Posted on 02/03/2021 6:39:11 AM PST by Kaslin
Medicare is functionally insolvent, people are getting way more from entitlements than they paid in, and Congress has been spending like drunken sailors for decades with no signs of stopping.
Two data points explain the current debate in Washington on more rounds of COVID spending. The Biden administration’s repeated statements that “the risk is not…going too small, but…going not big enough” reflects a position Joe Biden publicly articulated while serving in the Obama administration a dozen years ago:
Biden: We Have To Spend Money To Keep From Going Bankrupt
As to the cumulative effects of these policies, the budget resolution itself tells the tale, with its projected estimates of the total national debt over the coming decade:
(5) PUBLIC DEBT.—Pursuant to section 4 301(a)(5) of the Congressional Budget Act of 1974 (2 U.S.C. 632(a)(5)), the appropriate levels of the public debt are as follows:
Fiscal year 2021: $29,943,000,000,000.
Fiscal year 2022: $31,647,000,000,000.
Fiscal year 2023: $32,911,000,000,000.
Fiscal year 2024: $34,102,000,000,000.
Fiscal year 2025: $35,262,000,000,000.
Fiscal year 2026: $36,311,000,000,000.
Fiscal year 2027: $37,261,000,000,000.
Fiscal year 2028: $38,443,000,000,000.
Fiscal year 2029: $39,652,000,000,000.
Fiscal year 2030: $41,068,000,000,000.
To provide some sense of perspective, the most recent gross domestic product estimates show the size of the American economy at $21.5 trillion on an annual basis. In other words, our total national debt (including IOUs placed in the Medicare and Social Security Trust Funds) already exceeds the size of our economy. A decade from now—after an additional $13.6 trillion in deficits under the Democrat budget—our debt will approach twice the size of our economy now.
Contra Biden circa 2009, that’s not “spending money to keep from going bankrupt”—that’s already bankrupt.
Without a doubt, many American families and small businesses are hurting due to the pandemic, and the lockdowns associated with it. These individuals and businesses deserve some level of assistance to overcome the government-mandated lockdowns, reopen their establishments, and get on with their lives.
But a spending spree that would give $5,000 in “stimulus” payments to a family of five making $250,000, or Obamacare subsidies to households earning $300,000, far exceeds the reasonable or even rational limits of federal aid. Rather, it epitomizes a myth that politicians of both parties have perpetuated for far too long: That the American people can have more government than we can afford.
Mitch Daniels, the former Indiana Republican governor and Office of Management and Budget director now heading Purdue University, eloquently made this case in the Washington Post last week:
I conclude, reluctantly and dejectedly, that it’s time to face the unpleasant facts. The past decade demonstrates amply that our political process is not capable of the kind of decisions that are necessary. The temptation to savage anyone proposing safety-net reform (the sine qua non of any serious fiscal rescue, really the only issue that matters) remains electorally irresistible and invariably effective.
Because politicians believe they can profit by attacking anyone who proposes changes to entitlements—e.g., Paul Ryan throwing grandma off a cliff—leaders in both parties have abandoned any attempts at reform, such that we may have passed a fiscal “point of no return.”
Daniels cited the “noble lies” that politicians have used over the years to avoid making necessary but unpopular fiscal choices. To correct three of the most popular misnomers:
No. 1: You Haven’t “Earned” Your Medicare Benefits: According to the Urban Institute (not exactly a home for firebrand conservatives), a single male making average wages who retired in 2020 paid in a total of $81,000 in Medicare taxes over his working life, but will receive a total of $229,000 in Medicare subsidies. Those gaps will continue to grow over time, such that a retiree in 2060—someone just starting his or her working life at present—will pay $133,000 in Medicare taxes, but receive $573,000 in benefits.
No. 2: Medicare Is Functionally Insolvent: Not least because of No. 1 above, Medicare has already exhausted its trust fund. In 2009, the program’s last trustees report before Obamacare’s enactment showed an insolvency date of 2017. In other words, for (at least) the past four years, Medicare has stayed afloat only because the tax increases and Medicare reductions included in Obamacare have been used to both fund that law and address Medicare’s solvency—an illogical budgetary gimmick born of government trust fund accounting.
This fiscal sleight-of-hand not only didn’t really improve Medicare’s fiscal condition, it also encouraged politicians to ignore the program’s underlying problems to this day. It also reinforces the pernicious Democratic policies that would raid Medicare to pay for other spending, whether the current “stimulus” bill or a single-payer health care system.
No. 3: Tax Cuts Don’t (Fully) Pay for Themselves: Yes, lowering tax rates, particularly on capital gains and investment, can unlock productivity gains in the economy that generate additional revenue. But that additional revenue only offsets part of the fiscal impact of tax relief, which is why conservatives must also work to reduce our unsustainable spending levels.
Also last week, former House Majority Leader Eric Cantor, R-Va., took a tone similar to Daniels’s. In discussing Obamacare repeal in 2013 and the aftermath of last year’s election, Cantor in both cases blamed “an unwillingness to speak truth to power”—for politicians to tell their constituents facts their constituents didn’t want to hear.
Notably, Cantor’s exhortation for elected leaders to speak the truth didn’t include anything about the unrealistic and unsustainable fiscal promises politicians have made to their constituents for decades. In some respects, Cantor epitomized that problem, by his own admission nixing the chance of an entitlement “grand bargain” between then-House Speaker John Boehner, R-Ohio, and President Obama.
The rioting and violence at the Capitol a few weeks ago was both a horrific and tragic event in American history. Yet I fear the tumult throughout 2020 may pale in comparison to the not-too-distant future, when the American people finally realize their leaders have systematically lied to them for decades. To paraphrase the Book of Hosea, Congress and presidents have sown the wind—but on our current fiscal course, we all stand to reap the whirlwind.
Since JFK.
They lost me right there.
Biden: We Have To Spend Money To Keep From Going Bankrupt
I worked with business in bankruptcy. Lots of interesting observations. Everything was fine until the bank called and said no more credit.
It was always the banks fault for calling the loan.
Just watch, the Dems will try to nationalize all retirement accounts. They’ve floated the idea for years.
Better bring in 50 million illegal aliens and refugees and give them unlimited welfare. That’ll fix it. By giving the democrats an even bigger standing army to keep the tax slaves in line.
Now, to easy your mind regarding bankruptcy. Life went on, but it was tough. Some went to work in town and some found new creditors to repeat the process.
In Mongolia, they had a hard life but were excited about the future with the new found freedom.
Bankruptcy is just a realignment. All the creditors stand in line for the assets, those at the back of the line get nothing.
The physical assets stay there, the book entries/electrons disappear.
“The American public won’t do anything until their bank accounts are effected and stomachs empty.”
That is so true.
I guess we need to learn how to grow a veggie garden and hunt for meat, Buy a cow for dairy
PRAY
We inherited over a million dollars about 4 years ago, now its a matter of keeping it and not losing everything our parents worked for. Seriously considering moving, no more investing in real estate in Oregon or the US.
The USA has been Officially Bankrupt since August 15, 1971 when Nixon declared it Publicly.
It will be the death of the democrat party, who depends on pandering hand-outs to get votes. No more sitting back waiting on that EBT or SNAP card refill, ‘cuz it ain’t coming.
, which is why conservatives must also work to reduce our unsustainable spending levels.
Nothing changes till the cash flow stops.
or the corollary.
Cash flow affects mgt more than mgt affects cashflow. If I win the lottery, management decisions get pretty shitty. If I lose all my cash flow, I get hungry and start making better decisions.
Well, that may be you and I, the rest will riot.
I started working when I was 16.
Worked until about 66.
HAVE NEVER USED A PENNY OF MEDICARE
Time for
“Give me Liberty or give me death”
*******
Is anyone listening to today’s War Room?
Gaetz is guest and he is hitting a HOME RUN.
Watch it if u can
That is how I felt during the dot com rise and bust. There has always been a “gambling” aspect to trading stocks. But if you educated yourself you could reduce it to a small percentage of the formula. Now it is most of the formula.
The exception is technical trading. It is based more on information rather than gambling. However, the information is not about the company. The information is about what other investors are doing, rather than the company’s strengths or weaknesses.
Seriously considering moving, no more investing in real estate in Oregon or the US.
And with all the WFH happening, and much of it becoming permanent, you can expect suburban and rural real estate to experience an increase and, in some cases, a boom.
There will definitely be permanent ramifications from this Rona nonsense. Well, decades worth anyway.
We inherited over a million dollars about 4 years ago, now its a matter of keeping it and not losing everything our parents worked for. Seriously considering moving, no more investing in real estate in Oregon or the US.
What is a millions dollars?
$4,000 interest a year in a money market
8-10 years in a nursing home.
When times get tough like they are going to, your most valuable asset is relationships. Your money and wealth are worthless.
That being said. One should get their Bible out and start reading slowly with moving lips. The most valuable relationship!!!!
Nathan's maxim: a lot of smart people have gone broke being right at the wrong time.
Many of us believe that the current state of unsustainable national debt, together with uncounted liabilities coupled with the danger of derivatives means that a harsh reckoning for the economy is inevitable. That it will come we do not doubt, but we do not presume to say we know when.
By way of illustration, the stock market has been operating for years now, really since Greenspan, on the assumption that the Fed has assumed moral hazard duties. In other words, so long as the Fed has our back, it will do what is necessary to pour money into the banks to prop the system up. We have learned that as bubbles burst the Fed will step in. So the market keeps playing because it believes the music will play on. Still, many are watching the Fed because the second they espy the mere wisp of an emanation or intimation of increased interest rates they will trample innocent bystanders in their rush out the door.
That a reckoning will come we think we are smart enough to know. But we don't know when nor do we know it's dimensions. If severe enough, it will lead to political as well as cultural disintegration.
Nathan's other maxim: the remedy for failed socialism is not genuine reform restoring capitalism but invariably imposing more socialism.
So we don't know what we are dealing with here, how close we are to the reckoning, the severity of the pain nor the degree of political derangement that will result. There are entirely too many leftists who would welcome a crisis that they would not let go to waste. My own view, we will not emerge more capitalist, more democratic or more constitutional.
The writer, citing Daniels, reinforces the mistaken notion of applying the terms “trust funds”, “solvency”, and “earned” to Medicare (same logic for SS) which are “pay-as-you-go”, tax and spend, wealth transfer payments, aka welfare.
The trust fund is a fiction and today’s payments are made from today’s taxes and borrowing. Funding levels and taxation levels are political calculations and can be changed at anytime for any reason. Benefits are not earned nor do they accrue except in a political fashion. It is impossible for them to bankrupt or insolvent.
Tax cuts pay for themselves by depriving the gov of revenue which it generally uses to harm the economy and instead allows it be spent and invested by individuals who in general increase wealth. The Laffer explains the principal that rates of taxation can reach a point of $0 revenue.
The writer and maybe even Daniels are the fuzzy thinking conservatives who believe Progs and Dems are just “mistaken” in their actions instead deliberate and calculating.
I wonder why the analysis is always about Social Security and Medicare and never about welfare, Medicaid and foreign aid.
you ain’t seen nothing yet....
combine a pre-blizzard supermarket crowd with 2/3 empty shelves from last March/April due to covid hysteria and a black Friday Walmart mob....
it won’t be pretty. what do you think people fighting over the last big-screen TV on sale will do to each other fighting over the last loaf of bread on the shelf?
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