Today we hear quite a lot about the U.S. debt ceiling or debt limit. So in this article I try to draw upon Internet news, political news, and economic news for sources to examine this situation. Before deciding about the politics of the debt limit, one must understand it – what it is, from where it came, and how Congress uses it.
Debt Ceiling ORIGIN, Composition, and Purpose
A statutory ceiling on federal debt was established in 1917 under the ‘Second Liberty Bond Act.’
The debt is the total outstanding liability owed by the US Federal Government to:
- U.S. Citizens
- Corporations
- Foreign Governments
The debt can be classified into two general categories:
- Public accounts, consisting of treasury bills, bonds, and notes
- Government accounts, owed by the federal government to itself, consisting primarily of Social Security and similar trust funds
The debt ceiling’s original purpose was an instrument established by Congress to limit the Treasury Department’s ability to borrow, but it has increasingly lost its effectiveness. It has been waived ten times in the last decade. And a vote to increase the debt limit has often been tied to “must pass” spending increases.
Debt Ceiling MYTHS
Here are some myths about the debt ceiling:
- Failure to pass a debt ceiling increase means defaulting on our debts – Refusing to raise the debt limit does not mean defaulting on our debts. The U.S. Treasury currently takes in more than enough revenue to pay both the interest and the principal on the debts we currently owe. The government would have to prioritize its expenditures – for example, sending out checks for the troops’ pay and Social Security first.
- Failure to pass the debt-ceiling increase on time would be unprecedented – Both the administration and the media sound as if we are at the edge of economic Armageddon if we have not raised the debt ceiling. That’s not quite so.
- It’s always a “clean bill” – The administration is insisting that it would be shocking for Congress to add any conditions to the debt-ceiling increase. But such conditions are far from unprecedented.
- This is not about future spending – The administration insists that raising the debt ceiling is just about paying for spending that’s already occurred. Depending on how high it is raised, it may be about paying only for spending that is already authorized – or much more. Authorized and spent are not the same thing.
- Only Republicans oppose raising the debt ceiling – The media and the administration want to turn this into a partisan fight. The ongoing narrative is that radical Republicans in thrall to the Tea Party want to wreck our finances, while Democrats responsibly want to pay our bills.
Debt Ceiling SCARES
Here are some scares that the administration and MSM try to promulgate:
- Treasury Secretary Timothy Geithner has warned that failing to lift the debt ceiling would have “unthinkable” consequences.
- Timothy Geithner said, [not raising the debt ceiling will] “shake the basic foundation of the entire global financial system.”
- Joshua Green, a senior editor at The Atlantic, wrote, “If Congress fails to raise the federal debt limit, the government will default, which all parties agree would have catastrophic effects on the economy.”
- The Associated Press reported that if “borrowing slams up against the current debt limit ceiling of $14.3 trillion and Congress fails to raise it, ‘the resulting’ damage would ripple across the entire economy, eventually affecting nearly every American.”
- When Democratic Senator Mark Warner of Virginia asked at a hearing what would happen “if we were to default and not raise that debt ceiling,” Federal Reserve Chairman Ben Bernanke replied ominously: “It would be an extremely dangerous and very likely recovery-ending event.”
When/If the Debt Ceiling IS raised, what happens?
In a release this afternoon (2 Jun 11), the Moody’s ratings agency said it would put the U.S. credit rating under review if Congress and the Obama administration don’t make progress on increasing the debt limit. “If the debt limit is raised and default avoided, the Aaa rating will be maintained. However, the rating outlook will depend on the outcome of negotiations on deficit reduction.”
The United States is at risk of having its pristine credit rating lowered if politicians in Washington cannot agree on a plan to bring down the nation’s deficits over the long term, ratings agency Standard & Poor’s said Monday (18 Apr 11). This means that there is a one-in-three chance that S&P could downgrade the nation’s “AAA” credit rating within two years. S&P said its outlook change was based on the growth of the United States’ deficits over the last several years as a percentage of gross domestic product, the broadest measure of economic activity.
Back in April, Standard & Poor’s threatened to reduce America’s top-shelf credit rating. Now another investment agency, Moody’s, has issued a similar warning. In fact, Moody’s is more urgent. S&P spoke of a one-in-three chance that our credit rating would take a hit within the next two years. Moody’s is talking about downgrading our AAA credit rating within the next few weeks. There is also a difference in the stated reasons both agencies gave for issuing their warnings. S&P was explicitly worried about our mounting national debt, while Moody’s is worried that we won’t make it bigger. This is an important warning shot fired by the credit market. Standard & Poor’s used a rifle, while Moody’s used a pistol. Raising the debt ceiling without budget reforms in place means we would dodge the Moody’s pistol shot and run smack into the S&P rifle bullet, which was fired to warn us of much more serious, long-term danger.
When/If the Debt Ceiling is NOT raised, what happens?
The United States has hit its debt limit on 16 May, 2011, and the world hasn’t come to a screeching end, the sky isn’t falling, and no one is really talking about it. The Obama Administration and Geithner have continually warned about a “double-dip recession,” yet, America is still in a recession and hasn’t gotten out of it. “Recovery Summer,” in fact was the opposite, the economy hasn’t recovered.
If Congress fails to raise the debt limit by August 2, the Treasury has only two options: It can default on its debt – meaning, stop paying its creditors around the world – or continue to pay creditors but halt any other federal spending above what the government collects in taxes. In effect, that would mean an overnight spending cut of about 40 percent. Here are six consequences if the Treasury is forced to choose one of those options:
- Cut $125 Billion Per Month – The federal government must borrow an additional $125 billion each month to finance all of its commitments. If the Treasury chooses to continue to pay creditors but stop all other federal spending, the government will have to begin reducing its spending by $125 billion every 30 days.
- Treasury Bonds Collapse – If the government defaults on its debt, economists say that prices for Treasury bonds would collapse and interest rates would probably soar to record highs.
- Cut Medicare and Social Security – To reduce spending by $125 billion a month, the government would have to make deep cuts to the two giant entitlement programs.
- Stock Market Plunge – Wall Street generally agrees with Geithner that it would be a disaster if the U.S. defaulted on its debt.
- Government Furloughs or Mass Layoffs – The federal government would most likely turn to furloughs or mass layoffs to immediately cut spending.
- Sky-High Mortgage and Interest Rates – If the government defaults, interest rates on mortgages would shoot up.
Dilemma and Debate
Current spending growth is unsustainable. The Government Accountability Office estimates entitlement spending on Social Security, Medicare and Medicaid alone will amount to more than 20 percent of GDP by 2080, if current policies are unchanged. Excessive government spending and high tax rates reduce economic freedom and thus the range of choices open to individuals. When government runs large deficits and adds to the national debt, private investment can be crowded out. Today, the gross federal debt is approaching 100 percent of GDP. In addition, unfunded liabilities of Social Security and Medicare total more than $100 trillion. Studies by leading economists Kenneth Rogoff and Carmen Reinhart have shown that when sovereign debt exceeds 90 percent of GDP, real growth tends to slow.
China, and others holding U.S. sovereign debt, will suffer huge losses if the United States cannot get its fiscal house in order and return to constitutionally limited government. By undervaluing the yuan against the dollar, China has accumulated more than $3 trillion in foreign exchange reserves, with a substantial amount invested in U.S. government securities.
For most of America’s history, adherence to the framers’ “Constitution of Liberty” did limit government spending, and the private sector flourished. Whether that ethos of liberty returns will determine the future path of U.S. fiscal and monetary policies.
Two of the biggest companies to warn of fallout from the debt-ceiling fight are life-insurance giant MetLife and private-equity powerhouse KKR. MetLife is brief in its warning, which appears in the quarterly report it filed May 10. It’s wrapped into a broader “risk factor” disclosure about “difficult conditions in the global capital markets and the economy,” and warns of market and economic volatility more generally. KKR is more specific. With its quarterly report filed on May 5, it added an entirely new section to its risk factors, warning of potential harm from a “failure or the perceived risk of a failure to raise the statutory debt limit of the United States…”
Financial firms aren’t the only ones worried about the debt ceiling. Hansen Medical, a small maker of medical robots in Mountain View, Calif., warns about the debt ceiling debate in its May 10 quarterly report. Seattle Genetics, a biotech company focusing on cancer and autoimmune disorders, warns of the debt ceiling debate in its May 6 quarterly report.
The debt ceiling is NOT the problem
The Treasury is out of money, but not out of games. Now that it has finally been made clear that in order to accommodate the debt ceiling by adding marketable debt, the Treasury has no choice but to literally plunder retirement accounts, we now know that in order to fit in the just announced $110 billion in new bond issuance over the next week, Tim Geithner will have to reduce US retirement funding (the bulk of which, the Social Security Trust Fund already lost $1.1 trillion in the past year) by at least $45 billion.
It should be noted that the debt ceiling is not the problem. Raising it solves the duplicity of Treasury behavior but doesn’t resolve the fact that we are caught in a debt death spiral that will result in the collapse of the dollar, producing hyperinflation and the likely collapse of our government.
Congress must accomplish three things to put the United States on a path to financial responsibility: (1) cut current spending, (2) restrict future spending, and (3) fix the budget process.
- Responsibility for the Debt Lies with Congress – When the Constitutional Convention met in Philadelphia in May 1787, the delegates who attended were well aware of the problems of the national debt, the state debts, and the poor financial reputation of the government. The Framers of the Constitution sought to reassure lenders that, even though it might change its form of government, the United States would honor its debt. The Framers included in the Constitution several other provisions that fixed responsibility for the national debt on the Congress of the United States. Legislative powers fix upon Congress the responsibility for the national debt.
- Congress Let Debt Get Out of Control – To spend more money than you have, you borrow, creating debt. Congress has grossly overspent beyond its means, creating a huge national debt. From a debt of $79 million when the Revolutionary War ended, the United States has racked up a debt of nearly $14.294 trillion. To put today’s debt in perspective, consider:
- It would take essentially everything that Americans produced (GDP) in all of last year to pay off the existing national debt of $14.294 trillion.
- The debt when the American Revolution ended was about $34 per American, which in today’s, inflation-adjusted dollars would be about $653 per American. Today, the debt owed by each American is over $45,000, nearly 68 times the size of the debt when the American Revolution ended.
- Cut Current Spending, Restrict Future Spending, and Fix the Budget Process – As federal borrowing approaches the current debt limit, Congress must reach agreement to accomplish three things to put the country on a path to financial responsibility.
- Cut Current Spending – In making cuts in current spending, Congress should emphasize cuts in continuing programs because, given the budget practices of government that look to existing budgets as baselines for setting future budgets, the current cuts likely will result in related reductions in future spending.
- Restrict Future Spending – In designing effective statutory restrictions on future spending, Congress should seek to reduce spending, with a reasonable transition period, to not more than the modern historical level of federal revenues.
- Fix the Congressional Budget Process – To do this, Congress should:
- amend existing federal laws that provide permanent or indefinite appropriations for federal agencies or programs (including entitlement programs), so as to retrieve congressional control of spending for those agencies and programs.
- estimate and publish the projected cost over 75 years of any proposed policy or funding level for each significant federal program.
- require a calculation of cost of a proposal that takes account of that response information available to Congress when it decides whether to pursue the actions.
Default on the debt does not occur when government borrowing reaches the debt limit. When the government reaches the debt limit and cannot borrow more money to pay its bills coming due, it must, as a practical matter in the absence of guidance set by law, establish priorities in paying the bills.
Congress should proceed with an orderly change of course in federal spending – taking action to cut current spending, restrict future spending, and improve federal budgeting – and at the same time it addresses the debt limit.
Failing to Control the Spending that Causes Debt, Congress Has Raised the Debt Limit Regularly – Early in the past century Congress enacted the first aggregate public debt limit, on federal bonds. Throughout the 20th century and into the present century, Congress has from time to time raised the debt limit and also has authorized the government temporarily to exceed the debt limit.
Fifteen weeks after the Japanese attacks on the U.S. territories of Hawaii, Guam, Wake Island, and the Philippines, Congress doubled the debt limit. Following the Japanese surrender on September 2, 1945, Congress took up the debt limit again -to cut it to $275 billion on June 26, 1946. Congress left the debt limit of $275 billion in place, but several times enacted legislation that temporarily authorized the government to borrow money in excess of the debt limit. Finally, on September 2, 1958, Congress raised the debt limit to $283 billion.
Since then Congress has raised the debt ceiling 30 times, and it now stands at $14.294 trillion.
WARNINGS from Europe – What could happen
- The European Debt Crisis – The “Vienna initiative” was a plan, drawn up in 2009, that halted the rot of financial contagion spreading through central and eastern Europe. It is now being discussed as a possible model for resolving Greece’s sovereign-debt crisis. The need to come up with a new plan for Greece is mounting. On May 20th, 2011, Fitch, a ratings agency, cut the country’s debt rating by another three notches. Yields on Greek ten-year bonds this week reached 16.8%, more than twice what they were a year ago.
- Greece’s Monetary Policy – Greece, struggling to avoid default on its massive national debt, obviously is in bad shape. This year it will run a budget deficit equal to 9.5 percent of its GDP. That actually is a significant improvement over last year, when its deficit topped 15 percent of GDP. Greece also provides an object lesson to those who believe that budget deficits are the result of low taxes. Greek taxes run as high as 40 percent on incomes above €70,000 per year. It’s not low taxes that caused the Greek crisis, but high spending. (Sound familiar?)
- Greek Coup? – Despite last year’s 110 billion euro Greece bailout there remains serious concern that the periphery EU nation will be unable to continue its debt repayments. Due to the increasing severity of the problem, and the ongoing resistance to additional support, the Central Intelligence Agency has now issued a report warning on how worsening Greek unrest could bring rise to even a military coup. A number of European Union countries including Germany, Finland, and the Netherlands have lost already lost interest in and support for extending any further bailout funds to Greece as its austerity measures continue to flounder.
- EU Safety Net Frays – “There can be no more illusions about getting help from the state,” said Ms. Gema Díaz, at home on a recent evening in a charmless, government owned complex on the outskirts of the city. Hers is a story repeated across Europe, fueling the protests and strikes that have tied up airports, blocked highways and, in Greece, even turned deadly. For millions of Europeans, modest salaries and high taxes have been offset by the benefits of their cherished social model – a cradle-to-grave safety net which, in the recent boom years, seemed to grow more generous all the time. Now, governments across Europe say they have little choice but to pull back on social benefits, at least for now.
- Greece, Ireland, Portugal Bailouts – It was a year ago that the European Union produced its big bazooka to quell the euro area’s sovereign-debt crisis: a €750 billion fund to safeguard the single currency, following within days of the €110 billion bail-out of Greece. It did not work. Ireland has since been bailed out, and a rescue of Portugal is in the works.
- Debt Ceiling Warnings from Europe – As the debate over America’s debt burden intensifies, Europe’s social and economic problems provide a warning to the United States. For over a decade, continental Europe has witnessed political and economic decline, culminating in a sovereign debt crisis which has brought the single European currency to its knees. What are the lessons from Europe on where the spiraling debt crisis will end? The Government in Britain has chosen to swallow the bitter pills of austerity cuts and deficit reduction. The Conservative-led coalition has pledged to eliminate Britain’s structural deficit by 2015, as well as to cut 490,000 public sector jobs. Sweden, which is also outside the Eurozone, has successfully steered its economy through this crisis. Having learned valuable lessons in the 1990s, Sweden’s center-right government has chosen to incentivize work and maintain budget discipline, which has led to economic growth of 4.5 percent in 2010.
Conclusion
Let us Americans analyze these different European approaches and what lessons they can offer America’s next presidential candidates. Politicians (of both parties) have only to look to Europe for a free, painless lesson about what awaits this country. But, as we (taxpayers) know, politicians tend to cling to their beliefs, even in the face of contrary evidence (Reid and Schumer come to mind).
But that’s just my opinion.
Great Britain’s credit rating at risk:
http://gantdaily.com/2011/07/26/experts-warn-britain-of-credit-downgrade
Larry, INRE means testing… CEPR did a study on this already, which Business Insider summarizes. Considering that such a small percentage of those collecting benefits are in over $40K non SS income bracket, and the costs to apply such a testing, it would be worthless savings to the taxpayer at best.
But it sure would add lots more government jobs to the mix.. and therefore the taxpayer debt for added payroll and federal pensions… not included in the CEPR mix… would make it a losing proposition.
As far as any “caps” go, there is already a maximum amount of income that is taxable, and thereby a finite amount that even the most prolific of earners over the 35 year period could draw. And if someone did 35 years of that max taxable, why shouldn’t they be deserving of that benefit back upon retirement?
Talk about welching on a deal… LOL
MATA , YES IT make more sense, I know that I was quite radical on it,
I learned that he spent a lot of money abroad on aid so call, the last one was with HILLARY
and the deal they made 100,000 exchange with the Muslims it was for some kind of agriculture learning on their part it was not well public and not very clearly define,
the other was in BRESIL THE ONE MILLIARD GIVEN TO THEM TO BUILT SOME KIND OF STRUCTURE FOR THEIR NEXT OLYMPIC, IN THERE, AND HE HAD HIS BANKER WITH HIM AS IT WAS SAID IN MEDIA.
JUST SOME OF HIS SPENDING SPREE.
BYE
@MataHarley: #54,
“Oh yes.. for those panicking about the downgrade in credit rating. May I remind everyone there are few nations in better shape? “
A few months ago I heard a radio interview with a couple in France – both were teachers and were about to retire. They were retiring with Pensions of approximately 64+% of their recent past incomes. They owned their home, and if I recall correctly also owned a second home outright which they were renting out. That % of income is enormous and is one of the principal reasons Europe is in serious trouble, and isn’t about to recover.
Somewhere during the past half century, our society was lulled into believing that those relatively small deductions we were paying into pensions plans, at least for those of us who weren’t entrepreneurs, would support us with some degree of comfort in retirement.
I would bet that almost None did the calculations, and wondered how that would ever be possible. It’s likely that most of us assumed that genius fund managers would make the funds grow, and of course, there was the other assumption that a new crop of young earners would contribute and everything would work out ok.
Somewhere during the past 1/3 century, it became ok for those funds to be replaced with IOUs, . . . surely investment geniuses could make more money, and corporate CEOs could make better use of those funds – building, growing and acquiring. This was all insanity. Our perceptions were skewed.
The problem can’t be fixed. Government won’t find the funds to make good on those IOUs. Allowing a flooding with new immigrants to grow the workforce won’t do it. North of the 49th parallel Canadians are opening the doors wide thinking this will solve long term financial problems, and the reality is that the welfare system is drowning underwater, and possibly worse, and it’s resulting in an overburdened healthcare system which is breaking. The government doesn’t know any better but to raise taxes.
America is beginning to understand that the only real answer will come from a strong, decisive leader who will make the most difficult cuts in all areas of federal government spending. Only a principled leader will make the toughest decisions, rather than the politically expedient ones, and he/she will be able to “sell” those plans to the taxpayers. Such leader will also spend time promoting the unequalled American entrepreneurialism.
@James Raider, don’t you find it ironic we can get lectured by Congress and the WH about being irresponsible, indebted borrowers, leveraging our homes with credit to consume… and yet their leveraging of a ponzi scheme trust fund is immune from criticism? And that includes the French couple, living quite well with a bad financial investment by the French government – and all at the expense of the upcoming generations.
Ponzi schemes never work… doesn’t matter in what language they are constructed, eh?
Right on on all you said. All I can humbly add is “ditto, dude…” :0)
PS: Oh yes… let me know when one of the brave leaders, willing to do the hard tasks, shows up. Ain’t on the radar now, from what I can see. It’s still Bozo vs Emmett the Clown in all aspects
RETIRE5, YOU ARE CORRECT, IN WHAT YOU’RE DEBATING,
WE JUST HAVE TO ADJUST WITH ANYONE CARACTER,
WHICH IS CORRECT BUT BEING CHALLENGE ON ISSUE THAT ARE SO IMPORTANT TO DEBATE, AND NOT JUST THROW THE ANSWER AS LABELING, WHERE WE KNOW IS NOT THE INTENT OF THE COMMENTER,
A DEBATE HAS CONSEQUENCE, AND WHEN IT’S FUELING THERE IS WAYS TO TURN ON THE AIR CONDITION. NOT LIGHTING UP ANOTHER FIRE.
WE JUST GET SO INTENSE SOMETIMES, AND THAT IS THE POPULATION OF FLOPPING ACES HERE,
THIS CROWD SHOULD BE RUNNING THE AMERICA TOTALLY ALONE, THEY KNOW EXACTLY HOW TO USE THEIR BRAIN. AND THEY HAVE A PASSIONATE LOVE FOR THIS COUNTRY, SOME HAVE SCARS TO SHOW IT TOO,
AND THEY ARE THE PROUD CONSERVATIVES WHOM ARE THE MOST TOLERANT AND GENEROUS AMERICANS. THEY ALSO KNOW WHEN TO TALK AND WIN THEIR DEBATE BETTER THAN THE DEMOCRATS
@ johngalt
I know you know he won’t listen to this. He’s just going to move on to the next talking point. He believes people should be taxed so their money can go to others in the form of Earned Income Tax Credits, because the people being taxed don’t know how to spend their money properly.
By the way, I work in telecommunications. Everyone I know in telecommunications is hiring. We even started an apprentice program for those with no experience. We called the local DOL and had them send people our way. You know what 99% of the applicants wanted? They wanted us to sign the paper saying they applied for the job. They didn’t want the job, they just wanted their benefits.
John, Larry, Rich…this is the year Florida State rises from the ashes of Bobby Bowden. Rich? Notre Dame? Do they still have a football program? 😉
@Aqua: Aqua, Re: comment #61 As a graduate of FSU, I could not agree with you more. This will be Jimbo Smith’s year!
“John, Larry, Rich…this is the year Florida State rises from the ashes of Bobby Bowden. Rich? Notre Dame? Do they still have a football program?”
Aqua 1993 “Game of the Century” Undefeated #1 Charlie Ward- led Seminoles beaten in South Bend 31-24.by #2 N.D. Classic Pre season 2011 N.D. ranked above F.S.U. and Michigan. Enjoy the season.
@rich wheeler:
It seems like there might be enough CFB fans here that ongoing discussions can be made about the subject during the season. It would be an interesting change of pace considering guys like Larry and I, normally on different sides of a political debate, would suddenly be on the same side, eh?
@MataHarley:
Regarding government ideas that are not worth the cost to implement:
We use two huge bridges that take us over the Port of Long Beach, then the Port of Los Angeles into Palos Verdes Penninusla. (SP?)
Years ago we had to pay a toll at a set of 8 manned booths to go one way (the other way was free).
Then it was realized that, even with only two toll takers the money wasn’t covering the costs of the employees!
The booths were torn down and the bridges are free both ways.
NOW, money being tight, there is a plan to put in automated toll collectors.
It is too bad when wealthy Americans go ahead and accept their Social Security checks.
I’m friends with the wife of a millionaire who is a real tightwad.
He brags about collecting Social Security even as he readies his yacht for its next race.
There simply are not enough workers on the ground to support all of the Social Security checks that the entire baby boom generation will want to collect.
She secretly does charitable giving so he doesn’t get mad at her.
There are so many things that do not make sense when it comes to money and Congress.
How do they manage to spend money without even having a budget directing where money is to be spent?
How insane is baseline budgeting, anyway? And why is this not a major topic in this debt discussion?
Why is it so impossible to (1) select a year (like 2006, 2008) and go back to that budget; or (2) to simply mandate an across the board 10% cut in every single program? Repeat the next year as well.
Obviously, social security recipients, and those 70-80 million who get checks from the government would suffer. However, this would be at least a shared sacrifice, which those who live off the government have not yet shared with the rest of us.
Gary Kukis, yes that would be the first step to have the recipients of welfare checks participate into this NATION’S ECONOMY, they would whine but feel the pride of being a part of helping the burden of debts,
I always come back in the idea SMORGASBORD GAVE US IN ONE COMMENT SOME WHILE AGO.
THIS TO IMPLEMENT A TAX IN ALL YOU BUY REGARDLESS OF ANYONE ‘S STANDARD,
THAT IS THE FAIREST TAX YOU CAN PUT ON AND THE POORS WOULD DO THEIR SHARE OF IT ,AND ALSO THE UNION’S EMPLOYEE IN ANY GOVERNMENT JOBS, TOO AND THE ELECTED WOULD ALSO PAY, AND THIS IS MANAGE BY THE STORE WHERE YOU BUY NOT BY GOVERNMENT EMPLOYEES,
INSTEAD OF TAXING THE RICHS WHICH PROVIDE JOBS
,LOWER YOUR TAX PERCENTAGE AND GET ALL ABOARD OR DON’T TAX AT ALL. AND DON’T SPEND THOSE REVENUE UNWISELY AND FOOLISHLY LIKE IT’S YOUR MONEY.
@ilovebeeswarzone: I completely agree with a consumption tax, as long as the federal income tax was ended simultaneously.
@Nan G:
So what if your friend who is a millionaire collects his Social Security? Was he a millionaire when he started paying into the system? Did he obtain his wealth by hard work and due diligence? If he inherited that money, and knew he would not need to use the system, did he have a way to opt out so that he would not have a later claim to the money he paid into SS?
It is wrong to look down on those who were forced to pay into a system and then take what they are owed. The federal government uses our money for forty years, and then has a responsibility to pay it back, as promised. If you don’t want those who are independently financially secure to take money out of the system, don’t require them to pay into for their entire work lives. It is just that simple.
I know a number of people who draw SS benefits, but donate that money to charity because they don’t need it. One person I know gives their entire monthly benefit check to St. Jude’s Children’s Hospital in Memphis. That is a lot of money going to a charitible hospital that hospital would not have otherwise had.
@retire05:
In essence this man’s wife is doing what you see being done, Retir05.
He’d just blow his stack if he knew it.
He enjoys messing with his employees’ last nerves.
That’s why he makes a point of mentioning that he is collecting Social Security when he deals with working people.
Although retired, he is constantly hiring people to do this-and-that then he uses the opportunity to belittle them.
@Rita: I agree wholeheartedly that cutting waste alone won’t “cut” it-
I am all for eliminating whole departments- Education, EPA, Commerce, and several more. These just play the shell game with our money, and we got by for 200 years without the Dept. of Education- Some might even say that that Dept. has dumbed down our kids.
I will forever wonder what happened to Wood Shop, Gym, the band practices, etc. They have, in many schools, been cut, due not to budget shortfalls, but to a different, “testing” agenda.
Authority over these things should be given back to the States, the proper venue for them, not the Federal government, which can’t tie its own shoelaces, and needs a soft helmet all the time. (especially Biden).
Nan, if he is an employer (earning a salary from his company) then his Social Security benefits are diminished by anything he earns over [I think] $25,000/yr. He will lose one dollar in benefits for every two dollars earned over the legal limit on income. If he earns $50K/yr, and reports that income he will lose $12,500/yr in benefits. If he is getting roughly $2,000/mo (or $24K/yr) in benefits his check will be reduced by $12,500.00
@retire05:
Retire05, he’s an ”employer” only in the sense that you or I employ gardeners, landscapers, painters, etc.
He isn’t working at a paying job.
(Sorry for the confusion.)
@Gary Kukis:
I have mentioned baseline budgeting before. Essentially, it is the federal budget, as extended out, that assumes a 7-10% or so increase in spending, per year, based on assumptions that the GDP, and consequently, tax revenue, will increase by the same, or greater. Extrapolating that out, if the assumption is a 10% increase in spending every year, the amount spent by our federal government will be well over $9 Trillion dollars by the end of the next decade.
And yet, all we hear is screaming from the liberal/progressives when even a small “cut” in spending is proposed over the course of that ten years, and they then start bringing out the “victims” who will be hurt most by these spending “cuts”.
In reality, even at the most extreme “cut” amount I’ve heard, of $4 Trillion over ten years, that isn’t a spending cut. That is an increase in spending of $2 Trillion over that ten years. NOTHING is actually cut. But the liberal/progressives claim that the other side wants to take food out of the mouth of babes, and medicines out of grandma’s hands. Their rhetoric is nothing but a big crock.
And the Stimulus? Ask a liberal/progressive about it. They’ll claim it was just a one-time $1 Trillion “boost” to the economy, and that it’s nearly gone. NO, it’s not. Much of that spending got rolled into the baseline budgeting by the government, and continues on, adding it’s 7-10% new spending per year. My guess is that the result of the Stimulus has been well over $1 Trillion in spending, if not a couple Trillion.
And, in complete irony, the liberal/progressives bitched, moaned, and whined about the two wars we were fighting, in Iraq and Afghanistan, not being included in the Defense portion of the budget. One of the first things Obama did was to move that funding into the Defense budget where it became what? You guessed it. Just one part of the Defense Dept.’s baseline budget, accruing a 7-10% additional spending allotment every year. The fact that during Bush’s terms that funding was separate from the baseline budget of the government was actually a good thing, but the liberal/progressives saw it as some kind of way that Bush was hiding the cost of those wars. Stupid, stupid, stupid.
Get rid of the baseline budgeting scheme and budget based on reality, like the rest of America does, and much of the issues concerning the debt and deficit could then be solved realistically.
@Nan G, I’ve motored over those bridges to PV many a time in my years in Southern Cal. No surprise they’re trying for automated toll booths… it is a state desperate for every cent they can milk… or would that be bilk… out of the residents.
I’m somewhat taken aback at your opinion of the man collecting his social security, despite being wealthy. Why should that make an iota of difference? And I’ll leave aside the inference that you’re not too fond of this individual, personally. That really isn’t relevant.
If you were a multimillionaire and gave me a credit line of $3000 for 3% interest, are you not due that cash plus interest, even tho it’s a paltry amount to you and your lifestyle?
I look at SS much like giving the government a credit line using our SS funds. After all, that is how they utilize it. We, the taxpayers, pay in, and they parlay that money as a “loan” for other spending via treasury purchases. Thus the lockbox filled with IOUs. In return for using the taxpayers’ SS trust fund as a piggy bank credit line, they average an x amount of return on those deposited funds. What you draw is based on your maximum averages over 35 years, and differs from individual to individual. There is, however, a maximum amount of income that is SS taxable, therefore there is a finite amount that a person can draw.
So if someone more affluent has paid in that money, and the feds have utilized it – along with the cash from less affluent contributors – why on earth do you not think he is due his return, right along with everyone else? And you’re reasoning for this is because he’s financially well off enough that he doesn’t need it?
What the heck does that have to do with the price of bread? Isn’t that much like Greg, who insists he knows when someone has more wealth than they need, and therefore that wealthy person should be denied their due and it should be spread around, used elsewhere for those more in need?
What you’re suggesting is somewhat surprising, and something I’d not expect from you. Perhaps it’s a personal thing, confined to this person you find less than appealing. But the concept you’re working on is seriously flawed, IMHO.
Just because one has more wealth than another, he should be entitled to his SS investment return, just like everyone else, to utilize as he sees fit. Otherwise what you suggest is just another form of government mandated “charity”.
@Aqua: #61,
“You know what 99% of the applicants wanted? They wanted us to sign the paper saying they applied for the job. They didn’t want the job, they just wanted their benefits.”
Since 51% of the Nation doesn’t pay taxes, it’s understandable that this crew you refer to, supports Obama’s socialist agenda. What is worse, is that this mindset is so prevalent and no one in Washington seems interested in affecting it positively. Obama in fact, panders to it, nurtures it, and appeals to it. That fact alone makes him a worse President than Jimmy Carter, IMNSHO.
@Gary Kukis: #66,
“How insane is baseline budgeting, anyway? And why is this not a major topic in this debt discussion?”
Absolute right on. For every company I have run or owned, at the beginning of each fiscal year, my mantra was Zero Based Budgeting. This forces you and your executives to reassess returns and value of each dollar spent and why. It also forces the executive in charge of each division to know intimately his/her business in the “present,” in order that he/she can justify and speak to every expenditure. In my view, there is never an expenditure too small, that even a very senior executive could be excused with, “I can’t be bothered – it’s too small.” . . . . Nosedive where you have to.
Government is a game of entitlements and expectations.
The current circus in Washington is NOT even about base line budgeting vs. zero base budgeting, or slicing expenditures. It’s about NOT INCREASING the current spending levels. No one is brave enough to get the ax out. Certainly not Barry. He wants spending increases because there are expectations out there in his “base” that he Will deliver on those entitlements.
@mata: You (and retire) raise a lot of interesting/important issues. I like discussing both SS and Medicare, but no time at all, at present.
I just want to make two comments:
In the first place, it’s not “IOUs.” It’s T Bills. The same T Bills held by Goldman Sachs, CALPers, China, and Deutsche Bank. Exact same T Bills. As I pointed out, during the Reagan administration, there were massive cuts on progressive taxes (income and estate) and substantial hikes on regressive taxes (SS and Medicare). In other words, wealthy people were being rewarded; average people were taking a hit. So the government (under Reagan) made what should be considered a sacred promise. Yes, we are raising your taxes, but we promise you that we are NOT going to use these tax increases on you average people to subsidize our tax cuts on the wealthy. (And government deficits soared, as a direct result of those tax cuts to the wealthy, as shown in the very study which you quoted on an earlier thread). So the regressive Social Security tax hikes under Reagan, which hit the middle class disporportionately, were supposed to go for two things and two things only (this was the promise): (1) pay out current benefits. (2) be invested in T Bills to pay out future benefits.
So T Bills were issued. The same T Bills as issued to everyone else. And now, conservatives, who supported the Reagan tax cuts which were subsidized by average people paying more into social security, state that those weren’t really triple A rated Treasury Bonds after all. They were just IOUs. They were just imaginary. They were just monopoly money. Guess the joke’s on you, average people. Guess the joke’s on you.
The second issue is this “ponzi game” charge. No, it’s not a ponzi scheme. A ponzi scheme is intentionally designed to steal money. SS is a pay as you go system. If the population was absolutely level, with no fluctuations, then the ponzi scheme charge would be false, on its face. But the population fluctuates. There were decades (when the Baby Boomers matured into their prime earning years) that SS was flush with cash. It wasn’t FDR’s intention that this cash be used for a piggy bank during peace time, as it was for decades. The smartest thing that could have been done with all those surpluses would have been to redeem government debt (redeem T Bills). If we had a debt to GDP ratio of much closer to zero, during population blips when there was a surfeit of wage earners, then it wouldn’t be a big problem to borrow money (sell T Bills), during population blips where there was a surfeit of SS beneficiaries.
The point is that the problem with SS was not in the concept or even in the design. The problem was in the execution.
In any event, Reagan made a promise, at the time he cut progressive taxes on the rich, while raising regressive taxes on average Americans. And it’s positively immoral to walk away from that promise.
@retire (regarding doctors (sellers) making the purchase decisions for their patients (buyers)):
In the middle of composing the above response to Mata, my mobile phone went off. It was from my older daughter, currently a 2nd year medical student.
Several weeks ago, she went swimming in a lake. She stepped on a splinter, which she couldn’t extract. She went to a “Prompt Care” clinic. She registered, waited a bit, and was seen by a physician, who looked at her foot (heel), wiped it off with alcohol, took out a number 11 scalpel blade, scraped the surface of the skin to expose the tip of the splinter, and then teased it out with the point of the blade. The entire procedure took less than 5 minutes.
Today, she got her insurance statement:
1. “Office visit” $129
2. “Debridement of open wound” $463
She asked me what to do about this. I told her to call her insurance company (which has a contract with the Prompt Care clinic). She did so. She just now called me back. They told her not to worry; the bill would be covered by her insurance, and she wouldn’t have to pay anything herself. She said, that’s not the point. I didn’t have an “open wound.” I had a splinter. The doctor teased out the splinter, using a one dollar disposable scalpel blade, in less than 5 minutes. The insurance company representative said “I can’t do anything about that. The doctor coded it as an “open wound,” and a splinter qualifies; so we have to pay.”
Patients have virtually no control over what services a doctor provides and how the doctor codes for the services provided. The doctor can say he did a “brief” consultation, or an “extended” consultation, or a “comprehensive” consultation. Lawyers, at least, bill by the hour. Doctors bill by the procedure.
Some years back, urologists lost their major money maker. Surgical removal of kidney stones. There’s now a machine which does this which doesn’t require any surgery. So the urologists decided they needed a replacement operation. Voila! The radical prostatectomy for prostate cancer. A virtually useless operation, which causes major morbidity (e.g. erectile dysfunction, urinary incontinence) and which doesn’t improve cure rates or prolong life. But the doctor holds all the cards. “You’ve got cancer.” “We’ve got to cut it out.” Who’s going to say no? Rudy Giuliani didn’t say no. John Kerry didn’t say no. Colin Powell didn’t say no. etc. And hundreds of thousands of average men didn’t say no, either.
Or take a woman with breast cancer. Your doctor recommends intravenous cyclophosphamide plus docetaxel, in his office (which makes the doctor thousands of dollars per month). He doesn’t tell you that you could just take capecitabine pills, from your local pharmacy, with equally effective results. How are you supposed to know?
You have chest pain. Do you have coronary artery stents placed? Do you have coronary artery bypass? Or do you just have conservative management, with medications and lifestyle improvements? Does it make a difference if you talk to a cardiologist versus a thoracic surgeon versus a very experienced general internal medicine physician?
It’s the sellers who call the shots. They make the purchase decisions. It’s the fatal flaw in the concept that traditional private practice American medicine follows the rules of market economic efficiency.
– Larry Weisenthal/Huntington Beach, CA
@James Raider:
In other words, you promote budgeting based on reality.
Mata and I had this discussion. No scalpel, as Obama suggests. No carving knife, no ax. The budget needs a chainsaw taken to it, cutting off all of the unneeded branches, and then the black stuff painted over it so that it doesn’t grow again.
AS an aside advice, always make sure that you have some bandages and pads in the house:
I put an empty jar of mayonaise into the sink bowl in hot soapy water, for a while and came back put my hand to pick it up and to sponge it clean and the jar had lost a small piece of glass on top and I hit the razor cut between my 2 end fingers that split open the in between loose skin,
you think there is no blood there well think twice, it bleed until I MANAGE TO CLIME UP TO GET A PAD AND TAPE AFTER DRYING UP THE PEROXIDE, NOW IT’S COVER,
ONE GOOD THING ALWAYS COME UP FROM A NEGATIVE ,THAT IS MY LEFT HAND,
GEEZ just typing it to my friends make me feel better already,
than you all, for lending your eyes to read me,
and take the advice too.
@MataHarley: #75, . . . .
“If you were a multimillionaire and gave me a credit line of $3000 for 3% interest, are you not due that cash plus interest, even tho it’s a paltry amount to you and your lifestyle?”
Sadly it is very human nature that feels that – if you Have, you don’t really need or deserve to get the loan repaid. Personally, while I don’t believe in debt of any kind for myself and have been very lucky and fortunate on that front, each and every single instance in my life when I have relented and made a personal loan, large or small, I Immediately became an a**hole in that borrower’s eyes. The relationship instantly changes even if you don’t bang on the door for over a decade demanding minor payment.
My other thought on your comment is that when you become financially successful, the vast majority of your “friends” become expectant. Those expectations can be broad from assuming you will be picking up all dinner checks, to “friends” camping on your doorstep spending 2 week holidays languishing by your pool, enjoying your food, while you’re somewhere else “earning,” – just because you have plenty of rooms.
The sense of “entitlement” I have witnessed in too many acquaintances annoys the crap out of me, and has jaundiced my perception of my fellow man. It also redefined and filtered my definition of friends.
I suspect NanG. has a particular personal dislike of the individual in question which affects her percepts, nevertheless, I whole heartedly agree with you that no one has the right to dip into your pocket, or dictate what you might give away, when you have rightly and legally earned it, no matter how small or large.
James Raider, what was the address of your place again?
I would bring my lunch for 2 weeks
@MataHarley: #75,
“Just because one has more wealth than another, he should be entitled to his SS investment return, just like everyone else, to utilize as he sees fit. Otherwise what you suggest is just another form of government mandated “charity”.
Hear, hear!
Because I only worked for other companies for a few short years early in my career, my monthly pension checks, when they start arriving in the not too distant future, will cover little more than a few hot meals for my two granddaughters. Regardless how small those checks, I still expect them, and I will cash them as soon as they arrive.
I will look forward to my granddaughters’ smiles as they tell me their stories of the day over those hot meals, and I will feel a small bit of satisfaction that governments that I have supported all my life have left me a few crumbs, . . . . a nominal bit of thanks from them, is how I will choose to view them.
@openid.aol.com/runnswim: What were the options for the prostate cancer then? I had a radical prostatectomy in early 2005 and if memory serves me correctly, the only options given to me were that and seeding but because of my age, my urologist recommended the surgery.
As you’ve figured out, I despise the old coot.
It only is partly about his being a skin flint.
I don’t like how he rubs the noses of people he hires to do work for in about the fact that they pay taxes to support him.
I worry he is calling down ill fortune on all of us near enough to him IF the stuff ever blows back on him.
Some of the kids he pays to detail his cars and to wash his yacht are sketchy individuals.
Others of them are college kids trying to earn their tuition and books for the next semester.
The ”evil” rich people Obama demonizes could be depicted by a photo of this man.
And why does he do it?
For the laugh.
He’s a disgusting human being who has reduced teenage girls to tears over the way he treats them.
He, like Obama who speaks about his unneeded extra money, is entitled to every penny he has.
@ilovebeeswarzone: #81,
You know Bees, the strange thing is that I never had a problem with the “paying.” I never have much cared about money, and enjoyed the thrill of the “hunt” more. However, what erked me to no end, was the very obvious “expectation and assumption,” that I either had to pay because I could or would because I could. Admittedly, I rarely spoke up, and just changed my relationships with those who expected. The room, sad to say, almost emptied out quickly.
James Raider, yes the powerful always attract the flyes,
we see that many times, they get in the camera view sometimes against their will and a group is around
to try to feed on them. and some are liking it, but they have to pay a big price, and then when they get old
or sick, they find that they are all alone, because they have relinquish their power to another person,
and the first group is no more accepted, but another one is forming around the new king,
quite many times I heard some people talking and end their conversation by saying well he or she has money, so I can take what I can, or an employee will say he made money so I can profit from it,
to get the most, It goes with all class, the danger of having more is troublesome and ciniqual,
that woman open the door to receive a CHRISMAST BOX FROM THE POLICE FOR HER AND HER 10 CHILDREN, THE REPORTER ASK, YOU MUST BE HAPPY TO BE ABLE TO HAVE A NICE CHRISTMAS FOR YOUR CHILDREN, ? AND SHE REPLY WELL IT’S THE LEAST THEY CAN DO, SHE DID NOT EVEN SAY THANK YOU. is it a human trait or a lowest trait of human,
bye
@another vet:
Here’s the deal.
For men aged 65 and over, prostate cancer comes in two “flavors.” The first (and, fortunately, most common) “flavor” is the “live with it” type. The second (less common) variety is the “die of it” variety.
Now, if you’ve got the “live with it” variety, you don’t need treatment. You’ll just peacefully coexist with the disease and, ultimately, die (of some other cause) with prostate cancer, but won’t die because of prostate cancer.
If you’ve go the “die of it” variety, then radical treatment won’t help. From the very instant that it is first diagnosable (i.e. the first time that it causes symptoms or the first time it raises PSA levels), it has already metastasized (to lymph nodes and/or bones). So treatment to the primary tumor doesn’t help. In neither type (“live with it” or “die of it”), does treatment to the primary tumor make a difference. Your fate is in the hands of your tumor’s intrinsic biology and not in the hands of your surgeon.
Virtually all men will get prostate cancer, if they live long enough. My father (almost age 98) almost certainly has prostate cancer. He’s probably had it for 20 years or more. I’m currently 64. There’s a good chance that I’ve got prostate cancer cells, lurking silently. But I’ve never had a PSA test, and I never intend to have such a test. My uncle, who is a retired urologist (age 82), has never had a PSA test, either. As he’s a urologist and I’m an oncologist, we’ve been discussing this issue for more than 20 years.
What’s reasonable to do? Well, I don’t want a PSA test, because, if it were elevated, it would only make me worry, but it wouldn’t make me get needle biopsies to diagnose prostate cancer and it sure wouldn’t make me get my prostate whacked out. My father in law had an elevated PSA test when he was in his 60s. His urologist wanted to do a radical prostatectomy. I flew him out here to California and had a radiation oncologist treat his prostate with radioactive iridium wires plus low dose external beam radiation. He had no serious side effects at all. He died 12 years later (of small cell lung cancer), with no evidence at all of recurrence of his prostate cancer.
Why did I even have him treated (given the above information)? Well, it was because he’d actually been diagnosed with prostate cancer and was worried about this and his doctor told him that he needed to have it cut out, or else the cancer would probably kill him. So he was worried. Just leaving the prostate cancer untreated wasn’t something that he could sleep with, at night. So I recommended the least “toxic” treatment then available.
For men under the age of 65, there is some evidence that treatment of the primary disease could make some difference. This was a Scandinavian study which is discussed here. Overall, there was no significant difference in overall mortality at 12 years and there was evidence described in follow up publications that all the risk for metastatic disease had occurred in the first 10 years. Among patients 65 and older, there was no difference in overall survival 12 years following operation, but in patients younger than 65, there was a slight decrease in mortality. This was in a study limited to patients age 75 and under and with poorly differentiated tumors excluded (the poorly differentiated tumors tend to be the “die of prostate cancer” category). A previous American study showed no benefit to surgery versus “watchful waiting.” There’s currently a very large, ongoing American study which, when finished, should further define who benefits from treatment of the prostate primary.
There are a number of options for treating the primary tumor. Radical prostatectomy. Radioactive “seeds” (radioactive iodine or palladium, implanted as “seeds” into the prostate gland). External beam radiation. Radioactive iridium wires, combined with low dose external beam radiation. Cryoablation (with liquid nitrogen). Radiofrequency ablation (essentially microwaving the tumor bed). Proton beam radiation.
We don’t know which, if any, of the above are superior to the other(s).
I’d personally chose the procedure with the least morbidity, if diabolical circumstances forced me to choose. I’d say, either proton beam radiation or the radioactive iridium wires, combined with low dose external beam radiation.
As stated earlier, there are data to indicate that PSA screening for prostate cancer causes major morbidity (from the needle biopsies and from the subsequent treatment, itself) without improving survival. Which is why my uncle and I refuse to be tested.
– Larry Weisenthal/Huntington Beach, CA
openid.aol.com/runnswim.
hi, my husband died in 07 from a clog in his easophagus, he just stopped eating and end up in hospital for his last week of life, he had an removal of prostate 2o years before and they also removed the bladder so he end up with a bag for the urine and lived good after his recovery done with,
his son had been diagnose with prostate cancer cell, a few 3 years ago, he was treated with a new thing
they injected with a treatment of live cancer eating things like some microbes,
and for a month every week, it killed the tumor, the year after he had to be check and they found
another one forming, so they gave him the same injection treatment and he is okay at 65 now,
living a regular life as he was before. are you aware of what is the injection microbe cancer eating?
just wondering if you know about that new thing of 3 years
bye
Larry, are you telling us that your daughter, in her SECOND year of med school, does not know how to remove a simple splinter from her foot?
Perhaps you should take her aside and show her the use of alcohol, a simple sharp pocket knife and a pair of tweezers.
Hi Bees,
There have been a number of prostate cancer vaccines tested in clinical trials, e.g.
http://171.66.121.246/content/22/11/2122.short
http://clincancerres.aacrjournals.org/content/11/9/3353.short
The basic idea is to combine the PSA antigen with a (harmless) virus antigen to stimulate an immune response, where immune “killer” cells will be generated by the body to go attacking cells which express the PSA antigen (hopefully the prostate cancer cells). Here’s a very brief summary of the current state of the art, from the NIH:
http://www.urotoday.com/prostate-cancer-1014/immunotherapy-in-prostate-cancer-emerging-strategies-against-a-formidable-foe-abstract-.html
– Larry Weisenthal/Huntington Beach
@openid.aol.com/runnswim:
Larry you lay out in great detail the story about the splinter and the bill from the doctor’s office but you didn’t state what you felt the solution should be.
Was this a coding error in which the doctor marked a box? Or do you suspect that the doctor was attempting to maximize profit from the treatment of your daughter’s sole?
I know that medical coding is a pretty standardized kind of thing so is there another code that would have been more appropriate? And would your daughter have been in a better position to monitor/protest the charges had she paid with a FSA or HSA?
I’m a really big fan of FSA/HSA accounts because it puts the patient in more close contact with what things actually cost and allows the patient to manage his money very carefully through negotiation as well as shopping around.
Your thoughts?
@retire05:
One of my biggest problems are those who receive social security and they are in their 30’s….and I will guarantee you that many of them pay nothing into social security. I have come across 3 different people, all healthy, in their 30’s, all foreign-born (from what I can tell), and they collect pretty nice ss checks (2 receive a little under $1000 each) and the other gets nearly $3000/month (I think partially because there are children involved). Every single one of them is capable of pushing a broom, making change or posing the ultimate question, “You want fries with that?”
How the heck did we get to a point where 70 million people get a check each month from the federal government??
@retire (#89): That was a little uncalled for. For the record, said med student worked for three years following her graduation from Harvard in 2 sophisticated stem cell research labs, in which, among other things, she did sophisticated microsurgery on murine fetuses in utero. The lesion in question was on her heel, basically inaccessible to direct vision and bimanual manipulation, and available friends were unable to extract it, despite probing and digging. She called me up and I told her to just go to a Prompt Care and not risk an infection (which getting a foot sliver in lake mud can cause).
– LW/HB
@Larry, you sure spent paragraphs, flipping back and forth on what you assert INRE Social Security and solvency. Let me expound, if you please:
I have two problems with this revisionist history, Larry. First of all, the mandate that SS funds in excess of payments – originally held as just credits in the Social Security account on the Treasury’s ledger in the initial law – also had that any funds not used for payouts were to be invested. The formal Social Security Trust Fund (spit…) was created in 1939.
Somehow I doubt that Ronald Reagan, who was a new LA arrival from Iowa at the age of 28, had much to do with that “concept” you desperately try to defend.
From the Social Securities govt site on the history of the trust fund and investments…
Q.E.D…. LOL
You may attempt to convince someone out there… certainly not me… that these “investments” in T-notes don’t entail any incurrence of debt. This is no where close to the truth… per the SSA’s horses’ mouth.
Again I’ll try to have Allan Sloan, of CNN Money, explain it to you from his Aug 2010 article.
That’s worthy of repeating… when the Treasury has to redeem their T-notes, they have to borrow the money from some fund, some where, or investors, in order to redeem that note. All because, as the SSA points out, the money from the SS Trust Fund is being *lent* to the federal government for non social security spending. So when SS needs a redemption, payback, the time to pay the piper comes due and the money must be borrowed from somewhere else.
But despite your comments above, you also seem to realize that the trust fund has, indeed, been an unofficial credit line piggy bank, abused by Congress over the decades (yes, both parties). This is because you did, indeed, say “It wasn’t FDR’s intention that this cash be used for a piggy bank during peace time, as it was for decades.”
Peace time, or times of war… it has been, and continues to be used as a piggy bank. Would have been better if just put into a Reserve bank money market type account, and earned nominal interest over it’s decades of existance, and locked away from legislators’ sticky fingers.
Then we go back to this “ponzi scheme” argument you and continue to have. In your words, “intent” is the only difference between a ponzi scheme and SS (or Medicare, for that matter)
All taxes and fees are a way to “steal money”, Larry. The government doesn’t earn or generate a penny. It only takes from the private sector. Then it has the private sector pay the massive and ever growing public sector’s salaries, and takes back some of that in their income taxes. Recycling nothing but money that was generated solely by the private sector.
Social Security is not “pay as you go”. It is a government mandated pension plan – that also functions as a Congressional lending bank – that you may, or may not, live long enough to collect at retirement. Medicare is a government mandated medical plan that you may or may not live long enough to collect. Both, however, are requiring payments of front… for which you get nothing in return.
You cannot say, with a straight face, that Social Security is merely those receiving back what they “paid as they went” since the first year of both Social Security and Medicare paid out to people who never put in a dime, paying nothing as they went. And what did they pay them with? Funds taken from generations who get nothing for their payments, and have to live long enough to receive any pension or medical services for decades of mandated payments.
From the Legal-Dictionary definition of ponzi scheme:
From Lawyers.com:
Now the only thing you may attempt to question was if there was “an illusion of profitability”, or there was the appearance of a “dramatic increase in value in a short time”. This, however, would be attempting to read the minds of the earlies recipients of both entitlement programs. If they invested $12, and received lump sums, and more substantial as time went on, they most certainly would consider their lesser investment “dramatically increasing” in value, and it sure would be a realistic illusion of profitability for them.
However the base reality is that, just like a ponzi scheme, the early investors are paid with the funds provided by the later investors. And just like a ponzi scheme, it will collapse because population figures are not stagnant. The demand by boomers retiring, and living longer, will be overtaxing those that are supposedly “paying as they go” and funding money that isn’t in the trust fund at all.
But you make excuses for the government’s intent, giving them the moral high ground that SS or Medicare was never designed to “steal money”… yet when you are taking from the later investors to pay the early non or minimal vested investors, you are stealing money nonetheless. You are robbing Peter to pay Paul, and there’s no way you can gloss over that reality with a sense of moral superiority by legislative intent.
You say “…that the problem with SS was not in the concept or even in the design. The problem was in the execution.” It’s genuinely naive to even try to separate those two. The legislation.. which *is* the “concept”… laid out the “execution” via regulations.
Therefore the concept was faulty in it’s original design because of the way it was funded, and that the funds could and would be used for funding non social security spending via t-note accounting tricks. And that was all proven in my opening paragraphs about the history of the SSA and the creation of the trust fund four years later.
It was opposed by the populus, and still rammed thru…. shades of O’healthcare. Today, with the runaway costs of living, and medical, combined with the poor concept that dictated the “execution” exactly as it was originally intended, we are paying the price of such legislative folly that illegal in the private sector.
And speaking of O’healthcare and your daughter’s story… let’s see. You say: “Office visit” $129
“Debridement of open wound” $463″. I have constantly said our health care problems cannot be solved by price fixing insurance premiums, and must address such idiocy as a splinter removal costing this outrageous price.
Yet look at what happens? The insurance company has to pay it because of doctor coding, and the patient isn’t supposed to worry because the insurance company will pay it. And since she’s in MA, it’s yet one more thing that proves insurance and medical mandates are worthless when it comes to reining in the cost of providing medical services. Heaven knows the ponzi scheme of Medicare… you know, where you pay for insurance you can’t get until you live long enough? and then pay more?… would remain solvent a little longer if removing splinters weren’t costing $592.
And yet you wonder why premiums are on the increase?
Now… tell me how O’healthcare brings down the cost of removing a splinter, Larry. Because if it doesn’t, it ain’t doing squat but creating over 55 new federal agencies, all with more taxpayer paid employees, loading up on more unfunded pensions as a liability, and stiffing healthcare providers and insurance companies to the point where they just have cut benefits to keep costs in line. Or, eventually go out of business.
O’healthcare fixes nothing, but it sure piles on a lot of expense for both businesses and the taxpayer. And, as usual, it will also be in need of increasing money from the taxpayers annual, just as MassHealth’s budget is $9.84 bil for 2011, 6.5% higher than the 2010 budget, even tho the enrollment increase is only 3%.
@openid.aol.com/runnswim:
Larry, I understand her deciding to let a medical doctor remove the splinter rather than a friend.
But I am in my 60s and not that limber, but I can get a visual on my own heels!
Once I see my heel, I can also bring both hands to bear on it.
Sometimes only your own nerve endings tell you where the splinter is.
I go barefoot often and thus get splinters sometimes.
I am surprised she couldn’t get a visual and both hands involved.
I have on many occasions.
But when my cat cut my eyelid I did let a doctor fix it with liquid stitches.
No scar at all, thank you very much.
She did nothing wrong in getting a doctor to remove the splinter.
I hope she is well.
openid.aol.com/runnswim,thank you for your answer and the link to it,
of course I did not comprehend all the scientific language but enough of how you explained yourself was easy to understand, bye
so far my stepson is doing fine and no recurence,
I THINK THAT IS THE VERY NEW FINDINGS WHICH SEEMS TO WORK. WILL IT WORK ON ALL OTHER CANCER.
IT’S YOU RES TO KNOW
@Aye:
The latter, for sure. Given that the guy was already receiving $129 for an “office visit,” it was hardly necessary to claim payment for a “surgical” procedure.
With regard to your comments on HSAs: I am in full agreement with you. My own health care plan is an $8,000 annual deductible Blue Shield HSA account. High deductible HSAs are a great idea, under the currently-existing system. I give all credit to the conservative, Republican politicians who were instrumental in getting the HSA law written and passed and signed into law.
What I would have done, in the situation under discussion, was to tell the administrative clerk who checked me in, “look, I’ve got $8,000 deductible insurance, meaning that I’ve got to pay out of pocket, and all I need is a sliver taken out of my heel; so can you tell me how much you are going to be charging me? At least a ball park?”
It’s perfectly acceptable to negotiate payment in advance. Few patients do this, however.
In the case of my daughter, I’m sure that they just looked at her insurance and knew precisely what they could get away with and just took advantage of the wording in their contract. In my daughter’s case, her insurance paid everything. In theory, she shouldn’t have cared. But she saw the bill, compared the bill with the services actually provided, and was personally offended (as most people, I think, would be).
With respect to coding, there’s usually an array of choices. Doctors employ experts in coding and reimbursement who code in ways which maximize revenues. You might call this “personalized billing.”
Although I think that high deductible HSAs work well for the “small stuff,” it’s not the “small stuff” which is bankrupting the health care system. But looking at “small stuff” examples like this is instructive, because it shows precisely what those who are trying to reign in the costs of health care are up against.
– Larry Weisenthal/Huntington Beach, CA
Just a side observation… I’m utterly amazed that a few focus on whether or not Larry’s daughter should have been able to take care of own medical needs, instead of getting your ears blown back by the cost of $592 to remove a splinter…
???
sigh…
@openid.aol.com/runnswim:
I guess I just have a really hard time being cynical when it comes to doctors and their billing practices.
Definitely not saying that it doesn’t happen, it’s just that my experience has always been the opposite in that the doctors and dentists have always looked for ways to help make things affordable.
I wonder if the fact that it was one of those stand alone walk in type clinics made a difference in the billing. I sort of doubt that her general practitioner would have treated her that way. Then again….
Once we got our FSA we were much more aware of how we spent our dollars. My wife was embarrassed by me when I shamelessly asked for a discount from my carpal tunnel surgeon as well as from my oral surgeon. I reminded her that we had to manage that money wisely so that it would last us the entire year.
That was really my only complaint about the FSA. You had to make the money last all year and then, when you got to the end of the year, you had to use up the balance so that you wouldn’t lose it.
A roll over option would be so much better. That way, if you have a “well” year you can carry those benefits over to the year where you break your leg.
@mata:
What I wrote about the SS “fix” in the Reagan years wasn’t revisionist. I don’t have time to go looking it up right now, but the way I explained it captures the essence, I’m fairly certain. There was a debate about the morality of cutting progressive taxes while raising regressive taxes at the same time. SS had been taken out of the budget, effectively, some years before, but was put back in budget, as part of the SS “fix,” to ensure that the surpluses would be accounted for and banked as T bills. I distinctly remember you, yourself, quoting this, as part of an earlier debate with me on something else. The change in the SS accounting during the Reagan years.
No time, now, for anything else.
P.S. For the record, the daughter in question is my older daughter, who is the Harvard grad who lives in Colorado, not the younger daughter (Yale grad) who lives in MA — so you can’t go blaming RomneyCare.
With respect to the rest of your argument, I addressed that in my original comments.
1. The social security trust fund does exist. It is in the form of T bills worth $2.7 trillion. They are the same T bills as held by all the other US creditors. If we choose to default on T bills held by Social Security, it will be no less egregious than defaulting on T bills held by anyone else. The “sanctity” of the SS trust fund was specifically affirmed during the Reagan administration, when the regressive payroll and self employment taxes were raised, even as the progressive income and estate taxes were being cut.
2. SS is NOT a ponzi scheme. It is a mismanaged, pay as you go system. The government could have used the SS surpluses to pay down debt. This would have paid for current deficits, in the same way that major US corporations borrow money at certain times and pay it back at other times.
You have to look at social security over a 100 year period. There will be fluctuations in population, just as there are fluctuations in business cycles. You borrow money in bad times and pay it back in good times. You borrow money when the ratio of retirees to workers goes up and you pay it back when the ratio of retirees to workers goes down. The latter will happen as the Baby Boomers die off.
The problem was that the social security trust fund was mismanaged. Rather than using the (decades-long) surpluses to pay down government debt, it was used to finance “general fund” operations, including Reagan’s cuts to income and estate taxes.
– Larry Weisenthal/Huntington Beach, CA
Larry, you will find nothing in the archives from me about Reagan’s responsibility with SS accounting and the budget because it is, despite what you believe, revisionist history. Again, from the SS gov website itself, it dispels the myth you are attempting to perpetuate.
I’m pretty darned sure that Reagan’s alternate name is not Johnson, and equally sure he wasn’t president in 1990. Reagan’s amendments, which was vast bipartisan in passage, implemented that that up to 50% of Social Security benefits could be added to taxable income, if the taxpayer’s total income exceeded certain thresholds. Reagan’s amendments (again linked on the SS gov site) still had the trust funds in the unified budget, and scheduled to be removed as of Oct 1992. Instead a Dem Congress removed it two years earlier.
But you still continue this fallacy..
Larry, pardon me but that’s a bunch of hooey horse manure. The SSA and created Trust fund was “managed” exactly as it was intended and designed to, and created to do so, by Congress. That you continually give them a pass is absurd. Never in it’s original intent or legislative structure was it mandated to be used to pay down debt. It was always a piggy bank at the fingertips of Congress, to be used at their discretion.
Also that you attempt to blame this on Reagan in any form is simply laughable. I know you always remain unnaturally fixated on Reagan’s tax policies. Ironic when you consider the reversal of the recession was showing within the first years and the GDP growth was astronomical in it’s wake… unlike the plans this set of economic idiots in charge put into play. But now you only whine about Congress spending the SS trust funds… as they designed it to do from the beginning… for Reagan’s tax policies, and not another other of Congressional irresponsible spending. Nor do you criticize the entire debacle of an entitlement program that was flawed, and responsible – along with Medicare – for sinking the US economic ship today. Seriously misguided, guy… what can I say?
BTW, Clinton doubled down on Reagan’s SS taxation when he and the Dem Congress increased the amount of SS benefits that could be taxed. Yup… just had to rob the more frugal and conscious Granny and Gramps, of higher incomes, of more, they did.
@Aye:
With HSAs, you don’t have to use it or lose it. You can accumulate it over time — build up a medical nest egg, to use when “the big one” hits.
http://personalinsure.about.com/od/health/a/aa022807a.htm
– Larry Weisenthal/Huntington Beach, CA
@MataHarley:
I read of his daughter’s billing experience and was reminded of your kitty encounter.
Didn’t you have overcharge issues at one of those walk in type clinics too?
So, Larry, now you say that your daughter performed microsurgery but was unable to reach a splinter in her heel and unable to retract it herself? Somehow I feel like there is more to the story, or it was for affect.
Also, $129.00 does not seem unreasonable for what is basically an emergeny room facility. As to the surgery costs, is there not a medical board in your state that deals with such issues or an insurance board that would not accept a complaint of “gouging”?
In my area, firefighters would have been able to retrieve the splinter as they are all certified EMTs. Maybe she should have just went to the nearest fire station.
@openid.aol.com/runnswim:
Ours is an FSA. I’ll have to look further into the HSA and see if that is an option for us.