AARP’s Endorsement of Obamacare puts pressure on Social Security Benefits

Posted by PITHOCRATES - December 29th, 2012

Week in Review

AARP endorsed and helped pass Obamacare into law.  In exchange for an exemption from the very law they supported so they can sell their “Medigap” insurance policies easier than their competitor Medicare Advantage could sell theirs (see AARP latest to receive Obamacare break by Matthew Boyle posted 5/19/2011 on The Daily Caller).  Good for AARP.  But not for the senior citizens they represent.  For Obamacare will lower the quality of US health care.  And increase health care costs.  Especially for seniors.  So whenever AARP starts quoting Ronald Reagan one should be suspect as they are no friend of Ronald Reagan.  For Ronald Reagan would not have approved of what AARP did to help pass Obamacare into law.  Even if he and Tip O’Neill worked together to pull Social Security back from the brink of insolvency (see Ronald Reagan’s 9 Wisest Words About Social Security by Alejandra Owens posted 12/19/2012 on AARP).

That legislation, negotiated by President Reagan and Democratic House Speaker Tip O’Neill, focused on what was needed protect Social Security for the long term. Reagan understood that Social Security is a separately funded program unrelated to problems in the rest of the budget, and he clearly stated that: “Social Security has nothing to do with the deficit.”

Indeed, today the Social Security trust funds hold $2.8 trillion in government bonds. These reserves have been built up with the contributions that workers and employers have paid into the system for the dedicated purpose of paying Social Security benefits. These funds are held in legally established trusts and cannot be used for any purpose other than paying benefits. According to the latest Trustees’ report, Social Security can pay full benefits through 2033, and roughly 75 percent of benefits beyond that time.

The Social Security Trust Fund?  There’s no trust fund.  The government raided it long ago and replaced it with IOUs.  Government bonds.  Current Social Security taxes go to pay for current benefits.  There is no pile of cash earning interest anywhere.  No personalized savings accounts for individual Social Security contributors.  If there were then there would be no Social Security crisis.  No, that money is gone.  Spent by the government to fund their current spending obligations.  Which are so great that even by raiding the Social Security Trust Fund they still can’t find enough cash to prevent a deficit.

The government spends our Social Security contributions for every other purpose they want to other than paying our benefits.  They just launder the money first through the Treasury Department.  Exchange IOUs (i.e., government bonds) for that cash.  Then they go and spend that cash.  And when it comes time to redeem those government bonds they’ll probably just print money.  Inflating the money supply.  And depreciate the dollar.  Making it ever harder for a senior to live on their retirement savings.  And because of what AARP did to help pass Obamacare into law there will even be less money available for Social Security benefits.  Requiring more printing of money.  And more devaluing of the dollar.  Making life a living hell for the retirees they supposedly represent.  At least according to that article in The Daily Caller.

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President Obama to Reverse Trend in Falling Child Obesity Rates

Posted by PITHOCRATES - December 29th, 2012

Week in Review

When it comes to government policies there are unintended consequences.  And then they are the ‘I don’t care what the consequences are’ as long as those policies are politically expedient (see US childhood obesity dips for first time in decades: study by AFP posted 12/27/2012 on channelnewsasia.com)

CHICAGO: Obesity rates among small children may finally be on the decline after more than tripling in the United States the past 30 years, a study out Wednesday indicated.

The study found that obesity rates peaked in 2004 and then declined slightly among low-income children aged two to four who receive benefits from a federal food stamp program called SNAP…

In an accompanying editorial, Dr. David Ludwig said the declines seen are not enough, and he urged an overhaul of the federal food stamp program (SNAP) to help low-income families tackle obesity by eliminating junk food and adding more fruit and vegetables to their diet.

“SNAP is essential for hunger prevention in the United States, but its exclusive focus on food quantity contributes to malnutrition and obesity, and is misaligned with the goal of helping beneficiaries lead healthier lives,” wrote Ludwig, who works in an obesity prevention centre at Boston Children’s Hospital…

Ludwig noted that it pays for an estimated US$4 billion in soft drinks per year, which adds up to about 20 million servings of soda a day.

“The public pays for sugary drinks, candy, and other junk foods included in SNAP benefits twice: once at the time of purchase, and later for the treatment of diet-induced disease through Medicaid and Medicare,” he wrote.

“The nation’s US$75 billion investment in SNAP could provide a major opportunity to reduce the burden of diet-related disease among low-income children and families if policies that promote nutritional quality are instituted.”

Peaked in 2004?  Why, that was when George W. Bush was president.  At least 4 years before Michelle Obama began her war on childhood obesity.  To ensure success she should consult with George W. Bush.  Who must have done something right to reverse a trend that was in the making for 30 years.  And not her husband.  Who appears to be hell-bent on making children obese again.

One of the major causes of childhood obesity has been the federal food stamp program.  Which President Obama has expanded like no other president.  Even earning himself the moniker ‘The Food Stamp President’.  Guess he doesn’t like kids.  Well, not all kids.  Just the poor ones.  Who he is helping to a life of diet-induced disease.

So the president may be sacrificing another generation of children to heart disease, diabetes and all those other diet-induced diseases.  Why?  Well, like Bill O’Reilly said, to give the people stuff.  So they will vote for him.  Which he has.  And our poor children will pay the ultimate price with poor health.  While we pick up the cost for their extensive and costly medical care.

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Gun and Knife Violence in UK Despite Ban on Gun Ownership

Posted by PITHOCRATES - December 29th, 2012

Week in Review

The American Left loves the United Kingdom.  Not for their rich history of farming advances, representative government, laissez-faire economics, the Industrial Revolutions, etc.  No.  In fact, they’re not big fans of what made the English-speaking world some of the best places to live.  And for those of us lucky to live in that world we say thank you for making us English.  No, what they like is their National Health Service (NHS).  Which they hope to turn Obamacare into one day.  Despite the NHS suffering from massive costs, long wait times, shortages and rationing.  As a national health care system is wont to do.  And the other thing they love about the United Kingdom are their gun control laws.  In the UK the average person cannot own a gun.  Which, of course, according to the Left results in a safer and a less dangerous society (see Knife Crime: Funding To Tackle Youth Violence by Niall Paterson posted 12/27/2012 on Sky News).

The government has announced extra cash to help tackle youth violence and gun crime.

Half a million pounds [about $808,500 US] will be given to the voluntary sector, charities and other organisations working directly with young people at risk of becoming violent offenders and those already involved in knife and gun crime.

In addition, the Home Office intends to expand the “priority areas” in which its Ending Gang and Youth Violence frontline team works from 29 to 33.

Home Secretary Theresa May said: “Serious youth violence has a devastating impact on communities and needs to be stopped.

“We need to change the life-stories of the young people who too often end up dead or seriously injured on our streets or are sucked into a life of violence and crime.

Imagine that.  No guns but there is gun violence.  And a lot of knife violence.  Guess there is more to ending violence than just taking away weapons.  Some areas sound so bad that they could be the south side of Chicago.  Which is a city with very restrictive gun control laws.  And where there is a lot of gun crime.  Where the criminals have the guns to commit the crimes.  But the citizens subjected to this violence cannot own a gun to protect themselves from these crimes.

Guns aren’t the problem.  It’s people who are intent on hurting others.  Whether it is with a gun.  A knife.  Or pure blunt force trauma like that poor woman in India that just passed away after a vicious gang-rape on a bus (see Body of India rape victim arrives home in New Delhi by Adnan Abidi posted 12/29/2012 on Reuters).  People who are intent on hurting others will use the weapon available to them.  Whether it be a gun, a knife or a metal rod.  The choice of weapon may change.  But their intent rarely does by a simple weapons ban.

If they want to hurt someone they will find a way to do so.  Which is why new gun control legislation is a bad idea.  For it won’t change the intent of these people.  For unless we can change or interdict these individuals intent on doing harm they will find a way to do harm.  Perhaps even in a more harmful and indiscriminate way.

What we need is not new gun control laws.  We need a way to prevent these people from wanting to hurt others.  And the root cause for most of these people going astray lie in the policies of the Left.  Their attacks on religion and families (especially ‘predatory’ men) have left our inner cities virtually fatherless (see Fathers disappear from households across America by Luke Rosiak posted 12/25/2012 on The Washington Times).  And Godless.  Without a father to provide a positive male role model a lot of kids turn to the streets.  And gangs.  Inoculating them into violence.  While inoculating them from the Golden Rule.  Where they commit acts of violence with the ease and nature of an animal in the wild.  Who are also raised by a single mom.  And have no concept of the Golden Rule.

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Defying Economic Sense the 1% now support Higher Tax Rates on their Income

Posted by PITHOCRATES - December 29th, 2012

Week in Review

Now everyone is ganging up on the Republicans.  In the fiscal cliff showdown.  The Republicans want some deficit reduction coming from spending cuts.  They have modified their position to allow some higher tax rates.  But they want those spending cuts.  Which the Democrats simply refuse.  They want all deficit reduction to come from higher tax rates.  Now even the 1% are saying to tax them more.  At least, according to a new poll (see Majority of Rich Want Themselves Taxed More: Poll by Robert Frank, CNBC, posted 12/24/2012 on Yahoo! Finance).

American Express Publishing and The Harrison Group found that 67 percent of the top one percent of American earners support higher income taxes. Their support has grown since the election. This summer, 62 percent of them supported higher taxes.

Some might say the rich are hoping to tax people richer – or poorer — than themselves. The top one percent consist of people making more than $450,000 a year. But the survey clearly shows most One Percenters favor taxing themselves. More than half say that they support taxing those making $500,000 or more…

“There is an absolute willingness for the vast majority of the One Percent to take a tax increase,” said Jim Taylor, Vice Chairman Harrison Group. “What the Republicans think is not necessarily what their constituents think.”

Ask yourself this.  Why are super rich movie, television and music stars staunch supporters of the Democrat Party?  Is it because in their music studies they minored in economics?  No.  I don’t think so.  I would even go so far as to posit that they cannot differentiate between classical economics, the Austrian school of economics, the Chicago school of economics and the Keynesian school of economics.  Though they are staunch supporters of the last one.  Because the Democrats embrace Keynesian economics as it enables big government spending.  So why are super rich movie, television and music stars staunch supporters of the Democrat Party?   So they can escape the bitter attacks on wealth business owners face.

These superstars live lives like Roman Emperors.  All without having a real job.  So they have no understanding of economic fundamentals.  Or the first thing about scraping the cash together to make a payroll.  But they do know that if they support and campaign for Democrat candidates they can enjoy their obscene wealth without someone attacking them for living like Roman Emperors.  Could it be the reason why the superrich 1% are coming out in favor of higher tax rates on themselves?  Perhaps.  For there is no good economic reason to do so.

Raising taxes on them will not make a dent in the deficit.  In fact, if you added all the federal income taxes those earning $200,000 or more paid in 2010 (see Table 3.  Number of Individual Income Tax Returns, Income, Exemptions and Deductions, Tax, and Average Tax, by Size of Adjusted Gross Income, Tax Years 2001-2010) it comes to approximately $489 billion.  If you divide that number by the highest marginal tax rate (at high income levels most income is taxed at the highest marginal tax rate) that comes to about $1.397 trillion.  Which is just over the average Obama annual deficit of $1.324 trillion.  So if you confiscated 100% of all earning from those earning $200,000 or more it will pay for one year’s deficit.  So taxing the rich a few more percentage points will do NOTHING to reduce the deficit.  The deficit is just too big.  And there are just too few rich people.  No, the only way to reduce the deficit by higher taxes only is to hit the middle class with a huge tax increase.  Or you could cut spending.  Which would require no new middle class tax.  Like the Republicans want.

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Bad Health Care in Obamacare will be as Inevitable as it is in the NHS

Posted by PITHOCRATES - December 29th, 2012

Week in Review

As Obamacare kicks off in January what can we expect from the greatest overhaul of the American health care system?  A step towards national health care?  Well, the best way to understand what’s in store for us is to look at a populous nation with national health care.  The UK.  Which has only 1/5 the population the US has.  Where bad health care in their National Health Service (NHS) is, to quote someone from the UK, inevitable (see Bad care is inevitable in the NHS by Harry Mount posted 12/24/2012 on The Telegraph).

… the appalling neglect of 38 patients at the Alexandra Hospital in Redditch is the logical result of the NHS’s untenable management structure.

Imagine if everything at Tesco’s [a British grocery and general merchandise retail store like Wal-Mart in Europe, Asia and North America] was free but rationed, and subject to delivery delays of several months. Then throw in the fact that there are no other free alternatives. You would have a nightmare on your hands – huge queues, attracted by the free goods, then further stretched by the long delays.

Imagine how the staff would then behave – harrassed by the limitless demand of customers, but also in a tyrannical position of monopoly power, because there is no alternative provider. They can be as rude as they like, knowing that the customer has nowhere else to go; knowing that, without their services – food in the Tesco’s case, life-saving healthcare in the case of NHS – you will die.

On top of all this, imagine that the government ran Tesco’s, with absolutely no previous skill or experience in running supermarkets.

This is not to say that the people in the NHS are bad.  It’s just that when you put good people in bad situations they tend to lose their empathy.  Because they are forced to deal with the shortages and rationing on a daily basis.  And are powerless to do anything about it.  For this is national health care.  Trying to do more with less.  The costs of caring for their aging baby boomers are overwhelming the NHS.  As the baby boomers have left the workforce and no longer pay income taxes.  And who are now consuming the lion’s share of their limited health care resources.  Less revenue.  And more costs.  A recipe for disaster.

This is the future of American health care.  Only with 5 times the population the shortages and rationing will be 5 times worse.  And if we ask someone who knows a thing or two about national health care what they think Obamacare will be like we can guess their answer.  Bad health care in Obamacare will be inevitable.  For if the British can’t negotiate the aging population problem at a 1/5 scale what chance do the Americans have at trying their struggling system at full scale?  It’s a recipe for disaster.  Heavy on the disaster.

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FT150: “The Left wants to extend tax hikes down to those earning $250,000 because there are just too few rich people to tax.” —Old Pithy

Posted by PITHOCRATES - December 29th, 2012

Fundamental Truth

If you Confiscated ALL Income from those Earning a Million+ it would be Less than HALF of the Average Obama Deficit

The fiscal cliff yadda yadda yadda the Democrats want to raise taxes and the Republicans’ mothers are whores.  That about summarizes the fiscal cliff negotiations.  The Democrats want to raise taxes.  The Republicans don’t because there is nothing that will kill off an economic recovery quicker than raising taxes.  And the Democrats are mean.  Calling the Republicans a lot of names.  And saying things about them that aren’t very nice.  So once again let’s look at the numbers to see what they say about federal income taxes.  The following numbers come from the IRS (see Table 3.  Number of Individual Income Tax Returns, Income, Exemptions and Deductions, Tax, and Average Tax, by Size of Adjusted Gross Income, Tax Years 2001-2010).

The Democrats keep saying that the Republicans want tax cuts for the rich paid for by the poor.  But according to these numbers that’s just not happening.  People who earned $15,000 or less paid 0.0% of all federal income taxes.  People who earned $30,000 or less paid less than 1% of all federal income taxes.  It’s the meaty center that paid the taxes.  Those who earned from $75,000 to $1 million submitted approximately 20.5% of all federal tax returns while they paid approximately 62.9% of all federal income taxes.

Now how about those rich people?  Those earning $1 million or more submitted approximately 0.19% of all tax returns.  Less than a quarter of one percent.  And yet they paid approximately 21.9% of all income taxes.  Is that fair?  At these high levels of income people pay basically the top marginal tax rate as only a very small fraction of their earnings falls outside this top rate.  So if we divide the total taxes paid by this 0.18% ($207 billion) by 0.35 (the 2010 top marginal tax rate) you get a total income of $590 billion.  So if you confiscated ALL of their earnings it would be less than HALF of the average Obama deficit ($1.324 trillion).  Meaning that it is IMPOSSIBLE to reduce the deficit with any tax rate on those earning $1 million or more.

The Rich may be paying Lower Tax Rates but they’re paying Far More Tax Dollars than most of Us

All right, so it won’t reduce the deficit.  But the Democrats say we must do this to be fair.  Meaning those earning more should pay more even if it’s only symbolic.  To punish success.  As if they’re not being punished already for their success.  We’ve all heard about Warren Buffet’s secretary paying a larger tax rate than he pays.  But talking percentages isn’t the same as talking dollars.  Because a small percentage on a much larger earnings amount will produce more tax revenue than a higher tax rate on a smaller earnings amount.  So let’s look at dollar amounts to see if the rich are paying their fair share.  Or whether we’re punishing them enough for their success.

The rich paid a smaller percentage of their earnings in taxes but paid far more in actual dollar amounts.  Which is the only thing that allows government to pay for things.  Dollars.  Let’s assume Warren Buffet’s secretary falls into the income range $50,000 to $75,000.  Who paid on average $4,310.92 in federal income taxes.  Now compare this to what rich people paid in income taxes.  Those earning from $1 million to $1.5 million paid on average $306,779 in federal income taxes.  Or more than 71 times what someone earning $50,000 to $75,000 paid.  Those earning $1,500,000 to $2,000,000 paid 102 times more than that lower income earner.  Those earning $2,000,000 to $5,000,000 paid 179 times more than that lower income earner.  Those earning $5,000,000 to $10,000,000 paid 407 times more than that lower income earner.  Those earning $10 million or more paid 1,389 times more than that lower income earner.

The rich may be paying lower tax rates but they’re paying far more tax dollars than most of us.  An inordinate amount.  If you look at it in terms of government services people consume (which is what taxes pay for) are those earning $10 million or more consuming 1,389 times the government services those earning $50,000 to $75,000 consume?  No.  If anything, they consume far less government services than most people.  Because they live the good life.  The good life their high earnings provide.  Being that the rich are paying far more than their fair share you can only conclude then that these excessive taxes are punitive.  To punish their success.

The only way to Achieve Real Deficit Reduction is to Increase Taxes on the Middle Class or Cut Spending

So what can we conclude?  The rich are paying more than their fair share of taxes.  The amount of tax dollars they’re paying could even qualify as being punitive.  As they are so great any further increase in rates on the rich is not likely to increase tax revenue.  First of all as they are already paying so much they will take every tax shelter advantage they can to minimize the further confiscation of their earnings.  But more important than that is that there are just so few rich people.  Even though the rich pay on average hundreds of times more in federal income taxes than that meaty center it’s the meaty center where most of the tax revenue comes from.  Because there are so many more people in the meaty center.  And by graphing the number of tax returns from each income bracket and the amount of tax revenue they pay we can understand why the Democrats are so adamant to raise taxes on those earning as little as $250,000.

The blue line (Series 1) is the number of tax returns filed in thousands of people for each income bracket (the left vertical axis).  The red line (Series 2) is the total tax revenue in millions of dollars each income bracket produces (the right vertical axis).  You can see the meaty center of tax revenue (from those earning $75,000 to $1 million).  And you can see the meaty center of those filing tax returns (form those earning $30,000 to $200,000).  As you can see the meaty center of tax filers and tax payers are not the same.  As the tax code shifts the tax burden onto the higher income earners.  And in this chart we can see why the Democrats want to increase tax rates on those earning $250,000 and more.

The drawback to progressive tax rates is that it shifts the tax burden onto fewer people.  Who must pay more in taxes than is their fair share.  And that worked for awhile until government grew so large.  But as our aging population has increased the costs of Medicare and Social Security (and soon Obamacare) there just aren’t enough rich people to tax to pay these soaring costs.  And they will have no choice but to shift the tax revenue graph to lower income people.  So they can capture more people (and incomes) under this graph.  Yes, they want to tax the rich more.  But only for the symbolism.  For once they’ve punished them by forcing them to pay their ‘fair’ share then they can raise tax rates on everyone else.  Which is the only way they have a snowball’s chance in hell of achieving real deficit reduction.  Increasing taxes on the middle class.  Well, that, or cutting spending.  Which could provide serious deficit reduction.  By shrinking the size of government. The very cause of those massive deficits.  And accumulated debt.  But shrinking government is, of course, crazy talk for those on the Left.  Who would rather let the country sink into insolvency before agreeing to that.

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