the room… ENTITLEMENTS
May 12, 2012
going to eat us.
a look at the essay in Forbes that outlines ten reasons why we should
scared. The lion in the room: ENTITLEMENTS.
three problems with entitlements – and those would be federal
programs like social security, Medicare & Medicaid and
problem is one of language: entitlements. The left has co-opted the
and defined terms in their political leaning. As the adage goes, repeat
often enough and people will believe it. We on the right side of the
spectrum have allowed the left to get away with this and now the nation
getting ready to pay the price.
Why, in a
free society – and to be clear, I’m talking about a society that
individual freedom, not a society that gives people “free stuff” –
anyone be “entitled” to anything beyond the opportunity to pursue their
Why does society – the government – “owe” me a retirement plan or
insurance? And, if you’re going to try to scramble some answer to that
question, please include a reference from the U.S. Constitution. Bottom
there is no reason, either constitutional or moral, why you should pay
problem is the mindset of politicians, the major media and probably
people, and that mindset is captured in this from Forbes.
Medicare was introduced in 1960’s, it was described as “brazen
socialism” in the
Senate. When Truman proposed a national healthcare program in the
plan was called a Communist plot by a House subcommittee. And when
Roosevelt introduced Social Security in the 1930’s, he was branded as a
Communist sympathizer by Republican Senators from Ohio, Pennsylvania
Minnesota, publisher William Randolph Hearst and Alf Landon
opponent in the 1936 Presidential election). So in 1969, when the US
found that one quarter of Americans over the age of 65 lived in
politicians showed courage in creating a larger social safety net.
mine. Politicians showed courage… Please. Politicians found a way to
permanently link a population group – seniors – to the growth of the
government. And, those who opposed Social Security and Medicare were
right and I hope there’s a hot place in Hell for those who voted to
Now for the
third problem, and that’s the cost of the programs. They are not
any way, shape or form. These programs need to be privatized and the
government needs to be out of the retirement and health care business.
look at Medicare, again from Forbes.
In the late
1960’s, the government estimated that Medicare expenses would grow by 7
by 1990 (unadjusted for inflation); they grew by 61 times instead.
little miss, but typical of government accounting and an example of
the critics of Medicare were absolutely right.
Security is no better. The program was originally passed as a
retirement program and was structured in a manner that had double
workers for every retiree. It was also scheduled to pay out in a manner
most Americans would never collect a penny given that the SS retirement
several years older that the average life expectancy. Today there are
approximately two workers paying into the SS system for every retiree
system is funded from cash flow not investments. THERE IS NO SOCIAL
“FUND”. The estimated “benefit” you see on your periodic Social
mailing – recently put online to save mailing cost – is not guaranteed
be modified or eliminated at any time. The money you pay into the
taxes is not yours, it’s not part of your estate, as a 401K or IRA
it’s the property of the U.S. Government.
Social Security and Medicare, the U.S. – make that my kids and yours –
facing an unfunded liability of over $100T. One hundred trillion
dollars. To be
paid for with future tax increases.
Forbes says about those tax increases.
would tax rates have to rise to support entitlements growing at 5%-7%
if nominal GDP grew at 4%-5%? First, the 2001 tax cuts would have to
all brackets, and then tax rates would have to be raised by the same
everyone. At that point, federal debt to GDP would still be well above
levels, but at least it would create some borrowing capacity to fund
entitlement payments. The question is what such a policy would do to
like Forbes, but this is simply a sappy analysis. They provide
facts in terms of where the money could possibly come from or how much.
also don’t bother to note that the U.S. is currently carrying debt that
our “debt-to-GDP” ratio over 100% and all they’re talking about is
some borrowing capacity to fund entitlement payments.” In other words,
doubling the current tax rates will give us the cash flow to borrow
money to pay the light bill.
final sentence makes me wonder what planet the editors of Forbes live
Certainly not earth. There should be no question about what will happen
growth and employment, and if you wonder at all, look at Greece.
is roughly 50%, there is no “growth” in the economy and their stock
closed today at a 20 year low and don’t count on a rebound any time
must be dealt with, and very soon or we’re looking at the explosion of
economy. Half measures are no longer acceptable; the system is so
tweaking won’t work. (Interesting side note to consider when listening
politicians who want to make minor changes to entitlements – “tweak
them” – on
the street, crystal meth users are known as “tweakers”.) Paul Ryan’s
plan is a
start. The Tea Party Senators plan is a better start. None, however, go
Will a man
or woman of principle raise up with the courage to address moving
and health care out of Washington DC? I certainly hope so but I’m not
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