Today’s (February 2, 2010) New York Times contains an editorial about the Obama budget.  After reading it, you would think all is right with the world and any rationale is viable to keep spending and raising taxes.  Indeed, we can each make a valid case for any issue over which we are passionate, a bridge to nowhere for example.  In addition, any discussion of the federal budget just assumes that things like Social Society and Medicare and Medicaid are off the table even though they make up the bulk of the budget and the bulk of the growing deficit. The NYT says the Presidents’ health care reform would have saved money on Medicare (by shifting those costs to everyone else), but that was an illusion from the start, at the same time they were touting saving money they were improving the much decried drug benefit, expanding an entitlement to be precise.

I beg to differ on this rationalized justification to continue bankrupting American.  I truly fear for our future, our place in the world, and for the kind of lives we are planning for our children and grandchildren. Let’s be clear though, this is not entirely the fault of politicians.  Americans have come to want more and more without regard to where it is coming from.  It’s fine to bitch and moan about taxes and spending but don’t have your hand out for a new community center or high speed rail line or more subsidized this or that at the same time you are complaining. In today’s political environment Americans are told more and more about what they deserve, what they are entitled to and are promised help with everything from buying a car, to a home, to hiring a new employee all with unquestioned justification in the name of recovery.  Guess what, we are not recovering from anything at the rate we are going.  Step back and look at all this with a wide-angle lens, something is wrong.  While government and its debt grow, we are crippling individual initiative and undermining individual

Are those real, I don't think I ever saw a dollar

responsibility.  No, I am not a right wing Limbaugh wannabe, just someone who cannot fathom the apparent belief that we can keep charging our national credit card and make only minimum payments.

Let’s look at Social Security, untouchable you say.  How about this?  Under the law a person can be divorced an unlimited number of times and each ex-spouse (meeting certain basic criteria) can receive 50% of the ex’s monthly benefits and 100% of the benefit upon the ex spouses death.  So, let’s say a man earns the maximum and pays the maximum tax thereby collecting $2323 per month.  Let us also say the man was married three times including his current wife. Even though he paid as one person and one spouse via his payroll taxes, upon the ex-spouses attain age 60, they each can claim $1,161.50 even if the ex husband has not started collecting a benefit.  In other words, at some point, this clan could be collecting $5807.50 per month and when the guy dies the total monthly benefit to three ex-wives would be $6,969 per month.  Under a private pension, the employee may be forced to give away 100% of his pension in a divorce, but the pension plan can never pay more than the total benefit earned by the worker, that is not so with Social Security, so where does all the extra money come from?  Hee, hee.  This is just one example where an entitlement has gotten out of hand. 

How about the cost of living under Social Security, a COLA is rare in a private pension, but quite common for all government plans, do we see a pattern here?  When the formula under Social Security did not call for an adjustment in benefits for 2010, the cry immediately went out from many in Congress to provide the COLA anyway, and the President wanted to give each retiree $250 in lieu of the COLA.  That should give you an idea of the sincerity associated with trimming the deficit. 

However, back to the COLA, there are many things that can be done that would have a major impact on future liabilities and the deficit.  Some of these were called for by earlier studies of the problem.  For one, the basis for the COLA could be adjusted to accurately reflect the cost of living that applies to seniors, or suspend the COLA for a few years and replace it with non-compounding lump sum payments. Why not cap the COLA, perhaps phase it out over a period of years and or grant it based on total income of Social Security recipients so that incomes over a certain level would be capped or receive only lump sums?  The point is that if anyone gets serious about reform and the deficit and Americans look toward the common good and not their own ox, there are ways to solve these problems gradually.

One thing is for sure, the way to solve our financial woes is not to keep spending and raising taxes to chase an entitlement mentality. 

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Do they get it?

Senators Charles Schumer, D-N.Y and Orrin Hatch, R-Utah, wrote an op-ed piece for the New York Times  January 25  in which they called for a Social Security tax break for employers in orders to boost job creation.

The Senators said that, under their plan, “any private-sector employer that hires a worker who had been unemployed for at least 60 days will not have to pay its 6.2% Social Security payroll tax on that employee for the duration of 2010.”

“The Social Security trust fund will then be made whole with spending cuts elsewhere in the budget between now and 2015.”

I don't seem to be getting anywhere

Creating jobs is a fleeting thing if there is no real work to be done. What happens at the end of 2010? Will spending cuts really replenish Social Security? Why would an employer hire and incur all related expenses to save the 6.2% that it would not pay if they don’t hire. Employer are not stupid, they understand the need to sustain a worker in a job when they are hired, that means they have something to do that adds value and revenue to an organization.  Workers were not laid off because of the Social Security tax they were laid off because demand was down and there was no work for them to do.

The key is demand for the goods and services newly hired workers provide, not gimmicks.

A better way to stimulate demand and help the unemployed at the same time; find a way to suspend sales taxes , perhaps by rolling it across America, by certain goods and services, whatever. That goes immediately to people but only if they spend which in turn creates demand across a wide spectrum (and gives politicians less money to throw away).

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