Medicare's Accelerating Insolvency Date

Lawrence O'Donnell, the MSNBC primetime news anchor, defended socialism on C-SPAN during an interview on Tuesday.  He cited the well-managed socialist Medicare program as a justification for our having a high regard for much of socialism.

He did not point out that a June 2018 report by the the Medicare trustees projects that the Part A Medicare Hospital Insurance trust fund will be depleted (wiped out) by 2026.  He also did not point out that the Medicare trustees had projected that fund to be wiped out in 2029 only one year earlier.  So much for the projections of socialists.  A rational evaluator has to wonder if the 2019 projection by the Medicare trustees will be a zeroing of the fund in 2023 and the 2020 projection will be that the fund is empty in 2020.  I am just projecting here based on my poor opinion of government programs in general and two data points, but rational people should always be realistic and pessimistic about such programs.

It is a good thing for Medicare that Anna and I are still working well past normal retirement ages and paying into Medicare (and Social Security) and I am still operating my laboratory and paying half of the Medicare payments for each of my employees.  Of course I am also paying half of their Social Security payments as well.  These wonderful examples of socialism in the minds of many are largely paid for by transferring the costs to employers.  That makes the programs more popular with most of the voters, who are of course not employers.

It is going to be very interesting indeed as more and more Baby Boomers retire and their medical expenses increase and increase.  The medical care provided by Medicare will have to further deteriorate and the taxes on those working will have to go up.  The aged will be very grumpy and the geese being plucked of their feathers are going to put up quite a ruckus.  Will the young American impostors who so often think highly of socialism think as highly when they are paying much more for it before they get their take-home pay, even as those on Medicare and Social Security grumble more and more about how disappointed they are in the programs that are breaking the backs of younger American workers?

Of course the die-hard socialists will not care one iota because this is just reality and their emotions should never, ever be held hostage by reality.

A Crime Syndicate Head, Foreign Agent, Harridan President?

Hillary Clinton is the worst major party presidential candidate in my lifetime, with the possible exception of Obama.  The first election of Obama at least came with a built-in excuse for those of a lame mind and irresponsible nature.  Those who make no real effort to learn about the candidate for whom they vote could claim him as an unknown.  Of course they could not make the same excuse in 2012.

Hillary is a decades long known collectivist, personal power luster, and criminal and crime abettor.   She is now known also as the thief of government e-mails, a paid (through the Clinton Foundation) foreign government lobbyist while Secretary of State, and an effective undercover spy for foreign governments using her highly insecure e-mail server as a drop for our national security information for any foreign government to pick up at their leisure.  Hillary gave up classified documents and much insight into State Department bargaining positions for her convenience in hiding her pay for play schemes through the Clinton Foundation.  Any foreign government, generally friendly to the U.S. or unfriendly, that was not monitoring her e-mails was negligent or incompetent.  It is known that at least five foreign governments did and that some also monitored the e-mails of Hillary's close confidants.  It is likely many more were able to do so without leaving amateurish traces of their snooping.  Hillary truly should be in jail for her effective work as a spy against the national interests of the United States.

Let us not forget that Hillary also defied court orders to turn over the e-mails she stole from the government by destroying them.  Then she testified that she suffered massive memory loss both to the FBI and more importantly to the court when she evaded the answers to many of the Judicial Watch questions the court ordered her to answer.  Can a person with such massive memory loss function as President of the United States of America?  Before her severe memory loss, she failed to take the State Department required course to be able to recognize classified information and to handle it correctly.  Can anyone unable to recognize classified information be entrusted as President, the Commander-in-Chief?

Hillary took a nearly $100,000 payoff engineered through a commodities trading scheme from Tyson Foods and worked for them as a lawyer when Bill Clinton was attorney general and then governor of Arkansas so the state would look the other way as Tyson Foods heavily polluted the state rivers. Tyson Foods was then and still is one of the nation's top polluters.  Then she and Bill contributed to the savings and loan disaster with their Whitewater activities.  As President, Bill Clinton pardoned a top Tyson executive who was imprisoned for trying to bribe the Secretary of Agriculture.  Of course he also pardoned a fugitive from justice, Marc Rich, with the encouragement of Eric Holder.  Rich, a long-time contributor to the Clinton Foundation, was convicted of tax evasion, wire fraud, trading with the enemy, and racketeering.  The Clinton's have also had a long relationship with the billionaire pedophile Jeffrey Epstein and have often visited him on his island in the Caribbean Sea, known to many as Lolita Island.  The Clintons are very unusually nasty people.  They have close ties with many other corrupt people, including Hillary's brother.

Hillary Clinton was even later than Obama in continuing to support Don't Ask, Don't Tell (DADT) and the Defense of Marriage Act (DOMA), both of which came out of the Clinton administration and deprived LGBT individuals of their individual rights.  The reason for this may well be that most of the major nations providing contributions of money to the Clinton Foundation have laws making sex between two people of the same sex a crime punished by death.  Most also routinely deny women equal rights.

The Clinton Foundation claims that it is a charitable foundation and says on its website that it spends 87.2% of its money on program services.  But you are in serious error if you assume that this means that needy people are receiving 87.2% of the Foundation's contributions.  Almost all of that money is actually used to promote such causes as the catastrophic man-made global warming fraud and the provision of sub-standard AIDS medications made in India and the jetting around the world of Bill Clinton, Chelsea, and their colleagues as they build their world-wide crime syndicate with close alliances with scam artists and dictators around the world.  Now it appears that the Foundation even paid for Chelsea's wedding and a lavish income for her and her husband, the son of a convicted criminal.

Let us take note of Hillary's bad policy positions:

• A national $15 minimum wage, still higher in high cost of living areas, which she wrongly claims will help grow the economy, but which will increase unemployment and force many businesses out of business
• Support for union card check and the outlawing of Right-to-Work laws in the states, forcing many Americans into unions, dues payments, and making contributions to the Democrats many oppose
• Kill off more coal industry and supporting industry jobs
• Decrease or end fracking which provides us with relatively inexpensive and reliable energy
• A 12-week family and medical leave mandate to be paid by increased taxes
• Higher tax penalties to force more people to use the ObamaCare they hate
• She has said behind closed doors that she wants open immigration
• She wants the government to decide whether equal pay for equal work is the case in companies, but not for her staff.
• Free college education, with taxpayers to pay for young people uninterested in learning, but very interested in four years of play
• Increased business taxes, which will increase the cost of goods and services, decrease business investment, and decrease employee compensation
• Supports the idea that carbon dioxide is a pollutant and the false claims of catastrophic man-made global warming
• Spend more money on Medicaid and induce the states to do so also
• Maintain the government monopoly on education, preventing school choice and anchoring the teachers unions as the prime beneficiary of government-controlled education
• More limitations on the right to bear arms
• Campaign limits on freedom of speech for individuals and companies, but not labor unions or other Democratic Party support organizations
• Have taxpayers provide matching money for first-time home down-payments
• Give preferred status to women and chosen minorities for capital access in starting businesses, thereby making it harder for men not in the preferred minorities to obtain capital
• Force taxpayers to pay for more free Internet
• Block efforts to privatize the VA and its medical services
• Expand national service at taxpayer expense
• Prevent options to save for retirement that by-pass Social Security impoverishment in retirement
• Maintain policy to force Christians and others to violate their conscience

Well, Donald Trump is not a gentleman.  He can be childish and indelicate.  He has paid politicians to favor his business.  But, he is not the head of a major crime syndicate and he has not massively shuttled national security information into a drop to be picked up by any old foreign government.  He did not fail to act in Benghazi to save American lives and he did not lie about why those lives were lost.  He may well prove to be a failed President, but with Hillary's political track record and her massively wrongheaded policies, she will certainly be a failure.  Known failures should not be put in office.  If Trump fails, he should be put out of office in four years.  He does have a some good policies, such as

• Supports the fossil fuel industries
• Repeal of ObamaCare
• Reduction of business taxes, making it much easier to U.S. companies to hire and build facilities and plants again in the U.S. and to bring home $2 trillion of money now kept abroad
• Allow private schools to compete with the generally poor government schools
• Bring order to immigration laws
• Oppose the catastrophic man-made global warming scam, saving tens of billions of taxpayer money and ending distortions to the economic markets through crony mercantilism
• Favors term limits on members of Congress
• Freeze government employee hiring
• Reduction of regulations with active effort to retire many
• Allow energy infrastructure building to provide less expensive, safer, and more reliable energy
• Cancel many of Obama's unconstitutional executive orders
• Allow veterans to see private doctors rather than travel long distances to VA Hospitals and provide them timely service
• Seriously investigate fraud in the VA
• Overhaul the IRS with its attacks on freedom-favoring tax exempt organizations
• Reduction of personal income taxes
• Repeal the death tax
• Supports the right to bear arms

I do not like Trump and since he will not win in Maryland, I may not vote for him.  But, he is clearly the lesser of two evils and it is not even close.  Trump is not a principled defender of individual rights, but neither is he a fully committed collectivist as Hillary Clinton is.  He probably has some respect for productive people operating in the private sector, which Hillary clearly does not.  He may prove a rascal as so many politicians do, but it may also take him time to become so corrupted and to learn the usual political paths to scamming the People.  If he disappoints us, as Hillary surely will, we should be happy to throw him out in 2020.

Hillary says "We are Stronger Together."   What she means is "I am stronger when you jump to it and do what I tell you to."  I for one do not want this not very intelligent, power-hungry person telling me what values I must choose and micromanaging my life.  She is incredibly presumptuous and would be even if she knew me, which she most certainly does not.

I am appalled by the number of Americans supporting her authoritarianism.  I note that this includes the majority of American women, who clearly do not wish to protect the rights of the individual against the force of government.  The use of force should be minimized in our society, not made rampant and placed in the hands of a corrupt, unknowing, uncaring harridan.

Medicaid and ObamaCare are Racist

The Progressive Elitists have told us over and over that those of us who believe one should have to have photo identification to vote are racist.  Of course there are many actions for which a photo ID is required, such as setting up a bank account.  That is not just a bank policy, but it is actually required by law.  One is sometimes also required to show a photo ID to enter a courthouse or many a federal facility.  All apparently racist policies.

Why is it racist to require a photo ID?  Well because the poor are more likely to be of certain racial or ethnic groups and the poor are less likely to own a car or have other easy transportation.  They are also less likely to have a stable address.  Yet, ObamaCare either requires you have a computer, or go to a few sparse and undependable centers for registering, or to undergo an exchange of mailings which tends to depend upon a stable address.  It clearly discriminates against the poor by the criteria of the left.

Now many of the poor will qualify for Medicaid in those 26 states that chose to expand Medicaid under the PPACA or ObamaCare law.  How do they apply for that Medicaid once they find out they qualify for it?

• Go to your Social Security, health department, or social services office.
• Produce a birth certificate or a passport
• Produce your Social Security card
• Produce a utility bill with your address on it
• Provide a recent paycheck or a tax return
• Provide a photo ID

Now, having enrolled in Medicaid, call and travel all over tarnation trying to find a doctor who will actually treat any medical condition for the severe underpayment amount provided them by Medicaid.  Clearly, the Medicaid program does not consider those on it to be worthy of an adequate payment for their medical care and has no concern for their travel time or problems, long waits for care, or even if they can actually find care at all.

As is usual for Progressive Elitist programs for the poor, it is all a pretense and there is no actual concern for the poor.  Yet, the existence of the programs is supposed to fool everyone into believing that they care, while those of us who point out the absurdity of the programs are claimed to be uncaring and racists by criteria the Progressive Elitist laws themselves require.

• Birth certificate or passport
• A power or light bill showing your address
• Something that shows your Social Security number
• A recent paycheck or tax return

Let's see; did I forget anything? Oh, that's right… A PHOTO ID!

Read more at http://freedomoutpost.com/2013/12/obama-racist-promoting-obamacare/#ep0PgVDhw432vRDE.99

The Obama Civilian National Security Force as Powerful as the Military

In a speech of incredibly blatant power-lust, candidate Obama on 2 July 2008 called for the creation of a civilian national security force as powerful as the military.  There are reports that the Department of Homeland Security (DHS) is buying up to 2 billion rounds of ammunition.  DHS says they will buy perhaps 750 million rounds for a five year period.  Some speculate this is an attempt of the Obama gang to make ammunition expensive and of very limited supply for civilians.  It is part of the attempt to limit the citizenry to 7 rounds apiece, perhaps.

Well, it sure is a curious matter.  Republican Rep. Jason Chaffetz discovered the DHS has more than 260 million rounds in stock.  DHS bought more than 103 million rounds in 2012 and used 116 million rounds.  Immigration and Customs Enforcement (ICE) is the primary weapons use part of DHS.  They had 15 shooting incidents in 2012 and fired fewer than 100 rounds.  DHS has a total of 70,000 agents, so the average number of rounds fired in training was apparently 1,657 rounds an agent.  In comparison, an Army officer fires an average of only 350 rounds a year.  Perhaps Obama was very serious that he wants his civilian national security force to be even better trained than the Army and more powerful.

This has a special meaning to me.  In 1970, I was drafted and the Army trained me as a light arms infantryman and sent me to Vietnam to fight the North Vietnamese Army.  My entire training consisted of about 4 trips to a firing range where I was given an M16 whose sights were always very badly aligned for me.  I was never allowed to fire more than about 10 rounds and about half of those were commonly used to align the sights.  Several times the first round hit 3 or 4 feet away from the target.  My last 3 or 4 rounds were pretty well aimed and the Army was satisfied with my shooting ability.  I was not.  I thought I was seriously under-trained.  But Obama's DHS agents are clearly not suffering from under training at the firing range.  He is really serious about his civilian army.

Even the Social Security Administration is arming up.  Its 295 agents investigate Social Security fraud and apparently those fraudsters are mighty dangerous.  They bought 174,000 hollow point rounds to deal with the threat.  This is 590 rounds apiece.  Each of them will fire enough rounds to train about 15 of us late Vietnam era light arms infantrymen.  I do not believe they have been involved in as many shoot-outs as the ICE agents are, so they must be well-trained.  Though one does not normally use expensive hollow point rounds for training.

This is a very curious affair.  The Obama regime has a real penchant for curious affairs which the press rarely has any interest in learning more about.  Given the totalitarian socialists he and his friends so much admire, a rational person sure has to wonder and worry about what is going on.

Obama Wants Bigger Government on Top of This?

From his State of the Union address, it could not be more clear that Obama wants a much bigger government with much more spending and much more control over our lives.  He wants to impose this further growth upon the already unbelievable increases in government spending since 2002 as shown in this great graphic from the current issue of the magazine of the National Federation of Independent Businesses:

Of course there is no limit to the extraction of money, time, and other resources from the private sector for the use of the government sector in this fool's mind.  All of these programs have grown much faster than real, per capita income has in that time.  This has been especially true during the four years Obama has occupied the White House.  This is a huge problem he simply does not recognize, which means he is either incredibly dumb or incredibly evil.

Social Security Blahs

On the verge of the new year, 2013, let us consider some of the gloom due to the government Social Security Ponzi Scheme to be faced eventually in our future:

•  2012 deficit of SS was $48 billion, which was added to the national debt.
• SS beneficiaries hit new record of 56,758,185 people.
• People collecting disability payments hit new record of 8,827,795.
• 112.5 million full time workers in 2011 to support those on SS.  Only 94.7 million full time workers were in the private sector.
• 1.67 full time private sector workers support each SS recipient.
• 1.27 full time private sector workers support each SS recipient or full time government worker.
• 2012 is the third straight year that SS has spent more money than it received in tax receipts.
• Baby Boomers have barely begun to retire.
• The National Debt is now $16.42 trillion, in excess of the $16.4 trillion debt ceiling and the National GDP of 2012 estimate of $15.9 trillion.
• Politicians are almost universally happy to pretend there is no problem, as are the voters.

Have a happy 2013 in some Galt's Gulch of your own making, while the nation whistles its way merrily to self-immolation.  The nation is drunk, not just tonight, but everyday.  As long as the con man Obama and his henchmen entertain them with being conned, they are happy drunks, jobless or not.

Misdirection on Medicare by Obama Ad

Obama is running an ad now that claims that Romney is going to cut $6000 from seniors Medicare benefits and shows various seniors in the ad.  First of all, Romney is not proposing any cut for anyone 55 years or older.  Second, in the future for those less than 55 years old, should legislation be passed to make Medicare sustainable, it is by no means clear that seniors will lose $6,000 of benefits many years from now.  That number has little credibility.  It is simply pulled from a hat.  But it works to scare people. 

It works to create a division between the young and the elderly. The AARP is quoted by Obama's ad, but this group specializes in inter-generational warfare.  It is at war with the children of the elderly.  The young cannot possibly be taxed heavily enough to continue to pay the costs of Medicare given the demographics of the huge Baby Boomer generation and the too small generations following them, unless changes are made.  The best way to control medical costs is to give individuals a stake in how much those services cost.  Vouchers are the means to do this critical task.  You need them to decide that pointless visits to the doctor are expendable.  You need them to put pressure on medical service providers not to overcharge them.  When government says it will control costs, we know that to be nonsense.

The Democrats refuse to deal with the reality that Medicare is not sustainable, much as they refuse to deal with Social Security's problems or to recognize that several terrorist attacks were just that.  The Republicans are manning up and are willing to make the changes needed to make these programs sustainable.  The pretense-given Democrats are standing by as both Medicare and Social Security are spending more money than they are taking in.  We have switched from a situation in which excess Medicare and Social Security tax revenues were used to fund irresponsible general government spending to one in which general income tax income has to be used to make up the shortfall in Medicare and Social Security expenditures.

Misleading Obama Claims About Romney's Effective Tax

Obama keeps claiming that most people pay more taxes than Romney does.  Actually, Romney's 14.1% effective tax rate is higher than that of 97% of Americans.  It is probably very similar to Obama's own effective tax rate, so Obama is being quite the hypocrite.  But Obama will make any claim if he thinks he can take advantage of people not thinking things through.

When pressed, Obama will claim that he is right because he will say the average person pays Social Security and Medicare taxes at such a high rate that their effective tax rate is higher than Romney's is.  This is perhaps true, since most of Romney's income exceeds the upper limit on income taxed by these payroll taxes.  But, these taxes are supposed to be rather like insurance premiums, or at least that is what Democrats have always told us.  It is not clear that they should be compared to income taxes.

If you insist on counting the Social Security and Medicare taxes, not reported on any 1040 tax forms, one might just as well include real estate taxes also.  I am sure that very few of Obama's average tax payers pay anywhere near as much real estate tax as Romney does.  In any case, Obama's claims that it is unfair that Romney does not pay a higher effective tax rate also ignores the fact that most of Romney's income is due to dividends and capital gains.  Consequently, this form of income is what is left after a corporation pays corporate income taxes.

You really have to hunt for a very peculiar viewpoint to make the claim that Romney does not pay his fair share of taxes. 

Government Gone Wild on the National Debt and Liabilities

Daniel J. Mitchell of the Cato Institute just drew my attention to this excellent video created by Government Gone Wild.  Earlier videos from Government Gone Wild that I have seen have been excellent also, which is an assessment with which Daniel Mitchell agrees.

Obama Cruelly Threatens to Withhold Social Security Payments

There is no cruelty to match that of a frustrated socialist yearning for control over the People.  Obama has told tens of millions of very frightened seniors on Social Security that if the Republicans do not cave-in and give him a blank check to continue spending massive amounts of taxpayer money and then add much more to the national debt, he may not send out Social Security checks in August.  This is probably an empty threat, but that does not diminish the brutality of it.

By any rational analysis, it is also an absurd threat.  In 2010, Social Security income was $677.1 billion according to the Social Security Fund Trustee's Report.  Social Security outgo was $584.9 billion, which means it had a surplus of income over outgo of $92.2 billion.  That surplus was used to help fund the massive deficit spending on all other government programs, as the Social Security surplus has been used for decades.  Because of this, of the $677.1 billion of income, $108.2 billion is interest on government bonds the Social Security Trust Fund bought to help the government finance its deficits in the general fund for decades.

The Obama administration wants to keep spending money it does not have on such things as

• the expenses of setting up the bureaucracy and rules for ObamaCare, 
• setting up the bureaucracy and rules for the Dodd-Frank finance "reform", 
• paying ethanol, windmill, electric vehicle, solar, and other "green" energy subsidies, 
• paying higher electric and gasoline bills because it is foolishly convinced by its own propaganda that man is causing a catastrophic global warming, 
• paying hordes of scientists to prove this false catastrophic man-made global warming hypothesis,
• persecuting business with reinvigorated threats of anti-trust actions, 
• putting more people on Medicaid and Medicare,
• paying bloated union wages on federal contracts,
• using the Labor Department to provide site requirements to companies for their expansions while considering only Union Shop states,
• using the Justice Department to promulgate injustice against the states and the people and discrimination against those not in government-favored minorities,
• funding universities that long ago became bloated with government money and stopped educating students,
• promulgating tens of thousands of new regulations which serve no useful purpose but to increase the power of bureaucrats over the People who do not have the time to read the regulations,
• and providing funding to the United Nations, the IMF, the World Bank and many other international institutions that do not like the U.S. and hate our Constitution and concept of individual rights.

Apparently, Obama is now telling us that he is so unwilling to stop such foolish spending that he is going to transfer more than the surplus in the Social Security Fund income out to cover these other expenses.  It is his decision to do this which will prevent him from sending out the August Social Security checks!  Actually, I do not think the law will even allow him to do this, but then he is accustomed to ignoring the law, so that does not mean he will not do it.

Let us suppose that he chooses not to use the federal income from income taxes, corporate taxes, capital gains taxes, tariffs, gasoline and cigarette taxes, and many other taxes to pay the $108 billion owed the Social Security Fund in current interest payments.  In other words, he might make payments on interest to the Chinese and to investors, but not to the Social Security Fund.  The Social Security surplus of $92.2 billion would then be turned into a small deficit of $16.0 billion.  If he then did not send out that $16.0 billion, but did send out the remaining $568.9 billion of checks, this would mean that 2.8% of Social Security payments would not go out.  But, there is no way that $16 billion shortfall due to the default on the interest payment would not be made up by any President not grasping at power as a lust-driven would-be dictator.

Obama's threat really has struck terror into the hearts of many Americans on Social Security.  This was a totally irresponsible and pernicious act on the part of this cruel and evil man.  It seems to take such people to be the strongest advocates of socialism.  Despite its pretenses of caring for the needs of some of the People, those who pursue this so-called ideal as a career are never actually caring people.

This entire fuss about the debt ceiling is due to the failure of the Senate to produce a budget for over two years.  The House would not produce one either until the Republicans took it over.  But, the Senate and the President have ignored their budget.  Since no agreement has been reached on what the government will spend in 2012, there is no basis for an agreement on what spending cuts will be made to reduce the deficit to some manageable proportion of our GDP.  All we know is that the record over the last three years was for the government to spend an average of more than 24% of GDP, while before 2008, the spending was below 20% of GDP.  Obama and the Democrats appear to want to continue spending much more than 20% of GDP even though that will mean huge on-going deficits.  Apparently, they intend that this funding will be the result of many more continuing resolutions on spending, so they will never have to recognize that the welfare and crony mercantilist government they want is not sustainable.  They can ignore the failure of big government socialism as long as they do not have to produce an actual budget.  Unless, of course, we collapse as Greece is and Italy may be on the verge of doing.

A 4% of GDP reduction in government spending is more than a $600 billion reduction per year.  It is clearly easy for the government to function at its 2007 spending levels, so there is no excuse for spending cuts that are not in the $600 to $700 billion per year range relative to the spending of this year and the two previous years.

The Deception of the Reduced Employee Share of Payroll Tax

I am sure there are many employees who are delighted that the government has decided to make the total 2.0% reduction in the rate of the Social Security tax in the employee's contribution and not in the employer's contribution.  In fact, this is a nearly meaningless distinction, except that it plays well with those who have not thought the problem through.  I can tell you from my experience with mostly quite intelligent employees that very few people have thought this issue through.

In view of this ignorance, the ploy makes great political sense.  First, there are many more employees than there are employers, so it wins more votes for the politicians.  Second, the disappointed Progressive Elitists who so badly wanted to raise taxes on those guilty of being productive enough to earn more than $200,000 or somewhat less or couples earning more than $250,000 together or somewhat less are likely to feel that the reduction of the Social Security tax only on employees making less than $106,800 helps to equalize their disappointment in not getting to soak the rich.  They are also getting even with those rich, exploitative employers by not letting them have a share of the tax break for 2011 offered by this Social Security tax reduction.  Progressive Elitists hate business, profits, and businessmen, so this plays well.  But then this little triumph is entirely based on their own ignorance of employee compensation, which they display in many ways in addition to the present case.

Why is the distinction of employee and employer shares of the Social Security and the Medicare taxes meaningless?  On one level, it is because they are both paid by the employer.  The employee does not take his paycheck home and then send his Social Security withholding of 6.2% and his Medicare withholding of 1.45% in to the IRS.  His employer does that, unless he is self-employed, in which case he sends 12.4% in Social Security tax and 2.9% in Medicare tax.  But while this fact is important, it is not the hard part to understand.  Let us get to that.

An employer hires an employee because he wants the employee to help him produce goods and services and hiring the employee is calculated to produce enough more goods and services that the employer can cover all the costs of hiring the additional employee and make some profit as well.  The employer and the employee make a deal that the employee will be so productive that the employer can rationally afford to keep him employed.  There are two sides to this issue that need to be considered.  What will the employee add in company income and what he costs the employer.  For our purposes here, we will mostly consider what the employee costs the employer.

Adding an employee will generally require more work space and more equipment.  Workman's Compensation Insurance payments will go up.  The company may need to do more advertising to bring in more customers for the employee to provide goods or services for.  There will be an incremental increase in liability insurance in many cases.  There will be generally added expenses for business cards, office supplies, pollution controls and other regulation compliance, and the materials and goods the employee must use to make the company's finished goods or provide services.  There will also be overhead expenses due to the added work in doing payroll and keeping records for the IRS and reporting to them and other government agencies on tax and labor issues, and to provide and keep track of benefits.

Finally, there is the matter of providing the compensation package to the employee.  His compensation cannot rationally be greater than his additions to the company's income minus the many expenses of the previous paragraph.  If they are, for more than a brief training period, he should be fired.  Now every company is also in a bidding war with every other employer and even with the employee's potential thoughts of being self-employed, so that he has little leeway on the downside as to what he can offer in a compensation package.  He may increase that leeway somewhat by providing a nice work environment, good people to work with, good customers to work with, extra freedom in hours worked, and interesting work to do.  But one way or another, he is still in a stiff competition to keep desirable employees, who are likely to be desirable to other employers as well.  But most important of all, the employee's total compensation has a strict upper bound determined by what he adds to the company income minus the expenses associated with his doing so.

The compensation package is usually considered to be his wages or salary plus the costs of his benefits such as health insurance, retirement plans, vacation, sick leave, etc.  One could say that the employer's share of the Social Security tax and the Medicare tax, that state and federal unemployment taxes, and Workman's Compensation costs are all overhead expenses.  But if you do, the employer still needs to consider them as part of the costs of adding an employee and the employee still has to cover those costs or lose his job.  But, unlike added equipment, office or warehouse space, advertising, and other common overhead expenses, these taxes, which Workman's Compensation also is for all intents and purposes, are very easy to attribute to each particular employee and most rational employer's will do just exactly that.  They are part of your compensation package then.  Sure, most employees do not think of them as such, but that is the real case.

Why is this?  It is because the employer would have been just as happy to have given these tax monies to you as to give them to various governments or insurance companies.  If you are employed, you are worth the sum of these taxes, your take-home pay, the other taxes fictionally paid by you though he pays them for you, and all of your benefits.  In fact, if the employer could hand all of this money to you he should be happier.  He probably likes you and he would surely be very happy not to have go to all the trouble of separating the amount you are worth into separate piles with all the associated record keeping, report filings, and payments needed to

• Withhold income taxes for the state.
• Pay unemployment insurance to the state.
• Withhold income taxes for the federal government.
• Withhold Social Security taxes for the federal government.
• Withhold Medicare taxes for the federal government.
• Pay unemployment insurance to the federal government.
• Pay Workmen's Compensation insurance.

I can certainly vouch for the fact that I would love to give all this money to my employees and if any of these taxes had to be paid, I would be delighted if they would relieve me of all the tedious work involved and do it themselves.  Of course, I have a devious motive.  I know that that would create so many very angry voters that we would soon have a much simpler tax system and much smaller governments.  Many more people would pay more attention to how much they were paying in taxes.  The present system is designed to fool them into underestimating the amount of taxes they pay.  That deception works with most people.

Now, let us consider the case of a tax increase.  It does not matter a bit whether the tax increase is designated as paid by the employer or the employee.  The employer is still the one who is actually going to make the payments, though the employee is involved in some minor adjustments on the income tax.  Let us suppose that either the Social Security or the Medicare tax goes up.  If it does, the employer will have to do one of a few things:

• If he has many employees, he can easily fire one or more of the least productive employees to compensate for the cost increase.
• He may crack the whip and say all employees must work harder.
• He may defer pay increases until increases in worker productivity match the increased tax cost.
• He probably will be loathe to take on new workers who will not be able to match their cost of employment for an initial period of time as they learn the job.
• He may cut back on benefits.
• He might have to decrease wages or salaries, though this is usually psychologically a tough choice for everyone.

The employer has options and he will have to exercise them.  Losing money is not a choice he can handle for long.  But, you should note that such compensatory actions are harder on small businessmen than on big companies.  If your costs go up 2% and that wipes out your profit, but you have four employees, firing one causes you to lose 25% of your income.  That is most often not an option.  So you have to use the remaining options or go out of business altogether.  The going out of business option is very frequently exercised by small businesses, especially since they are usually already working very hard and productivity increases are often harder for them to come by.

Now let us return to the 2% decrease in the employee share of the Social Security tax.  Each employee gets to now take that 2% home and spend it as he wishes.  But, what would have happened if the 2% decrease had been in the employer's share of the Social Security tax?  Well, perhaps for a few weeks the employer might have had a few extra dollars to reinvest in his company or to call net income and to be taxed, but there would be a very rapid readjustment in the marketplace in which employers found that they must offer employees 2% more to retain them or to get them to come to work for them.  Why?  Because the worker in question has already proven that his labor is worth that extra 2%.  That is why he had a job in the first place.

Good, productive employees are a scare resource.  There is always an active bidding process for their services, just as there is a market for plumbers, accountants, gold, wheat, pork, televisions, and other goods and services.  The inescapable Law of Supply and Demand applies here as it generally does in life.  Governments often pretend that they are above the Law of Supply and Demand, but all they do is shift the equation is some way, usually some bad way, but some new Supply and Demand equilibrium ensues.

In the case of the 2% reduction from 6.2% to 4.2% in the employee share of Social Security, there will be more money available in the short run for people to spend.  Generally, I favor reductions in taxes.  However, this reduction is going to make the financial straits of the Social Security system all the worse.  The Baby Boomers are about to start retiring in large numbers.  The politicians have been unwilling to face that program's severe underfunding.  The Ponzi scheme is about to collapse upon us all.  The best solution is simple, but few will yet accept it.  The problem is the size of the Baby Boomer wave and the fact that retirees are living a long time.  The life expectancy of the 65 year old in 2006 was 18.5 years.  That is a long time in retirement, particularly given that many people aged 70 are now in good enough health to be working.  The retirement age should be at least age 70.  I expect to work at least until I am 75 and longer if my health allows, which it probably will.

Given that the federal government has long been using Social Security tax revenues to generally pay for the obscenely excessive spending of the government, either major retirement age increases or major tax increases will be required.  Taxes are already much too high and they are already very much degrading the health of the private sector.  What we generally need are massive government spending decreases.  They are coming because the People will not put up with higher taxes and they are coming to understand the fatal nature of government deficit spending.  The process by which the necessary spending decreases will occur is going to be very interesting to observe.  Because a simple problem has so very long been ignored, its solution will now be all the tougher and may be catastrophic for some.

ObamaCare Long-Term Care Withholdings

One of the little-discussed provisions of ObamaCare is that beginning in 2012 money will be automatically withheld from your paycheck for long-term care.  The amount has not been decided, but numbers from $146 per month to $240 per month are being discussed.  It will be possible to opt out of this plan, but we do not yet know how difficult or easy that may prove to be.

I am a bit puzzled at the numbers being discussed here.  Then again maybe I am not.  My wife and I started paying for long-term care insurance just a few years ago and the amount we pay was a function of how late in life we began paying for it.  The average worker is surely much younger than we were when we started paying for this insurance, so one would think they would pay less than we are paying.  But, what we are paying is about equal to the $146 per month figure.  So why would the government withholding be so high?

I suspect the answer lies in the supply and demand expected.  First, many Baby Boomers will eventually need long-term care and when that wave hits the limited supply of long-term care providers, costs will go way up.  Second, this program of automatic withholdings will likely also increase future demand greatly for long-term care.  So, the government must plan for major future cost increases for long-term care.  But, nobody can reasonably pretend to predict now what that care will cost given the new uncertainties introduced by ObamaCare.  I expect our insurance will become quite the bargain given how much ObamaCare will increase the costs.  Of course, that may bankrupt our private insurance company and be a disaster for us.

Will the people who are put on the ObamaCare long-term insurance plan be doing so in the same way that people are put on Medicare and Social Security?  That is, is this a plan in which they have no right to expect benefits and those benefits may be taken away at the whim of Congress?  Is this another Ponzi scheme?  Or will the government actually invest their money for their future use?  Given that this is a Democrat plan, I expect they will use the money for current expenditures on the general budget and write IOUs to be redeemed later when the government has no expectation of being able to honor them or can attempt to do so only in the midst of huge deficits due to Medicare, Medicaid, and Social Security.  Good luck with that "investment" scheme.

Postscript Summarizing the Comments below of Scott A. Olson, a professional long-term care insurance seller with 15 years experience and licensed to sell long-term care insurance in 37 states:

The CLASS Act long-term care insurance will allow people with any health history to have long-term care insurance.  It will cost people below the poverty level income only $5 per month.  The plan is operated with a "trust fund" similar to that of the Social Security program.

Medicare and Social Security Liabilities Prior to ObamaCare

Let us review the status of the Medicare and Social Security liability situation in 2009 according to the Social Security and Medicare Trustee Reports.  Their combined unfunded liabilities are $107 trillion!  To this, we are now going to add the liabilities of ObamaCare.  It is also important to note that the Congressional Budget Office was not allowed to calculate the cost of ObamaCare borne directly by the public, which it had done for ClintonCare.  For ClintonCare, 60% of the added cost was to be borne by the private sector, while only 40% was borne by the government, which of course taxes the private sector for that amount.  This is at least likely to be roughly true for ObamaCare.  So, the real price of ObamaCare will really be about 2.5 times the price admitted by the CBO numbers.  In the end, all of these costs will be borne by the private sector, even as the private sector staggers under the crushing load of previous commitments to Medicare and Social Security.

Pamela Villarreal, a senior policy analyst of the National Center for Policy Analysis, prepared an excellent and brief summary of the Medicare and Social Security future burdens in 2009.  Medicare and Medicaid spending has grown at an average rate of 2.5% faster than GDP since 1970.  So, they are taking more and more of our productive output year after year after year.  This retards GDP growth considerably.  Now, ObamaCare has just added greatly to the cost of Medicaid by putting at least 15,000,000 more people on that program.  But, we will ignore that sudden spurt in growth and just assume these programs will "plod" along with a growth rate in excess of GDP by 2.5%.  The consequences:

• Social Security, Medicare, and Medicaid would have consumed almost half of the federal budget by 2050, just as today's recent college graduates are nearing retirement.  Remember that much of the cost of Medicaid is passed on to the states, which are already staggering on the brink of bankruptcy in many cases under its burden.
• By 2082, Medicare alone will devour almost the entire federal budget.  Of course this is of no concern to most people now, since they will be dead by then.  But, today's children will be living in those dire times, unless the medical system is so deteriorated by then that life expectancy has shortened to that of the old Soviet Union or of Russia.

Let us consider the popular fiction that tax rates can be increased and people do not change their behavior.  Politicians who support tax increases like to make such projections to calculate the increase in tax revenues.  Of course, tax increases actually usually mean lower tax revenues over time, given the high rates we already start at now.  So, what tax rates are now needed to maintain all of the programs of 2009 in the federal budget at their current levels of spending under a balanced budget under the fiction that everyone will work as hard as now?

• The lowest marginal income tax rate of 10% goes to 26%.
• The 25% rate goes to 66%.
• The highest rate of 35% in 2009, which Obama now wants raised, goes to 92%.
• The corporate tax rate of 35% goes to 92%.

It would seem there soon will not be any wealthy people to shift the tax burden to for long. Imagine the entire middle class paying 66% of income to taxes!  There surely will not be a middle class for long either at these tax rates.  This was our future before ObamaCare made matters worse!

Let us look at an article from the Washington Post last year by Amy Goldstein on the financial problems of these programs.  She notes that the financial status of both Medicare and Social Security deteriorated at an accelerated rate in 2009.  This would largely be due to the recession and the shrinking payroll tax take that resulted as people lost jobs, went to shorter hours, and took pay cuts.  Of the two, Medicare is in the worse shape.  By 2017, Medicare will not be able to pay all of its hospital bills, which is two years earlier than was projected in the 2008 Trustee Report.  Social Security will be unable to pay retirees full benefits by 2037, which is 4 years earlier than was projected in the 2008 report.  That, I caution you, assumes the government honors the IOUs it has given the Social Security program for previous taxes it used for the general budget.  The situation has further deteriorated since the 2009 report was issued on 12 May 2009.  The part of the Social Security program for disabled Americans will run out of funds in 2020.  That report, however, predicted that the Social Security tax fund will begin to spend more money in 2016 than it takes in through the Social Security payroll tax each year.  As I recently noted, the recession has caused this milestone to be reached this year!

At that time, before the problems continued to become worse as this government-caused recession has dragged on and on, the Social Security problem, provided you consider the IOUs to be good and without problems, could be solved by increasing the payroll tax from 12.4% to 14.4% or by reducing benefits by 13%.  I believe increasing the tax rate will only lead to a compounded reduction of growth in the economy and is a bad idea.  The proper thing to do is to raise the retirement age enough to greatly reduce the costs.  People have been living longer and they are certainly more healthy at age 65 or age 70 than they used to be.  They can work longer.  Since they would then be working longer, they can continue to pay for their own health care costs longer also.  This is clearly the right and moral way to solve the financial crises of these programs.  Of course, I would also encourage programs to allow people to save and invest more, such as a huge reduction in government spending for many purposes, so people will have more take-home pay to save and invest.

Increasing taxes is not the answer.  We must become more hard-nosed and cut the many unconstitutional government programs so people can do a much better job of managing their own lives.  Going on as we are is not a realistic option.  It is the option chosen by the Obama administration, however.  Well, not really, since the Obama administration thought it would be better to make the situation much worse yet and has given us ObamaCare as one of many ways to make it worse.  The young Americans who still like Obama and his socialist programs need to consider very carefully whether they really want the future implied here of incredibly burdensome taxes.  It is time for you young people to focus on trying to live rewarding personal lives in the real world.  But, if you want to continue with your fervor for socialist programs, you need to do a few things:

• Work incredibly hard for the collectivist good and earn a lot of money to be taxed at very high rates.  Never stop working.  It is your duty to the collective good.
• Get used to spending little money, because you will have little left after taxes.  Save all of that money for your old age.  No luxuries, no big homes, no fancy cars, clothes from the thrift shop, and squeeze every penny ten times before spending it.  No, don't spend it.  You cannot afford to.
• Have lots and lots of children to support you in your old age after Medicare and Social Security have gone broke or to keep them hobbling along.  Remember, they are Ponzi schemes and they require lots of young workers to support the older geezers, which you will one day be.  You hope.  If ObamaCare and Medicare do not kill you before what we now think of as our time.  Remember those death panels, they are a-coming, unless retirement and Medicare ages are greatly increased.  As I keep reminding you, Supply and Demand will not be denied.  It is the Grim Reaper of Life.
• Teach your children that they are slaves to your future need as an old geezer.  You must indoctrinate them really, really thoroughly to work like demons and to want nothing from life, but to support you in your old age.

Darn, I missed John Stossel's program again on Fox Business News.  He was going to talk about how the needs of the old require the young to give them their all.  I missed his 8:00 PM show and the re-run at 11:00 PM.  I hope you did not miss his show.

I later realized that an important clarification was needed on the solution of the Social Security funding shortfall with a mere 2% increase in the payroll tax and added the above color-coded caveat on 27 March.

Social Security is already operating at a loss!

For years I have been pointing out that although Social Security projected adequate income until some year well into the future (now 2037), the really important date was the date when current income was not enough to cover current outgo.  Until very recently, this was projected to happen between 2013 and 2017.  Because of the recession and the many unemployed, underemployed, those fully employed at lower incomes, and early retirements largely due to loss of jobs, Social Security will spend more money this year than payroll taxes will provide.  The Social Security Program must start cashing in the IOUs the government issued to it to borrow its income for spending on other programs over the last few decades.  This will now drive the federal government even deeper into its colossal hole of debt.

Of course, the Obama economics ignorant followers will cry for an increase in tax rates.  But not on those who are now paying little in tax rates.  No, they will call for an increase on the wealthy.  That is, they will call for an increase on those who own small, medium, and large businesses and provide jobs and good incomes to many, many Americans.  Except, with higher marginal tax rates, they will produce less taxable income, fewer jobs, and invest less in capital equipment as I noted in my previous post.  This will slow down the growth of the economy and decrease government tax revenue over the longer haul and add to the Social Security and Medicare liability problems.  The only possible helpful thing to do is to cut the higher marginal tax rates and the corporate tax rate and allow the country to grow as best it can.  That may not solve the problem with the need to shovel money into the Social Security program and Medicare rather than borrow their excess income as we have come to be used to doing, but it is the least harmful present response to this problem any but an idiot has long seen coming.

Bush tried to deal with it, as Reagan had before, but the Democrats have always insisted we hide our heads in the sand on this one, as on so many other issues relating to matching our means and our wants as a nation.  Dealing with the need for net Social Security outgo, rather than income, is now going to be very painful.  This is now present pain, rather than future pain.

The Effect of the Wrongheaded Obama Tax Increase

Chris Edwards, the Cato Institute Director of Tax Policy Studies, testified before the Senate Committee on Finance on 23 February 2010 on the effects of the proposed Obama tax policy of increasing the top two personal income tax brackets.  Key background facts are:

• The top two personal income tax marginal tax rates are now 35% and 33%.
• The Tax Reform Act of 1986 had reduced the tax rates to either 15% or 28%, but these were increased in the 1990s with a 1993 increase in the top rate to 39.6% and only partially rolled back in the 2000s to the current rate structure.
• More than half of all business income in the United States is reported on individual returns.
• About one-quarter of all individual tax filers earning more than 50% of their income from a business fall into the top two marginal tax rate brackets.  This is about 600,000 businessmen.
• The average of the highest marginal tax rates (combined to include local taxes) of the 30 countries of the OECD has fallen and now matches that of the U.S.
• One-quarter of all U.S. technology companies started in the last 10 years had an immigrant founder.

The consequences of the proposed Obama high tax bracket tax rate increases are:

• Reported income of affected tax payers will fall by 3%.  This wipes out about 40% of the expected tax revenue gain if one ignores behavior changes due to the higher rates.
• The 1993 increase in the top rate to 39.6%, reduced the number of upper middle income households starting a business by as much as 20%.
• A Small Business Administration study found that a 1% decrease in the marginal tax rate would increase entrepreneurial activity by 1.42% for single filers and by 2.0% for married filers.
• Businessmen affected by the highest marginal tax rate will reduce hiring by about 8.5%.
• Business income in those businesses affected by the highest marginal tax rate will drop by 5.7%.
• Capital expenditures of the businesses affected by the highest new tax rate will drop by 9.2%.
• U. S. businesses will find it harder to compete in the global marketplace with the highest corporate tax rate (shared with Japan) and one of the higher highest marginal tax rates.
• Fewer high-skill and highly motivated immigrants will come to the U.S.
• The quarter of high technology businesses founded by immigrants will decrease to a smaller fraction.

The net effect of these dynamic responses of real businessmen to being soaked by the Obama government will be lower, not higher, tax revenues in just a few years time.  The only reason to increase these taxes is for a very short term increase in tax revenues and as an example of class warfare.  If equality is more important than everyone's actual well-being, then this is a viable policy.  But, it is not a viable and rational policy if you aim to

• Allow everyone to have higher incomes, though they will not be equal incomes.
• Increase government tax revenues in the longer haul to be better able to cope with the huge unfunded Medicare, Medicaid, and Social Security liabilities as the Baby Boomers retire.
• Encourage people to work longer (past minimal retirement ages) and harder so they will pay more Medicare and Social Security and income tax money and draw less Social Security money from the government.
• Fire up the jobs creation engine that produced many more jobs in the 1990s when the highest marginal tax rates were lower than the 2000s have produced with already higher marginal tax rates.
• Increase U.S. exports.
• Create as many high technology, high-value added businesses as possible with high paying jobs.

As usual, Obama is just as wrongheaded as he can be.  He is either so ignorant of basic economics that he follows insane tax policies, or he values income equality so highly he is happy to see Americans with many fewer jobs and lower incomes, if only the end result is more income equality.  In other words, he must either be ridiculously ignorant or saturated with hateful envy.

Representative Paul Ryan's Comments on ObamaCare Costs

Representative Paul Ryan is a Libertarian-oriented Republican Congressman of the 1st Congressional District of Wisconsin, which is bordered by Illinois, Lake Michigan, the southern suburbs of Milwaukee, and reaches out to Janesville in the west.  Racine and Kenosha are in his district.  Paul Ryan has read Ayn Rand's works and thinks highly of them.  I have heard him speak a number of times at events which the Atlas Society or the Competitive Enterprise Institute were participating in or sponsoring and he has always been a rational voice.  On 25 February, he spoke up at the Health Care Summit called for by Obama to discuss budgetary issues.  While I believe the primary, and completely sufficient, reason to oppose ObamaCare is the personal mandate and the idea that government has the power to decide what is and what is not acceptable health insurance and health care, the budgetary issues are also important.

Congressman Ryan said:

• Medicare has a $38 trillion unfunded liability already, but half a trillion dollars is to be taken from it, so 20% of present Medicare providers will either go out of business or stop serving people on Medicare.
• The cost of Medicaid is growing at a 21% annual rate and is about to bankrupt a number of states.
• The Majority Leader of the Senate claims the Senate bill will reduce the deficit by $131 billion over the next 10 years, which is nonsense.
• The bill collects half a trillion dollars of new taxes for 10 years and cuts Medicare for 10 years, in order to provide revenues for 6 years of ObamaCare spending.
• The first 10 years of ObamaCare will cost $2.3 trillion.
• The Senate bill takes $52 billion from Social Security, which has huge unfunded liabilities already.
• It takes $72 billion from the long-term care insurance program called the CLASS Act.
• The real 10-year cost of ObamaCare will cause a $460 billion deficit, despite the four-year delay in the program and counting taxes in that 4-year period.
• The second 10-year cost of the program is $1.4 trillion.
• For the last 7 years, Congress has not made the kind of 21% doctors payment cuts that are supposed to be part of the savings from Medicare according to the Senate bill.  The savings which will not occur from this cut is $371 billion.
• Far from reducing Medicare's costs as claimed by Obama, the chief actuary at Medicare says medical costs are going up $222 billion.

The Obama camp response to being in deep, deep debt and running deep, deep deficits, is to close your eyes and plow ahead with huge new spending plans.  After all, tomorrow we will all be dead.

Obama's Job Creation Summit

This is really a funny event.  Obama has gathered together some executives from large companies, government Labor and Commerce Department people, and his ever popular labor union leaders for a jobs creation conference.  After taxing small business owners to death and wanting to tax them still more beyond the grave, after threatening everyone with energy restrictions under the ridiculous claim that CO2 is a pollutant causing catastrophic man-made global warming, after telling businessmen in industry after industry that he has a Marxist hatred for them, after threatening to saddle companies with new health care expenses, after a Stimulus Package that creates no private sector jobs, after threatening business contracts and property, and after making all investment decisions a roll of the dice, Obama is having a job creation conference.  Is he admitting finally that he who sits at the feet of every Marxist professor he can find in college has no idea how the economy works?

Indeed, he does not.  Including labor union leaders in such a meeting flies in the face of its purpose: job creation.  Labor union leaders are experts in one thing related to jobs: killing them.  This is why private sector employees have been avoiding labor unions now for decades.  They have come to understand this.  This is also why the labor union bosses so badly need card check.  Without intimidation, they cannot force private sector employees to join the unions.

The executives of large businesses are not really interested in spurring job creation either.  The large businesses do not hire many people.  It is small businesses that hire most people.  So, if a large business executive were to spur more jobs in the economy in general, he is doing more to grow his competition, the lean and mean small companies who are always trying to make inroads in his product and service areas.  The big businessman usually fears small business.  The last thing he wants to do is to help them grow.

With 15.7 million Americans unemployed, this jobs summit should have an easy job creating new jobs.  There are plenty of sufficiently skilled and interested potential employees available for hire.  All we need is for large numbers of small business owners to gain the means and the confidence to hire them.  Within a framework of Marxist theory, there is no way to motivate the small businessmen to hire.  No, it would require Capitalist theory to understand what government actions and inactions are needed to spur job creation.  The answers are tried and true.  Most small businessmen can tell you what is needed.  They just need these very simple encouragements:

• No new payroll taxes.
• No threats to take down their businesses when they die with a death tax.
• Lower individual income taxes for higher income brackets.  Finally come to understand that the net government revenues increase with lower upper bracket income tax rates than those we presently have, while encouraging growth of the economy.  The onlyreason for higher rates is to punish the rich.
• Remove the minimum wage laws or at least lower the minimum wage.
• Stop increasing unemployment insurance rates.
• Control Workmen's Compensation Insurance costs with tort reform.
• Do not raise the cost of health insurance as ObamaCare will certainly do.
• Do not increase energy costs and lower energy reliability as carbon cap and trade or the EPA's plan to declare CO2 a pollutant will do.
• Do not threaten businesses with union takeovers as card check will do.
• Cut back on government spending so investment capital is available for the private sector.
• Lower corporate income taxes, so American companies can compete with companies abroad, almost all of which now have lower taxes than do American corporations.
• Reduce barriers to trade.  Simplify both import and export laws and regulations.
• Understand that Medicare and Social Security will both be turning in their IOUs in just a very few years and that increasing payroll taxes on them at that time will kill many jobs.
• Reduce the burdens of government regulations, instead of constantly increasing them.
• End subsidies that distort the markets into inefficient activities.
• Allow the drilling of oil and gas fields in the US and its offshore waters.
• Sell off much of the federal lands which are not being used productively, so that private owners can use them productively.  Use the income to reduce government tax rates.
  
• Encourage the states to stop business discouraging activities, such as those common in California, New York, Michigan, and Ohio to name a few.

OK, so if we saw Obama and the Democrat Congress doing these things, rather than the opposite in every case, we small businessmen would be hiring people instead of firing them.  As long as Obama and his cadres of comrades refuse to recognize these basic factors in the economy, there is simply no justification for companies to hire.  It is all very simple, if you are not a childish, Marxist blockhead.

Our Unsustainable Federal Spending

Democrats love to talk about sustainable energy policy, sustainable agriculture, sustainable environmental policies, sustainable cities, and sustainable housing.  But, they never give a fig about sustainable government, sustainable public sector spending, sustainable health care, and sustainable deficits.  Indeed, they almost seem to court governmental catastrophes as just an excuse for more government and a still bigger catastrophe.

Richard W. Rahn wrote an article in the Washington Times on 22 September about the growing problem of sustainability in the federal government.  He notes that the Congressional Budget Office (CBO) has estimated the additional federal debt grew by $4 trillion for the 2010-19 period in the last 8 months.  In the same 8 months, the amount of taxpayer debt grew from $5.9 to $7.5 trillion.

The taxpayers now own or insure about 80% of the $14.6 trillion of home mortgages outstanding debt in the United States.  This was not enough for the Democrat Congress, so it passed a bill outlawing bank student loans and requiring that all student loans be from the federal government.  Social Security, Medicare, Medicaid, and other entitlement programs are growing faster than the economy.  They will take more than 100% of federal tax revenues this year.  All other federal spending, including defense and interest payments on our debt, will be funded by government borrowing.

There is no way to tax ourselves out of this dilemma, especially not by only taxing the rich.  The only thing that can happen is that the entitlement programs will have to be cut back.  The growing Medicare, Medicaid, and Social Security entitlements will have to be cut.  In other words, rationed retirement and health care are coming.

Planned increased taxes and anti-trade policies such as the tariff on Chinese tires and the failure of Congress to approve the trade treaties with South Korea, Colombia, and Panama will make it harder to grow the economy to produce more tax revenues for the federal government.  The Chinese, who have bought a large part of our debt, are looking to diversify their investments.  We are driving other debt buyers away also, so we will have to offer higher interest rates to attract more bond and debt buyers.  This will make business investment less attractive, further retarding growth of the economy.

Rahn concludes:

What is particularly frightening is that neither political party has offered a serious plan to defuse the debt bomb. The Democrats are just piling up more debt as if there were no limit, and the Republicans, to date, are only proposing measures to reduce the increase, rather than reverse it. When the debt bomb explodes — within the next one to three years — expect to see record high real interest rates and/or inflation, coupled with a collapse of many "entitlements." It will be like the neutron bomb, the buildings will be left standing, but the people will not.

So much for the Democrat commitment to sustainability.

Whalen: We Broke the Bank!

Mike Whalen, founder, president, and CEO of Heart of America Restaurants and Inns and also policy chairman at the National Center for Policy Analysis, summarized the debt situation of the federal government in an excellent commentary in the 11 August 2009 Washington Times called We Broke the Bank! We need to rein in our overspending. Let us examine some of his key points:

• On-the-books national debt is $11.6 trillion.
• Off-the-books debt including Medicare and Social Security, is $107 trillion.
• Even these amounts do not include pensions and benefits of federal workers and veterans.

Adding just the $11.6 trillion [expected to be $12 trillion by October] to the $107 trillion gives us $119 trillion in debt. The GDP is about $14.3 trillion and federal revenues are about $2.5 trillion, so the debt to federal revenue ratio is 48. But, he points out that there is no available cash in the government revenues to pay the debt, since it is all obligated elsewhere already.

Looking at this another way:

• Total national private net worth is $51.5 trillion.
• Federal unfunded liabilities are 2.3 times the nation's net worth.
• "That's pretty darn broke."

Whalen says there is no way to service this debt. The game is up. "Even if we significantly slash the federal entitlements by half, we cannot fix this problem. Even if we increase federal receipts from the 50 year average of 18.5 percent of GDP to say 27 percent, killing private sector growth, we cannot fix the problem."

Indeed, the problem may well be fixed only after the U.S. goes bankrupt and forfeits on its obligations. The best we can do is to rein in spending drastically and do the opposite of Mike Whalen's suggestion on increasing federal receipts as a fraction of GDP. We know that attempts to increase tax rates result in a drop in federal revenues, while decreases in rates result in increases in federal revenues.

Many people absolutely cannot understand this. But, first, it has been demonstrated when Presidents Coolidge, Kennedy, Reagan, and George W. Bush reduced income tax rates and when Clinton reduced the capital gains tax. Tax decreases result in added growth of the economy, which contributes to more tax receipts for the federal government. But, this is not the only effect. Lower taxes make people feel better and make them more confident about their future, which helps them to deal with the federal debt they are saddled with.

Finally, and this is really important, people work very hard to avoid high taxes. Business decisions that make great sense with low tax rates, make no sense with high tax rates and are not undertaken. People also cheat much more when the tax rates are high. The size of our underground economy, while not proportionally as large as that in Italy, will increase as tax rates increase. Another hugely important factor is the velocity of transactions. When tax rates are low, especially capital gains taxes, people buy and sell with much greater frequency. Taxing 10 transactions of $10,000 at a rate of 12% yields $12,000, but taxing 4 transactions of $10,000 at a rate of 20% yields only $8,000. The frequency of taxable transactions is critical in government revenues.

In summary, our best hope in minimizing the damage is to reduce government spending, stop making unfunded future obligations such as throwing more people into Medicaid, and accelerate the economy with tax cuts for investors and hardworking businessmen. The more business investment, the sooner the unemployment rate comes down and this helps to decrease government spending on unemployment and increases income tax revenues. The more business investment, the more profits are realized and this adds to tax revenues. If there is a solution, this is it.

Unfortunately, the Democrat Congress and Obama will not hear of any of this. Unless the American People throw them out of office as soon as possible, we are doomed to bankruptcy as a nation. Then, of course, the People must demand reductions in spending and tax rates, or we are still doomed. They must learn to appreciate the ability of Americans to manage their own lives and to grow the economy while making life richer and easier for almost everyone.

Tea Parties on 15 April Protest Taxes and Deficits

Tea party protests, after the fashion of the original Boston Tea Party, are being organized in 300 cities in the United States on 15 April 2009. Please consider attending one of these Tea Parties or having one of your own, even if just with your family or a few neighbors. The huge spending being planned by the federal government will destroy much of the private sector, where we make our own individual choices in the management of our lives, replacing it with a much more bloated public sector, where elitists dictate our values to us.

Then there are the terrible deficits to be passed on to our children and grandchildren. It is not enough that the politicians will not address the tax burdens of the Social Security system as the Baby Boomers retire or the deficits of Medicare as more and more of the same Baby Boomers, no longer productive workers, have more and more health problems. With those problems alone our children and grandchildren were going to be staggering under unbearable tax burdens. But this was not enough. Government responded to the Oil Crisis by refusing to allow more oil and gas production and threatening to bankrupt all users of coal. The auto industry staggered. Then when the recession caused some people with high risk loans to default, even though the federal government with ACORN's help, had long urged financial firms to make risky loans while taking them to court, the government and the media claimed the entire recession was caused by the American financial industry and capitalism. Never mind the fact that the rest of the world had largely been in recession before the U.S. was. But, this was the "crisis" too good not to use as the excuse for a major grab for power by our newly installed Messiah of Socialism and his "Progressive" Congressional majority.

When you can stagger no more children, what happens to you then? Do the kindly socialists of the government then have any use for you? Or do you finally overcome your public high school and college indoctrinations as socialists and rise up in rebellion? Would it not be much better to rebel now, before quite so many American lives have been destroyed because no one was allowed to figure out what their personal dream was and then pursue it? The socialists do not like it, but life is personal. If you cannot see that it is so, you have only to study the history of all the other socialists regimes to learn what happens to the herd of followers when socialist government is in control of their lives. There must be something spiritually very deadening about these tyrannical systems which so consistently have turned their people to drunken stupors as the only way to lessen the pain of their personal unhappiness. Awaken, please, for this is a looming tragedy you must not ignore.