March 8, 2010

Ruining a Country for Smarties

NoObamaCare0809If leftists are so smart, why are we so broke?

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Note: What follows originally appeared at Pajamas Media under the title “Should the ‘Smarties’ Really Be Put in Charge of Health Care?” and was teased here at BizzyBlog on Saturday.

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In a delicious coincidence, another supposedly scientific study telling us that liberals and atheists are more intelligent than everyone else appeared during a weekend when two dreadful reports on the tangible results of their supposedly superior circuitry arrived.

I’ll leave detailed critiques of the study to others, but you’ll have to excuse me for suspecting that its conclusions were reached using the same degree of experimental rigor and attention to detail last seen in attempts to “prove” that human activity causes global warming.

The Treasury Department delivered most of the evidence of the wonders done for us, or I should say to us, during the past 75 years by those higher beings on the left known as liberals, leftists, and “progressives” on Friday. It came in the form of the “2009 Financial Report of the United States Government,” a 254-page, 2.4 megabyte behemoth which tells us where the nation stood financially on September 30 of last year in painstaking detail — with a heavy emphasis on the pain.

The report’s Table 1 (seen at right) lays out Uncle Sam’s balance sheet, but also has two big line items near its bottom, under the category called “Social Insurance Net Expenditures.” These really represent taxpayers’ obligations to future government entitlement program beneficiaries. The first listing, amounting to $7.677 trillion, is Social Security.

Following much of the model pioneering smarties like Bismarck had initiated in Europe, that quintessential smarty Franklin Delano Roosevelt got his rubber-stamp congress to pass the Social Security Act in 1935, primarily as an old-age retirement plan. Its early cost  of 1% of the first $3,000 of individual earnings, plus a matching amount paid by employers, was modest enough, while early Social Security Administration publications promised workers and employers that their taxes would never increase.

Oops. The program’s subsequent history is one of continually increasing tax rates and taxable amounts, while the roster of those forced to make “contributions” has grown to include the self-employed and many others. In 2010, employers and employees must each pay 6.2% of the employee’s first $106,800 of earnings into the system. The maximum amount a person and his employer might pay of $13,243 (12.4% x $106,800) is over 220 times the program’s initial price tag of $60 (2% x $3,000).

Yet the reported $7.677 trillion liability shows that it’s still nowhere near enough to meet future promises, primarily because:

  • FDR and his smarties didn’t build the improved life expectancy of future generations into the program. If they had, today’s normal retirement age would be somewhere between 70 and 75, instead of its current 66-67, depending on one’s year of birth.
  • The method of indexing chosen in the mid-1970s has caused benefits to go up faster than the real living standards of everyone else, and has subtly changed the program’s perceived purpose from preventing destitution to providing the means to ensure a lower middle-class lifestyle.
  • The smarties also didn’t anticipate lower birth rates that were already occurring, and which were then dampened even further almost 40 years later by legalized abortion. As a result, at the end of 2008 there were less than 2.6 employed workers for each Social Security beneficiary (143.3 million divided by 55.8 million). (Update: The job losses of the past two years and the accompanying wave of retirements to collect Social Security benefits have taken that ratio to below 2.4.)
  • Additionally, as shown in several previous columns (one is here), the so-called Social Security “Trust Fund” has been wantonly raided for the past 40 years and used to pay for the government’s everyday operations. The “Trust Fund” contains virtually nothing except $2-plus trillion in IOUs from the rest of the government, which is itself trillions of dollars in debt.

Because of all of this, even the astronomical taxes noted earlier have been less than benefits paid for most of the past year — and it’s going to get worse. The crisis that supposedly didn’t exist in 2005 is here. Thanks, smarties.

As bad as Social Security is, the $38.1 trillion future obligation for Medicare, a mid-1960s creation of the oh-so-brilliant, is almost five times worse. Besides having most of the design flaws just noted, the program has consistently driven up medical costs faster than inflation and is riddled with roughly $60 billion a year in fraud, a double-digit percentage of the program’s 2008 cost of $468 billion.

As a reward for its 45 years of miserable Medicare management, the government’s smarties now want to control the entire health care system. Besides the myriad moral reasons why this cannot be allowed, there’s a more practical one, which arrived with full force in the other bit of weekend news, when we learned that our supposed betters have already committed to spending what they think they have available for statist health care on covering their screw-ups in housing and mortgage lending.

After the markets closed on Friday, February 26, former “government-sponsored enterprise” Fannie Mae, which is now a ward of the state, announced that it lost over $74 billion in 2009. Combined with the $26 billion loss at Fannie’s kissing cousin Freddie Mac, that’s $100 billion down the drain in just a year. There’s no real end in sight to the government’s open-ended financial commitment to these two zombies. The ultimate price tag could top $1 trillion; one congressman thinks it’s more like $5 trillion. What’s more, the commitments to Fan and Fred aren’t included in the Financial Report above.

No one who can add two plus two can possibly think there is any real money available to pay for state-run health care, and nobody familiar with the smarties’ track record can possibly believe their breezy claims of cost savings. Instead, regardless of intentions, we will inevitably see draconian cuts in the quality of care, serious rationing, and Zeke Emanuel-like death panels.

At some point, you have to ask yourself, “If they’re so smart, why are we so broke?” It’s hard not to believe that the real answer to the question is, ”Because they want us to be.”

Lucid Links (030810, Morning)

Filed under: Lucid Links — Tom @ 9:39 am

From the “Be Careful What You Wish For” Dept. — The apparently well-orchestrated hatchet job done on Toyota in advance of and during congressional hearings did not hurt the company’s February sales as badly as analysts predicted.

But just to make sure, Toyota is making a move just about every other maker has employed frequently but which I don’t think the Japanese company has ever done before — 0% financing for 60 months. In other words, the company is upping the competitive ante.

Megan McArdle thinks this is an act of desperation. I think it’s more like playing possum.

Unless the government and the press figure out a way to up the anti-Toyota ante even further, I think that its March sales will bounce back to about where they were before its recall issues hit, and that a certain pair of formerly proud automakers that are now wards of the state will be the ones most severely hurt by the resurgence. If I’m right, it couldn’t happen to a more deserving bunch.

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Do you realize how desperate Eleanor Clift of Newsweek had to be to find something, anything from 1994 to point to as a “success” of the Clinton administration’s first two years? After what had to be hours of futility, she “found” it (HT to WoMD’s Mark during a break in Saturday’s stellar broadcast) in the 1994 crime bill, known for its attempt to up 100,000 additional cops on the streets (which didn’t happen; the money was used largely to ease tight municipal budgets) and its “midnight basketball.”

Clift claims that the crime bill was a short-term liability that contributed to the Democrats loss of their Congressional majorities in the 1994 elections, but that it was a long-term success.

Actually, it was at least 10th on the Democrat-sourced list of reasons to boot out the party in power, after the following: income tax increases, Medicare tax increases, increased taxation of Social Security benefits, the thankfully stopped HillaryCare, the administration’s clear and visible hostility to the military, the Whitewater corruption, Troopergate, the House Bank hangover, and Dan Rostenkowski’s unique brand of corruption. But the best reason for the House and Senate takeovers was the clearly defined agenda contained in the Newt Gingrich’s Contract With America.

Clift’s claim that the crime bill was a long-term success is attested to by the fact that in Ohio by the late 1990s, I could walk down any street in Akron, Canton, Cincinnati, Cleveland, Columbus, Dayton, Toledo, or Youngstown and have absolutely no legitimate worries about my personal safety. Uh-huh.

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ISM catch-up — Last week’s news from the Institute for Supply Management was pretty good. ISM’s Manufacturing Index for February fell a bit from January’s 58.4 to 56.5, but it was still significantly expansionary (anything over 50% indicates that). The index’s employment component indicated that employment was increasing, and at a faster rate.

More important, since it’s about 85% of the economy, the group’s Non-Manufacturing Index moved more solidly into expansion, rising to 53.0 from January’s 50.5 — and though its employment index was still in contraction, it moved much closer to break-even.

Reports such as these out of ISM would ordinarily be advance indicators of increased full-time employment. Whether they will be depends on whether the recent spikes in temporary employment are intended to go lead to additional hiring at client companies, or are instead indications that companies are doing everything they possibly can to avoid adding to their own full-time payrolls in what the Wall Street Journal has called the Uncertainty Economy, and what yours truly has been calling the POR (Pelosi-Obama-Reid) Economy since June of 2008.

I believe it’s much more the latter than the former. At least around here, people tell me that the temp agencies have almost exclusively temporary positions, and precious few temp-to-perms.

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Darn, I was soooooo looking forward to ripping into the ethically challenged outrageous quote machine known as Pete Stark as he took over the reins of the House Ways and Means Committee from the ethically challenged outrageous quote machine known as Charlie Rangel.

Alas, Stark was a bridge too far for Democrats, who uncharacteristically recognized bigtime trouble ahead of time.

Stark got some attention here at BizzyBlog in October 2007 (third item at link) when he claimed on the House floor that the country was sending troops to Iraq so they could “get their heads blown off for the president’s amusement.” That was so over the top that Stark was forced into a tearful apology several days later.

It looks like there may be fun to be had with Sander Levin, the person who will assume the Ways and Means chair, based on this Roll Call item:

Newly anointed House Ways and Means Chairman Sander Levin (D-Mich.) repaid a Maryland property-tax credit Friday that he should not have received, his office confirmed.

Levin, who owns a home in Chevy Chase, Md., received a $690 credit on his most recent property tax bill, the result of Montgomery County program that provided one-time credits to residential property owners in the 2009-10 tax year.

Consider the possibility that Levin might the least corrupt guy the Dems could find.

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Following up on its related report several months ago, USA Today put out an apples-to-apples comparison (HT Hot Air) of federal pay vs. private sector pay for specific job categories.

The difference in pay, averaging a non-weighted 13% and having a median of 20%, is bad enough. The difference in benefits — $40,975 federal (that’s not a misprint) vs. $9,082 in the private sector — is outrageous. I suspect that most of the difference is in employer-provided health care (usually free or almost free to Uncle Sam’s workers) and retirement benefits.

That level of fringe benefits is not sustainable. If federal worker fringes were cut in half, they would still be twice as generous as he private sector and taxpayers would save $55.3 billion (2.7 million federal employees times $20,487).

Does anyone think SEIU head Andy Stern and President Obama’s deficit reduction commission will take a serious look at this?

Positivity: Sainthood promoted for Mississippi priest

Filed under: Positivity — Tom @ 6:16 am

From Jackson, Mississippi (HT Catholic News Agency):

02/26/10

Father Benjamín Piovan, pastor of St. Michael Parish in Saltillo, Mexico, came to Mississippi recently to talk with Bishop Joseph Latino about a movement among the people of Saltillo to have Father Patrick Quinn declared a saint.

Father Quinn, 66, died of a heart attack in Saltillo on Jan. 9, 1997. He had been pastor of Our Lady of Perpetual Help Parish since January 1969.

Bishop Latino said Father Piovan asked his approval to print a prayer card asking God to eventually declare Father Quinn a saint.

The bishop told Father Piovan he doesn’t have any problem encouraging the people of the Diocese of Jackson to pray to Father Quinn. But, Bishop Latino said, according to Canon Law seeking sainthood for an individual is requested by the local ordinary, the bishop of the Diocese of Saltillo, José Raul Vera López.

Father Piovan also informed Bishop Latino of documentation he has obtained about a miracle attributed to Father Quinn.

On Nov. 21, 2009, the Diocese of Saltillo celebrated a Mass to observe the 40th anniversary of the coming of Father Quinn to Saltillo. During Mass, Bishop Francisco Villalobos, who was the Bishop of Saltillo during Father Quinn’s years in Saltillo, spoke about the sanctity of Father Quinn.

And this year, on Jan. 7, Father Piovan celebrated a Mass at St. Michael Church in Saltillo to mark the 13th anniversary of Father Quinn’s death. During Mass, several people gave testimonies about cures they credited to his intersession.

The grounds where the Diocese of Saltillo plans to build a new St. Michael Church in memory of Father Quinn were blessed the same day. An altar in the church, that will have a capacity to seat 400 people, will be dedicated in Father Quinn’s honor. This altar will contain the names of all those who contribute to the construction of the new church. …

Go here for the rest of the story.