May 14, 2011

The 2011 Social Security Trustees Report: Living on General Receipts From a Broke Government Now, 25% Cuts in 25 Years (If We’re Lucky)

Filed under: Economy,Soc. Sec. & Retirement,Taxes & Government — Tom @ 10:46 am

SocSecBrokeCard0309From the report’s summary bolds and footnotes are mine; paragraph breaks added by me):

Social Security expenditures exceeded the program’s non-interest income in 2010 for the first time since 1983. The $49 billion deficit last year (excluding interest income) and $46 billion projected deficit in 2011 are in large part due to the weakened economy [1] and to downward income adjustments that correct for excess payroll tax revenue credited to the trust funds in earlier years.

This deficit is expected to shrink to about $20 billion for years 2012-2014 as the economy strengthens. [2] After 2014, cash deficits are expected to grow rapidly as the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers.

Through 2022, the annual cash deficits will be made up by redeeming trust fund assets from the General Fund of the Treasury. Because these redemptions will be less than interest earnings, trust fund balances will continue to grow. [3]

After 2022, trust fund assets will be redeemed in amounts that exceed interest earnings until trust fund reserves are exhausted in 2036 [4], one year earlier than was projected last year. Thereafter, tax income would be sufficient to pay only about three-quarters of scheduled benefits through 2085.

[1] – The POR (Pelosi-Obama-Reid) Economy strikes again. In barely a year, it turned what were $100-plus surpluses into serious cash deficits. The ongoing damage continues. Before the POR Economy began, cash deficits weren’t projected to begin until 2017. They began in 2010.

[2] – That should read “IF” the economy strengthens, not “as.”

[3] – “Annual cash deficits” are being “made up” with general taxes — from a government that is running $1.4 trillion and more in annual deficits and is $14 trillion in debt. Socially Security is functionally bankrupt.

[4] – If nothing is done, we’ll meander along for the next 25 years (2036 minus 2011), down from last year’s projected 27 years (2037 minus 2010). That’s IF the economy turns around. If it doesn’t, the 25% cut date will loom ever sooner with each passing year.

Positivity: Pope urges Catholics and Jews to ‘stand together’

Filed under: Positivity — Tom @ 10:14 am

From Vatican City:

May 12, 2011 / 08:07 pm

Pope Benedict XVI today urged Catholics and Jews to “stand together” in facing some of the greatest challenges facing mankind today.

“There are many ways in which Jews and Christians can cooperate for the betterment of the world in accordance with the will of the Almighty for the good of mankind. Our thoughts turn immediately to practical works of charity and service to the poor and those in need,” the Pope told a delegation from the Jewish humanitarian society B’nai B’rith International at the Vatican May 12.

“One of the most important things that we can do together is bear common witness to our deeply-held belief that every man and woman is created in the divine image and thus possessed of inviolable dignity. This conviction remains the most secure basis for every effort to defend and promote the inalienable rights of each human being.”

B’nai B’rith is one of the oldest Jewish humanitarian, advocacy and human rights groups in the world.

It was founded by German-Jewish immigrants in New York’s Lower East Side back in 1843. Its aim then was to alleviate the poverty which afflicted many Jewish immigrants to the city. It now operates in more than 50 countries around the globe.

The Pope commended their work as helping to promote “a sound understanding of the role of religion in the life of our present-day societies.”

“The life and work of all believers should bear constant witness to the transcendent, point to the invisible realities which lie beyond us, and embody the conviction that a loving, compassionate Providence guides the final outcome of history, no matter how difficult and threatening the journey along the way may sometimes appear.” …

Go here for the rest of the story.

Sacramento Business Reporter Uncritically Relays ‘Nonpartisan’ Group’s CalWORKS Cuts Critique

Apparently, the state of California has been trying to do something about the runaway costs of its “traditional welfare” program. Nationally, it’s known as TANF (Temporary Assistance for Needy Families). In the tarnished Golden State, it’s called CalWORKS (California Work Opportunity and Responsibility to Kids).

Wednesday, the supposedly nonpartisan but clearly left-leaning California Budget Project (CBP) issued a report entitled “Recent Cuts to CalWORKs Have Significantly Affected Families and Local Communities.” At the Sacramento Business Journal, Staff Writer Kathy Robertson essentially transcribed its major points. Had she done further work, she would have noted that the number of CalWORKs recipients, already over triple the national average as a percentage of the population, increased by another quarter-million during the past 27 reported months (June 2008 to September 2010) to 1.46 million. That total is almost 4% of the state’s population. The welfare-receiving percentage of the population in the rest of the country, including a few other states which have allowed their rolls to unreasonably balloon, is less than 1.2%.

Here are several paragraphs from Robertson’s report:

Report: Welfare, disability cuts take local toll

The cumulative impact of state cuts to welfare recipients and low-income California seniors and people with disabilities amounts to more than $8 billion over the three-year period ending June 30, 2012, a report by the nonpartisan California Budget Project concluded.

The welfare cuts add up to $3.5 billion over this period, equivalent to a loss of roughly $3,100 for each of the 1.1 million children in the program.

… The welfare program — called CalWORKS — provides cash assistance to low-income families with children while helping parents find work and overcome barriers to employment. State budget cuts have reduced cash assistance, scaled back the earnings limit below the federal poverty line, cut funding for employment services and child care and — effective this July — rolled back the time limit for support to four years from five.

A total of 40,120 families and 73,670 children in the four-county Sacramento area will lose almost $242.5 million in support by the end of the next fiscal year.

… The maximum monthly grant for individuals will drop to the federal minimum of $830 in July, a reduction of $77 per month compared to the maximum grant of $907 in January 2009.

CBP’s $3,100 figure uses clearly deceptive math by presenting a 3-year figure for the purpose of creating a big number, and by further assuming that the cuts will only affect children and not adult recipients. Correctly applied math would mean that the cuts amount to $801 per person per year ($3.5 billion divided by 1.46 million divided by 3), or $67 per person per month ($200 for a family of three). That doesn’t sound so bad, especially when you consider that the vast majority of recipients more than likely qualify for food stamps, where the Maximum Monthly Allotment for a family of three for fiscal 2011 is $526 (the same as fiscal 2010 presented at the link), an increase of $100, or 19%, over fiscal 2008.

The problem in California, religiously ignored by its establishment press as long as I have been following related developments, continues to be its outsized caseload, as a comparison to the eight worst other states, DC, and the rest of the country shows:

TANFcaseloadsForKeyStatesAndUS0608and0910

If its welfare recipients constituted the same percentage of its population as the rest of the country, California’s welfare rolls would total less than 440,000 (1.17% times 37.267 million per the July 1, 2010 census). If the state didn’t have more than 1,000,000 more people on welfare than it arguably should, the program changes CBP is decrying may not have been necessary.

As to the CBP’s objectivity, give me a break:

  • Its Board of Directors includes Dean Tipps, Retired Executive Secretary of the California State Council of Service Employees International Union (SEIU); Ellen Wu, Executive Director of the California Pan-Ethnic Health Network; and several other welfare state advocacy group official.
  • Its Executive Director since its 1995 inception also has SEIU background.
  • One of its core principles is that “government should work to improve the lives of the people it serves.” (No, government should in most cases get out of the way so people can improve their own lives while helping those who legitimately cannot help themselves.)
  • No objective think tank could possibly look at CalWORKs without questioning its self-evidently bloated caseload. It’s clear that CBP simply takes it as a given.

The fact is that Democrat-dominated California has resisted implementing the national welfare reform initiatives enacted in 1996. Since it doesn’t have the nerve to address its caseload overload, it’s cutting benefits instead. This is where misplaced compassion and bureaucratic stubbornness lead when you start running out of other people’s money. You would think someone like Kathy Robertson, who after all writes for a business publication, would understand that.

Cross-posted at NewsBusters.org.