Stimulating welfare
Bill would dramatically expand health-care entitlements
Rocky Mountain News
Published February 10, 2009 at 12:05 a.m.
It would be bad enough if the $800 billion-plus stimulus package - which could pass the Senate today - merely added hundreds of billions of dollars to the federal deficit while offering few incentives to spur long-term growth.
But it's worse than that. The bill threatens even greater damage to the nation's fiscal health by expanding health-care entitlements. These new obligations would saddle future taxpayers with untold costs, potentially making millions of Americans - even those recently earning six-figure salaries - eligible for taxpayer subsidies.
They're also a stealthy way to give Washington much greater control over health care, as The New York Times reported, "with little public notice and no public hearings."
Several provisions in the stimulus package would immediately grow the welfare state. One would make Medicaid, the federal health program for the indigent, available to anyone who's unemployed - former millionaire CEOs and laid-off retail workers alike. Another measure would, for the first time, provide taxpayer subsidies under the COBRA health-insurance law.
Either of these proposals would undermine individual responsibility, allowing people who can afford to pay for medical insurance from their own pockets to collect taxpayer subsidies.
Under the Medicaid provision, any worker receiving unemployment benefits could sign up for Medicaid without satisfying an income or asset test. The federal government would pay all of the costs of these new enrollees until the end of next year.
Since Colorado's fee-for-service version of Medicaid charges patients no more than $10 a day for hospital stays, $3 for outpatient services and $3 for brand-name prescription drugs, out-of-work Coloradans with significant savings and assets might find the lure of taxpayer-subsidized health care irresistible.
Next, people who lose their jobs but want to maintain medical coverage under the 1986 COBRA law would for the first time win taxpayer subsidies.
COBRA lets unemployed workers stay in their employer-provided medical plan for either 18 months or 36 months. For many people who have ongoing medical conditions or dependents who don't have access to other medical insurance, COBRA provides continuing care during periods of unemployment.
The catch: The employee must pay the entire premium, and in many cases, an additional 2 percent administrative charge.
This is actually no bargain for businesses, because COBRA enrollees cost more to insure than typical workers. The U.S. Chamber of Commerce reports that it costs companies 45 percent more to cover former workers under COBRA than it does to pay insurance costs for current employees.
The stimulus bill would have taxpayers pick up 65 percent of COBRA premiums for one year - again, while imposing no means test. As with the bill's new Medicaid perk, high-income people who lose their jobs will have little incentive to purchase insurance on their own.
Should the downturn continue, Congress will face heavy pressures to maintain these subsidies for much longer than one year.
Entitlement programs, even those launched as temporary measures, are nearly impossible to shrink or eliminate once they've taken hold.
These provisions could transform the government's role in health-care finance. They should be publicly and deliberately debated, not buried inside legislation that is rushing through Congress and is intended to accomplish other goals.
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February 10, 2009
5:54 a.m.
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DavidRicardo writes:
We need to stay focused on the 60% + of mandatory entitlement spending that is within the current budget. If we can dump programs like Social Security, and end these and all other defined benefit pension programs (PERA), perhaps we can finally live within our means.
Cut taxes - but cut spending, too.
February 10, 2009
6:07 a.m.
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youngman writes:
Don't you get it...the Liberal Socialist Democrats want at least 60% of the (people/comrades) on the governmnet teat...then they will always be reelected and they will always be in power...they do not care about the (people/comrades)..they are the ruling class..they are Royality..just listen to them speak
February 10, 2009
6:16 a.m.
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tbizzy writes:
From the mobile edition:
0429 Alycia Cantrell, 35, holds her son Chino Domingo, 9, in a cultasac where three out of eight homes are under foreclosure including hers, right, on Perth St. in Aurora Colo., Monday, February 9, 2009. "You have to hold onto the things you love, God, your kids, family and friends, says Cantrell who has struggled paying her mortgage since she was laid off last year. She bought her home in eight years ago for $176,000 and the home next door which has been abandoned and is going for $120,000. "I need a roof over my head, it just doesn't have to be this one" says Cantrell. "(BARRY GUTIERREZ/ROCKY MOUNTAIN NEWS)
Did she really buy the house next door or do RMN editors unable to structure sentences and use commas?
February 10, 2009
6:20 a.m.
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NavyChief writes:
Excuse me, but didn't the RMN spend a lot f time shouting from the roof tops that the liberal Democratics were the only possible salvation from the previous administration?
Well, it look like you will reap what you sow. If Obama had any sense of urgency, he wuold immediately veto this bill when it hits his desk and send it back to Congress with instructions to remove every bit of pork barrel spending. There should be nothing in an economic stimulus package that does not lead to producing jobs and stability.
He has a golden opportunity to force Congress to do its job, but I don't believe he has the courage to do so. And your children and grandchildren will be paying for this folly for decades to comes.
February 10, 2009
6:27 a.m.
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tbizzy writes:
Where is Obama's scalpel that he was going to use to go through items line by line?
Looks like he is trying to back the Brinks truck up to his political donors to grease the skids, Chicago Machine Politics style.
February 10, 2009
7 a.m.
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DavidRicardo writes:
Anyone who truly believes in Conservative values will not undermine those values by accepting welfare from Social Security or benefits from a defined benefits pension plan.
Are of any of you who call yourselves 'Conservatives' taking those government handouts?
End the Nanny State welfare programs and defined benefit plans -PERA, Social Security, Medicare, Medicaid, and ridiculous defined benefit pension programs like the ones that are sinking our auto industry.
End all of them.
Real Americans don't need these idiotic programs, invented during the Socialist administrations of FDR and LBJ.
February 10, 2009
7:02 a.m.
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taoistblockhead writes:
Definition of Republican = Corporate Welfare Queen.
Democracy Incorporated fought the Communists in Southeast Asia so that American Corporations could offshore millions of American jobs, employ millions of Chinese laborers at dirt cheap wages and gut America's manufacturing base. American Corporations and Republicans have one oath of loyalty - to the almighty dollar.
Talk about economic chickens coming home to roost.
February 10, 2009
7:36 a.m.
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taoistblockhead writes:
The Chess Master
http://www.nytimes.com/2009/02/10/opi...
“The simple truth is that most Republican politicians would like Mr. Obama to fail because that is their ticket to a quick return to power. I think the president is a more formidable opponent than they realize.
“Mr. Obama is like a championship chess player, always several moves ahead of friend and foe alike. He’s smart, deft, elegant and subtle. While Lindsey Graham was behaving like a 6-year-old on the Senate floor and Pete Sessions was studying passages in his Taliban handbook, Mr. Obama and his aides were assessing what’s achievable in terms of stimulus legislation and how best to get there.”
February 10, 2009
7:49 a.m.
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DougH writes:
A little fact checking is in order, the RMN says" The catch: The employee must pay the entire premium, and in many cases, an additional 2 percent administrative charge.
"This is actually no bargain for businesses, because COBRA enrollees cost more to insure than typical workers. The U.S. Chamber of Commerce reports that it costs companies 45 percent more to cover former workers under COBRA than it does to pay insurance costs for current employees."
Employees on COBRA pay the same premium as the company Plus a 2 % charge. COBRA employees DO NOT Cost more, they pay the same. They also pay 100 % of the plan, there is no company sharing, so they cost employers less that a regular employee.
It is likely that COBRA employees have a greater claim rate. Terminated employees that are young and in good health probably do not take COBRA, while older employees or families would likely pay for COBRA and are likely to have more claims.
I can't believe hysteria in this editorial, the News brought out all the fear words, Entitlement, Welfare , Subsidies and just about all of the standard class warfare trash talk. Medical costs consume 18 % of our GNP and are tearing down entire industries and completely dismantling employer driven health plans .
Maybe the Rocky would care to address that issue some time.
February 10, 2009
7:54 a.m.
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Slimjim_800 writes:
The problem is the un-insured still receive medical care whether we like it or not. As unemployment increases the level of un-insured is increasing. Obama plan is pro-active instead of reactionary. This is consistent with the idealogy today that current crisis is a result of the gov't not being pro-active enough in identifying and preventing future catastrophes. The alternative is to let some of our public and private hosptals fail. To disagree with this proposal without offering another solution would suggest that RMN does not think there is a problem.
February 10, 2009
8:11 a.m.
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glowrock writes:
I think that some subsidization of COBRA is probably a good thing right now, but it does go to the heart of a very, very serious problem, namely that health insurance is largely at this time tied to one's employer, and that shouldn't be the case.
Until this enormous issue is resolved, allowing families to keep their COBRA with some subsidy while unemployment is so high is probably a good thing.
February 10, 2009
9:38 a.m.
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INC writes:
for every dollar invested in food stamps $1.60 is returned.
oh how sweet it is to hear republicans complain about Domestic Spending...
as republicans have nothing to say about spending on Iraqi Health care or billions going to corporate bonuses without oversight.
seems to be that the louder republicans whine about whatever, the better it is for America.
February 10, 2009
9:40 a.m.
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DavidRicardo writes:
The model for portability already exists, between 401(k) plans, and Social Security. In 401 (k), you have the elements of a self-directed program. Your employer should be able to offer to pay those premiums while you are employed there, and when you move, the next employer can offer to contribute to the same health plan.
In Social Secuirty, you would have an even (defined) benefit no matter where you go; the problem with this is that the defined benefit program would not necessarily carry itself.
February 10, 2009
9:44 a.m.
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DavidRicardo writes:
Navychief,
I think you must agree with me that it is mandatory, for our national security, for the US government to give no bid contracts to KBR, Blackwater and their friends, AND to spend billions of American dollars helping the Iraqis build up their health care system.
If we don't help the Iraqis build a national healthcare system, who will?
February 10, 2009
10:30 a.m.
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Marshdale writes:
And tax cuts would do what? There is no gauranty that savings incurred by companies recieving tax cuts would be spent on investment. It may simply be recorded as increased profits to boost stock value. This would also deplete the treasury therefore adding to the deficit. Either way the deficit increases. At least with stimulus money it would be spent because it is required by law. State and local governments would have to spend it. To me, at least there is a gauranty that some jobs will be created. I don't see the same with a blanket tax cut happening.
You complain about the welfare state. What is your alternative? Would you rather see people feeding themselves and obtaining medical care by ALTERNATIVE methods, ie. steeling, robbing, identity theft etc.? Then you can pay for the clogged up courts and jails, and the time spent by law enforcement tracking who stole your identity all while trying to stay on top of petty crime and domestic violence. That's cost effective thinking!!
Get a grip!! What the stimulus package proposes is way cheaper than the alternative. Conservatives know this to. They just won't admit it because it goes against the core of the Ayn Rand philosophy of "I got mine, Screw You".
February 10, 2009
11:37 a.m.
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CdaLuni writes:
Marshdale: I was telling someone the same thing. The same old argument of rolling back corporate taxes is great if the situation was EXACTLY the same as it was when Reagan was president. At the time, the corporate rate was about 78% and he dropped it down to 28% or so, right? We don't have the ceiling to drop the rate another 40-50 points. Cutting the rate in half might make companies more effiecient, but even if they make the world's best and cheapest "Spacely Sprockets", it won't mean anything if people don't have a job to pay for them. Besides, does anyone really believe that these corporations pay exactly what the rate is? If so, then why would they have an army of tax accountants, lawyers and in the case of Haliburton, off shore headquarters?
I rarely see any other alternatives offered by Conservatives except cut taxes. When they say an item is pork, like expanding wireless service to rural communities, do they really believe the only people out of work are just people who are qualified to build roads or schools? There are people from all walks of life out of work and to try and include them in the stimulous package shows more forward thinking than most are used to. Scary, huh?
February 10, 2009
11:58 a.m.
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DavidRicardo writes:
We can certainly keep cutting taxes - all we need to do is cut spending at the same time. If we remove these wasteful spending entitlements, Social Security, Medicare, Medicaid, etc. that make up 60% of the budget.
People depending on Social Security entitlements need to start living within their means, and stop asking for handouts from future generations in the form of deficit spending to support their 24/7 vacations.
If you need to move to get off the dole, then move. The government shouldn't be supporting your wasteful life style no matter where you live.
And I'm NOT talking about the money you have paid into Social Security over the years - you are entitled to get that back, with interest. It is the blatant welfare entitlements that Social Security recipients beg for every year, and which they have NOT paid for, that need to be ended.
February 10, 2009
12:11 p.m.
Marshdale writes:
(This comment was removed by the site staff.)
February 10, 2009
12:57 p.m.
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Marshdale writes:
Mr. Ricardo:
One more thing. You righties like to preach National Security as being a priority. If you want a real National Security problem go ahead and take away entitlements for the needy. See what happens. There will be more chaos here than any terrorist could ever generate. The short sightedness of the right is astounding. All you righties think about is mine, mine, mine. You flat out don't give a rats a@# about anybody but yourselves. You are the most selfish bunch I have ever run accross in my life. The idea that you may have to spend some tax dollars on helping someone is repulsive to you. I'll tell you what's repulsive. It is your inconcievable lack of compassion, empathy(if you ever had any), and caring.
You all want to help the needy through private TAX DEDUCTABLE DONATIONS. You know and I know that no matter what the personal income tax rate is, people will never donate what it takes to help all of the needy in this country. Why? Because it is human nature to hoard. It's just that some of us are willing to admit that, while others are not.
I bet you are a lousy tipper to.
February 10, 2009
12:58 p.m.
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denverrose writes:
Those that think Social Security is government welfare obviously are not employed. Of course conservatives have always said it is an entitlement program because as it is set up YOuR and MY contribution just sits there, doesn't earn any interest. That is why it is an entitlement. But... dems don't believe in doing what it takes to further someone... they prefer those that want handouts, entitlements and dependent on the government. I will retire soon and I doubt if I will live past the contrubtions that I have put in. I am not fatalistic, just a realist.
February 10, 2009
1:14 p.m.
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Bookem writes:
Marshdale:
First, I thought you better than to start labeling someone who disagrees with you.
Second, please keep in mind that: "A government that is big enough to give you everything that you want is big enough to take away everything that you have." Thomas Jefferson.
Where does this (entitlment spending) stop? If we were to add the current pay out obligations of entitlement spending to the national debt this country is $57 TRILLION!!
"Do your great uncles and aunts not deserve medical treatment?"
As a great uncle I would expect myself to take care of...myself. What a concept.
Under NO circumstances do I expect my children, and my children's children to take care of me and to have pay for my 'free' benefits.
February 10, 2009
1:17 p.m.
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Marshdale writes:
DenverRose
I've got news for you. There are needy republicans to. Don't tell me there aren't either. Just how many blue collar republicans do you think lived paycheck to paycheck and have now lost their jobs are hoping for a chance or a hand up just to get going again.
You are a fool's fool DenverRose.
February 10, 2009
1:18 p.m.
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enginerd writes:
Let's call it what it really is. It's not a stimulus package. It's shameless porkage.
February 10, 2009
1:23 p.m.
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robbyr2 writes:
I wonder how many of the righties have parents on Social Security? Maybe they should walk the talk and replace their SS checks. Or have a parent in a nursing home on Medicaid? Maybe they should just pay the nursing home $4K a month to save the government some money. Or drive to work on a "freeway" which is no such thing- maybe they could send a check to CDOT. Or have a child in a public school? Or have employer-subsidized health insurance (or have hypertension or diabetes)?
Obviously, the RMN editorial staff doesn't understand 1) that poor people do spend money and when they don't have it, we all suffer, and 2) that the insured already pay for the uninsureds' medical care.
February 10, 2009
1:24 p.m.
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Marshdale writes:
Bookem;
Evidently you have never suffered a tremendous financial tragedy that stripped you of your savings either. You must have everything in order in your life and I'm sure your blue collar job payed you plenty to squirel away for the rest of your life. Hell, I bet you retired by the time you were 50 and are sitting pretty. I'm sure you have many family members who are still alive to step right up and wipe your butt when your dementia gets to bad to do it yourself. I think everyone should be as fortunate as you.
Lucky You, Bookem!!
February 10, 2009
1:35 p.m.
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Bookem writes:
Marshdale:
I have been fired from a job before and had to roll out a 401(k) to keep up on bills. Like many others I was living check to check. My wife had complications after our son was born and we were hit with some medical bills, too.
Guess how much I expected from the government? ZERO! Guess how much I asked for and took? ZERO! It is NOT anyone's responsiblity to take care my family except mine.
I am still working - only 39! I suggest you take a long hard look at yourself, Marshdale. You obiviously expect others to take care of you - and I pity you for that.
I really do.
February 10, 2009
2:07 p.m.
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mmannino writes:
Christmas has come in February. It is a little late but since the Great Obama was not officially on the scene until January, the timing seems reasonable. For those displaced by these difficult times, do not worry. The Great Obama, Saint Nancy, and Father Harry will save you. They can create wealth and bestow it upon you so you need not worry about housing, food, health care, energy, and other essentials. Their infinite wisdom, righteous judgment, and pure hearts will guide us into a Marxist Utopia.
If you believe that this spending orgy will fix the economy, you must agree with my first paragraph. The country is bankrupt. We cannot afford a welfare explosion. We will be unable to finance the debt. Foreign governments do not have the strong exports to afford our debt. I do not think they want to own it anyway. The ugly picture of California will spread to many states, possibly Colorado even. California will be forced to make drastic reductions in government spending and welfare.
The left should focus on stimulating the private sector. A strong private sector can support large welfare spending. With a weakened private sector, welfare spending will collapse.
February 10, 2009
2:15 p.m.
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Marshdale writes:
Bookem;
Thats fine and dandy. I'm glad you were able to pull yourself up. It's admirable. How old were you when all of this went down, and how many more good working years did you have left in your body? I expect nothing of the sort, I am 43 and I work 75 hours a week at two jobs trying to ensure I don't need that safety net but I'm not pretending that it could not happen to me. Quit beating around the bush. You know who we are talking about. We are talking about seniors in their late sixties up until they die. We are talking about indigents with low IQ's and physical disabilities. You act as if those people don't exist. We are talking about those with severe mental disabilities. We are talking about those who have worked hard all their lives and all of a sudden find out when they are near retirement and fully vested the company they worked for is now in Tiawan and China, and has robbed them of their retirement while their wives stayed at home to raise the children because Reagan wanted America to go back to basic family values. Do you get it yet? We just have a different philosophy. I believe America, supposedly being the compassionate country that it is should help take care of those who have a hard time doing it themselves. We will always disagree I suppose.
February 10, 2009
2:22 p.m.
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gs writes:
Excellent editorial. I agree that we are witnessing a back door into a single payer government run health insurance system. I hope it works.
February 10, 2009
2:47 p.m.
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mytwosense writes:
Bookem writes: "I have been fired from a job before and had to roll out a 401(k) to keep up on bills. Like many others I was living check to check. My wife had complications after our son was born and we were hit with some medical bills, too."
I do have respect for you for biting the bullet and using your 401K funds to keep your family above water between jobs. It must have been mentally tough to dip into an "off limits" reservoir of funds that you'd worked so long to build up.
Trouble is right now, a lot of folks have seen their 401K lose almost half their value or more. I'm not sure how many people actually have a sizable 401K on hand to use in an emergency.
It's just something to think about before you write others off as government leeches. Most workers do pay income and sales taxes to help fund our government, even if the rightwing spinmasters would have people believing otherwise. Giving some of this back to people when they become unemployed seems like the right thing to do to me, plus it can prevent a lot of bad things from happening we might not normally think of.
Using just one example, I've read that financial stress is the top reason people divorce. It's hard to keep your head together, your temper in check instead of losing it on your family, etc. when you are deeply worried about how you're going to pay basic bills. Unfortunately, with economic downturns, we tend to see increases in certain social problems.
February 10, 2009
2:55 p.m.
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mytwosense writes:
Bookem writes: "Under NO circumstances do I expect my children, and my children's children to take care of me and to have pay for my 'free' benefits."
Not to keep giving you grief, but I'm curious what you plan on doing for your old age if you happen, God forbid, to become infirm? Based on your comments, it appears you wouldn't consider living with your kids. And that you'd even refuse Social Security. Do you really think you can save up enough during your fruitful working years to pay for residency in an assisted living facility - which typically costs thousands of dollars a month - in addition to what you'd need just for basic retirement?
February 10, 2009
3:10 p.m.
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DavidRicardo writes:
You cannot have it both ways. Either government handouts and welfare, like Social Security, Medicare, Medicaid and PERA, are welfare programs - or they are not. Many of the Conservatives here do not have the courage of their convictions. They believe it is always, 'the other guy' who is on welfare, but they themselves are not.
If we simply terminate ALL entitlement programs, including Social Security, Medicare, Medicaid, etc., maybe we can finally bring this to a sensible conclusion: If you have saved for retirement, lived frugally and responsibly, you do not need these handout programs. If you are stupid, or Conservative - you want a government handout.
February 10, 2009
3:24 p.m.
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Slimjim_800 writes:
bookem-that is one way to rationalize your situation. Another is to say that because your family did not pay the average per person income tax you were a welfare case and a burden on society. Don't feel bad because given that the majority of taxes are paid by the rich the majority of us fall into that category. The point being it's often the welfare cases who complain that someone else's welfare is greater than theirs.
February 10, 2009
3:26 p.m.
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gs writes:
Let me rephrase my comment. I think it is inevitable that we have single payer government run health insurance. And, should that happen, I sincerely hope that the program provides quality health coverage at an affordable price. I have serious doubts that such a program would. And I point to the cartoon that showed standing in line at the Post Office, the TSA line, and the Dept of Motor Vehicles as reason for my doubt. But again, it seems inevitable at this point.
February 10, 2009
3:29 p.m.
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DavidRicardo writes:
I think you only need to look at our fellow supporters of John McCain, who in his 70's has been able to acquire millions of dollars in assets, and a number of homes, to realize that the Republican Conservative cause is the key to wealth for all Americans.
Most Liberals are envious of Mr McCain; from humble beginnings as the son of an American admiral, Mr. McCain has amassed a fortune that is almost unmatched in American government. We simply must support the wealthiest Republicans among us; they are the source of some of the greatest wealth creation in our nation. Every one of us is benefitting from the trickle down effects of their creative and industrious efforts.
February 10, 2009
3:44 p.m.
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mmannino writes:
DavidRicardo,
Although we probably agree on most issues, I do not think that Senator McCain is the ideal person for wealth accumulation. He married into wealth so he is not exactly self made. There is nothing wrong with marrying into wealth if it the attraction is more than wealth. I am not disparaging Senator McCain's accomplishments either. There are many examples of self made wealth creation so I am not sure why you used Senator McCain.
February 10, 2009
3:46 p.m.
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mytwosense writes:
mmannino, you mean DavidRicardo is actually being serious with his last post...and you seriously agree with most of it? I thought he was being sarcastic!
Wow.
February 10, 2009
3:58 p.m.
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DavidRicardo writes:
mmannino:
You are exactly right!! Senator McCain met his present wife, Cindy McCain, when his first wife had been in a severe accident that has disabled her for life.
John McCain had the good sense to meet Cindy McCain in a bar in Florida while he was still married to the first Mrs McCain, and he leaped at the chance to marry a younger wealthy woman, while he kicked aside his first wife.
What could demonstrate better foresight on the part of a brave Republican candidate for president, than dumping his poor, disabled wife, to marry a wealthy, younger woman? He has been nothing, if not practical, and Republican voters have rewarded him for it.
Nothing could represent our values as clearly as John McCain's values and decisions have.
February 10, 2009
4:16 p.m.
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DavidRicardo writes:
For those of you sending me private messages - stop.
John McCain has been our most recent and well respected candidate for president.
If the Republican candidate for president does not represent our party's values, then I ask you, ALL of you - who does?
February 10, 2009
4:24 p.m.
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Fisherman writes:
Karl Marx just stuck his foot in the door.
February 10, 2009
4:25 p.m.
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Bookem writes:
Marshdale & mytwosense:
Thank you for dialogue - I mean that!
Marshdale, my parents are seniors & retired. They both worked very, very hard throughout their years and saved a long time in order to have a large enough nest egg to afford retirement.
mytwosense & marshdale: I realize we've all lost a LOT of $$$ recently with the Stock Market. However, if a senior had the bulk of thier nest egg wrapped up in stocks, only a few years away from retirement (which is big financial no, no - ask any finacial planner or accountant) ...sorry...that is not my children's fault, who will be paying for a senior's mistake or ignorance.
mytwosense - you ask several 'what if' scenarios. Two things: One, I have insurance that I pay hefty premiums for. If I get hit by a meteor am I covered? Dunno. But in any case, it is MY responsiblity to make sure if I am struck down in my prime that I am able to care for myself. Two, I have a will. It is MY responsibility to plan for my disability or death.
Also, my 401(k) was not enough to cover everything. You know what I did - I mowed lawns part time. A bit on the humiliating side, but I did it.
Slimjim: "Another is to say that because your family did not pay the average per person income tax you were a welfare case and a burden on society."
Ever pay the taxes and penalties when you roll out a 401(k) prematurely?
February 10, 2009
4:36 p.m.
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jay writes:
yet another rocky editorial following in lockstep.
good little footsoldiers
http://www.rushlimbaugh.com/home/dail...
February 10, 2009
4:45 p.m.
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Cwillyrun1 writes:
davidricardo, you and some others against PERA have no clue about it. Give it up.
Government being so involved in health care isn't a good idea. Wait until they start dictating how you have to live your life to receive any kind of benefits. Then they're really in control.
February 10, 2009
4:47 p.m.
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Bookem writes:
jay: "yet another rocky editorial following in lockstep.
good little footsoldiers"
Talk about the pot calling the kettle black.
Heaven forbid if we question what our government is doing....
February 10, 2009
4:56 p.m.
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mytwosense writes:
Bookem writes: "Marshdale & mytwosense: Thank you for dialogue - I mean that!"
You're welcome! Likewise. And not that it really matters, but I don't think lawnmowing is a humiliating job in the least. I did a little landscaping in college from time to time - mostly helping with a boyfriend who had a landscaping business - and it felt good to actually be doing physical labor outdoors. We tend to value that very little these days, sad to say.
February 10, 2009
5:38 p.m.
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denverrose writes:
Marshdale: I bet that most... not all... conservatives would love to take the money that goes in to Social Security (theirs) and invest it because a lot of them know how to make their money work for them... something a large percentage of libs/dems don't care about. Again they care more for showing their compassion by catering to human's lack of morals and dipping in to YOURS and MY pocket to take care of everyone. So why invest, why do anything and just let whatever comes your way, comes your way? That is precisely why we have a mess... our sense of entitlement. Conservatives have been trying to get money that comes out of our pocket to be re-invested but NO... that doesn't work for you. Libs/Dems need to be in control. Fine. Bankrupt this country just so you can show how compassionate (not!) you are.
February 10, 2009
7:56 p.m.
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mytwosense writes:
denverrose writes: "Marshdale: I bet that most... not all... conservatives would love to take the money that goes in to Social Security (theirs) and invest it because a lot of them know how to make their money work for them... "
Have you ever actually tried to calculate what you would earn if you invested that money yourself versus the annuity you are guaranteed through Social Security (and the healthcare via Medicare)? You might be surprised to find you could end up with a worse deal, depending on a few factors.
First, understand you'd get 7.65% back, not the full 12 or so percent currently taken out. The 7.65% figure is what you, the employee pay. The difference is paid by your employer, and it's unlikely they would opt to keep paying that into your salary. It's a tax that would be going away for them, why would they opt to keep paying that expense?
So, let's say you make 50K a year, and with the elimination of Social Security, you now keep an additional $3825 a year. You work 30 years, that's $114650 in total. Or, invest that amount at a 7% interest rate, compounded annually, and by the end of thirty years, you have $386,604.38. Not bad.
But, if it's your entire retirement plan, not so great if you live beyond twenty more years.
Divide that figure by twenty years, and you're living off $19,330.29 a year, or $1610 a month. Further, you'll now be paying completely out of pocket for healthcare, which is very expensive for seniors. Remember, your FICA taxes covered Medicare, but that's gone now, so hopefully, you saved enough in addition to cover that, especially if you have to live in an assisted living facility in your much later years.
Now, what would your Social Security annuity be instead, using the same income assumptions? You'd have to use the Social Security calculator on their website to find out, but I believe it's over $2000 a month, plus your health care is covered through Medicare. All these benefits are your's until you die. Granted, the longer you live, the more your investment in Social Security pays off for you.
FYI, I used the 7% investment return figure mainly working off the fact that from 1945 to 2000, the market actually averaged just a little over 5% in growth, accounting for all the volatility. So I was trying to give an optimistic return scenario, in the interest of giving a private investment strategy a very fair chance.
February 10, 2009
8:33 p.m.
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jbowen43 writes:
More than half the budget is discretionary spending by the defense department. They are long overdue for a large cut. I would say a third of their budget could get whacked.
February 11, 2009
7:11 a.m.
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DavidRicardo writes:
mytwo sense:
That is a very good breakdown of the consequences of the potential return on self-management of retirement funds. I'm continuously disappointed at the low level of discourse in commentary in these posts; yours are a refreshing change.
In all honesty, we are up against some very difficult circumstances with rising health care costs. The nearly total absence of analysis of the long term ramifications of our health care decisions is exacerbated by pandering pundits playing to a captive audience on the conservative right. The current answer for this group seems to be to borrow from future generations, via reduced taxes and deficit spending.
If all spending is brought within relatively current tax revenues, we'll have a critical drop in entitlement spending, and many seniors will need to go without health care. Seniors do not seem to realize that they have, indeed, become government welfare cases.
February 11, 2009
8:31 a.m.
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mytwosense writes:
DavidRicardo writes: "If all spending is brought within relatively current tax revenues, we'll have a critical drop in entitlement spending, and many seniors will need to go without health care. Seniors do not seem to realize that they have, indeed, become government welfare cases."
I think anyone who has had FICA taxes withdrawn from their paychecks during a lifetime of work would vigorously disagree with your assertion that they're "welfare cases" simply because they're now drawing income from what is essentially an annuity they paid into, no matter the funding structure of the Social Security and Medicare trusts.
Have you thought about the social ramifications of millions of seniors without any sort of healthcare? While there is probably a small portion of Americans who wouldn't mind a good number of our seniors truly turning into hapless charity cases, I think most would find it an absolutely depressing - and unacceptable - situation. Americans may heatedly disagree on countless topics, but we tend to seek and find solutions, rather than shrug our shoulders and give up in the face of complicated challenges.
Also, Social Security is still regularly sending out checks, and Medicare is still making sure it's recipients get treatment. These institutions have worked for decades and will continue to once Americans demand their politicians stop raiding their funds.
February 11, 2009
8:57 a.m.
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DavidRicardo writes:
Seniors without healthcare, and living without some sort of retirement stipend, won't happen, and we will not let it happen.
What is occurring in the mythical world of tax cuts without spending cuts, however, is that we borrow this money to maintain the current set of defined benefits. The unsustainable system of healthcare without limits to total cost per individual, and the continuation of a system that pays out more in benefits than it took in by drawing from current contributions, is a financial train wreck on a national scale.
Outside of this issue, we have transferred trillions of dollars overseas via our trade deficit, with the continuous decline in manufacturing domestically, and our externalized energy supply.
We are not in good shape financially, and no single solution is going to get us to a better financial position. The problems are complex, and the solutions are difficult, and expensive.
When they are reduced to, 'it's just big government', or we are becoming 'Socialist', or 'just cut taxes', we are cutting our own throats, and we will get no closer to useful solutions.
February 11, 2009
9:05 a.m.
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mytwosense writes:
DavidRicardo: "We are not in good shape financially, and no single solution is going to get us to a better financial position. The problems are complex, and the solutions are difficult, and expensive."
Agree, although some solutions will be more cost-efficient than others.
February 11, 2009
9:16 a.m.
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mmannino writes:
mytwosens,
Your logic is flawed on Social Security because you are starting from a flawed premise. Your basic premise that Social Security will continue in the future with the same benefit levels is flawed. Social Security is a generational Ponzi scheme. There will be major benefit reductions in the coming years. The funds to support the baby boom generation have already been spent. The only issue is the form of the benefit reductions, not the level of benefit reductions. Benefit reductions may be direct such as increasing the retirement age, reducing COLAs, and means testing benefits. Benefit reductions may be indirect by increasing taxes on benefits, increasing payroll taxes, and general economic decline. I think that a combination of direct and indirect benefit reductions is likely. I fear the indirect reductions because it will be part of an economic collapse. There is no way that we can finance the large debt to pay the full benefits. We are likely to see hyper inflation as a result of the current debt and future entitlement debt.
In addition, your comparison is false even if Social Security can pay its promised benefits. You must compare the benefit levels with the same level of contribution (12.4%). Social Security has strong welfare component so that low wage workers receive a much better return than higher paid workers.
The bottom line on Social Security is that partial privatization would have prevented politicians from spending the excess payroll taxes. Your private accounts would have earned some return. With the government run Ponzi scheme, we are facing an uncertain level of benefit levels and economic consequences.
February 11, 2009
1 p.m.
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mytwosense writes:
mmannino writes: "In addition, your comparison is false even if Social Security can pay its promised benefits. You must compare the benefit levels with the same level of contribution (12.4%)."
I see what you're saying here. But I disagree that the comparison *must* be made, because in this instance, I was addressing the very specific argument that employees can make a higher return if they keep the FICA taxes portion they're currently responsible for paying and invest it in the market themselves instead.
However, your point may be relevant for self-employed people responsible for paying the entire 12.4% (if their business is set up that way).
I still wonder if the return would be better in that case, because again, you have to include that your FICA taxes also pay into Medicare for when you retire. That's a pretty valuable benefit, too, especially for seniors who have higher health care costs and would pay much more for private insurance.
February 11, 2009
1:10 p.m.
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DavidRicardo writes:
mmannino:
You are counting on the honest nature of investment bankers to make effective use of the partial privatization of Social Security - probably a further stretch than the assumption that benefits will remain the same. Private investment managers have not had a stellar track record as of late.
I think you are exactly right about the reduction in benefits, but that will occur in the context of fundamental changes in what we call retirement. Retirement used to mean a few short years before the end. Now, people who can retire in their 50's in good health may live for decades, and nothing in our current system is designed for that eventuality.
Reduced benefits and changes to work flow may be the future of 'retirement'. I'm not sure why everyone here keeps thinking in terms of the 'Golden Years' . Either we've got a lot of old people, or a lot of illusions. Possibly both.
February 11, 2009
1:34 p.m.
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mytwosense writes:
DavidRicardo writes: "I'm not sure why everyone here keeps thinking in terms of the 'Golden Years'."
There's just something a bit unsettling to me about the idea of stretching the retirement age AND shrinking benefits at the same time. It brings to mind the horse Boxer from Animal Farm who worked himself to death for years, always envisioning that day when he could retire and rest...and then got sent to the glue factory for his retirement "reward"!
February 11, 2009
2:22 p.m.
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DavidRicardo writes:
I think that we are still learning about the real sources of wealth, capital creation and capital preservation. There's a lot of 19th-20th century nonsense being kicked around, justified by saying, "well, 2+2 still equals four!".
The arguments of Socialism versus Capitalism are rather dumb - these systems have co-existed for hundreds of years, and they have morphed over time into hybrids that at times only vary by degree from each other. We do have a social safety net, we do have medical care and support at taxpayer expense, we do have state run colleges, etc. All of these elements are by the strictest definition, Socialist. They could be made non-Socialist if each was self-supporting, without resort to the government or taxpayers, but that's not the case.
The magic wand of free enterprise is just that. Oil companies and Greenpeace both show up for subsidies whenever they are available, depletion allowances and professionalized NGO's and non-profits both have similar complexions in the effect on GDP. And GDP is where the action is.
Real gains in GDP come from just two sources: More people, or higher productivity. It is a pretty simple number, maybe too simple. Everyone keeps reaching in and trying to perform some slight of hand, to no avail.
So if we are going to preserve BOTH benefits, and the age of retirement, we need to really amp up the productivity per person.
Ask the question, what raises per capita GDP?
The answer is the solution.