With the failure of the super committee to recommend at least $1.2 trillion in deficit reduction, Congress’s latest attempt at budget control has collapsed. There will be many analyses of why the process did not work, but it’s worth stepping back to recall what generated the need for this extraordinary procedure and what the exercise actually produced.
From early in the year, it was generally accepted that the divided Congress would be unable to agree on a budget through regular procedures. Republicans chose to use a necessary vote on the debt limit to force the Administration to face the need for spending reductions. After a summer-long debate, rife with hyperbole about a potential government “default,” the Budget Control Act of 2011 (BCA) was born, crafted in a way that at face value expressed the goal of fiscal prudence.
The BCA both imposed a set of discretionary spending caps to limit annually appropriated spending and established the super committee to recommend policies that would reduce the deficit by at least an additional $1.2 trillion through 2021. In return, the BCA included debt limit increases in three tranches: $400 billion, $500 billion, and then $1.2 trillion, as the chart below illustrates.
The debt limit hikes were ostensibly contingent on deficit reduction and a vote on a balanced budget amendment to the Constitution. But in fact, under the language of the BCA legislation, they could be blocked only if Congress passed a joint resolution of disapproval. If passed, such a resolution would be subject to a presidential veto, requiring the usual two-thirds vote of both houses to override. Thus these debt ceiling increases up to $2.1 trillion were all but assured from the beginning. (Article continued below chart)
The first two increases totaling $900 billion have already occurred, and the debt limit now stands at an astounding $15.124 trillion. It is up from the $14.29 trillion limit set in early 2010 and follows a history of frequent and growing debt limit increases, as shown in this Heritage Budget Chart Book chart. (Article continued below chart)
The third increase of $1.2 trillion—projected to occur early in 2012 when the debt begins to again encroach upon the limit—would raise the debt limit to an unprecedented $16.324 trillion, or over 100 percent of GDP.
Thus, the debt limit will climb ever higher, accommodating the profligate spending of the President and Congress. As Heritage’s J. D. Foster wrote in January: “The need to raise the debt limit reflects an intention to continue deficit financing” and should signal to Congress that it should urgently reexamine its current policy decisions.
Policies that promote reckless spending—forcing the government to borrow about 40 cents of every dollar it spends, while pushing total debt past 100 percent of gross domestic product (GDP)—are flat-out irresponsible. This upward trajectory makes it crystal clear that the government’s spending priorities have deviated severely from what the Founders laid out in the Constitution.
Equally disappointing, both the existing spending caps and the automatic enforcement in the BCA are less than advertised. The caps contain flaws that may make them all but meaningless. The “sequester” mechanism that would impose spending cuts will not be triggered until January 2013, giving Congress plenty of time to rewrite or abandon it.
As The Heritage Foundation’s David Addington writes, “The overspending problem is still here. Congress must still act to get the federal spending under control, in a thoughtful, intelligent manner that meets the needs of the American people.” It should do this without succumbing to pressure to hike taxes on Americans and further weigh down an already struggling economy. Remember, the problem is Washington’s spending.
Congress should demonstrate that it is serious about tackling the problems of rising spending, debt, and deficits. That means reforms to Medicare, Medicaid, and Social Security; transforming the maddeningly complicated tax system; and reducing the size and scope of government. In Saving the American Dream, The Heritage Foundation offers the kinds of bold solutions needed to put America back on a path toward fiscal sustainability and economic prosperity.
They’re right, though they probably don’t realize the seriousness of that looming crisis.
Here’s what you need to know: America’s fiscal crisis is actually a spending crisis, and that spending crisis is driven by entitlements.
More specifically, the vast majority of the problem is the result of Medicaid, Medicare, and Social Security, programs that are poorly designed and unsustainable.
The Medicaid program imposes high costs while generating poor results. This Center for Freedom and Prosperity Foundation video explains how block grants, such as the one proposed by Congressman Paul Ryan, will save money and improve healthcare by giving states the freedom to innovate and compete.
This Center for Freedom and Prosperity Foundation video explains how a “premium-support” plan would solve Medicare’s fiscal crisis and improve the overall healthcare system. This voucher-based system also would protect seniors from bureaucratic rationing. http://www.freedomandprosperity.org
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. www.freedomandprosperity.org
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Regular readers know I’m fairly gloomy about the future of liberty, but this is one area where there is a glimmer of hope.
The Chairman of the House Budget Committee actually put together a plan that addresses the two biggest problems (Medicare and Medicaid) and the House of Representatives actually adopted the proposal.
The Senate didn’t act, of course, and Obama would veto any good legislation anyhow, so I don’t want to be crazy optimistic. Depending on how things play out politically in the next six years, I’ll say there’s actually a 20 percent chance to save America.
I feel so strongly about the evil practice of running up our national debt. I was so proud of Rep. Todd Rokita who voted against the Budget Control Act of 2011 on August 11, 2011. He made this comment:
For decades now, we have spent too much money on ourselves and have intentionally allowed our kids and grandkids to pay for it. It is intergenerational theft—literally stealing from our best asset, our posterity. The correct course of action, as I have said from the beginning, is to enact permanent and structural reform as the price for raising the debt ceiling. Today’s bill does not do that.
This week the Club for Growth released a study of votes cast in 2011 by the 87 Republicans elected to the House in November 2010. The Club found that “In many cases, the rhetoric of the so-called “Tea Party” freshmen simply didn’t match their records.” Particularly disconcerting is the fact that so many GOP newcomers cast votes against spending cuts.
The study comes on the heels of three telling votes taken last week in the House that should have been slam-dunks for members who possess the slightest regard for limited government and free markets. Alas, only 26 of the 87 members of the “Tea Party class” voted to defund both the Economic Development Administration and the president’s new Advanced Manufacturing Technology Consortia program (see my previous discussion of these votes here) and against reauthorizing the Export-Import Bank (see my colleague Sallie James’s excoriation of that vote here).
One of those Tea Party heroes was Congressman Todd Rokita of Indiana. Last year I posted this below concerning his conservative views and his willingness to vote against the debt ceiling increase:
Rep. Todd Rokita voted against the Budget Control Act of 2011 because it fails to implement the long-term permanent and structural reforms necessary to put the nation back on a fiscally sustainable trajectory:
“I have heard a couple different definitions of leadership today. Let me add mine: leadership is effectively persuading others of the proper course of action. It is also about standing up for those who have no voice. For decades now, we have spent too much money on ourselves and have intentionally allowed our kids and grandkids to pay for it. It is intergenerational theft—literally stealing from our best asset, our posterity. The correct course of action, as I have said from the beginning, is to enact permanent and structural reform as the price for raising the debt ceiling. Today’s bill does not do that.
This legislation is a Washington deal, and it barely begins to address our long-term spending problem. Our debt crisis is driven by mandatory spending on entitlement programs and this plan fails to address such spending. Also, this plan only reduces the future debt we will pile on the backs of our kids from $10 trillion to around $7 trillion over the next decade. It does not begin to reduce our $14 trillion in current debt.
However, this legislation could eventually lead to the best permanent solution, a balanced budget amendment. This is certainly worth fighting for and I will lead on that front. But a vote alone is not worth the $2.5 trillion price tag, again to be paid by future generations. For that price, we should have required passage of a balanced budget amendment for state ratification.
I will continue to fight for a balanced budget amendment, lead our nation to live within its means and tackle out-of-control entitlement spending. It will be a long fight, but the enactment of a balanced budget amendment is the only way to fix the broken system that created this mess, both addressing our long-term fiscal health and giving Americans long-term peace of mind.”
Senator Kay Bailey Hutchison delivered remarks regarding her landmark proposal on entitlement reform, the Defend and Save Social Security Act at the Heritage Foundation’s “Saving Social Security” event. Sen. Hutchison announced that Senator Jon Kyl (R-AZ), member of Biden’s budget working group, has lent his support of her bill as the original cosponsor. At her press conference last week, Sen. Hutchison unveiled her Social Security proposal, and today she reiterated the urgency of putting Social Security on the table in the Biden budget group discussions. Sen. Hutchison sent a letter to Vice President Joe Biden last week urging him to incorporate Social Security reform in the ongoing deficit reduction debates that he is leading.
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Once the baby boomers are finished getting on Social Security (2011 to 2030) there will be nothing left.
There are two serious problems with America’s Social Security system. Almost everyone knows about the first problem, which is that the system is bankrupt, with huge unfunded liabilities of about $30 trillion.
The other crisis is that the system gives workers a lousy level of retirement income compared to the amount of taxes they pay during their working years. Younger workers are particularly disadvantaged, as are African-Americans because of lower life expectancy.
These are critical issues, but perhaps looking at a couple of charts is the best way to illustrate why the Social Security system is inadequate.
This system, which was made universal by the Labor Party beginning in the 1980s, has turned every Australian worker into a capitalist and generated private wealth of nearly 100 percent of GDP. Here’s a chart, based on data from the Australian Prudential Regulation Authority.
Now let’s look at one of the key numbers generated by America’s tax-and-transfer entitlement system. Here’s a chart showing the projected annual cash-flow deficits for the Social Security system, based on the just-released Trustees’ Report.
By the way, the chart shows inflation-adjusted 2012 dollars. The numbers would look far worse if I used the nominal numbers.
The two charts aren’t analogous, of course, but that’s because there’s nothing to compare. The Social Security system has no savings. Indeed, it discourages people from setting aside income.
And Australia’s superannuation system doesn’t have anything akin to America’s unfunded liabilities. The closest thing to an analogy would be the safety net provision guaranteeing a basic pension to people with limited savings (presumably because of a spotty employment record).
So now ask yourself whether Australia should copy America or America should copy Australia? Seems like a no-brainer.
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:
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.
Senator Kay Bailey Hutchison delivered remarks regarding her landmark proposal on entitlement reform, the Defend and Save Social Security Act at the Heritage Foundation’s “Saving Social Security” event. Sen. Hutchison announced that Senator Jon Kyl (R-AZ), member of Biden’s budget working group, has lent his support of her bill as the original cosponsor. At her press conference last week, Sen. Hutchison unveiled her Social Security proposal, and today she reiterated the urgency of putting Social Security on the table in the Biden budget group discussions. Sen. Hutchison sent a letter to Vice President Joe Biden last week urging him to incorporate Social Security reform in the ongoing deficit reduction debates that he is leading.
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If you don’t think that Social Security is in trouble then just consider the fact that the first Baby Boomer just got their first Social Security check at age 65 in 2011 and now we have 19 more years of baby boomers retiring. Also in 2011 Social Security spent $45 billion more in benefits than it took in from its payroll tax.
“There are risks and costs to action. But they are far less than the long-range risks of comfortable inaction.”
—John F. Kennedy
“Lawmakers should not delay addressing the long-run financial challenges facing Social Security and Medicare,” the trustees wrote. “If they take action sooner rather than later, more options and more time will be available to phase in changes so that the public has adequate time to prepare.”
—2012 Social Security trustees report
Social Security’s finances significantly worsened last year, according to the new 2012 trustees report,[1] because of a weakened economy and structural problems with the program. The April 23 report shows that all people who receive Social Security benefits face about a 25 percent benefit cut as soon as 2033—three years earlier than predicted in last year’s report. The program’s long-term deficit is now larger than it was before the 1983 reforms. In order to pay all of its promised benefits, Social Security would require massive annual injections of general revenue tax money in addition to what the program receives from payroll taxes. These additional funds would be needed for the next 75 years and beyond.
Factors Dragging Down Social Security
The poor numbers come from a number of factors, including the continued weakness of the U.S. economy, high energy prices holding down wages, and a significant increase in the number of people who receive benefits from Social Security’s disability program (SSDI). SSDI has its own sub-trust fund that will be exhausted in 2016. While some SSDI costs will be paid from money that would have gone to pay retirement and survivors’ benefits, SSDI recipients face across-the-board benefit reductions in just four years. As this year’s report shows, the need to reform SSDI is as great as the need to fix the rest of the program.
Long-Term Financial Picture Worsens
In net-present-value terms, Social Security owes $11.3 trillion more in benefits than it will receive in taxes. This 2012 number consists of $2.7 trillion to repay the special-issue bonds in the trust fund and $6.5 trillion to pay benefits after the trust fund is exhausted in 2033. This is an increase of $2.2 trillion from last year’s report. This is the largest one-year drop in the program’s finances since 1994.
Net present value is the amount of money that would have to be invested today in order to have enough money on hand to pay deficits in the future. In other words, Congress would have to invest $11.3 trillion today in order to have enough money to pay all of Social Security’s promised benefits through 2086. This money would be in addition to what Social Security receives during those years from its payroll taxes.
The trustees report’s perpetual projection extends beyond the usual 75-year planning horizon. In net-present-value terms, the perpetual projection is $20.5 trillion, including money necessary to repay bonds in the trust fund. Last year’s number was $17.9 trillion.
This means that Social Security’s net-present-value deficit after 2086 is $9.2 trillion. These projections show that the program’s total deficit continues to grow well beyond the 75-year projection period. For that reason, a successful reform would need to eliminate the deficits over the 75-year window and address those that come after that period.
In actuarial terms, Social Security’s long-term financing declined sharply from a 75-year deficit of 2.22 percent of taxable payroll in last year’s report to a deficit of 2.67 percent. This 0.44 percent change resulted mainly from the economy’s continued weakness and the effects of high energy costs.
Social Security Ran Another Deficit Last Year
In 2011, the Old-Age and Survivors Trust Fund, which pays for retirement and survivors’ benefits, took in $698.8 billion, which includes $106.5 billion that came from a paper transaction that credited interest to the trust fund. Excluding the interest, the retirement and survivors program had income of $592.3 billion but paid out $603.8 billion in benefits, leaving a deficit for 2011 of $11.5 billion. Additional deficits were suffered by Social Security’s disability program.
Counting both programs together, in 2011, Social Security spent $45 billion more in benefits than it took in from its payroll tax. This deficit is in addition to a $49 billion gap in 2010 and an expected average annual gap of about $66 billion between 2012 and 2018. These deficits will quickly balloon to alarming proportions. After adjusting for inflation, annual deficits will reach $95 billion in 2020 and $318.7 billion in 2030 before the trust fund runs out in 2033. Now is the time to focus on solutions.
The immediate cash-flow deficits are largely due to the effects of the recession on the program’s finances. The recession increased the amount of benefits paid out by Social Security, as older workers who lost their jobs chose to file for benefits earlier than they might have otherwise. Meanwhile, younger unemployed workers did not pay Social Security taxes, while workers who suffered a drop in their incomes paid lower amounts. However, this year’s projections show that these effects will continue. Higher energy prices are expected to dampen income increases, while the longer-term effects of the recession are likely to hold down the number of hours individuals can work.
Moreover, the condition of Social Security continues to deteriorate in future years so that the overall estimate is further worsened in 2012, when the 75-year financial window shifts to include 2086—a year when Social Security is expected to run a very large deficit.
The Trust Fund Does Not Make Social Security Healthy
The existence of a trust fund does not make Social Security healthy. Although those assets are guaranteed by the full faith and credit of the United States, the bonds it contains must be repaid using general revenue that would otherwise go to other programs. Similarly, the interest that Social Security receives on existing trust fund balances is not spendable income. It merely inflates the numbers in the trust fund and increases the amount that Social Security will eventually receive from general revenue. The only part that counts today is the cash that Social Security receives from the Treasury to cover its annual operating losses.
Many opponents of reform claim that raising payroll taxes by about 2.7 percent (the average percentage difference between revenues and outlays over the 75-year period) would permanently solve Social Security’s problems. The reality, however, is that the program’s future deficits are projected to be both large and growing, so this tax increase would still leave a huge shortfall. Modest changes will not fix the current system.
Delay in Fixing Social Security Will Only Make Matters Even Worse
Congress could have fixed Social Security several years ago but delayed because it feared making the difficult decisions. A further delay in addressing Social Security’s financial problems will only make the situation even worse. The new trustees report is not based on conjecture; it is based on a firm understanding of the economy and the U.S. population. Almost every new taxpayer who will begin a career before 2033 is living today and can be counted. Similarly, all the people who will face approximately 25 percent across-the-board benefit cuts starting in the year 2033 if Congress does nothing to fix the program are alive now, and most of them are paying taxes.
Social Security’s problems are based on demographics that do not change from year to year. The people who will be hurt if nothing is done to fix Social Security are not unknown people of the future: They are the nation’s children and grandchildren of today.
David C. John is Senior Research Fellow in Retirement Security and Financial Institutions in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.
(This blog post first appeared at Cato@Liberty following the release of the 2006 Medicare and Social Security trustees’ reports. I repost it, with updated links and “exhaustion dates” because sadly nothing else has changed.)
Year after year, federal officials speak of the Social Security and Medicare trust funds as if they were real. Yesterday Today, the government announced that the Social Security trust fund will be exhausted in 2040 2033 and that the Medicare hospital insurance trust fund will be exhausted in 2018 2024— projections that the media dutifully reported.
But those dates are meaningless, because there are no assets for these “trust funds” to exhaust. The Bush administration wrote in its FY2007 budget proposal:
These balances are available to finance future benefit payments and other trust fund expenditures—but only in a bookkeeping sense. These funds…are not assets…that can be drawn down in the future to fund benefits…When trust fund holdings are redeemed to pay benefits, Treasury will have to finance the expenditure in the same way as any other Federal expenditure: out of current receipts, by borrowing from the public, or by reducing benefits or other expenditures. The existence of large trust fund balances, therefore, does not, by itself, increase the Government’s ability to pay benefits.
This is similar to language in the Clinton administration’s FY2000 budget, which noted that the size of the trust fund “does not…have any impact on the Government’s ability to pay benefits” (emphasis added).
I offer the following proposition:
If the government knows that there are no assets in the Social Security and Medicare “trust funds,” and yet projects the interest earned on those non-assets and the date on which those non-assets will be exhausted, then the government is lying.
If that’s the case, then these annual trustees reports constitute an institutionalized, ritualistic lie. Also ritualistic is the media’s uncritical repetition of the lie.
Social Security is a Ponzi Scheme but Blake who is a blogger said I was off base. Ark Times reader says Social Security is not Ponzi Scheme Social Security Disaster Walter E. Williams Columnist, Townhall.com Politicians who are principled enough to point out the fraud of Social Security, referring to it as a lie and […]
We got to do something soon about Social Security. The Case for Social Security Personal Accounts Posted by Daniel J. Mitchell There are two crises facing Social Security. First the program has a gigantic unfunded liability, largely caused by demographics. Second, the program is a very bad deal for younger workers, making them pay record […]
Senator Obama’s Social Security Tax Plan Uploaded by afq2007 on Jul 23, 2008 In addition to several other tax increases, Senator Barack Obama wants to increase the Social Security payroll tax burden by imposing the tax on income above $250,000. This would be a sharp departure from current law, which only requires that the tax […]
Saving Social Security with Personal Retirement Accounts Uploaded by afq2007 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 […]
“Saving the American Dream: The Heritage Plan to Fix the Debt, Cut Spending, and Restore Prosperity,” Heritage Foundation, May 10, 2011 by Stuart Butler, Ph.D. , Alison Acosta Fraser and William Beach is one of the finest papers I have ever read. Over the next few days I will post portions of this paper, but […]
Is Social Security a Ponzi Scheme? I just started a series on this subject. In this article below you will see where the name “Ponzi scheme” came from and if it should be applied to the Social Security System. Ponzi! Ponzi! Ponzi! 9/14/2011 | Email John Stossel | Columnist’s Archive Ponzi! Ponzi! Ponzi! There, I […]
Uploaded by LibertyPen on Jan 8, 2009 Professor Williams explains what’s ahead for Social Security Dan Mitchell on Social Security I have said that Social Security is a Ponzi scheme and sometimes you will hear someone in the public say the same thing. Yes, It Is a Ponzi Scheme by Michael D. Tanner Michael Tanner […]
They’re right, though they probably don’t realize the seriousness of that looming crisis.
Here’s what you need to know: America’s fiscal crisis is actually a spending crisis, and that spending crisis is driven by entitlements.
More specifically, the vast majority of the problem is the result of Medicaid, Medicare, and Social Security, programs that are poorly designed and unsustainable.
The Medicaid program imposes high costs while generating poor results. This Center for Freedom and Prosperity Foundation video explains how block grants, such as the one proposed by Congressman Paul Ryan, will save money and improve healthcare by giving states the freedom to innovate and compete.
This Center for Freedom and Prosperity Foundation video explains how a “premium-support” plan would solve Medicare’s fiscal crisis and improve the overall healthcare system. This voucher-based system also would protect seniors from bureaucratic rationing. http://www.freedomandprosperity.org
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. www.freedomandprosperity.org
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Regular readers know I’m fairly gloomy about the future of liberty, but this is one area where there is a glimmer of hope.
The Chairman of the House Budget Committee actually put together a plan that addresses the two biggest problems (Medicare and Medicaid) and the House of Representatives actually adopted the proposal.
The Senate didn’t act, of course, and Obama would veto any good legislation anyhow, so I don’t want to be crazy optimistic. Depending on how things play out politically in the next six years, I’ll say there’s actually a 20 percent chance to save America.
Ken Aden is running for Congress against Steve Womack in Arkansas’ third district. He believes Social Security is not a Ponzi Scheme and those who want to cut it are criminals. I was reading on the leftwing blog “Blue Arkansas” about Ken Alden and I got this video clip which is below:
It is my view that the wise thing would be to allow people to invest in personal retirement funds with a portion of the money that is going to Social Security now.
Saving Social Security with Personal Retirement Accounts
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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Governor Rick Perry got in trouble for calling Social Security a Ponzi scheme and I totally agree with that. This is a series of articles that look at this issue.
Governor Rick Perry of Texas is being attacked by two rivals in the GOP presidential race. His sin, if you can believe it, is that he told the truth (as acknowledged by everyone from Paul Krugman to Milton Friedman) about Social Security being a Ponzi scheme.
Mitt Romney doubled down on his attack against Texas Gov. Rick Perry this afternoon, warning in an interview with Sean Hannity that his critique of Social Security amounted to “terrible politics” that would cost Republicans the election. Romney’s decision to pile on suggests that he’s willing to play the “granny card” against Perry if it will help him get elected, a tactic more becoming of the likes of DNC chairwoman Debbie Wasserman Schultz than a potential Republican nominee.
…another Republican rival, Michele Bachmann, is preparing to hit Perry on the same issue. “Bernie Madoff deals with Ponzi schemes, not the grandparents of America,” says a Bachmann adviser. “Clearly she feels differently about the value of Social Security than Gov. Perry does. She believes Social Security needs to be saved, that it’s an important safety net for Americans who have paid into it all their lives.” … “She strongly disagrees with his position on that…”
Shame on Romney and Bachmann. With an inflation-adjusted long-run shortfall of about $28 trillion, Social Security is a Ponzi scheme on steroids.
But as I explain in this video, that’s just part of the problem. The program also is a terrible deal for workers, particularly young people and minorities.
Here’s what’s so frustrating. Romney and Bachmann almost certainly understand that Social Security is actuarially bankrupt. And they probably realize that personal retirement accounts are the only long-run answer.
But they’re letting political ambition lure them into saying things that they know are not true. Why? Because they think Perry will lose votes and they can improve their respective chances of getting the GOP nomination.
Sounds like a smart approach, assuming truth and morality don’t matter.
But here’s what’s so ironic. The Romney and Bachmann strategy is only astute if Social Security is sacrosanct and personal accounts are political poison.
I’m not a political scientist, so maybe something has changed, but I wouldn’t be surprised if Perry benefited from the left-wing demagoguery being utilized by Romney and Bachmann.
U.S. Senator Rand Paul Speaks at Cato University 2011 Uploaded by catoinstitutevideo on Sep 6, 2011 http://www.cato.org/multimedia/subscribe.php U.S. Senator Rand Paul (R-KY) spoke at this year’s Cato University on everything from national healthcare and the commerce clause to spending cuts and social security reform. Cato University is the Cato Institute’s premier educational event of the […]
Dan Mitchell on Social Security Uploaded by catoinstitutevideo on Aug 19, 2010 Discussing the troubles facing social security, with Mark Walsh, Left Jab host and Dan Mitchell, Cato Institute. Social Security is a Ponzi scheme (Part 4) Governor Rick Perry got in trouble for calling Social Security a Ponzi scheme and I totally agree with […]
Uploaded by YAFTV on Aug 19, 2009 Nobel Laureate Dr. Milton Friedman discusses the principles of Ronald Reagan during this talk for students at Young America’s Foundation’s 25th annual National Conservative Student Conference MILTON FRIEDMAN ON RONALD REAGAN In Friday’s WSJ, Milton Friedman reflectedon Ronald Reagan’s legacy. (The link should work for a few more […]
Milton Friedman – The Social Security Myth Uploaded by LibertyPen on Mar 5, 2010 Using Social Security as his prime example, Professor Friedman explodes the myth that the major expansions in government resulted from popular demand. In a speech delivered more than 30 years ago, he directly relates this dynamic to today’s health care debate. […]
I really like Rick Perry because he was right when he called Social Security a “Ponzi Scheme” which it is. How did he do in the last debate? You be the judge by watching his response above. Rick Perry’s Moment Posted by Roger Pilon Last night POLITICO Arena asked: Who won the Reagan debate? My […]
Herman Cain’s 9-9-9 plan did steal the show at the Republican debate of October 11, 2011. Take a look at this article below: The Republican presidential debate in Hanover, N.H. (AP) There was one clear winner from Tuesday’s Republican presidential debate, based on the simple metrics of name recognition: businessman Herman Cain’s “9-9-9 Plan.” Virtually […]
Sen. Hutchison Speaks at the Heritage Foundation Forum on Saving Social Security Uploaded by SenatorHutchison on Jun 21, 2011 Senator Kay Bailey Hutchison delivered remarks regarding her landmark proposal on entitlement reform, the Defend and Save Social Security Act at the Heritage Foundation’s “Saving Social Security” event. Sen. Hutchison announced that Senator Jon Kyl (R-AZ), […]
IOUSA Solutions: Part 1 of 5 Uploaded by LibertyPen on Jan 8, 2009 Professor Williams explains what’s ahead for Social Security Governor Rick Perry got in trouble for calling Social Security a Ponzi scheme and I totally agree with that. This is a series of articles that look at this issue. The Case for (Carve-Out) […]
Social Security is a Ponzi scheme (Part 7) IOUSA Solutions: Part 2 of 5 Governor Rick Perry got in trouble for calling Social Security a Ponzi scheme and I totally agree with that. This is a series of articles that look at this issue. Personal Accounts Build More Than Just Assets by Andrew Biggs This article […]
Further Reforms to Modernize Social Security — Saving the American Dream Uploaded by HeritageFoundation on May 24, 2011 http://www.savingthedream.org | Currently deep in debt, America’s Social Security program doesn’t look very secure. Today there is a new plan to get it back on track. David John, Senior Research Fellow in Retirement Security at The Heritage […]
Republicans need to tackle runaway entitlement spending Uploaded by NatlTaxpayersUnion on Feb 15, 2011 Dan Mitchell, Senior Fellow at the Cato Institute, speaks at Moving Forward on Entitlements: Practical Steps to Reform, NTUF’s entitlement reform event at CPAC, on Feb. 11, 2011. __________________________ I am disappointed in some of the Republicans who do not want […]
I really like Ron Paul and Rick Perry. Only three Republican presidential candidates are worth any money _ campaign money, that is. Mitt Romney, Rick Perry and Ron Paul have banked millions. But the other GOP candidates are struggling or broke, putting their candidacies in question four months before the first nominating contests take place. […]
Rick Perry says Social Security is a Ponzi scheme Rick Perry and Mitt Romney went after each other at the debate over this term “Ponzi scheme.” Over and over Rick Perry has said that Social Security is a Ponzi scheme and I agree with him. John Brummett asserted,”Rick Perry was last week’s savior, but then he […]
IOUSA Solutions: Part 3 of 5 Uploaded by IOUSAtheMovie on Aug 25, 2010 The award-winning documentary I.O.U.S.A. opened up America’s eyes to the consequences of our nation’s debt and the need for our government to show more fiscal responsibility. Now that more Americans and elected officials are aware of our fiscal challenges, the producers of […]
Social Security is a Ponzi scheme (Part 4) Governor Rick Perry got in trouble for calling Social Security a Ponzi scheme and I totally agree with that. This is a series of articles that look at this issue. Trains, Pensions, and Economic Freedom by Timothy B. Lee This article appeared on Forbes.com on August 17, 2011. recently […]
Social Security is a Ponzi scheme (Part 3) Governor Rick Perry got in trouble for calling Social Security a Ponzi scheme and I totally agree with that. This is a series of articles that look at this issue. Personal Accounts and the Savings Rate by Timothy B. Lee This article appeared on Forbes.com on September 11, 2011 […]
Rick Perry and Mitt Romney went after each other at the debate over this term “Ponzi scheme.” Janet M. LaRue Romney’s Ponzi Phobia 9/19/2011 When it comes to Social Security, Republicans should stop treating seniors like the feeble-minded demographic portrayed in commercials written by 13-year-olds on Madison Avenue. It’s like the home security commercial […]
Social Security is a Ponzi scheme (Part 2) John Stossel – Government’s Ponzi Scheme Uploaded by LibertyPen on Apr 21, 2010 A look at the Social Security system. By contrast, Bernie Madoff seems like a shoplifter. http://www.LibertyPen.com Uploaded by LibertyPen on Jan 8, 2009 Professor Williams explains what’s ahead for Social Security ______________________________ Governor Rick […]
Is Social Security a Ponzi Scheme? I just started a series on this subject. In this article below you will see where the name “Ponzi scheme” came from and if it should be applied to the Social Security System. Ponzi! Ponzi! Ponzi! 9/14/2011 | Email John Stossel | Columnist’s Archive Ponzi! Ponzi! Ponzi! There, I […]
Social Security is a Ponzi scheme (Part 1) Governor Rick Perry got in trouble for calling Social Security a Ponzi scheme and I totally agree with that. Max Brantley wants to keep insisting that this will be Perry’s downfall but think that truth will win out this time around. This is a series of articles […]
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