Posts

Obama's Proposed Cuts: Not Even Close to REAL Entitlement Reform

/0 Comments/in , /by

In his latest attempt to cajole Republicans into raising taxes, Obama has called for a budget plan that makes some cuts to Medicare providers and subjects Social Security payments to the chained CPI. John Boehner was correct to reject this ploy of holding entitlement savings hostage for tax increases. However, he has come close to negotiating such a deal in the past, and there are some GOP officials who are saying they would still agree to such a trade. Lindsey Graham has already expressed encouragement over the proposal.

We must remember that even to the extent we would be willing to trade tax increases for something transformational, Obama’s proposal is not entitlement reform, and it certainly doesn’t represent something transformational. It is a proposal of austerity cuts to the status quo.

The problem with entitlements is not limited to the budgetary cost to the federal government, although that is certainly a major concern. The problem with our entitlements – in the case of Medicare and Medicaid – is the lack of choices, free market forces, and the inflationary cost of healthcare to the individual. The problem with Social Security is the lack of private property rights, dreadful rate of return, lack of individual liberty, and hopeless dependency on government. Limiting benefits to the chained CPI might be fine for the government option, but it should not replace policies that offer more choices. Means-testing benefits might save money, but we must not forget that Social Security is already means-tested, as its benefit formula is tendentious towards low-income earners relative to what they contribute to the program.

Read more from this story HERE.

America’s Last Chance

/1 Comment/in , /by

Let’s expose presidential prevarication. Earlier this year, President Barack Obama warned that Social Security checks will be delayed if Congress fails to increase the government’s borrowing authority by raising the debt ceiling. However, there’s an issue with this warning. According to the 2012 Social Security trustees report, assets in Social Security’s trust funds totaled $2.7 trillion, and Social Security expenditures totaled $773 billion. Therefore, regardless of what Congress does about the debt limit, Social Security recipients are guaranteed their checks. Just take the money from the $2.7 trillion assets held in trust.

Which is the lie, Social Security checks must be delayed if the debt ceiling is not raised or there’s $2.7 trillion in the Social Security trust funds? The fact of the matter is that they are both lies. The Social Security trust funds contain nothing more than IOUs, bonds that have absolutely no market value. In other words, they are worthless bookkeeping entries. Social Security is a pay-as-you-go system, meaning that the taxes paid by today’s workers are immediately sent out as payment to today’s retirees. Social Security is just another federal program funded out of general revenues.

If the congressional Republicans had one ounce of brains, they could easily thwart the president and his leftist allies’ attempt to frighten older Americans about not receiving their Social Security checks and thwart their attempt to frighten other Americans by saying “we are not a deadbeat nation” and suggesting the possibility of default if the debt ceiling is not raised. In 2012, monthly federal tax revenue was about $200 billion. Monthly Social Security expenditures were about $65 billion per month, and the monthly interest payment on our $16 trillion national debt was about $30 billion. The House could simply enact a bill prioritizing how federal tax revenues will be spent. It could mandate that Social Security recipients and interest payments on the national debt be the first priorities and then send the measure to the Senate and the president for concurrence.

Read more from this story HERE.