The National Budget Controversy

I was really surprised that neither the GOP nor the President, suggested changes in Social Security to alleviate our critical national deficit problems. I guess I shouldn't have been surprised, because it is certainly a hot potato. President Bush's attempt to “privatize” or “personalize” SS met with much public disfavor. If it had been in place during the recent meltdown, would have been catastrophic. But lets look at SS.

I think Social Security has been getting a bum rap. Here is my understanding of it and what I think is happening to it.

SS is a somewhat mandatory insurance plan to insure everyone a meager safety net for old age. Most people don't have the wisdom, foresight or ability to save enough for their sustenance in old age, or some tragic event may thwart the best of plans. You know, like a new car, kids going to college, our sudden family health problems, or an unexpected lay-off.

Our SS plan has been highly successful for about four score years in keeping aging citizens out of abject poverty. It does not provide a very comfortable stipend. Currently, the average monthly payout is about $1000/month (actually I get less). This is about 50% less than the poverty level, so you won't be living in the lap of luxury, if that's all you have to subsist on.

In life insurance, you win if you die early, and lose if you pay in a lifetime and your heirs only get back a portion of what you paid in. In SS you win if you live a long life and lose if you die young, because your heirs get no money. I say somewhat mandatory because not everyone has to participate, for example. Congress. However these people who don't participate regularly, can be eligible to collect the benefits with only 40 quarters (10 years) participation.

Like insurance, SS uses tables of probability for population figures and death rates to determine tax collection requirements and expected payouts. Right now SS collects more money each year than it pays out. It is not “broke”. In a few years this will not be true and there will be more pay out than collections for a few years. Then according to the projected demographics SS will be in the black again for a couple decades.

Then why is it that many are suggesting we need to essentially dismantle our current system to reduce our debt? It's simply because previous tax and spend Democrats and borrow and spend Republicans have amassed a tremendous 14 Trillion debt over the last 30 years. This is not the fault of SS. Citizens have been paying their own way all along but Congress has been using the proceeds to pay for their own special pet pork projects as well as to build infrastructure, conduct wars and many worthwhile expenses using the citizens SS funds, instead of appropriating funds through additional taxes or cutting spending on other projects, as they should have. If the government had left the SS money in the proverbial “lockbox” and accrued interest, SS would be safe for generations. Now we are living longer, so it would make sense to “tweak” the system and that might provide a modest aid to the governmental shortfall without damaging the system.

Those on the right will say our current problems are the fault of the current administration while the left will point out TARP and the recession were inherited. It doesn't make any difference, we're stuck with it. However, it goes back a lot further than the last two administrations and the Congresses of their day.

But why does the well managed and well funded SS have to be the piggy bank to be destroyed for the politicians? Because it is well funded. It looks like, that for the time being, it has escaped the scalpel or meat axe. Instead, the GOP (Ryan), wants to revamp Medicare, which was created along with SS and also serves as a safety net. The governments, G and D, have also raided it over the years, and with ballooning medical costs, Medicare and Medicaid are a huge drain on the budget. The GOP plan is to “privatize” or “personalize” Medicare and Medicaid.

I personally do not pretend to know all the facts of this plan, but several things have been widely revealed. If I misstate the facts, I apologize.

First, Medicare and Medicaid as we know it would be drastically changed and privatized – like the failed attempt for SS. This would change the economy from a single payer (government), not for profit system, to a multiple corporate, for profit system. I have been on Medicare for a number of years. Every time I go to the doctor or have an expense, I am sent a copy of the transaction, which shows what the doctor (or facility) charged, what medicare will allow, what they will pay and what I may be charged. The amount Medicare pays is almost always far less that the doctor charged. The doctor must accept this or lose Medicare patients. Most doctors accept this because otherwise they would lose too many patients. Therefore, this single payer system saves the government and the patient (copay) money. I have never been refused care from any doctor I chose, or any procedure the doctors recommended. This is not true for the corporate healthcare systems. Even with competition between HMO's, the need for continuing increased profits would negate any savings otherwise afforded by private competition.

Just today in the news, a man was denied a simple nuclear stress test that his doctor had ordered. Blue Cross denied the doctor's request (to save money and profit). The man promptly had a severe heart attack and nearly died, resulting in 5 bi-passes. (That's where your “death panels” are located.) That would not have happened with Medicare.

People over 55 are supposed to be still covered by Medicare, under the Ryan plan. The people like 5 of my six children, who have paid taxes for 25-30 years with the belief they would receive Medicare, are out in the cold. They will get “chits” to initially help cover part of the cost of their commercial insurance, with no assurance that as costs rise they will receive more. Since they are close to the age 55 cut-off, their private health insurance will be much more expensive than the average and they may not be able to afford it. They also have the “pre-existing condition” of being older. Instead, they may have shortened life expectancies, and may have to rely on emergency room treatment, that you pay for. Their safety net would be gone. In addition, their taxes will continue to be used for care of the over 55 people still on Medicare. Doesn't sound quite fair to me.

Medicaid will be converted to block grants to the states, based on population, not on need. The states will then decide how to spend this money. Lord help those who need it in Florida, with the clowns we have in Tallahassee. Mortality in the retirement “sun belt” states will skyrocket.

I recall an awful lot of tea party members that were angry about Obamacare because they didn't want anyone to “mess” with their Medicare/aid/advantage. I don't think they all will want to support the tea party anymore. I just hope they remember that all but 4 GOP House members voted to end Medicare as we know it, and many of us rely on it. Those in the tea party over 55 may not object. They have theirs. Some of the wealthy and those who think they will be wealthy, are probably cheering. Their patriotism ends just outside their wallets.

Next in line of the Ryan bill, is a huge tax cut for the wealthy. Theoretically the GOP believes this will increase revenue and jobs. If it were really true, why not exempt the wealthy from any taxes. Would that create even more jobs and completely revitalize or economy? I think not.

Now I was a big supporter of Reagan and even thought his 'Voodoo Economics” might work. It didn't. There was a slight initial surge, but the end result was a TRIPLING of the national debt, and he even ended up raising taxes. Bush 1, of read my lips fame ( I liked him too), also had to raise taxes, which cost him a second term.

Then Clinton came along and boosted taxes some more, added more than 20 million jobs and had the first budget surplus (minus debt service) in eons. Back came another Bush with his reasonable first tax cut for all, then the “tax cuts for the rich”, doubled the national debt, and lost of 600,000 jobs. Now I ask you doesn't history mean anything. Beginning with Reagan, there has been a massive transfer of wealth to the very rich and total devastation of the middle class. The middle class are the ones that do the spending. The poor can't buy and the purchases by the rich aren't affected by the economy. How hard is that to understand. Nearly half of the citizens have fallen into the category that they can no longer afford to pay income taxes. (However, they still pay a lot in other taxes). I'm certainly not an economist, but I don't think it takes one to figure out that it's demand that creates more production of goods and services, which increases employment and real wealth. That's bottom up, not top down. The well to do aren't going to start hiring just because they have more money. The driving force is demand.

Our politicians of both brands have acknowledged that it is the small businesses that drive our economy. I don't consider a business that nets $l million small. Now the GOP is touting the mega-wealthy captains of industry (read “robber barons”) and saying they need stimulus to create wealth for all. Hogwash! Many of these leeches have been stealing the wealth of the country for their own greedy interests. CEO's have been outsourcing and moving business off shore, and even accepting ridiculous gifts of governmental largess. Their stockholders have received little benefit in the form of increased stock prices or dividends. Their employees pay has been stagnent. These corporate executives have not built the industries that they manage, like Henry Ford or Sam Walton. They have merely been handed the reins, and for this they have raised their compensation over 1000 fold in the last 10-15 years, while holding the line on pay for the workers that make the business go. Adding a comparatively little tax on the likes of George Soros and the Koch brothers, will not endanger their empires (See, I'm being fair and balanced, or ambidextrous).

There are also thousands and thousands of multimillionaire pro-athletes, musicians, actors and other entertainers that would not suffer to any extreme manner by boosting their contributions to Uncle Sam. Many of them are quite generous and have charities around the globe. I believe they wouldn't mind kicking in to help save the lives of their neighbors. The bankers and brokers that pocketed the billions and billions of dollars by duplicitous means and crashed our economy, will probably not be happy with a tax increase, but they will continue to survive an prosper, because the Democrats are still fighting regulation of the GSA's, and the Republicans are blocking bank regulation.

This Ryan bill alleges 6T saving over 10-12 years. During 2012, it estimates expenses of 3.5 T, and revenue of 2.5T. So we will continue to lose another trillion, next year. The debt limit would again have to be raised and who knows what will really happen after that.

Having listened to the President's speech, I agree it sounded like a campaign rhetoric and it was certainly devoid of specifics. However, much of it made sense to me Relatively few small business would be harmed by restoring pre-Bush tax rates for the rich. The very wealthy certainly can afford to kick in a little more. With the notable exception of Steve Jobs (Apple), most executives are doing very little to increase their earnings other than outsourcing. They rely on their employees to do the heavy lifting, while they work on their compensation package. Ending subsidies for highly profitable oil companies certainly has my blessing and so does stopping GE and others from sucking the blood out of our economy when they were already profitable. I'd like to see penalties instead of rewards for moving off shore.

Remember a few years ago, when Bush made a deal with the pharmaceutical industry. It prohibited the government ( except the VA)from bargaining for lower prices for prescription drugs. This caused the US to have such high drug prices, citizens turned to Canada for their drugs, until they were threatened with criminal punishment. We could greatly decrease our national budget for healthcare, by allowing market forces and the economy of scale to determine the drug cost, instead of subsidizing the highly profitable drug companies. There is no need for us to pay higher prices than the rest of the world.

I would have liked to see some massive cuts in Washington—Like cuts in the excessive pay and perks of congress and their massive and expensive staffs. The President could cut back on the high pay of his Czars. Most of them are already wealthy and could volunteer to serve their country. The Prez, could also cut way back on his expensive travel around the country. Maybe he doesn't know it, but Scype has a free service where he can be seen when he talks to people. That would also save the cost of a lot of teleprompters. (just joshing)

I probably won't be around to see it, but I think the debt problem could be resolved, with minor tweaking of SS and the Medicare family, along with increased restraint in new spending and moderate tax increases on those who can afford it and conversion of more welfare to workfare. Everyone should be required to do something, within their capability, to earn welfare. However, we will have to also restrain our imperialism, and not try to be the policeman and savior of the world, while we can't even take care of the weakest among us. It's time to bring the troops home.

Israel is doing a good job of survival and they're in the thick of trouble spots. We just have to worry about people we let in.

Unfortunately, the mindless buzz word mantra of the current Republicans in Congress is “Cut Taxes, Cut Spending” which will probably result in a impasse that will destroy America as we have known it. What is indeed frightening is some tea party elected officials, like our own Senator Rubio, has already voted to bankrupt our government, and cause economic upheaval in the entire world, because ALL of his demands were not met. Our only hope is that the “Gang of Six” , a bipartisan group, may inject some sanity.

Also unfortunately, I am reminded that all former great democracies eventually failed when a fascist wealthy small ruling class emerged and subjugated the middle class. In addition, one only has to look at the upheaval in North Africa and the Middle East to see what happens when all the wealth of a country is in a comparatively few hands and the rest of the country is destitute. Of course those despots have enjoyed a long run.

God Help America