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Archive for the ‘Entitlements’ Category

The Brewing Generational Conflict

Pushing Gen X Too Far

Financial promises made under different conditions and assumptions are null and void, period.

Essayist Eric A. touched on a key theme of the next decade in his two-part series A Brief History of Cycles and Time, Part 1 and Part 2: the political, social and financial dominance of the Baby Boom generation, and the eventual erosion of that dominance.

The promises made to the 76 million baby Boomers cannot be met. It’s really very simple: promises made when the economy was growing by 4% a year and the next generation was roughly double the size of the generation entering retirement cannot be fulfilled in an economy growing 1.5% a year (and only growing at all as the result of massive expansions of public and private debt) in which the generation after the cohort entering retirement is significantly smaller.

Just look at this chart: demographics is destiny, and the so-called Silent Generation (roughly those born 1925 – 1942) currently drawing Social Security and Medicare benefits is somewhere between half and 2/3 the size of the Baby Boom.

Meanwhile, Generation X that follows the Baby Boom is almost half the size of the enormous cohort currently entering retirement. Sorry folks, the numbers don’t add up, no matter how you finesse them: a smaller working population in a low-to-zero growth economy burdened with fast-rising debt cannot fund the pay-as-you-go retirement of 76 million citizens, fully 25% of the entire U.S. population.

(Recall that Social Security, Medicare and all other entitlements are pay-as-you-go. There is no trust fund; the current benefits are paid in full by taxes paid by current workers/taxpayers or by Federal borrowing via the sale of Treasury bonds.)

(The numbers and dates of generations are inexact; the Silent Generation, for example, is assumed to have missed serving in World War II but my father was born in 1926, joined the U.S. Navy in 1944 and was on a LST preparing for the invasion of Japan in early 1945, so this is not true of all Silents. The Baby Boom is typically defined as those born between 1946 and 1964, but many of those born in 1959-64 do not feel they belong to the “earlier” Baby Boom, and so some people divide the Baby Boom into two cohorts, or start Generation X in 1961. The lack of precision does not change the basic demographics.)

Everyone takes the present trend, takes out a ruler and pencil and projects it into the future, as if current trends will continue in a straight line. But they never do; the world is dynamic and trends change and reverse.

I have been surprised by the deep emotions that arise out of our cultural Id when generational characterizations and conflicts are openly discussed. Perhaps this is why these issues and feelings are rarely aired in the mainstream media.

In the free-form blogosphere, these officially inconvenient (i.e. suppressed) emotions are expressed, and these few honest expressions garner large audiences and a great many highly charged comments.

My position on the entitlements promised to the Baby Boomers has been clear since 2005 (Boomers, Prepare to Fall on Your Swords June 2005): demographics, the changing job market and the destructive consequence of financializing the U.S. economy render the entitlements promised (Social Security and Medicare) unpayable.

The current 115 million full-time workers cannot sustainably support the 110 million people currently drawing Social Security and Medicare/Medicaid–and the number of retirees entering these entitlement program will rise by millions in the decade ahead.

This worker-beneficiary ratio (already 1-to-1) will only become more unsustainable as Baby Boomers retire and the forces of The End of Work erode full-time jobs The End of (Paying) Work (January 21, 2009).

The Promises That Cannot Be Kept (July 6, 2011)

That Which is Unsustainable Will Go Away: Medicare (May 16, 2012)

The generation in power has the biggest stake in retaining the status quo.Anything that threatens the status quo threatens their power and all that has been promised to them by the status quo.

As a result, any real reform that reduces entitlements to a sustainable level is politically dead on arrival (DOA). Reform is thus as impossible as paying the promised entitlements.

Though he is often presented as belonging to a new generation, President Obama (born 1961) is a Baby Boomer in age, outlook and politics, accepting the fantasy that 25% of the nation can draw hefty, open-ended benefits from Medicare indefinitely.

The solution is to work backwards from what the current generation of workers can afford to pay, not to work forwards from promises made when things were different. The pool of money that can be skimmed from the productive economy via taxes to pay for national defense, the care of veterans, education, welfare in all its forms, corporate and individual, all the myriad departments of government and Social Security pensions and Medicare is not unlimited. Difficult choices will have to be made, and what was promised decades ago is not the key consideration: what is foremost is the sustainability of the nation as an ongoing concern, which means focusing on the generations coming of age and those shouldering the tax burden going forward.

It is a truism of the entitlement mindset that the greater the entitlements promised and offered, the greater the resentments and self-absorption of the beneficiaries. I have often written about the state of permanent adolescence the Savior State/entitlement mindset engenders:

Our Many Layers of Entitlement (September 29, 2011)

The State, Dependency, Addiction and Reciprocity (September 28, 2010)

Opting Out and the Culture of Entitlement (March 29, 2010)

Entitlements, Taxes, Inequality and Three-Way Class Warfare (September 20, 2010)

Tyranny of the Majority, Corporate Welfare and Complicity (April 9, 2010)

Entitlements and the Federal Deficit (February 5, 2011)

We desperately need an adult discussion focused on reality rather than resentment. The solution will require dismantling open-ended, everyone-deserves-everything Medicare, which will bankrupt the nation itself. The solution is currently “impossible”: The “Impossible” Healthcare Solution: Go Back to Cash (July 29, 2009)

As for pay-as-you-go Social Security, it will have to be means-tested: those drawing thousands of dollars a month in other pensions will have to let go of “what wuz promised” so other Boomers who have only Social Security can receive their full benefit. What exactly is so difficult about that?

I am a Baby Boomer, born 1953, and I hope our generation musters the courage to face reality and the need for re-assessment and adjustment and yes, the word that is tossed around in endless lip-service but avoided in the real world, sacrifice. Anything less will be a generational failure of monumental proportions.

I refuse to burden our children and grandchildren with mountains of debt so I can get the full measure of “what I wuz promised.” Financial promises made under different conditions and assumptions are null and void, period. Reality trumps “what wuz promised” every time.

What nobody dares say is that if the 76 million Boomers press their claims to the point the nation is bankrupted, then the next generations (X and Y) will have to wrest political power from the retirees, not for their own sake but for the sake of the nation and for the generations behind them.

Charles Hugh Smith – Of Two Minds

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Stupidity By The Masses On Entitlements

 

The following is making the rounds on Facebook:

 by genesis

My reply, which incidentally is all easily-verified, was thus:

No you didn’t. 

You were conned. 

You paid a tax, nothing more. 

This has been ruled on by the US Supreme Court.

That is the same Supreme Court that liberals believe has the right to ban guns (any or all), starting with the NFA and onward through Miller and more. 

It is the same US Supreme Court that the liberals say was correct in endorsing Obamacare. 

The problem is that the US Supreme Court ITSELF is a con; in Marbury .v. Madison they ARROGATED the right to change the Constitution to themselves, but no such power was ever delegated to them IN the Constitution or by Amendment thereof. 

All of those acts by the US Supreme Court are thus unlawful, and those that impugn fundamental liberty interests are openly seditious. 

But…. you believe in that court, so go take the issue up with them, SINCE THEY HAVE RULED YOUR SO-CALLED “PAYMENTS” NOTHING MORE THAN A TAX.

You can’t have this one both ways folks…..

The Market-Ticker

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The Real Problem With America: Morality

 

When you get down to it, the fiscal cliff, along with most of the rest of the political “problems” we face in this nation, come down to one thing: willful and intentional misconduct.

That’s a morality problem folks.

Let’s put the record on the table, shall we?

In 1980 total Federal Health Spending was $55.3 billion.

In 1990 it was $155.8 billion.

That’s about an 11% annualized increase.

At that rate what is US Federal Spending for a 65 year old 30 years hence when he dies?

$3,567 billion, or three times the size of the entire Federal Government in 1990.

Possible?  No.

Known in 1990?  Yes.

So what did the government do after that?  It started talking about and ultimately passed Medicare Part “D”, which dramatically increased future entitlement promises.

Who’s responsible for this?  Both Democrats and Republicans.  We have had both administrations and both parties in control of Congress.

Is the underlying problem simply that government is paying too much?  No, it is monopoly practices which took hold during the 1980s.

But was it just the 1980s?  Why no.  In 1970 the US Federal Government spent $12.1 billion on Health Care.  Remember, this was not long after Medicare was put in place.  Just 10 years later in 1980 the government spent more than four times as much.

Morals?  Where?  The fact that the medical industry would “eat” the government and ultimately destroy our society was known 30 years ago.  You were lied to by both parties and both parties continue to lie to you today.

They lie because you let them.

You let them because many of you are lying too.

Who are the people lying to?  Themselves.

Can you live beyond your means?  No.  So why do we allow it?  Why do we remove from personal responsibility the consequence of having children, for example?

EBT cards are one example.  It used to be that if you were hungry you could go to a soup kitchen and stand in line for a bowl of soup and some donated (and usually stale) bread.  It didn’t taste all that good, but it was reasonably nutritious; it usually contained beans or some similar source of protein, and occasionally some small pieces of meat, all donated.

But you had to stand in line before the church or other place running the kitchen, effectively announcing “I’m poor.

We decided as a society that your self-esteem is more important, and thus we started issuing “food coupons.”  That (partially) hid your poverty.  But even that was visible, so now it’s done via what looks like an ordinary credit card — but isn’t.

Why?

Because we’re dishonest.  We think it’s perfectly fine for people to hide that they’re sponging off everyone else.  We claim that self-esteem (in the negative sense) is not a motivator, even though we know that failure does motivate people (to not fail again!)  We further claim that you won’t get more of whatever you subsidize, even though we know you will, and that you won’t get less of whatever you tax.

These are all lies.  They’re lies that you tell yourself.  You tell your neighbors, friends and acquaintances those same lies.

Worse, you lie to your children, and tell them they’ll have a better tomorrow, and a better future, even though you know damn well that what you’re doing and demanding is destructive and mathematically impossible.

The worst offenders are school teachers, administrators and politicians of all stripes.  I have particular disdain for those political types that claim to be “for the people” or even worse, “for liberty”, because they’re not only lying they’re either doing so from positions of power or trying to achieve power through lies.  Teachers lying to students are particularly mendacious; those who use students for political protest (and there are many) or who selectively teach that collectivism is somehow superior and will “work” (even though history shows it never has) and then argue that they are somehow “special” and should have “retirements” that are guaranteed at a level that nobody else can achieve in private industry are in fact trying to defend the right to financially rape their students!

Want an example?  How about right here:

Two Michigan school districts closed Tuesday after hundreds of teachers called out, likely so they could participate in union protests tied to the expected passage of “right-to-work” legislation this week in the state capital.

FoxNews.com confirmed that the Warren school district had to close Tuesday after  so many teachers called out absent; WDIV in Detroit reported that the Taylor  school district had to do the same. A statement from the Warren system said that  by 8 a.m. local time, 750 staff members had called out.

 

A Michigan Education Association (MEA) member teacher who can’t seem to be able to spell our governor’s name. Pssst, it’s S-N-Y-D-E-R.

If you associate with any of these teachers in any way, shape or form or worse, are one, you are a pig.  You are a feral rat, a snake, a pile of used dogfood.  You deserve to rot under a bridge and your remains should be despoiled by wild fox and whizzed on by all who pass.  No parent should permit their child to remain in your classroom and any that does should be charged with felony child abuse.

Is my opinion clear enough or need I state it more-strongly?

We will never address what ails our nation until we cut this crap out.  It begins with you, I, and everyone else.  It begins with we the people demanding that those who we choose to associate with and those who we elect to office hold a higher moral standard and when they fail if they are in a position of powerthey be immediately removed and replaced by someone else.  If they are an associate then we must cease association until their behavior changes.

A nation and her people are only as moral and ethical as those who reside within it demand of those who lead, and especially those who instruct our youth.

Our founders were wiser than we, in the main.  John Adams comes particularly to mind, who said, among many other things:

“Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence.”

Indeed they are.

“While our country remains untainted with the principles and manners which are now producing desolation in so many parts of the world; while she continues sincere, and incapable of insidious and impious policy, we shall have the strongest reason to rejoice in the local destination assigned us by Providence. But should the people of America once become capable of that deep simulation towards one another, and towards foreign nations, which assumes the language of justice and moderation, while it is practising iniquity and extravagance, and displays in the most captivating manner the charming pictures of candour, frankness, and sincerity, while it is rioting in rapine and insolence, this country will be the most miserable habitation in the world. Because we have no government, armed with power, capable of contending with human passions, unbridled by morality and religion. Avarice, ambition, revenge and licentiousness would break the strongest cords of our Constitution, as a whale goes through a net. Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.

The responsibility begins and ends with us folks.

So your charge today, dear reader, is to do exactly that.

To accept that our government cannot fund that which we will not pay for in the present tense.

To demand that our government put a stop to the medical monopolies right now throughout the system, without exception, fear or favor.

To return poverty “assistance” programs to their former status which places your acceptance of such aid in public view; if “society” is paying for it then we have a right to see it, for good or bad, in all its splendor, and be able to count it, as this not only is a check and balance on people claiming that which they don’t really need, it also prevents hiding the scope of problems when they’re real.

Finally, I challenge you to look at your own personal associations in your daily life, and to decide.  This is not just a matter of your personal way of life, although it may appear that way.  We are, as a nation, governed by liars and thieves, yet arithmetic does not know politics nor will it sit still for them.  It just is, and if our conduct does not change in the immediate future the outcome as dictated by arithmetic will come and your weal — or woe — will be determined not just by your own conduct but also by the conduct of those who you choose to associate with.

Choose wisely, for the time remaining to choose at all is coming to a close.

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Another Unicorn Peddler (Payroll Tax)

 

It never ceases to amaze me how people get “column inches” in a paper like the NYT peddling nonsense like this gent is doing.  Oh wait; it’s not that hard to figure out – the media is not about reporting or even opinion, it’s about shaping opinion — and the truth, even arithmetic, be damned.

WE have two political parties in America, runs a saying that conservatives like to quote. One is stupid, the other is evil. And when they join forces to do something that’s both stupid and evil — well, that’s what we call “bipartisanship.”

The payroll tax holiday that passed Congress in the winter of 2010 was a rare exception to this pessimistic rule. Cutting the payroll tax was good short-term politics for both Democrats and Republicans: it was a tax cut that liberals hoped would double as stimulus, and a boost to the middle class that conservatives could support without embracing new federal spending. But more important, it opened the door to what would be good long-term policy as well — because more than almost any feature of the American tax code, the payroll tax deserves to be pared away into extinction.

Ross goes on to do what so many other so-called “populist” commentators do — he conflates the two components of the payroll tax and then talks about getting rid of one of them.

That’s intentionally dishonest and Ross knows it.

The Payroll Tax has two components, both of which are intentionally designed so that you, the employee, only “see” half of them.  Both halves, however, come directly out of your wages even though employers are forbidden by federal law to itemize the second half (the “employer contribution”) and show it to you on a pay stub as a deduction off what you would otherwise be paid.

Social Security has a number of very serious and I would argue intentional design features that are both racist and sexist.  For example, a black man is expected to live to be 70.8 years, while a white woman is expected to live to 81.2 years.  If we presume an equal retirement age of 65 (which the Social Security system does for equal benefits, assuming equal earnings history) the black man will collect benefits for 5.8 years, while the white woman will collect them for 16.2 years, or 279% of the black man’s Social Security payments.  Note that a large percentage of the difference is found in things that kill black men before they reach 65; those people get exactly nothing.

All paid in, however, the exact same amount of money.

That’s racist and sexist — and intentional.  Those who pay in and get nothing wind up being the net “suckers”; they have no choice but to pay, but they get zero since their payments do not have their name on them – they’re just a tax.

In addition Social Security is “progressive” in that the amount of benefit you get from further contributions once you reach the minimum requirement is less, on a ratable basis, than what you paid in.  That is, the lower-income person gets a larger benefit in proportion to their paid-in capital than the higher-income does.  Further, the FICA cap and payout cap means that beyond a certain level of contribution, which is reasonably modest and occurs in the middle class income band, you get nothing further at all.  Of course you pay nothing more either, so that, I suppose, is “fair.”

Nonetheless Social Security is fixable without a lot of drama, although we certainly should talk about whether the program should exist at all, or whether it should exist in its present form.  The reality is that the payroll tax has become a convenient slush fund from which the government steals, and which causes the reported deficit to be smaller than it really is.  It was responsible for Clinton’s so-called “Surplus”, which in fact never happened — he simply stole the amounts paid in from the payroll tax that were not immediately disbursed as benefits!  Every President since Ronald Reagan has done the same.

To fix Social Security removing the payroll tax abatement is required, as is indexing the full benefit retirement age to longevity.  If we want to fix the sexist and racist elements as well, we could index the retirement age by race and gender; this would work because the persons with the lower life expectancy would also pay in for fewer years and likely would have lower benefits, but they would last for the same average amount of time as does someone who is of a longer-lived race and/or gender.  This could be adjusted on a five-year sliding scale to account for changes in demographics.

The real problem with the payroll tax is found in Medicare.  The Federal Government went from spending $53 billion on all medical services in 1980 to about $850 billion last year.  The average retiree gets between three and five dollars out from every dollar they “contributed” during their working years.  To put this in perspective the payroll tax is 3.8% for Medicare (both halves) and if we look at the average working wage of about $50,054 (all workers, all races, US Census Bureau) then the payroll tax for Medicare is $1,902 annually (both halves.)  Over a 45 year working life this amounts to $85,592.34.

How long does this amount of money last? 

The fact is that the average expense that Medicare puts forward for a given retiree is close to $300,000!

There is simply no way to make the books balance given these facts; to make the books balance either benefits must be cut by more than two thirds or the 3.8% Medicare tax must more than triple.

This has been hidden intentionally from the public debate on entitlements because both Democrats and Republicans know what the figures say, and they also know there are only three choices when it comes to solving this problem:

  • Triple the Medicare tax to approximately 12%, 6% each for employer and employee with no earnings cap.  Incidentally, this is only the forwardcomponent for retirement; you still have medical costs during your working years, insured or not!
  • Dramatically curtail Medicare benefits — by a literal 2/3rds or more.  That’s not going to be popular, but it’s what is inevitably coming if we don’t solve this, because the law does not permit Medicare to go into negative balances, and by the end of the decade it will.

  • Break the medical industry’s monopoly-style pricing and controls.  Up and down the line, from drugs to devices to “CON” laws and more.  In short, make the entire industry from insurance to providers to hospitals to doctors accountable under Sherman, Clayton, Robinson-Patman and first-sale doctrines, along with removing all shields that prevent them from being attacked under Racketeering and similar statutes for any element of price-fixing or other anti-competitive behavior.  This would cause prices to collapse by 75% or more, and suddenly the problem goes away.

#3 is the only way that can work in the long term.  But #3 causes an instant deep recession or worse, as the short-term impact of removing that spending from GDP will be immense.  It also destroys the political power of these companies and groups, such as the AMA and the insurance industry.

What you’re seeing in editorials like the one cited above, along with the so-called “debate” in Washington (and what drove Obamacare) is the inherent scam and fraud in the system as it has been designed and implemented. Whether FDR intended Social Security to be racist and sexist at its inception is not material to the debate, but the factual outcome as it exists today most-certainly is!

Yet nobody — not Democrat, Republican or even the so-called “Libertarian” party, all of which espouse equality under the law for all persons, will take these issues on and bring them to the forefront of public and political discussion.

Instead what we get is the Three-Card Monte game run by columnists in the NYT, along with the political class, seeking to divert us from the facts and figures that are right under our noses.

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The “New Normal” In Pictures

 

Some ugly facts for your Saturday….

From 1990 to 2000 GDP expanded at an average rate of 4.80%.  Debt expanded at an average rate of 7.51%

From 2000 to 2010 GDP expanded at an average rate of 4.13%.  Debt expanded at an average rate of 6.55%.

From 2010 to 2Q 2012 GDP expanded at a rate of 3.93%.  But debt expanded at only 0.94%, which is a massive paradigm shift from the previous 20 years.

This is good instead of bad, right?

In a word, no.  It is signaling the end of the self-delusional game we’ve been running for the last three decades.  That endpoint is here, now and today.

Real economic growth has to subtract out government deficit spending. When you do that it looks like this:

There has been no growth of materiality since 2000.  We cheated.  And we cheated before too, but in the private sector with all the Internet scam companies that blew up in the tech wreck.

And by the way, at current run rates (although the numbers are not in yet) this year in terms of actual deficit and actual adjusted GDP will be almost identical to 2011, unless something dramatic changes in the next two months.

We have a grown a few things though.  First, let’s look at the growth in Federal (only) health spending.  This is what we’ve done thus far (smoothed, using the endpoints — $53 billion in 1980 and $850 billion last year.)

And then there’s what that rate projects out to for the next 35 years, which is what the government has promised all those who are 50 and older – your Medicare will not change if you’re 50 or older — remember?

Best of luck with that, Kemosabe; roughly $16 trillion on federal health spending alone in 2043?  smiley

By the way, for the math-challenged by 2029 we will spend more on health care than the entire federal budget is today.  If you believe that can happen, say much less that 2043 will happen, I have a bridge for sale in Brooklyn.  The foundation might have had a bit of trouble of late though.  I think it was called “Sandy”.  Heh, that works, doesn’t it?

Of course we’ve all heard that the economy is recovering since early 2009.  That recovery must be real because this statistic is just skyrocketing — the number of people (and households) on food stamps.  Uh, if the economy is recovering, why does this number keep going up and why has it gone up by more than 50% in the last four years — and has never gone back down?

That must be because the fine government people and “eCONomists” are all lying to you.  Let’s see if we can find the lies.

We’ll being with employment.  We keep hearing that we’re gaining jobs.  This is half-true.  We have in fact added 7.2 million jobs from January 2010 to today.

Unfortunately we also added 7.15 million working-age people during the same time period.  So in point of fact, we added jobs – all 50,000 of them, when you account for working-age population growth.

Eh, that’s not so good, and nobody wants to talk about that.

Of course during the same time gasoline prices have roughly doubled, and most food items are up dramatically in price — 50% or more.  Milk, eggs, cheese, meats.  I wonder if that would force people onto food stamps — stagnant employment and outrageously-rising costs.

It just might!

Why is that happening?  Well that might be due to the Federal Budget.  Ok, ok, it’s not really a budget because they didn’t pass one.  But this is where we’re spending our money, and where we’re taking in money in taxes — and what we’re putting on the credit card.  I ordered a few things to point out that we must pay the interest, we must pay “General Government” (that’s the light bill for the Capitol, among other important things) and we probably want to pay for things like the Fibbies (various federal law enforcement entities and their infrastructure.)  It’s also important to keep in mind the size of those shards of the budget, so when someone says “but the FBI and government is so wasteful on such programs” you can point to exactly how much we would “save” if we stopped doing all of it.

That is, not enough to matter.

 by genesis

So if we were to stop deficit spending today we could pay the interest on the debt, we could pay for the lights in the White House, we could pay for the FBI and similar, we could pay for Medicare, Medicaid and Social Security.

But then we run out of money half-way through Defense and have nothing for Welfare, Other spending, Education or Transportation. 

Zip, zero, nada.

There’s this little problem with that chart too which explains all of the above with employment and food stamps, along with the other markers of actual economic health.  That nasty red bar with the label “Debt”, and which both sides of the aisle claim we can continue to add onto every year, is actually dilution of the nation’s wealth.  This is exactly identical to imposing a tax, and it’s over a trillion dollars annually.  In point of fact from 2008 to 2012 (calendar) it has been $1.40 trillion, $1.647 trillion, $1.852 trillion, $1.225 trillion and at the current (10 month) run-rate for 2012 it will be $1.246 trillion this year.

Remember, President Obama, when he took office, told us all that he would cut the deficit in half from the fiscal 2008 level, which was about $600 billion, by the time he came up for re-election.

He instead more than doubled the annual deficit and added about $5 trillion in debt across his first term.

And let’s not forget that this is not just a Democrat thing.  Oh no — all spending bills must originate in The House.  Without the House there is no spending and there is no deficit.  And who controls The House?  Why that would be Mr. Speaker Boehner, and I do think he has an “R” after his name.  Despite all the screaming about “fiscal responsibility” he (and Paul Ryan) are abject liars; when push comes to shove they are all more than happy to shove all right – they shove you, your children and every senior citizen right into the hole right along with help from Obama, Nancy Pelosi and Harry Reid.

But that’s not the bad news.  The bad news is that at the rate of escalation going on today we will try to do this by the end of the decade:

 by genesis

Now that is just not going to work at all; we’ll pay that light bill, the Fibbies and Health Care but then will run out of money about halfway through Social Security, at which point the FBI will have plenty to do as Granny’s shotgun comes out.

So as you go about your weekend, contemplate these facts:

  • You can’t fix medical entitlement spending.  You instead have to fix the medical system, and the only way to do that is to pull all of the monopoly-style protections so that the cost of care in terms of dollars spent crumbles by 75% or more.  This will result in a lot of short-term unemployment and contraction in GDP, but if it’s not done our government and society will blow up.  This is a mathematical certainty.

  • You can’t keep escalating defense spending either.  But to fix that you must solve our energy dependence problem, because a huge part of why we spend over $750 billion a year is found there.  Oh, it might help if we didn’t hand man-portable anti-aircraft missiles to our “friends” that happen to be affiliated with Al-Qaida too, as we reportedly did in Libya.

If we contracted Medical Spending by 75% and Defense by half, expiring the payroll tax credit and indexing Social Security retirement to longevity we would balance the budget and stop destroying our nation’s competitiveness and middle class.

Doubt me?  Here’s the graph, and those three things are all I changed; Social Security does not move in expense but tax receipts go up due to the payroll tax cut expiration by about $200 billion a year.

 by genesis

There isn’t any other way to do it.  Welfare, even if cut dramatically, can’t be cut enough.  Other spending, education and transportation don’t have enough margin in them either — even cutting them in half won’t get there.  Social Security can be slowed in escalation but in point of fact most of it is paid for by the Payroll Tax, or at least it was before Congress raided it with the allegedly “temporary” payroll tax deduction that costs about $210 billion a year in revenue.  Indexing retirement to longevity gets us the rest of the way there by halting the advance of spending on that program.

It comes down to medical spending and defense, and with medical spending the only solution is to remove the monopoly protections and allow competition to force the industry to eat well over a trillion dollars a year in decreased gross revenues, accepting the impact that has on the economy and employment in the short term.  On defense we must resolve our energy dilemma and stop pandering to the Middle East, then literally go home, cutting defense spending in half.  There is no other answer; raising taxes to close the debt gap is exactly identical to what we’re doing now in terms of economic damage; the downward spiral will continue if that is attempted exactly as if we do not and keep trying to deficit spend our way out of the hole.

This is reality folks, and yet nobody wants to face it.

Arithmetic cannot be bargained with.

It just is.

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What Our Nation Refuses To Face

 

This is the sort of animal that we simply will not face in this country.

Romney make me wanna hop through the tv & just assasinate his ass .— Alyece Johnson (@alyy_joee)

….

I aint gone lie… Food stamps the shit! I mite assasinate romney my damn self if he get elected ! I fuxx wit free 99 on the eats

….

If Romney win , a nigga gone murder ass .. smh— Blake Griffin Yo Hoe (@DamnGurlYuNasty)

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If Romney win, IM GOING TO JAIL FOR MURDER cuz imma whack his bitch ass ASAP— Birthday Oct 20th (@AKOOjunky)

And dozens more.

And what’s got people all worked up?  The possibility that they might have to work instead of simply suck off other people’s labor.

Remember this?

“It was the most-memorable day of my life.  I won’t have to work.

Want to know why I’ve been rather “on” about where our nation is headed and what’s to come?  Do you really need to know more after reading and seeing that — and realizing that this is not about a racial issue at all, in reality (despite how some people are spinning it) but rather simply about refusing to face the fact that our politicians have and are continuing to refuse to face the fact that without productive output there is literally nothing?

There’s nothing to tax.

There’s no way to “create demand.”

The last 30 years have “taught” Americans that they don’t have to actually get off their fat asses and make an effort.  They don’t have to live in under a bridge or in a box if they decide to sit on their butts and play “homie” instead of waking up in the morning and getting out there in the world, finding a way to make something with their hands, mind or brawn, negotiating with someone else so as to provide economic output from human output.  We don’t have to deal with the fact that not everyone can have $500,000 worth of medical care through their life when they produce nearly zero in surplus economic output beyond their immediate needs in food, shelter and energy during their lifetime — and that which they do have in surplus instead of saving for said health requirements later in life they blow on an iPhone and chrome wheels for their “ghettomobile.”

At the same time our government bestows special protections on various segments of industry so it too does not have to compete.  Health care is the worst but far from only sector where this happens.  Education is one of the more-recent; during the alleged “debates” everyone talked about making sure people could borrow more and more money, but neither of the “big two” candidates and none of the third-party ones have said word #1 about reversing the policies that make student loan debt “special”, elevating it to a status beyond that of child support and turning it into effective enslavement.

This change has turned college into a bad joke, where “free money” chases goods and services, driving up prices on a radical and continuing basis.

We then act like good little sheep and goad our young adults into signing themselves into bondage, an act which our kids should respond to by eating those who made that recommendation, starting with the most well-marbled.

Ben Bernanke openly flaunts the very statute that gives him a jobrepeatedly braying about his alleged “2% inflation” when the actual words of the mandate are stable (that is,unchanging) prices.

Our Congress provides incentives for and allows offshoring of millions of jobs to China and India in the name of “free trade” where 14 year olds are impressed into forced labor, others are driven to literal suicide by their working conditions while the air, water and soil are poisoned with industrial waste.  This is undertaken so companies like Apple can make billions in “profits” and have a $600 stock price, we can have folks like Kudlow and Cramer cheer on ”a roaring market recovery” and you can have your “status symbol” — the most-important thing in the world and worth camping out on a sidewalk to acquire.  This form of human arbitrage and abuse of people is called “free trade”; a particularly outrageous bit of irony given that the nation involved and the word “free” are never used correctly in the same sentence.

At the core of rot in our nation lies corruption, fraud and counterfeiting via actual and effective acts.  We are told that banks take in deposits and then write loans with a reserve, but that’s a lie; Bernanke asked for and got in TARP the ability to set reserves to zero.  The truth is that banks haven’t worked that way in ages; they first counterfeit the money and cut you a cashier’s check backed by nothing at all, you spend it, the merchant deposits the spent funds and then they reserve some of what comes back in — maybe.  Note that at no time did the funds lent actually exist first.  This is called a “naked short” when done in the stock market and is a crime, but it’s also done every minute of every day by the banksters and we call it “making money.”

Well, I guess it is, after a fashion, but if you’ve wondered why this chart looks like it does:

You should now understand.

The usual check and balance on this sort of behavior is that you’d have to find someone to put up capital to lend out and he or she would be very interested in making sure you could pay.  But our capital has been offshored to China and replaced by credit at the federal level, hollowing out our capital base and turning our nation into an empty shell filled with people who continually demand more and more “free shit” that the politicians provide while pointing to the stock market as evidence of “success.”

Nonsense.

There is a mathematically-certain collapse in our funding and economic model in the offing and we are now at the point where the actions we have left available to us can only change the outcome from catastrophic to “big suck”, but cannot avoid the inevitable and ugly adjustment that must be taken.

But nobody — and I do mean nobody — in the political class will take up these issues, most-particularly the unbacked emission of credit by everyone including government, laws protecting effective monopoly behavior in the health industry, offshoring that exists only due to the wanton and outrageous abuse of people not far from what Kony is doing in Uganda and the “Free Shit Army” that must be cut off here and now, being told in no uncertain terms that if they choose to try to riot instead of making an effort to better themselves and their lives we will solve our unemployment problem in America through their assumption of room temperature via lawful self-defense.

As such all you can do is be personally prepared for the worst possible outcome, because on the road we’re traveling that’s exactly what is to come.

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