Category Archives: Social Security

Dear Senator Pryor, here are some spending cut suggestions (“Thirsty Thursday”, Open letter to Senator Pryor)

Dear Senator Pryor, here are some spending cut suggestions (“Thirsty Thursday”, Open letter to Senator Pryor)

Senator Pryor pictured below:

Why do I keep writing and email Senator Pryor suggestions on how to cut our budget? I gave him hundreds of ideas about how to cut spending and as far as I can tell he has taken none of my suggestions. You can find some of my suggestions herehereherehere, hereherehereherehere, herehereherehereherehereherehereherehere,  here, and  here, and they all were emailed to him. In fact, I have written 13 posts pointing out reasons why I believe Senator Pryor’s re-election attempt will be unsuccessful. HERE I GO AGAIN WITH ANOTHER EMAIL I JUST SENT TO SENATOR PRYOR!!!

Dear Senator Pryor,

Why not pass the Balanced  Budget amendment? As you know that federal deficit is at all time high (1.6 trillion deficit with revenues of 2.2 trillion and spending at 3.8 trillion).

On my blog www.thedailyhatch.org . I took you at your word and sent you over 100 emails with specific spending cut ideas. (Actually there were over 160 emails with specific spending cut suggestions.) However, I did not see any of them in the recent debt deal that Congress adopted although you did respond to me several times. Now I am trying another approach. Every week from now on I will send you an email explaining different reasons why we need the Balanced Budget Amendment. It will appear on my blog on “Thirsty Thursday” because the government is always thirsty for more money to spend. Today I actually have included a great article below from the Heritage Foundation concerning an area of our federal budget that needs to be cut down to size. The funny thing about the Sequester and the 2.4% of cuts in future increases is that President Obama set these up and then he acted like the sky was falling in as the cartoons indicate in the newspapers.

IF YOU TRULY WANT TO CUT THE BUDGET AND BALANCE THE BUDGET THEN SUBMIT THESE POTENTIAL BUDGET CUTS PRESENTED BELOW!!

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The European Fiscal Crisis and Lessons for America

Uploaded on Nov 16, 2011

Many European welfare states have been caught in a downward spiral of taxes, spending, and debt. This mini-documentary from the Center for Freedom and Prosperity Foundation identifies key lessons for policymakers seeking to avoid the inevitable fiscal crisis caused by the welfare state.

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We got to let the young people entering the work force have private retirement accounts instead of Social Security!!! If we change nothing our budget  will explode because of Sociai Security!!!!
August 6, 2013 1:10PM

Downsize the Social Security Administration

A new section on the Social Security Administration (SSA) has been added to Cato’s Downsizing Government website. The SSA operates three large programs that provide benefits to millions of Americans: Old-Age and Survivors Insurance, Disability Insurance, and Supplemental Security Income. Total SSA spending will be $873 billion in 2013, which works out to an average of about $7,300 for every household in the nation.

Essays:

Social Security Retirement: Social Security faces a huge financing gap because of its pay-as-you-go structure and the aging of the U.S. population. It should be transitioned to a system of personal savings accounts, which would increase individual financial security and help to avert future tax increases.

Social Security Disability Insurance: Growing numbers of Americans are receiving disability benefits, and the system is subject to major abuses. Policymakers should tighten eligibility for the program and explore ways to move it to the private sector.

Supplemental Security Income: This program for low-income and disabled individuals suffers from similar abuses and overspending problems as Social Security Disability Insurance. The financing and administration of Supplemental Security Income should be devolved to the states.

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The Balanced Budget Amendment is the only thing I can think of that would force Washington to cut spending. We have only a handful of balanced budgets in the last 60 years, so obviously what we are doing is not working. We are passing along this debt to the next generation. YOUR APPROACH HAS BEEN TO REJECT THE BALANCED BUDGET “BECAUSE WE SHOULD CUT THE BUDGET OURSELF,” WELL THEN HERE IS YOUR CHANCE!!!! SUBMIT THESE CUTS!!!!

Thank you for this opportunity to share my ideas with you.

Sincerely,

Everette Hatcher, lowcostsqueegees@yahoo.com www.thedailyhatch.org, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733

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Conan creates examples of wasteful government programs, but why make up examples?

Sometimes it is tragic that you got to laugh about it. Dear Conan, Reckless Government Spending Is Worse Than You Think Brandon Stewart August 10, 2011 at 7:31 pm Late-night comedian Conan O’Brien’s blog has a new post parodying Washington’s excessive spending. “Team Coco has found out why our government is so broke,” the blog explains, “They’ve […]

We want to be protected but is the government going too far?

We want to be protected but is the government going too far? Crime Fighting or Corporate Welfare? July 18, 2013 by Dan Mitchell I want government to successfully and rationally fight crime and stop terrorism. That’s a perfectly appropriate libertarian sentiment since protecting life, liberty, and property are among the few legitimate roles for government. But […]

John Stossel notes how good intentions lead to bad results when the government is involved

John Stossel notes how good intentions lead to bad results when the government is involved. Why do we keep on giving the government more money when they waste so much? We should be putting more time in staying out of the small businessperson’s way!!!! The Reverse Midas Touch of Government January 6, 2013 by Dan Mitchell […]

Milton Friedman: “Nothing is so permanent as a temporary government program”

______________________________________ Milton Friedman On Charlie Rose (Part One) The late Milton Friedman discusses economics and otherwise with Charlie Rose. _________________________________________ Milton Friedman: Life and ideas – Part 01 Milton Friedman: Life and ideas A brief biography of Milton Friedman _____________________________________ Stossel – “Free to Choose” (Milton Friedman) 1/6 6-10-10. pt.1 of 6. Stossel discusses Milton […]

President Obama and government spending (GSA Govt waste tip of iceberg)

I wish President Obama would try to cut spending instead of increasing spending and our debt. Two Very Good GSA Waste Cartoons April 21, 2012 by Dan Mitchell One of my first blog posts back in 2009 featured a column about the Social Security Administration squandering $750,000 on a “conference” at a fancy golf resort in […]

A suggestion to cut some wasteful spending out of the government Part 8 (includes editorial cartoon)

Does Government Have a Revenue or Spending Problem? People say the government has a debt problem. Debt is caused by deficits, which is the difference between what the government collects in tax revenue and the amount of government spending. Every time the government runs a deficit, the government debt increases. So what’s to blame: too […]

A suggestion to cut some wasteful spending out of the government Part 7 (includes editorial cartoon)

What Are the Dangers of Too Much Debt? Published on Mar 20, 2012 Interest payments on U.S. government debt are three times spending in the Iraq and Afghanistan wars already, and that is with the lowest interest rate we have seen since the 1960s. A rise in interest rates would increase interest payments dramatically. What […]

A suggestion to cut some wasteful spending out of the government Part 6 (includes editorial cartoon)

Funding Government by the Minute Published on Mar 28, 2012 At the rate the federal government spends, it runs out of money on July 31. What programs should be cut to balance the budget and fund the government for the remaining five months of the year? Cutting NASA might buy two days; cutting the Navy […]

A suggestion to cut some wasteful spending out of the government Part 5 (includes editorial cartoon)

Does Government Have a Revenue or Spending Problem? People say the government has a debt problem. Debt is caused by deficits, which is the difference between what the government collects in tax revenue and the amount of government spending. Every time the government runs a deficit, the government debt increases. So what’s to blame: too […]

A suggestion to cut some wasteful spending out of the government Part 4 (includes editorial cartoon)

What Are the Dangers of Too Much Debt? Published on Mar 20, 2012 Interest payments on U.S. government debt are three times spending in the Iraq and Afghanistan wars already, and that is with the lowest interest rate we have seen since the 1960s. A rise in interest rates would increase interest payments dramatically. What […]

A suggestion to cut some wasteful spending out of the government Part 3 (includes editorial cartoon)

What Can We Cut to Balance the Budget Published on Oct 16, 2012 Will Rogers has a great quote that I love. He noted, “Lord, the money we do spend on Government and it’s not one bit better than the government we got for one-third the money twenty years ago”(Paula McSpadden Love, The Will Rogers Book, (1972) […]

A suggestion to cut some wasteful spending out of the government Part 2 (includes editorial cartoon)

Does Government Have a Revenue or Spending Problem? People say the government has a debt problem. Debt is caused by deficits, which is the difference between what the government collects in tax revenue and the amount of government spending. Every time the government runs a deficit, the government debt increases. So what’s to blame: too […]

A suggestion to cut some wasteful spending out of the government Part 1 (includes editorial cartoon)

What Are the Dangers of Too Much Debt? Published on Mar 20, 2012 Interest payments on U.S. government debt are three times spending in the Iraq and Afghanistan wars already, and that is with the lowest interest rate we have seen since the 1960s. A rise in interest rates would increase interest payments dramatically. What […]

Lots of wasteful spending by federal government

I wish the federal government would go back to spending less than 5% of GDP like they did the first 150 years of our country’s history. We could cut down on a lot of wasteful spending if we did that. Morning Bell: The Governing Class and Us Mike Brownfield April 19, 2012 at 8:57 am […]

By Everette Hatcher III | Posted in President Obama | Edit | Comments (0)

Open letter to President Obama (Part 475) (Putting up to 12% of your income away for private social security system is Australia’s plan.)

Open letter to President Obama (Part 475)

(Emailed to White House on 5-4-13.)

President Obama c/o The White House 1600 Pennsylvania Avenue NW Washington, DC 20500

Dear Mr. President,

I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get a pulse on what is going on out here.

______________

Putting up to 12% of your income away for private social security system is Australia’s plan.

Unexpected Praise for Australia’s Private Social Security System

April 21, 2013 by Dan Mitchell

As part of my “Question of the Week” series, I said that Australia probably would be the best option if the United States suffered some sort of Greek-style fiscal meltdown that led to a societal collapse.*

One reason I’m so bullish on Australia is that the nation has a privatized Social Security system called “Superannuation,” with workers setting aside 9 percent of their income in personal retirement accounts (rising to 12 percent by 2020).

Established almost 30 years ago, and made virtually universal about 20 years ago, this system is far superior to the actuarially bankrupt Social Security system in the United States.

Probably the most sobering comparison is to look at a chart of how much private wealth has been created in Superannuation accounts and then look at a chart of the debt that we face for Social Security.

To be blunt, the Aussies are kicking our butts. Their system gets stronger every day and our system generates more red ink every day.

And their system is earning praise from unexpected places. The Center for Retirement Research at Boston College, led by a former Clinton Administration official, is not a right-wing bastion. So it’s noteworthy when it publishes a study praising Superannuation.

Australia’s retirement income system is regarded by some as among the best in the world. It has achieved high individual saving rates and broad coverage at reasonably low cost to the government.

Since I wrote my dissertation on Australia’s system, I can say with confidence that the author is not exaggerating. It’s a very good role model, for reasons I’ve previously discussed.

Here’s more from the Boston College study.

The program requires employers to contribute 9 percent of earnings, rising to 12 percent by 2020, to a tax-advantaged retirement plan for each employee age 18 to 70 who earns more than a specified minimum amount. …Over 90 percent of employed Australians have savings in a Superannuation account, and the total assets in these accounts now exceed Australia’s Gross Domestic Product. …Australia has been extremely effective in achieving key goals of any retirement income system. …Its Superannuation Guarantee program has generated high and rising levels of saving by essentially the entire active workforce.

The study does include some criticisms, some of which are warranted. The system can be gamed by those who want to take advantage of the safety net retirement system maintained by the government.

Australia’s means-tested Age Pension creates incentives to reduce one’s “means” in order to collect a higher means-tested benefit. This can be done by spending down one’s savings and/or investing these savings in assets excluded from the Age Pension means test. What makes this situation especially problematic is that workers can currently access their Superannuation savings at age 55, ten years before becoming eligible for Age Pension benefits at 65. This ability creates an incentive to retire early, live on these savings until eligible for an Age Pension, and collect a higher benefit, sometimes referred to as “double dipping.”

Though I admit dealing with this issue may require a bit of paternalism. Should individuals be forced to turn their retirement accounts into an income stream (called annuitization) once they reach retirement age?

I’m torn on this issue. Paternalists sometimes do have good ideas, but shouldn’t people have the freedom to make their own decisions, even if they make mistakes? But does the answer to that question change when mistakes mean that those people will be taking money from taxpayers?

Fortunately, I don’t need to be wishy-washy on the other criticism in the study.

Australia’s system does have shortcomings. It is heavily dependent on defined contribution plans and is vulnerable to weaknesses in such programs.

I strongly disagree. A “defined contribution” account is something to applaud, not a shortcoming.

The author presumably is worried that a “DC” account leaves a worker vulnerable to the ups and downs of the market, whereas a “defined benefit” account promises a specific payment and removes that uncertainty. Sounds great, but the problem with “DB” accounts is that they almost inevitably seem to promise more than they can deliver. And that seems to be the case whether they’re supposedly based on real savings (like company retirement plans or pension funds for state and local bureaucrats) or based on pay-as-you-go taxation (like Social Security).

*Since I’m somewhat optimistic that America can be saved, I’m not recommending you head Down Under just yet.

P.S. I’m also a huge fan of Chile’s system of private accounts. At the risk of oversimplifying, Chile’s system is sort of like universal IRAs and Australia’s system is sort of like universal 401(k)s.

P.P.S. There’s much to admire about Australia, but its government is plenty capable of boneheaded policy. Heck, the government even provides workers’ compensation payments to people who get injured while having sex after work hours, simply because they were on a business-related trip. Talk about double dipping!

P.P.P.S. Here’s my video explaining why we should implement personal retirement accounts in the United States.

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Saving Social Security with Personal Retirement Accounts

            Uploaded on Jan 10, 2011

There are two crises facing Social Security. First the program has a gigantic unfunded liability, largely thanks to demographics. Second, the program is a very bad deal for younger workers, making them pay record amounts of tax in exchange for comparatively meager benefits. This video explains how personal accounts can solve both problems, and also notes that nations as varied as Australia, Chile, Sweden, and Hong Kong have implemented this pro-growth reform.   http://www.freedomandprosperity.org

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P.P.P.S. The death tax has been abolished in Australia, so there’s more to admire than just personal retirement accounts.

Two Social Security Cartoons

April 27, 2012 by Dan Mitchell

Since we recently learned Social Security is even more financially decrepit than previously estimated, let’s cheer ourselves up with a couple of cartoons.

This first one is a pretty good assessment of what’s going to happen in a few years if we don’t see reform. Think about what’s happening in Europe, if you don’t have a good imagination.

This cartoon covers the same topic, but looks at how an aging population is going to create unsustainable fiscal demands.

There are solutions, of course, but don’t hold your breath waiting for them to be implemented.

Incidentally, you may recognize the artistic style in the second cartoon. It’s by Ramirez. Here are links to some of his other cartoons that I found especially worthwhile: Here, hereherehereherehereherehere, and here.

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Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.

Sincerely,

Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com

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Cartoons from Dan Mitchell’s blog that demonstrate what Obama is doing to our economy Part 3.2  (Two Social Security Cartoons)

I have put up lots of cartoons from Dan Mitchell’s blog before and they have got lots of hits before. Many of them have dealt with the economy, eternal unemployment benefits, socialism,  Greece,  welfare state or on gun control.   Two Social Security Cartoons April 27, 2012 by Dan Mitchell Since we recently learned Social Security is even […]

We got to reform Social Security now!!!

We got to reform Social Security now!!! Yes, We Should “Reform” Payroll Taxes, but only if that Means Personal Retirement Accounts January 2, 2013 by Dan Mitchell Washington is filled with debate and discussion about the economic burden of the federal income tax, which collected $1.13 trillion in FY2012 ($1.37 trillion if you include the corporate […]

“Feedback Friday” Letter to White House generated form letter response July 30,2012 on Social Security (part 16)

I have been writing President Obama letters and have not received a personal response yet.  (He reads 10 letters a day personally and responds to each of them.) However, I did receive a form letter in the form of an email on July 30, 2012. I don’t know which letter of mine generated this response so I have […]

Antony Davies’ video “Social Security vs. Private Retirement” (includes cartoon)

Social Security vs. Private Retirement

Is Social Security a good retirement plan? Economics professor Antony Davies shows that Americans stand to earn significantly less and assume more risk with Social Security than other investment options. According to Davies, taxpayers would be better off both in terms of financial security and return on investment by investing their money privately. Social security is extremely expensive, soon to be insolvent, and doesn’t even offer taxpayers the most bang for their buck. For those reasons, Prof. Davies argues that it is time for the government to phase out Social Security. Davies’ solution: the government should honor its obligations to current retirees while giving Americans the freedom to invest their money as they see fit.

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The current Social Security system is a ponzi scheme.

A picture says a thousand words, and this Gary Varvel cartoon definitely exposes the government’s Ponzi system.

Cartoons from Dan Mitchell’s blog that demonstrate what Obama is doing to our economy Part 30 (Social Security Ponzi scheme cartoons)

I have put up lots of cartoons from Dan Mitchell’s blog before and they have got lots of hits before. Many of them have dealt with the economy, eternal unemployment benefits, socialism,  Greece,  welfare state or on gun control.

Liberals that say that Social Security is running fine don’t want to live in the real world but in a make-believe liberal world that doesn’t exist.

Another good cartoon below:

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Social Security’s $30 Trillion Fiscal Time Bomb

August 13, 2012 by Dan Mitchell

I don’t give the issue much attention on this blog, but I’m very interested in Social Security reform. I wrote my dissertation on Australia’s very successful system of personal retirement accounts, for instance, and I narrated this video on Social Security reform in the United States.

So I was very interested to see that the Associated Press put out a story warning about the dismal state of the program’s finances.

Here’s some of what the AP reported.

For nearly three decades Social Security produced big surpluses, collecting more in taxes from workers than it paid in benefits to retirees, disabled workers, spouses and children. The surpluses also helped mask the size of the budget deficit being generated by the rest of the federal government. Those days are over. Since 2010, Social Security has been paying out more in benefits than it collects in taxes… The projected shortfall in 2033 is $623 billion, according to the trustees’ latest report. It reaches $1 trillion in 2045 and nearly $7 trillion in 2086, the end of a 75-year period used by Social Security’s number crunchers because it covers the retirement years of just about everyone working today. Add up 75 years’ worth of shortfalls and you get an astonishing figure: $134 trillion. Adjusted for inflation, that’s $30.5 trillion in 2012 dollars, or eight times the size of this year’s entire federal budget.

First of all, kudos to the AP. I criticized them for a sloppy and biased report on poverty last month, so it behooves me to mention that their story on Social Security is mostly fair and accurate.

My only complaint is that the story does include some analysis of the Social Security Trust Fund, even though that supposed Fund is nothing but a pile of IOUs – money that one part of the government promises to give to another part of the government.

But let’s set that aside. Another interesting tidbit from the story is this quote from one of the kleptocrats at the American Association of Retired Persons. Note that he implicitly rules out any changes other than those that enable the government to “pay the benefits we promised.”  But that shouldn’t be a surprise. AARP is part of the left-wing coalition.

“I’m not suggesting we need to wait 20 years but we do have time to make changes to Social Security so that we can pay the benefits we promised,” said David Certner, AARP’s legislative policy director. “Let’s face it. Relative to a lot of other things right now, Social Security is in pretty good shape.”

But I will say that Mr. Certner is sort of correct about Social Security being in better shape than Medicare and Medicaid. But that’s like saying the guy with lung cancer who is 75 lbs overweight is in better shape than the two guys with brain tumors who are both 150 lbs overweight.

If you have to engage in fiscal triage, it would be smart to first address Medicare and Medicaid, but Social Security also needs reform. And not the kind of statist reform the folks at AARP would like to see.

By the way, you probably won’t be surprised to learn that President Obama’s approach is similar to the left-wingers at AARP. Here’s a video I narrated about his preferred policy.

It seems that the question doesn’t matter with this administration. The answer is always to impose more class-warfare tax policy.

P.S. If you need to be cheered up after reading this post, here’s a good cartoon showing the difference between Social Security and a Ponzi scheme, and here’s another cartoon showing what inspired Bernie Madoff to steal so much money.

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Cartoons from Dan Mitchell’s blog that demonstrate what Obama is doing to our economy Part 2

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Cartoons from Dan Mitchell’s blog that demonstrate what Obama is doing to our economy Part 1

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Great cartoon from Dan Mitchell’s blog on government moochers

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Gun Control cartoon hits the internet

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“You-Didn’t-Build-That” comment pictured in cartoons!!!

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Cartoons about Obama’s class warfare

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Cartoons on Obama’s budget math

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Funny cartoon from Dan Mitchell’s blog on Greece

Sometimes it is so crazy that you just have to laugh a little. The European Mess, Captured by a Cartoon June 22, 2012 by Dan Mitchell The self-inflicted economic crisis in Europe has generated some good humor, as you can see from these cartoons by Michael Ramirez and Chuck Asay. But for pure laughter, I don’t […]

Obama on creating jobs!!!!(Funny Cartoon)

Another great cartoon on President Obama’s efforts to create jobs!!! A Simple Lesson about Job Creation for Barack Obama December 7, 2011 by Dan Mitchell Even though leftist economists such as Paul Krugman and Larry Summers have admitted that unemployment insurance benefits are a recipe for more joblessness, the White House is arguing that Congress should […]

Get people off of government support and get them in the private market place!!!!(great cartoon too)

Dan Mitchell hits the nail on the head and sometimes it gets so sad that you just have to laugh at it like Conan does. In order to correct this mess we got to get people off of government support and get them in the private market place!!!! Chuck Asay’s New Cartoon Nicely Captures Mentality […]

2 cartoons illustrate the fate of socialism from the Cato Institute

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Cartoon demonstrates that guns deter criminals

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Gun control posters from Dan Mitchell’s blog Part 2

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We got to cut spending and stop raising the debt ceiling!!!

  We got to cut spending and stop raising the debt ceiling!!! When Governments Cut Spending Uploaded on Sep 28, 2011 Do governments ever cut spending? According to Dr. Stephen Davies, there are historical examples of government spending cuts in Canada, New Zealand, Sweden, and America. In these cases, despite popular belief, the government spending […]

Gun control posters from Dan Mitchell’s blog Part 1

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Taking on Ark Times bloggers on the issue of “gun control” (Part 3) “Did Hitler advocate gun control?”

Gun Free Zones???? Stalin and gun control On 1-31-13 ”Arkie” on the Arkansas Times Blog the following: “Remember that the biggest gun control advocate was Hitler and every other tyrant that every lived.” Except that under Hitler, Germany liberalized its gun control laws. __________ After reading the link  from Wikipedia that Arkie provided then I responded: […]

Taking on Ark Times bloggers on the issue of “gun control” (Part 2) “Did Hitler advocate gun control?”

On 1-31-13 I posted on the Arkansas Times Blog the following: I like the poster of the lady holding the rifle and next to her are these words: I am compensating for being smaller and weaker than more violent criminals. __________ Then I gave a link to this poster below: On 1-31-13 also I posted […]

Open letter to President Obama (Part 396) We got to reform Social Security now!!!

(Emailed to White House on 1-3-13.)

President Obama c/o The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500

Dear Mr. President,

I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get a pulse on what is going on out here.

We got to reform Social Security now!!! Don’t you think the young people entering the workforce now are discouraged that Social Security will not be there for them when they retire. They are putting 15.3% in the system every year and there is now why they will get that kind of return.

Washington is filled with debate and discussion about the economic burden of the federal income tax, which collected $1.13 trillion in FY2012 ($1.37 trillion if you include the corporate income tax).

Yet politicians rarely consider the economic impact of payroll taxes, even though these levies totaled $.85 trillion during the same fiscal year.

Yes, we had a gimmicky payroll tax holiday for the past few years. And it’s true that Obama has signaled that he wants to increase the payroll tax burden at some point to prop up the Social Security system.

But there’s rarely, if ever, a discussion of wholesale reform.

That’s actually a good thing. Compared to the income tax, the payroll tax does far less damage. And it’s not just because it collects less money. On a per-dollar-raised basis, the payroll tax is considerably less destructive than the income tax.

Why? Because it’s actually a form of flat tax.

  • It has only one tax rate. There’s a 12.4 percent tax for Social Security and a 2.9 percent tax for Medicare, which means a flat tax of 15.3 percent.
  • There’s almost no double taxation. The payroll tax applies to wage and salary income, as well as personal earnings from business activities (sometimes known as “Schedule C” income). But dividends, interest, and capital gains are generally spared – other than the 3.8 percent Obamacare surtax.
  • There are no loopholes or deductions for politically connected interest groups.

And because of these three features, the tax is remarkably simple and doesn’t even require a tax form unless taxpayers have Schedule C income.

None of this, by the way, means the payroll tax is a good or desirable levy.

  • It takes for too much money from the American people and is far and away the biggest tax paid by the majority of American workers.
  • Those revenues are used for two programs – Social Security and Medicare – that are actuarially bankrupt and contributing to the nation’s long-run fiscal collapse.
  • The 15.3 percent tax undermines work incentives by driving a wedge between pre-tax income and post-tax consumption.
  • And the tax is very non-transparent, particularly since many taxpayers don’t even realize that the “F.I.C.A.” tax on their pay stub only reflects 50 percent of their payroll tax burden. In a hidden form of pre-withholding, employers pay an equal amount to the government on behalf of their workers – funds that otherwise would be part of worker compensation.

In other words, the payroll tax is a bad imposition. That being said, it still does considerably less damage, on a per-dollar-collected basis, than the income tax.

With that in mind, I’m puzzled that some folks want to keep the income tax and get rid of the payroll tax.

My friends at the Heritage Foundation, for instance, have a tax reform proposal that would fold the payroll tax into the income tax. Since they’re also proposing to turn the income tax into a form of flat tax, with one rate and no double taxation, the overall proposal clearly is a big improvement over today’s tax system. But all of the improvement is because of reforms to the income tax.

The Washington Examiner has an even stranger position. The paper recently editorialized in favor of abolishing the Social Security portion of the payroll tax and expanding the income tax.

The payroll tax — 12.4 percent, split between workers and their employers to help finance Social Security – is one of the worst taxes on the books for several reasons. A basic economic principle is that when the government taxes something, the nation gets less of it. Because the payroll tax makes it more expensive and administratively burdensome for businesses to hire workers, it’s a drag on employment. Also, even the employer’s share of the tax is effectively passed on to workers in the form of lower salaries and benefits.

There’s nothing overtly wrong with the above passage. The tax does all those bad things. But the income tax does all those things as well, but in an even more destructive fashion.

The editorial addresses a couple of potential objections, starting with the notion that the payroll tax is a revenue dedicated to social Security.

There are two main objections to scrapping the payroll tax. The first is the theoretical idea that payroll taxes are a dedicated revenue stream for Social Security. In practice, it just isn’t true. All government expenditures ultimately come from the same place. Payroll taxes help subsidize other government functions, and the government will use other tax revenue and borrowing to pay for Social Security when revenues are short.

They’re right that all taxes basically get dumped into the same pile of money and that the relationship between payroll taxes and Social Security benefits is imprecise.

But since my argument has nothing to do with this issue, I don’t think it matters.

Here’s the part of the editorial that doesn’t make sense.

The other objection is the massive revenue hit to the federal government. In 2010 (the last year before the recent payroll tax holiday), social insurance taxes raised $865 billion in revenue, according to the Congressional Budget Office. But there are a number of ways to recoup that revenue. As stated above, eliminating the payroll tax would make it easier to get rid of a lot of credits, loopholes and deductions. Also, if lower-income Americans aren’t paying payroll taxes, they can pay a bit more in income taxes. This would also deal with a conservative complaint that the income tax system needs to be reformed so everybody has at least some skin in the game.

This passage has a policy mistake and a political mistake.

The policy mistake is that the proposed swap almost surely would make the overall tax code more hostile to growth. The Examiner is proposing to get rid of an $865 billion tax that does a modest amount of damage per dollar collected, and somehow make up for that foregone revenue by collecting an additional $865 billion from the income tax system – which we know does a very large amount of damage per dollar collected.

To be sure, it’s possible to collect that extra money by eliminating distortions such as the state and local tax deduction or the healthcare exclusion. Compared to raising marginal tax rates, those are much-preferred ways of generating more revenue. But even in a best-case scenario – with politicians miraculously trying to collect an extra $865 billion without making the income tax system even worse, it’s hard to envision a better fiscal regime if we swap the payroll tax for a bigger income tax.

The political mistake is the assumption that more people will have “skin in the game” if the income tax is expanded. That’s almost surely not true. The poor don’t pay income tax, but the payroll tax grabs 15.3 percent of every penny earned by low-income households. And since very few taxpayers pay attention to which tax is shrinking their paychecks, it doesn’t really matter whether the “skin” is a payroll tax or an income tax.

Since the Examiner isn’t proposing a specific plan, there’s no way of making a definitive statement, but it’s 99 percent likely that eliminating the Social Security payroll tax would result in low-income households paying even less money to Washington. I think everybody should send less to Washington, but I don’t think shifting a greater share of the tax burden onto the middle class and the rich is the right way of achieving that goal.

I have one final objection, and this applies to both the Heritage Foundation plan and the Examiner proposal.

Notwithstanding everything I just wrote, I actually agree with them that we should eliminate the Social Security payroll tax. But we should get rid of the tax as part of a transition to a system of personal retirement accounts.

This is a reform that has been successfully implemented in about 30 nations and it also should happen in the United States. But an integral feature of this reform is that workers would be allowed to shift their payroll taxes into personal accounts. Needless to say, that’s not possible if the payroll tax has disappeared.

This video explains why genuine Social Security reform is so desirable.

And let’s not forget that the Medicare portion of the payroll tax could and should be part of a broader agenda of entitlement reform. But that’s also less likely if the payroll tax is folded into the income tax.

__________

Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.

Sincerely,

Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com

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We got to cut the fraud out of the Social Security Disability system!!!!!

Collapse of Social Security & Education w/Heritage Foundation President Edwin Feulner 08/30/2012

Published on Aug 30, 2012

Heritage Foundation President Dr. Edwin Feulner discusses the sad state of our education and Social Security systems. He also explains why The United States of America would continue to be the best country in the world.

With more than 700,000 paid supporters, The Heritage Foundation is the most prominent conservative think-tank in the world.

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We got to cut the fraud out of the Social Security Disability system!!!!!

August 15, 2013 4:35PM

Social Security Disability Fraud in Puerto Rico

In 2011, the Wall Street Journal’s Daniel Paletta reported on the rapid growth in individuals applying for and receiving Social Security disability benefits. Paletta found that Puerto Rico had become a particularly easy place to obtain benefits. Officials with the Social Security Administration (SSA) absurdly claimed that nothing was amiss. 

It looks like the SSA is about to get some egg on its face. 

Yesterday, Paletta reported that federal investigators, including the FBI, raided doctors’ offices in Puerto Rico as part of a widening probe into disability fraud on the island. A doctor’s opinion that an individual is suffering from a disability is naturally quite helpful in convincing examiners and judges that benefits are warranted. Investigators are apparently looking into whether Puerto Rican doctors are being paid to document that applicants are disabled. From the article: 

In 2006, just 36% of initial applicants in Puerto Rico were awarded benefits. In December 2010, the award rate had jumped to 69%. By 2010, nine of the top 10 U.S. ZIP Codes for workers receiving disability benefits were on the island. 

At the time, SSA officials said the high number of recipients and the high award rate was due to the island’s weak economy and a lack of adequate health care for workers. 

The program is overseen by the Social Security Administration in Baltimore, but each state and territory is responsible for performing an initial screening to determine eligibility. Social Security officials said in 2011 that Puerto Rico had rigorous standards and a virtually nonexistent error rate. 

The characteristics of Puerto Rico’s beneficiaries differed from other areas. In addition to the large clusters in certain zip codes, federal data showed that 33.3% of Puerto Rican beneficiaries qualified because of “mood disorders,” a rate that is at least 10 percentage points higher than any U.S. state. 

Disability examiners and federal judges say mental disorders are harder to measure and often rely on medical opinions issued by doctors to make a determination. 

SSDI was designed as a way to provide benefits for people who can’t work because of mental or physical health problems, and Americans can qualify for benefits because of ailments ranging from severe back pain to terminal cancer. 

A lifetime of benefits, including access to Medicare, can cost the government about $300,000 a person. 

As I noted in my recent paper on the growing cost of Social Security Disability Insurance, the SSA’s inspector general says that “fraud is an inherent risk in SSA’s disability programs.” But as my paper explains, the problems with the program go way beyond outright fraud: 

Given the subjective and convoluted nature of determining SSDI eligibility, it’s likely that erroneous and unjustified payments are far larger in volume than just outright fraud. The huge, complex, and difficult-to-audit system is a perfect breeding ground for awarding and continuing benefits to people who shouldn’t be on the disability rolls.

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The Moocher Index is a measure of which state has the highest level of welfare dependency!!!

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We got to let the young people entering the work force have private retirement accounts instead of Social Security!!!

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The European Fiscal Crisis and Lessons for America

Uploaded on Nov 16, 2011

Many European welfare states have been caught in a downward spiral of taxes, spending, and debt. This mini-documentary from the Center for Freedom and Prosperity Foundation identifies key lessons for policymakers seeking to avoid the inevitable fiscal crisis caused by the welfare state.

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We got to let the young people entering the work force have private retirement accounts instead of Social Security!!!

August 6, 2013 1:10PM

 

Downsize the Social Security Administration

 

 

A new section on the Social Security Administration (SSA) has been added to Cato’s Downsizing Government website. The SSA operates three large programs that provide benefits to millions of Americans: Old-Age and Survivors Insurance, Disability Insurance, and Supplemental Security Income. Total SSA spending will be $873 billion in 2013, which works out to an average of about $7,300 for every household in the nation. 

Essays: 

Social Security Retirement: Social Security faces a huge financing gap because of its pay-as-you-go structure and the aging of the U.S. population. It should be transitioned to a system of personal savings accounts, which would increase individual financial security and help to avert future tax increases.   

Social Security Disability Insurance: Growing numbers of Americans are receiving disability benefits, and the system is subject to major abuses. Policymakers should tighten eligibility for the program and explore ways to move it to the private sector.   

Supplemental Security Income: This program for low-income and disabled individuals suffers from similar abuses and overspending problems as Social Security Disability Insurance. The financing and administration of Supplemental Security Income should be devolved to the states.

 

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By Everette Hatcher III | Posted in President Obama | Edit | Comments (0)

Putting up to 12% of your income away for private social security system is Australia’s plan

Putting up to 12% of your income away for private social security system is Australia’s plan.

Unexpected Praise for Australia’s Private Social Security System

April 21, 2013 by Dan Mitchell

As part of my “Question of the Week” series, I said that Australia probably would be the best option if the United States suffered some sort of Greek-style fiscal meltdown that led to a societal collapse.*

One reason I’m so bullish on Australia is that the nation has a privatized Social Security system called “Superannuation,” with workers setting aside 9 percent of their income in personal retirement accounts (rising to 12 percent by 2020).

Established almost 30 years ago, and made virtually universal about 20 years ago, this system is far superior to the actuarially bankrupt Social Security system in the United States.

Probably the most sobering comparison is to look at a chart of how much private wealth has been created in Superannuation accounts and then look at a chart of the debt that we face for Social Security.

To be blunt, the Aussies are kicking our butts. Their system gets stronger every day and our system generates more red ink every day.

And their system is earning praise from unexpected places. The Center for Retirement Research at Boston College, led by a former Clinton Administration official, is not a right-wing bastion. So it’s noteworthy when it publishes a study praising Superannuation.

Australia’s retirement income system is regarded by some as among the best in the world. It has achieved high individual saving rates and broad coverage at reasonably low cost to the government.

Since I wrote my dissertation on Australia’s system, I can say with confidence that the author is not exaggerating. It’s a very good role model, for reasons I’ve previously discussed.

Here’s more from the Boston College study.

The program requires employers to contribute 9 percent of earnings, rising to 12 percent by 2020, to a tax-advantaged retirement plan for each employee age 18 to 70 who earns more than a specified minimum amount. …Over 90 percent of employed Australians have savings in a Superannuation account, and the total assets in these accounts now exceed Australia’s Gross Domestic Product. …Australia has been extremely effective in achieving key goals of any retirement income system. …Its Superannuation Guarantee program has generated high and rising levels of saving by essentially the entire active workforce.

The study does include some criticisms, some of which are warranted. The system can be gamed by those who want to take advantage of the safety net retirement system maintained by the government.

Australia’s means-tested Age Pension creates incentives to reduce one’s “means” in order to collect a higher means-tested benefit. This can be done by spending down one’s savings and/or investing these savings in assets excluded from the Age Pension means test. What makes this situation especially problematic is that workers can currently access their Superannuation savings at age 55, ten years before becoming eligible for Age Pension benefits at 65. This ability creates an incentive to retire early, live on these savings until eligible for an Age Pension, and collect a higher benefit, sometimes referred to as “double dipping.”

Though I admit dealing with this issue may require a bit of paternalism. Should individuals be forced to turn their retirement accounts into an income stream (called annuitization) once they reach retirement age?

I’m torn on this issue. Paternalists sometimes do have good ideas, but shouldn’t people have the freedom to make their own decisions, even if they make mistakes? But does the answer to that question change when mistakes mean that those people will be taking money from taxpayers?

Fortunately, I don’t need to be wishy-washy on the other criticism in the study.

Australia’s system does have shortcomings. It is heavily dependent on defined contribution plans and is vulnerable to weaknesses in such programs.

I strongly disagree. A “defined contribution” account is something to applaud, not a shortcoming.

The author presumably is worried that a “DC” account leaves a worker vulnerable to the ups and downs of the market, whereas a “defined benefit” account promises a specific payment and removes that uncertainty. Sounds great, but the problem with “DB” accounts is that they almost inevitably seem to promise more than they can deliver. And that seems to be the case whether they’re supposedly based on real savings (like company retirement plans or pension funds for state and local bureaucrats) or based on pay-as-you-go taxation (like Social Security).

*Since I’m somewhat optimistic that America can be saved, I’m not recommending you head Down Under just yet.

P.S. I’m also a huge fan of Chile’s system of private accounts. At the risk of oversimplifying, Chile’s system is sort of like universal IRAs and Australia’s system is sort of like universal 401(k)s.

P.P.S. There’s much to admire about Australia, but its government is plenty capable of boneheaded policy. Heck, the government even provides workers’ compensation payments to people who get injured while having sex after work hours, simply because they were on a business-related trip. Talk about double dipping!

P.P.P.S. Here’s my video explaining why we should implement personal retirement accounts in the United States.

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Saving Social Security with Personal Retirement Accounts

            Uploaded on Jan 10, 2011

There are two crises facing Social Security. First the program has a gigantic unfunded liability, largely thanks to demographics. Second, the program is a very bad deal for younger workers, making them pay record amounts of tax in exchange for comparatively meager benefits. This video explains how personal accounts can solve both problems, and also notes that nations as varied as Australia, Chile, Sweden, and Hong Kong have implemented this pro-growth reform.   http://www.freedomandprosperity.org

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P.P.P.S. The death tax has been abolished in Australia, so there’s more to admire than just personal retirement accounts.

Two Social Security Cartoons

April 27, 2012 by Dan Mitchell

Since we recently learned Social Security is even more financially decrepit than previously estimated, let’s cheer ourselves up with a couple of cartoons.

This first one is a pretty good assessment of what’s going to happen in a few years if we don’t see reform. Think about what’s happening in Europe, if you don’t have a good imagination.

This cartoon covers the same topic, but looks at how an aging population is going to create unsustainable fiscal demands.

There are solutions, of course, but don’t hold your breath waiting for them to be implemented.

Incidentally, you may recognize the artistic style in the second cartoon. It’s by Ramirez. Here are links to some of his other cartoons that I found especially worthwhile: Here, hereherehereherehereherehere, and here.

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Open letter to President Obama (Part 294)

 

President Obama c/o The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500

Dear Mr. President,

I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get a pulse on what is going on out here.

I got this cartoon below from Dan Mitchell’s blog.

Where can our government turn to get out of this socialist mess they have got themselves in? They have to realize what really creates wealth. Over in France they are facing the same problems we are because of the welfare state and they are about to put in a bunch of new leaders who want more of the same. How can you get out of this mess by doing the same thing that got you in the mess to begin with? Bradley Gitz wrote on 4-29-12 in the Arkansas Democrat-Gazette:

Escape from reality

LITTLE ROCK — The “left” is making a comeback in France. Not just Francois Hollande’s Socialists, but the hard left guys, the French Communist Party (PCF).

More than two decades after the dissolution of the Soviet Union supposedly signaled the end of Marxism-Leninism as a viable belief system, the Communists are once again attracting huge crowds waving red flags and their candidate, the “charismatic” Jean-Luc Melenchon, is said to hold the key to the outcome of the May run-off between Hollande and French President Nicolas Sarkozy.

Just as some Catholics can be more Catholic than the Pope, during the Cold War the PCF was often more Stalinist than Stalin (or at least Leonid Brezhnev and Andrei Gromyko). The crimes against humanity committed by the Soviet regime and other Communist despotisms around the world never seemed to make a dent in their moral obtuseness. The PCF even condemned Mikhail Gorbachev’s perestroika as a betrayal of the dictatorship of the proletariat.

That such a blight on the human experience, one exceeding even Nazism in its body count, could gain electoral traction in an advanced postindustrial democracy tells us something other than that cheese-eating surrender monkeys have a unique capacity for political idiocy. Indeed, the foundation of the Communist comeback has been resistance to the austerity measures that the French government has been reluctantly forced to embrace due to France’s mounting debt problems. The irony comes when considering that Communism represents the most extreme extrapolation of the welfare state mentality that produced such debt levels in the first place.

The European crisis (and the American crisis, too) is essentially a crisis of the welfare state. More precisely, it represents the presentation of the bill for payment that the welfare state has racked up for decades on both sides of the Atlantic. And in both Europe and America, the left, whether Communist, socialist,or “liberal-progressive,” is counting upon voters refusing to accept reality and the austerity measures that it so obviously dictates. More of what caused the disease is now being recommended as treatment.

Just as Communism in its heyday represented an effort to repeal the laws of human nature and the economic realities that flowed from them, today’s French Communists (and American liberals) seek to deny that budget numbers have any real meaning because money grows on trees.

What Charles Krauthammer calls “free lunch egalitarianism” is now firmly, perhaps irreversibly, entrenched in the politics of democratic states. That you can get something for nothing (or at least something that others can be made through political coercion to pay for) increasingly drives the voting behavior of ever-larger chunks of their dependent, dumbed-down electorates.

Momentum in that direction continues even after the money has run out.

The ability of Communism to survive in the electoral politics of France requires both historical amnesia regarding its crimes as well as an encouragement of the human desire to believe that two plus two really can be made to add up to seven or eight if one wishes it hard enough; that if we just close our eyes, plug up our ears, and stamp our feet in unison those nasty budget deficits will magically disappear, there will be no need for painful austerity programs, and we can go on providing free college tuition, health care, housing, and anything else that the political left designates as a fundamental human right without economic repercussion.

In the end, there is apparently something deeply ingrained in human nature that makes Communism and other forms of political leftism alluring. But just as there will always be credulous people living under the imperfections of capitalism who crave what Communism promises, there will always also be people who seek to escape from the ugly practice of Communism wherever it is established. What history has never produced, and likely never will, are a people who, once having arrived at the Communist paradise, are content to remain there. The guard towers atop the Berlin Wall weren’t, after all, designed to prevent people from entering.

Of course, no one with anything resembling a functioning brain really believes that if the French do what Melenchon and the PCF recommends-to confiscate wealth, nationalize banks and industries, and dramatically increase government benefits and the minimum wage-things will go well for France. Rather,

their supporters appear to only be hoping that it will provide them with the ability to continue to live beyond their means for a bit longer, and thereby push the inevitable crash onto the next generation.

The truly sad thing about all of this is that the formula for economic growth in the post-industrial age isn’t all that complicated, consisting as it does of secure property rights, low tax rates, and reasonable constraints upon governmental regulation, spending, and welfare state entitlements.

The left, whether in its French Communist or American liberal permutations, cannot construct sustainable societies because it has never figured out where wealth comes from. There are, in the end, no “shortcuts” to prosperity, and reality can only be temporarily ignored.

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Freelance columnist Bradley R. Gitz, who lives and teaches in Batesville, received his Ph.D. in political science from the University of Illinois.

Editorial, Pages 75 on 04/29/2012

Print Headline: Escape from reality

<!–Editorial 75

_____________

Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.

Sincerely,

Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com

Sequester Cartoons from Dan Mitchell’s blog Part 3

I have put up lots of cartoons from Dan Mitchell’s blog before and they have got lots of hits before. Many of them have dealt with the economy, eternal unemployment benefits, socialism,  Greece,  welfare state or on gun control.

These sequester cartoons from Dan Mitchell’s blog have been great but today he has about 1/2 cartoons that are much more funny than the past ones. Obama’s scare tactics make for real funny cartoons.

I shared some sequester cartoons last month, but I didn’t think they hit the nail on the head.

As regular readers know, I want the message to be focused.

  1. The problem is spending, not deficits.
  2. Government is too big.
  3. The sequester is a good thing, albeit too small.
  4. Obama and the other politicians are engaging in hysterical hyperbole to protect special-interest spending.

I think that message is slowly sinking in, which is why I was much happier about the next batch of sequester cartoons.

Now we have an embarrassment of riches. Enjoy (and widely share) this set of cartoons.

We’ll start with Michael Ramirez, who uses pie charts to show how much bigger government is today and how the sequester is just crumbs.

Sequester Cartoon Ramirez 3

And here’s one from Ed Gamble showing the President engaging in fear tactics, though both Ramirez and Gamble are wrong about the “cuts.” The sequester cuts $85 billion of “budget authority,” but that translates into only $44 billion of “budget outlays.”

That’s just 1.2 percent of FY2013 spending. And remember that this means spending will still go up compared to FY2012 – as I explained in my most recent interview.

Sequester Cartoon Gamble 3

Here’s a cartoon from Gary Varvel, which is quite similar to an excellent cartoon he produced last year.

Sequester Cartoon Varvel 3

Here’s one from Glenn McCoy, poking fun at Obama for taking everything in stride…except when something happens to threaten the amount of waste in Washington.

Sequester Cartoon McCoy 3

I’m especially fond of this Glenn Foden cartoon since I’m sick and tired of the absurd hyperbole from the interest groups in DC.

Makes me wish I could bop a few Chicken Little characters on the head.

Sequester Cartoon Foden 3

Here’s one from A.F. Branco, which I also like because it simultaneously mocks Obama’s Keynesian mindset while showing that the real danger is an ever-rising burden of government spending.

Sequester Cartoon Branco 3

Last but not least, Lisa Benson makes fun of Obama for his never-ending efforts to instill panic.

Sequester Cartoon Benson 3

Let’s keep our fingers crossed that the sequester happens on March 1. Then, even if the Obama Administration deliberately tries to cause inconvenience for the American people, we’ll see that the world doesn’t come to an end.

Who knows, maybe that will even lead lawmakers to think they can impose some real fiscal restraint, as we’ve recently seen in countries like Estonia and in the 1990s by nations such as Canada and New Zealand.

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