These guys never quit.
Ryan’s “budget proposal” is out once again, just like last year.
And just like last year he’s lying again. Let’s count the lies:
Repeals President’s health care law; Advances bipartisan solutions that take power away from government bureaucrats and put patients in control; No disruption for those in or near retirement; Ensures a strengthened Medicare program for future generations, with less support given to the wealthy and more assistance for the poor and the sick
Then Medicare still goes bankrupt. The fact of the matter is that it is the demographic shift and the cost increases in medical care that are driving this train wreck. Remember that the boomers had not started to retire in 1980, yet we have seen 9.2% compound annual growth from 1980 to 2011 in federal medical spending.
There is no solution that actually avoids the bankruptcy of the nation without fundamental health reform — not Medicare reform, not Medicaid reform, not forcing people to buy “health insurance” (a fraud in and of itself) or anything of the kind.
The only solution is to arrest medical cost escalation right now — today. Not alleged “bending” of the curve that will never happen as it’s all in the “out years” and relies on projections that have never worked. The only “projection” you can count on is what you do right now.
If you want to actually fix health care you can start with the reading list in my Tickers on this topic; I suggest beginning with the oldest. There’s not that many; you can knock this out in a couple of hours. Implement those suggestions and medical cost inflation disappears overnight.
Yes, it also means that not everyone can have two new hips and a triple-bypass courtesy of the taxpayer. The simple fact of the matter is that we can’t afford that irrespective of whether we are compassionate. We have written checks we cannot cash for 30 years, with the worst of them coming in the last ten with things like Medicare Part “D”. We either stop — right now — or we go bankrupt. It’s that simple.
Ryan is great at spinning platitudes about our financial system, such as his lament about toxic securities. What he refuses to address is that his plan does not stop the Ponzi games; it in fact adds to them. Here is the fact regarding public and private debt along with economic growth, as presented in the government’s own numbers:
There has been no net-on-net growth. None — since 1980.
Got that folks? Zero. It has all been debt accumulation. The reason we hit the wall in 2008 was that we had run a Ponzi scheme for 30 years of greater and greater debt accumulation being used to “goose” GDP — that is, economic output. This never works because it can’t work. It is inherently a fraud. When the borrower stumbles and the debt he has on his shoulders crushes him the entire market that has been operating on the premise of false demand fueled by more and more debt collapses.
That is the truth of the 2008 crisis, just as it was in 1929 and 1873 in America along with myriad economic collapses around the world going back to Tulip Mania.
Rather than address this and accept it in 2008 the Federal Government, led by George Bush and John McCain, larded up even more debt, this time on the Federal balance sheet, to rescue those who had run Ponzi schemes — schemes that, in the general sense are (and should be) unlawful yet remain unprosecuted to this day. This unlawful conduct, including but not limited to lying about asset valuations, selling worthless trash under false pretense and more was not only “given a pass” it was enhanced and amped up further in 2009 with Kanjorski’s hearing at which FASB was (legally) extorted to allow banks to keep “assets” on their books at mythical values.
This is still going on today, as evidenced by Regions Financial that recently filed required reports showing that under market pricing their “assets” had a shortfall against their booked “values” sufficient to entirely erase their common equity. In blunt terms under Prompt Corrective Action, 12 USC 1831o, market pricing would render them bankrupt.
Regions is almost-certainly not alone in this regard. Pretending that the debts taken on as represented above are all “money good” when they are in the opinion of the market — a market that has seen stock prices double — worth less in an amount sufficient to bankrupt the company if it had to sell is not “an irrational panic.” You might have made that argument in 2008. Today you can’t make that argument. Today you are forced to accept that these prices as claimed by essentially every major financial institution are fictions that were made lawful for the explicit purpose of perpetuating a 30-year Ponzi scheme by legalizing conduct that on the basis of any rational analysis ought to be indictable as a felony act of fraud.
The same fictions are presented implicitly through Ryan’s “budget.” By refusing to force mark-to-market accounting back into the system Ryan is perpetuating frauds. By arguing that “block grants” will fix Medicaid Ryan ignores the enormous cost-shifting distortions that the insurance and medical industries have managed to get written into law, thereby forcing Americans to bear the cost of not only indigent treatment but also that of illegal aliens and the development of every drug and device marketed worldwide. By refusing to address the “free money lottery” in education Ryan’s budget effectively sells our youth into slavery, an act that will eventually result in their revolt and possible violent revolution — and if it happens we will, as a nation, deserve it.
Social Security can indeed be fixed, and relatively easily. The Democrats argue that we should lift the salary cap. But if we do that, we should lift the benefit cap too. Nobody wants to do the latter and we should not do the former. Instead we should simply index Social Security’s retirement age to longevity.
The bigger issue with retirement income security comes from the Federal Government’s incestuous tie to the Federal Reserve and their intentional debasement of the purchasing power of the dollar. This is outright fraud and theft, and it is the cause of retirement insecurity. A 2% (targeted) inflation rate over the 45 year working life of the average individual is a 143% increase in the cost of living in nominal dollars over that time. A 3% (actual) CPI increase is a 278% increase in the cost of living. Put another way a dollar of purchasing power you save at age 20 is worth only 36 cents worth of goods and services when you retire at 65, and this is intentional.
That’s theft. That’s fraud.
And it is the reason that Seniors have insecurity in retirement.
Forcing “savings” into the stock market is even more stupid. For this Bernanke deserves to be indicted for theft by conversion along with debasement of the currency and sentenced under the original Coinage Act, which proscribed death for such a crime. Since that act has been modified and you can’t pass ex-post-facto laws (despite the obvious need to do so once in a while) I therefore have repeatedly called for the reinstatement of the original Coinage Act, along with its penalty, and then imposition of said penalty should intentional debasement continue for just one more day.
For those who claim inflation is “low” this is what monetary inflation (measured as a differential between money and credit compared to GDP) has looked like since 1953 — again, from the government’s own data:
The fact of the matter is that the stock market tends to crash about once every seven years. Since nobody has ever been able to prove they can accurately time such events and your working life tends to span six of these periods there is a high probability you will be wiped out as you approach retirement (during your last ten years of work) and thus the stock market is no different than buying lottery tickets that have a mathematical probability of destroying your bankroll. That some people “win” does not change the mathematical facts; no person should have to gamble in order to have a secure retirement.
Ryan waxes on about Pell grants and student loans, but simply refuses to mention the simplest and only market-based solution — get the damned government out of it. No more bankruptcy protection for student loans and no more government guarantees. Cut off the “free money” spigot and tuition, fee and book costs would instantly plummet by 50% or more. This is the only solution that will work. So long as the “free money” brigade has their way with higher education we will see no progress.
There are good ideas in Ryan’s proposal. For example, bringing Fannie and Freddie formally on balance sheet is not only a good proposal it is the only rational thing to do and absent special government dispensation it is also what would be required under the law.
But Ryan, just like the last time he pontificated on the budget, doesn’t get to “balance” until 2040 — nearly 30 years hence. He relies on unrealistic expectations of growth to get there as debt continues to grow and debt service costs continue to tax the economy and drain innovation and economic progress. He also intentionally ignores the fact that the “growth” since the 1980s was all driven by this expansion of debt, yet he claims to intend to reduce it to zero. The obvious one-word question is “how?”, given the historical facts and that he does not allow for the economic contraction that is mathematically certain when the deficit spending is pulled back.
Simply put, GDP = C (consumption) + I (private investment) + G (government spending) + X (net exports)
Even a simple-minded US House member should be able to perform addition — or its complement in this case, subtraction.
If “G” is reduces GDP declines. If the alleged GDP “growth” historically has been driven by debt accumulation then either leverage in the system must increase further or GDP must go down.
The crisis in 2008 occurred because we hit the wall on the serviceable amount of leverage in the system as a whole. Incomes have not materially improved since that time and instead of allowing GDP to contract the Federal Government has replaced up to 10% of economic demand with borrowed money, exactly as did private consumers during the 2000s by withdrawing funds from their houses.
The path Ryan puts forward, by refusing to account for this and either find a way to evade this effect (that is credible and subject to being tested) or accounting for and accepting it, including the effects in the modeled outcomes, renders his entire document a massive and outrageous fraud upon the public.
PS: Do not take from the above that I endorse Obama’s plans. Those are public frauds as well. The fact that both major political parties appear to be incapable of telling the truth and repeatedly publish document like this that would be considered prima-facia felonies if promulgated as claimed and expected outcomes for a publicly-traded company is what we, as Americans, need to focus on — not the “beauty contest” we’re being presented. In point of fact our “choice” today when looking at the two major political parties is between ingesting strychnine and arsenic; electing either option will, with certainty, kill this nation dead. We must choose a different path and eject all these venomous vipers from Washington and our respective state legislatures.
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