Getting Honest About Social Security – Part 2

/ L. M. Walker / Leave a comment

What are Entitlements?

Entitlement Spending, at $1.412 trillion in FY 2006, is over half of the U.S. Federal Budget. The largest entitlement spending programs are Social Security and Medicare, as follows:

  • Social Security – $544 billion

  • Medicare – $325 billion

  • Medicaid – $186 billion

  • All other mandatory programs – $357 billion. These programs include Food Stamps, Unemployment Compensation, Child Nutrition, Child Tax Credits, Supplemental Security for the blind and disabled, Student Loans, and Retirement / Disability programs for Civil Servants, the Coast Guard and the Military

How Is Social Security Funded?

Social Security is funded through payroll taxes. Through 2017, Social Security collects more in tax revenues than it pays out in benefits because there are 3.3 workers for every beneficiary. However, as Baby Boomers start to retire and draw down these benefits, there will be fewer workers to support them. By 2040, the revenues to pay for Social Security will be less than the expenditures.

How Is Medicare Funded?

Unlike Social Security, Medicare payroll taxes and premiums cover only 57% of current benefits. The remaining 43% is financed from general revenues (i.e. including any surplus remaining from Social Security). Because of rising health care costs, general revenues will have to pay for 62% of Medicare costs by 2030.

Medicare has two sections:

  • The Medicare Part A Hospital Insurance program, which collects enough payroll taxes to pay current benefits.

  • Medicare Part B, the Supplementary Medical Insurance program, and Part D, the new drug benefit, which is only covered by premium payments and general tax revenues.

How Will the FY 2008 Budget on Entitlement Spending Affect the U.S. Economy?

Through 2012, entitlement spending is budgeted at about 10.5% of GDP, with payroll tax revenue at about 6.5% of GDP, so that these unfunded obligations add to the general budget deficit. For example, in FY 2006 Social Security brought in $608 billion in “off-budget,” extra funds from payroll taxes. However, other entitlement programs had expenses that far outweighed this “extra” revenue, creating a mini-deficit of $574 billion within the entitlement spending budget alone. The amount increases to $784 billion by 2012.

Long-term Impacts

Long-term, however, the impact of doing nothing about these burgeoning unfunded mandates will be huge. The first Baby-Boomer turns 62 this year, and becomes eligible to retire on Social Security benefits. By 2025, those aged 65+ will comprise 20% of the population.

As Boomers leave the work-force and apply for benefits, three things happen:

  1. The percentage of the labor under 55 stops growing, providing less payroll taxes to fund Social Security.

  2. GDP growth declines to less than 2% due to fewer workers.

  3. By 2040, Social Security alone brings in less than it spends.

Getting Honest

Obama has stated that any further debate on his health care reform proposals needs to be “honest debate”. He implies that critics have been dishonest, which means we’re just lying.

In looking at the facts above, one need only ask the following question:

Are the budgetary problems facing ‘government workers’ in Washington, DC caused by the private sector, or by the government?

Obama wants to overthrow the private health insurance industry and fold it into a government run entitlement. Yet, the federal government has proven itself incapable of managing its current programs. How is adding more of the burden to the government going to resolve the baby boomer issue?

With all due respect, as a wise man once stated, “government is not the solution to our problems, government is the problem.”

What we need to be discussing is a way to turn over the government’s primary entitlements: Social Security and Medicare to the private sector, not the other way around. If not, the next thing ‘government workers’ will be proposing is how they can fold State, and private pension money into the black hole of the Social Security Ponzi Fund.

Obama’s solution: Solve a problem by compounding it. “We have to spend more money to keep from going bankrupt.”

American’s are simply saying, “No”.

Getting Honest About Social Security – Part 1

/ L. M. Walker / 1 Comment

Reality

The maximum social security benefit for 2009 for a person retiring at full retirement age (66) is $2,323. This is based on earnings at the maximum taxable amount for every year after age 21.

Analysis based on maximum benefits:

  • The total paid into the system by, or on behalf of, the recipient by the age of 66 is $266,377 ($235,042 of this since 1980).
  • The total paid in by the age of 66 with 3% compound annual interest is $394,785.
  • By the age of 74, the recipient will receive a full return of the amount paid in on their behalf without interest.
  • By the age of 77, the recipient will receive a full return of the amount paid in on their behalf with interest compounded at 3% annually.
  • Assuming the funds continue to receive a return of 3% through the annuity phase, the funds would last up to the age of 80.

So by the age of 74 the total paid in by the recipient plus amounts matched by employers are exhausted. If the government were able to achieve a meager 3% rate of return, the total savings at the time of retirement would be exhausted by the age of 77. Assuming a 3% return on investment during the annuity phase, the funds should last through the age of 80.

However, in reality, the average monthly benefit for social security recipients is only $1,061 per month or $12,732 per year in 2009. There are currently some 51.8 million recipients receiving some $55.0 billion in benefits each month.

Dishonesty

The only problem and it is a major problem, in fact it is a problem many times worse than the alleged health care crisis, is the fact that the government has stolen the Social Security Trust Fund. There is no trust fund. There are ‘no’ dollars in savings for the government to invest and receive even a meager 3% return. Every dollar paid into the fund this month will be spent this month, and then some.

Worse than that, the Federal Government has run up a National Debt of $11 trillion, and intends to increase this debt by another $9 trillion over the next 10 years. With the peak of baby boomers hitting retirement age in 2019, a $20 trillion National Debt, longer life expectancy, and a smaller workforce, how are politicians going to be able to keep this “ponzi” scheme going?

Honesty

It is clear to me that Washington, DC cannot be trusted with taxpayer’s money. We need to get the Federal Government the heck out of the retirement business. And don’t even talk to me about letting the government take over health care. I’m not hearing it.

We need to work on solutions that will allow American citizens to save for their own retirement, and to be able to pay for their own health care. At the same time, we have to figure out how to untangle ourselves from this massive ponzi scheme which politicians have gotten us into.

As far as I’m concerned, any solution that involves spending another dollar of taxpayer’s money better include a detailed cost benefit analysis. Any solution to the problems of our time that doesn’t involve drastic cuts in spending by the federal government is not a solution.

To even begin an honest discussion on social security, Medicare, health care or any other political issue being discussed these days, ‘government workers’ had better get honest with the public, and their proposals had better include the following:

  • Reductions in government spending
  • Reductions in government programs
  • Privatization of government entitlement programs
  • Budget balancing initiatives
  • Incentives for private investment
  • Incentives for private business growth
  • Incentives for private job creation
  • Policies that promote individual liberty

References:

http://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/

http://ssa-custhelp.ssa.gov/cgi-bin/ssa.cfg/php/enduser/std_adp.php?p_faqid=5&p_created=955050377

http://www.socialsecurity.gov/OACT/COLA/cbb.html

https://blackandcenter.blog/2009/08/16/the-cbo-and-our-common-welfare/

http://www.cbo.gov/doc.cfm?index=10297

http://www.usnews.com/articles/opinion/mzuckerman/2009/08/10/deficit-means-massive-tax-hike-years-of-misery-if-obama-wont-cut-spending.html

The CBO and Our Common Welfare

/ L. M. Walker / 2 Comments

This blog post was inspired today by comments made during Obama’s town hall event in Colorado. Here are the tweets that inspired this research:

Obama said, “Despite all the scare tactics out there, what is truly scary is if we do nothing.”

I said, “Isn’t this a scare tactic?”

Obama said, “Spread the word, knock on doors, to help enact his health coverage plan.”

I said, “It might help if he actually had a plan, no?”

Obama said, “Health care costs are the biggest part of federal deficit and debt?”

I said, “Defense and interest on the debt are right behind.”

Obama again states: “Nobody is talking about a government takeover of health care.”

I said, “Nobody as in Congress via H.R. 3200?”

My summary of Obama’s town hall meeting is this: “Let’s all get behind this idea of spending money that we don’t have, on a reform plan that hasn’t been written.”

Afterwards I watched the following CBO webcast, The Long-Term Budget Outlook, and studied the cost projections for Medicare, Medicaid, Social Security, and Interest on the Debt. After all of this, I am convinced that our government is on the wrong track.

Link to CBO Video

The issue should not be how to include more people in entitlements while cutting costs (an impossible feat). But rather how to create incentives to make people more self-sufficient so that they will not need to depend on the government? In other words, the focus needs to be on reducing the number of people covered by government entitlements, reducing government size and spending, and increasing government revenue to extinguish the debt.

In Mortimer Zuckerman’s USA Today column entitled, “The Coming Government Debt Bomb” [Spending must be cut, or surging deficit could leave U.S. deep in the red for years], he states the following:

The nonpartisan Congressional Budget Office reckons that the deficit will run for a decade and will still exceed $1.2 trillion in 2019. By that time, the United States will have virtually doubled its national debt, to over $17 trillion. Then, after 2019, we get another turn of the screw as the peak waves of baby boomers move into their retirement years and costs soar for the major entitlements, Social Security and Medicare.

At 41 percent of GDP in 2008, the accumulated federal debt will rise to 82 percent by 2019. One out of every 6 dollars spent then by the feds will go to interest, compared with 1 in 12 dollars last year. These out-year budgets will require an increase in everyone’s income taxes, raising federal income taxes an average of $11,000 for families, a hike of 55 percent per household—a political impossibility. The Government Accountability Office estimates that by 2040, interest payments will absorb 30 percent of all revenues and entitlements will consume the rest, leaving nothing for defense, education, or veterans’ pensions.

I know you don’t want to hear about private savings accounts versus Social Security. And you probably don’t want to hear about high deductible health insurance plans and health savings accounts. But the alternative being peddled by the Obama Administration and Congress is to increase government debt until it actually exceeds what our economy can produce in a year.

In other words they would rather bankrupt the United States, than face the fact that government cannot provide for the health and retirement needs of the people. And that’s the bottom line – the government cannot provide for the health and retirement needs of any but the most needy. Come to think of it, seems to me that was the original plan.

I realize that this is counter to the Biden-Obamanomics view that, “we need to spend more to keep from going bankrupt,” but I live on planet earth. The track being followed by this government will create a new problem, i.e. what do we pay or not pay this month. A bankrupt government would create a more serious crisis than any we have ever faced. Listen to the hearing, read the legislation, study the numbers, and see what you think.

“Give a man a fish and he will eat for a day. Teach a man to fish and he will eat for life.”

We can do this on our own if our government would get out of the way, and simply provide us with the incentives to provide for ourselves.

The bottom line on Obama’s non-existent health care/insurance reform ‘plan’ – show us the ‘plan’ you are talking about, or stop talking.

Obama Scores a Zero on Health Care Reform

/ L. M. Walker / Leave a comment

Bombs on the Fundamentals

Barack Obama’s main argument and the key to his whole presidency seems to be this idea that health care reform will lead to economic recovery. However, what Obama has failed to do is to convince the American public, and mainly conservatives, that it was our present health care system that caused the economic recession of 2007. His failure to convince an intelligent public has caused him to score a big fat zero on fundamental logic.

Obama: “We must lay a new foundation for future growth and prosperity, and a key pillar of a new foundation is health insurance reform.”

Conservatives: We believe you create jobs by keeping taxes and regulation low, and litigation at a minimum. Americans succeed when government puts in place positive policies that encourage more freedom, and more opportunity.

Most of us were under the impression that the recession was caused by the failure of our financial system as specifically related to the housing market. We believe that our economy failed due to a combination of easy money, lax mortgage regulations, and the crash in home prices. We also believe that the problems that caused the housing/mortgage crisis have yet to be resolved.

Instead of focusing on the main problem, the one that actually caused our economy to buckle, along comes Barack Obama with the false premise that it was the lack of health care reform that caused the recession. American’s are however, unable to connect the dots. Some key questions are as follows:

  1. How did the lack of health care reform cause the present recession?
  2. How will health care reform lead to economic recovery?
  3. How do you define economic recovery?
  4. Why did Fannie Mae lose another $15 billion in the 2nd Quarter of 2009?
  5. How will passing ‘untested’ (unread) legislation restore America’s confidence in a broken federal bureaucracy?

It is precisely Obama’s inability to answer the above questions that has American’s like myself so ticked off. Instead of recognizing and focusing on the real crisis, Obama has created a make-believe crisis, and he is proposing a make-believe solution.

Will the Obama brand of make-believe health care reform help delinquent consumers pay their bills? Will it keep real interest rates down? Will it create jobs? Will it encourage more freedom and opportunity? Will it balance the current budget deficit?

When Obama can come to the table with a logical argument regarding his proposed government take over of the health care industry, I will be glad to sit down with him, and have a serious conversation. Until then he can look forward to more questions and more dissent.

Resignation of David M. Walker

/ L. M. Walker / Leave a comment

The most important economic indicator of things to come: The Fall of Rome

Posted by sakerfa on June 18, 2009

Since the global financial meltdown seems to be the main concern with our corporate world, let’s begin with this topic.

David M. Walker and the Fall of Rome

There have been a few major economic events in the last few years, but I consider the resignation, in March 2008, of David M. Walker from his commission of Comptroller General of the United States and head of the Government Accountability Office to be the harbinger of what is to come.

Walker resigned 5 years before the end of his 15-year term expired. His reasons for resigning were that he was limited to what he could do and that the United States was in danger of collapsing in much the same manner as the Roman Empire.

“Drawing parallels with the end of the Roman empire, Mr Walker warned there were ‘striking similarities’ between America’s current situation and the factors that brought down Rome, including ‘declining moral values and political civility at home, an over-confident and over-extended military in foreign lands and fiscal irresponsibility by the central government’.”

For months before his resignation he traveled the country educating Americans about the financial crisis and the pending bankruptcy of the United States.

60 Minutes segment with David Walker originally broadcast on March 4, 2007 Click Here.

Walker’s resignation six years prior to the end of his 15 year term was a few orders of magnitude greater than the Chief financial officer of the largest non-governmental corporation in the world resigning (more on this later). The position is so crucial to the functionality of the corporate structure of the United States of America that it’s subject to Senate confirmation.

“The selection process is somewhat unusual. A commission made up of congressional leaders presents the president with at least three candidates for the job. The commission is made up of: the Speaker of the Houses, president pro tempore of the Senate, the Senate majority and minority leaders, the House majority and minority leaders, and the chairmen and ranking minority members of the Senate Homeland Security and Governmental Affairs and the House Oversight and Government Reform committees. The president chooses one of the three candidates for the job. His nominee must be approved by the Homeland Security and Governmental Affairs panel and then confirmed by the Senate.”

What transpired with Walker jumping ship and in the first three months of 2008 was nothing short of the beginning of the largest consolidation of wealth in the history of the United States. Walker’s resignation removed the last obstacle for those controlling US fiscal policy to readily make available cheap money. From August 2007 to December 2008 the Federal Reserve lowered the Primary Discount Rate from 6.25% to 0.5%. What followed was a blank check to bailout and buyout banks, defusing a global financial Chernobyl in the derivatives markets some have argued, while at the same time impoverishing American citizens, and eliminating the middle class (more on these later).

Elizabeth Warren: The Coming Collapse of the Middle Class

From 2007 to early 2008, when US national debt was sitting around $9 trillion, Walker compared what was happening to the US with the collapse of the Roman Empire. Let’s see what’s happened since then?

The Largest Ponzi Scheme in History

As of 2 June 2009, the US federal debt is now sitting at well over $11 trillion. This amount does not include the extra $10 trillion to $14 trillion that US taxpayers will eventually be required to pay back for buying toxic assets.

“Make no mistake – we are selling off our future and the future of our children to prevent the bondholders of U.S. financial corporations from taking losses. We are using public funds to protect the bondholders of some of the most mismanaged companies in the history of capitalism, instead of allowing them to take losses that should have been their own. All our policy makers have done to date has been to squander public funds to protect the full interests of corporate bondholders. Even Bear Stearns’ bondholders can expect to get 100% of their money back, thanks to the generosity of Bernanke, Geithner and other bureaucrats eager to hand out the money of ordinary Americans.”

Buying up toxic assets is known as The Troubled Asset Relief Program (TARP) – “a program of the United States government to purchase assets and equity from financial institutions in order to strengthen its financial sector.” When Congress approved this program, “Fed Chairman Ben S. Bernanke and then Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. The Federal Reserve so far is refusing to disclose loan recipients or reveal the collateral they are taking in return.”

In the following video “Rep. Alan Grayson asks the Federal Reserve Inspector General about the trillions of dollars lent or spent by the Federal Reserve and where it went, and the trillions of off balance sheet obligations.” The Inspector General, Elizabeth Coleman, states that her office is not tracking this information. In essence, she is confirming that we are witnessing the largest Ponzi Scheme in history unfold in real time.

These numbers, however, are a little misleading. The American public is largely unaware that the true deficit of the federal government is approximately “$65.5 trillion in total obligations”, exceeding global GDP.

The following 2008 documentary, “I.O.U.S.A. – One Nation. Under Debt. In Stress.,” does an excellent job explaining why the current fiscal policy in the United States is unsustainable, and recommends some very painful solutions to resolve the problem.

Keep in mind that all of the above debt is exclusive of the personal debt that US citizens may carry. So even though many, including myself, have compared what is happening to the United States to what happened during the Great Depression, a more accurate comparison was given by Walker, the 2008 recipient of the American Institute of Certified Public Accountants’ highest award and the person holding the highest accounting position in the United States from 1998 to 2008, and he compared the collapse of the United States to the Fall of Rome.

Let me rephrase this another way, if you were an accountant, then professionally speaking, David M. Walker is who you would aspire to be, and he bailed ship in 2008 stating that the game was over for the United States of America.

I hope the above explains the magnitude of our current economic metamorphosis. It will be one of the main themes for our conversation.

to be continued…

Source: http://www.chycho.com/?q=Rome

The above is Part 3 of a conversation about the state of the world:

Source: The Peoples Voice

The DC Black List

/ L. M. Walker / Leave a comment

This is a list of the top four politicians on the list for impeachment or removal from office, and some of the reasons. There are many more reasons for removing these four from office, so feel free to add to the list. There are also many more politicians who should be removed, in fact, most of Washington DC should be purged.

Nancy Pelosi

  1. Snubbed Republicans during the passage of the Bailout Bill. She openly blamed President Bush for the financial crisis. Everyone knows that the financial crisis has roots going back to the 1970’s so to pass the blame solely on Bush was not only untrue, but unfair.
  2. Rammed the Stimulus Bill through without allowing anyone time to read it.
  3. Lied about her knowledge of the CIA’s enhanced interrogation practices, and stated that the CIA misled Congress for the past seven years.

Barney Frank

  1. For his role in the botched oversight of Fannie Mae. Frank stated that there was no problem with Fannie Mae and that everything was just fine in the mortgage industry.
  2. About to authorize the funding of $8 billion to Acorn. When questioned, Frank simply states that President Bush gave Acorn $14 million over 8 years so Acorn must be a good organization.
  3. Ran a male prostitution ring from his DC apartment in 1989, was busted, but the Congress let him off the hook because he was deemed just a harmless weird gay guy.

Joe Biden

  1. Has added nothing to decision-making regarding foreign policy (his alleged specialty), or in any area.
  2. Spilled national security secrets. He is a joke and a laughing stock. They are not gaffs, but rather the remarks of an incompetent, insensitive, and ignorant man.
  3. When something happens to Obama, Biden will not be capable of leading this country.

Barack Obama II

  1. Still hiding his original birth certificate and his college transcripts from the public. Circumstantial evidence proves that Obama probably got into college as a foreign student and received foreign aid just like his father.
  2. Not a Natural Born Citizen by virtue of his father’s nationality at the time of his birth. Obama was born with dual citizenship. Article II, Section I of the US Constitution states that only a Natural Born Citizen can occupy the office of the Presidency.
  3. Dismantled the US auto industry, violated the rights of secured creditors, quadrupled the National Debt in only 4 months, and threatens to bankrupt the United States.

Natural Rights vs. Legal Rights

/ L. M. Walker / 4 Comments

May 5, 2009

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness.”

Natural rights (also called moral rights or inalienable rights) are rights which are not contingent upon the laws, customs, or beliefs of a particular society or polity.

In contrast, legal rights (sometimes also called civil rights or statutory rights) are rights conveyed by a particular polity, codified into legal statutes by some form of legislature, and as such are contingent upon local laws, customs, or beliefs.

Natural rights are thus necessarily universal, whereas legal rights are culturally and politically relative.

All races of mankind are created equal. No race is superior to another because they are all of the same species, mankind. Therefore, Blacks, Whites, Hispanics, Asians, Indians etc… all have equal rights as endowed by their Creator. There is no need for a law to be written to endow Blacks with the same rights as Whites. The right already exists in nature.

Civil rights in the U.S. have given women equal rights with men, animals equal rights with humans, and now gays equal rights with heterosexuals. This is man’s law. With man’s law, each society is different. Man’s law is based on the desires of men, and is not necessarily in line with natural law (let God be the Judge).

Gay rights proponents often proclaim that there is no law against homosexuality in the bible. Although this is not true, I would counter to gay marriage proponents, that there is no law regarding marriage in the bible, and certainly not gay marriage. The bible speaks of marriage between men and women, but it does not command that one be married. As there is no biblical, nor natural law regarding marriage, it is a custom or civil right granted by civil societies.

What follows is ‘natural law’ from the Bible on the issue of homosexuality:

Wherefore God also gave them up to uncleanness through the lusts of their own hearts, to dishonour their own bodies between themselves: Who changed the truth of God into a lie, and worshipped and served the creature more than the Creator, who is blessed for ever. Amen. For this cause God gave them up unto vile affections: for even their women did change the natural use into that which is against nature: And likewise also the men, leaving the natural use of the woman, burned in their lust one toward another; men with men working that which is unseemly, and receiving in themselves that recompence of their error which was meet. And even as they did not like to retain God in their knowledge, God gave them over to a reprobate mind, to do those things which are not convenient; Being filled with all unrighteousness, fornication, wickedness, covetousness, maliciousness; full of envy, murder, debate, deceit, malignity; whisperers, Backbiters, haters of God, despiteful, proud, boasters, inventors of evil things, disobedient to parents, Without understanding, covenantbreakers, without natural affection, implacable, unmerciful: Who knowing the judgment of God, that they which commit such things are worthy of death, not only do the same, but have pleasure in them that do them. Romans 1:24-32

If various States want to legalize gay marriage, that is their prerogative, and it has nothing to do with God’s law. However, I would warn that if homosexuality is against natural law, then the foundation of gay marriage is built on sinking sand. If a society wants to pass laws that are in opposition to natural law, that is their right. If a society believes that by condoning certain behaviors they are somehow granting natural rights, then that society is delusional. And if a society passes laws that are opposed to the laws of nature, then that society will perish.

I hereby formally reject the Civil Rights Act of the United States as having any force or effect regarding my equality as a Black man to any other race, creed, or color of man. I don’t need your law to tell me that I am equal, nor do I need your protection from those who would reject natural law. Whether or not the United States subscribes to natural law, I am free. However, if the United States has chosen to reject natural law, and has arrived at the ‘age of man’, then it has deviated from its original intent.

Just as businesses fail and are dissolved, nations fail and are dissolved. If the United States continues on its present course, [the rejection of natural law], then the United States will be replaced. Contrary to popular belief, America will meet its end, not at the hands of some violent revolution staged by proponents of natural law; but rather through natural law itself. External forces who believe in natural law will prevail, and will triumph over weak, watered down American’s, who place all their faith and trust in the laws of man. DHS can take proponents of the US Constitution, the Word of God, and Natural Law off the list. We are not the threat. Government itself is the threat.

You know the saying, ‘the strong survive’. There is no higher law, nor higher power, than following the course of one’s Creator. Although there is a purpose for civil laws, when the dictates of man begin to infringe upon natural law, know that the end is nigh.