An Unforeseen Development?

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On NPR this morning, I heard that 525,000 people had left the American labor force in December. I couldn’t find the number on the NPR website, so I looked on the Labor Department’s. My “find” function came up empty there as well. It’s probably there, but I think you have to add and subtract a little from the relevant columns of figures to come up with it. Having wasted precious minutes, I grew impatient. I baited my Google hook with the raw number (525k) and cast it into the data sea. The number was reported on many suspect blogs, tagged with red doughnuts warning me away. Then: Voilà. An article from Economics Analytics Research, Unemployment Rate Plunges to 6.7% in Dec. As Labor Force Shrinks; Payrolls Up Disappointing 74K”:

The drop in the unemployment rate came as a result not of new jobs, but a sharp increase in the number of persons not in the labor force — 525,000 — to 91,808,000, an increase of 2,969,000 in the last year. In 2012, the number of persons not in the labor force increased 2,199,000.

Why are people dropping out of the labor force? Some retire. Some grow weary of a fruitless job search and move in with their parents. Others migrate to the underground economy. But why the “sharp” increase at the end of 2013?

Let’s face it, there are people who will choose to glide into Social Security and Medicare on the wings of Obamacare.

At least part of the reason may be this: before January 1, 2014, when you left the labor force early, not only did you lose any possibility of unemployment benefits but you were also probably tossed into the healthcare jungle of uninsurable pre-existing conditions, crowded emergency rooms, and lousy medical treatment.

Let us say that you are a 60ish empty nester who has been downsized. You have been looking for work for a year. Your unemployment benefits have run out and all your job leads have led nowhere. While you have a modest nest egg, Social Security won’t kick in for a few years and Medicare a few years after that. Your company-sponsored health insurance has run out and you are on the verge of applying for jobs for which you are ridiculously overqualified just to get the insurance.

But not so fast. Beginning on January 1, 2014, if you don’t have a job or more than a modest income, you are eligible for Medicaid — healthcare provided at no cost to you as a result of the Affordable Care Act. Please note: non-income assets don’t count against eligibility, and, under the new law, the allowable income ceiling has been raised (eligibility requirements have been relaxed) to allow millions more to enjoy this benefit, including the boomer described above.

Let’s face it, there are people who will choose to glide into Social Security and Medicare on the wings of Obamacare. They will choose not to take a big step down the career ladder in order to secure a benefit that is available for the asking. There is a facet of human nature that shrugs, “Why not?”

It has to be asked: was this incentive to hang it up early an intended part of the new law, or was this “sharp” shrinking of the labor force an unforeseen development?

In either case: heck of a job, guys.




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Observations on a Leaking “Social”

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In a recent piece I had a bit of fun with the notice that the Social Security Administration (SSA) had purchased 174,000 rounds of hollow-point .357 caliber ammo, which the SSA later said was for “target practice.” I speculated that the SSA was gunning up to gut-shoot granny when she comes to complain about her benefits being cut, owing to America’s spending and (lack of saving) problem.

Two recent reports provide an interesting new take on the story.

The first conveys the news — totally ignored in the mainstream media — that this year marks a record high for Social Security retirement and Social Security disability benefits paid out. And the fiscal year has a month left to go!

In Fiscal Year 2011 (which ended September 30 of that year), the feds shelled out a record sum: nearly $592 billion in benefits (from the Old Age and Survivors Insurance Trust Fund). But as of the end of last month, they had already spent about $3 billion more than that — $595 billion in total so far in FY 2012.

Again, in FY 2011, the SSA paid out $128 billion in disability benefits. As of last month, it had paid already paid $129 billion for FY 2012.

As of now, there are a record 45,505,287 retirees or survivors receiving regular Social Security payments, and an additional 10,786,510 workers or their dependents on Social Security Disability. And the wave of retiring baby boomers is just getting underway.

Then there is the fascinating story out of Louisiana of a dude who was denied emergency food stamps. This citizen — one Mark Knight — allegedly returned to his truck and pulled out his handy AR-15 “assault” rifle, apparently to petition for redress of grievances. He was nabbed by national guardsmen before he could use it.

All this conjures up the vision of granny herself gunning up with an assault rifle . . . against SSA agents with .357 magnums . . . not really a fair fight.

My suggestion: the SSA needs to bring in tanks, with hollow-point ammo for the .50-caliber machine guns. This will help the citizenry achieve true moral clarity.




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Three Ways of Reacting to the Obvious

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At this writing, no one can say what happened in Benghazi on September 11, when Ambassador Chris Stevens was brutally murdered by a mob of Muslim fanatics, driven to frenzy by an obscure YouTube feature. Or was he murdered by a Muslim army, conducting a well-planned attack? Or was it an inside job, perpetrated by Libyan employees of the embassy? Or perhaps all three?

The administration’s account of the enemy has frequently changed. But what about America’s arrangements to defend its people and property? What about our own operations? What happened with them? Mrs. Clinton’s State Department clearly wants everyone to assume that adequate security was in place. But . . . but . . . what about the obvious? The ambassador is dead.

The badly named Buck McKeon (R-CA), who serves on the House Armed Services Committee, made that point. It’s an obvious point, but he made it, and he did a little something with it: “It’s pretty obvious he did not have adequate security. Otherwise he would probably be here today. . . . I’m really disappointed about that. I think when we put our people around the world at risk and don’t provide adequate security, shame on us.”

This is one kind of response to fact. It’s banal, it’s obvious, but at least it recognizes the obvious. It recognizes things as they are, and allows for some further investigation, and perhaps some redress of grievances.

A second kind of response is represented by President Obama’s bizarre remarks of Sept. 20, about what he had learned as president: "The most important lesson I've learned is that you can't change Washington from the inside. You can only change it from the outside."

In making this comment, Obama assumed a general recognition of the obvious: he had not managed to fulfill his promises of hope and change. An obvious response would be, “Well, maybe somebody else can fix things.” But that’s not the tack Obama took. That’s not what he said he had learned. He said he’d learned that you can’t change Washington from the inside, that you have to be an outsider to do that.

There’s no way you can make sense out of that. Obama couldn’t be farther inside, and he’s campaigning to stay that way, despite the fact that insiders can’t change anything. But obviously, when he was on the outside, he didn’t manage to change anything, either — because otherwise why would he have campaigned to get on the inside?

This dilemma has no exit. It’s a radical form of conservatism: since no one, either inside or outside, can do anything about anything, we need to stay exactly where we are right now. Obama happens to be in the White House, so that’s a good deal for him. As for the rest of us . . . we’ll always have Social Security to fall back on.

Or will we? On September 20, Paul Ryan addressed the convention of the American Association of Retired Persons, otherwise known as the world’s greatest purveyor of direct mail, and said what is obviously true and admitted by all: Social Security is broke, and getting broker, and if something isn’t done about it, the system will fold. This non-news should, theoretically, be of the first importance to the AARP. The AARP should want to do something about it. But what it did was to boo and hiss Paul Ryan.

This is the third kind of reaction to the obvious — an impassioned resistance to knowing or doing anything. It’s a conservatism so militant that even Jerry Falwell, were he still on earth, might pause and admire it. It’s the kind of conservatism that one sees everywhere in the campaigns of incumbents (and this year, the Democratic Party is the chief incumbent). Every Obama sign and sticker is like a giant billboard reading SO WHAT? The failure is obvious; the intention to fix it, nonexistent. The program is, keep everything exactly the way it is. The fact that this program will probably win is an even ghastlier reflection on American politics than the Republicans’ tedious gyrations between truth, untruth, and sort of truth.

“Fact checks” almost always hurt the Republicans, because the Republican campaign is predicated on the idea that facts exist and must be faced. But they do nothing to hurt the Democrats — and that’s the really awful thing.

rsquo;s not the tack Obama took. That




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Social Security Guns Up

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A fascinating little article suggests that despite the rosy assurances of the Obama administration that Social Security is in fine shape, the Social Security Administration (SSA) is preparing for civil unrest.

The article reports that the SSA just purchased 174,000 rounds of ammo — and not just any ammo, but real ’boon-stopping hollow-point bullets (you know, the ones that expand when they hit you, tearing apart your internal organs). The ammo will be distributed to 41 SSA offices around the country. All this ammunition, by the bye, is for .357 semi-automatic handguns, quite formidable pieces for such an anti-gun administration.

Oh, wait — I forgot. Anti-gun progressive liberals only oppose citizens owning guns, not governments.

But the SSA's armaments are nothing compared to those of Homeland Security, which earlier this year bought 450 million rounds of .40 caliber hollow point ammo, on top of 750 million rounds of other calibers.

I have suggested often before in these pages that the Social Security system is unsustainable in its current form, and will be more or less insolvent in about a decade. It is already running a deficit, “covered” only by the fraudulent “trust fund,” which is just a pack of federal IOUs.

At that point, one of five “solutions” will be employed. Benefits could be dropped by about a fourth for all recipients. Or benefits could be “means-tested,” meaning that anybody who is well enough off not to “need” Social Security would just be denied it, despite having paid into the Ponzi scheme for decades. Or the government could print money and debase the currency, causing inflation (which is a kind of universal tax). Or 401k and other private retirement accounts could be “nationalized,” i.e., seized and used to shore up the Social Security system (as happened not long ago in Argentina). Or SSA taxes could be jacked up on all income levels.

Each of these outcomes would make some group, or the whole country, very angry.

Hence the hollow point ammo. Gut-shoot granny with hollow-point bullets when she storms the local SSA office, pissed off because her promised retirement support hasn’t materialized . . .




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Social Insecurity

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I feel remiss in not reporting lately on the most recent news concerning the crown jewel of the progressive liberal welfare state: Social Security. It is the ur-program from which all the other major programs (such as Medicare) were spawned. Over the years, I have periodically reported on its looming fiscal crisis, but I haven’t said much during the past year.

So it’s time to check up on the program that has elected so many generations of Democratic politicians. Surprise, surprise — it is accelerating downwards!

Start with that cesspool of fraud, Social Security Disability Insurance (SSDI). A report in the estimable Investor’s Business Daily informs us that Obama has set another new record. Not only is he the Debt President (having added more to the federal deficit in his short time in office than any other chief executive — nearly $5 trillion, more than the big-spending Bush spent in 8 years), the Food Stamp President (having added to the rolls of food stamp recipients more than twice the number of new recipients per year — over 4 million — than even the prior record-setter, Bush, who added 1.84 million yearly), and the Emigration President (having presided over a political economy in which a record number of Americans renounce their citizenship — nearly 1,800 last year, compared to about 200 in 2008). In addition to those titles, Obama is now the Disability President.

Yes, a record number of people have gone on SSDI during Obama’s benighted reign — a whopping 5.4 million. And the number is growing at a rapid clip: from January of this year through last month, an astonishing 540,000 more have been granted disability, and more than 750,000 have applied. Of the total (10.8 million) now on SSDI, half joined under Obama. America’s seemingly endless high unemployment is clearly taking its toll. Doubtless this will hasten the projected day of SSDI’s insolvency, scheduled already for 2018.

Turning to the Social Security retirement program (i.e., the main one), the news is grim again. As recently as 2007, the Social Security program ran a surplus of $186 billion. This dropped to a mere $3 billion the next year, and became a $49 billion deficit in 2009, in the depths of the recession. However, last year — a “recovery” year — Social Security ran a deficit of $45 billion. The program’s trustees now forecast a deficit of about $66 billion on average for the next six years. After that, the trustees project triple-digit billions in deficits. In 20 years — three years earlier than projected last year, the so-called trust fund (a bogus pile of IOUs from the federal government to itself) will be gone, at which point benefits will have to drop by 25%.

Strange to say, the Obama administration is far more concerned about whether Romney engaged in a mean prank half a century ago than about Social Security’s lack of solvency. Obama’s economic record is so wretched that one can see why he refuses to discuss the entitlement crisis. But why do the mainstream media refuse even to mention the government’s own report? Surely this report should be of immediate and vital concern to all the public. . . Oh, yeah — I forgot. The mainstream media, formerly noted for “investigative journalism,” has become the Amen corner of the Church of Obama.




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Wage War on Dependence

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Recently, I heard a school administrator promoting the importance of making all of the parents at our schools aware of the existence of government programs for the homeless. “Lots of people don’t even know that they qualify for these programs.” she enthused. “If they are living with family members and not paying rent, they can qualify as homeless!”

What would that do for them, I wondered?

According to the website of the Oregon Homelessness Prevention and Rapid Re-housing Program (HPRP), its “re-housing program” can provide these kinds of services to the "homeless":

Re-housing programs work with people who are already homeless to help them quickly move into rental housing. Re-housing programs can provide housing location, financial assistance including security deposits, rent assistance and payment of arrearages and case management. Both homeless prevention and rapid re-housing programs coordinate with other community resources to ensure that participants are linked to ongoing assistance, such as housing vouchers, intensive case management, or assertive community treatment.

So if a family (in this community often a new immigrant family) is managing their finances by living with relatives until they can get on their feet, government agencies can arrange to give them financial assistance in the form of security deposits to rent a place they otherwise couldn't afford to rent, and participate in a program of government “rent assistance” or “housing vouchers.” The person recommending this seems to think it would be a good thing to move someone into a situation where he was dependent on government for a place to live. Implied, but not stated, is the assumption that it is kind of stupid to prefer to take care of yourself when you can get something for free instead.

Connected to that assumption is the proposition that any well-meaning person, such as a teacher or school administrator, has an obligation to convince stiff-necked individuals that their pride is hurting their children, and they really should accept the government’s largesse. This assumes, however, that one’s quality of life is measured simply by the dollar amount of the things one receives, without regard to how one obtained them.

Implied, but not stated, is the assumption that it is kind of stupid to prefer to take care of yourself when you can get something for free instead.

Not so many decades ago it was commonly understood that there was something demeaning about being on "the dole.” People did not want to accept charity if they could make their own way in life. There were the pejorative terms “kept woman” and worse still, “kept man,” meaning a person who did not have a job but was supported by a sex partner. Many of the social programs we have today were sold with difficulty to an American public for whom public assistance and dependency carried a stigma.

According to Andrew Biggs of the American Enterprise Institute, Social Security was presented not as a needs-based program of charity in which today’s workers pay for the benefits of today’s elderly, but as “a system of social insurance under which workers (and their employers) contribute a part of their earnings in order to provide protection for themselves and their families if certain events occur. As a result of this 'earned benefit' status, collection of Social Security benefits has never carried the stigma associated with food stamps, Supplemental Security Income, or other welfare programs.”

That has been the pattern with a number of “entitlement” programs. Instead of being needs-based charities, which show one’s dependence, programs such as Medicare and Social Security are made for everyone. Therefore there is no stigma and everyone should be happy to receive benefits from the government. Of course, the effect is that these programs have ballooned in size and are currently unsustainable. (Odd that sustainable houses and buildings are all the rage, but sustainable social programs, not so much.) We have a huge financial burden looming ahead of us as these entitlement programs become ever more costly as more of us baby-boomers retire and expect to collect benefits. Because there is no stigma associated with these programs, we all intend to capitalize on them.

Here lies the problem — and also the solution to the problem. Instead of a War on Poverty, we should have a War on Dependence. All our social programs should have as their goal helping people become independent of government assistance. They would still require considerable effort and would still employ many social workers for years to come, but the war could be won! We could get to the point where everyone had a way to support himself.

How would that look different from today’s social programs?

For one thing, we’d begin by applauding all those who already take care of themselves. We would hold them up and give them recognition. We would put them on talk shows and news programs to tell their story of how they manage in life without government assistance. They would become our role models. We would applaud and appreciate the fact that they do not need to collect on the various social programs to which they are “entitled.”

For example, people over 65 who were working at a job or who could afford their own medical insurance would be honored for their ability to be independent of Medicare. Right now of course, you virtually have to take it, because no one will insure you at age 65 unless you collect all the Medicare benefits you can. So right now we are forcing dependency — but the War on Dependence would change that.

We should encourage everyone to avoid having to depend on Social Security as well. Anyone over 65 who doesn’t need to collect “benefits” from the payroll tax in order to survive in old age would be a hero in everyone’s eyes. If people keep working, that would be super, because they can be independent thereby. If people save enough to retire with dignity, that would be even better, because they would be permanently independent. What’s more, their children would be well on their way to permanent financial independence, when they inherited the principal of their parents' retirement fund. As part of the War on Dependence, social workers would help younger people set up various retirement savings plans. Each person who had a workable retirement savings plan could stand tall in the knowledge that he would not become dependent on Social Security.

All our social programs should have as their goal helping people become independent of government assistance.

One of the sad byproducts of the endless and hopeless War on Poverty is that self-sufficiency is no longer valued as it once was. Someone is considered a fool to turn down government benefits if he can “qualify” for them. What’s more, someone who gets a first-rung-on-the-career-ladder-job at a low wage still feels bad about himself. Instead of being proud of being independent, he sees that he is still in relative poverty, and that is what’s bad. People who are supporting themselves, no matter how meager their circumstances, should be encourage to take pride in not being dependent. We should make self-sufficiency the goal, the prize, the honor.

Social workers could help farmers who accept government subsidies find ways to become self-sufficient so they can be respected for making an “honest living” without help. Businesses that sold products abroad without help from the government would be recognized and patronized. Similarly, industries that did not ask for protectionist tariffs imposed by the government, but could stand on their own, would be new American heroes. Students who found a college they could afford without government help would be seen as more resourceful and valuable future employees. Colleges that keep themselves in business without whining for more government money would be seen as more competent than those that couldn’t manage on their own. This turn of events might even drive down the cost of college. Primary and secondary schools that focus on helping their graduates prepare for the real world would also be recognized and respected; the ability of their graduates to avoid dependence would be the final measure of the schools' own worth.

Success would no longer be a nebulous and ill-defined chimera, but would be identified as the ability to support oneself and one’s family. Families that took care of their own (whether the young or the elderly) without government assistance would be honored. People with disabilities would be helped to develop as much independence as possible, and honored for every bit they could obtain — instead of scorned for their efforts to contribute to their own support.

Industries that did not ask for protectionist tariffs imposed by the government, but could stand on their own, would be new American heroes.

Oddly, poverty could, in a sense, be eliminated overnight by simply writing checks of the proper amount to all the poor. It would help if all our programs of assistance were rolled into one program, so we could keep track of how much we were giving to each person. We might find that we had already eliminated poverty — that the cash value of all the various forms of assistance we provide to the needy would total enough to give them an income over the poverty line. But few people really believe, deep in their hearts, that mere dollars will eliminate the problems of the poor.

Independence is the solution — and we need to return to the habit of valuing it. There is still truth in the old proverb, “Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime.” That means focusing our efforts on reducing dependence instead of fostering it. A War on Dependence would be infinitely better than the old, unwinnable War on Poverty.




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Social Security

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My father’s siblings were an eccentric bunch. Born and bred in Brooklyn, they had a very peculiar perspective on the world. None of them ever learned to drive or talked on the phone. They seldom watched TV but lived by the clock, obsessively timing their every move down to the minute — meals, drinks, constitutionals, shopping, reading, waking and sleeping. They minutely measured every quantity that affected them — the volume of their hamburgers (a 50-cent piece), the number of cans of creamed corn in the pantry (4), the size of the jigger of gin in their drinks (1 oz.), the number of daily drinks (3 — plus a Ballantine’s Ale at lunch and a 6 oz. glass of Cribari Red with dinner), the length of their walks (10 blocks), etc.

Ken, the oldest, for some unknown reason, wasn’t fond of black people. But after his wife of 35 years passed away, he married a Japanese mail order bride and adopted two Korean orphans. The gambit forever severed his relationship with his first set of offspring.

Ruth, the only sister, moved in with the other three bachelor brothers — Wallace, Arthur, and Stanley — when her marriage fell apart. Wallace, a chain-smoking aesthete, wrote volumes of poetry and literary criticism, yet never held a job — an attitude vaguely reflected in his politics: he was a progressive social democrat whose ideal society, he quietly enthused, was realized under the Lyndon B. Johnson administration. He kept a secret stash of mild pornography in his closet.

Arthur, the youngest, lived under a tiny cloud of shame no one ever alluded to. A Teamster stevedore, he’d once had one drink too many and passed out on a park bench on his way home. Other than tending the siblings’ elaborate truck garden, he never worked again. On walks to the grocery store he’d stop to turn over upside-down beetles.

Stanley, a diminutive stockbroker with coke-bottle glasses, supported the household. He and Wallace had served their country during WWII in noncombatant roles. Stanley had once been engaged, but when his fiancée broke off the engagement without an explanation, he was heartbroken and disillusioned, and always remained that way. Upon retirement, and after Ruth’s death, the remaining brothers moved to a small town in eastern Colorado, where they lived very frugally except for the weekly visit of a cleaning gal.

Stanley and I kept up a weekly correspondence, mostly a running commentary on politics and current events. One day I received a letter informing me that the cleaning lady had altered a $100 payment check to read $1,000, cashed it, and disappeared. Stanley, who budgeted their affairs down to the penny, said that the theft — along with the rampant inflation of the 1970s — had reduced their finances to below a sustainable level. Could I help them out with a monthly stipend?

It must have been a tough letter to write.

I did — and enlisted my brother and sisters in the project. When my mother found out, she complained that the uncles refused to collect their Social Security checks. It was a matter of principle to them: even though they had paid into the system, they perceived it as welfare — not something they wanted to participate in (except for Wallace, I presume, who may not have paid anything into the system). Despite all that, I never questioned their decision, and continued to send a monthly check.

When Arthur passed away, Stanley turned down my offer to visit and help out. It would, he said — in the only phone conversation I ever had with him — “disrupt their routine too much.” When Wallace died, Stanley again begged off. He died in 1995 at the age of 86.

Last month, in anticipation of turning 62 before the year’s end, I visited my local Social Security office to help determine whether it was better to collect early benefits or wait until I turned 65. Unlike my uncles, I have no qualms about collecting from a system that I’m forced to pay into. I passed a security check, took a number, and patiently waited my turn. When it came, I got a totally unexpected surprise, untempered by any introductory foreplay: I was told that unless I paid another 20 quarters worth of taxes into the system, I would not qualify for any Social Security benefits.

Now, I’ve worked all my life (and continue to do so), and have always paid all my taxes assiduously (though not all of my income was subject to Social Security taxes). I've paid nearly $17,000 into the “compact between generations” (as the Social Security Administration phrases it). I figured my “investment” would be worth at least $80 a month. In spite of knowing that government programs never live up to their promise, I’d never considered that I would be outside the receiving end of Social Security benefits.

What might I have done with those $17,000 I’d paid in over the years? Or with the thousands in stipends I sent my uncles in lieu of their Social Security checks?

Who knows? But I am certain of one thing: I will not throw good money after bad.




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Two Big Surprises

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Well, now, you can knock me over with a feather! Two stories just out are amazing in their a priori improbability. They tell us a lot about the growing awareness of our looming national financial crisis.

The first is the news that the U.S. Senate has voted to end federal subsidies for ethanol, which this year hit a high of $6 billion from taxpayer dollars.

This is surprising for a number of reasons. The ethanol lobby (i.e., the group of rentseekers who derive much of their income from this screwy subsidy) is powerful, consisting of many players in key political states. Moreover, it has been around for more than 30 years — an unhappy product of the Carter presidency. Also, it has been a darling of the environmentalist movement, which has consistently opposed fossil fuel and nuclear power, favoring instead so-called “renewable” sources of power (biofuels, wind power, and solar power).

Even more surprising is that the vote was bipartisan and wasn’t even close: 73 for, and only 27 against, with Dianne Feinstein (D-CA) joining Tom Coburn (R-OK) in sponsoring the bill. In the end, 33 Republicans and 40 Democrats joined to kill the subsidy program.

I suspect that a number of facts helped the Senate reach this epiphany. One is that despite over 30 years (and untold billions of taxpayer dollars) invested in research and development, the energy output that you get for the required input still keeps the fuel from being economically attractive — a point that even Mr. Green himself, Al Gore, mentioned when he came out against corn-based ethanol earlier this year. In part, the problem is that we are making ethanol out of corn, which is far less efficient than making it out of sugarcane — and this is why, besides giving the domestic producers of the stuff a hefty tax credit of 45 cents per gallon of ethanol blended with gasoline, the feds have had to impose a whopping 54 cents per gallon tax on ethanol imported from abroad (mainly Brazil).

Another senatorial eye-opener may have been the recent, massive discoveries in domestic sources for oil and natural gas that can be produced by new technology such as fracking. These discoveries make the case for subsidizing domestic ethanol even more dubious.

Besides, politicians are finally beginning to see the obvious, deleterious impact that diverting 40% of our corn crop to make ethanol (which, again, we could buy more cheaply from Brazil) has on food prices both here and abroad. The rapid inflation of food prices has caused riots abroad and is beginning to cause real discomfort here.

Finally, there is the sense that this subsidy program has just gone on too long. As Senator McCain put it, “Enough is enough. The industry has been collecting corporate welfare for far, far too long.” Exactly so. There is demand for ethanol, but the industry needs to supply it in the free market.

The ethanol industry has been angling to replace tariffs and subsidies with federal spending for special pumps and tanks to hold higher concentrations of ethanol. But the House just voted against that by a margin of 283-128.

So it may be that the governmental subsidies for ethanol will end soon.

Now, the second surprising story is that the AARP, the liberal advocacy group that purports to represent the elderly, and was so crucial in helping President Obama ram through Obamacare, has changed its position on reducing benefits for Social Security. John Rother, the AARP’s policy head, has said that the AARP now views change in Social Security’s benefits structure as inevitable, and wants to have an influence on the process. This is a big change from AARP’s earlier stance, which was that all we needed to do was increase payroll taxes to cover the deficits. As Rother put it, “The ship was sailing. I wanted to be at the wheel when that happens.” Of course, the question is, why would we want this toad and his leftist organization — who did all they could to block reform and increase the depth of the problem — to be “at the wheel” of reform?

It is all so richly ironic. The AARP was viciously instrumental in killing President Bush’s attempt to reform Social Security. It claimed that Bush was going to shortchange the elderly. Now the AARP itself will face the same charges.

Indeed, the AARP immediately aroused the antipathy of a coalition of leftist groups calling itself (in pure Alinsky style) “Strengthen Social Security.” It has already accused AARP of becoming elitists disconnected from their base.

The AARP is approaching this cautiously. It lost about 300,000 members by helping push through Obamacare. To cover its tail, it wants to make sure that the Social Security revision process is bipartisan. Its own polls match public polls that show the elderly deeply oppose changes to the program. One recent poll shows that 84% of all Americans 65 and older oppose any and all cuts in benefits.

But the AARP and members of Congress are finally coming to see the iceberg of fiscal insolvency toward which the economy is headed. Visions of Greece, currently in the throes of riots by dependents of the state and facing the prospect of defaulting on its debts, are concentrating minds wonderfully.

In fact, it is all rather like watching a Greek tragedy. The blind AARP finally has to face its fatal flaw — the mess it helped create and maintain.




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Keeping an Eye on the Iceberg

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I have often reflected on the looming fiscal disasters that are Social Security and Medicare. As several recent articles suggest, our economy is still heading toward the financial iceberg.

The first report comes from the trustees of these two Ponzi programs. It shows that the financial outlook of both has worsened dramatically over just the last year. It confesses that the so-called Medicare trust fund will be empty by 2024, five years earlier than predicted by the trustees just a year ago. Assuming current revenues, and no unusual increases in the costs of medical care (a dubious assumption indeed), Medicare will only be able to pay 90% of its promised benefits after its trust fund is depleted.

Social Security is also in deep trouble. Last year, it started running a deficit between taxes paid in and benefits paid out. The trustees’ report indicates that from here on out, this deficit will be permanent, and will rapidly increase in magnitude. As another report notes, Social Security will exhaust its “trust fund” by 2036 — one year earlier than last year’s estimate — at which point it will have to slash its benefits by 23%.

This second report confirms a prior reflection of mine that the separate trust fund for the Social Security Disability Insurance program will actually be gone by 2018, if not sooner.

Yet another recent piece sheds light on why SSDI is going off the cliff so quickly: at least some of the 1,500 judges who administer the program just hand out “disability” awards without any real scrutiny of the merits of the claims being made.

This fascinating story centers on Judge David B. Daugherty, who routinely rubber-stamps all requests for disability that come before him. Last year, of the 1,284 cases he saw, 1,280 were greeted with benefits. This year, he is being even more generous with our money, awarding benefits in all 729 cases received. Judge Daugherty has often listened to 20 cases a day, spaced 15 minutes apart, and many from one local lawyer to whom he appears to be particularly sympathetic. His near-100% record awards contrasts with the average of 60% for the system as a whole.

Daugherty is just a particularly egregious example of an entitlement system run amok. Many of the SSDI judges award taxpayer money to claimants without any hearing at all, or merely by looking at the medical evidence submitted by claimants’ attorneys. The SSDI paid out an amazing $124 billion in benefits last year — and the sum will only balloon, making it the first of the entitlement programs to go bust (in a technical sense: naturally the taxpayers will be forced to pick up the tab).

Of course, the point needs to be re-emphasized that all these so-called “trust funds” are just government IOUs issued to cover the surpluses they ran while the Baby Boomers were at their peak earnings. The surplus funds were spent running the government. The “trust funds” are thus the moral equivalent of the “special purpose entities” set up by the crooks at Enron to hide its debt. Their function is to push debt onto entities that are apparently separate from the main organization, which actually owes it. Alas, since Congress exempted itself from the provisions of the Sarbanes-Oxley Act, the feds can get away with this fraud (a point I have explored elsewhere).

The accelerating deficits have moved no less a luminary than Tim Geithner, our incorruptible Treasury Secretary and head of the Social Security and Medicare trustees, to tell us that the report makes clear that we need to act “sooner rather than later.” Yeah, but Geithner didn’t indicate how his call for action squares with the views of his boss Obama, who has steadfastly refused to state where he would cut entitlement programs — even as he created a huge new one in the healthcare field.

The few brave souls who have called for reforming the entitlement programs — most heroically Republican Congressman Paul Ryan — have gotten scant public or media support. (Even Newt Gingrich has attacked Ryan’s call for reform, calling it “right-wing social engineering.”)

The estimable economist Veronique de Rugy, commenting on the recent trustees’ report on the Medicare-Social Security mess, makes the point that these Ponzi schemes transfer money from the young to the elderly population. What she doesn’t note is that the reason they are still so generally supported is that the elderly vote religiously, while younger people vote only sporadically — and children, who must in the end pay for all these deficits one way or another, have no vote whatsoever.




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Another Busted Safety Net

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I like to reflect upon the news about our vaunted safety net pension plans — the crowning jewels of our progressive paradise — as they head off a fiscal cliff. The latest report concerns a rather neglected jewel, the Social Security Disability Insurance (SSDI) program, created in 1957 during the Eisenhower presidency.

Under this perhaps well-intended program — assuming that any social program is truly well-intended, a dubious assumption, indeed — workers of any age who become disabled or unable to work because of health issues receive federal support. The idea is that all workers pay a small amount into the SSDI fund, so that the few workers stricken by health issues derive a small but reasonable stipend (on average, about $1,100 a month).

Well, the SSDI will have the dubious honor of being the first federal support program to go bust. It will likely run out of funds in four to seven years — which probably means four years. At that point, it will become a pure negative — an explicit draw on tax dollars collected by the feds from hapless taxpayers.

I can hear readers ululating dolorously, “Why? Why? Why?” The reason is this: during the last decade, there has been an explosion of disabled people. In the year 2000, there were 6.6 million people in the program—a remarkable number in itself. But by last year that number had swelled to 10.2 million, an increase of 55%.

That’s the nationwide figure. In a number of states, however, the rate of increase in disability recipients has been even higher. Examples are New Hampshire at 69% and Texas at 85%. But at the top of the list is Puerto Rico. It has nine of the top ten American zip codes for receiving SSDI disability checks. And it has the highest approval rate (63%!) for disability claims. It would appear that there is a large amount of abuse going on in the Commonwealth of Puerto Rico. As Ivan Gonzalez-Cancel, a local surgeon who is planning on running for governor in 2012, has put it, “The mentality is that it’s ‘big, rich, Uncle Sam’s money.’ ”

The consequence of the explosion of eligibility is that the SSDI program went negative in 2005, and by 2015, the earliest but most likely date, it will be spending $22 billion more in benefits than it takes in. At that point, all of its “reserves” will likely have been exhausted.

Naturally, the program’s advocates have a ready cure: raise SSDI taxes, or hide the deficit in the regular Social Security fund. Of course, what to do when the regular Social Security fund goes bust, they don’t say.




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