As media predictably pound the table for Congress to allow the Bush tax cuts to expire, an interesting analysis by Washington Post contributor Robert J. Samuelson should raise a caution flag.
Higher taxes inhibit couples from having children which in other developed nations has led to longterm economic paralysis.
In a western civilization that got drunk on entitlement programs in the previous century, population growth is essential as all of these schemes have a Ponzi component to them: they only work if you continually have new people entering the system to pay for those collecting benefits.
As Samuelson outlined in the Post Monday, our federal income tax structure is quite at odds with our best interests as a nation:
Initial requests for jobless benefits rose last week to their highest level since April, a sign that hiring remains weak and some companies are still cutting workers.
The Labor Department said Thursday that new claims for unemployment insurance rose by 19,000 to a seasonally adjusted 479,000. Analysts had expected a small drop. Claims have risen twice in the past three weeks.
Chris Matthews on Monday got a much-needed lesson from Rep. Paul Ryan (R-Wisc.) on how tax hikes impact the budget as well as the economy.
"Congressman Ryan, is there any tax role for reducing our $1.4 trillion to $1.7 trillion debt this year -- deficit this year?" Matthews asked during the 5PM installment of MSNBC's "Hardball." "Is there any role in tax increasing to help do that job?"
When Ryan gave an answer Matthews didn't like, the host arrogantly responded, "So, you won`t cut -- you won`t raise taxes and you won`t cut spending...All this bitching about the deficit doesn`t mean squat, because you won`t do either, raise taxes or reduce spending."
With the ball nicely teed up, Ryan unleashed a drive down the middle of the fairway that would make Tiger Woods proud (video follows with transcript and commentary, h/t Twitter's @LFRGary):
Once again, it's clear that reading editorials and op-eds at publications like the Wall Street Journal and Investors Business Daily becomes a requirement to be truly informed when a Democratic administration in power.
On July 6, Peter Ferrara at IBD noted that the annual report from the trustees of the Social Security and Medicare system is long overdue, and wondered why:
Are Overdue Reports Concealing ObamaCare Impact On Medicare?
Every year, the Annual Report of the Social Security Board of Trustees comes out between mid-April and mid-May. Now it's July, and there's no sign of this year's report. What is the Obama administration hiding?
Jeanne Sahadi at CNNMoney.com has finally realized Social Security needs urgent reform - and by reform, she means going after the wealthy, of course.
On Monday, Sahadi reported on news from the Congressional Budget Office that Social Security is dipping into savings already this year and will not be able to meet its obligations by 2037. That's at least 15 years earlier than what the CBO had predicted during the last administration, and with 27 years to go it's entirely possible the deadline will move again, especially if the current recession persists.
But Sahadi wasn't worried. In fact, she began her piece by saying "it should be a snap" to rescue the program from bankruptcy.
After blissfully assuring readers that Social Security will be fine for another 27 years, Sahadi offered three easy-peasy steps that could be enacted over time to make the program solvent. Sadly, those three ideas were all too predictable:
A $787-billion stimulus. Liabilities of $356 billion for the TARP bailout on the federal government's balance sheet. And that's in addition to other unfunded liabilities from federal entitlements like ObamaCare, Medicare, and Social Security.
But that doesn't mean the U.S. is heading down the path toward socialism because they were one-time expenditures, according to CNBC senior economics reporter Steve Liesman.
On CNBC's "Squawk Box" April 29, as jobless claims for the week was being released on the floor of the CME Group in Chicago, co-host Joe Kernen asked for Liesman's opinion.
The Pentagon rescinded the invitation of evangelist Franklin Graham to speak at its May 6 National Day of Prayer event because of complaints about his previous comments about Islam.
The Military Religious Freedom Foundation expressed its concern over Graham's involvement with the event in an April 19 letter sent to Secretary of Defense Robert Gates. MRFF's complaint about Graham, the son of Rev. Billy Graham, focused on remarks he made after 9/11 in which he called Islam "wicked" and "evil" and his lack of apology for those words.
Col. Tom Collins, an Army spokesman, told ABC News on April 22, "This Army honors all faiths and tries to inculcate our soldiers and work force with an appreciation of all faiths and his past comments just were not appropriate for this venue."
The establishment press has for decades and almost without exception insisted that FDR's sacrosanct legacy of Social Security can go on and on with only minor tweaks, and that if trouble looms, it's way out there in 2040 or so when the "Trust Fund" is depleted. The problem is that during that time the federal government has raided the annual surpluses generated by "Trust Fund" which now consists almost entirely of IOUs from the rest of the government. Meanwhile, annual surpluses, where tax collections exceed benefits paid and which were well over $100 billion just a couple of years ago, have vanished, and aren't coming back to any significant degree.
Another mythology is under development: That the just-passed ObamaCare legislation has "saved" Medicare. The Social Security/Medicare Trustees report is being delayed until June 30 to incorporate the effects of the recently passed ObamaCare on the health of Medicare. It will supposedly tell us that the life of the Medicare "Trust Fund" has been magically extended by about a decade. (Raise your hand if you think the Trustees are under immense political pressure to issue a favorable verdict regardless of the facts.)
In his Tuesday coverage of a government official's leak to the Associated Press about the report's delay in advance of the official administration announcement, the AP's Martin Crutsinger spun these and other fairy tales in his stout defense for the fiscally destructive programs. But in doing so, he perhaps inadvertently revealed that Congress and the administration had no idea of the true future impact of ObamaCare.
Here are key paragraphs from Crutsinger's report (footnotes are mine, and are explained later):
Wondering how much faith the left has in your ability to run your own life? Chris Matthews was brutally honest today when he criticized that "idealistic notion" of self-reliance that ignorant conservatives insist on pushing.
Matthews apparently believes that without massive social welfare programs like Medicare and Social Security, there would be "poor people all over the place, old people lying in the streets," and the nation would look like "Calcutta."
He made these absurd claims -- and they are absurd -- on yesterday's Hardball, and went on to call for a more robust "social state," complaining that lefty bloggers had not done enough to make it seem more desirable to the American people (h/t GatewayPundit).
PBS's Jim Lehrer on Tuesday wrongly accused Republicans of always being against major social legislation in this country including the Civil Rights Act, Social Security, and Medicare.
"[T]hrough history, recent history in particular, Republicans have opposed things like Social Security, Medicare, even civil rights legislation, but then, once they lost, they took some deep breaths and moved on, and then finally ended up embracing many of these major changes in -- in laws and in the way we do business here," the News Hour host amazingly said to his guest Sen. Jon Kyl (R-Ariz.).
Of course, nothing could be further from the truth, and Kyl quickly corrected Lehrer (video embedded below the fold with partial transcript and commentary, relevant section at 4:40, h/t Cubachi):
In David Leonhardt's latest "Economic Scene" column for the New York Times, "The Perils Of Pay Less, Get More," he reestablished his reputation as the paper's neo-liberal economic voice, admitting that at a certain point taxes hurt economic growth, but also urging Obama to break his pledge and raise taxes on everyone, not just people making over $250,000 a year, in order to cut the deficit.
Leonhardt has certainly changed his mind about Obama's tax pledge. In a huge August 2008 story for the New York Times Magazine, Leonhardt actually promoted Obama's popular campaign promise to reduce taxes for those making under $250,000, in the name of addressing "inequality":
Obama's agenda starts not with raising taxes to reduce the deficit, as Clinton's ended up doing, but with changing the tax code so that families making more than $250,000 a year pay more taxes and nearly everyone else pays less. That would begin to address inequality.
The Associated Press's timing couldn't have been better for those who still want to pretend that Social Security is really not in serious trouble. Stephen Ohlemacher's item ("Social Security to start cashing Uncle Sam's IOUs") originally appeared on Sunday, in the midst of most of the major college basketball conference tournament championships, then followed by the evening's announcement of the selections for the NCAA Division I Men's basketball tournament. (The AP has issued minor revisions several times since its original appearance, up to and including today.)
The wire service's timing, while convenient for the Washington establishment, as it minimizes the possibility of distractions from its statist health care obsession, couldn't have been worse for those of us who wish the American people would get a grip on the gravity of the situation -- which is why I saved this post for today.
What is about to occur is the event that as little as a year ago, according to the Social Security Trustees' 2009 Report, wasn't expected to arrive until 2016. Ohlemacher tells us that it's right here, right now, and gets the reporting right until his seventh paragraph (bolds are mine):
Scher railed against the Bush tax cuts, and asserted that a 35-45 percent inheritance penalty (the estate tax or death tax) isn't punitive enough to stem the deficit crisis.
"But those massive tax breaks to the superwealthy don't quite have the same juice they used to. Especially, the estate tax - levied on the inheritances of the wealthiest heirs in America," Scher wrote. "This year, because of the Bush tax plan from his first term to gradually phase out the estate tax altogether, the estate tax is literally wiped off the books."
Americans have been so bombarded with the word "crisis," it appears to have lost all meaning. But according to a distinguished scholar at the Cato Institute, there is a real, serious crisis pending in America's addiction to entitlement programs, government-dependence, and imaginary "rights" to live off future generations.
"You will have to look into the future, do the responsible thing, and begin moving toward a system of personal accounts. That is the only long-term solution," said Jose Pinera of America's social security and pension system.
Pinera knows what he's talking about - he's the architect of social security reform in Chile. Introducing a recent interview with Pinera, Fox Business Network's Brian Sullivan said, "Thirty years ago, the social security system of Chile was broke, flat-busted. Entitlement reform was just destroying the nation's finances. In walks the Harvard-educated Jose Pinera. He pushed through by force of will a plan to privatize their entire entitlement system and social security - there is no government social security in Chile now - and everybody has a private account."
A rather shocking thing happened on Sunday's "Meet the Press": host David Gregory asked Alan Greenspan and Henry Paulson if it would be a mistake to let the Bush tax cuts expire.
Chatting with the former Federal Reserve Chairman and former Treasury Secretary, Gregory referenced Tuesday's Wall Street Journal article about what the impact of allowing these tax cuts to expire would be on the budget and the economy.
Gregory first asked Paulson and then Greenspan, "Is that a bad idea?" (video embedded below the fold with transcript, relevant section at 6:48):
On Wednesday's Countdown show on MSNBC, shortly before the beginning of the State of the Union address, as Keith Olbermann discussed the speech with Chris Matthews and Rachel Maddow, after Olbermann brought up the possibility that President Obama would give a divisive FDR-style speech, Matthews seemed to lament that such a speech would "spook" the middle class, and, as he credited the Democratic party with actually "creating" the middle class, he argued that Democrats are a victim of their own success. After claiming that it would have been "unpatriotic" not to increase government spending in time of recession, he went on to describe President Obama's economic policies as "conservative": "Everybody who studies economics knows if you have no business spending, no consumer spending, the government has to spend. That is reasonable and I would argue conservative economics."
At about 8:57 p.m., after contending that President Herbert Hoover "proved to every single American that the Great Depression was Republican doing," Matthews made his extraordinary claim about Democrats "creating" the middle class:
UPDATE AT END OF POST: 2006 video of Sen. Barack Obama applauding the death of Social Security reform.
Contrary to what the Left and their media minions told Americans in 2005 when President George W. Bush wanted to reform Social Security, the nation's largest entitlement program is now projected to run deficits for at least the next two years.
In an article on the subject published Sunday, the Associated Press mysteriously hid the seriousness of this revelation while never once mentioning the Republican push to solve this problem four years ago, or that Democrats in January 2006 -- including Sen. Barack Obama (D-Ill.) -- actually applauded the death of the previous year's reform efforts.
Thanks to info "steveegg" at No Runny Eggs linked me to earlier today, I had to add the word "Annual" before "Cash Flow" at this post (at NewsBusters; at BizzyBlog) that originally appeared Wednesday.
That's because the system is already running monthly deficits, and significant ones.
Back in February, the system also ran a deficit. It was bad news, but because February is an unusual month containing a full month of payments but only 20 business days of collections (actually 19, since Presidents Day is a federal holiday), I didn't think it was an indicator of a near-term problem when I noted it in early April. I was wrong.
The degree of the decay is obvious when you look at July's and August's results. The drastic decline in year-over-year collections noted in Wednesday's post indicate that September is almost certainly going to be no better, and will probably be worse.
Go to this link and you'll be able to replicate the tables that follow (simply type "7" or "8" at Item 3):
Ed Morrissey at Hot Air had the catch of the day yesterday when he revealed, based on Congressional Budget Office internal projections distributed to Congress during the summer, that the Social Security system will spend more cash than it takes in during the government's next fiscal year ending September 30, 2010. Read about it there, or here, because you won't see the establishment media acknowledge the existence of these revelations.
Morrissey isn't clear as to when the report was prepared, but if it dates back to July or even early- mid-August, it's possible that Social Security will show a measly positive cash flow of less than $10 billion when the dust settles on the current fiscal year that will end next week, compared to +$72 billion a year ago. That's because the decay in Treasury's cash collections during the current quarter has been that bad.
ABC's Brian Ross on Wednesday investigated a subject that has been skipped by CBS and NBC's morning shows, the more than $1 million spent by the Social Security Administration for its employees to attend lavish retreats, complete with a motivational dance company performing for the government bureaucrats. Host Chris Cuomo asserted that Social Security may be "on the brink of financial ruin. But, you would never know it from a recent luxurious retreat paid for by your tax dollars."
Good Morning America's Ross, who has spend much of 2009 delving into whether or not Wall Street executives should fly on private jets or go on lavish retreats, provided some consistency by looking into a story that has, so far, been ignored by CBS's Early Show and NBC's Today. He explained that Social Security is "expected to be insolvent in less than 30 years, unless taxes are raised substantially. But, there was no sense of financial crisis when almost 700 Social Security executives gathered here last week at the Arizona Biltmore in Phoenix."
In his report's apparent final incarnation early Tuesday morning, the AP writer:
Told us the amount of June's deficit ($94.3 billion), but didn't disclose the figures for June's receipts ($215.4 billion) or "outlays" ($309.7 billion), or how they compared to June of last year. In doing so, he "succeeded" in concealing the accelerating decline in tax collections.
Didn't tell us that the past month's deficit is by far the worst June ever.
"Forgot," as he did in May, to tell readers that the deficit would be hundreds of billions of dollars higher if it weren't for an "accounting change" retroactively put into place by Treasury in April that changed the definition of "outlays."
Cited the Iraq and Afghanistan wars as contributors to the deficit situation, while not identifying several other expenditure categories that have been worse offenders by far.
Found an economist, without dissent, to support the claim that what the Obama administration has done had to be done.
And that doesn't even count Crutsinger's Krugmanesque rewrites of the history of the 1930s Depression era and 1990s Japan, or the apparatchik-like tone present in a few of his paragraphs.
Yesterday, in the process of passing on news that bloggers such as Ed Morrissey at Hot Air and outfits like the Heritage Foundation were onto earlier, Bloomberg's Kevin Hassett delivered a stinging indictment of the establishment media for being asleep at the switch (the sole exception appears to be a video report at PBS). But while he does a good job identifying the problem and indicting journalists for ignoring the news, his prescription for a solution is badly wanting.
The news? The days of Social Security surpluses are over, six to possibly eight years earlier than was thought to be the case just a year ago.
Here are excerpts from Hassett's commentary ("Recession Bites Into Social Security’s Surplus"). His first word reveals what he thinks of the nation's political elites, and of the media that are supposed to be watching them:
Although an admitted Barack Obama supporter during last year's campaign, CNBC's Jim Cramer has certainly changed his view concerning our 44th president.
On Tuesday's "Today" show, the outspoken "Mad Money" host said: we have "an agenda in this country now that I would regard as being a radical agenda"; Obama's just announced budget "put a level of fear in this country that I have not seen ever in my life," and; "This is the most, greatest wealth destruction I've seen by a president."
He also called Timothy Geithner "an invisible treasury secretary," and expressed hope that the next time he goes to Capitol Hill "he doesn't throw the drowning man the anvil like he did the last time he spoke" (video and transcript below the fold, file photo):
The self-aggrandizing denizens of Hollywood constantly scold Americans over a lack of national healthcare. It is the biggest failure of American society ever that there is no cradle to the grave program for free health care, they constantly tell us. And now, in keeping with these nearly universal Hollywood "principles," to prove how Hollywood is far more moral than we lowly citizens of flyover country, and to show that they are better than the great unwashed in the backwaters of America... Hollywood is closing its nearly 90-year-old Motion Picture Fund hospital and accompanying long-term living facilities for aging actors.
Yep, dumping it. Walking away from the facilities for free healthcare for actors. Fuggedaboutit.
The Associated Press's record of running interference for Treasury Secretary nominee Timothy Geithner continues mostly unabated.
My chronicle of AP's largely weak coverage, most of which has been previously detailed at NewsBusters (here, here, and here), is at the end of this post.
No AP report I have seen has noted that Geithner applied for and merely pocketed partial "reimbursements" from the International Monetary Fund for payroll/"self-employment" taxes. He signed IMF forms saying that he had paid or would pay those taxes. He didn't pay up for 2003 and 2004 until his returns were audited. He more than likely never would have paid up for 2001 and 2002 if he had not been nominated, even though a strong case could be made that he engaged in tax evasion.
These aspects of Geithner's tax situation, if widely known, would, I believe, cause the average taxpayer to object strongly to the very idea of his nomination. AP's alleged journalists appear to believe that this cannot be allowed to happen.
AP Personal Finance writer Dave Carpenter, in a mostly Q&A piece with a really weak title ("Meltdown 101: US tax laws can even foil the pros"), continued the silence on pocketed reimbursements yesterday afternoon (stored here for future reference). He also seems to have found every excuse for Geither except "the dog ate my W-2":
Christmastime is the time of giving. So we can thank Bernie Madoff for giving Americans some special gifts this holiday season.
Yes, I said thank him. OK, maybe not a lot. But the one-time financial wizard's downfall is a morality tale that provides so many lessons it's almost impossible to know where to start.
If you've been living under a rock, the former chairman of the Nasdaq has been charged with securities fraud. Not just ordinary securities fraud, either. Reportedly, Madoff's sons turned in their father, and who could blame them. He had allegedly confessed to them "that his investment business was a giant Ponzi scheme' that cost clients $50 billion, a lawyer for the brothers" told Bloomberg.
In the interview for Wednesday’s Barbara Walters Special on ABC with Barack and Michelle Obama, excerpts of which were also shown on Wednesday’s World News with Charles Gibson, Walters asked few questions that put the Obamas on the defensive, in contrast with her January 2001 interview, aired on 20/20, with then-President-elect Bush in which she challenged him on a number of fronts. Most notably, she seemed to chide Bush for choosing John Ashcroft as Attorney General because he "openly opposes abortion," and claimed that Ashcroft was "not considered a friend to civil rights." She asked Bush about reports that, as governor of Texas, he "spent relatively little time studying specific issues," and "only does a few hours of work" a day. The ABC host also challenged Bush from the left on the trade embargo against Cuba, and even asked Laura Bush if her more "traditional" plans for her time as First Lady would be a "setback for women." It is also noteworthy that Walters asked Bush about his plans for dealing with Saddam Hussein and cited "people in the know" who contended that the Iraqi dictator was "stronger than ever."
If the Republicans had a few more spokesmen like Haley Barbour, the political landscape might look a lot different. The Mississippi governor's down-home good humor and razor-sharp wit are a formidable combination. Barbour's killer combo of skills was on display on this evening's Hardball. When Chris Matthews challenged his criticism of Obama's tax credit plan, Barbour good-naturedly backed him down with an impressive disquisition on New Deal history. When he was through, Matthews had to admit that Haley was right.
I'd encourage people to view the video, not only for the entertainment value, but as a case study of how to defeat a member of the liberal media.
In 2004, economists at the University of California, Los Angeles (UCLA), studied the policies of President Franklin Roosevelt's New Deal and determined it actually prolonged the Depression by seven years.
Harold L. Cole and Lee E. Ohanian blamed anti-free market measures for the slow recovery in an article published in the August 2004 issue of the Journal of Political Economy.
Cole and Ohanian asserted that Roosevelt thought excessive business competition led to low prices and wages, adding to the severity of the Depression.
"[Roosevelt] came up with a recovery package that would be unimaginable today, allowing businesses in every industry to collude without the threat of antitrust prosecution and workers to demand salaries about 25 percent above where they ought to have been, given market forces. The economy was poised for a beautiful recovery, but that recovery was stalled by these misguided policies," Cole said in a press release dated Aug. 10, 2004.
NewsBusters is, of course, a site dedicated to exposing liberal bias in the press. But, once in a while the liberal press gets something right and this is one of those cases. On Spetember 20, Newsweek hosted an article by FactCheck.org that exposed the outright lies contained in the claims Barack Obama made against John McCain's record on Social Security in order to scare as many elder citizens as he can. Obama may have expected every Old Media outlet out there to cover for him, but Newsweek didn't oblige this time. So, I thought I'd highlight this piece and give Newsweek the thumbs up for hosting the FactCheck.org article.
Over the weekend, Barack Obama appeared in the battleground state of Florida and made to scare citizens over McCain's votes on Social Security. Obama claimed that McCain voted for a plan that would have seen the Social Security benefits of "elderly women" at risk in the stock market during the recent wildly fluctuating market. Telling his audience, "if my opponent had his way, the millions of Floridians who rely on it would've had their Social Security tied up in the stock market this week," Obama tried to claim that the elderly would have lost their money because of John McCain. FactCheck.org called these claims "not true."