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.
the last loaf of bread on the shelf?
************
Have you been in any of the food markets lately? I was in a
Walmart grocery area a day or two ago and the sliced bread
section was completely empty and this was about 2pm.
As usual, you are spot on. I really enjoy your commentary. Thanks.
Do you let them free range or keep them penned up?
Do you let them free range or keep them penned up?
LOL..... Well poop is a problem in the areas they have
to range in. Also gardens have to be protected if they
are free range.
Yes. We’ve got a bunch of that black “netting” with the one or two inch holes that we use as the ceiling to their penned area. We may be using that around the garden and the entrances to the porch. but all the plants in other areas are fair game. And the run is only 30 feet from my garage. Opening the garage door is a problem when they are out.
Economy needs a ground World War to reduce the surplus population, restart manufacturing and kick the insolvency can into the next century.
Thank you.
Good luck. I know some of the issues you are dealing with.
There is a law on the books that states that the Federal government cannot spend more than it takes in. This law was adopted in 1981, Public Law 95-435, Section 7. It’s still valid, so why do our elected officials in Congress not obey that law?
That raises a number of other questions. Is there a penalty clause for violations of the law? Can every politician who voted in favor of violating the law be punished? Is a violation a misdemeanor or a felony? Who would be in charge of prosecuting the offenders?
We the people are expected to obey the law; why won’t we hold our servants (who have, regrettably, morphed into masters) to the same standard?
Finally, since the law is already being ignored, what makes us think that a balanced budget amendment would not also be ignored? The Second Amendment being a prime example in New Jersey; what part of “shall not be infringed” do they fail to understand?
Nah, melt it down and make a wicked blade out of it. Way cooler, and it gives you an excuse to learn blacksmithing and weapons forging.
NO. Lyndon Johnson putting Social Security into general revenues, financing his Great Society program and funding the Vietnam war put us on the road to financial perdition
Long memory, very good
Not too many clean hands in last 60 years
Do you really think we aren’t bankrupt now??
I think govt is in denial.
True that. Professional time serving political hacks are a curse
Depends on the pay scale of the retiree during their working years. Lower income people get a really good return, with the really low $ workers getting a huge risk-free windfall.
Those at the high end get effectively less than 0%, meaning they could have put it into long-term Treasury bonds and made 2%+, but instead will get a negative return.
Consider, too, that the tax rate went up in the early 80s, so older retirees are doing EVEN BETTER than this if they were at the lower income scale.
Your problem is you are worried about losing the $1 million AND worried about missing out on stock market gains. Can’t have it both ways - even with hedging (put options, etc.) you can’t eliminate all the risk.
So if you are worried - get out. Follow what the uber rich are doing (e.g. Bill Gates) and buy farm land with working water wells.
Lyndon Johnson was likely the most evil president in my memory, Hillary Clinton would have likely been similar.
For a few years only part of my income was charged SS tax because I was over the maximum. But they substantially increased the maximum taxable so that ended pretty quickly.
The good news is that your SS payments are based on what you put in, at least to a degree.
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