I find Minority Leader Boehner to be refreshingly candid, in a recent interview (see below for a relevant video clip). But anytime you start discussing constructive options for resolving entitlements, unlike the Democrats whom have shunned taking responsibility for their own Ponzi scheme entitlements (namely, social security and Medicare), you know that the Democrats, who have run 4 decades or more of elections running on a campaign based on sowing Fear, Uncertainty and Doubt (FUD) over what the "Scrooge-like" Republicans would do to the promised benefits of cash-strapped retired senior citizens, aren't changing their message. Now one could argue that the Democrats knew they had only a limited amount of time with overwhelming majorities to ram their agenda down the minority GOP's throats. They could have used their clout to fix their entitlements under the most favorable circumstances. They didn't--why?
I think it's because they are scared to death of publicly backtracking on Obama/their commitment not to raise taxes, except on the top 5%, and the problem can't be fixed without shared sacrifice, including spending cuts, raised co-pays or premiums, etc.--there simply aren't enough rich people to pick up everybody else's check.
In terms of social security reform, Boehner discusses things like means-testing, adjusting payment increases to reflect the cost of living (not the cost of labor), and raising the retirement age (steps I've advocated in past posts). The Dems, of course, are already raising FUD over what Boehner said, even though means-testing is something they've been pushing. Also, Boehner really doesn't repeat the typical GOP talking point of the partial privatization of young worker contributions, something that is not really appreciated by the partisan Dems.
However, I do disagree with a few points Boehner discussed. First, he talks about repealing the $534B in Medicare cuts being used to fund the new health care entitlement. I disagree; I do agree against using the $534B being used to fund the new entitlement, but I would argue that those savings should be used to shore up a massively underfunded Medicare liability. Second, Boehner's discussion of discussing the need for entitlement reform to ensure payment for the war needs more explanation. We have what should be a lockbox in terms of social security--pay-as-you-go. It's true entitlement spending comes out of the budget, but payroll taxes go into the budget. In most years to date payroll taxes have exceeded disbursements to senior citizens, allowing for a growing liability to the trust funds. It looks as though because of early retirements due to the tough economy, not to mention a large unemployment problem resulting in lower than expected premium collections, we are seeing the necessity of the trust fund having to redeem some of its T-bills to make up the difference. But in theory the redemption of T-bills does not crowd out the defense budget because they have different funding sources. Note that unless we do away with payroll taxes, we will always have some dedicated income to fund social security disbursements. We won't have to fund disbursements out of operations unless the trust fund runs out of T-bills--which will be years from now (presumably our Afghanistan involvement will be over long before then). It is true we need to reform social security to ensure we have a viable reserve before we find ourselves faced with the dilemma of funding out of operations and/or cutting disbursements.
Third, Boehner's discussion of pushing a fix for social security before Medicare seems dubious given the fact that the unfunded liability of Medicare is multiple times larger than social security's. Boehner needs to address the more critical and difficult Medicare issue more directly, because kicking the crisis down the line is not acceptable. We do need to fix social security, which is low-hanging fruit. But during the whole process of the Democratic Party Health Care Bill/Law, with all its disingenuous smoke-and-mirrors accounting, the Democrats, who never saw a Medicare cut they liked--until it came for paying for a new entitlement, suddenly talk about finding half a trillion dollars--but not using it to shore up a $75T unfunded liability, I'm screaming, "The emperor is wearing no clothes..." Nobody is talking about the Medicare solvency issue. I know the Democrats, with a tough mid-term straight ahead, aren't about to take some politically unpopular stands a real solution would require, but Boehner needs to talk about it now versus later...
New Favorite Website
The US Debt Clock (real-time mode) is oddly mesmerizing. There are several things in particular that I note from these numbers. For example, I'm looking at federal revenue and federal spending year-to-date, and I'm comparing government revenue to debt totals; it's fairly easy to see that state and local revenues are more closely related to their debt levels whereas the federal debt is over 6 times current revenue. By toggling the World Debt public/external switch, we can see although Japan has the worst public debt/GDP ratio, most of Japan's debt is financed internally, whereas we owe other nations nearly as much as our $14.4T GDP. I'm also concerned about the current trade deficit, large percentages of which involve trade with China and foreign oil/gas suppliers. In terms of federal expenditures, there are the outlays for national debt interest and federal pensions (e.g., military retirement at half pay, starting as early as late 30's). Then there are the total and component parts of US unfunded liabilities.
We can easily see the folly of this fiscal year's (Democratic Party) federal deficit of $1.43T and climbing, not to mention the national agenda on health care; for example, Speaker Pelosi and her fellow progressives are anxious to hype "doughnut hole" handouts to senior citizens for coverage gaps in the relatively new prescription drug entitlement--while at the same time we are looking at nearly a $40T unfunded prescription drug liability. How does the Democratic Party exactly plan to resolve the unfunded liability? There are several steps that would need to be considered, all of which are politically unpopular: e.g., limit program participation (e.g., income- and/or age-eligibility), prune, limit or substitute eligible drugs (e.g., generics when available), and raise revenues (e.g., payroll taxes or (more preferably) consumption taxes). I can summarize the progressive Democrats' pathetic approach on this issue over the past decade to 3 basic points: (1) lift the income cap on payroll tax contributions (i.e., effectively increase the top income tax rate even more than Clinton), (2) the prescription drug plan under Bush was too stingy, and (3) import drugs from Canada.
No, the Democrats know exactly where to put their priorities in the Age of Obama: they want to emulate the social spending quagmire of Europe--after all, what's not to like about anemic economic growth, massive unfunded liabilities, and sticky high unemployment?
There are several logical reforms to public policy obvious from reflecting on these numbers. We need to understand several factors are beyond our control, e.g., growing economies that compete with the US for the oil it needs for imports. This includes, on grounds of national security, the necessity of aggressively exploring each and every viable oil/gas property (including oil shale, offshore, etc.), etc. Most of our imports with China involve various consumer products with narrow profit margins and low wages. Labor unions need to understand in this world they can't compete where lower-skill labor is a commodity. We may need to invest in new production facilities needing fewer workers, but with specialized, value-added skills. But we need to have policies that draw investment to America, not away from America, e.g., uncompetitive business tax rates. And even if many of those commodity jobs never come back to the US, wouldn't it make more sense to diversity our suppliers (including more business with the rest of my dream of an Americas free trade zone)?
If we look at our national savings rate (granted, over the past several months, there's been a tick-up but this has more to do with economic uncertainty--you might defer vacations or purchase if you're worried about losing a family income), it's been abysmal; look at consumer debt. The problem is that this is a double-edged source; if people save too much, it might dampen demand for local goods and services, but a consumption tax, in combination with systematic spending reforms, provides a more balanced fiscal perspective and a down payment towards a more responsible fiscal policy.
Of course, you'll hear nothing of this from progressive Democrats. They remain faithful to their preposterous talking points that somehow the well-to-do (who pay the most taxes) were in a zero-sum game with the middle class (it had nothing to do with a tough global economy, 9/11, anti-economic growth policies, and federal spending crowding out the private sector, among other things...) What have the Democrats done to pass 3 free trade pacts pending at the end of the Bush Administration? What have they done to cut the second highest business tax bracket among the developed nations, which is resulting in businesses choosing instead to invest overseas? What have they done to stop the bleeding of our enormous trade deficit of energy supplies? Instead they focus on things like a fairy-tale energy policy that over the past 40 years still accounts for less than 10% of energy consumption, despite massive public subsidies; never mind that cleaner air at extraordinary high costs, an added cost of manufacturing in the US likely to result in more jobs being shipped overseas, can be more than offset by greater pollution from developing economies (e.g., China, India, etc.).
Bonus Video: Santelli Rant Redux: "STOP SPENDING! STOP SPENDING! STOP SPENDING!"
My 2009 Man of the Year and inspiration for the Tea Party Movement takes on a "tax-and-spend" economics reporter.
Political Cartoon
Gary Varvel introduces the 2000-page string-pushing, "let-the-bureaucrats-decide" (i.e., the antithesis of transparency), "tax-bank-success" financial reform, which does not address Freddie Mac or Fannie Mae, the easy money policy of the Fed, the failures of regulators, Congressional oversight, credit raters, or "too big to fail", not to mention political pressure on the banks to lend to riskier applicants.
After all, we know the REAL priority isn't to resolve the troubled housing market dominated by the GSE duo, is it? Home ownership in the aftermath of the housing bubble burst isn't a high priority, is it? It's not as if a person's home might be his or her biggest asset....
It is wonderfully simple in the progressive world view where everything over the last 8 years can be blamed on either George W. Bush or Big Banks.
Quote of the Day
He who thinketh he leadeth and hath no one following him is only taking a walk.
Anonymous
Musical Interlude: Chart Hits of 1979
Bee Gees, "Tragedy" greatest Bee Gees' song ever!
Supertramp, "The Logical Song" favorite pop philosophy song!
Kiss, "I Was Made For Loving You" best KISS song ever!
Cheap Trick, "I Want You to Want Me"
England Dan & John Ford Coley, "Love is the Answer"
