FT193: “Democrats are more unified than Republicans because they put their hatred of Republicans ahead of their policy differences.” —Old Pithy

Posted by PITHOCRATES - October 25th, 2013

Fundamental Truth

Democrats believe Republicans should be like a 1950s Housewife and be Pretty but Express no Thoughts of their Own

What did we learn from the government shutdown?  Well, if you listened to the left you learned that there is a civil war going on in the Republican Party.  And perhaps there is.  For there are two factions in the Republican Party.  Those the Democrats like and can push around.  And those who refuse to be their bitch.

The Tea Party would be in that latter category.  And the Democrats really hate them.  Because they won’t play ball.  Like the establishment Republicans.  Who argue with and debate the Democrats.  Put on a little kabuki theater to shut the constituents up back at home.  Then vote with the Democrats.  And thank the Democrats for the occasional spoils hand-me-down.

You see, the Democrats know how to be a good Republican.  You act like a 1950 housewife.  With Democrats, of course, being the 1950s husband.  Republicans are to look pretty and agree with the Democrats.  They’re not supposed to express a thought of their own.  The Democrats promise them all sorts of things.  To honor their agreements.  To be faithful.  Then go out and break their promises and whore around.  Because in their world Republicans are second-class citizens.  Just like the 1950s housewife.  At least as liberal Democrats see the 1950s housewife.

Extorting Everyone via Obamacare has more Political Dividends than Extorting only Seniors

Washington changes people.  Well, it changes Republicans.  Where power corrupts them.  While absolute power seduces Democrats.  Which is their ultimate goal.  Even when they campaigned for their first election.  They want power.  All the power they can get.  So they can become a ruling class.  An aristocracy.  Where they can do whatever they want.  And live the good life.  At the expense of the masses.  Like it used to be in feudal Europe.  Where who you knew was all that matter.  And a good last name set you up for life.

Power.  It’s all that counts.  And with power comes privilege.  The Democrats see themselves as a privileged elite.  Or at least they think they should be.  Which explains why working Americans have to pay high premiums and pay high deductibles for a basic Obamacare health insurance policy with no subsidies while members of Congress get a generous subsidy for their gold-plated policies even though they earn more than $100 grand a year.

In fact the Affordable Care Act is all about power.  Not health care.  Forcing people to turn to government for their health care makes all people dependent on government.  And much more willing to vote for Democrats who want to raise taxes and expand benefits rather than Republicans who want to ‘throw Grandma off the cliff’.  As the left accuses Republicans of wanting to do.  For it’s one thing extorting seniors.  But it’s another extorting everyone.  Which has far more political dividends than extorting only seniors.

Empowering the Ruling Class is the One Priority Democrats put above all Others

So you have the Democrats trying to make all Americans dependent on government so they can extort them whenever they want more.  If they want more money they threatened whatever the people are dependent on.  Saying if we don’t raise taxes the Republicans will prevent the Democrats from giving them these benefits.  With establishment Republicans onboard for the occasional spoils hand-me-down.  While the Tea Party Republicans are trying honor the promises they made to their constituents.

Was the attempt to defund Obamacare a wise move?  When the Republicans only controlled the House of Representatives?  Especially with the Republicans fighting among themselves?  Time will tell.  But what was clear is that the Democrats are more unified than the Republicans.  Why?  Is it because there is no dissension in the Democrats’ ranks?  Like there is with Republicans between establishment (i.e., Democrats in Republican clothes) and the Tea Party?  No.  It’s not that.  For there is dissension in the Democrat ranks.  But unlike the Republicans, they don’t let this interfere with their ultimate aim.  Power.

The Democrats never lose sight of the big picture.  The acquisition of power.  Democrat primary elections can be brutal.  In 2008 when Bill Clinton was trying to get Senator Ted Kennedy to endorse Hillary Clinton instead of Barack Obama he said, “A few years ago, this guy would have been carrying our bags.”  A racial slur.  But that was all forgotten after the election.  With Hillary Clinton even taking a post in the Obama administration.  Because empowering the ruling class is the one priority they put above all others.  And you do that by destroying the opposition.  The Republicans.  In particular the Tea Party Republicans.  Whatever the cost.  However it hurts the American people.  This is what unifies the Democrats.  Their love of power and their hatred of Republicans.  Which lets Democrats forget things like racial slurs.  While those Republicans who fight for the people get attacked by members of their own party.

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Shutting Down Government and Taking Hostages

Posted by PITHOCRATES - October 3rd, 2013

Politics 101

Democrats close National Parks and Deny Cancer Treatment for Children to win Political Contest

The politicians have shut down the government.  And the executive branch (i.e., President Obama’s branch) is really trying to make the shutdown hurt.  In fact they are gleeful.  For the president had his ass handed to him over his redline comment on Syria.  Having been ridiculed on the international stage he is trying to show how tough he is with people he can push around.  Americans.

So President Obama has closed national monuments.  To really annoy the people.  Even World War II veterans (men who know a thing or two about courage and bravery and being tough) coming to see the outdoor World War II monument.  Yes, he closed that, too.  But he didn’t stop there.  His executive branch even tried to close Mount Vernon.  The privately owned and privately operated Mount Vernon.  Proving the politics that motivate the president and the Democrats.

When a reporter asked Senator Harry Reid if he would approve a spending bill that would let children with cancer to participate in an experimental treatment program he said ‘no’.  Because if he did that would mean the other side would have won.  When you’re talking about winners and losers, though, you’re not doing what is best for the American people.  You’re doing whatever you can to win.  Regardless of what’s best for the people.

The Obama administration refused additional security in Benghazi so they wouldn’t offend their Muslim Hosts

The Democrats are playing hardball.  Acting like petulant children who can’t get their way.  And they don’t care who they hurt in the process.  Children throwing tantrums rarely do.  Pity they couldn’t show this same toughness when it comes to real enemies of America.

President Obama and the Democrats have unleashed every invective in the dictionary against the Republicans.  Calling them terrorists and their actions jihad.  Yet they bend over backwards not to offend those waging jihad against America.  To this day they still call the Fort Hood massacre workplace violence.  After the Boston Marathon bombing they held off calling it an act of terrorism.  And refuse to call the bombers Muslim even though they were Muslims fighting a jihad for Islam.

When the American ambassador in Libya requested additional security for their mission in Benghazi the Obama administration refused the request.  As they didn’t want to offend the sensitivities of their Muslim hosts in Benghazi by showing that we were worried about our safety there.  For President Obama won the War on Terror with the killing of Osama bin Laden.  So there was nothing to worry about.  And there was an election coming up.  So not only were they worried about their Islamic host’s sensitivities they were worried about how a ramp up of security in Benghazi would look back at home.  As they were getting a lot of miles out their campaign slogan.  “Osama bin Laden is dead.  And General Motors is alive.”  Which led to four dead Americans in Benghazi.

The Democrats hold Social Security Recipients Hostage whenever they can’t get What they Want

Of course, what government shutdown would be complete without scaring old people?  Yes, they have brought up Social Security.  Because those Social Security recipients are hostages to the government.  If the government doesn’t get what they want the government threatens to take away their benefits.

The government shutdown does not affect Social Security.  But tying the current fight in with the future fight over raising the debt limit helps the Democrats.  For they buy a lot of votes.  Which isn’t cheap.  Each year federal spending increases to pay for new and/or expanded federal programs that buy votes from those they make dependent on government.  This is the Democrats’ great fear.  That they won’t be able to raise the debt limit.  So they can continue to buy votes.  Which they must do as they can’t win in the arena of ideas.

Which is why they’re already playing the Social Security card.  Taking Social Security recipients hostage.  Threatening them that if they don’t pressure the Republicans to stop trying to be responsible they will make them pay.  And stop issuing their checks.  Which further proves how political everything is.  First of all, we pay into Social Security.  There is a Social Security Trust Fund that is supposedly holding our money.  Which means one of two things.  Either they’re withholding our own money from us.  Or Social Security is really a Ponzi scheme after all.  And the Trust Fund is empty.  Filled with nothing but federal IOUs.  Yes, they’ve spent that money to buy more votes.  So not only have they spent more than the government can pay.  They’ve also raided our retirement accounts.  To buy votes.  Which is what Obamacare is all about.  Buying votes.  To get even more Americans dependent on the government.  So the government can hold them, too, hostage to get what they want.

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The Planter Elite, Southern Democrats and the Political Left’s Embrace of Racism

Posted by PITHOCRATES - July 18th, 2013

Politics 101

The Left needs Racism to Exist so they can Continue the Fight to End Racism

George Zimmerman had what pretty much everyone said was a fair trial.  And extensive attempts to detect a racial motivation have been in vain.  Most people seem to agree that race was not a factor in the shooting of Trayvon Martin.   Yet since the ‘not guilty’ verdict some have been saying things like if Trayvon Martin was a white kid Zimmerman would not have followed him.  And that if Martin was a white kid and a black man shot him a jury would have found that black man guilty of first degree murder.

These things are so obvious that some people (primarily those on the political left) are demanding the federal government charge Zimmerman with a race-based hate crime.  And for violating Martin’s civil rights.  Despite pretty much everyone having said it was a fair trial.  And extensive attempts to detect a racial motivation have been in vain.  But it’s now about race.  Why?  And where is their concern for what’s happening in Chicago?  Where the black on black murder rate is soaring?

Government fixes problems.  And Big Government fixes big problems.  Problems like racism.  By creating agencies and writing legislation to end racism.  Increasing the size of the government.  And increasing their power.  Putting more and more people into powerful positions.  Earning large salaries.  While activists agitate.  Getting more time in the news whenever they speak out against racism.  Staying relevant.  And allowing them to collect vast sums of money to continue the fight to end racism.  Which brings us to why the political left is giving the Zimmerman case a racial component when none exists.  For they need racism to exist.  So they can continue the fight to end racism.  Because it gives them power.  And pays them so well.

The Left has transformed Rugged Individualism into Complacency, Lethargy and Subservience

The political left wants to expand the size of government.  They want the government to do more for the people.  Like the social democracies in Europe.  And they want the people to be dependent on the government.  With the government redistributing ever more wealth.  And they want to be the people deciding who gets this redistributed wealth.  Because of the power it gives them.  And the wealth.  For the more wealth that passes through the government the more they can skim off the top.  So they can make ‘investments’ in selected businesses.  Businesses, coincidentally, that their friends own.  Who return the favor with campaign donations.  From the very tax money they ‘invested’ in those businesses.

But their crony capitalist friends in business are not the only recipients of government largesse.  The government gives alms to the people.  To make them dependent on government.  Form Social Security to Medicare to Obamacare to food stamps.  Not a lot to make their lives really comfortable.  But enough that they can survive without working.  Getting them complacent.  Lethargic.  And subservient.  A permanent underclass.  Afraid to lose their government benefits.  So they keep voting the political left into office.  To keep their benefits.  Keeping them complacent.  Lethargic.  And subservient.  A long way from the rugged individualism of our grandfathers.

But it’s just not the crony capitalism.  And the alms.  There are also the agencies and the legislation.  And the vast government bureaucracy.  That becomes so entrenched that it becomes impossible to get rid of it.  Which is why government only grows.  It never shrinks.  Because government bureaucracies take on a life of their own.  And like any living organism they grow.  And the more agencies and legislation for that permanent underclass the greater that vast government bureaucracy is.  The more positions of power.  And the more money that passes through government.

The Left is making the Zimmerman Verdict about Race because it gives them Purpose, Power and Wealth

During the mid 1800s the majority of southerners lived and worked on family-owned farms.  Were poor.  And did not own slaves.  For slaves were expensive.  The great slave populations were on the plantations.  Owned by the rich planter class.  Who ran the government.  A true Old World aristocracy if there ever was one.  You’ve seen Gone with the Wind.  Glorious mansions.  Huge landholdings.  Servants.  And family names so great they were nearly royalty.  People treated them like royalty.  And they expected the people to treat them as royalty.  For they were.  In the plantation South.  And this was what they were fighting to preserve.  That part of the Old World that the United States broke free from.  Where some people were better than you based on their birth.  And it mattered what your last name was.

So they plunged their people into war.  Telling them it was about states’ rights.  And northern aggression.  When it was nothing more than these few people, the planter elite, the southern Democrats, trying to keep the South in the 18th century.  With them enjoying their positions of privilege.  While the masses toiled for them.  In fact they were so exalted that they actually owned human beings.  Like barons.  And earls.  And dukes.  They liked that world.  Just as landowning aristocracies have for millennium.  Then the Founding Fathers had to come along and muck everything up.  With their “all men are created equal.”  And their Constitution.  Creating a government of the people.  Instead of what it should be.  A government of the privileged elite.  Then that abominable Abraham Lincoln.  And his “government of the people, by the people, for the people, shall not perish from the earth.”  How they hated that.  And ever since losing the Civil War the southern Democrats struggled to maintain their position of privilege.

The descendants of those southern Democrats, liberals, still seek privilege and power.  And few have suffered as much to advance their cause than blacks.  They destroyed the black family with Aid to Families with Dependent Children (AFDC).  Where the government replaced the father in the black families on AFDC.  Saying these women didn’t need to get married.  Or live with the fathers of their children.  So black children grew up without fathers.  Or male role models.  Which spurred the creation of Big Brothers.  To provide positive role models for these black kids harmed by liberal policies.  So they wouldn’t turn to the streets.  Or gangs.  Which they did.  And still do.  In alarming numbers.  And today little has changed in the black community.  The vast majority of black children are born to single mothers.  And the streets of Chicago run red with the blood of black teens and young adults.  But the political left doesn’t care about these blacks.  Because their deaths can’t help them politically.  Especially when it’s their policies that caused all of this violence.  But when a light-skin Hispanic (who those on the left called a ‘white’ Hispanic) kills a black teen, why, that’s close enough to a white man killing a black teen.  And THAT can help them politically.  Which is why the left is making this a case about race.  Because it gives the left purpose.  And purpose leads to power and wealth.

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Political Promises, Lies and the Advancement of an Political Agenda

Posted by PITHOCRATES - April 11th, 2013

Politics 101

Government Helps the Poor by Keeping them Poor so they Remain Dependent on Government

Politicians lie.  Everyone knows this.  It’s a running joke in comedy movies and television programs.  And a common plotline in dramas.  Because politicians will say and promise anything to get elected.  Which is their primary and only objective.  Winning an election.  And the needs and wants of the people are secondary.  Things they can easily brush aside once ascending to elected office.  Because they don’t really care about the people.  At least, they don’t care for them as much as they care for themselves.

And once they’re in office the promises keep coming.  To help them win the next election.  And to keep the size of government growing.  As well as the amount of taxes they collect.  Which gives them wealth.  And power.  The ultimate goal in running for elected office.  That’s why they sneer at the concept of limited government.  And tax cuts.  Because the less government we have the less wealth and power they enjoy.  For if we really are the self-reliant people of the Founding what need do we have for an expanding government?

Of course the answer to that question is we would have little need for an expanding government.  For we can earn our pay and take care of ourselves.  And our families.  The way Americans did before Woodrow Wilson, FDR, LBJ and Barack Obama.  Men who do not like that independent spirit.  And will use a host of arguments to condemn it.  It’s not fair being their favorite.  Because who can argue against being fair?  So everything they do is about leveling the playing field.  To make sure the rich pay their fair share.  And to help the little guy.  By making him dependent on government.  And perpetually poor.  So they will remain dependent on government.  So they can keep taking care of these poor.

Government rarely chooses Tax-Cutting for Stimulus as Cutting Taxes doesn’t Increase the Size of Government

LBJ declared a War on Poverty.  Justifying a huge increase in federal spending starting the Sixties.  And after spending untold billions to eradicate poverty what did we get?  Not much.  We still have poverty.  And the government spends more with each passing year to alleviate the suffering of the impoverished.  But it never goes away.  Poverty.  And the government nurtures it.  Protects it.  By making it more attractive to stay on a meager government assistance instead of going to work.  And building a career.  Doing something you love.  While leaving your mark on the world.  Instead we get ever increasing federal spending.  And a permanent underclass the government can be savior to.  You see they don’t want to win the War on Poverty.  Because if they win it then we won’t need them anymore.

The greatest killer of poverty is a job.  People gainfully employed can provide themselves food, shelter, etc.  They can have clean drinking water.  And heat in the winter.  It’s only the unemployed who look at food, shelter and heat as sought after luxuries.  For people with jobs are those self-reliant people.  Who provide tax dollars instead of consuming them.  This is no secret.  So it would follow that the best thing to do during a recession is to make it as easy as possible to create jobs.  You do that by lowering taxes.  And cutting regulations.  Not by raising taxes.  Or adding regulatory costs.  And you sure don’t pass a quasi national health care plan like Obamacare.

Also, history has shown that Keynesian stimulus spending does not pull economies out of recession.  If it did Ronald Reagan would not have won in a landslide against Jimmy Carter.  And Europe would not be in a sovereign debt crisis.  Keynesians know this.  But they can’t pass up the opportunity to increase federal spending.  So they promise lower unemployment rates and higher GDP numbers if only Congress does the right thing and “pass this stimulus bill.”  And when it doesn’t work they have two predictable explanations.  They didn’t spend enough.  And that even they didn’t realize how bad their predecessor destroyed the economy.  Calling the recession du jour the worst since the Great Depression.  Covering their lies about ending the recession with statements like “things would have been worse if we didn’t act.”  And though they didn’t reduce unemployment they’ll make incredulous claims like “we saved 800,000 jobs with this bold action.”  Predictable.  For their primary objective isn’t to end any recession.  It is to exploit the crisis to advance their agenda.  Basically, increasing the size of government.  And we know this because there are two ways to put more money into people’s pockets to stimulate the economy.  You can cut taxes so they have more money to spend.  Or you can tax, borrow and print money so the government can spend more.  Very rarely do they ever choose the tax-cutting route.  Because the tax-cutting way works against their agenda of increasing the size of government.

Politicians Promise and Lie to the Young and Naïve to Advance a Political Agenda

And speaking of Obamacare President Obama promised the American people that if you liked your private health insurance plan you could keep it.  And the cost of that health care plan would go down.  Because they had a massive convoluted health care plan that was going to give health care to everyone.  Increase the quality of health care from what it is now.  And it was going to be less expensive.  Which was a lie.  Because you can’t have more of anything for less money.  Life just doesn’t work that way.  As they implement Obamacare its taxes and regulations are forcing business owners to push people from full-time to part-time.  So they aren’t forced into providing mandated health insurance plans.  Some even have no choice but to drop their health care coverage for all of their employees.  Because their health care costs went up.  Not down.  And they’re predicting doctor shortages.  Because the only cost savings they can get is by forcing people to work for less in the health care industry.  So they’re leaving.  Under Obamacare there will be higher costs, longer wait times, rationing, denial of services and lower quality.  Everything they promised wouldn’t happen.  And everything critics said would happen.  So are the proponents of Obamacare just so utterly ignorant?  Or were they lying through their teeth because they just wanted to take over one-sixth of the U.S. economy?  With an agenda to increase the size of government one has to go with lying through their teeth.

President Obama blamed George W. Bush for the world hating America.  When he became president he no longer projected American power.  Instead he wanted to talk to our enemies.  To negotiate with them.  He even dropped words from official usage.  Like the War on Terror.  To make our enemies like us.  Because people like people who aren’t bullies.  And that was what George W. Bush was.  A bully.  So President Obama warmed up to the Islamic world.  So the Islamic world would warm up to us.  Even announcing withdrawals from Iraq and Afghanistan early in his administration.  Ending the war on you-know-what.  So he could use that money for Obamacare.  Promising the American people the world would be a safer place.  Even passing on an opportunity to help overthrow the government in Iran.  America’s greatest enemy.  Instead, he helped people overthrow a couple of our allies.  Hosni Mubarak in Egypt.  And Muammar Gaddafi in Libya.  Who since the Iraq war had been an ally in the War on Terror.  And the thanks for this new Islam-friendly American policy?  They killed our ambassador in Benghazi along with three other Americans.  Al Qaeda is now in Libya.  And the Muslim Brotherhood is in Egypt.  And it looks like al Qaeda is now in Syria.  Another enemy of the United States the people were trying to overthrow that President Obama chose not to help.  The Middle East may burn now.  Making the world a more dangerous place.  But the president got what he wanted.  All that money we were spending overseas they can now spend at home.  Rewarding friends and campaign contributors.  As well as buying votes.

And now they are calling for tighter gun control measures.  Greater background checks.  And a national gun register.  To protect the kids they say.  So another Newtown massacre doesn’t happen.  Even though they themselves will admit that every measure they proposed thus far would not have stopped the shooter at Newton.  Aurora.  Tucson.  Virginia Tech.  Or any other shooting where some mentally unsound person killed random strangers.  These people didn’t kill because guns made them kill.  They killed because they were sick.  And we didn’t protect society by institutionalizing these people.  The only thing we could have done to stop them once they started shooting we didn’t do.  Having someone armed in these ‘gun-free’ zones.  For these sick people shoot unarmed innocents until someone with a gun arrives on the scene to shoot back.  So arming teachers may save children from another Newtown.  While everything they proposed thus far will do absolutely nothing to prevent a future Newton.  Yet they press for further restrictions on gun ownership.  And if it won’t make children safer one wonders why they want to exploit these shootings to advance their anti-gun-ownership agenda.  As they are interested in acquiring greater wealth and power one would have to assume it’s the power.  Perhaps making them feel more all-powerful if they can actually nullify the Second Amendment.

So politicians promise and lie to advance an agenda.  Which is why the young typically vote for those who promise and lie so much.  The liberal Democrats.  As the young are naïve and easy to lie to.  While older people tend to vote Republican.  For they are older.  They have heard all of the promises and lies before.  And they’re wiser.  Which comes with age.  Which is why the liberal Democrats get them while they’re young. For it’s hard to keep them once they gain knowledge and experience.

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Great Britain is trying to Privatize their State Pensions

Posted by PITHOCRATES - January 26th, 2013

Week in Review

Britain is a social democracy.  Not as much as they were before Margaret Thatcher.  But still a social democracy.  They have national health care.  And state pensions.  Something the American Left always wanted in the United States.  They got the state pensions—Social Security—a long time ago.  But they’ve been waiting a very long time for their national health care.  Now they’ve got something like it in Obamacare.  And now the Left can follow in the footsteps of that social democracy they so admire.  Who has no problem whatsoever in providing those lavish benefits onto their people (see Start retirement saving now or the government may make you by Sarah Mortimer posted 1/25/2013 on Reuters).

Britain may soon have to force workers to start saving for retirement to cut a soaring pensions bill set to reach 120 billion pounds in 20 years…

The government’s current pension legislation is an attempt to tackle the country’s ballooning pensions bill, set to hit 8.5 percent of economic output by 2060, from 6.9 percent now…

Britain lags behind countries including Denmark, the Netherlands and Australia in global pension rankings. Its pension system ranks seventh out of 16 countries in a global comparison of national schemes, according to data from consulting firm Mercer. Its lowly ranking reflects an ageing population, low investment returns and large government debt…

“One way or another, long-term pension contributions will increase,” Paul Macro, defined contribution retirement leader at Mercer said. “The government are trying to stop people relying on the state to support them in retirement.”

An aging population, low investment returns and large government debt?  Sounds like they’re talking about Social Security.

Note how Britain is trying to make their people less dependent on government while the U.S. is trying to make their people more dependent on government.  Even though both countries face the same problems.  An aging population, low investment returns and large government debt.  So it would appear one country—Britain—is trying to be responsible.  While that other country—the United States—isn’t.  Why?  Because Social Security, Medicare and Obamacare are not about taking care of people.  They’re about increasing the power of government.  Which is why the U.S. continues to increase their spending obligations no matter how much they can’t afford to.  Because spending money buys votes.  And winning elections give them power.  Which is what they want.  So they will ignore the responsible governing Britain is doing.  While implementing the kind of programs that caused Britain’s financial problems in the first place.

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Partnering with the Grim Reaper: Saving Medicare, Medicaid and Obamacare

Posted by PITHOCRATES - December 29th, 2010

Taxing the Young to Save Medicare for the Old

Medicare and Social Security make up the lion’s share of the federal budget.  The government is setting records for both deficits and debt.  And everyone is projecting both of these programs to go bankrupt.  A dim picture for anyone hoping to rely on either for their retirement.  And they’re worried (see AP-GfK Poll: Baby boomers fear outliving Medicare by Jennifer Agiesta and Ricardo Alonso-Zaldivar posted 12/29/2010 on the Associated Press).

A new Associated Press-GfK poll finds that baby boomers believe by a ratio of 2-to-1 they won’t be able to rely on the giant health insurance plan throughout their retirement.

The boomers took a running dive into adolescence and went on to redefine work and family, but getting old is making them nervous.

Now, forty-three percent say they don’t expect to be able to depend on Medicare forever, while only 20 percent think their Medicare is secure. The rest have mixed feelings.

The problem with both Medicare and Social Security is that they are both Ponzi schemes.  Scams by the government to make generations dependent on government.  And to funnel a lot of cash to Washington.  But the Baby Boomers mucked up the works.  Their free love in the 60s and use of birth control and abortion left their family tree a barren one.  The boomer generation of families with maybe 2-3 kids will support in retirement their parent’s generation of families with 10+kids.  There’ll be more people entering retirement than entering the workforce to pay for those retirees.

Here’s the math: when the last of the boomers reaches age 65 in about two decades, Medicare will be covering more than 80 million people. At the same time, the ratio of workers paying taxes to support the program will have plunged from 3.5 for each person receiving benefits currently, to 2.3.

And the numbers are worse.  Because Social Security will be covering those same people.  We’re approaching one working person supporting one person in retirement (Medicare and Social Security benefits combined).  Even Bernie Madoff’s great Ponzi scheme had a better ratio when his pyramid imploded.  It just isn’t sustainable anymore.  Something’s gotta give.  And by something I mean benefits paid out to people.

The government can’t balance its books without dealing with health care costs, and Medicare is in the middle. Some leading Republicans and a few Democrats have called for phasing out the program and instead giving each retiree a fixed payment — or voucher —to help them buy private medical insurance of their choice. The poll found doubts about the idea, and a generational debate.

Overall, a narrow majority (51 percent) of Americans opposed the voucher plan. But those born after 1980 favored it by 47 percent to 41 percent, while seniors opposed it 4-to-1. A majority of boomers were also opposed, with 43 percent strongly objecting.

And here’s the problem.  Those who don’t pay payroll taxes anymore (retirees) are all for raising taxes to pay for their current level of benefits.  No matter how much it bankrupts future generations.  And these people vote.  More than anyone else.  So for good reason they call Social Security the third rail of politics.  You touch it at your own peril.  Those with a lifetime of paying taxes ahead of them, on the other hand, would rather raise a family than support an individual in retirement.  Not only do they want to touch the third rail, they want to short it out.  But they don’t have the numbers.  Yet.

States to Make Steep Cuts in Medicaid to Stave off Bankruptcy

And we even haven’t talked about Medicaid yet.  This program is bankrupting the states.  It’s their biggest budget item.  And they can’t sustain it any longer (see Medicaid Pushes U.S. States Off ‘Cliff’ as Governors Seek Cuts by Christopher Palmeri and Pat Wechsler posted 12/22/2010 on Bloomberg).

Governors nationwide are taking a scalpel to Medicaid, the jointly run state and federal health-care program for 48 million poor Americans, half of whom are children. The single biggest expense for states, Medicaid consumes about 22 percent of their total $1.6 trillion in expenditures, more than what is allocated to elementary and secondary education, according to a National Governors Association report.

Talk about being stuck between a rock and a hard place.  You know that states aren’t going to cut education.  The unions won’t let them.  So they have to address the 800 pound gorilla in the room.  And cut Medicaid.

Governors are slashing Medicaid to close as much as $140 billion in budget deficits for the 12 months starting in July 2012, after eliminating $130 billion in gaps this year, according to the Center on Budget and Policy Priorities, a Washington-based research group. Spending is being cut even though state revenues rose for the three quarters ended Sept. 30, as the U.S. recovered from the longest recession since the Great Depression, the Nelson A. Rockefeller Institute of Government in Albany, New York, said in a Nov. 30 report.

“I don’t think most states want to sentence people to death,” said Judy Solomon, co-director of health policy at the Center on Budget and Policy. “But what we see is a pretty bleak picture of tough cuts made this year, and next year’s numbers look worse.”

The sad truth is that sick people are costly.  Dead people aren’t.  So you can see where this is going.  Rationing.

Spending on Medicaid nationwide rose 8.8 percent last year, the most since 2002, according to Kaiser. Nearly every state issued at least one new policy to cut program costs in the past two years, including benefit reductions, increased copays and lower reimbursements to health-care providers.

Cost cutting and reductions in benefits.  Rationing.  And you know where that will lead to.  More dead people.  Which is the only thing that will save Medicaid.  That, or federal contributions.

Every state has a unique formula for calculating the federal contribution for Medicaid. The 12 with the highest personal income, including California, New York, New Jersey, Connecticut and Colorado, typically depend on the U.S. government for about half their expenditures.

Lucky for the states that the federal government has money to spare.  Wait a tic, they don’t.  They’re setting record deficits and debt.  They don’t have the money.  Especially now that they’ve thrown Obamacare into the mix.  And the cost for this behemoth will dwarf Medicare and Medicaid.

States face the prospect of enrolling 16 million more people in Medicaid beginning in 2014 under the Patient Protection and Affordable Care Act, the health-care law Obama signed in March. It expands coverage to include certain childless adults under 65, according to Foley & Lardner LLP, a law firm in Milwaukee. The federal government will pay 100 percent of the increased expense for the first three years.

Well, perhaps not.  They’ll be sticking the states with some of those costs.  Poor states.  These unfunded federal mandates are killing them.  But they won’t be the only ones dying.  In three years time, when those federal subsidies expire, some of the current Medicaid patients may lose their heath care benefits.  And die.

Death Panels to Decide Life and Death

The problem with healthcare is that the raison d’être of healthcare is the very thing bankrupting it.  Providing healthcare to sick and dying people.  If the sick and dying would just hurry up and die these healthcare programs (Medicare, Medicaid and Obamacare) would be just fine.  If only there was some mechanism to encourage people to take a pill to manage pain instead of consuming expensive healthcare services.  I mean, they are only delaying the inevitable.  They should just suck it up.  And do the right thing.  After receiving something like, oh, I don’t know, let’s call it end of life counseling (see WSJ Opinion Death Panels Revisited posted 12/29/2010 on The Wall Street Journal).

On Sunday, Robert Pear reported in the New York Times that Medicare will now pay for voluntary end-of-life counseling as part of seniors’ annual physicals. A similar provision was originally included in ObamaCare, but Democrats stripped it out amid the death panel furor. Now Medicare will enact the same policy through regulation.

We hadn’t heard about this development until Mr. Pear’s story, but evidently Medicare tried to prevent the change from becoming public knowledge. The provision is buried in thousands of Federal Register pages setting Medicare’s hospital and physician price controls for 2011 and concludes that such consultations count as a form of preventative care.

No wonder they hid it.  Encouraging people to hurry up and die.  That’s something that doesn’t win you points at the PTA.  The law as written isn’t all that bad, though.  The panels are voluntary.  So far.  But everything Big Government has done started small.  They are, after all, the master of incrementalism.  And with out of control healthcare spending bankrupting Medicare and Medicaid, what do you think these panels will evolve into?

The regulatory process isn’t supposed to be a black-ops exercise, but expect many more such nontransparent improvisations under the vast powers ObamaCare handed the executive branch. In July, the White House bypassed the Senate to recess appoint Dr. Berwick, who has since testified before Congress for all of two hours, and now he promulgates by fiat a reimbursement policy that Congress explicitly rejected, all while scheming with his political patrons to duck any public scrutiny.

If there was nothing to hide they wouldn’t have hidden this provision so deep in the federal register.  But when you hide things, there are reasons you hide them.  So much for transparency.  And the most ethical Congress ever (of course an ethical Congress is a moot point when the executive rules by fiat).

Under highly centralized national health care, the government inevitably makes cost-minded judgments about what types of care are “best” for society at large, and the standardized treatments it prescribes inevitably steal life-saving options from individual patients. This is precisely why many liberals like former White House budget director Peter Orszag support government-run health care to control costs: Technocrats in government can then decide who gets Avastin for cancer, say, and who doesn’t.

When a government bureaucrat decides who gets life-saving medication and who doesn’t, that sounds like a death panel to me.  Because that decision has the power of life and death.  They can be as nontransparent as they want but the truth is pretty clear.  To control the out of control spending of Medicare and Medicaid (and, in time, Obamacare), they will be partnering with the Grim Reaper.  Because dead people don’t consume health care benefits.  And that is their biggest problem.  Consumers of benefits.

The Swedish National Health Care System Rations Care

So what about the social utopias of European Socialism?  Those advanced nations that have national healthcare?  Are they having these problems?  Of course they are.  In fact, their future is ours.  Here’s a small sampling of what to expect (see Man’s penis amputated following misdiagnosis posted 12/29/2010 in Science and Technology on The Local).

A Swedish man was forced to have his penis amputated after waiting more than a year to learn he had cancer.

The man, who is in his sixties, first visited a local clinic in Blekinge in southern Sweden in September 2009 for treatment of a urinary tract infection, the local Blekinge Läns Tidning (BLT) reported.

When he returned in March 2010 complaining of foreskin irritation, the doctor on duty at the time diagnosed the problem as a simple case of inflammation.

After three weeks passed without the prescribed treatment alleviating the man’s condition, he was instructed to seek further treatment at Blekinge Hospital.

But it took five months before he was able to schedule an appointment at the hospital.

When he finally met with doctors at the hospital, the man was informed he had cancer and his penis would have to be removed.

It remains unclear if the man would have been able to keep his penis had the cancer been detected sooner.

The matter has now been reported to the National Board of Health and Welfare (Socialstyrelsen) under Sweden’s Lex Maria laws, the informal name used to refer to regulations governing the reporting of injuries or incidents in the Swedish health care system.

Misdiagnosis.  And long waits.  National healthcare.  Where government bureaucrats cut costs and make doctors work long hours.  Not a very attractive offer for all those years of medical school.  So there’s a doctor shortage.  And, consequently, long waits.  In this case, 6 months to be advised he needed to go someplace else.  Then another 5 to get an appointment someplace else.  In the mean time the cancer spread.  This is what happens when you ration health care.

Is this the future you want?  It’s not the future I want.

The Third Rail of Politics is a Generational Thing

It’s a generational battle.  The young want to cut taxes (and benefits).  Because they’re paying those taxes.  And not consuming the benefits.  The old want to raise taxes and maintain benefits.  Because they’re not paying those taxes.  But are consuming the benefits.  Right now there are more old than young.  So you can guess who will win this struggle.  Bankrupting the future will help the politicians stay in office today.  So the old will win.

But there is a little irony in all of this.  To save these programs (Medicare, Medicaid and Obamacare), they need old people to die.  But once they do, the politicians will lose their political support.  The younger generation (whose future the politicians mortgaged) will then broom them out of office.  And they will be all too glad to short out that third rail once and for all.

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LESSONS LEARNED #40: “Big Government is more efficient when old people die sooner.” -Old Pithy

Posted by PITHOCRATES - November 18th, 2010

Big Government is a Ponzi Scheme

When it comes to government funding, birthrates and death rates are key.  Think of government as a great Ponzi scheme.  Ponzi schemes work when more people pay into the scam than collect from the scam.  Like in a pyramid scheme.  Those collecting benefits are the few at the top.  Those paying in are the many at the base.

An increasing birthrate means more taxpayers for each successive generation.  This keeps the base of the pyramid growing.  A steady or increasing death rate keeps the top of the pyramid smaller than the base.  A declining death rate, on the other hand, will flip the pyramid upside down.  Because the population at the top will grow larger than the population at the bottom.

Big Government tries to keep as many people as possible dependent on government.  Lots of different programs attach lots of different people to the welfare state.  But when it comes to big numbers, old people can’t be beat.  The lion’s share of government assistance goes to them via Social Security and Medicare.  And they are the most politically active.  That means they vote.  And when they vote, they vote to keep their benefits.

Of course, this is a dual-edged sword.  Yes, old people can provide a loyal voting base to sustain Big Government.  But on the other hand, the cost of their benefits is growing so large that it is undermining the very foundations of Big Government.  How?  By the double whammy of a falling birthrate and a declining death rate.  For various reasons, fewer people are being born.  And old people are living longer.  This has flipped the pyramid in the great Ponzi scheme upside down.  The growth rate of those collecting benefits is greater than the growth rate of those paying into the scheme.

An Increasing Life Expectancy is Bankrupting Social Security

FDR signed Social Security into law in 1935.  The average life expectancy in 1930 was approximately 59 years.  The retirement age in the Social Security Act of 1935?  65.  That’s right, the average American would have been dead for 6 years before qualifying for Social Security retirement benefits.  That’s a 6 year cost cushion.  But not everyone died at 59, though.  So a lot of people lived to receive those benefits.  But one thing the actuaries were sure about then, this Ponzi scheme was going to be a big winner.  For Big Government.

The average life expectancy increased to approximately 70 years in 1960.  In other words, people were living approximately 11 years longer.  That 6 year cost cushion just became a 5 year cost exposure.  That’s a swing of 11 years.  The actuaries in 1930 never saw this coming.

Social Security had its first crisis in 1975.  To save the program, they increased payroll taxes and decreased benefits.  Another crisis came in 1983.  Now they started taxing some Social Security benefits.  Even taxed federal employees (who previously didn’t pay these payroll taxes).   And they would increase the retirement age for later retirees.

By 2000, the average life expectancy increased to approximately 77 years.  That’s another 7 years.  That’s a swing of 18 years from 1930.  A huge actuarial miscalculation.  The population was getting far older then the FDR administration ever guessed.  And, to make matters worse, the birthrate was declining.

A Declining Birthrate is Bankrupting Social Security

The birthrate (per thousand of population) had been declining from 1910 (30.1) to 1920 (27.1) to 1930 (21.3).  That’s about a 10% decline from 1910 to 1920.  And a 20% decline from 1920 to 1930.    Perhaps that’s the reason for the 6-year cost cushion they gave themselves.  They saw fewer babies being born.  Which meant fewer taxpayers would be paying for later retirees.

The birthrate fell to 19.4 in 1940.  Though it was falling, it wasn’t falling as much.  Only 9% from 1930 to 1940.  Then came the baby boom generation.  The birthrate in 1950 shot up to 24.1, a 24% increase from 1940.  More babies meant more taxpayers.  This birthrate held pretty steady in 1960.  No doubt the LBJ administration felt optimistic. 

LBJ exploded federal spending.  He added Medicare and Medicaid.  Made Social Security more generous.  And why not?  Things were looking up.  Birthrate-wise.

But it was short-lived.  The birthrate went from 23.7 in 1960 to 18.4 in 1970.  That’s a 22% decline.  The birthrate was 15.9 in 1980.  That was a 14% decline from 1970.  Or a 33% decline from 1960.  Birth control and abortion were taking their toll on the U.S. birthrate.  Fewer babies meant fewer future taxpayers.  And fewer taxpayers could pay for less government, not more.  The LBJ administration was wrong to feel optimistic.

The Selfish Baby Boomers Invert the Ponzi Scheme Pyramid

The baby boom generation has really thrown a wrench in the works.  The government used their spike in the birth rate as a baseline for future government spending.  But they screwed the government in the end.  Instead of being good little taxpayers by making even more little taxpayers, they stopped having babies.  They didn’t stop having sex.  They just stopped having babies.  It was the era of free love.  And ‘free love’ had no room for babies.

And it’s these baby boomers that are working themselves up to the top of the pyramid.  But being the selfish ingrates that they are, they’ve left no one to follow behind them to keep the Ponzi scheme going.  And to make matters worse, they’ll be living longer in retirement than anyone ever guessed.

It’s a perfect storm of sorts.  A declining death rate.  An even more declining birthrate.  And a huge chunk of the population about to go on the public dole.  But it gets even worse.  The boomers will be living longer in retirement because of huge outlays in Medicare spending to keep them alive.  In other words, the government is spending a fortune to make their financial problems worse.

Amnesty, Catholics and Dead Retirees May Save Social Security

They’re trying to fix things on the taxpayer side.  The Big Government legislators are desperate to give illegal aliens amnesty and citizenship.  To them it’s simple math.  More people equal more taxpayers.  And these taxpayers will be Catholic.  Catholics don’t use birth control and abortion like Americans currently do.  Their birthrate is less likely to decline.  (Approximately 1 in 5 of young children in the United States is Hispanic already.  They project that to increase to 1 in 4 within a few decades.)

On the benefit side, they’ve already raised the retirement age to 67.  And there’s talk about raising it to 69.  If more people die before they’re eligible to collect retirement, that’s a lot of benefits the government doesn’t have to pay.  They’re also talking about cutting the Medicare budget.  The less they spend, the more may die.  And dead people don’t consume Medicare benefits.

There’s no getting around the fact that old people are a huge drain on government.  Though they worked hard to get these people dependent on government, their continued living is becoming more of a burden than a benefit.  An increasing lifespan is anathema to Big Government.  Old retirees take more than they give.  Young workers, on the other hand, give more than they take.  The government needs more young workers.  And fewer old retirees.

(Social Security + Medicare) Spending = 2 X Defense Spending

To be efficient government has to minimize costs in relation to revenue (i.e., taxes).  And there’s an 800 pound gorilla in the room.  Old people.  Nothing can impact the budget more.  Even war.  Social Security and Medicare combined make up approximately 40% of the federal budget.  Defense spending is approximately 20%.  A blind man can see the gorilla.  Government needs these old people to hurry up and die.

And now add Obamacare to the equation.  Which will cover more people than Social Security.  The costs will be astronomical.  Social Security, Medicare and Obamacare will easily eclipse 60% of the total federal budget.  That kind of spending cannot be sustained.  Greece, France and Great Britain have proven this in the 21st century.

That’s some serious cost to contain.  And how do you contain that kind of cost?  You do what the Left says the private health insurers do.  Deny coverage to sick people.  And they will.  They’ll have to.  And with the power of life and death literally in their hands (i.e., death panels), they’ll be able to.  They’ll be able to maximize the number of young workers (by treating them).  Minimize the number of old retirees (by not treating them).  As well as minimize the number of undesirables who take more than they give (by not treating them).  Or even take more serious measures with those seriously ill or impaired (euthanasia).

Don’t think it can happen?  It’s happened in other Big Government states.  In fact, the Progressives even talked about the scientific benefits of eugenics and euthanasia here in the United States in the early 20th century.  To deal with undesirables.  So, yes, it could happen here.  Because it almost once did.

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LESSONS LEARNED #38: “Repeating a lie doesn’t make it true.” -Old Pithy

Posted by PITHOCRATES - November 4th, 2010

Liars Lie

Lying works.  Political spin.  Poetic license.  Fibbing.  Slander.  Libel.  Call it what you’d like.  Politicians lie.  Because it works.  Especially when you can’t win in the arena of ideas.  If they can’t win the philosophical debate what do our politicians do?  Attack the messenger, not the message.  If the history doesn’t validate their policies what do they do?  Revise history.  It never changes.  The only thing that does is the people hearing the lies.

Presidents may dream, but the House of Representatives controls the purse.  That’s why there are numerous battles between Capitol Hill and the White House.  Between Speakers of the House and presidents.  Some of the big partisan battles in recent times?  Tip O’Neil and Ronald Reagan.  Tom Foley and George H.W. Bush.  Newt Gingrich and Bill Clinton.  Nancy Pelosi and George W. Bush.  When different political parties hold the White House and the Hill, the partisanship escalates.  And the lies get more brazen.  Especially on the political fringe.

Some lies bordered on the ridiculous.  Like Ronald Reagan created AIDS to kill homosexuals.  That George H. W. Bush flew to Iran on an SR-71 to meet secretly with the Iranians during the 1980 presidential campaign.  Why?  To negotiate with the Iranians to keep the American hostages until after the election.  That George W. Bush blew up the Twin Towers to start a war that would let him invade Iraq.  No doubt there was some political damage from these lies.  But the lasting damage from these ridiculous lies pale in comparison to the Big Lies that the Left perpetuates to this day.

Trickle-Down Economics

Ronald Reagan was president from 1981 until 1989.  When he entered office, the economy was in the toilet.  Double digit inflation.  Double digit interest rates.  Unemployment at 7.1%.  Reagan wanted to cut taxes and spending.  The Democrat controlled Congress wanted to increase federal spending to ‘stimulate’ the economy (ala Keynesian economics).  The Congress fought him.  But Reagan used the bully pulpit and appealed directly to the American people.  They liked his message which brought pressure down on Congress.  They gave a little.  Reagan got his tax cuts.  The top marginal rate went from 70% down to 28% by the time he left office.  The result?  The economy boomed.  They call it the Decade of Greed.  Because we were very materialistic and greedy.  And people lived well.

Yes, but at what cost?  That’s what the Left always says to refute Reaganomics.  What they deride as trickle-down economics.  They point to military spending.  They point to Reagan’s deficit spending.  And the growing federal debt.  The Left says this is what Reagan’s tax cuts have given us.  Growth and prosperity at the expense of future generations.  Which is perhaps the greatest lie of the 20th century.  But because the Left has repeated it so often, a lot of people accept it as fact.  Even though the numbers refute this grand lie.

When Reagan entered office, federal tax receipts were $517 billion.  When he left office in 1989, federal tax receipts were $991 billion.  This is an increase of 91.7%.  Or, to look at in another way, tax receipts in 1989 were 1.9 times the amount they were in 1980.  That’s almost double.  So, despite the great lie of the 20th century, Ronald Reagan’s tax cuts did NOT cause deficits or increase the debt.  Cuts in the tax rates brought MORE money into the federal treasury.  Excessive federal spending caused the deficits.  Federal spending increased from $590.9 billion in 1980 to $1,143.7 billion in 1989.  That’s a 93.6% increase.  Spending, too, almost doubled.  In other words, spending increased 1.9% more than tax receipts by the end of Reagan’s second term.  Washington was awash in money.  They just spent it faster than it came in.

Blame the excessive spending on Cold War defense spending or domestic spending.  The point is moot.  Because it doesn’t change the fundamental truth that Reagan’s tax cuts INCREASED federal tax receipts.  Or the lesson learned that tax cuts stimulate the economy.  Anyone saying otherwise is lying and trying to revise history.

Wither on the Vine

The Reagan decade ended prosperously.  Reaganomics were a success.  Which was a threat to those with a vested interest in Big Government.  But people liked Reagan.  And only agreed to vote for George H.W. Bush when he made the infamous ‘read my lips – no new taxes’ campaign pledge.  But Bush was no Reagan.  He wasn’t as conservative.  Or as charismatic.  He couldn’t sell conservative America (center-right) his less than conservative policies (center-left).  The Left, seeing he was no Reagan, maneuvered him into a position favorable to them on the deficit.  The Republicans wanted to cut spending.  The Democrats, of course, wanted to raise taxes.  And with the Democrats in control of the House, he caved.  He raised taxes.  And when he did, he became a one-term president.  The American people were so angry when he reneged on his ‘read my lips – no new taxes’ pledge, the third party candidate in the 1992 presidential campaign, Ross Perot, got 18.9% of the popular vote.  No third party candidate did better.  Exit polling shows he drew equally from both Bush and Clinton, though only 20% of his voters were liberal.  The rest were conservatives and moderates.  Perot brought a carnival atmosphere to the campaign.  Charts and props made for good TV.  This spectacle, though, drew critical attention away from Clinton’s past.  Parts of which moderates would have found objectionable.

Clinton ran as a centrist.  He lied.  As liberals are wont to do during a campaign in a center-right country.  Once in office, he swung to the left.  The American people were angry.  As people are wont to be when lied to.  At the 1994 midterm elections, the people spoke.  And gave both houses of Congress to the Republicans.  Newt Gingrich became the Speaker of the House.  He co-authored the Contract with America which was a Republican pledge to return America to a conservative path.  It appealed to the American people.  It’s what swept the Republicans into power.  And it scared the Left.  So they attacked it.  Called it the Contract on America.  And they attacked Newt Gingrich.  With a vengeance.

In 1995, Gingrich discussed an alternative to Medicare.  Number crunchers projected Medicare (and Social Security) to go into the red a decade or two out.  Medicare (and Social Security) is a big federal expenditure and a political third rail.  The Left uses the elderly as political pawns whenever they can.  Because that’s what Big Government does.  Get people dependent on Big Government and then scare the hell out of them by saying the Right wants to take their benefits away.  Gingrich was discussing high-deductible health insurance plans and tax free Medical Savings Accounts (MSAs).  The MSAs included an annual federal subsidy for seniors.  The plan would be appealing to seniors, Gingrich thought, because they could get better health care coverage with a private plan.  The MSAs and the federal subsidies would make it affordable.  Better care without paying more.  Who wouldn’t want that?  Once people made this choice voluntarily, they would move out of Medicare into a private plan.  Those comments in 1995 included this:

What do you think the Health Care Financing Administration is? It’s a centralized command bureaucracy. . . . Now, we don’t get rid of it in round one because we don’t think that that’s politically smart and we don’t think that that’s the right way to go through a transition. But we believe it’s going to wither on the vine because we think people are voluntarily going to leave it — voluntarily.

Wither on a vine?  Talk about a hanging softball.  There was no way the Democrats weren’t going to whack that one out of the park.  It quickly became ‘Medicare benefits’ and NOT the inefficient ‘centralized command bureaucracy’ that was going to wither on the vine.  The Left ran with it.  Another grand lie.  Repeated it at nauseam.  And scared the seniors.  Gingrich’s days were numbered.  And Clinton had a new enemy to demonize.  Which came in handy when no one wanted his policies.

The Lies that Keep on Giving

Big Government depends on getting as many people dependent on government as possible.  Medicare (and Social Security) is one program that does this very well.  And when Gingrich dared to threaten it, they destroyed him.  With a grand lie.  Like the grand lie that tax cuts stimulate deficits, not the economy.  Perpetuating these lies enables unsustainable government spending.  Threatens the future of all Americans.  And the longer it takes for the truth to come out, the deeper the hole we dig ourselves into.

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LESSONS LEARNED #28: “Politicians love failure because no one ever asked government to fix something that was working.” -Old Pithy

Posted by PITHOCRATES - August 26th, 2010

THE TELEVISION SHOW Gomer Pyle, U.S.M.C. aired from 1964-1969.  It was a spinoff from the Andy Griffith Show.  Gomer, a naive country bumpkin who worked at Wally’s filling station, joined the Marines Corps.  And there was much mirth and merriment.  To the chagrin of Sergeant Carter, Pyle’s drill instructor (DI).  Think of Gunny Sergeant R. Lee Ermey’s Sergeant Hartman in the movie Full Metal Jacket only with no profanity or mature subject matter.  Sergeant Carter was a tough DI like Sergeant Hartman.  But more suitable for the family hour on prime time television.

Gunny sergeants are tough as nails.  And good leaders.  They take pride in this.  But sometimes a gunny starts to feel that he’s not himself anymore.  This was the subject of an episode.  And Gomer, seeing that Sergeant Carter was feeling down, wanted to help.  So he stuffed Sergeant Carter’s backpack with hay before a long march.  While the platoon was worn and tired, Sergeant Carter was not.  He was feeling good.  Like his old self.  Until he found out he was not carrying the same load his men were.  He asked Pyle, “why hay?”  He could understand rocks, but hay?  Because if he outlasted his men while carrying a heavier load, he would feel strong.  But knowing he had carried a lighter load only made him feel weak.

This is human nature.  People take pride in their achievements.  They don’t take pride in any achievement attained by an unfair advantage.  Self-esteem matters.  And you can’t feel good about yourself if you need help to do what others can do without help. 

AN OLD CHINESE proverb goes, “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.”  Let’s say I am a fisherman in a small village.  I catch fish to feed my family and sell/trade for other family needs.  There’s a man in my village who asks me for a fish each day so he can eat.  I’m a caring person.  So I give him a fish each day.  So a pattern develops.  Each day he shows up when I come in from my fishing.  He takes the fish and goes away.  It works out well for him.  He doesn’t have to work.  He can live off of my kind charity.  Then I move.  Without me being there to give him a fish each day, he no longer can eat.  And dies.  If I only had taught that man to fish. 

Kindness can lead to dependency.  And once dependent, you become lazy.  Why develop marketable skills to provide for yourself when someone else will provide for you?  The problem is, of course, what happens when that charity ends?  If you’re unable to provide for yourself and there is no longer someone providing for you, what do you do?  Steal?

Dependency and a lack of self-esteem are a dangerous combination.  And they feed off of each other.  This combination can lead to depression.  Behavioral problems.  Resentment.  Bitterness.  Envy.  Or a defeatist attitude.

These are often unintended consequences of government programs.  A failed program, then, has far reaching consequences beyond the initial economic costs of a program.

LIQUIDITY CRISES CAUSE a lot of economic damage.  If capital is not available for businesses to borrow, businesses can’t grow.  Or create jobs.  And we need jobs.  People have to work.  To support themselves.  And to pay taxes to fund the government.  So everyone is in favor of businesses growing to create jobs.  We all would like to see money being easy and cheap to borrow if it creates jobs.

But there is a downside to easy money.  Inflation.  Too much borrowing can create inflation.  By increasing the money supply (via fractional reserve banking).  More money means higher prices.  Because each additional dollar is worth a little less. This can lead to overvalued assets as prices are ‘bid’ up with less valuable dollars.  And higher prices can inflate business profits.  Looks good on paper.  But too much of this creates a bubble.  Because those high asset values and business profits are not real.  They’re inflated.  Like a bubble.  And just as fragile.  When bubbles burst, asset values and business profits drop.  To real values.  People are no longer ‘bidding’ up prices.  They stop buying until they think prices have sunk to their lowest.  We call this deflation.  A little bit of inflation or deflation is normal.  Too much can be painful economically.  Like in the Panic of 1907.

Without going into details, there was a speculative bubble that burst in 1907.  This led to a liquidity crisis as banks failed.  Defaults on loans left banks owing more money than they had (i.e., they became illiquid).  They tried to borrow money and recall loans to restore their liquidity.  Borrowers grew concerned that their bank may fail.  So they withdrew their money.  This compounded the banks problems.  This caused deflation.  Money was unavailable.  Causing bank runs.  And bank failures.  Business failures.  And unemployment grew. So government passed the Federal Reserve Act of 1913 to prevent a crisis like this from ever happening again.  The government gave the Federal Reserve System (the Fed) great powers to tweak the monetary system.  The smartest people at the time had figured out what had gone wrong in 1907.  And they created a system that made it impossible for it to happen again.

The worst liquidity crisis of all time happened from 1929-1933.  It’s part of what we call the Great Depression.  The 1920s had a booming economy.  Real income was rising.  Until the Fed took action.  Concerned that people were borrowing money for speculative purposes (in paper investments instead of labor, plant and material), they put on the brakes.  Made it harder and more expensive to borrow money.  Then a whole series of things happened along the way that turned a recession into a depression.  When people needed money, they made it harder to get it, causing a deflationary spiral.  The Great Depression was the result of bad decisions made by too few men with too much power.  It made a crisis far worse than the one in 1907.  And the Roosevelt administration made good use of this new crisis.  FDR exploded the size of government to respond to the unprecedented crisis they found themselves in.  The New Deal changed America from a nation of limited government to a country where Big Government reigns supreme.

ONE PROGRAM OF the New Deal was Social Security.  Unemployment in the 1930s ran at or above 14%.  This is for one whole decade.  Never before nor since has this happened.  Older workers generally earn more than younger ones.  Their experience commands a higher pay rate.  Which allows them to buy more things.  Resulting in more bills.  Therefore, the Great Depression hit older workers especially hard.  A decade of unemployment would have eaten through any life savings of even the most prudent savers.  And what does this get you?  A great crisis.

The government took a very atypical moment of history and changed the life of every American.  The government forced people to save for retirement.  In a very poor savings plan.  That paid poorly by comparison to private pensions or annuities.  And gave the government control over vast amounts of money.  It was a pervasive program.  They say FDR quipped, “Let them try to undo this.” 

With government taking care of you in retirement, more people stopped providing for themselves.  When they retired, they scrimped by on their ‘fixed’ incomes.  And because Social Security became law before widespread use of birth control and abortion, the actuaries of the day were very optimistic.  They used the birth rate then throughout their projections.  But with birth control and abortion came a huge baby bust.  The bottom fell out of the birth rate.  A baby bust generation followed a baby boom generation.  Actually, all succeeding generations were of the bust kind.  The trend is growing where fewer and fewer people pay for more and more people collecting benefits.  And these people were living longer.  To stay solvent, the system has to raise taxes on those working and reduce benefits on those who are not.  Or raise the retirement age.  All these factors have made it more difficult on our aged population.  Making them working longer than they planned.  Or by making that fixed income grow smaller.

FDR used a crisis to create Social Security.  Now our elderly people are dependent on that system.  It may suck when they compare it to private pensions or annuities, but it may be all they have.  If so, they’ll quake in their shoes anytime anyone mentions reforming Social Security.  Because of this it has become the 3rd rail of politics.  A politician does not touch it lest he or she wishes to die politically.  But it’s not all bad.  For the politician.  Because government forced the elderly to rely on them for their retirement, it has made the Social Security recipient dependent on government.  In particular, the party of government who favors Big Government.  The Democrats.  And with a declining birth rate and growing aged population, this has turned into a large and loyal voting bloc indeed.  Out of fear.

A PROGRAM THAT straddled the New Deal and LBJ’s Great Society was Aid to Families with Dependent Children (AFDC).  Its original New Deal purpose was to help widows take care of their children.  When program outlays peaked in the 1970s, the majority of recipients were unmarried women and divorced women.  Because this was a program based on need, the more need you had the more you got.  Hence more children meant more money.  It also reduced the importance of marriage as the government could replace the support typically provided by a husband/father.  Noted economist Dr. Thomas Sowell blames AFDC as greatly contributing to the breakdown of the black family (which has the highest incidence of single-parent households).

With the women’s liberation movement, women have come to depend less on men.  Some affluent women conceive and raise children without a husband.  Or they adopt.  And the affluent no doubt can provide all the material needs their children will ever need.  Without a husband.  Or a father for their children.  But is that enough?

The existence of ‘big brother’ programs would appear to prove otherwise.  Troubled children are often the products of broken families.  Mothers search for big brothers to mentor these fatherless sons.  To be role models.  To show an interest in these children’s lives.  To care.  When no such role models are available, some of these troubled children turn to other sources of acceptance and guidance.  Like gangs.

AFDC has compounded this problem by providing the environment that fosters fatherless children.  And another government program compounds that problem.  Public housing.

POOR HOUSING CONDITIONS hurt families.  They especially hurt broken families.  Without a working husband, these families are destined to live in the cheapest housing available.  These are often in the worst of neighborhoods.  This is an unfair advantage to the children raised in those families.  For it wasn’t their fault they were born into those conditions.  So, to solve that problem, government would build good public housing for these poorest of the poor to move into.  Problem solved.

Well, not exactly.  Public housing concentrates these broken families together.  Usually in large apartment buildings.  This, then, concentrates large numbers of troubled children together.  So, instead of having these children dispersed in a community, public housing gathers them together.  Where bad behavior reinforces bad behavior.  It becomes the rule, not the exception.  Making a mother’s job that much more difficult.  And because these children live together, they also go to school together.  And this extends the bad behavior problem to the school.  Is it any wonder that public housing (i.e., the projects) have the worst living conditions?  And some of the highest gang activity? 

Government didn’t plan it this way.  It’s just the unintended consequences of their actions.  And those consequences are devastating.  To the poor in general.  To the black family in particular.  AFDC and public housing enabled irresponsible/bad behavior.  That behavior destroyed families.  As well as a generation or two.  But it wasn’t all bad.  For the politicians.  It made a very large constituency dependent on government.

THERE ARE SO many more examples.  But the story is almost always the same.  Dependency and a lack of self-esteem will beat down a person’s will.  Like an addict, it will make the dependent accept poorer and poorer living standards in exchange for their fix of dependency.  Eventually, the dependency will reach the point where they will not know how to provide for themselves.  The dependency will become permanent.  As will the lack of self-esteem.  Conscious or not of their actions, Big Government benefits from the wretched state they give these constituencies.  With no choice but continued dependence, they vote for the party that promises to give the most.  Which is typically the Democrat Party.

But how can you fault these politicians?  They acted with the best of intentions.  And they can fix these new problems.  They’ll gather the brightest minds.  They’ll study these problems.  And they will produce the best programs to solve these problems.  All it will take is more government spending.  And how can you refuse?  When people are hungry.  Or homeless.  Or have children that they can’t care for.  How can anyone not want to help the children?  How can anyone not have compassion?

Well, compassion is one thing.  When the innocent suffer.  But when government manufactures that suffering, it’s a different story.  Planned or not the result is the same whenever government tries to fix things.  The cost is high.  The solution is typically worse than the original problem.  And the poorest of the poor are pawns.  To be used by Big Government in the name of compassion. 

Of course, if Big Government were successful in fixing these problems, they would fix themselves right out of existence.  So as long as they want to run Big Government programs, they’ll need a stock of wretched, suffering masses that need their help.  And, of course, lots of crises.

www.PITHOCRATES.com

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