Government

When you hear the promises and proposals, consider this

imageThe political debate rages on. The left wants more and the right wants less and the American people want both. Government has made significant promises to the American people, but has failed to adequately fund those promises and has failed to tell Americans the truth about the liabilities created and what it will take to fund our current commitments.

Consider the following while you listen to the promises to expand programs and the strategies proposed to deal with the cost of what we have now.

Fact: In fiscal year 2016 the federal government spent $432,649,652,901.12 in interest payments on the federal debt

Fact: On February 1, 2009 the federal debt owed to the public was $6,317,224,182,633.94; the total debt was $10,632,005,246,736.97. On November 1, 2016 the debt held by the public was $14,284,843,453,012.60 and total debt was $19,760,054,127,045.83.

imageWhile government will always have debt, we are at exceptional levels. With interest rate rising the interest payments will also rise, that is money that could be used more effectively in any number of ways.

Fact: The federal deficit is about one-half a trillion dollars per year.

Fact: The Medicare Part A Trust is projected to be insolvent by 2028

Fact: The Social Security Trust Fund is projected to be insolvent by 2035

Fact: Medicare basic premiums increased by 10% for 2017, however because of the hold harmless provision plus Congress’s  action to mitigate the 2016 increase, a great deal of catch-up premiums will be necessary and will consume future Social Security COLAs for most beneficiaries.

Fact: In 2006 the family poverty rate was 9.9%; ten years later it was 10.4%

Fact: “In the United States, current unfunded corporate defined benefit commitments total approximately $425 billion. State and local government employee defined benefit pension plans have from $1 trillion to $3 trillion in unfunded commitments (depending on the discount rate used)…” Source: The Coming Pension Crisis 

Fact: The US workforce participation rate is 62.8% (including those retired) indicating a demographic shift and also a decline in those paying payroll taxes.

Advertisements

8 replies »

  1. I really believe that now is the time to take off the limit on the FICA tax that is already in place.
    Some CEOs and Dick you know one of them right off the bat, are done paying their FICA taxes by February. If everyone paid them all year long; the fund would have more money in it and will go on for many decades. that would be a fair way of the Rich paying more. It’s already a tax. Most folks never reach that limit. Now every American is entitled to receive the benefits when they retire.
    The richer folks will also get the benefits. We Are Entitled to them as we ALL paid them in good faith and were matched by our employers dollar for dollar so that when we retire; there will be something for us EXCEPT CONGRESS WHO DIDN’T PAY IN. You pay for your life insurance so that it will be there for your family when you are gone. Social Security is NOT meant to be a real welfare program as Congress says. We have WORKED FOR IT, WE HAVE PAID FOR IT. I know Medicare is different but consider that a few years ago the Democrats in Congress STOLE $738 BILLION not million, from Medicare to pay for Obamacare for mainly under 65 and their credits. Rubio got a 10,000$ credit and announced it saying he deserved it. 714B for Obamacare and 24B for the credits. That has all been in the Press back then. Not one Republican voted for it but Pelosi said we have to pass it to find out what’s in it….with all the staff they have and all the money we pay them they couldn’t take it apart and read it. But many attys. since have. Now folks have found out about the deductibles and the higher prices. Medicare was set up for Seniors. It was passed in the 1960’s.
    Now we also know that since LBJ moved SS into his general funds to balance his budget from the Escalation of the Vietnam War, Congress has been dipping into it. Kasich and Christie both admitted there are many IOUs in the SS pot. They BORROWED IT AND PROMISE TO PAY IT BACK, IOUs. For over 50 years they thought it was their money to spend. This past year they tried it again and Lance got a bunch of them to STOP the taking of it in 2016.

    Like

    • Removing the taxable wage cap does not even make SS solvent for the current measurement period. SS benefits are based on earnings up to the cap and the formula provides a higher benefit for lower earnings. What has higher earnings to do with it if the benefit earned is limited to what taxes are paid on? If someone earning $175,000 pays taxes on that amount, but receives a lower proportional benefit than someone earning $75,000, that’s welfare for some Americans.

      As far as stealing money or misappropriation of the SS money goes that is not true at all for any President. SS has been funded the same way since the beginning. Any excess of incoming taxes over benefit payments were invested in US Treasury Bonds and like any other bonds including Savings Bonds, the government uses the money for general spending.

      Those bonds pay the SS Trust interest which is used to pay benefits. Between now and 2035 the Trust will redeem ALL those bonds to pay benefits, then incoming taxes will only pay about 76% of the earned benefits.

      If this had not occurred, where could the trust have been invested to have guaranteed interest AND guarantee of the funds?

      Like

  2. Very soon we will be spending more on interest payments than we spend on the military. Where do you think the cuts will come from, or the new taxes to pay for all the things that the government should not even be involved in. I see a 20% VAT coming just like Europe.

    Like

  3. The phrase, “if present trends continue,” precedes the eventual end of whatever trend is being talked about. In 1963, “if present trends continue” meant a continuation of the baby-boom. Instead, the boom ended, rather abruptly. In 1986, “if present trends continue” would have resulted in the continuing enslavement of hundreds of millions of Europeans to communist regimes. Instead, the biggest social and political change since World War II, occurred with barely a shot fired when communism collapsed.

    The impending dissolution of the Medicare and Social Security programs will indeed happen, “if present trends continue.” But they won’t. What will happen, later and slightly better than never, are expensive and disruptive “fixes.” Having driven up to the edge of the cliff, both parties will slam on the brakes and congratulate themselves for not having flown over the edge in “Thelma and Louise”
    style.

    Like

  4. Dick…. your latest post squarely defines the overused phrase “kicking the can down the road.”

    The question that comes to mind is whether this road goes on forever or like any other road has an end and how painful it will be when we get there.

    Like

    • No road goes on forever and this one is ready for some very bumpy section. Sadly the politician who finally tries to fix all this will be the one who takes all the blame.

      Like

What's your opinion on this post? Readers would like your point of view.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s