Dr. K reminds us that our FICA taxes are not put away in some “lock box” to be returned to us in the form of social security/medicare benefits when we retire. Essentially we are paying the benefits for current retirees and the remainder is going back to the United States Treasury to pay for infrastructure. When Social Security was first introduced the average life expectancy in America was around 62years old, but using the current actuarial statistics we are going to be running out of money to pay for the entitlements. Sadly, social security reform is the “third rail” of American politics i.e. instant death because left-wing politicians will demagogue the issue whenever responsible people seek to reform the S.S.A. with cries of “The Republicans are going to take away your benefits”. Barack Obama – who views himself not as president but king of the United States, will pass the problem on to his successor.
by Charles Krauthammer
Everyone knows that the U.S. budget is being devoured by entitlements. Everyone also knows that of the Big Three – Medicare, Medicaid and Social Security – Social Security is the most solvable.
Back-of-an-envelope solvable: Raise the retirement age, tweak the indexing formula (from wage inflation to price inflation) and means-test so that Warren Buffett’s check gets redirected to a senior in need.
The relative ease of the fix is what makes the Obama administration’s Social Security strategy so shocking. The new line from the White House is: no need to fix it because there is no problem. As Office of Management and Budget Director Jack Lew wrote in USA Today just a few weeks ago, the trust fund is solvent until 2037. Therefore, Social Security is now off the table in debt-reduction talks.
This claim is a breathtaking fraud.
The pretense is that a flush trust fund will pay retirees for the next 26 years. Lovely, except for one thing: The Social Security trust fund is a fiction.
If you don’t believe me, listen to the OMB’s own explanation (in the Clinton administration budget for fiscal 2000 under then-Director Jack Lew, the very same). The OMB explained that these trust fund “balances” are nothing more than a “bookkeeping” device. “They do not consist of real economic assets that can be drawn down in the future to fund benefits.”
In other words, the Social Security trust fund contains – nothing.
Here’s why. When your FICA tax is taken out of your paycheck, it does not get squirreled away in some lockbox in West Virginia where it’s kept until you and your contemporaries retire. Most goes out immediately to pay current retirees, and the rest (say, $100) goes to the U.S. Treasury – and is spent. On roads, bridges, national defense, public television, whatever – spent, gone.
[…]
On Tuesday, Democratic Sen. Joe Manchin of West Virginia denounced Obama for lack of leadership on the debt. It’s worse than that. Obama is showing leadership. With Lew’s preposterous claim that Social Security is solvent for 26 years, Obama is preparing to lead the charge against entitlement reform as his ticket to reelection.
Read the rest: Et tu, Jack Lew
Jonah gives us a good example of what frugality means to a Democrat.
by Jonah Goldberg
By earth-logic, if you got a raise of 10 percent last year, but this year you’re only getting a raise of 8 percent, you’re still getting a raise. On Planet Washington, that qualifies as an indefensible slashing.
So when the GOP cut $4 billion from the budget last week, the Democrats acted as if it was an involuntary amputation.
Now the GOP wants to cut $61 billion of discretionary nondefense spending from the total budget of $3.7 trillion, and Democrats are responding as if this will spell the end of Western civilization.
But given their terror of forcing a government shutdown, Democrats were forced to counteroffer with a cut of $10.5 billion, or 0.28 percent of the federal budget.
Imagine you have a budget of $10,000 (about 40 percent of it borrowed on a credit card), then “slash” 28 bucks. That’s what it’s like to be a frugal Democrat.
“Fox News Sunday” host Chris Wallace repeatedly pressed Sen. Dick Durbin: Is $10.5 billion in cuts “really the best the Democrats can do?” The No. 2 Senate Democrat responded, eventually: “We’ve pushed this to the limit.” Any cuts beyond that would simply crater our economy and gut “investments” to make us competitive with China. Apparently, Durbin thinks trimming the staff at the Oregon National Laboratory will result in us all becoming busboys at a Beijing restaurant.
Meanwhile, House Minority Leader Nancy Pelosi’s solution to the deficit is — wait for it — spend a whole bunch more. In October, Pelosi said that every dollar spent on unemployment benefits and food stamps puts another $1.79 into economy. “It is the biggest bang for the buck when you do food stamps and unemployment insurance.”
Her latest version of teenage-mutant ninja Keynesianism is to “invest” even more on education. “Nothing brings more to the treasury than investing in education,” Pelosi said.
[….]
Would another trillion spent on education really have a greater return than, say, allowing US companies to drill for the billions of gallons of oil and the trillions of cubic feet of natural gas under our soil?
Why am I talking about Durbin and Pelosi? Well, Obama is in a fetal crouch under the Oval Office desk, muttering something about the need for courage and bipartisanship while quietly proposing $6.5 billion in cuts, which the Congressional Budget Office said is really only $4.7 billion. (That’s about $700 million more than the US spends in borrowed money every day.)
Oh, and Senate Majority Leader Harry Reid seems determined to keep talking until the men in the white coats escort him off the Senate floor. He was last heard saying the GOP has gone crazy because it had cut funding for a Nevada cowboy-poetry festival. No, really.
In 2007, the budget was 19.6 percent of the GDP. In 2009, it went up to 25 percent of GDP. That’s where the Democrats would like to see it stay.
[…..]
We owe $14 trillion we don’t have. Our total liabilities — i.e., Social Security and other entitlements — dwarf that. So we can’t just cut discretionary spending alone. But if it’s this hard to ask cowboy poets to pony up, how are we going to deal with what everyone agrees is the much harder stuff?
Read the rest Planet Washington
Tags: Charles Krauthammer
