NYT: Social Security & Medicare Closer To Insolvency

The New York Times just released an article a few minutes ago about how the current poor economic climate has increased the moment when Social Security and Medicare will go insolvent.

The interesting thing about this article reports quotes from various politicians and bureaucrats who want to keep these kinds of programs running even when the funds are no longer available:

"The shorter deadline for Social Security insolvency does not mean that future retirees would receive nothing after that date.

The trustees noted that even when the Social Security trust fund is exhausted in 2037, tax revenues will presumably continue to come in. But benefits would be limited to the amount paid in that year, and would probably continue at only 75 percent of their promised level — 3 percentage points less than was projected in last year’s report."

What a brilliant idea!? Lets keep funding these programs even when they've gone bankrupt!! Its nice that politicians want to keep these programs from going insolvent and by working in a bipartisan manner to find a solution:

"The Treasury secretary, Timothy F. Geithner, said in a statement on Tuesday that the new projections underscored the need for a bipartisan approach to shoring up the two programs, through what he said would be “difficult but achievable changes.”

“That is why even as this president has focused on pulling our nation out of economic recession, he has made clear his commitment to working in a bipartisan way to address the long-term health of Medicare and Social Security” and, he added, “not simply pass on our debts.”

However, it is foolish to think that the leaders in Washington D.C. won't pass on our debts to younger generations in attempt to "save" these welfare programs. The truth is that politicians and bureaucrats will ALWAYS pass on the debt to the next generation. President Ronald Reagan did it in 1983 when he approved a $165 Billion bail out for Social Security. In the eyes of our elected leaders, the only solution to save Social Security is to spend more of the taxpayer's money.

The best and most wise solution to fixing this problem is to let these welfare programs (and others like it) die out when they become bankrupt. These programs should not be revived for the simple reason that welfare programs violate the U.S. Constitution.

President Franklin Pierce, in 1854, explained why such programs are unconstitutional:

"[I must question] the constitutionality and propriety of the Federal Government assuming to enter into a novel and vast field of legislation, namely, that of providing for the care and support of all those … who by any form of calamity become fit objects of public philanthropy ... I cannot find any authority in the Constitution for making the Federal Government the great almoner of public charity throughout the United States. To do so would, in my judgment, be contrary to the letter and spirit of the Constitution and subversive of the whole theory upon which the Union of these States is founded."

In 1887, President Grover Cleavland made this statement about the unconstitutionality of government welfare programs:

"I find no warrant for such an appropriation in the Constitution, and I do not believe that the power and the duty of the General Government ought to be extended to the relief of individual suffering which is in no manner properly related to the public service or benefit.

The friendliness and charity of our countrymen can always be relied upon to relieve their fellow citizens in misfortune. This has been repeatedly and quite lately demonstrated. Federal aid in such cases encourages the expectation of paternal care on the part of the Government and weakens the sturdiness of our national character, while it prevents the indulgence among our people of that kindly sentiment and conduct which strengthens the bonds of a common brotherhood."

It is a shame that we used to have politicians who were faithful to the Constitution and refused to waste the tax payer's money. They understood that is the people, not the government, who are in the best position to help the downtrodden. They knew that it was the local community and private institutions who are the most efficient in providing relief to those who need it.

We need politicians who understand these principles. Where are they?

UPDATE: CNN had an expert come out and talk about how Medicare is the real danger, not social security. Riiiiiiight.

UPDATE #2 (5/14/09): Here's a nice blog explaining why Medicare is a real danger but Social Security is still a problem.

What!? The Deficit Is Greater Than Expected!?

In January of 2009, the Congressional Budget Office (CBO) director Douglas W. Elmendorf projected a $1.2 trillion deficit for this year. The CBO director has posted a revision of the deficit on his blog that the deficit is now projected at $1.8 Trillion for 2009 which is 50% greater than previously expected. What this means is that the US government is borrowing 50 cents for every dollar it spends.

However, the fact that projected deficit is 50% higher is only half of the shocking news. In reading the CBO Director's blog, we learn several interesting things which are highlighted in bold:

• As estimated by CBO and the Joint Committee on Taxation, the President’s proposals would add $4.8 trillion to the baseline deficits over the 2010–2019 period. CBO projects that if those proposals were enacted, the deficit would total $1.8 trillion (13 percent of GDP) in 2009 and $1.4 trillion (10 percent of GDP) in 2010. It would decline to about 4 percent of GDP by 2012 and remain between 4 percent and 6 percent of GDP through 2019.
• The cumulative deficit from 2010 to 2019 under the President’s proposals would total $9.3 trillion, compared with a cumulative deficit of $4.4 trillion projected under the current-law assumptions embodied in CBO’s baseline. Debt held by the public would rise, from 41 percent of GDP in 2008 to 57 percent in 2009 and then to 82 percent of GDP by 2019 (compared with 56 percent of GDP in that year under baseline assumptions).
• Proposed changes in tax policy would reduce revenues by an estimated $2.1 trillion over the next 10 years. Proposed changes in spending programs would add $1.7 trillion (excluding debt service) to outlays over the next 10 years. Interest costs associated with greater borrowing would add another $1.0 trillion to deficits over the 2010–2019 period.
• Our estimates of deficits under the President’s budget exceed those anticipated by the Administration by $2.3 trillion over the 2010-2019 period. The differences arise largely because of differing projections of baseline revenues and outlays. CBO’s projection of baseline deficits exceeds the Administration’s estimate (prepared on a comparable basis) by $1.6 trillion.

Those of us who have been fiercely opposed to bailouts and other excessive government spending are justified in saying, "see I told you so!" We warned that deficit spending would get us deeper in debt and increase the public debt and take up a larger share of the GDP. Our predictions have come true and if our government continues this path of irresponsible spending, things will only get worse.

When and Where Will The Buck Stop?

America has always been a nation in debt. Shortly after the birth of our nation, our country went into debt and continued as political leaders came and left Washington D.C. President Truman once claimed that the “buck stops here” but like other politicians, he just passed the buck to the next successor coming into our nation’s capital.

America has always been a nation in debt. Shortly after the birth of our nation, our country went into debt and continued as political leaders came and left Washington D.C. President Truman once claimed that the “buck stops here” but like other politicians, he just passed the buck to the next successor coming into our nation’s capital.

As politicians passed the buck to the next generation, the national debt steadily grew. Politicians, both past and present, are infected with the false belief that they can wash their hands of responsibility for paying down the deficit and that some future generation will take up the mantle of eliminating our country’s debt.

Politicians, regardless of political party, have recklessly allowed the federal deficit get out of control. Neither party has, nor currently, been able to say no to spending beyond what our nation can afford. Consider this, in 1980, the year I was born, the US National Debt was approximately 900 Billion dollars. Today, as we speak, the US National Debt is over 11 Trillion Dollars.

The heavy mantle of paying off the debt falls on the shoulderS of every young adult in this country. They are passing the debt to my generation, and subsequent generations that are after us. The national debt is equivalent to having every man, woman and child in the country saddled with $35,000 in debt and we are piling on more debt. Let’s not forget that American individuals are also drowning in their own consumer debt as well. The American Dream is being taken away from us by irresponsible adults.

As a young adult who is about to leave higher education and enter the workplace, I have a burning question for the political leaders of our nation: will you continue to spend away our American Dream or will the buck stop with you?

I fully support the outrage over the bailout money irresponsible corporations have been given by equally irresponsible politicians. America has a history of bailing out failing airline companies, incompetent car companies, greedy savings and loan associations, and now irresponsible financial institutions. When will politicians end the practice of giving the buck to incompetent business leaders and corrupt corporations? This practice needs to stop and it needs to end today.

When we talk about the consequences of passing the buck of financial stewardship over our nation’s finances to the next flock of politicians who enter the halls of government, we’re not talking about dollars and cents. The discussion was, and never is, about money -- nor is it about taxes, reckless spending, deep deficits and gigantic bailouts. Such discussions are just a way to help us visualize what we’re really talking about, which is Rights and Freedoms.

We have learned from the sad history of nations across this planet that a government once stretched by the increase of power, never regains its original dimensions. As the government grows in size and power, it expands at the expense of the rights and freedoms of its citizens. We know that a decrease in the rights and freedoms of its citizens is a direct result of an increase in acts of oppression and abuse by the government.

We have also learned from history that when a country spends beyond its means, such as providing massive bailouts, there will be a corresponding loss of freedoms. A nation that runs on debt ensures that it will not remain free and strong forever. A state that is burdened by debt will be powerless in guaranteeing rights or preventing the loss of freedoms that were once enjoyed by the public. Likewise, the people will not have the ability to exercise their rights and freedoms because they will not have the financial ability to do so. A government that is not economically free, will abuse the citizens and rob them of whatever rights are remaining.

Despite its weaknesses and flaws, one the best protectors of individual liberty and freedom, and strongest defenses against the abuse of government power, is capitalism. When an individual is able to earn, keep and spend his wages, they are in the best position to meet his or her needs and wants, to pursue their desired careers, to support institutions that reflect their values and beliefs, to improve the community they live in, help the downtrodden or oppressed, enjoy the environment, and pursue their dreams.

Capitalism never was meant to operate only by an invisible hand. Government has the responsibility to ensure that corporations conduct honest transactions with the public and that they do not abuse their powers gained through the income from its consumers. It is to ensure that the market place operates freely, fairly and openly for all. Government should not meddle in the affairs of the free market by dictating who can get fired, how much a person’s wage should be and whether or not a business or employment contract should be honored. The government is only to be a referee to put bad corporations permanently in the penalty box and leave the good corporations to participate in the free market.

Any government that has the absolute authority to determine the flow of commerce will not be content with just having dominion over the economic sphere of the nation. It will also seek to dictate the political, social, religious, and cultural affairs of the nation. When the government has greater power than the people, inequality occurs because it is typically just the ruling class and everybody else. As a result, oppression and abuse at the hand of government occur with greater frequency and the light of individual liberty will grow dim.

We are at a unique moment in American history. We can either preserve our freedom or let it slip away from us. We choose to either avoid or face the consequences of financial irresponsibility.

To anyone even considering running for office or any politician seeking reelection: I don’t want to hear any promises other than that they will get us out of debt and stop the reckless spending of our tax dollars.

We the People, young and old, male and female, rich and poor, republican and democrat, believers or disbelievers in God, are united today in protest against the financial irresponsibility of our leaders. Prosperity is not a guarantee -- it is a challenge that must be earned every generation. But because the politicians have refused to let the buck stop with them, the buck stops with us. It stops with my generation. TODAY.

UPDATE: You can watch the speech on YouTube: