on cancer and autoimmune disorders, warns of the debt ceiling debate in its May 6 quarterly report.
The debt ceiling is NOT the problem
The Treasury is out of money, but not out of games. Now that it has finally been made clear that in order to accommodate the debt ceiling by adding marketable debt, the Treasury has no choice but to literally plunder retirement accounts, we now know that in order to fit in the just announced $110 billion in new bond issuance over the next week, Tim Geithner will have to reduce US retirement funding (the bulk of which, the Social Security Trust Fund already lost $1.1 trillion in the past year) by at least $45 billion.
It should be noted that the debt ceiling is not the problem. Raising it solves the duplicity of Treasury behavior but doesn’t resolve the fact that we are caught in a debt death spiral that will result in the collapse of the dollar, producing hyperinflation and the likely collapse of our government.
Congress must accomplish three things to put the United States on a path to financial responsibility: (1) cut current spending, (2) restrict future spending, and (3) fix the budget process.
- Responsibility for the Debt Lies with Congress – When the Constitutional Convention met in Philadelphia in May 1787, the delegates who attended were well aware of the problems of the national debt, the state debts, and the poor financial reputation of the government. The Framers of the Constitution sought to reassure lenders that, even though it might change its form of government, the United States would honor its debt. The Framers included in the Constitution several other provisions that fixed responsibility for the national debt on the Congress of the United States. Legislative powers fix upon Congress the responsibility for the national debt.
- Congress Let Debt Get Out of Control – To spend more money than you have, you borrow, creating debt. Congress has grossly overspent beyond its means, creating a huge national debt. From a debt of $79 million when the Revolutionary War ended, the United States has racked up a debt of nearly $14.294 trillion. To put today’s debt in perspective, consider:
- It would take essentially everything that Americans produced (GDP) in all of last year to pay off the existing national debt of $14.294 trillion.
- The debt when the American Revolution ended was about $34 per American, which in today’s, inflation-adjusted dollars would be about $653 per American. Today, the debt owed by each American is over $45,000, nearly 68 times the size of the debt when the American Revolution ended.
- Cut Current Spending, Restrict Future Spending, and Fix the Budget Process – As federal borrowing approaches the current debt limit, Congress must reach agreement to accomplish three things to put the country on a path to financial responsibility.
- Cut Current Spending – In making cuts in current spending, Congress should emphasize cuts in continuing programs because, given the budget practices of government that look to existing budgets as baselines for setting future budgets, the current cuts likely will result in related reductions in future spending.
- Restrict Future Spending – In designing effective statutory restrictions on future spending, Congress should seek to reduce spending, with a reasonable transition period, to not more than the modern historical level of federal revenues.
- Fix the Congressional Budget Process – To do this, Congress should:
- amend existing federal laws that provide permanent or indefinite appropriations for federal agencies or programs (including entitlement programs), so as to retrieve congressional control of spending for those agencies and programs.
- estimate and publish the projected cost over 75 years of any proposed policy or funding level for each significant federal program.
- require a calculation of cost of a proposal that takes account of that response information available to Congress when it decides whether to pursue the actions.
Default on the debt does not occur when government borrowing reaches the debt limit. When the government reaches the debt limit and cannot borrow more money to pay its bills coming due, it must, as a practical matter in the absence of guidance set by law, establish priorities in paying the bills.
Congress should proceed with an orderly change of course in federal spending – taking action to cut current spending, restrict future spending, and improve federal budgeting – and at the same time it addresses the debt limit.
Failing to Control the Spending that Causes Debt, Congress Has Raised the Debt Limit Regularly – Early in the past century Congress enacted the first aggregate public debt limit, on federal bonds. Throughout the 20th century and into the present century, Congress has from time to time raised the debt limit and also has authorized the government temporarily to exceed the debt limit.
Fifteen weeks after the Japanese attacks on the U.S. territories of Hawaii, Guam, Wake Island, and the Philippines, Congress doubled the debt limit. Following the Japanese surrender on September 2, 1945, Congress took up the debt limit again -to cut it to $275 billion on June 26, 1946. Congress left the debt limit of $275 billion in place, but several times enacted legislation that temporarily authorized the government to borrow money in excess of the debt limit. Finally, on September 2, 1958, Congress raised the debt limit to $283 billion.
Since then Congress has raised the debt ceiling 30 times, and it now stands at $14.294 trillion.
WARNINGS from Europe – What could happen
- The European Debt Crisis – The “Vienna initiative” was a plan, drawn up in 2009, that halted the rot of financial contagion spreading through central and eastern Europe. It is now being discussed as a possible model for resolving Greece’s sovereign-debt crisis. The need to come up with a new plan for Greece is mounting. On May 20th, 2011, Fitch, a ratings agency, cut the country’s debt rating by another three notches. Yields on Greek ten-year bonds this week reached 16.8%, more than twice what they were a year ago.
- Greece’s Monetary Policy – Greece, struggling to avoid default on its massive national debt, obviously is in bad shape. This year it will run a budget deficit equal to 9.5 percent of its GDP. That actually is a significant improvement over last year, when its deficit topped 15 percent of GDP. Greece also provides an object lesson to those who believe that budget deficits are the result of low taxes. Greek taxes run as high as 40 percent on incomes above €70,000 per year. It’s not low taxes that caused the Greek crisis, but high spending. (Sound familiar?)
- Greek Coup? – Despite last year’s 110 billion euro Greece bailout there remains serious concern that the periphery EU nation will be unable to continue its debt repayments. Due to the increasing severity of the problem, and the ongoing resistance to additional support, the Central Intelligence Agency has now issued a report warning on how worsening Greek unrest could bring rise to even a military coup. A number of European Union countries including Germany, Finland, and the Netherlands have lost already lost interest in and support for extending any further bailout funds to Greece as its austerity measures continue to flounder.
- EU Safety Net Frays – “There can be no more illusions about getting help from the state,” said Ms. Gema Díaz, at home on a recent evening in a charmless, government owned complex on the outskirts of the city. Hers is a story repeated across Europe, fueling the protests and strikes that have tied up airports, blocked highways and, in Greece, even turned deadly. For millions of Europeans, modest salaries and high taxes have been offset by the benefits of their cherished social model – a cradle-to-grave safety net which, in the recent boom years, seemed to grow more generous all the time. Now, governments across Europe say they have little choice but to pull back on social benefits, at least for now.
- Greece, Ireland, Portugal Bailouts – It was a year ago that the European Union produced its big bazooka to quell the euro area’s sovereign-debt crisis: a €750 billion fund to safeguard the single currency, following within days of the €110 billion bail-out of Greece. It did not work. Ireland has since been bailed out, and a rescue of Portugal is in the works.
- Debt Ceiling Warnings from Europe – As the debate over America’s debt burden intensifies, Europe’s social and economic problems provide a warning to the United States. For over a decade, continental Europe has witnessed political and economic decline, culminating in a sovereign debt crisis which has brought the single European currency to its knees. What are the lessons from Europe on where the spiraling debt crisis will end? The Government in Britain has chosen to swallow the bitter pills of austerity cuts and deficit reduction. The Conservative-led coalition has pledged to eliminate Britain’s structural deficit by 2015, as well as to cut 490,000 public sector jobs. Sweden, which is also outside the Eurozone, has successfully steered its economy through this crisis. Having learned valuable lessons in the 1990s, Sweden’s center-right government has chosen to incentivize work and maintain budget discipline, which has led to economic growth of 4.5 percent in 2010.
Conclusion
Let us Americans analyze these different European approaches and what lessons they can offer America’s next presidential candidates. Politicians (of both parties) have only to look to Europe for a free, painless lesson about what awaits this country. But, as we (taxpayers) know, politicians tend to cling to their beliefs, even in the face of contrary evidence (Reid and Schumer come to mind).
But that’s just my opinion.
Nan G
Great summary and overview, Warren B.
I had read that we are ”technically” not on a recession….anymore.
We had our 3 quarters of anemic growth ending it in 2009.
But the ”recovery” has been a non-jobs recovery, a non-home-sales recovery and a put-your-cash-in-a-pillow recovery.
It could go south at any time.
One thing that I hate about all the so-called plans from Boehner, Ryan, Reid and the unwritten one from Obama is that they ALL increase government programs’ spending.
Some of them slow the rate of that growth, but all of them grow the government.
Fact is, the media trots out some would-be victim of any real cut in federal spending and everybody’s heart bleeds in response.
We are going to have to take some strong and stinky medicine if we are going to survive as a nation.
Obama seems to favor the Cloward – Piven strategy that overloads the entire nation’s welfare systems so that he can replace them with a national system of a guaranteed annual income and an end to poverty as we know it.
He’s the only one of our nation’s leaders who seems to be on target to win his contest.
Rita
There seems to be a lot of confusion in the general public about the debt ceiling and many think that raising it will result in additional spending down the road – rather than the more accurate notion that it will allow the US to borrow money to pay bills which were approved in the past by both sides and are now coming due.
Here are some Bipartisan Policy Center figures:
Program Cost (billions)
Social Security $49.2
Medicare/Medicaid $50.0
Unemployment $12.8
Welfare & Food Programs $9.3
Military Active Duty Pay $2.9
Veterans’ Affairs $2.9
Pentagon Vendors $31.7
FBI & Federal Courts $1.4
Debt Interest $29.0
Housing Assistance $6.7
Pell Grants & Other Ed. $20.2
IRS Refunds $3.9
Health & Human Services $8.1
Salaries & Benefits Fed Workers $14.2
Total for just those programs $242.3
Incoming Funds $172.4
Balance $(69.9)
Ignoring the fact that we would need to pay at least some federal workers to process the necessary payments and deliver them, let’s take Federal Salaries & Benefits completely out of the equation. Now we only need to get rid of another $55.7 billion to break even. Pell Grants and such – we’re down to $35.5 billion. IRS refunds, that gets us to $31.6 billion.
Housing assistance, Health & Human Services Grants – $16.8 billion. We could to stop investigating and prosecuting federal criminals — that would bring us to $15.4. Completely cut Welfare & Food programs and we’re still short $6.1 billion.
We’re left with reducing benefits for SS (the elderly), Medicare/Medicaid (the sick), Military (active duty, veterans, and their support/supplies), and interest on the debt. Not an easy choice and political suicide for any who would dare attempt it.
Blake
@Rita: Rita- While it is true that some cuts are less desirous than some others, these cuts will always hurt someone– and it does have to be done.I would like to see the elimination of the Dept. of Education- after all, most baby-boomers went to school and college without the benefit (or detriment) of the Dept. of Education.
Another is the EPA- its intended goals have been hijacked by progressive eco-weenies to the point where it is an obstructive program, not a beneficial one. Now it exists only to block any drilling for fossil fuels, and while I would like to see “commom sense” green fuels, none now exist in the US, so until there are some that will really work in reeality, and not just in some progressive’s wet dream, I think the EPA has to go- now there’s some money saved. Toss in the Dept. of Commerce, and we have something approaching balance.
Nan G
It is one thing to pay what is owed and quite another to pay for things authorized yet not spent — yet.
Those latter are the things we will have to readjust.
Sure, free-spending politicians passed those older budgets into law with promises of 10 years worth of growth in each program, but all of that can and should change.
There is no reason to continue to waste taxpayers money on bridges to nowhere or shrimp on treadmills when austerity is the only way to save our nation.
_________________
Rita, I think the last thing we ought to take out of the equation are federal employees, their salaries and benefits!
Let them retire early, be furloughed once a month or even more than that, and especially, let them begin to match the private workers for productivity levels!
America’s private sector workers are at their most productive EVER.
But federal workers grouse and moan if they have to do even 1/3rd of the work a private worker does every day.
Remember Cash For Clunkers?
An auto buyer could get UP TO $4,500 for the right auto with trade-in.
BUT the federal program in the Department of Transportation opened THREE NEW DIVISIONS just to administer the Cash For Clunkers program!
So, our federal workers at DOT sucked off $6,000 per car that went through the Cash for Clunkers program!
Four other forms had to be filled out by federal employees at the National Highway Traffic Safety Administration (NHTSA).
(Forms 1070, 1071, 1073 and 1075)
$12 million more was spent by DOT and NHTSA just to pay federal employees to fill out those forms.
Add to this, the federal government web site, Recovery.gov contracted out another $18 million just to modify a web site for Cash For Clunkers.
mathman
An attorney in private practice, were he/she to take assets under his/her control and expend them, would be disbarred, put in jail, and be unemployed. This happened to my brother-in-law.
The Congress stole the Social Security Trust Fund and spent it. This was criminal misfeasance.
The Congress will suffer no civil or criminal penalties for their crimes.
The Congress IS the law.
The Congress routinely spends money which it does not have. The Congress routinely binds its successors to spending money: these are called “entitlements.”
How does a citizen become entitled to Federal money? What do you have to do? Breathe?
A private company, spending what it does not have, goes bankrupt. A private company, publishing a prospectus which is false in its facts, has its principals indicted and sent to jail.
Why is Congress immune from Federal prosecution?
I know. They ARE the law. They need obey no law. They are lawless, but subject the rest of us to their law-breaking.
We need a different Congress.
Rita
@Blake:
“While it is true that some cuts are less desirous than some others, these cuts will always hurt someone- and it does have to be done.”
I agree. But it’s a NIMBY-type problem. If asked about each of the programs I listed individually, many voters would say “of course we should fund that…and that…and that” without realizing that we can’t afford them. Almost everyone believes that if the government just cut wasteful spending, everything would be all hearts, flowers and rainbows. In reality, eliminating waste alone won’t get us to where we need to be – it will involve cutting programs that many voters would consider “essential”.
Until they can be re-educated, any politician moving against those programs stands a very good chance of being voted out of office in the next election. It creates a self-perpetuating cycle. We have a glut of politicians when what we need are true public servants who can get themselves elected (hard to do if one is advocating cuts to the aforementioned programs), are willing to do what is necessary no matter how unpopular, and then “suffer” the consequences. And sadly it would take several consecutive such servants to enact lasting change.
johngalt
The biggest thing that the liberal/progressives in Congress and Obama are misleading the public about is the idea that taxes are the key to balancing our budget, or, in the case of some, that tax hikes should be included within any talk of reducing the deficits by way of a balanced approach.
Why do I say that it is misleading? Because the tax increases that Obama, and the liberal/progressives in Congress keep harping on will only gather in $70 Billion or so per year in additional revenue, and only if the economy starts growing at a faster pace than it is now. $70 Billion, when we are talking about deficits well north of $1 Trillion. Balanced? Hardly. And what’s more, the negative effect on the economy of those added tax hikes is unknown.
To have a truly balanced approach to lowering the deficit, tax hikes would have to be somewhere in the neighborhood of $500-700 Billion per year, with corresponding spending cuts. Keep in mind that the current estimated “cost” of keeping ALL of the Bush tax cuts in place(over the Clinton-era tax rates) is around $340 Billion per year(average over ten years). This means that another $160-360 Billion in tax hikes would have to be administered, above and beyond the Clinton-era tax rates, for taxes to approach the level of spending cuts required in a balanced approach to reducing the deficit.
Remember, Obama has already pledged that the bottom 95% of taxpayers won’t see one dime in new taxes(yes, I know that pledge has been broken already). So, let’s say that we go along with him, and raise taxes on the top 5% of wage earners in order to get to that $500 Billion number(average estimated deficit over ten years is $1 Trillion per year). How much would taxes have to be raised on them to satisfy that? Well, a total of around 20% in their effective tax rates would have to be realized, whether solely in rates themselves, or a combination of rate increases and “loophole” closings.
The problem with all of this talk about tax increases is that the negatives to the economy are widely known, as Dr. Thomas Sowell has pointed out;
http://www.investors.com/NewsAndAnalysis/ArticlePrint.aspx?id=578623&p=1
What would happen is a double whammy if such tax hikes were enacted:
-One, the higher income earners would place more of their earnings within tax shelter investments, taking that money off the table and out of the private economy. An exact amount is unknown, but an off the hand guess would be in the neighborhood of $1 Trillion.
-Two, the money that government took in due to those tax hikes would also be removed from the table and out of the private economy. Now, while some of that may, eventually, find it’s way back into the economy, the vast majority of it ends up in the hands of pure consumers who do not produce anything, and add nothing to the GDP itself.
-Combined, less money in the hands of private enterprise would lead to a contraction in the economy, and stagnant GDP growth rates for a period of time.
And all of this doesn’t even touch on the fact that even if such tax hikes are enacted, the liberal/progressives in Congress, and Obama, do not, and have not, been willing to enact the spending cuts necessary immediately. No, they wish to put that off into the future, where only the idea of the spending cut would remain, and never actually be done.
The liberal/progressives and Obama are not serious about the issue, and never have been. All they want is another credit card paid for by mommy and daddy to continue their free spending ways, not caring that mommy and daddy are being driven deeper and deeper into debt, possibly to a point they can never climb out of. Unless their credit debt is held to current levels, bankruptcy will happen. The question is merely a matter of when.
CbR
My thoughts, edited and brought over from another thread – Simple House/GOP solution … Double the terms of the CCB (it has passed the house once) and send it back to the Senate and WH. Every time it fails double it again.
The “no planners” will only wish for the original back. Don’t let that happen. The backup baseline room for negotiations is 25% of the last one sent.
The cry is “no substance”. Well this would be a good start. Let the screams of indignation begin.
MataHarley
premium_subscriber
Rita, don’t know what the BPC is using for their figures. Take, for example, HHS. Their entire budget in 2010 was $78.4 billion. So what’s the $8.1 billion quote all about? Think the HHS is overabundant in agencies, subagencies and more sub sub agencies? Or a’wash in federal employees that really aren’t needed? In fact, HHS was only formed in 1953 and then included a smaller Dept of Education and also Social Security (HEW). Dept of Ed was split out to become it’s current monster late 70s, early 80s, and in 1995, they made the new Social Security monster it’s own entity. To boot, the HEW (now HHS) was created during an era when the POTUS had authority to do so, unless Congress veto’ed it’s creation. Eisenhower used that authority to do so… a pox on his house, IMHO.
How did we survive as a nation with a more streamlined version… or at all?
Talk about other worthless agencies with big 2010 budgets, there’s the Dept of Energy with $24.1 billion, Dept of Education with an annual budget of $56 bil, plus got stimulus funds to the tune of $102 billion in 2009, $51 billion in 2010, and on target for another $23 billion this year. Ironically, the Dept of Ed is one of the smallest agencies with only 5000 federal employees back in 2007.
So I have no clue what the BPC is using, save that they must be addressing only what they feel is expendable. So they, as well as you, are incorrect if you think that benefits need to be reduced for the entitlement programs… which is what got us into this mess to begin with… and sacrificing military benefits. Your order of priorities is puzzling, to say the least.
Me? I think it’s quite simple. The problem is the entitlement programs on a runaway spending train. That needs reform. And government spending can be reduced by shinking the size of these mammoth agencies. An axe should be taken to the ga’zillions of federal agencies, and the dead weight thrown back into the private sector to generate revenue, instead of being people that just recycle taxpayer funds (who pay their salaries) then giving back some of those taxpayer funds to the feds in the form of their income taxes. They contribute nothing when it comes to revenue growth. They only feed on others’ labors and accomplishments. And that most especially includes Congressional elected officials at the top of the list. They should be part timers… home for part of the year as a private citizen generating revenue, and not being a parasite/leech full time, feeding on the taxpayers blood.
MataHarley
premium_subscriber
BTW, Warren… stellar contribution in this post. A big “atta boy” to you.
MataHarley
premium_subscriber
Exactly… it runs under the assumption of a rosy GDP projected growth, and not accounting for smaller growth… most especially because of the tax deterrent for businesses. They assume the turnips can churn out the same amount of blood with the increased taxation, and despite a continual decline in the housing market and stagant to increasing unemployment.
Gotta get a set of those rose colored glasses these elected ones use for myself. Sure must make the world look purdy…..
johngalt
@MataHarley:
Funny that you presented it that way. Back in 2008, during the Presidential debates, Obama used the analogy of using a scalpel to the budget while McCain “talked” about taking a hatchet to it. At the time, I was discussing this on another site, and I laughed at the people defending Obama’s ‘scalpel’ analogy, and stated that the budget didn’t need a scalpel, carving knife, machete, or hatchet, but instead, needed a northwoods logger with his massive chainsaw.
I still think that way. “Use the right tool for the job”, is what my father always says. And for the job of balancing the budget, nothing less than a chainsaw will work.
openid.aol.com/runnswim
I’m actually starting to think that the best outcome would be for neither side to blink. Hold firm to core principles. Let the Deadline pass. Furlough Federal workers. Reduce Social Security payments. Have T-Bills downgraded. Maybe even a delay in interest payments (default). Let chaos ensue.
What could emerge, from the ashes, is precisely what this country needs. A third (centrist) party. Built on the concepts of pragmatism, consensus-building, and, when necessary and appropriate (such as right now), compromise. The country has had it up to its ears in true believer, take no prisoners radicalism. Enough.
http://www.theatlantic.com/politics/archive/2011/07/the-clearest-sign-yet-that-boehners-bill-will-pass-the-house/242647/
– Larry Weisenthal/Huntington Beach, CA
Warren
@MataHarley: MataHarley, Re: comment #9 “They contribute nothing when it comes to revenue growth. They only feed on others’ labors and accomplishments. And that most especially includes Congressional elected officials at the top of the list. They should be part timers… home for part of the year as a private citizen generating revenue, and not being a parasite/leech full time, feeding on the taxpayers blood.”
VERY GOOD POINT!
I could not agree with you more.
MataHarley
premium_subscriber
Allow me to point out an ugly reality for you, Larry. Any “chaos” that ensues is specifically chosen, and implemented, by Obama and Geithner, and will be chosen for political purposes.. not for expedience. For it is they who decide what will and will not be paid. Thus, the onus of that ensuing “chaos” lies squarely on their shoulders alone.
There need be no “chaos”. If you, as a family, find your income short, do you not triage what is vital and what is not? Do you not shave down expenses to fit within your reduced income budget?
Or do you simply choose to take that vacation instead, pay the interest only on your credit cards, and dump food and the mortgage expenses? If the Zero and Tax Bum Tim take the route of slashing Medicare, stiffing SS and veterans, they are doing exactly that.
So would “chaos” be beneficial? Unless Obama and Tax Bum Tim can sell to the public, thru the media, that the GOP was the ones choosing what bills get paid, and what doesn’t, it’s a serious political price they need to pay. I believe they will feel no compunction to stiff grandmama and the military in order to play political games they think will work in their favor to hold power. Thus I have no doubt they will take the partisan route, and then furiously fingerpoint to absolve themselves of their genuine responsibility. If the audience is dumb enough, they’ll buy it. And apparently, there’s a large swatch of “dumb” out there to play on.
@johngalt, would this do the trick? I’m a thumbs up… LOL
johngalt
@MataHarley:
LOL! That’s a massive chainsaw, for sure.
In other words, they will do the same thing they have been doing since Obama first started campaigning for the Presidency. I would actually be surprised if they doing anything other than that.
openid.aol.com/runnswim
@Mata: I agree that there need be no crisis, at all. It could be managed in so many obvious ways. Why, for example, should Obama and Geithner be given the opportunity to work their selective mischief? The only way they get that “opportunity” is if a debt ceiling compromise is not reached. The only reason that a sensible compromise is not being reached is that our current two party system has become totally dysfunctional.
What the country now needs is either a new, centrist party or else a switch to a parliamentary system.
– Larry Weisenthal/Huntington Beach, CA
Greg
@MataHarley, #15:
Things might suddenly go into a terminal spin beyond anyone’s control. Many seem to want to ignore the fact that public sector spending is all done in the private sector economy. With the economy already in a weakened state, suddenly reducing that flow of funds into the private sector by 40 percent might trigger a cascade of events that wipes out the entire system.
I doubt if the GOP would be able to turn total economic chaos into 2012 election wins. People wouldn’t really give a d-mn whose fault it was.
MataHarley
premium_subscriber
Why so drastic in all solutions, Larry? You have a dirty baby in need of a bath, and a filthy bathtub, filled with stagnant, dirty water.
So your solution is to buy a new tub, and adopt a new baby???
I think I’ve been pretty clear with my mid July post about this whole debt ceiling farce, and how both parties are playing we… all taxpayers of all political stripes.. the fools. Neither party is offering a real solution, and I’m beginning to believe it’s because they are all far too stupid to see the base problem.
Instead they all seem to want to keep the government and agencies the size it is and think they can pay for it anyway, and ignore the increasing numbers to the entitlement programs rolls that are driving the primary amount of our debt. And we’ve already seen they’ve got the idiotic notion that health care costs can be controlled by price fixing insurance premiums.
By heavens, the level of “dumber than dirt” in the beltway is no less than astounding.and seriously depressing.
No, we don’t need to change the structure of our government to British Parliament. And no we don’t need a “new party”. What do labels do anyway, Larry? People’s political beliefs are not defined by their party registration since most are a combination of both. And your “centrist” idea? That’s interesting… there was a massive “centrist” running in McCain, and he was shunned by your party in favor of a Euro-socialist. Shunned by the GOP as just another Dem-lite (which he is…). And for those like me who don’t identify with either, the choice between Bozo on the left, and Emmett the Clown on the right made me nauseous.
Political officials need to be held to responsibility. But first the public may need to start screaming a little louder about appropriate cuts… as in shrinking the size of these ga’zillion agencies and paring back to reality.
Additionally, they need to learn the difference between “cutting” and “reforming”. You don’t keep Medicare/SS the same and just figure out a way to spend less on it…. which is what the Dems want to do, as well as some GOP. You need to reform how it works, and get it out of the future generations way as a fiscal anchor around their neck. You cannot operate programs that are funded by the upcoming generations that benefit only the current generation. This pyramid scheme depends upon each generation being more prolific in numbers and revenue to keep up with inflation of services. Not only a ponzi scheme idiotic, but it’s a dangerous projection. What if we did have a plague or war that wiped out a significant portion of that working youth? Or, as we’ve seen, the voluntary reduced birth rates?
Nope…
1: empty the dirty bathwater (eliminate non-fiscally responsible elected officials),
2: clean the tub (reform medicare/SS and genuinely institute health care reform that focuses on reducing the overhead costs of delivering health care services, and
3: keep the baby (no English Parliament or new parties… neither of which accomplishes whit since everyone remains the same, but with a new label/tag).
Rita
@MataHarley:
“So I have no clue what the BPC is using, save that they must be addressing only what they feel is expendable. So they, as well as you, are incorrect if you think that benefits need to be reduced for the entitlement programs… which is what got us into this mess to begin with… and sacrificing military benefits. Your order of priorities is puzzling, to say the least.”
To clarify, those BPC figures are just a portion of what is coming due for the month of August only. The list only covers the named programs for a single month. Many of the items the government currently “owes” (and that you point out) aren’t included. The numbers came from the BPC which doesn’t label any of those programs as necessary OR expendable – they make no judgment regarding the programs’ worthiness one way or the other.
The commentary beneath the list is mine and is meant to illustrate just how far in the hole we are. I personally consider many of the items on that list to be rather important — but important or not, they all will have to face varying levels of cuts – some of them painfully deep – if the government wants to “live within its means.”
As Blake said, those cuts are gonna hurt someone – it can’t be helped. Our elected officials have some very hard choices to make and no matter which ones they choose, some voters are going to want to punish them for it. We just have to hope that we 1) have public servants who are willing to make those hard choices and 2) try to educate the voters as to why such steps are necessary.
MataHarley
premium_subscriber
Oh for heavens sake, @Greg, every bit of it is controllable. The available funds are triaged to vitals, reduction of agencies and dead weight civil servant leeches are released into the wild of private entrepreneurship, and all investors and global credit rating industry wants to see is that the US is attacking it’s massive debt with some sensibility, and not just increasing the credit card limit while ignoring the problem.
It ain’t rocket science, and it’s only armaggedon if you have idiots at the helm. Which we do, but we have to assume there is some integrity and brain cells somewhere within the WH and Treasury.
But notice the way you think? Let me repeat what you said…
You apparently see the private sector’s health as revolving around government handouts. Perhaps this is the major flaw with your political philosphy. It’s this “re” distribution of wealth that you demand as the foundation for a central government.
Forget the government handouts. They wouldn’t be needed if the government weren’t picking their pockets.
The private sector would benefit handily in three ways…
1: They would have more cash assets left in their pocket by not being robbed, free to grow, expand or profit and spend that benefits other businesses
2: There would be less dead weight employees to support and recycle their stolen earnings and
3: Eliminated government employees are thrown back into the private sector pool where they no longer recycle taxpayers cash, and instead generate new revenue to contribute.
What you don’t get is that the ratio of public sector to private sector work force has been increasing, with more on the taxpayers payroll. Public sector employees contribute no revenue… they just redistribute existing private sector revenue. At this point, it’s a little over 16% of the entire workforce, and that doesn’t include all the new agencies and employees that have been created by both O’healthcare and Frank-Dodd financial “reform” (spit….)
This means there is only 84% of the workforce that is supporting everything… government, welfare/entitlement reforms and future spending… with original and fresh revenues. Of those, many don’t pay taxes at all, so that number whittles down considerably in reality as well.
The private sector needs more entrepreneurs and revenue generators. We need less leeches. When a nation becomes so burdened that more than 50% of the population is drawing off the work of the other half, you are in the spiral too deep to get out.
Hard Right
@MataHarley:
If I could I would give your post the thumbs up over and over for the rest of the day. You put words to what I have been feeling.
openid.aol.com/runnswim
@mata: Not too much energy for the whole R vs L thing, right now. Answer to SS is simple: raise retirement age, means test, remove yearly cap on payroll tax. Answer to Medicare is the same as the answer to health care: change payment to providers from payment for services provided to payment for health care outcomes obtained.
McCain couldn’t be McCain, in 2008’s GOP. If McCain had run as McCain, I’d have voted for him. But he ran as Dick Cheney. Romney can’t be Romney. Pawlenty can’t be Pawlenty. The only somewhat centrist who’s more or less being himself is Huntsman, and he’s got no chance. Same thing for the Dems, where no one can get nominated who’s not pro-public employee union, and what not.
What’s worse than politics at the Presidential level is politics at the legislative level — particularly in the House. Districts are gerrymandered to eliminate the possibility of a competitive election between the two parties; so our congresspeople are all radical right GOP and radical left Dem.
This blog (and liberal versions thereof) reflects the talk radio mentality, save for the fact that the discussions sometimes have considerably more meritorious substance. But the “attitude” is the same — belittle and delegitimize the opposition. And, depressingly, this is now the way the country is being run, at the national level.
So the result is what you see now being played out in Washington. It’s depressing; so I’m redirecting my attention to the upcoming college football season, where I’ll be closely following the exploits of Denard Robinson and Brady Hoke.
– Larry Weisenthal/Huntington Beach, CA
MataHarley
premium_subscriber
@Rita, can’t disagree much with your clarifications, save I would beg to differ with you on what you consider “important” in that list. Thus the NIMBY attitude enters the debate fray.
Me? What is important is only what I believe is within the realm of Constitutional duties of a central government, as opposed to the sovereign states. And the feds have far more than meddled outside their Constitutional authority on most of that list. However since the actual existence of these agencies has rarely been challenged in our court system, the criminals get away with the crime because no charges are pressed.
This is not to be confused with Congressional right to create such agencies. However what they do create, and it’s authority within the founding concept of a limited central government vs sovereign state governments, can most certainly be questioned. And that ability of the POTUS to create these, only faced with Congressional veto (ala Eisenhower and the HEW/HHS) was removed nine years later. I guess Congress wanted the power to grow government all by itself, and not share that with the POTUS.
@Hard Right, thank you for the kind words, But mostly thanks to find out I’m not so isolated in my anger, disgust, frustration and depression with pretty much everything and everyone in the beltway these days.
johngalt
@MataHarley:
This is what has been on my mind for a while now, and that I’ve hinted at in other articles. Those public sector employees do nothing for the GDP. The GDP of our country grows through efforts, big and small, in the private sector, from the grocery store clerk ringing up your groceries to the corporate CEO making multi-million and multi-billion dollar decisions for the company he runs.
Public sector employees merely are another middle-man between the money, or wealth, created by the private sector, and the return of that money into the private sector. And in the middle, there is waste and inefficiency which evaporates some of that wealth into thin air.
With the ratio of private sector to public sector employees changing, and not for the better, more and more of the GDP, or wealth, that our nation produces evaporates because of the inefficiency and waste.
And the liberal/progressives’ answer to this? Employ more people in the public sector, by either actual jobs, or the dependency upon entitlement programs. The only word that comes to mind is stupid. Just plain stupid.
johngalt
@openid.aol.com/runnswim:
As will I, my friend. Let’s hope that the combo of Robinson and Hoke, with Mattison on the defensive side, will result in an unforgettable season. Go Blue!
Greg
The assertion that public sector employees and public sector expenditures contribute little of consequences to the GDP makes about as much sense to me as the assertion that the wealthiest members of the population are somehow personally responsible for the bulk of wealth produced.
openid.aol.com/runnswim
@John: Someday I’d like to hear about when you were in A2 and other such stuff. If you feel like it, send me a private email to [email protected] – LW/HB
retire05
@openid.aol.com/runnswim:
“Answer to SS is simple: raise retirement age, means test, remove yearly cap on payroll tax.”
Great, why not just call it the Great Ponzi Scheme Redistribution of Wealth Program? Just tell all those people who have been working for 20 years “You know that money you have been paying into a program that you have been promised to get back when you reached 65, well, since the American health care system, that we keep saying is so rotten had managed to create technology that allows the probability that you are going to live longer, we are going to break our promise because we stole all the money during the fat years and now we don’t have the money for the lean years.”
Means test? Abolish limits on payroll taxes? Why not just be honest and tell those who have managed to reach some level of financial success that you are going to take their money and not give it back?
“Answer to Medicare is the same as the answer to health care: change payment to providers from payment for services provided to payment for health care outcomes obtained.”
Yeah, and all those people who suffer from terminal diseases, and have no hope of living in spite of the health care provided, can just do without the medical treatment that makes the disease a little less debilitating. Hell, they’re gonna die anyway, right? So that person with Altzheimers can just do without any medical treatment, or that person with terminal cancer can just pound sand. Isn’t that exactly what Dr. Emauel, Rahm’s brother, proposed, denying care to those whose life has less value and are really hopelessly terminal? Now there’s a pure Marxist solution you have there, Doc. Why not just admit you believe in forced redistribution of wealth, ala Marx, and be done with it?
How about this: we eliminate all social welfare for people who have been on it for over a year? People sometimes needs a hand up, but why do we have generational welfare? Drug/alcohol test for ALL welfare recipients. You continue to keep having kids that you can afford (because hey, we can’t tell people how many kids to have)? Fine, when you do, if you can’t support them, we take them away from you. Unemployment? Well, that is also simple; you never draw more than you have paid into the system. If you paid $5,000 into the system, when that is gone, you’re own your own. Find a charity to help you. Oh, that’s right; Obama wants to end the deduction for donations to charities. There is NO insurance policy in the world that pays you more than the agreed amount of benefits. Now we are paying people to sit on their ass watching Oprah for 99 weeks.
But I understand that the welfare queens and crackheads that live off welfare are the sacred cow of the Democrats.
openid.aol.com/runnswim
@retire.
Belittle and delegitimize.
Q.E.D.
retire05
@openid.aol.com/runnswim:
What did I say that was not true? The fact that you want to put the screws to everyone who has paid into Social Security based on a promise made in 1936? The fact that you want those who have achieved some level of financial success to be kicked out of a program they have paid for their entire working life?
Here’s a thought: you are probably one of those millionaires that make $200,000/yr (fuzzy math on Obama’s part) and have a couple of thousand dollars hanging around like Obama claims to, so why don’t you just write the IRS a check and add a note for them to use that money to pay down our debt instead of screwing people out of the benefits they have paid for all their working lives?
Patricia
Mata (#9), right on! Glad you jumped in before me, as you are always say it better and save me a ton of time I don’t really have right now.
Larry I’m SO glad you have at least finally seen the “light of the left.” I agree as well that both sides are disgusting, and in IMO, what our country needs, for starters, is NON CAREER POLITICIANS, as Mata pointed out and the fact that the per intention of the founding fathers, our representatives were never to be “career”, but part-times, with real lives and real jobs. FYI, the state of TX legislative branch only meets once every two years!
I also very much agree with your gerrymandering point Larry. We also need, national open primaries.
As for Obama and “chaos”, well, many of us know, that’s the way he, and the Alinskyites roll. IMO, nothing in his presidency is or will be more defining than his ‘management’ of this debt crisis. For every naysayer who failed to not only not believe, but even entertain the fact that Obama was purposely trying to destroy the country, well, it’s now being brought to us all “live.” At the very least, even his most staunch supporters have to admit that he is more interseted in re election than saving the country that he never really loved and still resents.
I have mixed feelings on the “let the chips fall” position. Originally I was very strong on it, knowing that everything we are watching is political theater and a band aid at best, while the hemmorage is continuing. One thing I do like about it, is that the buck HAS to stop with Obama. Yes, I realize he will play the political game in the distribution, but the mere fact that he would “allow” it, despite having had total control of the house prior, tells us everythinhg we need to know about the “real” Obama. I could easily make the case as to why Obama would WANT to go over the cliff, starting with the fact it’s a no brainer for raising taxes, as it will be we the taxpapers who will be “paying off the collection agencies.”
The other part of me, and on this I somwhat agree with Larry, that we need a “do over.” I”m not big on a party do over as much as a “reality check.” Like it or not, nothing gets more real than pain. It may well be, that it would take total chaos, to wake up half of this country to the political reforms that need to take place. Mata I don’t discount your “dirty bathwater”, only the reality that we need the real bottom for a new start.
All said, that chaos could be putty in Obama’s hands, and even more scary, he is still the POTUS. Power (from a radically left thinker) and choas is not my first choice. It’s a real balancing act, despite the fact that Aug 3rd (or is it Aug 2nd) is a made up “scary deadline day.” But rest assured, the real scary day when we do hit the wall can’t be too far away at a rate of 4B a day in spending.
openid.aol.com/runnswim
@retire:
I’m critical of your comments, because you are speaking only in derisive slogans. If you want to have a serious discussion, where discussion is a two way street, that is one thing. But if you simply want the opportunity to rant and belittle, I’d rather spend my time on the Bleacher Report.
– Larry
MataHarley
premium_subscriber
What a delight to see you here again, Patricia. Your even tone and diplomatic cyber whispers have been missed. LOL
Yes, I was actually surprised to read Larry’s acknowledgement that chaos wasn’t necessary, but did we really want to give that opportunity of “mischief” to Obama and Tax Bum Tim? Well, if the other choice is simply increasing the debt limit for the price either of the political prostitutes (Dems or GOP) are demanding for that service, yes… I do. It is their responsibility under our structure.
As you rightfully point out, the record of any incumbent POTUS for a second term is a judgment on how they handle a crisis. Since this has been a “crisis” mode from Inauguration Day, I’d say the record is pretty deplorable, and getting worse. But this comes with the job… and now, once again, we will have to see where Obama’s priorities lie… with his political career and favorability ratings by pitting grandma and the veteran against the nation’s economic future? Or with the genuine welfare of the nation which necessitates wise distribution of the revenue until something real is offered by anyone in Congress about shrinking government and genuine reform of the entitlement programs taking us down.
The same can be said for the elected officials in Congress. While the media laps up the political theatre, and we in the blog world jump to opine and whine, it’s a bad joke played on all of us. And it’s sad to think of how few people actually realize that neither party has our interests at heart.
retire05
@openid.aol.com/runnswim:
You want a “serious” discussion, Larry. First you have to admit that you are flaming progressive that espouses Saul Alinsky philosophies. Then we can have a serious discussion.
openid.aol.com/runnswim
@retire:
You made the charge; now back it up:
Here is a summary of Saul Alinsky’s “rules for radicals:”
I’d like you to compare and contrast the writings of you (on this blog) and me (on this blog) and then tell the readers which of us more closely adheres to Alinsky’s “rules for radicals.”
– Larry Weisenthal/Huntington Beach, CA
Patricia
retireo5 just curious (#35): what’s the deal with the “label ID”, which Curt has never required of any reader on FA?
Heck, if old Saul could resurrect from the grave, I would LOVE to engage him in conservation on the FA board.
retire05
Larry, those points are only a small part of Saul Alinsky’s Rules For Radicals. But I cannot have a “serious” discussion with anyone who thinks that Congress should construct another redistribution of wealth program as you proposed, by means testing for Medicare and upping the age for SS. It will just be another broken promise that was made in 1936.
You are a flaming progressive. At least have the cajones to admit it.
retire05
@Patricia:
what has Curt, or the practices at FA got to do with my calling down someone who thinks it is fine for the DHS to violate the Fourth Amendment?
And when my comments are directed to a specific person, what business is it of yours?
rich wheeler
Larry Is it possible that Retire05 is actually Saul Alinsky?
Memo to Larry and J.G. 2011 marks the return of The Fighting Irish to their rightful place atop the College Football Polls. Go Irish beat The Wolverines in Ann Arbor 9/10/11. The two winningest programs in college football history.
openid.aol.com/runnswim
@retire:
You comment on SS and Medicare. There should be no broken promises. In the early 1980s, Reagan massively cut marginal tax rates and estate taxes, but raised the (regressive) payroll and self-employment taxes. But he agreed that SS should go on budget and that SS should receive T bills (the so-called ‘trust fund’) for any surpluses paid in. Today, those T bills total $2.7 trillion, but the likes of Ann Coulter and her ilk claim that SS is now bankrupt. During his Presidency, George W Bush effectively said the same thing. I doubt that either Coulter or Bush would state that Goldman Sachs, China, Japan, and other holders of T Bills are only holding monopoly money, but that’s the implication for social security, according to many conservative writers and politicians.
So who’s welching on the deal?
Every year, I get an annual statement of the total amount I’ve paid into SS and the monthly amount I’m entitled to draw, depending on when I retire. It’s easy to calculate that I’ll get back (if I remain healthy and enjoy my projected life expectancy) considerably more than if I’d put that money into mutual funds and had the discipline to sit on them. So there is running room, with respect to adjusting SS payouts. No one ever promised you that you’d be able to retire at 65. No one ever promised you COLAs according to formulas used in the past. But the implied promise was that SS would be there for you, and it will be there for you, with some common sense stewardship.
With respect to means testing, you may not agree with it, but it’s an idea with a lot of bipartisan support. It has pros and cons, and it is deserving of the vigorous debate which it is certain to receive.
With regard to removing the caps on annual payroll taxes, this would simply change payroll (and self employment) taxes from a regressive tax (which it is now) to a flat tax.
Quoting me:
You retort:
The above simply indicates that you are uninformed about the concept of basing payment for outcomes, as opposed to volume of services rendered. To become better informed, you might start here. The reason why the payment for services system fails is that doctors (sellers) make the purchase decisions for the buyers (patients). During the recession, lots of people lost health insurance and stopped going to doctors. But the doctors just started providing more services to the remaining patients and doctors’ incomes didn’t go down, despite having fewer customers. They just sold more healthcare to the customers who remained. This is the fatal flaw in the hypothesis that health care, as provided under the current private practice model, has the same market efficiencies as other sectors of the capitalist economy.
– Larry Weisenthal/Huntington Beach, CA
openid.aol.com/runnswim
@Wheeler:
In your dreams.
retire05
@openid.aol.com/runnswim:
If you really think the Social Security funds are secure, well, revel in your delusions. I also, can do the math on the return on my Social Security payments. At the current level, I will have to reach age 72 1/2 in order to just break even. However, had I that additional money through the years, to invest as I did my savings, I would be in a hellofa lot better shape, even with the fall of the markets in 2008. And yes, Larry, the promise was that people could draw their SS at age 65, a promise made by FDR who pushed that bill, much like Obamacare, on a frightened populace who was still going through a depression and were fearful about their future. Seems the Dems love to play on people’s fears. And where did I even mention COLA (you have a nasty habit of putting words into people’s mouth, don’t you)? But as gas, groceries and all goods have increased in the last two years, seniors have not gotten a raise, but I bet Harry Reid did.
Your comments about how doctors just bilked current patients so that their revenue would remain the same is the sickest thing I have ever heard. I guess they are cutting off people’s feet (according to Obama) to make money. Perhaps the doctors in your failed state of California conduct business that way, but I can tell you that the doctor’s I know are now giving away their services as much as they are getting paid for them. And to claim that doctor’s made the “purchase” decisions for adults either proves that you don’t know what the hell you are talking about or the people you deal with on a daily basis are too stupid to make their own decisions.
No, health care is not efficient when every doctor in the nation (except in Texas) has to worry about being put out of business because of some over zealous tort lawyer. So he/she orders unnecessary tests to cover his/her ass in litigation. And doctors are not allowed to advertise their fees. Perhaps if they were, as independent businessmen, the ones who overcharge would quickly be put out of business.
None of that eliminates the fact that you believe in wealth redistribution and that the “rich” (you know, those making over $200/K a year, the Obama millionaires and billionaires) should pay more just because they reached a fiancial level that other have not.
openid.aol.com/runnswim
@retire:
You don’t understand how health care works in the real world. I’ve explained it before, on this blog. You are speaking in personal anecdotes (and uninformed anecdotes, at that). I’m speaking about the macroeconomic real world.
Lay people have no clue — truly. A doctor needn’t be unscrupulous to prescribe a medication (or operation or test) which makes him more money than an alternative treatment or test which makes him less money; he simply needs to be human.
Here’s a brief example which illustrates what I’m writing about:
http://www.cancerdecisions.com/content/view/525/2/lang,english/
http://www.cancerdecisions.com/content/view/526/2/lang,english/
You go on to say:
The precise form of malpractice tort reform introduced into Texas during the past decade was invented in California and introduced into California law 30 years ago. It caps pain and suffering and punitive damages at $250K, but doesn’t cap actual damages. Actual damages can (and do) frequently exceed $1 million. Additionally, a single malpractice suit is something which stays forever as a blot on the doctor’s reputation (and malpractice premiums). For this reason, there is no disincentive to order “unnecessary” tests. The impact of malpractice tort reform has been extensively studied in both California and Texas. Health care costs were not favorably impacted in any way. There was no reduction in “defensive” tests.
Doctors are allowed to advertise fees (and some do). Where on earth did you get the idea that they are not?
With regard to your own social security situation: will address after I’ve looked up some insurance actuarial data.
– Larry Weisenthal/Huntington Beach, CA
retire05
@openid.aol.com/runnswim:
Yes, Larry, any doctor who perscribes tests that are not necessary, to simply improve his revenue numbers, IS unscrupulous. I don’t know any doctors (and I know quite a few) that conduct their business in that fashion. Almost all I know donate much of their time to groups like Doctors without Borders and even the dentists I know make trips, on their own dimes, to perform oral surgery on patients in third world nations, to fill cavities, and help those who would otherwise have no help. Of course, as is typical of your arrogance, you say that I do not understand how health care works in the real world, indicating that I should bend to your ever superior knowledge. Like that is going to happen.
Now, as to my SS situation; I suppose you will come back telling me (to once again bend to your superior knowledge) that I don’t know what my own numbers are and how much I am scheduled to receive at age 65. Sorry, doc, you’re not privy to that information so you have no way to argue any differently.
johngalt
@rich wheeler:
First night game between the two schools. In Ann Arbor. With throwback uniforms. Must see TV, no matter which college football program one roots for. Go Blue!
johngalt
@Greg:
As I’ve said before, Greg, you are ignorant when it comes to basic economics.
Public sector employees contribute nothing to the GDP because they do not produce anything. And just because they spend their salaries in the private sector marketplace means very little. That money would be spent, or invested, anyway, were the public sector employees not in the mix. As I stated, all they are is an added middle-man between the wealth companies create, and the spending of that wealth. And due to the inefficiency of government, much of that wealth taken from the private sector and sent to the public sector employees disappears into thin air.
And no one has ever said that the wealthiest members of society are responsible for the bulk of wealth created. Most of us conservatives know that the small business interests, across the nation, create the bulk of the wealth in this country.
Patricia
@retire05: Oh I dunno retire05, maybe it has something to do with bullies killing a good thread.
retire05
@Patricia:
Or perhaps it has to do with past debates that you have not been privy to but think you have the right to stick your nose in anyway?
Now, unless you have some vested interest in my argument with Larry, I suggest you remain on the sidelines as long as I am addressing him SPECIFICALLY.
MataHarley
premium_subscriber
Larry, INRE your solution to SS and an age increase. It is true that when this unpopular bill was thrust to Congress, it was designed to beat the average life expectancy of 58. It’s interesting that the government SS site, itself, addresses this but by softening that blow of reality. They tend to mush the facts by saying that since the birth rate was a particular factor, it was likely that if any child made it to adulthood, it was likely to collect.
Now that’s not even a logical cover for what they intended. Likely to collect with seven years over the average? They had to be banking on a high rate of deaths for babies, assuming none of those would even be around beyond the life expectancy. And the infants, of course would not be contributing as they would not be of employment age.
Naturally, with better medical care, the infancy deaths are down, and life expectancy far surpasses the originally negotiated age that was seven years above the average. But none of that even negates the ponzi scheme structure. In it’s first year of implementation, over 53000 beneficiaries were paid lump sums… none of whom paid into the system. This means, of course, they were busy robbing Paul to pay for Peter.
Same with Medicare, when the first two to sign up were those financially destitute icons, Harry and Bess Truman. Really now… these two needed Medicare? As I’ve repeatedly said, and refer back to my Aug 2009 post on Hall vs Sebelius, Medicare should be an option, not a mandate. And if even just 1% of the wealthy over 65 citizens wanted to opt out and obtain private care instead, they could save the system billions. However that was cinched by Bill Clinton regulatory changes, mandating that opt outs mean forfeiting SS retirement benefits as well. That’s just insane.
But that was then… this is now. While I understand your mentality is to closer match life expectancy, and return to that gamble that not enough will live long enough to actually collect their mandated government social security pensions, the timing could not be worse. We’re now in an elongated period of high unemployment, unfriendly business environment, and a time when businesses are learning to be lean, mean and function on a skeleton crew with just temporary help in the good moments.
This means that those approaching Social Security are in hell and a handbasket if they are the ones laid off, and finding new work will be virtually impossible. It’s also an age where returning for retraining in a new career is a waste of time. You’d be at retirement age or so when you emerge, and competing with desperate college grads fighting for the same jobs. You’re an employer… you gonna hirer the old work horse? Or a fresh face where you can get more mileage? Especially when you know, with mandated O’healthcare, one is going to cost you more in insurance claims than another. But hey… good news. We ol’ farts can suck up some taxpayer retraining funds that the government will be happy to pay… even tho to no end.
For many, the only hope on the horizon is the goal post of retirement. And indeed, such an early retirement actually frees up a job for the hopeful college grad. So I have to say that if you’re going to move the goal posts for retirement, you’re going to have to make it an age where it’s beyond the expected recovery (assuming we have one…) for the economy and for jobs. Otherwise you’re dooming a segment of the boomer population to a serious vacuum period inbetween.
Something else about this treasury note and SS trust fund solvency business. I don’t know how many times this has been addressed in the media, but an IOU does not translate to an immediately issued government check to a beneficiary. Merrill Matthews at Forbes took on Obama’s budget spinmeister, Jacob Lew, on this very subject. It’s a shell game of money and IOUs.
There is not $2.6 nor $2.7 trillion in an imaginary lock box. Only Treasury IOUs. In order to pay back those IOUs, money must be diverted… or perhaps more accurately put, absconded… from either the General Revenue funds, or borrowered. Either way, it adds further to the debt because Congress… *both* parties…. could not keep their mitts off such a convenient piggy bank.
Even were there the cash in the system, accessible, the same problem leers it’s ugly head as Medicare. There’s no account with your name, or mine, on it safely tucked away. Our money is gone, and they are using the generations coming up to pay for this. It may not reach it’s pinnacle at the same time as Medicare, but it’s apex is looming nonetheless.
Personally, I’d love to opt out and tell them to give me my due in a lump sum, and I’ll fend for myself with my retirement fund. Unlike some who predict with a bizarre certainty they would be ahead of the financial game, I can’t say that I’d necessarily have done better if I had that cash or not. But at least it would have been my own responsibility to make it grow, or blow it. I’m certainly not interested in giving it to bank robbers for safe keeping either.
MataHarley
premium_subscriber
BTW, Larry… note how Jacob Lew frames the argument that there’s no problem with social security…
Hey… if we’re “paying social security back”, where has the money gone to begin with that we have to “pay it back”? Oh yes… stolen to spend on other things…. So when the “loan” from the trust fund, filled with IOUs, is paid back, it’s just more revenue spending or borrowing.
ilovebeeswarzone
MATA, WHAT ABOUT NUMBER ONE STOP FOREIGN AID ANYWHERE, HOW MANY BILLIONS WOULD THAT BE, STOP THE PARTICIPATION IN THE LIBYAN WAR WITH NATO, THAT IS MORE BILLIONS,
STOP OTHER PARTICIPATION OF WAR IN AFGHANISTAN MORE BILLIONS RECALL THE TROOPS,
OUT OF THE MUSLIM COUNTRIES. MANY MORE BILLIONS ,
GET RID OF THE UN, SEND THEM AWAY TO FIND ANOTHER PLACE THEY CAN RENT.
MORE BILLIONS ALMOST INSTANTLY.
THEN CHECK THE WASTE IN AMERICA
retire05
Mata,
you made excellent points and nailed it. (I know we have had our off times, but I give credit where credit is due).
You are correct about the original SS bill. FDR was fully aware that the average life expectancy of a white male was only 58, 60 for a white woman, under 50 for a black male. By moving the goal post 7 years out, he was betting the odds that most people would not live long enough to collect and widows would only collect a portion of the original benefit, reducing the federal burden.
And what happens if the income level restrictions are lifted? Why would anyone who earns enough to pay for their own health care, and provide for their own retirement, not just opt out by any means possible? Ironic how Congress seems to pass bills that affect the American population but doesn’t include them (like Obamacare). And remember, as members of unions negotiated for retirement benefits, like continuing their health insurance once they retired, it was the rocket scientists in the Congress that passed a law that Medicare would become the primary, which allowed for two things: it let companies off the hook for paying the bulk of insurance premiums for retirees (as premiums were reduced once an employee reached 65) and it let the insurance companies off the hook for paying out the bulk of benefits.
Again, great post. Kudos.
MataHarley
premium_subscriber
@Ms. Bees, I’m not anti-foreign aid, depending on what it’s for, if it’s shared technology achievements, and/or related to national security. Therefore I don’t support abandoning Afghanistan or Iraq. Definitely not Israel. Not to mention when you are part of bombing a foreign nation to smithereens, there is something to be said for reconstruction aid… as well as shared benefits by helping them exploit their natural resources. Oh how I wish Iraq actually WERE a war for oil….
All in all, foreign aid is a blip on the spending screen. Yes, it should be reexamined and triaged by importance as it relates to intel, responsibility and national security. But it’s not a blanket delete either.
While I think there is much foreign aid we can eliminate, not all can be eliminated and still maintain safety and US intel channels. However I think that the UN is ripe for the “chainsaw” as well…..
Oh yes.. for those panicking about the downgrade in credit rating. May I remind everyone there are few nations in better shape? Germany’s busy bailing out Greece for a second time, etal, etc. It’s not like the US fiscal condition is unique. So when you do an apples to apples, such a downgrade… based more on controlling spending vs debt ceiling/credit card limit increases… it’s really not anything to panic about.
retire05
Great Britain’s credit rating at risk:
http://gantdaily.com/2011/07/26/experts-warn-britain-of-credit-downgrade
MataHarley
premium_subscriber
Larry, INRE means testing… CEPR did a study on this already, which Business Insider summarizes. Considering that such a small percentage of those collecting benefits are in over $40K non SS income bracket, and the costs to apply such a testing, it would be worthless savings to the taxpayer at best.
But it sure would add lots more government jobs to the mix.. and therefore the taxpayer debt for added payroll and federal pensions… not included in the CEPR mix… would make it a losing proposition.
As far as any “caps” go, there is already a maximum amount of income that is taxable, and thereby a finite amount that even the most prolific of earners over the 35 year period could draw. And if someone did 35 years of that max taxable, why shouldn’t they be deserving of that benefit back upon retirement?
Talk about welching on a deal… LOL
ilovebeeswarzone
MATA , YES IT make more sense, I know that I was quite radical on it,
I learned that he spent a lot of money abroad on aid so call, the last one was with HILLARY
and the deal they made 100,000 exchange with the Muslims it was for some kind of agriculture learning on their part it was not well public and not very clearly define,
the other was in BRESIL THE ONE MILLIARD GIVEN TO THEM TO BUILT SOME KIND OF STRUCTURE FOR THEIR NEXT OLYMPIC, IN THERE, AND HE HAD HIS BANKER WITH HIM AS IT WAS SAID IN MEDIA.
JUST SOME OF HIS SPENDING SPREE.
BYE
James Raider
@MataHarley: #54,
“Oh yes.. for those panicking about the downgrade in credit rating. May I remind everyone there are few nations in better shape? “
A few months ago I heard a radio interview with a couple in France – both were teachers and were about to retire. They were retiring with Pensions of approximately 64+% of their recent past incomes. They owned their home, and if I recall correctly also owned a second home outright which they were renting out. That % of income is enormous and is one of the principal reasons Europe is in serious trouble, and isn’t about to recover.
Somewhere during the past half century, our society was lulled into believing that those relatively small deductions we were paying into pensions plans, at least for those of us who weren’t entrepreneurs, would support us with some degree of comfort in retirement.
I would bet that almost None did the calculations, and wondered how that would ever be possible. It’s likely that most of us assumed that genius fund managers would make the funds grow, and of course, there was the other assumption that a new crop of young earners would contribute and everything would work out ok.
Somewhere during the past 1/3 century, it became ok for those funds to be replaced with IOUs, . . . surely investment geniuses could make more money, and corporate CEOs could make better use of those funds – building, growing and acquiring. This was all insanity. Our perceptions were skewed.
The problem can’t be fixed. Government won’t find the funds to make good on those IOUs. Allowing a flooding with new immigrants to grow the workforce won’t do it. North of the 49th parallel Canadians are opening the doors wide thinking this will solve long term financial problems, and the reality is that the welfare system is drowning underwater, and possibly worse, and it’s resulting in an overburdened healthcare system which is breaking. The government doesn’t know any better but to raise taxes.
America is beginning to understand that the only real answer will come from a strong, decisive leader who will make the most difficult cuts in all areas of federal government spending. Only a principled leader will make the toughest decisions, rather than the politically expedient ones, and he/she will be able to “sell” those plans to the taxpayers. Such leader will also spend time promoting the unequalled American entrepreneurialism.
MataHarley
premium_subscriber
@James Raider, don’t you find it ironic we can get lectured by Congress and the WH about being irresponsible, indebted borrowers, leveraging our homes with credit to consume… and yet their leveraging of a ponzi scheme trust fund is immune from criticism? And that includes the French couple, living quite well with a bad financial investment by the French government – and all at the expense of the upcoming generations.
Ponzi schemes never work… doesn’t matter in what language they are constructed, eh?
Right on on all you said. All I can humbly add is “ditto, dude…” :0)
PS: Oh yes… let me know when one of the brave leaders, willing to do the hard tasks, shows up. Ain’t on the radar now, from what I can see. It’s still Bozo vs Emmett the Clown in all aspects
ilovebeeswarzone
RETIRE5, YOU ARE CORRECT, IN WHAT YOU’RE DEBATING,
WE JUST HAVE TO ADJUST WITH ANYONE CARACTER,
WHICH IS CORRECT BUT BEING CHALLENGE ON ISSUE THAT ARE SO IMPORTANT TO DEBATE, AND NOT JUST THROW THE ANSWER AS LABELING, WHERE WE KNOW IS NOT THE INTENT OF THE COMMENTER,
A DEBATE HAS CONSEQUENCE, AND WHEN IT’S FUELING THERE IS WAYS TO TURN ON THE AIR CONDITION. NOT LIGHTING UP ANOTHER FIRE.
WE JUST GET SO INTENSE SOMETIMES, AND THAT IS THE POPULATION OF FLOPPING ACES HERE,
THIS CROWD SHOULD BE RUNNING THE AMERICA TOTALLY ALONE, THEY KNOW EXACTLY HOW TO USE THEIR BRAIN. AND THEY HAVE A PASSIONATE LOVE FOR THIS COUNTRY, SOME HAVE SCARS TO SHOW IT TOO,
AND THEY ARE THE PROUD CONSERVATIVES WHOM ARE THE MOST TOLERANT AND GENEROUS AMERICANS. THEY ALSO KNOW WHEN TO TALK AND WIN THEIR DEBATE BETTER THAN THE DEMOCRATS
Aqua
@ johngalt
I know you know he won’t listen to this. He’s just going to move on to the next talking point. He believes people should be taxed so their money can go to others in the form of Earned Income Tax Credits, because the people being taxed don’t know how to spend their money properly.
By the way, I work in telecommunications. Everyone I know in telecommunications is hiring. We even started an apprentice program for those with no experience. We called the local DOL and had them send people our way. You know what 99% of the applicants wanted? They wanted us to sign the paper saying they applied for the job. They didn’t want the job, they just wanted their benefits.
John, Larry, Rich…this is the year Florida State rises from the ashes of Bobby Bowden. Rich? Notre Dame? Do they still have a football program? 😉
Warren
@Aqua: Aqua, Re: comment #61 As a graduate of FSU, I could not agree with you more. This will be Jimbo Smith’s year!
“John, Larry, Rich…this is the year Florida State rises from the ashes of Bobby Bowden. Rich? Notre Dame? Do they still have a football program?”
rich wheeler
Aqua 1993 “Game of the Century” Undefeated #1 Charlie Ward- led Seminoles beaten in South Bend 31-24.by #2 N.D. Classic Pre season 2011 N.D. ranked above F.S.U. and Michigan. Enjoy the season.
johngalt
@rich wheeler:
It seems like there might be enough CFB fans here that ongoing discussions can be made about the subject during the season. It would be an interesting change of pace considering guys like Larry and I, normally on different sides of a political debate, would suddenly be on the same side, eh?
Nan G
@MataHarley:
Regarding government ideas that are not worth the cost to implement:
We use two huge bridges that take us over the Port of Long Beach, then the Port of Los Angeles into Palos Verdes Penninusla. (SP?)
Years ago we had to pay a toll at a set of 8 manned booths to go one way (the other way was free).
Then it was realized that, even with only two toll takers the money wasn’t covering the costs of the employees!
The booths were torn down and the bridges are free both ways.
NOW, money being tight, there is a plan to put in automated toll collectors.
It is too bad when wealthy Americans go ahead and accept their Social Security checks.
I’m friends with the wife of a millionaire who is a real tightwad.
He brags about collecting Social Security even as he readies his yacht for its next race.
There simply are not enough workers on the ground to support all of the Social Security checks that the entire baby boom generation will want to collect.
She secretly does charitable giving so he doesn’t get mad at her.
Gary Kukis
There are so many things that do not make sense when it comes to money and Congress.
How do they manage to spend money without even having a budget directing where money is to be spent?
How insane is baseline budgeting, anyway? And why is this not a major topic in this debt discussion?
Why is it so impossible to (1) select a year (like 2006, 2008) and go back to that budget; or (2) to simply mandate an across the board 10% cut in every single program? Repeat the next year as well.
Obviously, social security recipients, and those 70-80 million who get checks from the government would suffer. However, this would be at least a shared sacrifice, which those who live off the government have not yet shared with the rest of us.
ilovebeeswarzone
Gary Kukis, yes that would be the first step to have the recipients of welfare checks participate into this NATION’S ECONOMY, they would whine but feel the pride of being a part of helping the burden of debts,
I always come back in the idea SMORGASBORD GAVE US IN ONE COMMENT SOME WHILE AGO.
THIS TO IMPLEMENT A TAX IN ALL YOU BUY REGARDLESS OF ANYONE ‘S STANDARD,
THAT IS THE FAIREST TAX YOU CAN PUT ON AND THE POORS WOULD DO THEIR SHARE OF IT ,AND ALSO THE UNION’S EMPLOYEE IN ANY GOVERNMENT JOBS, TOO AND THE ELECTED WOULD ALSO PAY, AND THIS IS MANAGE BY THE STORE WHERE YOU BUY NOT BY GOVERNMENT EMPLOYEES,
INSTEAD OF TAXING THE RICHS WHICH PROVIDE JOBS
,LOWER YOUR TAX PERCENTAGE AND GET ALL ABOARD OR DON’T TAX AT ALL. AND DON’T SPEND THOSE REVENUE UNWISELY AND FOOLISHLY LIKE IT’S YOUR MONEY.
Gary Kukis
@ilovebeeswarzone: I completely agree with a consumption tax, as long as the federal income tax was ended simultaneously.
retire05
@Nan G:
So what if your friend who is a millionaire collects his Social Security? Was he a millionaire when he started paying into the system? Did he obtain his wealth by hard work and due diligence? If he inherited that money, and knew he would not need to use the system, did he have a way to opt out so that he would not have a later claim to the money he paid into SS?
It is wrong to look down on those who were forced to pay into a system and then take what they are owed. The federal government uses our money for forty years, and then has a responsibility to pay it back, as promised. If you don’t want those who are independently financially secure to take money out of the system, don’t require them to pay into for their entire work lives. It is just that simple.
I know a number of people who draw SS benefits, but donate that money to charity because they don’t need it. One person I know gives their entire monthly benefit check to St. Jude’s Children’s Hospital in Memphis. That is a lot of money going to a charitible hospital that hospital would not have otherwise had.
Nan G
@retire05:
In essence this man’s wife is doing what you see being done, Retir05.
He’d just blow his stack if he knew it.
He enjoys messing with his employees’ last nerves.
That’s why he makes a point of mentioning that he is collecting Social Security when he deals with working people.
Although retired, he is constantly hiring people to do this-and-that then he uses the opportunity to belittle them.
Blake
@Rita: I agree wholeheartedly that cutting waste alone won’t “cut” it-
I am all for eliminating whole departments- Education, EPA, Commerce, and several more. These just play the shell game with our money, and we got by for 200 years without the Dept. of Education- Some might even say that that Dept. has dumbed down our kids.
I will forever wonder what happened to Wood Shop, Gym, the band practices, etc. They have, in many schools, been cut, due not to budget shortfalls, but to a different, “testing” agenda.
Authority over these things should be given back to the States, the proper venue for them, not the Federal government, which can’t tie its own shoelaces, and needs a soft helmet all the time. (especially Biden).
retire05
Nan, if he is an employer (earning a salary from his company) then his Social Security benefits are diminished by anything he earns over [I think] $25,000/yr. He will lose one dollar in benefits for every two dollars earned over the legal limit on income. If he earns $50K/yr, and reports that income he will lose $12,500/yr in benefits. If he is getting roughly $2,000/mo (or $24K/yr) in benefits his check will be reduced by $12,500.00
Nan G
@retire05:
Retire05, he’s an ”employer” only in the sense that you or I employ gardeners, landscapers, painters, etc.
He isn’t working at a paying job.
(Sorry for the confusion.)
johngalt
@Gary Kukis:
I have mentioned baseline budgeting before. Essentially, it is the federal budget, as extended out, that assumes a 7-10% or so increase in spending, per year, based on assumptions that the GDP, and consequently, tax revenue, will increase by the same, or greater. Extrapolating that out, if the assumption is a 10% increase in spending every year, the amount spent by our federal government will be well over $9 Trillion dollars by the end of the next decade.
And yet, all we hear is screaming from the liberal/progressives when even a small “cut” in spending is proposed over the course of that ten years, and they then start bringing out the “victims” who will be hurt most by these spending “cuts”.
In reality, even at the most extreme “cut” amount I’ve heard, of $4 Trillion over ten years, that isn’t a spending cut. That is an increase in spending of $2 Trillion over that ten years. NOTHING is actually cut. But the liberal/progressives claim that the other side wants to take food out of the mouth of babes, and medicines out of grandma’s hands. Their rhetoric is nothing but a big crock.
And the Stimulus? Ask a liberal/progressive about it. They’ll claim it was just a one-time $1 Trillion “boost” to the economy, and that it’s nearly gone. NO, it’s not. Much of that spending got rolled into the baseline budgeting by the government, and continues on, adding it’s 7-10% new spending per year. My guess is that the result of the Stimulus has been well over $1 Trillion in spending, if not a couple Trillion.
And, in complete irony, the liberal/progressives bitched, moaned, and whined about the two wars we were fighting, in Iraq and Afghanistan, not being included in the Defense portion of the budget. One of the first things Obama did was to move that funding into the Defense budget where it became what? You guessed it. Just one part of the Defense Dept.’s baseline budget, accruing a 7-10% additional spending allotment every year. The fact that during Bush’s terms that funding was separate from the baseline budget of the government was actually a good thing, but the liberal/progressives saw it as some kind of way that Bush was hiding the cost of those wars. Stupid, stupid, stupid.
Get rid of the baseline budgeting scheme and budget based on reality, like the rest of America does, and much of the issues concerning the debt and deficit could then be solved realistically.
MataHarley
premium_subscriber
@Nan G, I’ve motored over those bridges to PV many a time in my years in Southern Cal. No surprise they’re trying for automated toll booths… it is a state desperate for every cent they can milk… or would that be bilk… out of the residents.
I’m somewhat taken aback at your opinion of the man collecting his social security, despite being wealthy. Why should that make an iota of difference? And I’ll leave aside the inference that you’re not too fond of this individual, personally. That really isn’t relevant.
If you were a multimillionaire and gave me a credit line of $3000 for 3% interest, are you not due that cash plus interest, even tho it’s a paltry amount to you and your lifestyle?
I look at SS much like giving the government a credit line using our SS funds. After all, that is how they utilize it. We, the taxpayers, pay in, and they parlay that money as a “loan” for other spending via treasury purchases. Thus the lockbox filled with IOUs. In return for using the taxpayers’ SS trust fund as a piggy bank credit line, they average an x amount of return on those deposited funds. What you draw is based on your maximum averages over 35 years, and differs from individual to individual. There is, however, a maximum amount of income that is SS taxable, therefore there is a finite amount that a person can draw.
So if someone more affluent has paid in that money, and the feds have utilized it – along with the cash from less affluent contributors – why on earth do you not think he is due his return, right along with everyone else? And you’re reasoning for this is because he’s financially well off enough that he doesn’t need it?
What the heck does that have to do with the price of bread? Isn’t that much like Greg, who insists he knows when someone has more wealth than they need, and therefore that wealthy person should be denied their due and it should be spread around, used elsewhere for those more in need?
What you’re suggesting is somewhat surprising, and something I’d not expect from you. Perhaps it’s a personal thing, confined to this person you find less than appealing. But the concept you’re working on is seriously flawed, IMHO.
Just because one has more wealth than another, he should be entitled to his SS investment return, just like everyone else, to utilize as he sees fit. Otherwise what you suggest is just another form of government mandated “charity”.
James Raider
@Aqua: #61,
“You know what 99% of the applicants wanted? They wanted us to sign the paper saying they applied for the job. They didn’t want the job, they just wanted their benefits.”
Since 51% of the Nation doesn’t pay taxes, it’s understandable that this crew you refer to, supports Obama’s socialist agenda. What is worse, is that this mindset is so prevalent and no one in Washington seems interested in affecting it positively. Obama in fact, panders to it, nurtures it, and appeals to it. That fact alone makes him a worse President than Jimmy Carter, IMNSHO.
@Gary Kukis: #66,
“How insane is baseline budgeting, anyway? And why is this not a major topic in this debt discussion?”
Absolute right on. For every company I have run or owned, at the beginning of each fiscal year, my mantra was Zero Based Budgeting. This forces you and your executives to reassess returns and value of each dollar spent and why. It also forces the executive in charge of each division to know intimately his/her business in the “present,” in order that he/she can justify and speak to every expenditure. In my view, there is never an expenditure too small, that even a very senior executive could be excused with, “I can’t be bothered – it’s too small.” . . . . Nosedive where you have to.
Government is a game of entitlements and expectations.
The current circus in Washington is NOT even about base line budgeting vs. zero base budgeting, or slicing expenditures. It’s about NOT INCREASING the current spending levels. No one is brave enough to get the ax out. Certainly not Barry. He wants spending increases because there are expectations out there in his “base” that he Will deliver on those entitlements.
openid.aol.com/runnswim
@mata: You (and retire) raise a lot of interesting/important issues. I like discussing both SS and Medicare, but no time at all, at present.
I just want to make two comments:
In the first place, it’s not “IOUs.” It’s T Bills. The same T Bills held by Goldman Sachs, CALPers, China, and Deutsche Bank. Exact same T Bills. As I pointed out, during the Reagan administration, there were massive cuts on progressive taxes (income and estate) and substantial hikes on regressive taxes (SS and Medicare). In other words, wealthy people were being rewarded; average people were taking a hit. So the government (under Reagan) made what should be considered a sacred promise. Yes, we are raising your taxes, but we promise you that we are NOT going to use these tax increases on you average people to subsidize our tax cuts on the wealthy. (And government deficits soared, as a direct result of those tax cuts to the wealthy, as shown in the very study which you quoted on an earlier thread). So the regressive Social Security tax hikes under Reagan, which hit the middle class disporportionately, were supposed to go for two things and two things only (this was the promise): (1) pay out current benefits. (2) be invested in T Bills to pay out future benefits.
So T Bills were issued. The same T Bills as issued to everyone else. And now, conservatives, who supported the Reagan tax cuts which were subsidized by average people paying more into social security, state that those weren’t really triple A rated Treasury Bonds after all. They were just IOUs. They were just imaginary. They were just monopoly money. Guess the joke’s on you, average people. Guess the joke’s on you.
The second issue is this “ponzi game” charge. No, it’s not a ponzi scheme. A ponzi scheme is intentionally designed to steal money. SS is a pay as you go system. If the population was absolutely level, with no fluctuations, then the ponzi scheme charge would be false, on its face. But the population fluctuates. There were decades (when the Baby Boomers matured into their prime earning years) that SS was flush with cash. It wasn’t FDR’s intention that this cash be used for a piggy bank during peace time, as it was for decades. The smartest thing that could have been done with all those surpluses would have been to redeem government debt (redeem T Bills). If we had a debt to GDP ratio of much closer to zero, during population blips when there was a surfeit of wage earners, then it wouldn’t be a big problem to borrow money (sell T Bills), during population blips where there was a surfeit of SS beneficiaries.
The point is that the problem with SS was not in the concept or even in the design. The problem was in the execution.
In any event, Reagan made a promise, at the time he cut progressive taxes on the rich, while raising regressive taxes on average Americans. And it’s positively immoral to walk away from that promise.
@retire (regarding doctors (sellers) making the purchase decisions for their patients (buyers)):
In the middle of composing the above response to Mata, my mobile phone went off. It was from my older daughter, currently a 2nd year medical student.
Several weeks ago, she went swimming in a lake. She stepped on a splinter, which she couldn’t extract. She went to a “Prompt Care” clinic. She registered, waited a bit, and was seen by a physician, who looked at her foot (heel), wiped it off with alcohol, took out a number 11 scalpel blade, scraped the surface of the skin to expose the tip of the splinter, and then teased it out with the point of the blade. The entire procedure took less than 5 minutes.
Today, she got her insurance statement:
1. “Office visit” $129
2. “Debridement of open wound” $463
She asked me what to do about this. I told her to call her insurance company (which has a contract with the Prompt Care clinic). She did so. She just now called me back. They told her not to worry; the bill would be covered by her insurance, and she wouldn’t have to pay anything herself. She said, that’s not the point. I didn’t have an “open wound.” I had a splinter. The doctor teased out the splinter, using a one dollar disposable scalpel blade, in less than 5 minutes. The insurance company representative said “I can’t do anything about that. The doctor coded it as an “open wound,” and a splinter qualifies; so we have to pay.”
Patients have virtually no control over what services a doctor provides and how the doctor codes for the services provided. The doctor can say he did a “brief” consultation, or an “extended” consultation, or a “comprehensive” consultation. Lawyers, at least, bill by the hour. Doctors bill by the procedure.
Some years back, urologists lost their major money maker. Surgical removal of kidney stones. There’s now a machine which does this which doesn’t require any surgery. So the urologists decided they needed a replacement operation. Voila! The radical prostatectomy for prostate cancer. A virtually useless operation, which causes major morbidity (e.g. erectile dysfunction, urinary incontinence) and which doesn’t improve cure rates or prolong life. But the doctor holds all the cards. “You’ve got cancer.” “We’ve got to cut it out.” Who’s going to say no? Rudy Giuliani didn’t say no. John Kerry didn’t say no. Colin Powell didn’t say no. etc. And hundreds of thousands of average men didn’t say no, either.
Or take a woman with breast cancer. Your doctor recommends intravenous cyclophosphamide plus docetaxel, in his office (which makes the doctor thousands of dollars per month). He doesn’t tell you that you could just take capecitabine pills, from your local pharmacy, with equally effective results. How are you supposed to know?
You have chest pain. Do you have coronary artery stents placed? Do you have coronary artery bypass? Or do you just have conservative management, with medications and lifestyle improvements? Does it make a difference if you talk to a cardiologist versus a thoracic surgeon versus a very experienced general internal medicine physician?
It’s the sellers who call the shots. They make the purchase decisions. It’s the fatal flaw in the concept that traditional private practice American medicine follows the rules of market economic efficiency.
– Larry Weisenthal/Huntington Beach, CA
johngalt
@James Raider:
In other words, you promote budgeting based on reality.
Mata and I had this discussion. No scalpel, as Obama suggests. No carving knife, no ax. The budget needs a chainsaw taken to it, cutting off all of the unneeded branches, and then the black stuff painted over it so that it doesn’t grow again.
ilovebeeswarzone
AS an aside advice, always make sure that you have some bandages and pads in the house:
I put an empty jar of mayonaise into the sink bowl in hot soapy water, for a while and came back put my hand to pick it up and to sponge it clean and the jar had lost a small piece of glass on top and I hit the razor cut between my 2 end fingers that split open the in between loose skin,
you think there is no blood there well think twice, it bleed until I MANAGE TO CLIME UP TO GET A PAD AND TAPE AFTER DRYING UP THE PEROXIDE, NOW IT’S COVER,
ONE GOOD THING ALWAYS COME UP FROM A NEGATIVE ,THAT IS MY LEFT HAND,
GEEZ just typing it to my friends make me feel better already,
than you all, for lending your eyes to read me,
and take the advice too.
James Raider
@MataHarley: #75, . . . .
“If you were a multimillionaire and gave me a credit line of $3000 for 3% interest, are you not due that cash plus interest, even tho it’s a paltry amount to you and your lifestyle?”
Sadly it is very human nature that feels that – if you Have, you don’t really need or deserve to get the loan repaid. Personally, while I don’t believe in debt of any kind for myself and have been very lucky and fortunate on that front, each and every single instance in my life when I have relented and made a personal loan, large or small, I Immediately became an a**hole in that borrower’s eyes. The relationship instantly changes even if you don’t bang on the door for over a decade demanding minor payment.
My other thought on your comment is that when you become financially successful, the vast majority of your “friends” become expectant. Those expectations can be broad from assuming you will be picking up all dinner checks, to “friends” camping on your doorstep spending 2 week holidays languishing by your pool, enjoying your food, while you’re somewhere else “earning,” – just because you have plenty of rooms.
The sense of “entitlement” I have witnessed in too many acquaintances annoys the crap out of me, and has jaundiced my perception of my fellow man. It also redefined and filtered my definition of friends.
I suspect NanG. has a particular personal dislike of the individual in question which affects her percepts, nevertheless, I whole heartedly agree with you that no one has the right to dip into your pocket, or dictate what you might give away, when you have rightly and legally earned it, no matter how small or large.
ilovebeeswarzone
James Raider, what was the address of your place again?
I would bring my lunch for 2 weeks
James Raider
@MataHarley: #75,
“Just because one has more wealth than another, he should be entitled to his SS investment return, just like everyone else, to utilize as he sees fit. Otherwise what you suggest is just another form of government mandated “charity”.
Hear, hear!
Because I only worked for other companies for a few short years early in my career, my monthly pension checks, when they start arriving in the not too distant future, will cover little more than a few hot meals for my two granddaughters. Regardless how small those checks, I still expect them, and I will cash them as soon as they arrive.
I will look forward to my granddaughters’ smiles as they tell me their stories of the day over those hot meals, and I will feel a small bit of satisfaction that governments that I have supported all my life have left me a few crumbs, . . . . a nominal bit of thanks from them, is how I will choose to view them.
another vet
@openid.aol.com/runnswim: What were the options for the prostate cancer then? I had a radical prostatectomy in early 2005 and if memory serves me correctly, the only options given to me were that and seeding but because of my age, my urologist recommended the surgery.
Nan G
As you’ve figured out, I despise the old coot.
It only is partly about his being a skin flint.
I don’t like how he rubs the noses of people he hires to do work for in about the fact that they pay taxes to support him.
I worry he is calling down ill fortune on all of us near enough to him IF the stuff ever blows back on him.
Some of the kids he pays to detail his cars and to wash his yacht are sketchy individuals.
Others of them are college kids trying to earn their tuition and books for the next semester.
The ”evil” rich people Obama demonizes could be depicted by a photo of this man.
And why does he do it?
For the laugh.
He’s a disgusting human being who has reduced teenage girls to tears over the way he treats them.
He, like Obama who speaks about his unneeded extra money, is entitled to every penny he has.
James Raider
@ilovebeeswarzone: #81,
You know Bees, the strange thing is that I never had a problem with the “paying.” I never have much cared about money, and enjoyed the thrill of the “hunt” more. However, what erked me to no end, was the very obvious “expectation and assumption,” that I either had to pay because I could or would because I could. Admittedly, I rarely spoke up, and just changed my relationships with those who expected. The room, sad to say, almost emptied out quickly.
ilovebeeswarzone
James Raider, yes the powerful always attract the flyes,
we see that many times, they get in the camera view sometimes against their will and a group is around
to try to feed on them. and some are liking it, but they have to pay a big price, and then when they get old
or sick, they find that they are all alone, because they have relinquish their power to another person,
and the first group is no more accepted, but another one is forming around the new king,
quite many times I heard some people talking and end their conversation by saying well he or she has money, so I can take what I can, or an employee will say he made money so I can profit from it,
to get the most, It goes with all class, the danger of having more is troublesome and ciniqual,
that woman open the door to receive a CHRISMAST BOX FROM THE POLICE FOR HER AND HER 10 CHILDREN, THE REPORTER ASK, YOU MUST BE HAPPY TO BE ABLE TO HAVE A NICE CHRISTMAS FOR YOUR CHILDREN, ? AND SHE REPLY WELL IT’S THE LEAST THEY CAN DO, SHE DID NOT EVEN SAY THANK YOU. is it a human trait or a lowest trait of human,
bye
openid.aol.com/runnswim
@another vet:
Here’s the deal.
For men aged 65 and over, prostate cancer comes in two “flavors.” The first (and, fortunately, most common) “flavor” is the “live with it” type. The second (less common) variety is the “die of it” variety.
Now, if you’ve got the “live with it” variety, you don’t need treatment. You’ll just peacefully coexist with the disease and, ultimately, die (of some other cause) with prostate cancer, but won’t die because of prostate cancer.
If you’ve go the “die of it” variety, then radical treatment won’t help. From the very instant that it is first diagnosable (i.e. the first time that it causes symptoms or the first time it raises PSA levels), it has already metastasized (to lymph nodes and/or bones). So treatment to the primary tumor doesn’t help. In neither type (“live with it” or “die of it”), does treatment to the primary tumor make a difference. Your fate is in the hands of your tumor’s intrinsic biology and not in the hands of your surgeon.
Virtually all men will get prostate cancer, if they live long enough. My father (almost age 98) almost certainly has prostate cancer. He’s probably had it for 20 years or more. I’m currently 64. There’s a good chance that I’ve got prostate cancer cells, lurking silently. But I’ve never had a PSA test, and I never intend to have such a test. My uncle, who is a retired urologist (age 82), has never had a PSA test, either. As he’s a urologist and I’m an oncologist, we’ve been discussing this issue for more than 20 years.
What’s reasonable to do? Well, I don’t want a PSA test, because, if it were elevated, it would only make me worry, but it wouldn’t make me get needle biopsies to diagnose prostate cancer and it sure wouldn’t make me get my prostate whacked out. My father in law had an elevated PSA test when he was in his 60s. His urologist wanted to do a radical prostatectomy. I flew him out here to California and had a radiation oncologist treat his prostate with radioactive iridium wires plus low dose external beam radiation. He had no serious side effects at all. He died 12 years later (of small cell lung cancer), with no evidence at all of recurrence of his prostate cancer.
Why did I even have him treated (given the above information)? Well, it was because he’d actually been diagnosed with prostate cancer and was worried about this and his doctor told him that he needed to have it cut out, or else the cancer would probably kill him. So he was worried. Just leaving the prostate cancer untreated wasn’t something that he could sleep with, at night. So I recommended the least “toxic” treatment then available.
For men under the age of 65, there is some evidence that treatment of the primary disease could make some difference. This was a Scandinavian study which is discussed here. Overall, there was no significant difference in overall mortality at 12 years and there was evidence described in follow up publications that all the risk for metastatic disease had occurred in the first 10 years. Among patients 65 and older, there was no difference in overall survival 12 years following operation, but in patients younger than 65, there was a slight decrease in mortality. This was in a study limited to patients age 75 and under and with poorly differentiated tumors excluded (the poorly differentiated tumors tend to be the “die of prostate cancer” category). A previous American study showed no benefit to surgery versus “watchful waiting.” There’s currently a very large, ongoing American study which, when finished, should further define who benefits from treatment of the prostate primary.
There are a number of options for treating the primary tumor. Radical prostatectomy. Radioactive “seeds” (radioactive iodine or palladium, implanted as “seeds” into the prostate gland). External beam radiation. Radioactive iridium wires, combined with low dose external beam radiation. Cryoablation (with liquid nitrogen). Radiofrequency ablation (essentially microwaving the tumor bed). Proton beam radiation.
We don’t know which, if any, of the above are superior to the other(s).
I’d personally chose the procedure with the least morbidity, if diabolical circumstances forced me to choose. I’d say, either proton beam radiation or the radioactive iridium wires, combined with low dose external beam radiation.
As stated earlier, there are data to indicate that PSA screening for prostate cancer causes major morbidity (from the needle biopsies and from the subsequent treatment, itself) without improving survival. Which is why my uncle and I refuse to be tested.
– Larry Weisenthal/Huntington Beach, CA
ilovebeeswarzone
openid.aol.com/runnswim.
hi, my husband died in 07 from a clog in his easophagus, he just stopped eating and end up in hospital for his last week of life, he had an removal of prostate 2o years before and they also removed the bladder so he end up with a bag for the urine and lived good after his recovery done with,
his son had been diagnose with prostate cancer cell, a few 3 years ago, he was treated with a new thing
they injected with a treatment of live cancer eating things like some microbes,
and for a month every week, it killed the tumor, the year after he had to be check and they found
another one forming, so they gave him the same injection treatment and he is okay at 65 now,
living a regular life as he was before. are you aware of what is the injection microbe cancer eating?
just wondering if you know about that new thing of 3 years
bye
retire05
Larry, are you telling us that your daughter, in her SECOND year of med school, does not know how to remove a simple splinter from her foot?
Perhaps you should take her aside and show her the use of alcohol, a simple sharp pocket knife and a pair of tweezers.
openid.aol.com/runnswim
Hi Bees,
There have been a number of prostate cancer vaccines tested in clinical trials, e.g.
http://171.66.121.246/content/22/11/2122.short
http://clincancerres.aacrjournals.org/content/11/9/3353.short
The basic idea is to combine the PSA antigen with a (harmless) virus antigen to stimulate an immune response, where immune “killer” cells will be generated by the body to go attacking cells which express the PSA antigen (hopefully the prostate cancer cells). Here’s a very brief summary of the current state of the art, from the NIH:
http://www.urotoday.com/prostate-cancer-1014/immunotherapy-in-prostate-cancer-emerging-strategies-against-a-formidable-foe-abstract-.html
– Larry Weisenthal/Huntington Beach
Aye
editor
@openid.aol.com/runnswim:
Larry you lay out in great detail the story about the splinter and the bill from the doctor’s office but you didn’t state what you felt the solution should be.
Was this a coding error in which the doctor marked a box? Or do you suspect that the doctor was attempting to maximize profit from the treatment of your daughter’s sole?
I know that medical coding is a pretty standardized kind of thing so is there another code that would have been more appropriate? And would your daughter have been in a better position to monitor/protest the charges had she paid with a FSA or HSA?
I’m a really big fan of FSA/HSA accounts because it puts the patient in more close contact with what things actually cost and allows the patient to manage his money very carefully through negotiation as well as shopping around.
Your thoughts?
gary kukis
@retire05:
One of my biggest problems are those who receive social security and they are in their 30’s….and I will guarantee you that many of them pay nothing into social security. I have come across 3 different people, all healthy, in their 30’s, all foreign-born (from what I can tell), and they collect pretty nice ss checks (2 receive a little under $1000 each) and the other gets nearly $3000/month (I think partially because there are children involved). Every single one of them is capable of pushing a broom, making change or posing the ultimate question, “You want fries with that?”
How the heck did we get to a point where 70 million people get a check each month from the federal government??
openid.aol.com/runnswim
@retire (#89): That was a little uncalled for. For the record, said med student worked for three years following her graduation from Harvard in 2 sophisticated stem cell research labs, in which, among other things, she did sophisticated microsurgery on murine fetuses in utero. The lesion in question was on her heel, basically inaccessible to direct vision and bimanual manipulation, and available friends were unable to extract it, despite probing and digging. She called me up and I told her to just go to a Prompt Care and not risk an infection (which getting a foot sliver in lake mud can cause).
– LW/HB
MataHarley
premium_subscriber
@Larry, you sure spent paragraphs, flipping back and forth on what you assert INRE Social Security and solvency. Let me expound, if you please:
I have two problems with this revisionist history, Larry. First of all, the mandate that SS funds in excess of payments – originally held as just credits in the Social Security account on the Treasury’s ledger in the initial law – also had that any funds not used for payouts were to be invested. The formal Social Security Trust Fund (spit…) was created in 1939.
Somehow I doubt that Ronald Reagan, who was a new LA arrival from Iowa at the age of 28, had much to do with that “concept” you desperately try to defend.
From the Social Securities govt site on the history of the trust fund and investments…
Q.E.D…. LOL
You may attempt to convince someone out there… certainly not me… that these “investments” in T-notes don’t entail any incurrence of debt. This is no where close to the truth… per the SSA’s horses’ mouth.
Again I’ll try to have Allan Sloan, of CNN Money, explain it to you from his Aug 2010 article.
That’s worthy of repeating… when the Treasury has to redeem their T-notes, they have to borrow the money from some fund, some where, or investors, in order to redeem that note. All because, as the SSA points out, the money from the SS Trust Fund is being *lent* to the federal government for non social security spending. So when SS needs a redemption, payback, the time to pay the piper comes due and the money must be borrowed from somewhere else.
But despite your comments above, you also seem to realize that the trust fund has, indeed, been an unofficial credit line piggy bank, abused by Congress over the decades (yes, both parties). This is because you did, indeed, say “It wasn’t FDR’s intention that this cash be used for a piggy bank during peace time, as it was for decades.”
Peace time, or times of war… it has been, and continues to be used as a piggy bank. Would have been better if just put into a Reserve bank money market type account, and earned nominal interest over it’s decades of existance, and locked away from legislators’ sticky fingers.
Then we go back to this “ponzi scheme” argument you and continue to have. In your words, “intent” is the only difference between a ponzi scheme and SS (or Medicare, for that matter)
All taxes and fees are a way to “steal money”, Larry. The government doesn’t earn or generate a penny. It only takes from the private sector. Then it has the private sector pay the massive and ever growing public sector’s salaries, and takes back some of that in their income taxes. Recycling nothing but money that was generated solely by the private sector.
Social Security is not “pay as you go”. It is a government mandated pension plan – that also functions as a Congressional lending bank – that you may, or may not, live long enough to collect at retirement. Medicare is a government mandated medical plan that you may or may not live long enough to collect. Both, however, are requiring payments of front… for which you get nothing in return.
You cannot say, with a straight face, that Social Security is merely those receiving back what they “paid as they went” since the first year of both Social Security and Medicare paid out to people who never put in a dime, paying nothing as they went. And what did they pay them with? Funds taken from generations who get nothing for their payments, and have to live long enough to receive any pension or medical services for decades of mandated payments.
From the Legal-Dictionary definition of ponzi scheme:
From Lawyers.com:
Now the only thing you may attempt to question was if there was “an illusion of profitability”, or there was the appearance of a “dramatic increase in value in a short time”. This, however, would be attempting to read the minds of the earlies recipients of both entitlement programs. If they invested $12, and received lump sums, and more substantial as time went on, they most certainly would consider their lesser investment “dramatically increasing” in value, and it sure would be a realistic illusion of profitability for them.
However the base reality is that, just like a ponzi scheme, the early investors are paid with the funds provided by the later investors. And just like a ponzi scheme, it will collapse because population figures are not stagnant. The demand by boomers retiring, and living longer, will be overtaxing those that are supposedly “paying as they go” and funding money that isn’t in the trust fund at all.
But you make excuses for the government’s intent, giving them the moral high ground that SS or Medicare was never designed to “steal money”… yet when you are taking from the later investors to pay the early non or minimal vested investors, you are stealing money nonetheless. You are robbing Peter to pay Paul, and there’s no way you can gloss over that reality with a sense of moral superiority by legislative intent.
You say “…that the problem with SS was not in the concept or even in the design. The problem was in the execution.” It’s genuinely naive to even try to separate those two. The legislation.. which *is* the “concept”… laid out the “execution” via regulations.
Therefore the concept was faulty in it’s original design because of the way it was funded, and that the funds could and would be used for funding non social security spending via t-note accounting tricks. And that was all proven in my opening paragraphs about the history of the SSA and the creation of the trust fund four years later.
It was opposed by the populus, and still rammed thru…. shades of O’healthcare. Today, with the runaway costs of living, and medical, combined with the poor concept that dictated the “execution” exactly as it was originally intended, we are paying the price of such legislative folly that illegal in the private sector.
And speaking of O’healthcare and your daughter’s story… let’s see. You say: “Office visit” $129
“Debridement of open wound” $463″. I have constantly said our health care problems cannot be solved by price fixing insurance premiums, and must address such idiocy as a splinter removal costing this outrageous price.
Yet look at what happens? The insurance company has to pay it because of doctor coding, and the patient isn’t supposed to worry because the insurance company will pay it. And since she’s in MA, it’s yet one more thing that proves insurance and medical mandates are worthless when it comes to reining in the cost of providing medical services. Heaven knows the ponzi scheme of Medicare… you know, where you pay for insurance you can’t get until you live long enough? and then pay more?… would remain solvent a little longer if removing splinters weren’t costing $592.
And yet you wonder why premiums are on the increase?
Now… tell me how O’healthcare brings down the cost of removing a splinter, Larry. Because if it doesn’t, it ain’t doing squat but creating over 55 new federal agencies, all with more taxpayer paid employees, loading up on more unfunded pensions as a liability, and stiffing healthcare providers and insurance companies to the point where they just have cut benefits to keep costs in line. Or, eventually go out of business.
O’healthcare fixes nothing, but it sure piles on a lot of expense for both businesses and the taxpayer. And, as usual, it will also be in need of increasing money from the taxpayers annual, just as MassHealth’s budget is $9.84 bil for 2011, 6.5% higher than the 2010 budget, even tho the enrollment increase is only 3%.
Nan G
@openid.aol.com/runnswim:
Larry, I understand her deciding to let a medical doctor remove the splinter rather than a friend.
But I am in my 60s and not that limber, but I can get a visual on my own heels!
Once I see my heel, I can also bring both hands to bear on it.
Sometimes only your own nerve endings tell you where the splinter is.
I go barefoot often and thus get splinters sometimes.
I am surprised she couldn’t get a visual and both hands involved.
I have on many occasions.
But when my cat cut my eyelid I did let a doctor fix it with liquid stitches.
No scar at all, thank you very much.
She did nothing wrong in getting a doctor to remove the splinter.
I hope she is well.
ilovebeeswarzone
openid.aol.com/runnswim,thank you for your answer and the link to it,
of course I did not comprehend all the scientific language but enough of how you explained yourself was easy to understand, bye
so far my stepson is doing fine and no recurence,
I THINK THAT IS THE VERY NEW FINDINGS WHICH SEEMS TO WORK. WILL IT WORK ON ALL OTHER CANCER.
IT’S YOU RES TO KNOW
openid.aol.com/runnswim
@Aye:
The latter, for sure. Given that the guy was already receiving $129 for an “office visit,” it was hardly necessary to claim payment for a “surgical” procedure.
With regard to your comments on HSAs: I am in full agreement with you. My own health care plan is an $8,000 annual deductible Blue Shield HSA account. High deductible HSAs are a great idea, under the currently-existing system. I give all credit to the conservative, Republican politicians who were instrumental in getting the HSA law written and passed and signed into law.
What I would have done, in the situation under discussion, was to tell the administrative clerk who checked me in, “look, I’ve got $8,000 deductible insurance, meaning that I’ve got to pay out of pocket, and all I need is a sliver taken out of my heel; so can you tell me how much you are going to be charging me? At least a ball park?”
It’s perfectly acceptable to negotiate payment in advance. Few patients do this, however.
In the case of my daughter, I’m sure that they just looked at her insurance and knew precisely what they could get away with and just took advantage of the wording in their contract. In my daughter’s case, her insurance paid everything. In theory, she shouldn’t have cared. But she saw the bill, compared the bill with the services actually provided, and was personally offended (as most people, I think, would be).
With respect to coding, there’s usually an array of choices. Doctors employ experts in coding and reimbursement who code in ways which maximize revenues. You might call this “personalized billing.”
Although I think that high deductible HSAs work well for the “small stuff,” it’s not the “small stuff” which is bankrupting the health care system. But looking at “small stuff” examples like this is instructive, because it shows precisely what those who are trying to reign in the costs of health care are up against.
– Larry Weisenthal/Huntington Beach, CA
MataHarley
premium_subscriber
Just a side observation… I’m utterly amazed that a few focus on whether or not Larry’s daughter should have been able to take care of own medical needs, instead of getting your ears blown back by the cost of $592 to remove a splinter…
???
sigh…
Aye
editor
@openid.aol.com/runnswim:
I guess I just have a really hard time being cynical when it comes to doctors and their billing practices.
Definitely not saying that it doesn’t happen, it’s just that my experience has always been the opposite in that the doctors and dentists have always looked for ways to help make things affordable.
I wonder if the fact that it was one of those stand alone walk in type clinics made a difference in the billing. I sort of doubt that her general practitioner would have treated her that way. Then again….
Once we got our FSA we were much more aware of how we spent our dollars. My wife was embarrassed by me when I shamelessly asked for a discount from my carpal tunnel surgeon as well as from my oral surgeon. I reminded her that we had to manage that money wisely so that it would last us the entire year.
That was really my only complaint about the FSA. You had to make the money last all year and then, when you got to the end of the year, you had to use up the balance so that you wouldn’t lose it.
A roll over option would be so much better. That way, if you have a “well” year you can carry those benefits over to the year where you break your leg.
openid.aol.com/runnswim
@mata:
What I wrote about the SS “fix” in the Reagan years wasn’t revisionist. I don’t have time to go looking it up right now, but the way I explained it captures the essence, I’m fairly certain. There was a debate about the morality of cutting progressive taxes while raising regressive taxes at the same time. SS had been taken out of the budget, effectively, some years before, but was put back in budget, as part of the SS “fix,” to ensure that the surpluses would be accounted for and banked as T bills. I distinctly remember you, yourself, quoting this, as part of an earlier debate with me on something else. The change in the SS accounting during the Reagan years.
No time, now, for anything else.
P.S. For the record, the daughter in question is my older daughter, who is the Harvard grad who lives in Colorado, not the younger daughter (Yale grad) who lives in MA — so you can’t go blaming RomneyCare.
With respect to the rest of your argument, I addressed that in my original comments.
1. The social security trust fund does exist. It is in the form of T bills worth $2.7 trillion. They are the same T bills as held by all the other US creditors. If we choose to default on T bills held by Social Security, it will be no less egregious than defaulting on T bills held by anyone else. The “sanctity” of the SS trust fund was specifically affirmed during the Reagan administration, when the regressive payroll and self employment taxes were raised, even as the progressive income and estate taxes were being cut.
2. SS is NOT a ponzi scheme. It is a mismanaged, pay as you go system. The government could have used the SS surpluses to pay down debt. This would have paid for current deficits, in the same way that major US corporations borrow money at certain times and pay it back at other times.
You have to look at social security over a 100 year period. There will be fluctuations in population, just as there are fluctuations in business cycles. You borrow money in bad times and pay it back in good times. You borrow money when the ratio of retirees to workers goes up and you pay it back when the ratio of retirees to workers goes down. The latter will happen as the Baby Boomers die off.
The problem was that the social security trust fund was mismanaged. Rather than using the (decades-long) surpluses to pay down government debt, it was used to finance “general fund” operations, including Reagan’s cuts to income and estate taxes.
– Larry Weisenthal/Huntington Beach, CA
openid.aol.com/runnswim
@Aye:
With HSAs, you don’t have to use it or lose it. You can accumulate it over time — build up a medical nest egg, to use when “the big one” hits.
http://personalinsure.about.com/od/health/a/aa022807a.htm
– Larry Weisenthal/Huntington Beach, CA
Aye
editor
@MataHarley:
I read of his daughter’s billing experience and was reminded of your kitty encounter.
Didn’t you have overcharge issues at one of those walk in type clinics too?
retire05
So, Larry, now you say that your daughter performed microsurgery but was unable to reach a splinter in her heel and unable to retract it herself? Somehow I feel like there is more to the story, or it was for affect.
Also, $129.00 does not seem unreasonable for what is basically an emergeny room facility. As to the surgery costs, is there not a medical board in your state that deals with such issues or an insurance board that would not accept a complaint of “gouging”?
In my area, firefighters would have been able to retrieve the splinter as they are all certified EMTs. Maybe she should have just went to the nearest fire station.
Aye
editor
@openid.aol.com/runnswim:
Ours is an FSA. I’ll have to look further into the HSA and see if that is an option for us.
ilovebeeswarzone
openid.aol.com/runnswim,
you got the 100 comment, congratulation,
you work hard today for it. enjoy, and you had us sharks lirking,
MATA AND AYE AND NAN AND ME TRYING FOR IT.
bye
MataHarley
premium_subscriber
Larry, you will find nothing in the archives from me about Reagan’s responsibility with SS accounting and the budget because it is, despite what you believe, revisionist history. Again, from the SS gov website itself, it dispels the myth you are attempting to perpetuate.
I’m pretty darned sure that Reagan’s alternate name is not Johnson, and equally sure he wasn’t president in 1990. Reagan’s amendments, which was vast bipartisan in passage, implemented that that up to 50% of Social Security benefits could be added to taxable income, if the taxpayer’s total income exceeded certain thresholds. Reagan’s amendments (again linked on the SS gov site) still had the trust funds in the unified budget, and scheduled to be removed as of Oct 1992. Instead a Dem Congress removed it two years earlier.
But you still continue this fallacy..
Larry, pardon me but that’s a bunch of hooey horse manure. The SSA and created Trust fund was “managed” exactly as it was intended and designed to, and created to do so, by Congress. That you continually give them a pass is absurd. Never in it’s original intent or legislative structure was it mandated to be used to pay down debt. It was always a piggy bank at the fingertips of Congress, to be used at their discretion.
Also that you attempt to blame this on Reagan in any form is simply laughable. I know you always remain unnaturally fixated on Reagan’s tax policies. Ironic when you consider the reversal of the recession was showing within the first years and the GDP growth was astronomical in it’s wake… unlike the plans this set of economic idiots in charge put into play. But now you only whine about Congress spending the SS trust funds… as they designed it to do from the beginning… for Reagan’s tax policies, and not another other of Congressional irresponsible spending. Nor do you criticize the entire debacle of an entitlement program that was flawed, and responsible – along with Medicare – for sinking the US economic ship today. Seriously misguided, guy… what can I say?
MataHarley
premium_subscriber
BTW, Clinton doubled down on Reagan’s SS taxation when he and the Dem Congress increased the amount of SS benefits that could be taxed. Yup… just had to rob the more frugal and conscious Granny and Gramps, of higher incomes, of more, they did.
openid.aol.com/runnswim
@mata: There’s only so much I can do from memory. This is going to take some dedicated research time.
What you are doing, however, is throwing semantic arguments in my face. It’s a fact that there were steep rises in payroll and self employment (i.e. social security) taxes in 1982, at the same time that there were steep cuts in high end income and estate taxes. It is a fact that both of these occurred in the Reagan administration. It is a fact that the former (regressive tax hikes) were used to partially finance the latter (progressive tax cuts). The social security tax hike wasn’t used to finance some big new government program. The revenues went straight into the US general fund. They could have been used to retire debt. Instead, they were used to pay for the operations of government, which had less tax money to support those operations, on account of the Reagan tax cuts (as documented in major study which you, yourself, have quoted in the past). It is a fact that, coupled with legislation to increase the social security taxes, pledges were made reaffirming that the surpluses were, in effect, to be lent to the government in exchange for interest-bearing T Bills, to be retained by the social security trust fund.
I distinctly remember you quoting an accounting change relating to Reagan, which, I believe, you used to partially explain away the marked rise in debt:GDP resulting from the Reagan tax cuts. I hope that I can find this.
Here’s a well written op ed which explains the points I’ve been trying to make:
http://www.oregonlive.com/news/oregonian/david_sarasohn/index.ssf/2011/02/time_to_live_up_to_reagans_soc.html
For the record, I’m not “blaming” Reagan for anything having to do with social security. I blame him for voodoo economics, which is that tax cuts pay for themselves by generating increased economic activity sufficient to generate increased tax revenues to pay for the tax cuts. This is by now one of the most discredited economic hypotheses in history.
I’ll readily admit that too much government spending has contributed to the current debt crisis. But it is wrong to deny that the great tax cuts of the past 30 years have not played an important role. The Reagan tax cuts were justified, at the time, on the now discredited supply side theory that tax cuts pay for themselves. The Bush tax cuts were justified on the basis of illusory surpluses which were projected to extend out for a decade. Absent supply side theory and absent the illusory budget surplus, both tax cuts would have been viewed as irresponsible and unjustifiable.
Social security is not a ponzi scheme and Medicare is simply the best and most cost effective segment of the entire health care economy. The reason that Social Security is in trouble is that it is a pay as you go system which was mismanaged, by both political parties. The reason Medicare is in trouble is that Medicare is not allowed to raise the Medicare tax in the way that private insurance companies can have annual double digit increases in premiums, whenever the private companies want to unilaterally levy those premium hikes.
P.S. (re: your #107): Reagan raised SS benefit taxes on wealthy from 0% to 50% and Clinton raised them from 50% to 85%. This is entirely consistent with the Clinton/Rubin “focus like a laser” economic priority on deficit reduction, of which both felt that tax increases were an integral component. You can criticize it, but it was internally consistent with other policies and most economists would say that it worked. This is related, by the way, to the whole means testing social security debate.
– Larry Weisenthal/Huntington Beach, CA
MataHarley
premium_subscriber
Larry, I never would have mentioned the Social Security amendmends in any form except to point out to you that it was one of Reagans tax INCREASES, that he did in conjunction with tax reductions in his overall policy. Therefore, whatever you think you read, I assure you it was another of our many moments when you think I said something I didn’t because you evidently read in a different language than I do… LOL
Larry, you went on a multi-paragraph tirade about Reagan in a thread about Social Security, the trust fund, and Congress frittering away those funds with non Social Security related spending. Now you say you weren’t “blaming” Reagan for having anything to do with SS? Hey guy, you brung it up… not me. But again, what I notice is that you don’t mind Congress spending the trust fund on non social security spending… unless it was Reagan. This sounds to me like a personal problems. I guess we won’t be seeing you visiting the Reagan Presidential Library anytime soon, yes? Too bad… great facility. I got the inside tour once, including the “basement” archives.
INRE SS/Medicare and ponzi schemes. We’ll never get to an agreement on that, so I suggest we drop it. You think I’m wrong because of your liberal definition and imaginary Congressional intents. I think you’re naive. Not much more to be said about that, is there?
openid.aol.com/runnswim
@mata:
I never said that. I said that the government should have used social security surpluses to pay down debt/redeem T bills. I said that both parties are guilty of social security trust fund mismanagement.
I’ll try to find the quote from you to which I referred. You write a lot; so I suspect that it might not be all that easy. But I’ll give it the old college try.
– Larry W/HB
James Raider
@MataHarley: #109,
“INRE SS/Medicare and ponzi schemes. We’ll never get to an agreement on that, so I suggest we drop it. You think I’m wrong because of your liberal definition and imaginary Congressional intents. I think you’re naive. Not much more to be said about that, is there?”
Mata, stick to your guns on Ponzi, which is exactly what it is and how it’s structured, no matter what original intent may or may not have really been. I mentioned Canada above because there, both Federal and Provincial Governments have become convinced, against all intelligent research disputing it, that the only way to keep SS solvent is to bring in millions of immigrants whom, they are convinced, will “pay-in” to cover the retiring boomers, etc. That is a Ponzi scheme by any other name.
The U.S. Governments also believed and assumed that continual population growth would cover the shortfalls in time. By any other name, a Ponzi scheme is a Ponzi scheme.
openid.aol.com/runnswim
@raider (#111):
Social security was designed as a pay as you go system. Had all the social security tax surpluses gone to redeem treasury debt, the debt:GDP ratio would now be sufficiently low to allow for the borrowing necessary to finance it through the period when the Baby Boomers finally die off (given also some relatively simple adjustments). As I wrote, it’s a century-long cycle, with population cycles being precisely analogous to business cycles (in which companies alternately borrow/pay off/borrow/pay off).
Social security is a mismanaged pay as you go system. It is only a “ponzi scheme” to those who find the term politically expedient. What happens in Canada or anywhere else has no bearing on these facts.
– Larry Weisenthal/Huntington Beach, CA
MataHarley
premium_subscriber
I “write a lot”? Larry, I’ve been so scarce around this blog of late that I’m almost forgotten as an author! LOL
Let me save you some time, because you are wrong, wrong and more wrong. We’ve discussed Reagan tax policies vs Clinton on one thread in particular. None of which involved the GDP. That was where you and I had a personal falling out because I think of tax policies en toto, and you like to just focus on Reagan’s first tax cut bills, and ignore his corporate and other tax increases that enabled a faltering economy to recover… unlike this bunch. And in that thread, I only mentioned Social Security once, and that was in reference to the tax increases you choose to ignore to this day.
Since you’re morphing this as some how associated with our separate discussion in a different thread about GDP growth, I’ll provide that thread, taking place over a month later, to you as well. It had to do with Obama’s being the first GDP downswing on record thru any of our recessions in the lastest 110 years… a dubious accomplishment at best that I’m quite sure he doesn’t want to run on.
Apparently, you are trying to conjoin these two conversations, and conflate I said something about Social Security and GDP that I did not. Two simple facts. Reagan raised taxes on social security income. Clinton doubled down on that by raising it further, but only via class warfare senior citizens. Reagan’s GDP growth is a record of always going up, as has every other POTUS… until this one.
Now go cure cancer, and stop using your memory. It ain’t working right, guy.
MataHarley
premium_subscriber
Larry, just how is it “mismanagement” if Congress utilizes the SSA and the ensuing SS Trust Fund EXACTLY as how they wrote the legislation to use it?
You think it’s moral mismanagement. I’m telling you it was deliberate, intentional, and well within how they structured that immoral piece of legislation to begin with. The problem is you are placing your own wishful, more moral intents upon a Congress that NEVER, and I mean NEVER, held the same view.
I will also point out that your criticism of this intentional and deliberate “misuse” of taxpayer dollars has been confined to your favorite target to hate – Reagan. I will also point out, once again, that Reagan did NO accounting changes. It went on budget under Johnson. It stayed on budget under Reagan, and wasn’t scheduled to come off budget until 1992. The Dem Congress did that earlier.
And the on/off budget makes no difference in the accounting in the federal budget for all intents and purposes. You are barking up the wrong tree, standing on the dead horse you continute to beat.
MataHarley
premium_subscriber
No, Larry. It was designed as a take in advance pension plan where the immediate beneficiaries were paid by those who would not receive their benefits until well in the future.
It was also designed to be a piggy bank of borrowing by Congress from day one.
You’re simply imposing your own imagination over reality. Don’t fit. Ponzi, ponzi, ponzi.
As far as this repeated “pay as you go”, BS… aka PayGo… that is the Congressional practice of financing spending with funds available today, rather than borrowed. However what Congress designed, INTENTIONALLY, is to collect from taxpayers today for their pensions tomorrow, to pay other pensioners today that never put a dime into the system.
No matter how you spin it, it’s robbing Peter to pay Paul for the SS payouts. As far as it being “funded”, that would only have happened if the accounting trick of investing in T-notes that could be used to fund non-social security spending were written in as prohibited. But they didn’t, did they?
From day one and it’s inception – as written in 1935 – it was always intended to be a ponzi scheme tax fund of collecting fees today, to pay out tomorrow, and use as a piggy back loan source for Congressional spending on *anything* they wanted to. Period. And you wonder why I hate that entitlement as much as I do Medicare? But now, like many others, after five decades of being robbed, I have little choice. I sure won’t get that money back any other way other than to demand the benefits. But if they offered me a cash out payment, I’d take it in a heartbeat and go elsewhere.
another vet
@openid.aol.com/runnswim: Thanks for the feedback. I was in my middle 40’s when diagnosed so the wait and see option was a non-option for me. Based on the links you provided to bees, hopefully it looks like they may be coming out with new and better ways to treat it.
Ditto
I expect to catch hell for this, but there is another way to make Social Security solvent without crippling future generations. A linear cap-off on the maximum amounts that SS pays out to persons over 65. Sure, I understand that everybody payed in at X-amount of dollars depending on how much they made, and it fair to them, but the current system isn’t fair either. The consideration here is that the highest earning people who paid in are much more able to take the hit, and most of them (i.e. those who averaged over $200,000 a year in the last decade) could still likely afford a very nice retirement on what they were paid during that time. The trick here is that the SS system must be made a lock-box that Congress and the Treasury are forbidden to ever borrow from.
I don’t like this either, but it is a way to fix the current SS system until it can be phased out and a better sensible one created.
Gary Kukis
@Aye:
When Obama was out on the stump, saying that doctors were padding their income by cutting people’s feet off when that procedure was unnecessary, he was perhaps verging upon an almost truth. As we know, there probably isn’t a doctor in the entire U.S. who would do what Obama seemed to accuse doctors of typically doing; however, I would not be shocked if, for private insurance and government insurance, that doctors frequently “pad” their bills in the ways similar to that listed above. When there is no direct connection between the doctor and the patient with regards to billing, the doctor knows that medicare and insurance companies are out to screw him, so, when he can get a little extra money, by charging $500 to remove a splinter, he will do it. No way, if a patient was paying the doctor directly, would he charge him or her $500.
Gary Kukis
@MataHarley: You ought to repost this, Mata, apart from the references to Larry. You make many excellent points.
Gary Kukis
@Aye:
We are kindred spirits here. My medical insurance is a very high deductible, so I pay for most everything I need out of pocket. I always, without fail, ask up front if there is a cash discount or a direct-payment discount. In almost every instance, there is. This saves them 1-2 hours worth of paperwork.
Gary Kukis
@openid.aol.com/runnswim:
Now, let’s be serious; this is the government we are talking about here.
Gary Kukis
@openid.aol.com/runnswim:
When you talk about “paying for tax cuts” you are making the implicit assumption that all of your earnings belong to the government and when they parcel some back to you, that has to be compensated for somehow.
The phrase “voodoo economics” was a silly political phrase, offered up instead of an argument against tax cuts. Reagan’s stimulated economy lasted us for about 3 decades. I would much rather have the Reagan economy over the Obama economy.
In both cases, government spent too much. Not exactly a news flash.
1. Government is the only organization which is unable to do something like, “Let’s decrease the payments to this operation by 10% due to an economic downturn.” Instead, there is a built-in 7% increase each year, whether this is a call for that or not.
2. Government is so economically incompetent that, even though dozens of organizations can point out specific cases of waste, fraud and abuse, government seems unable to cut any of this from its budget.
3. Government is so economically confused that, many members of Congress assume a static response to tax rates being raised or decreased. This is stupidity beyond human comprehension. Reagan used himself as an example. He would work 2 pictures a year, because, after that, he was working for the government (paying a 90% tax rate). Tax rates have a great affect upon economic activity. Reduce tax rates and economic activity is ramped up….it happens every time it is tried.
Gary Kukis
@Ditto:
This makes perfect sense, which is why government will never do it.
MataHarley
premium_subscriber
First of all, Ditto, there is already an income cap for how much of your earnings are taxed for SS. It’s called the SSWB (Social Security Wage Base). It was $106,800 in 2010. This means that someone making a million annually is still only paying in the same as someone who made $107K. Ergo, when collecting post retirement, they have a cap for maximum benefits received because their contribtions were also limited.
Now you’re the second person who seems to believe that just because someone was able to earn and pay the maximum during their working years, that they do not deserve to get that benefit back because you, and others, have determined they can better afford it and can do just fine without it.
Seems that Greg, our resident socialist and income gap philospher has made great inroads with a few of you. Because now, with our seniors and social security, a few of you echo Greg by stating you can determine what someone can and cannot do without in income.
The Social Security calculations system is as fair a ponzi system as can be “fair”… what you get back is based on what you contribute over your working life (except in it’s first years)…. and that contribution is limited by the SSWB threshhold.
What is immoral about SS is not what some people are receiving over others, but it’s system of collection, and it’s function as the Congressional piggy bank for non SS spending.
And while I agree that the trust fund and SS surplus should have been made untouchable by Congress, that is not how they designed this system from the start… which is the foundation of my argument with Larry (providing he can manage not to divert the conversation in order to assail Reagan – his favorite sport).
I doubt that legislators ever cared about future pensions when constructing the SSA. Considering the fiscal era of the SSA, they were probably eyeing a no interest source of cash for Congressional spending since we were entering the New Deal Era with a bang… and for that they needed the bucks.
Ditto
I don’t believe at all that they don’t deserve it, which is why I specifically indicated I don’t like it. Nor has Greg convinced me of following his socialist beliefs. It’s just that no matter how the government handles it, some are not going to get what was promised. Little about the Social Security System is “fair”. One of the things the politicians are talking about is raising the age of collecting Social Security. That is not fair to those who were told they would receive it at age 65 and who will have to work longer than expected. Many current collectors of Social Security are getting far more than they ever paid into the system.
However, what you get back usually exceeds what you put into it during your life. Additionally the government found ways to expand who could collect. For example for those disabled at age 60 they can file to collect. About 4.4 million children receive approximately $2.4 billion each month because one or both of their parents are disabled, retired or deceased. Back in the 1970’s the government finally become aware that this Ponzi scheme system could not be sustainable. Now the system is clearly doomed because of the imbalance between those collecting and those paying in. It could be argued that the prevalence of birth control and abortions since Roe v. Wade helped to kill some of the expected potential payers into the system. Should we therefore reduce Social Security to those who admit to using birth control, women who had abortions, planned Parenthood Workers or radicals who supported the ” Zero Population Growth” movement? Should we take it away from every politician who voted to send our youth into war zones? Part of the problem is also due to the fact that people are living much longer than the designers of the system expected, and it wasn’t “tweaked” as it should have been years ago. Should we therefore cut the amount paid back in Social Security relative to the lowering of the income:payment ratio? In fairness to this, should we stop and roll back cost of living adjustments for SS? AARP wants to pretend that there is no problem and campaigns against any changes.
My whole point here is that the jig is up, and many are going to pay-up and get little in return. Some of us are going to be cheated from getting what they paid into the system. We have to deal with this because politicians have been too chicken-sh*t to fix the system before it could get to the current (and future) state. You can paint me with the “Greg” brush all you want, but that doesn’t change the fact that the system is untenable and will be broke in probably less than 20 years. Hell, I’m in my early fifties and the way the government has mismanaged SS I have no confidence that I will ever be able collect. We need consider tough sensible (and if possible fair) measures to try to deal with this boondoggle.
MataHarley
premium_subscriber
Ditto, I think you know that I don’t disagree one iota that the SS entitlement program was a political farce and monstrous error, right along with Medicare, from the start. And I’m not painting you with the “Greg brush”, but what you suggested is exactly what Greg always suggests… that the rich need to give up their due because they can better afford it. Don’t feel singled out… I said the same thing to Nan G when she echoed the “Greg mantra” too. I guess desperation about debt makes people not think too clearly about what they are suggesting on occasion.
The only solution is to reform SS (i.e. the overdue tweaking you mentioned), , keep it in place for current and upcoming, and start weening the young generation off of it and onto private sector alternatives. Unlikely that’s going to happen, mind you. But that’s the reality.
Social Security has a longer lifespan than Medicare for being insolvent, so they have more time to “kick that can down the road”, as they say. Medicare is the looming entitlement today. What they (Congress) have done, by spending the surplus on non social security expenses, is add interest and debt costs to the taxpayers for being free and easy with that SS piggy bank. But I hardly think it’s justified for those who have paid in… minimum or maximum… to bail out decades of irresponsible Congresses by allowing them to decide some people are just too wealthy to have their social security benefits returned. They are just as worthy of that benefit as the one who paid in the least.
Look at it this way. If those evil wealthy seniors don’t need it, they can return it to the private sector in multiple ways…. purchasing or charities. Despite what they choose to do, do you prefer the government hangs on to that stolen cash and hope they apply it correctly? Not me.
openid.aol.com/runnswim
@mata:
Just as Social Security and Medicare supporters have to acknowledge the very real problems which exist, so do the social security and Medicare critics need to acknowledge that these programs did precisely what they were designed to do. Hundreds of millions of people have been given dignified retirements and lifesaving healthcare, because of these programs. This includes benefits to widows and children. At the time Social Security was instituted, 65% of senior citizens were living in poverty.
Medicare is simply the least dysfunctional component of the entire healthcare sector. It delivers the best care, with the widest choice of providers, unsurpassed clinical outcomes, greatest consumer satisfaction, and for the least amount of money of any other component of the general health care sector. It could and will be much better, as payment is based more on outcomes and less on procedures.
The benefits to entrepreneurs, through not having to worry about providing support for their parents and for allowing them to take greater risks (by providing a safety net) are incalculable.
It is certainly a defensible position that privatization could be advantageous. I don’t agree with this position, but it is defensible. But it’s entirely unfair to dismiss the enormous good that both of theses programs have done. Both have done precisely what they were designed to do, and both have overwhelming support among beneficiaries and the voting public, in general. Both do have fiscal challenges, but there are common sense solutions, which can and will be employed.
As I wrote, I’ll stipulate as to the problems which have existed, and you should stipulate as to the hundreds of millions of lives on which these programs have positively impacted.
– Larry Weisenthal/Huntington Beach, CA
MataHarley
premium_subscriber
Larry, isn’t that assuming that if they had not given the US Treasury that cash, via the SS trust fund, that they could not have done better investing it for themselves? Not being able to see via a parallel universe, that’s quite a leap. Probably some would have done better with the extra cash and their own investment choices, and others worse. For the latter, incapable of handling their own cash, I’m sure it was a positive impact. For the former, those capable of handling their own cash, not likely. They could get better return on their cash elsewhere.
But I can’t say it’s a positive impact over all when you consider that the purchase of the t-notes, which were used by Congress to spend on other things, has now incurred debt and interest on what would have been surplus funds if Congress couldn’t get it’s sticky fingers on it. So all in all, considering every expense and the debt/interest involved, I’d say it was an extremely expensive program that is an utter failure for the nation.
openid.aol.com/runnswim
@mata:
I think that #127 and #128 provide a very nice depiction of the difference between liberal DNA and conservative DNA. I’m not claiming that one DNA is intrinsically “better” than the other, but it shows why it’s so often not possible to resolve these disagreements on the basis of factual argument.
It’s a fact that financial security is not simply a matter of hard work. A great many people would work hard all their lives, and never achieve it, no matter how a privatized social social security replacement was structured. Financial security is related more to investor acumen (and, not infrequently, luck), than it is to hard work, per se. At a certain point, most people become old and unable to work. In other situations, people have health care problems, which wipe out their savings. There are lots of ways where good, responsible, industrious people hit roadblocks.
Anyway, I’d like to ask you to consider the very real issue of the benefits to an entrepreneurial society in having said entrepreneurs free to invest their resources in their businesses, as opposed to having to invest it in the care of their parents. And the benefits to entrepreneurs in allowing for greater risk taking, because of the existence of the safety net. Safety nets provide actual benefits to capitalism, in addition to supporting neer-do-wells.
– Larry Weisenthal/Huntington Beach, CA
Ditto
@Mata
I don’t agree with Greg’s anti-rich class warfare rants, I was only proposing one option on dealing with the coming insolvency. The people are going to have to pay the price for the dereliction of duty of Washington DC on dealing with these issues and no matter what decisions are reached, it is going to be unfair to a good many people (and of course some fairness that will be seen as unfair from detractors). This can not be helped, but there must be mitigation to ensure that the unfairness is distributed in as fair a manner as possible. My motivation here is only on discussing real world ways to deal with the problem, without demagoguery and with no political ill will towards the wealthy or any other group.
Having said all that, I for one would like to hear suggestions on what to do to deal with these problems. I’m very tired of unproductive political posturing. I’m simply asking that we try discussing possible solutions.
MataHarley
premium_subscriber
Larry, I’d like to counter your theory of the SSA as “entrepreneurial” with a very real fact. If I die pre-retirement, or even a few years in, I am severely limited to whom that can be bequeathed to. I certainly can’t pass it on to my adult son or even my granddaughter. It’s simply vanished into the US Treasury.
On the other hand, if I assumed I made the same returns with using private investments and capital gains, instead of being forced into a government mandated pension plan, I can leave those benefits…. whether pre or post retirement… to any heir I choose. Those earned benefits and gains not only stay in the private sector, but my spouse or other limited beneficiary doesn’t get just a percentage of my earned benefits.
So which, exactly, is the best use of benefits and beneficiaries, as it relates to private entrepreneurs?
I’d say about the only way we could combine our two differing opinions on the value of the SSA is if it were a choice, and not a mandate. If one felt they wanted to government to manage their pension plan – knowing full well that any portion, or all of it could be inaccessible to those I want to have access – they should elect to participate.
Those who don’t should not be responsible for paying SS taxes at all.
Also, to be entirely on an even footing with private investment plans, any election to participate in SS should also be reversable, with a transferrence of their funds to a private investment of their choice later on…. much as changing 401Ks, banks for your CDs, money markets, etc.
Now, what would you say the chances of that happening as part of a reform might be? I’d say zip, nada, nothing. This would entail Congress willingly giving up their access to the future payments for today’s spending. And they won’t do it.
Greg
Social Security is an insurance plan, not an annuity plan or investment plan. FICA taxes are insurance premiums.
openid.aol.com/runnswim
@mata:
In principle, I’d agree with you. In principle, I’d agree to the same approach to the health care mandate. You can opt out, but you can’t receive any benefits, no matter what.
The problem is this: real world scenarios. There still are a lot of households where there’s a division of labor: one parent cares for the kids, while the other works. So, you’ve got families where the breadwinner doesn’t buy life insurance or disability insurance. You’ve got other situations where an elderly guy worked hard all his life, but made some bad investment decisions (or had some bad luck) and now he and his wife have exhausted their assets at age 78 and can’t get work to make a living wage. Does society turn its back on both the husband and the wife? If society doesn’t turn its back, then where’s the fairness to all those who paid into the system?
Health care is the same way. How about allowing people to opt out of ObamaCare and opt out of buying health insurance and then just letting them bleed to death on the sidewalk, when they are hit by a bus? Maybe you are O.K with that. But what about when it’s the guy’s wife or kid who gets hit by the bus? Should they be allowed to bleed to death, because the guy was either irresponsible or else lost his job and couldn’t afford the COBRA?
Nothing is simple and the details kill you.
– Larry Weisenthal/Huntington Beach, CA
MataHarley
premium_subscriber
@Ditto, I think I’ve put forth my own “solution”. But it sure isn’t going to be accepted. Social Security and Medicare, IMHO, both need to be carefully dismantled in a way that the current recipients are not affected, those close to receiving those benefits are not significantly affected (because, with this economy, they have too little time to make alternative arrangements).
For those under that magic cut off number, a “weening” solution needs to be implemented… just like a pension plan that has different benefits for vesting 10 vs 20 years. For the young? Total opt out and into privitization and self responsibility.
Oh my gawd.. the drama, the hyperbole, the insults. Larry, really now. How do you think the world went on prior to 1935 and 1965 (entitlement programs). I’ll tell you how. People and families made arrangement for their own golden… er, aluminum now… years, and doctors worked out different arrangements for payments for their services.
And in case that you didn’t hear me, after a post last year and more than a few references to it, there are many wealthy seniors who want to opt out of Medicare, but thanks to Bill Clinton and his regs change, they can’t do so without also yielding all the cash they paid into SS. And they are related how? Only as a deterrent. And even with that, the WH (both Bush and Obama) are fighting the opt out of Medicare request. Why? Because it screws up the ponzi scheme accounting.
No.. nothing is simple and the devil is all in the details. But unfortunately since Congress foisted both entitlement programs upon this nation in the early and mid 20th century – both of which are sinking this economy at different rates of speed – the only solution is to find the way to carefully bug out.
MataHarley
premium_subscriber
Larry, now that I’ve addressed your hyperbole and emotional characterizations, why don’t you address the two points you’ve avoided. I’ll make it simple for your triaging of time:
1: Government pensions plans (SSA) vs private pension plans and their entrepreneurial value in keeping the money accessible both to the investor and their choice of beneficiaries – plus keeping the money in the private sector for re’investment, which SSTF does not do.
2: Why don’t you explain to us how O’healthcare cures the costs of treating that hypothetical, bleeding heart story of people being left to die on the sidewalk when Medicare and our economy cannot sustain “free” coverage.
MataHarley
premium_subscriber
Oh my word.. the level if naivity here is staggering. Hey, if you and Wiki want to classify it as “social insurance”, and that makes it sound hunky dory to you, so be it. I’m not so easily swayed by convenient labels that misrepresent reality. But hey.. if you want to buy into an “insurance” plan for decades, changed annually at the whim of Congress based on our economic conditions, and with limited opportunity to pass that benefit on to heirs, have at it. Just don’t drag me into your net of complacency, blind trust of government, and limited investment intelligence. Please feel free to play the fool, sans my participation. Free world and all, ya know. Or it used to be.
SSA is an insurance plan, only if you become disabled prior to retirement ages. Even at that, there are criteria to be met for qualifications for such. As the retirement pension plan, there is no resemblence to “insurance”. Additionally the original SSA included unemployment “insurance” as part of it’s encompassing plan. That’s now a separate mammoth federal agency drain on it’s own, with ever morphing pots at the end of the rainbow.
So are you done with your BS “labels” as a non efficent and ineffectual argument now, Greg?
openid.aol.com/runnswim
@mata:
I try not to avoid things, but I don’t always read each and every post on big complicated threads like this. This thread got away from me. You’ve got to remember that it’s not just you – there are a lot of people who don’t agree with me. I don’t respond to each and every point which you make (you make a lot of points). I’m not making excuses, but, as I’ve stated before, this isn’t my day job and I reserve the right to choose what I read and what I write. In cases where anyone offers a criticism or offers a point aimed in my direction and I don’t respond, just feel free to declare victory and be satisfied with having the last word.
But I’ll answer your last two points, since you are kind enough to make it easy for me to do so:
I’ve stated that social security has been dreadfully mismanaged. The system would make perfect sense if all surpluses were put into debt retirement. In that way, there’d be efficient use of capital. The only active capital would go to paying benefits and to retiring debt. There would be decades of debt retirement and decades of debt accrual. Over the long term, everything would balance out — I can prove that mathematically; so the concept of social security was not ill conceived; it was only mismanaged.
I want to discuss this from a managerial point of view and not from a political philosophy point of view.
You have to start with the recognition that, one way or the other, people need health care. Young people, middle aged people, and old people. What’s the most cost effective way to provide this health care?
You can look at Medicare two ways. One way, it’s going bankrupt, because there’s not enough money coming in through Medicare tax to pay for it. But this is not because of bureaucratic inefficiency; it’s simply because the government can’t get away with raising Medicare tax the way that private insurers can get away with increasing premiums.
If you look at it the other way, Medicare is — objectively speaking — precisely as I’ve represented it to be: the least dysfunctional segment of the health care sector. Widest choice of providers. No pre-authorizations. Direct access to specialists, without gatekeepers. Greatest consumer satisfaction. Unsurpassed outcomes. Lowest cost per age-adjusted beneficiary.
So the issue with Medicare is just political philosophy. Conservatives object to paying for other people’s health care. Liberals acknowledge the fact that the government is taking their money to pay for other people’s health care, but this doesn’t give them abdominal cramps and indigestion.
– Larry Weisenthal/Huntington Beach, CA
MataHarley
premium_subscriber
I know you’re busy. And yes, I happen to consider your quest to cure cancer a far more lofty existence than mine. But I will remind you that this isn’t my “day job” either. I am merely responding to you, asking me to stipulate about such entrepreneurial “benefits” that you suggested. Since you asked, and I responded, I wanted feedback to my response.
And your response is, actually, a “non response”. Again you echo some emotional answer that it’s been “mismanaged” when I have pointed out to you… more than once.. that it was managed *exactly* how it was conceived and implemented. A 1935 Congress (SSA), followed by a 1939 Congress (creation of trust fund) had originally designed for surplus funds to become available for Congress to spend as they see fit. That you don’t agree with how “they saw fit” is a rare moment of unity. But you make excuses, and I point out this was the original intent.
Shall I ask again? You suggested I am supposed to “stipulate” that SSA… in it’s originally conceived and implemented execution… is supposed to be more “entrepreneurial” friendly than the private sector alternative. I suggest that it is NOT… based solely on the two facts that:
1: the funds are accessible to the investor for recycling as they see fit in the private world and
2: the beneficiaries of those funds in the event of a premature death are more wide spread.
Try again.
Larry, you and I do not disagree that affordable health care is important to everyone. Despite the fact that you callously accused me of wanting people to “bleed to death on the sidewalk, when they are hit by a bus”. Geez, Larry…. what a tactic to take in debate, and seriously below your abilities for cogent thought.
You and I differ in two ways. You are willing to let costs escalate, and just figure out a way to steal more money to support that. I am looking for ways to effectively curb the escalation, thereby making it more affordable for both insurance companies to offer reasonable insurance premiums.. We do not argue that everyone would benefit from having some affordable medical options at their disposal. Only the ways that “option” is to be delivered.
You are happy to have insurance premiums “price fixed” by government via O’healthcare. Which I find ironic when you simultaneously suggest you are responding from a “managerial position”. Give me a break. If your costs to provide your services to others were reduced, would you not reduce your prices to be competative in your field, thereby making it more affordable to more? And that includes the Medicare covered patients that you currently refuse to service because of your “managerial” bottom line now.
MataHarley
premium_subscriber
Ugly statement made by an ugly attitude and blanket charcterization. And it’s these types of things you resort to that make my patience level with you at below zero.
openid.aol.com/runnswim
@mata:
I can prove to you that this doesn’t work in the health care sector. California and Texas both had the same malpractice tort reform. This saved individual providers tens of thousands of dollars in premiums, but this had no impact whatsoever on health care costs to the consumers or on the volume and expense of “defensive medicine” practiced. There’s virtually no price competition in health care — save for rare situations, e.g. lasik refractive surgery.
I did — precisely — address these issues. What we are both talking about is efficient use of capital. Social security is only inefficient in that it removes capital from the economy. But this is only because the government steals the social security surplus to run other government programs, which have nothing at all to do with social security. This is capital mismanagement. If the government used surpluses only for debt retirement and benefit payment, there would be no extraneous capital removed from the economy.
I’ll concede that there was a fatal flaw in the inception of social security. Congress was given discretion in how to use the surplus. It’s understandable why this discretion was given, in that social security came into being during the Great Depression (and during the time of The Winds of War). The original law should have tied the hands of congress (i.e. mandated that surpluses go into debt retirement). But it didn’t do this. So I’ll give you this one.
With respect to not paying out to beneficiaries in the event of early death, there certainly are survivor benefits, to wit:
Now, if you don’t like these or if you want to expand them, then this could obviously be done, but this falls into the heading of SS management, more than shooting an arrow at the SS concept.
– Larry Weisenthal/Huntington Beach CA
openid.aol.com/runnswim
@mata:
Oh, c’mon Mata. Lighten up. It was a joke. I like my friendly neighborhood conservatives. I don’t go around making ad hominem attacks on conservatism as a philosophy.
Don’t you read what people on this blog write (all the time) about liberals?
“Liberalism is a disease”
“Liberals are brain dead”
“Liberals love dictators for cash” etc.
Just go to google and enter “flopping aces” “liberals”
It was just a little, good natured, very mild ribbing.
My apologies. I’ll truly try not to do it again. Lesson learned.
– Larry Weisenthal/Huntington Beach, CA
MataHarley
premium_subscriber
We’re getting somewhere on both the original intent of the SSA not being all you wished it to be. Thus it’s inherent flaws.
We are also getting somewhere you that recognize that the survivor benefits are not equal to a parallel private investment over SS. However do you notice that you again turn to the whining… the “they should have done this” bit. Larry, it’s government. As I pointed out earlier INRE the intent, since it was both the New Deal Era, and post the Great Depression, Congress was eyeing those future benefit taxes collected as today’s spending. Thus the folly, and an execution and implementation that is not “mismanaged”, but utilized exactly as they created it to be.
I’m very aware of the beneficiaries limitations for SSA. I don’t need your links. Those limitations are the very founding of my argument with you that there is a “positive” entrepreneurial impact of SSA benefits. We don’t need to expand them since it’s a flawed economic system to begin with. Secndly, there is no benefit to the economy is allowing surplus “government pension/insurance” funds to be spend by Congress, at discretion, and incurring debt and interest.
The best benefit to both economy, and the “insured/pensioners” is to have the invested funds in private sector that are not only spread around for private sector growth, but also transferrable to ALL beneficiaries as the investors choose.
MataHarley
premium_subscriber
There was no indication there that it was a “joke”, but I will give you that you aren’t normally given to ad hominem philosophical attacks. On the other hand, you have done so quite often in your past. So I’ll let it go by without further thought. And thank you for acknowledging that, whatever your intent, it did not come across as you intended.
Now… I wanted to address this one:
First , let me notice that you… as a personal medical service provider.. .did not answer if you would, or would not, reduce your costs if your overhead was reduced. That’s kinda interesting…. LOL. I guess you leave yourself open on that one.
What you describe is not definitive proof. And in fact, in the history of the private sector supply vs demand formula, this is factually incorrect. What you did not consider is that the playing field was not equalized because the tort reform did not make a significant amount of difference (since not also addressed on a national level, and most insurance providers do have a national/international conglomerate) in the proverbial “bottom line”.
What you are, however, suggesting is that the insurance industry.. who averages about a 3% profit (virtually unsustainable over longer term for a business)… is some sort of gouging type entity. This becomes more ironic when the top gouging entity is actually pharma. But it does address that you do have a personal vendetta against the insurance industry in general, and give others a pass.
When you equalize the overhead playing field, and competition is allowed to flourish, all will base their premiums on what attracts the most business, and thereby minimizes their potential loss. However with the base overhead…. gouging practices in medical services provided, not to mention having to go thru primary doctors for everything… you cant even begin to equalize the field. I did not say there was a single cure. As you say, details are complicated. And tort reform… your example of why supply vs demand and over head doesn’t work… doesn’t even come close to making an accurate portrayal of the quest to lower costs.
openid.aol.com/runnswim
@mata: I don’t have a vendetta against insurance companies. What I try to do is to educate people on how health insurance companies work.
In this vein, I don’t understand your point, here:
This doesn’t make sense to me. I may not be understanding your point. Health insurance can’t be sold across state lines. Anyway, my point on tort reform was simply addressing your contention that doctors would reduce their charges, in order to be competitive, were their costs to go down. I think that the malpractice reform data are conclusive on this point. Despite out of pocket costs to doctors and hospitals going down, neither fees nor amount of defensive medicine reflected this. Providers simply said “thank you very much,” and pocketed the difference.
The Texas experience is interesting (as it is more recent than California’s 32 year old tort reform initiative). Costs to consumers didn’t drop. Defensive medicine didn’t drop. What happened though, is this: High risk surgical specialists came into the state — not so low risk primary care physicians. Surgical specialists create their own demand. Boston has more neurosurgeons than the entire United Kingdom. So more surgeons, more surgery. Not necessarily to the benefit of patients.
Truly, I’m unaware of any study which ever showed that doctors ever compete on the basis of their fees. Would you want your cancer/heart disease/total hip replacement/face lift/diabetic retinopathy/etc. managed on the basis of “low bid?” The way it works in the real world is this: Insurance companies have to put together provider networks. This goes for Medicare, as well. So it’s the insurance companies (and Medicare) which set the rates for health care. If a doctor wants to be included in the “network,” he/she has to accept the rate schedule set by the insurance company. So that’s the level where the cost containment comes in, such as it is.
This doesn’t prevent the providers from compensating for lower payments than they’d like by providing more services. More and longer diagnostic sessions. More procedures. More treatment. More tests. More follow ups. More ancillary services. All of these under the control of the providers. It’s why ObamaCare (and also PawlentyCare) want to base payment on outcomes, as opposed to procedures and services. That’s the ultimate answer to cost containment.
With regard to Big Pharma being a huge part of the health care cost problem; I’m in complete agreement.
– Larry Weisenthal/Huntington Beach, CA
MataHarley
premium_subscriber
I’m sorta amazed I have to do this, Larry. I mean this is your industry. But then, much has to do with rhetoric anc catch phrases vs reality, yes? Take, for example, the major health insurance corporations including Humana, United Health, Humama, Cigna, Blue Shield, etc. All of these companies offer policy coverage, state specific, in all, or almost all, states. They are just state specific. So do they, as a corporation, sell across state lines? Yes. Kinda. They just have to repackage their product to do so because of [spit] laws.
Now, when it comes to being more cost effective as to their packaging (one for every state,. for example), would it be cheaper for them to offer a non specific national policy that travels with every moving insured, and then just offer riders for any state they relocate to? I think so. And this is what I advocate. Sell a basic package, that is competative via multi national companies. And then shop state specific riders. Also, those riders should be interchangable. You can have a basic national package with Humana, and choose a Texas or California rider wtih another company. This way when you change jobs or location, you only need to change the riders for that particular state’s mandates. This covers both “across state lines”, as well as respecting states’ rights for their own mandates. Just accomplished a different way.
This should take care for your unexplained “confusion” on selling across state lines, and national companies that happen to service multi states for their plans. There are, of course, smaller state specific competing companies. But on a “big box” theory, they are at a fiscal disadvantage.
Have no idea why you want to frame insurance competition and reduced costs as confined to tort reform. You might as well say that one company installs better and majorly cheaper roofs because they use a cheaper roofing nail. huh? Tort reform, altho an important part of the overall reform, is just one small part of the cost equation. It’s worthless state to state without equalizing this limitation of frivolous lawsuits nationally. But even then, it just addresses the “nail” as opposed to the rest of the roof’s condition and cost needs that drive up real costs.
Of course you’re “..unaware of any study which ever showed that doctors ever compete on the basis of their fees.” I’m sorry.. do you need some government funded “study” to prove that supply vs demand, or competition in services, offers better pricing for the consumer? Can’t help you there.
gary kukis
@Greg:
I don’t think that it has ever been sold like this. It has always been sold as being a retirement fund. And, if an insurance company did this, the benefits would not be conferred upon people who did not pay into the system. Furthermore, they would not go broke.
openid.aol.com/runnswim
@mata (#145): I still do not understand what point you were trying to make:
What does this have to do with the (well-studied, proven) fact that tort reform didn’t reduce health care costs? Your claim was that providers compete on the basis of fees and, if their costs were reduced, then they’d use this cost reduction to improve their competitive positions, vis a vis other providers. I said, no, they don’t, and the proof is that when their costs WERE reduced (via malpractice tort reform), they didn’t lower their fees.
You want to believe that health care follows straightforward rules of market economics. No, it doesn’t. This is because, uniquely in healthcare, the sellers control the purchase decisions for the buyers. This is why conventional market solutions will never work.
You think that health care providers compete on price, as in conventional capitalist markets. No, they don’t. There are no proscriptions against medical or hospital advertising. There’s a ton of health care advertising out there: cable TV, newspapers, magazines (including airline magazines), talk radio. Save for Lasik surgery, I don’t ever remember hearing a single advertisement about having lower prices. This also goes for pharmaceuticals. Do statin anti-cholesterol drugs (of which there are many) ever compete on price, in advertising? Do erectile dysfunction tablets? Why on earth would I, as an oncology provider, ever want to promote that I charge less than the competition (which I certainly don’t; quite the contrary)? You want cut rate oncology? Go to my competitor. Why would Memorial Sloan Kettering want to promote lower fees than MD Anderson? I mean, think about it. It’s absurd, and that’s why no one does it.
I never claimed that tort reform was the only “market” solution to health care costs. That wasn’t why I raised the example of tort reform. This, again, was simply to show you that lowered costs to providers doesn’t translate to lower prices for consumers.
The “solution” of allowing insurers to sell across state lines wouldn’t do anything at all for health care costs. Nothing at all. An insurance company selling insurance in California still has to meet California insurance standards, no matter where the company is headquartered and no matter what insurance product they sell in other states. Doctors are extraordinarily resourceful at maintaining their incomes. They control the purchase decisions. That’s the key to controlling health care costs. Change the incentives by reimbursing for outcomes, as opposed to reimbursing for procedures. And it’s an integral component of ObamaCare (as well as PawlentyCare).
– Larry Weisenthal/Huntington Beach, CA
MataHarley
premium_subscriber
And what does the single element of tort reform… in the overall aspect of reducing overhead of providing medical care… have to do with the entire question?
Once again. Roofing companies. I can get nails cheaper than the next guy. Am I now more competative for that piddly expense?
Stop moving the goal posts, Larry. Overall reduction of providing health care is not pivoting on tort reform, and you know it. Stop playing games.
And your comprehensive of a “basic national plan” that’s competitive, with insurance riders that are changeable (and shopable) when moving apparently sucks the big one. I fyou can’t get this basic concept, I’m done playing your elongated politicall games to support your hero and his failures. You can now address someone who gives a damn.
openid.aol.com/runnswim
@mata:
I truly can’t figure out what you are talking about and what points you are trying to make, other than you don’t like social security; you don’t like Medicare; you don’t like Obama, and you don’t like me.
What on earth does the above quote really mean and what on earth does it have to do with the original subject under discussion (which was you claim that lowering costs to providers will lead to a reduction in health care costs, because providers will want to lower their fees to be “competitive”)?
– Larry Weisenthal/Huntington Beach, CA
MataHarley
premium_subscriber
Oh for heavens sake, Larry. Stop being emotional.
Does, or does not Humana, United Health, Blue Cross etal offer plans in different states or not.? And are they the same company or not?
Hint.. if they didn’t, AARP – or indy’s – would have to offer 50 different companies offering supplemental Med Advantage in each in individual state to cover them all. Otherwise, how could these national conglomerates offer plans “across state lines”.
And what part about offering a nationally competative base plan, topped with state specific riders that are changeable and added to the base plan, escapes your comprehension? If it does, stick with curing cancer, and stop talking about insurance reform.
Ditto
@Mata
The problem here is still the money. What everyone has paid into the system up until now has already been spent by the government. If the government continues to draw money out of paychecks to fund SS while it is being phased out, then those workers are being cheated, because they will never see those funds. You suggest a pension system for many of us phased out of social security, but if the money has already been earmarked to support those still on SS, where will the funding for a pension system come from, and who will pay it? It seems to me that your solution is no more “fair” than mine.
With the dollar continually losing value due to the Federal Reserve printing, continual inflation, a job market where wages remain stagnant, with real estate values going down, and where 401K’s and current privatized investments going down the toilet thanks to market “corrections,” many people have lost their nest eggs. Real estate could possibly be an option for any who can still afford it, but banks are not lending out money like they used to even before the Democrats helped create a corrupt system to make all those high risk loans. I’m very pessimistic of privatization as an option when there are so few lucrative investments out there.
ilovebeeswarzone
Ditto, you’re right of not trusting the DEMOCRATS AND SOME PRIVATE MARKETS,
remember that GOLDEN SACH HAD THE BILLIONS INVESTED BY THE LIBYA
PRESIDENT GADAFI, AND WHEN HE RECLAIMED HIS MONEY ,THEY TOLD HIM IT WAS SPENT IN BAD PLACEMENT, THEY ARE FRIEND OF OBAMA, AND COULD NOT EVEN MANAGE THE BILLIONS,
and manage to give a lot of money to 2008 election for their friend
gary kukis
@openid.aol.com/runnswim:
You’re saying these things like they’re not true?
rich wheeler
Gary K. From the guy who assured us The Donald would be the nominee. To your credit you changed your mind. Who do you like now?