It will go up here at BizzyBlog Thursday morning (link won’t work until then) after the blackout expires.
It’s hard to know what’s more ridiculously entertaining when choosing between Jesse A. Myerson’s “Five Economic Reforms Millennials Should Be Fighting For,” the illogical screed in Rolling Stone which would lead to the enslavement of those about whom he claims to be concerned, or Myerson’s tweets as the opprobrium has poured in.
Since Noel Sheppard at NewsBusters has handled Myerson’s original work, I’ll have fun with the tweets. And it will be a pleasure to turn around Saul Alinsky’s Fifth Rule for Radicals (“Ridicule is man’s most potent weapon”).
AP Headline Claims Social Security Inflation Increase Will Be ‘Among Lowest in Years,’ When 2010 and 2011 Had No Increase at All
There was no annual adjustment to Social Security benefits for inflation during 2010 or 2011. That’s because the 2009 increase of 5.8 percent (announced in November 2008, and considered the “2009″ increase at this table) was artifically lifted by the $4 per gallon gas prices seen in the summer of 2008, the period used in the annual inflation adjustment calculation. After gas prices came down, overall prices levels were slightly lower during the next two years.
With that background, it’s hard to imagine how a headline writer at the Associated Press, aka the Adminstration’s Press, could transform what writer Stephen Ohlemacher accurately described as an “historically small increase” to “among the lowest in years” — unless it’s to create a false impression among those who only read headlines that the government is being unduly stingy in disbursing benefits. Excerpts from Ohlemacher’s report follow the jump (bolds are mine):
So now it’s a crisis.
The Buckeye Institute (HT to an email from Chris Littleton) has the details:
Cincinnati’s current public employee retirement plan, the Cincinnati Retirement System (CRS), is a traditional “defined benefit” (DB) pension plan that is far less fiscally sound than commonly understood. By some accounting standards, CRS is optimistically underfunded by $862 million. But a more accurate measure, the “fair market valuation” preferred by most economists, reveals unfunded liabilities of over $2.5 billion and a funding ratio of only 35%. As a result of this shortfall, pension costs for the City are extremely high. Total pension costs for 2014 are projected to equal 58% of total employee payroll, with the City bearing a cost equal to almost 49% of payroll. By comparison, the median total state or local government pension contribution is equal to 13% of employee payroll.
That $2.5 billion is roughly $8,400 for each of Cincinnati’s 296,000 residents.
Chris’s email points out to a related November ballot issue:
A Yes vote on Issue 4 this November, the charter amendment to fix Cincinnati’s pension problem, is extremely popular with voters and absolutely vital to Cincinnati’s future. Win-win from every direction!
This is going to require more research, because attempts at finding information about the issue on the web were futile.
Except that the evil employers are municipal governments, as an Investor’s Business Daily editorial noted yesterday:
Detroit Shows How ObamaCare Will Bankrupt the Country
Cost-Shifting: Looks like Detroit might get a federal bailout after all, by offloading its retiree health costs onto federal taxpayers via ObamaCare. It’s a window into why Obama-Care costs will quickly spiral out of control.
On Sunday, the New York Times noted that Detroit hopes to push its younger retirees who aren’t yet eligible for Medicare into the ObamaCare exchanges, where many will be eligible for subsidized insurance. Federal tax payers will pick up the tab, rather than those in Detroit. (IBD’s Jed Graham first wrote about this last month.)
One of the first to suggest this clever cost-shifting idea was Chicago Mayor Rahm Emanuel, who was in the Obama administration while it was putting ObamaCare together. In May, he revealed plans to save about $108 million a year by tossing 30,000 retirees into the ObamaCare exchanges.
If Detroit and Chicago get away with this, you can bet other cities will try, too. The U.S.’ 61 largest cities have more than $118 billion in unfunded retiree health care liabilities, the Pew Charitable Trusts estimates.
And the National League of Cities is practically drooling over the opportunity to shift as much as possible onto ObamaCare.
Imagine that. The public-sector unions will probably roll over on this. Union bosses tend to be all about representing current workers. When push comes to shove, they’ll throw retirees, who often do not have a vote on union contracts, under the bus and let the nation’s taxpayers pick up the tab (e.g., [although they're private sector -- well, sort of in GM's case]: GM and Chrysler bailouts).
Its defined-benefit plans are unsustainable.
This column went up with minor edits at Watchdog.org earlier this afternoon.
In a story which should have stayed on its home page for several days but instead was gone within hours, the Cincinnati Enquirer reported on Saturday that the City of Cincinnati must pay at least $85 million into its $2 billion pension and retiree health care system next year.
Cincinnati is alone among Ohio’s major cities in that its employees do not participate in any of the state’s five statewide retirement systems.
In the past year alone, the Enquirer’s Cliff Peale notes, the Cincinnati Retirement System’s unfunded liability has ballooned by 22 percent to a whopping $870 million, or just under $3,000 for each man, woman and child living within the city’s limits.
Not that it’s much consolation, but the city is far from alone.
Has no one heard of web conferencing?
This post went up a short time ago at Watchdog.org.
Two of the most tone-deaf organizations in America have to be the National Conference on Public Employee Retirement Systems, followed closely by Ohio’s School Employees Retirement System.
NCPERS markets itself as “the largest trade association for public sector pension funds, representing more than 550 funds throughout the United States and Canada.” SERS is a “public pension fund that provides pensions and access to health care coverage” for non-teaching personnel at public schools throughout the Buckeye State.
NCPERS thinks that holding an expensive members’ conference at a posh Hawaiian resort is a great idea. SERS believes, defiantly so, that sending two of its board members to the conference is an appropriate use of participants’ funds.
Politico’s Tau Pretends Big Labor ‘Targets’ Obama, When It Just Doesn’t Like One White House Proposal
I guess Byron Tau thought he had to make it look like Big Labor is really, really mad at President Barack Obama and the White House so he could make Obama look like he’s a moderate on economic and fiscal issues. Thus his Sunday morning post’s headline: “Labor targets Obama over proposed benefit cuts.”
Of course, they aren’t “cuts” at all, though they are being portrayed as such. All Obama has done, according to information which appears to have been conveniently leaked (perhaps in hopes of killing the idea) to the New York Times ahead of his very late President’s Budget, is “propose a new inflation formula that would have the effect of reducing cost-of-living payments for Social Security benefits, though with financial protections for low-income and very old beneficiaries, administration officials said.” Despite the weakly descriptive language at the Times, monthly Social Security and other checks would continue to increase under the proposal each year inflation occurs — just not by as much.
Politico’s ‘Quiet Liberal Plans for Entitlements’ Are Predominantly Tax Increases, Redistributions of Wealth
The front-page title at the Politico for David Nather’s lengthy write-up on Democrats’ alleged ideas for doing something about runaway entitlement programs is “The quiet liberal plan for entitlements; There are some ideas for reining in spending that have been blessed by the left.” That gives readers the impression that the left might actually have something specific and potentially palatable in mind.
No such luck. The actual title at Nather’s write-up, however, pluralizes “plan” — “The quiet liberal plans for entitlements.” Its itemization of the supposedly brilliant ideas for reform liberals have in mind are dominated by tax increases and income redistribution measures which fail to structurally reform anything.
For four years (and really going back further when you consider former President George W. Bush’s halting attempt to reform Social Security in the middle of last decade), Barack Obama and his party have paid lip service at best to the idea of entitlement reform while refusing to provide any specifics about what they would do to fix Social Security and Medicare, both of which are unsustainable in their current forms. Obama rejected his own Simpson Bowles commission’s recommendations. Democrats have treated serious proposals coming from Republicans as grannycide.
Yet the Politico’s Carrie Budoff Brown, who must be gaining strength in her arms and shoulders from all of her water-carrying for Obama and his party, wants us to believe that Obama has a “deeply conflicted relationship with entitlement reform.” And in case you missed it (I certainly did), Obama has tried “harder than any other Democratic president to tackle the issue” (no Democratic Party president has “tried hard” to tackle the issue). Several paragraphs from her Tuesday dispatch follow the jump (bolds are mine):
This column went up at FrontpageMag.com in slightly revised form early this morning.
On Wednesday, Julie Pace and Martin Crutsinger, two of the usual suspects at the Associated Press, began paving the way for what they clearly hope will be a worry-free Senate confirmation of current Obama administration Chief of Staff Jack Lew to become the nation’s next Treasury Secretary.
Towards that end, the AP pair larded on the compliments and historical revisionism with reckless abandon:
- “one of Washington’s most knowledgeable budget experts to manage prickly fiscal negotiations with Congress and steer the still-shaky national economy.”
- “Lew, 57, would bring to Treasury a mastery of federal budget mechanics …”
- “Lew helped negotiate a balanced budget agreement with Congress, something that has eluded Washington ever since.”
- “Lew, a pragmatic liberal … is well-liked in Washington by both Democrats and Republicans …”
Along the way, Pace and Crutsinger couldn’t make up their minds about the current condition of the economy. After the “still-shaky” characterization just noted in their first paragraph, they later evaluated it as “now stabilized, if still sluggish.” Those two conditions can’t exist at the same time, given that “shaky” is an antonym of “stable.” Although it would have required more verbiage, the AP pair should have characterized the current economy, as a result of the derelict stewardship of Obama, the soon-departing Tim Geithner, and Fed Chairman Ben Bernanke as “the worst since Franklin Delano Roosevelt needlessly extended the Great Depression by over eight years during the 1930s.” Because it is.
The AP also decided to have a little fun with Lew’s signature, which will appear on the nation’s currency if he is confirmed, commenting in a separate item that his sign-off, a ”J” followed by “seven loopy scribbles,” is “illegible.”
What’s really loopy is AP’s collection of contentions about Lew.
Its actuaries have been blowing the calculations, and there is no “buffer.”
This column went up at FrontPageMag.com with minor revisions early Tuesday morning.
At first, one doesn’t know whether to laugh or cry at research findings reported by two Ivy League profs in a co-authored column in the Sunday New York Times titled “Social Security: It’s Worse Than You Think.”
Actually, white-hot anger is more appropriate, given that what Gary King, a professor of government and director of the Institute for Quantitative Social Science at Harvard, and Samir S. Soneji, a demographer and assistant professor at the Dartmouth Institute for Health Policy and Clinical Practice, really told us, namely that the New Deal-era retirement system, thanks to its use of ossified actuarial calculations, is more insolvent than almost all of us knew.
The pair’s core finding, as presented in the Times: “[T]he Social Security Administration underestimates how long Americans will live and how much the trust funds will need to pay out — to the tune of $800 billion by 2031.”
Not even a band-aid.
This column went up at FrontPage Magazine earlier this morning.
The other-worldly nature of the current discussions and proposals in Washington over addressing the “fiscal cliff” can be seen in a brief look at where the country stands financially.
Through the first two months of the 2013 fiscal year which will end on September 30, 2013, the federal government has already run up a $292 billion deficit. Our overlords of Washington are clearly on track to run up a fifth consecutive full-year shortfall of over $1 trillion. Before fiscal 2008, the highest annual deficit ever recorded was $455 billion.
Federal outlays during October and November of $638 billion were 16 percent higher than during the same two months in 2011, and a breathtaking 52 percent greater than October and November of 2007. Collections in this lukewarm recovery, if you can even call it that, were up by less than 10 percent.
As of Monday, December 17, the national debt was $16.35 trillion, up by over $5.7 trillion in the 35 months since Barack Obama took office. The portion of the national debt known as “debt held by the public,” which is really debt held by any entity which is not part of the U.S. government but includes foreign countries and other foreign holders, made up $5.25 trillion of that amount.
A significant portion of that $5.25 billion is held by Ben Bernanke’s Federal Reserve, which many don’t realize really isn’t a part of the government. Instead, the Fed is a collection of 12 district banks, each of which is “a legally separate corporation that is owned by the commercial banks in its district.” Because they produce no goods or services, the district banks, and the Fed itself, have no inherent ability to repay the Treasury and other securities they have bought from our beyond-profligate government.
Within this dangerous framework, House Speaker John Boehner and President Obama are obsessing over whether taxes should be raised on those with annual incomes of over $1,000,000 — or $400,000, or $250,000, or whatever. Besides the obvious danger that any tax increase on our most productive citizens will slow down an already sluggish, low-growth, under-employing economy, the amounts raised will be a pittance, garnering less than 10 percent of the amount needed to close projected fiscal gaps (I would say “budget gaps,” but the government hasn’t passed a budget in nearly four years).
Where are the spending cuts? Or, more properly framed, where are the reductions in projected future spending? A Wednesday morning Associated Press dispatch on the President’s plans to veto Boehner’s so-called “Plan B” framework reported that the President would veto such a plan if it ever reached his desk — something that in the real world probably wouldn’t happen because Senate Majority Leader Harry Reid wouldn’t let any House bill Obama opposes get that far — because “the deficit reduction that would result from the `Plan B’ approach is minimal and offers no spending cuts.”
You read that right. The people who have brought us trillion-dollar deficits as far as the eye can see are positioning themselves to the right of the hopelessly timid Republican House.
Is Obama’s claim correct? Well, Erick Erickson at RedState writes: “The most significant thing John Boehner’s plan does is absolutely nothing on spending.” A Wednesday morning Wall Street Journal editorial identifies what can only be described as nibbling around the edges of the problem by changing how increases in entitlement spending and taxes are indexed, and tells us that it’s all about continuing with business as usual: “Tax and spending increases now, in return for the promise of spending cuts and tax and entitlement reform later.”
We’re long past the time where business as usual will work. The federal government’s financial condition today is the functional equivalent of a family taking home $27,000 per year, spending $38,000, and carrying over $160,000 in nonmortgage debt. The major difference between the family and our government is that while the family inolved would almost certainly be paying 10 percent or more interest on its outstanding debts, Uncle Sam is for now getting away with paying less than 2 percent. Oh, and Uncle Sam can keep on borrowing, while the family’s lenders would surely have ended any access to additional credit.
Even if the example family just described was paying only only 2% interest on its debts, its finances would still be considered almost beyond repair without major changes. Boehner’s Plan B is the equivalent of the family telling its lenders who wish to force them into bankruptcy that it will “solve” their problem by immediately having one of its members get a one day per month job paying $100 and by cancelling their premium cable channels and lawn service — starting a year from now. Maybe. If they feel like it.
Such a proposal would send lenders straight to bankruptcy court, as it would be obvious that this family isn’t at all serious about taking meaningful action. Boehner’s Plan B isn’t any better, and promises to send the credit rating agencies scrambling to see who can lower the federal government’s credit rating first.
Don’t get me wrong, what Obama and his party want — don’t touch Social Security, don’t touch Medicare, and don’t touch any other entitlements — isn’t serious either. But the fact that he can credibly claim that his “solutions” do more that Boehner’s Plan B shows how badly the Speaker has failed.
No wonder genuine conservatives are in open revolt. They should be.
This is painful for a liberal to admit, but conservatives have a point when they suggest that America’s safety net can sometimes entangle people in a soul-crushing dependency. Our poverty programs do rescue many people, but other times they backfire.
The evidence from the past four years, and really the last half-century, is that the “backfires” outnumber the “rescues,” and creates an entitlement mentality that reaches into virtually every corner of society.
And I can’t comment on the mentality of parents who would willfully deny their kids the opportunity to become literate lest they lose their SSI checks without violating this site’s PG-13 language policy:
“The kids get taken out of the program because the parents are going to lose the check,” said Billie Oaks, who runs a literacy program here in Breathitt County, a poor part of Kentucky. “It’s heartbreaking.”
“Heartbreaking” is far too generous a word. “Infuriating” is better, but still not good enough.
It’s in crisis right now, not decades from now.
At the first presidential debate on October 3, aka Barack Obama’s Denver Debacle, the President, when asked by moderator Jim Lehrer whether he saw a major difference between his position and that of Republican challenger Mitt Romney on Social Security, gave this response: “I suspect that, on Social Security, we’ve got a somewhat similar position. Social Security is structurally sound…”
At Thursday’s vice-presidential debate, incumbent Joe Biden, who probably set new all-time debate records for rude, obnoxious, interrupting, and inappropriate behavior, clearly believed he was scoring political points — and unfortunately probably did — when he told challenger Paul Ryan that “If we had listened to Romney … and the congressman during the Bush years, imagine where all those seniors would be now if their money had been in the market.”
Though both members of the GOP ticket won their respective debates on substance, each wasted an important opportunity to more fully inform the public about how the Obama-Biden administration’s historically awful economic stewardship hastened the arrival of Social Security’s currently dire circumstances, and how partial privatization can still, even at this late date, be a factor in saving it.
Contrary to what the President claimed, Social Security is not “structurally sound.” Vice-presidential debate moderator Martha Raddatz, who apparently never told the presidential debate commission which selected her that Obama attended her 1991 wedding, and who to absolutely no one’s surprise ended up being a de facto third debater Thursday, probably thought she was making a daring statement when she said that it’s “going broke.” No ma’am; it already is.
Five years ago, Social Security was taking in over $180 billion a year more in taxes than it was spending on benefits and administration. Though that annual surplus was doomed to dwindle as the wave of baby boomers began to retire, Social Security’s trustees estimated that surpluses would continue for another decade, and that triple-digit cash deficits wouldn’t arrive until many years after that.
That’s before the Community Reinvestment Act-driven, Fannie Mae and Freddie Mac fraud-accelerated recession kicked in, followed by the worst so-called recovery since the Great Depression. Just a few years later, the system began running annual cash deficits. The trustees now estimate that the calendar year 2012 cash deficit (i.e., “the deficit of tax income relative to cost”) will be $165 billion. The only reason it won’t approach $300 billion is that the rest of the government is kicking in about $120 billion to offset the current-year effect of the two-point reduction in payroll tax withholding which took effect in 2011. Team Obama dishonestly demagogued against allowing that unsustainable reduction to expire earlier this year. Regardless of who wins the presidency for the next four years, and despite the soaring national debt which threatens to swallow the entire economy, restoring Social Security withholding to its prior 6.2% level will be extraordinarily difficult.
Well, that’s okay, because Social Security’s “trust fund” assets will cover those annual cash deficits for many years to come, right?
Surely you jest. That “trust fund” consists almost entirely of IOUs from the rest of the government, which in case you missed it, has officially run its fourth consecutive fiscal year deficit of over $1 trillion. That’s because past congresses and presidents have “borrowed” (i.e., siphoned off and spent) previous system surpluses. To prop up the already broken system, the rest of the government has to cover the system’s cash deficits — today.
Despite that clear and present reality, Romney remained totally vague about Social Security, only saying that “I’ve got proposals to make sure Medicare and Social Security are there for them without any question,” while Ryan acted as if the problem is decades down the road:
… if we don’t shore up Social Security, when we run out of the IOUs, when the program goes bankrupt, a 25 percent across-the-board benefit cut kicks in on current seniors in the middle of their retirement.
No sir. The problem is now — and I should also note that we will, using Ryan’s words, “run out of IOUs” in only a decade or so if the economy continues to perform as badly as it has during the past four years.
If the majority of the American people knew (as they currently don’t) that we are burdening our grandchildren and generations yet unborn with hundreds of billions of dollars a year in debt right now so that current and future Social Security recipients can continue to receive uninterrupted and unaffected benefits, the political landscape surrounding the program and federal finances in general might be vastly different. We’ll never find out unless and until those who know the truth make the necessary points and arguments publicly.
As to Biden’s blithe blather about the dangers of privatization and the stock market, George W. Bush’s partial privatization proposal never involved forcing current seniors to invest in the stock market; in fact, it never required anyone to do so. Instead, it gave current workers well over a decade away from retirement the ability if they so wished to invest two percent of their gross pay in one or more passively managed stock, bond, or cash-equivalent mutual funds which would replicate the overall returns of their underlying indices.
As seen here, if someone making $50,000 a year had begun investing that 2% of earnings at the beginning of 2007 in an S&P 500 index fund, at the end of 2011 they would have had an estimated account value of over $5,200. That’s an annual return of less than 1 percent, but it’s not some kind of disastrous loss — and it occurred, as noted earlier, during the worst economy since Franklin Delano Roosevelt. Imagine how that account value could grow with a combination of several decades of continued investment and responsible leadership genuinely interested in growing the economy in Washington.
There is a significant political benefit to instituting partial privatization. Giving people the opportunity to invest a portion of their Social Security taxes could dramatically change the mindset of voters, who would become more interested in having the government pursue policies that would unshackle and grow the economy, better enabling their investments to continue growing.
Rest assured that the policies favored by the new investor class would not include continuing to give food stamps to people with more than adequate financial assets or whose incomes are way above the poverty line, passing out “Obama Phones” like candy to people who can afford to buy their own, and easing work requirements associated with traditional welfare. That’s what Obama, Biden, and Democrats, who do not hold “a somewhat similar position” to Romney and Ryan, really fear — an end to almost five decades of relentless Democratic vote-buying and cronyism.
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