When will it be a good time to raise the Social Security payroll tax?

8 Dec
Roosevelt Signs The : President Roosevelt sign...

It's insurance I said!

 This year’s 2% payroll tax cut was paid for by increased deficit spending. In other words we “temporarily” turned Social Security from a self-funded program into a Congressional budget allocation funded by more debt. That is exactly the opposite of the original design of the program.  On this path Social Security becomes another form of welfare subject to the political whim of each new Congress . . . but it’s only temporary. When you look on your paystub you will see “FICA” opposite the deduction for this tax.  Do you know what the I stands for?  It stands for Insurance, the Federal Insurance Contributions Act.  Messing with something that is supposed to be insurance funded by employer and employee contributions is nuts.  It undermines the very essence of the Social Security system for political expediency and places its funding not with the beneficiaries, but at the mercy of Congress.

Some ideas to pay for extending and enlarging this tax break, and I use the term loosely, include raising airport fees, gasoline taxes or taxes on other parts of the economy.  Even someone like me who got a C in Econ 101 can see the irony of this; raise the cost of gasoline… that should help the middle class. 

The many promises for this 2% tax break; new consumer spending, job growth, etc., we’re so successful politicians want to do it again also on a “temporary” basis. This time they want to raise the success level by cutting the tax rate to 3.1%, fully half the worker portion of 6.2% needed to fund Social Security (well, more is actually needed but that’s another story). This time they are actually going to pay for it by increasing taxes someplace or cutting spending someplace else thereby allowing some other federal money to be transferred to Social Security where it can be used to buy Treasury bonds to fund ongoing deficit spending, just like the payroll tax.

Social Security Poster: old man

Nothing to smile about now

Given this is all “temporary” (like the estate tax in 1918) what’s the big deal?  The big deal is what happens at the end of 2012?  Will the middle class be able to withstand a 3.1% tax “increase” then better than a 2% “increase” now?  Has the average beneficiary of this entire stimulus absorbed the 2% into their standard of living? Have they incurred new debt based on their new-found ability to repay?

To date we have sent stimulus checks to most Americans, we lowered their out-of-pocket health care costs, gave them tax credits to buy a car, a house, put in central air, new windows and I lost track of what else, now at the end of 2011 we are told diverting another $550 a year from Social Security to lower the average family tax bill will do the trick.

These tax games may be temporary, but it appears common sense is gone forever. 



Tags: Federal Insurance Contributions Act tax, Payroll tax

Will Obamacare, PPACA, Affordable Care Act save money and if so, for whom?

7 Dec

Much has been written, discussed and debated about health care reform.  Even more has been promised in terms of savings and making health care “affordable,” but what does it all mean?

Will there be savings and how will any savings generated benefit you? Read my assessment of the situation for a definitive answer to this important question.

Will health care reform save money and lower costs?


Death panels just wont die…another bogus e-mail is circulating, be careful what you pass along

6 Dec

I am beginning to think one can make a career out of debunking the nonsense e-mails that people believe and pass along or perhaps there is a fortune to be made writing this garbage.

In any case, here is the latest (unedited). Need I state emphatically that none of this is true or even logical? It is rather another attempt by ignorant people to undermine the affordable care act without the slightest understanding of what it is and is not.  Apparently the caller, also called other conservative talk shows as I heard a recording from the Mark Levine show as well.

The Bogus E-Mail


Before I finally decided to write this I had to think about it for some time as I know you are busy with the Thanksgiving day upon us but I felt it was important enough to write about it anyway.

I was listening to the Jerry Doyle radio program and he received a call from a listener that was completely different than the subject being discussed. Before Jerry Doyle allowed the caller on the air he had his call screener verify the callers credentials. The caller was a Neuro Surgeon and he had just completed a seminar in Washington DC which included a talk from a government official who was part of the set up team implementing the new Health Care Plan. He said they were told by this government official that starting in 2014 that anyone at the age of 70 or older with a major medical problem such as a stroke, heart attack or brain aneurysm as examples and will require an operation that the doctor will have to obtain approval from a government commission before the doctor can operate. He also said that the patient will be called a unit, not a patient. The commission will consider the age, other medical problems and cost before authorizing the operation on the unit. If the commission, who by the way are NOT doctors, deny the operation the only thing the doctor will be authorized to do is to – ready for this – make the unit as comfortable as possible until death. If the doctor operates anyway fines and sanctions would be taken against the doctor.

It wasn’t but a couple of minutes when Jerry Doyle received another call from another doctor who had been at the same seminar who verified what the previous doctor had said. This doctor added that the question was asked if this was the death panel that some had said was in the health care bill and the answer was, “We do not consider this a death panel but one of the ways they are going to reduce medical costs”. Both doctors said that they asked where they could go to read about this and they both said that there will not be anything published until the Health Care Bill is fully operational starting in 2014. That will be when all of the rules and requirements will become the law and made public. They were also told that none of this will apply to past, present and future congressional officials or those in the executive branch which past, present and future Presidents and Vice Presidents. When the health care bill was written this was one of two (2) exceptions. The second exception was – better be ready for this one also – ILLEGAL IMMIGRANTS! The rational behind this is being they are NOT United States Citizens that the law will not apply as it will only apply to United States Citizens or those in our country legally.

I know that some of you will read this and some won’t, some will believe this and some won’t but I hope that all of you do read this and believe it as I believe it is true. I have not heard anything else about this since the two doctors called Jerry Doyle’s radio program but there is no doubt that it won’t be long until the word about this gets out and hopefully this will help to terminate the so called health care bill. If you vote PLEASE vote intelligently as your life WILL depend on it this election.

If you want the facts on the only commission mentioned in the affordable care act including its mission and what it can and cannot do, go to this post on my blog.  The death panel, take a closer look

While the above e-mail is rubbish, the fact is that Medicare spends nearly 30 percent of its budget on beneficiaries in their final year of life. Slightly more than half of Medicare dollars are spent on patients who die within two months… and that must change if we have any hope of managing costs.

Tags: bogus e-mail, death panels, health care rationing, rationing care

Are your taxes going “up?”

6 Dec

From the AP:

The president has been seeking an extension and expansion to the payroll tax cut that will expire at the end of the year. The White House says taxes on the average family would increase by $1,000 if the cuts are not extended.

To make its point, the White House went so far as to put up a countdown clock during spokesman Jay Carney’s briefing to show when middle-class taxes would go up “if Congress doesn’t act.”

Fiddling with the isolated stream of Social Security revenue is a bad idea, we’ve talked about that before.  But it is also a bad idea to propagate false concepts and politically expedient rhetoric. If the scheduled expiration of a temporary reduction of the payroll tax on December 31 is a pending disaster, what will we call it on December 31, 2012?

According to the President, extending the tax reduction “Will spur spending. It will spur hiring and it’s the right thing to do.”  That’s a tall order for a tax reduction that has been in effect for a year with little or no such effect.  The latest version of paying for this is a lower temporary surtax on millionaires and new fees on lenders.

And then we have this from the White House:

Good afternoon,

It’s simple. If lawmakers don’t vote to extend the payroll tax cut, taxes for 160 million Americans will go up on January 1st.

President Obama just left the press briefing room at the White House where he called on Congress to extend the tax cut, pay for it responsibly, and expand it so middle class families get a $1,500 break next year.

He told Congress to put country before party and stop wasting time.

Every day, folks are fighting to make ends meet and businesses are working to keep their doors open. The longer Congress waits to extend the payroll tax cut, the more uncertainty it creates for ordinary Americans. So we’ve put a clock on every page of the White House website, counting down the days, hours, and minutes until taxes for the middle class increase. In the briefing room, where the President just spoke, that same clock is ticking down as well.

And to make sure you have the information you need to know exactly what this means for your family, we’ve put together a calculator to show how much of your money hangs in the balance.

This calculator illustrates for you what nearly every independent economist has said: letting this tax cut expire will be a blow to the economy. We can’t let that happen. Now is the time to make a real difference in the lives of the people who sent us here.
Check it out and pass it along:


David Plouff

Senior Advisor to the President

The clock is also ticking on a 27% reduction in  fees paid  to physicians treating Medicare patients. If that is fixed how  will it be paid for?  Perhaps a new temporary tax on health insurers, that won’t have any negative impact on anyone.    The estate tax was supposed to be temporary and the AMT was only to affect a handful of people who escaped paying any income tax.  Politicians have no common sense and economists find a way to validate that.

Your pension may be at risk. You CAN lose all or a portion of your pension…even if you are already retired

5 Dec

ERISA, the Employee Retirement Income Security Act, had its genesis in the failure of the Studebaker car manufacturer when the pensions of its workers we’re wiped away with the passing of the company.  ERISA included the establishment of the Pension Benefit Guarantee Corporation (PBGC) a government agency funded by premiums paid by pension plan sponsors, well partially funded, the PBGC is not in great shape itself in terms of assets versus liabilities. 

If you would like to see the issues facing the PBGC and what Congress is considering doing take a look at this:  Congress and the PBGC 

While ERISA imposed new minimum funding standards on pension plans, employers don’t or can’t always comply. The result is that if a pension plan is terminated with insufficient assets to cover liabilities or an employer goes bankrupt, the PBGC steps in to make up the difference for retirees … up to a point that is. 

For example, a 65-year-old retiree is guaranteed up to $4,653.41 in monthly payments from the PBGC in 2012 should the agency take over his or her plan. On the other hand, a 55-year-old retiree is guaranteed just $2,094.03 (both based on the age at which a person retired).  Any amount above those limits is lost, you had it and now you don’t. Participants who have earned a benefit but are not yet eligible to retire have even more to lose. 

The situation is worse for anyone who earned above the amount permitted under federal law for pension purposes. In 2011 the annual compensation limit is $245,000 (it’s adjusted periodically, for example: 1990=$209,200, 1995=$150,000, 2000=$170,000 and 2005=$210,000). That means any earnings above the annual compensation limit cannot be used to calculate a pension in a qualified plan, the benefit cannot be funded in a pension trust and is not guaranteed. 

So, if you happen to be in the same pension plan as employees earning $100,000 and you are fortunate to earn $300,000 you better hope your employer stays in good financial shape because the pension you earned is at risk if the employer goes bust.  Unlike a qualified pension trust, money put aside to pay pensions earned on income above IRS annual compensation limits is not protected from creditors. Remember, these are not extra pensions; they are based on the same formula used for all plan participants. It’s just that you earned too much and I guess you need to take your “fair share” of risk. 

Here is the bottom line, regardless of your income; at least a portion of your pension could be at risk if your employer or union is not adequately funding your pension. This is something you want to pay close attention to. What percentage of the promised benefits is funded in the pension trust?  Is the employer making required funding contributions today?  This information must be made available to participants once each year through the Annual Plan Funding Notice.  

The lack of adequate funding is going to wipe out a significant portion of the pensions earned by American Airlines (AMR) employees just as it did for United Airlines several years ago.

Here are the results of one study. 

The funded ratio of the Milliman 100 pension plans increased slightly during 2010, reaching 83.9%. The aggregate pension deficit of $231.6 billion had decreased by $12.4 billion during the 2010 fiscal years, partially reducing an aggregate deficit of $244.1 billion at the end of 2009. 

Many employer plans are far less funded as a result of employer actions and the decline in stock values. States are among the poorest funded plans, but then a state doesn’t go out of business. 

Read this from The Atlantic: 

The Incredible Shrinking Public Pension Funds

By Megan McArdle

Apr 9 2009, 4:38 PM ET 36

America’s public sector pensions have been a scandal for years.  It wasn’t that long ago that they finally got around to doing their accounting the way that normal pensions do:  by showing how likely their assets were to generate enough revenue to pay for future benefits.  When they did, we found out what critics had long been claiming:  many pension funds for state and local governments were disastrously underfunded.  Politicians had gotten into the habit of promising generous pensions as a “cheap” giveaway to powerful unions…

This is not, it should be emphasized, exclusively a problem of public sector pensions; private firms are also underfunded.   But the scale is vastly different.  According to the Pension Benefit Guaranty Corporation, which regulates and insures pensions, the total deficit in private plans covering about 34 million workers was a little over 10 billion as of September 2008.  That’s almost certainly multiplied quite a bit since then.  But the current underfunding in public plans, which cover about 22 million workers, seems to be something north of a trillion dollars.  And they’re not insured.

All this provides a good lesson. Too much of a good thing may end up being nothing. When an employer finds itself in decline, it behooves unions and management to deal with the problems before the PBGC starts writing partial pension checks that make retirement a struggle for many workers…or states start diverting money from other programs or raise taxes.

Tags: AMR, PBGC, underfunded pensions

Words of wisdom from Dr Berwick

4 Dec

This is an excerpt from the New York Times December 4, 2011.  If you read this blog regularly, you have heard it all before, but the truth repeated is good. More and more expensive health care does not mean better health care.

WASHINGTON — The official in charge of Medicare and Medicaid for the last 17 months says that 20 percent to 30 percent of health spending is “waste” that yields no benefit to patients, and that some of the needless spending is a result of onerous, archaic regulations enforced by his agency.

The official, Dr. Donald M. Berwick, listed five reasons for what he described as the “extremely high level of waste.” They are overtreatment of patients, the failure to coordinate care, the administrative complexity of the health care system, burdensome rules and fraud.

“Much is done that does not help patients at all,” Dr. Berwick said, “and many physicians know it.”

Get ready for your tax increase and pay cut in twenty-eight days…ho, ho ho!

3 Dec

While most of us are focused on the number of days until Christmas, politicians are focused on the number of days until Americans get a tax increase and doctors get a pay cut.

What the heck is he talking about?

Well, that 2% less you are paying for Social Security payroll taxes is set to expire at year end (which we all knew for the last twelve months), but that doesn’t stop some politicians from explaining the expiration of the tax holiday as a tax increase. Just imagine what they will say at the end of 2012 if the tax break is raised from 2% to 3.1% and extended to Jan 2013?

Just imagine what you will say when you look at your first pay stub in 2013. Oh what a tangled web we weave.  Better not use that extra cash for ongoing expenses because someday the expenses will still be going and the cash will be gone.

And about those doc’s pay, Congress has less than 27 days to figure out how to stop the 27% cut in Medicare’s physician payments scheduled to go into effect next year… again.

As I’ll conceived as this fee cut may be, and as obvious as it may be that temporary means temporary, these issues illustrate how politicians can’t deal with giving anyone less or taking away anything given even when Congress passed the laws that specify how the situations are to be handled.

And you really think all the parts of the Affordable Care Act will work as planned?

Tags: doc fix, Social security payroll tax, tax increase

Cash flowing to states to implement health insurance exchanges, but how will they control costs? Ability of state health insurance exchanges to “drive costs down” seems rather optimistic

2 Dec
Secretary of Health and Human Services Kathlee...

Ladies, remember, never let the facts get in the way of a good political goal

There coming, barely two years away and counting; that’s state health insurance exchanges by the way.

Federal money continues to flow to the various states to help them establish their exchanges. Initially the exchanges will be primarily for individuals and small businesses, but over time employers are expected to shift workers into the exchanges simply because there are financial incentives for employers and many workers to obtain health insurance through an exchange. Only time will tell.

What is interesting is that policy makers and bureaucrats still believe that the exchanges will somehow create new competition among insurers that will restrain costs. That is an interesting assumption since insurers already compete with one another with no positive effect on costs and by adding more insurers into a market their individual leverage to negotiate with health care providers is reduced. In addition, all insurers will be subject to the same mandates and minimum benefit packages. There will be little room to maneuver. We seem to keep missing the point that premiums are not the issue, underlying costs of health care are. Federal officials should articulate exactly what they expect insurers to do to hold down health care costs so we all have that information.

After you read the optimistic view of the world from the bureaucratic point of view in the following press release, read this:  Study: Employers Could Dump Sickest Employees On Public Health Care

News Release   FOR IMMEDIATE RELEASE   November 29, 2011
Contact: HHS Press Office
States receive more flexibility, resources to implement Affordable Insurance Exchanges.  More than half of states now creating marketplaces to help millions of families and small businesses buy insurance

The Department of Health and Human Services (HHS) today awarded nearly $220 million in Affordable Insurance Exchange grants to 13 states to help them create Exchanges, giving these states more flexibility and resources to implement the .  The health care reform law gives states the freedom to design Affordable Insurance Exchanges – one-stop marketplaces where consumers can choose a private health insurance plan that fits their health needs and have the same kinds of insurance choices as members of Congress.

The Department also released several Frequently Asked Questions providing answers to key questions states need to know as they work to set up these new marketplaces. Critical among these are that states that run Exchanges have more options than originally proposed when it comes to determining eligibility for tax credits and Medicaid.  And states have more time to apply for “Level One” Exchange grants.

Today’s awards bring to 29 the number of states that are making significant progress in creating Affordable Insurance Exchanges.  States receiving funding today include: Alabama, Arizona, Delaware, Hawaii, Idaho, Iowa, Maine, Michigan, Nebraska, New Mexico, Rhode Island, Tennessee, and Vermont.

“We are committed to giving states the flexibility to implement the Affordable Care Act in the way that works for them,” HHS Secretary Kathleen Sebelius said.  “Exchanges will give consumers more choices and make it easy to compare and shop for insurance plans.”

In the new Exchanges, insurers will provide new information such as an easy-to-understand summary of benefits and costs to consumers. The level of detail will sharpen competition between carriers which will drive costs down.  “OMG,” rdq

HHS also released today a set of Frequently Asked Questions (FAQs) in anticipation of state legislative sessions beginning in January. Answers will help advance state policy development for Exchanges.  For example, they clarify that Exchange grants can be used to build a state Exchange that is operational after 2014; that state-based Exchanges will not be charged for accessing Federal data needed to run Exchanges in 2014; and that state insurance rules and operations will continue even if the Federal government is facilitating an Exchange in the state.  HHS will also allow greater flexibility in eligibility determinations, allowing, for example, a state-based Exchange to permit the Federal government to determine eligibility for premium tax credits.

Of the 13 states awarded grants today, 12 are receiving Level One grants, which provide one year of funding to states that have already made progress using their Exchange planning grant.  The 13th state, Rhode Island, is receiving the first Level Two grant, which provides multi-year funding to states further along in the planning process.
Forty-nine states and the District of Columbia have already received planning grants, and 45 states have consulted with consumer advocates and insurance companies.  Thirteen states have passed legislation to create an Exchange.

Tags: , Health insurance exchange, health insurance exchanges, United States Department of Health and Human Services, United States Secretary of Health and Human Services, will employers force employees to exchanges

Reporting value of employer-provided health benefits on W-2 effective January 2012 … Is taxation of health benefits far behind?

30 Nov

Starting in 2012 employers will be required to report the  cost of employer-provided health care benefits in box 12 of your form W-2.  The amount will use code “DD”.

The amount shown on the W-2 is for information purposes and is not taxable . .  . for now.  However, do not lose site of the fact that the tax-free status of health benefits is the single largest revenue loser for the federal government.  The Simpson-Bowles Commission recommended a gradual phase out of this tax break.

Employer Provided Health Care Insurance: Exclusion capped at 75th percentile of premium levels in 2014, with cap frozen in nominal terms through 2018 and phased out by 2038; Excise tax (on high cost plans) reduced to 12%.

Given the failure of the super committee of Congress to accomplish anything, this employee tax benefit is a prime target for dealing with the federal deficit.  A change is unlikely to come all at once and it may be income sensitive, but it is hard to see how this plum will be left on the tree for much longer.

Tags: deficit reduction, Health care reform, Simpson Bowles, Taxing health benefits

Lipitor goes generic, but you can receive the brand for only a $4.00 co-pay, check with your doctor and health plan.

29 Nov
A non-working animation of atorvastatin (Lipitor)

On Wednesday November 30, a generic version of Lipitor the popular cholesterol lowering drug becomes available. This will substantially lower the cost of taking this drug.

It also means that many health plans will require patients to switch to the generic version of the drug or pay a considerably higher co-payment. Some plans may allow a transition period and the manufacturer of Lipitor is offering a co-pay deal.

If you are taking Lipitor, now is the time to check with your doctor and your health plan or pharmacy benefit manager (PBM) about the new generic version. This is true for Medicare beneficiaries as well.

For the next six months due to the Pfizer rebate structure, Lipitor will be less expensive than the generic. PBMs normally steer folks to generics but this case will be the exception. Many PBMs have such a pricing arrangement with Pfizer. So where does that leave the patient? The PBM may save money via the Pfizer rebate, but will the patient pay the brand co-pay or generic co-pay? And what about plan provisions that require the use of a generic when available? During this six month period using a generic may save the patient money, but cost the plan more. Best to check with your plan, your employer or your PBM.

For example, from Businessweek:

UnitedHealthcare has 9.5 million individuals, according to the company.  After Nov. 30, the insurer’s customer will pay about $30 to $35 for brand-name Lipitor, compared with $50 to $60 for the generic, Mason (a UHC spokeman) said.

After six months, the co-pay on the copycats will drop to about $15 as more generic competitors begin selling the pills, said Lynne High, a UnitedHealth spokeswoman. The co-pay for Lipitor at that point will depend on Pfizer’s pricing, she said.

Such a change in co-pays may not be so easy in employer plans with fixed co-pays for brand and generic drugs and requirements that a generic be used when available.

The generic version will look different, some inactive ingredients may be different, but the chemical make up is the same as the brand version.

In some states, such as New Jersey, unless the doctors checks otherwise on the prescription order, the pharmacy will dispense a generic when available.

In an effort to keep you using Lipitor, you can receive a one month prescription for $4.00 even if you have private coverage paying a portion of the cost (but not Medicare or Medicaid). 

Here is the link to Lipitor For You

Related articles


Tags: Atorvastatin, Lipitor, Lipitor co-payment, Lipitor for you, PBM, Pfizer

Barney Frank retires; another example of why we need term limits

28 Nov
Representative Barney Frank, co-architect of t...

Massachusetts Rep. Barney Frank, the ranking member of the House Financial Services Committee, will not seek reelection in 2012, his office has confirmed. Frank is a 16-term Democrat who last year helped pass the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Mr  Frank is 71 and was first elected in 1980; he made a career out of politics and it is hard to imagine that the people in multiple generations knew enough about his politics to affectively evaluate his sixteen terms in Congress. In most of his bids for reelection  he didn’t even have to campaign. Mr Frank is one of many such career politicians in both parties who overstay their welcome.

Mr Frank has a unique distinction however. While no one person can be blamed for the financial crisis and housing bubble, Mr Frank deserves a lot of the credit via pushing for sub prime mortgages, pressuring the federal mortgage agencies and most recently the ill conceived Dodd-Frank legislation.  One can only wonder if his constituents  even knew of these efforts or the unintended consequences.  He is not alone of course, politicians of both parties should be held accountable for similar social engineering disasters.

No matter, he is retiring with his federal pension and related benefits. His thirty-two year career as a “public servant” is over. However, it should have ended much sooner because we should be limiting the terms for members of Congress. Power corrupts and a long stay in Congress creates a lot of power and little accountability .

Sign the term limit petition by clicking on the link at the top of the page. 

Tags: Barney Frank, Congressional pensions, Ranking member, Term limits, United States House Committee on Financial Services

Why your retirement budget should include ongoing savings

25 Nov
ceramic piggy bank
Feed me, feed me

If you listen to the experts they will tell you that because expenses are lower and you no longer need to save, you can live on less in retirement.

About that saving thing … sure you are no longer saving for retirement, but that does not mean you no longer need an emergency fund with the ability to replenish it as needed. In other words, save again.

Here is my true story. Earlier this year my wife’s medical problems resulted in $1,000 in out-of-pocket costs. A few months ago I backed into a mailbox ripping the mirror off my car. That clearly was not planned, nor was my stupidity but it cost me $700 (yup, for the motor in a side mirror). My wife’s car needed new brakes, $430 and yes, that can be expected, unwelcome but routine. Here is the kicker and one I can legitimately claim as unanticipated. The famous October snow storm in the northeast devastated trees in my yard to the tune of $4,000 to get them trimmed and broken branches removed.

Let’s see, that is $6,130 in unanticipated, not budgeted expenses in the first ten months of my second year of retirement.  What to do, what to do?

Well, I’m lucky I do have savings to pay for this and when planning for retirement I budgeted ongoing savings for just such situations. I didn’t listen to the experts on this one. I am also lucky because I have a pension and do not rely on the accumulation of assets such as with a 401(k) plan. That is not typical.

What if I was relying on my 401(k) plan withdrawing at a certain rate for living expenses, but now I suddenly had to use an additional $6,000 in my second year of retirement. That snowstorm and my bad driving just put my future income stream at risk because depletion of my pool of money is accelerated. I may run out of money before I run out.

Assume you were earning $70,000 a year while working and you diligently figured that to cover all your expenses in retirement you need $65,000 (ignore taxes for this illustration).   An unexpected large expense throws your plans in a tizzy.   Let’s say you do have a pension, but no savings.  An unexpected expense probably means you whip out the credit card or otherwise take a loan. Either way your expenses have gone up and your living standard on your fixed income has gone down.

I hope there is a lesson here. Your retirement budget must include some ongoing savings. If you don’t need them,  great.  After a few years you’ll have extra money for a nice vacation. If you do have an emergency, it won’t impact your living standard.

Tags: 401(k), Out-of-pocket expenses, Pension, Retirement, Saving, saving for retirement, Standard of living

Happy Thanksgiving

24 Nov
American cultural icons, apple pie, baseball, ...

Even in these difficult times, all Americans have cause for giving thanks.  Even our poor are rich when compared with the poor in many parts of the world. No living American has experienced war on their doorstep.  As dysfunctional as our government may be at the moment, our citizens are still able to occupy here and there without fear of torture or disappearing into the night.  Always remember, as bad as things may be, there is always someone who is worse off than you.

Give thanks today and think of those less fortunate no matter where they are.

Happy Thanksgiving!



Pass the gravy please.

Gartman on disparity between rich and poor. Can you still be successful in America?

23 Nov
"View in Wall Street from Corner of Broad...

The following comment from the Gartman letter in response to a reporter’s question on income inequality has gained a lot of attention.  You can argue that this response is a bit simple in content and comes across as a bit arrogant.  However, I think it is hard to argue with his fundamental position.  The dream for America has always been to better ones self, to become successful and wealthy if you will (although that should not be the primary goal in anyone’s life in my view)?

The dream has also been one based on opportunity.  How did we get from providing opportunity to criticizing success? The income disparity does need to be addressed, but that has nothing to do with tearing down the successful in America. We should be focused on building up the middle class and addressing those policies and laws that hamper middle-income growth. To do that we must take a global view and we must foster less dependency on programs that encourage mediocrity, entitlement mentality and complacency.

From the Gartman Letter:

After the meeting we were interviewed by a reporter who asked us a most pointed, left-of-centre question: “Mr. Gartman, what about the growing disparity between the rich and poor in the US, and the increasing dichotomy between what those at the top earn and those at the bottom? What of income disparity? How do you feel about that?”

We know that our answer caught the reported wholly off guard, for he was, rather obviously, expecting us to reply something like this: “Well, that is indeed a problem, and perhaps something should be done about it, for after all, don’t the young people in the Occupying Wall Street groups have at least this on their side.” We would have none of it and we caught this journalist wholly off guard when we answered.

“We celebrate income disparity and we applaud the growing margins between the bottom 20% of American society and the upper 20% for it is evidence of what has made America a great country. It is the chance to have a huge income… to make something of one’s self; to begin a business and become a millionaire legally and on one’s own that separates the US from most other nations of the world. Do we feel bad for the growing gap between the rich and the poor in the US? Of course not; we celebrate it, for we were poor once and we are reasonably wealthy now. We did it on our own, by the sheet dint of will, tenacity, street smarts and the like. That is why immigrants come to the US: to join the disparate income earners at the upper levels of society and to leave poverty behind. Income inequality? Give us a break?

God bless income disparity and those who have succeeded, and shame upon the OWS crowd who take us to task for our success and wallow in their own failure. Income disparity? Feh! What we despise is government that imposes rules that prohibit or make it difficult to make even more money; to employ even more people; to give even more sums to the charities of our choice. That is what we despise… oh, and next question please.” There were no further questions; there was a bit of applause from those standing around however. We took solace in that fact.

The following is a comment appearing on Forbes.com with regard to the Gartman comment:

Eva Pereira, Forbes Staff

Oh that explains it…so these groups of people joining the OWS movement across the country are just the cry-babies of capitalism. Lazy fools, unwilling to hard like Mr. Gartman has! Everyone look away now!  Nothing more to see. These are the sort of delusional, self-aggrandizing beliefs that got us into this mess in the first place.  To start with, let’s dispel the myth that anyone makes it on their own.  If you live in this country, then you benefit from the societal framework provided: an educated workforce, a police force to keep your streets and neighborhoods safe, a capable justice system that protects your rights as a citizen, roads, highways and public transport, etc.  The list goes on, but the point is, society provides the framework that makes it possible for the individual to succeed.  It’s disingenuous for him to say that he made it alone.  What’s worse, is by cheering the increasing fragmentation of society, he’s essentially shutting the door behind him!  The truth about economic inequality is that the more extreme it becomes, the less mobility there is for others.  Travel to any third world country, and you’ll see what I mean.  The poor have no hope, no political representation and no rights for that matter. God bless America for keeping people like Mr. Gartman in check.You know this isn’t fair, you work too hard.

Do you believe that the door to opportunity is shut in America?  Do you believe that the societal framework does not support all Americans? Do you believe that the poor in America have no hope or political representation and no rights?  In fact, America spends most of it money on supporting the poor and low income. Is America analogous to a third world country?

This isn't fair, you work too hard

Ok, no one makes it on their own. So, then why do some people make it and some people don’t?  Why do some people start in the same place and end up quite differently in life?  There are many reasons of course, but they are not found in criticizing the tortoise or the ant.

Tags: Economic inequality, Gartman, Forbes, Gartman Letter, OWS

Democrats Urge Obama to Protect Contraceptive Coverage in Health Plans

21 Nov
Diana DeGette

"Free" Free at last!

The title of this post is actually the headline from a Sunday New York Times article on November 20th.   I find it incredible that as Rome burns our politicians, in this case apparently Democratic politicians, find their cause celeb is the “free” coverage by insurance of birth control pills.  I am trying to restrain myself at the stupidity of all this. 

Why in the world do birth control pills have to be “free?”  One exception may be within Medicaid where it makes sense to make this investment for people who likely truly need the help, but for the general population, give me a break. 

According to the one quote below millions of working women need coverage.  Get it “working women” need someone else to pay for their pills.  Apparently it is alright for them to pay 20% of the cost for open heart surgery, or treatment for breast cancer, but not 20% of the cost of a $35 prescription.   Many health plans have for years provided coverage for contraceptives with either modest co-pays or coinsurance, but that is now insufficient, it has to be free.

And you thought there was hope for us managing health care costs; not while this mentality persists there isn’t.

Quotes from the NYT article:

When the administration announced the requirement for contraceptive coverage, it said the decision was “based on science.”

House members have sent a letter to Mr. Obama urging him not to widen the exemption. Such a change, they said, would keep contraception out of reach for millions of women.

Representative Diana DeGette, Democrat of Colorado, said the broad exemption was “an outrageous idea.”

“Millions of women work for colleges, hospitals and health care systems that are nominally religious, but these folks use birth control and need coverage,” said Ms. DeGette, a leader of the Congressional Pro-Choice Caucus.

Based on science? . . . exactly what science tells us that people can’t afford to pay the cost or some part of the cost of a low-cost, voluntarily prescription drug?  Why is something that costs $15 to $50 a month out of the reach of millions of women when millions of (working} women already have such coverage with nominal co-pays or coinsurance?

Exactly what can a working women afford to spend $15 to $50 per month on; perhaps a few lattes, a trip or two to get their nails done, makeup, an extra pair of shoes, their hair?  No I am not being condescending or simply a smart ass, I am trying to point out that $1 spent on some important health care item is the same $1 spent on something not so important but that is not paid for by someone else.  We would think it ludicrous to say a manicure is covered by insurance, yet we don’t expect a person to make the choice between the manicure and a birth control prescription because “insurance should pay for the later.”  The prescription should be “free!”   As I have already said, we are not talking about the poor who cannot afford either. 

When I Googled(r) to find the current cost of oral contraceptives I often found something like this:

The initial physical exam in your healthcare provider’s office could range from $20 to $200. The monthly fee for each supply of pills ranges from $5 to $30 or more, depending on your medical coverage


Costs for generic birth control prescriptions change from pharmacy to pharmacy and also depend on your insurance plan, if it covers birth control. Often, insurance co-pays will be less for generics than for brand names. For example, you might pay $10 instead of $20 or $30. Some insurance plans will only pay for generics.

Get it, they don’t understand what the cost of something is, it depends on your insurance.  Here is a clue; the co-payment you pay is not the cost.

According to the Planned Parenthood website oral contraceptives cost between $15 and $50 per month.

Drugstore.com  “One popular birth control pill costs $48.07 per month for the brand name, or $27.99 for the generic.”

What hope does America have for controlling health care costs? Very little as long as we think we can cover it all and that the real cost of health care is only the portion we are expected to pay, which apparently is shrinking by the day.

Tags: Diana DeGette, Oral contraceptive pill, Planned Parenthood

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