unfunded liabilities

No, Mr. President, expanding Medicaid isn’t a “no brainer”

Earlier this month, President Barack Obama visited Dallas, Texas to give a speech in front of supporters in which he tried to pressure Republican governors to expand Medicaid, a government program that covers people who make below 138% of the federal poverty line.

“We were just talking on the way over here that in addition to signing people up for the marketplaces so they can buy private insurance, part of the Affordable Care Act was expanding the number of working families who would qualify for Medicaid,” President Obama told supporters.

“Here in just the Dallas area, 133,000 people who don’t currently have health insurance would immediately get health insurance without even having to go through the website if the state of Texas decided to do it,” he said. “There’s over $500 million just for this county that would come in to help families get health insurance — has nothing to do with the website — if the state of Texas made this decision.”

“And your neighboring states have made that decision because they look at it and they say, this is a no-brainer, why would not — why would we not want to take advantage of this,” he added.

The fact that President Obama gave this speech in Texas, home to the country’s largest uninsured population, isn’t a coincidence. Seeking to capitalize on the state’s large Hispanic population, there is a big push by activist Democrats with help from the party to “turn Texas blue.” Part of this effort is to pressure Texas politicians, including Gov. Rick Perry, to accept Medicaid expansion, which is part of the Obamacare.

Elizabeth Warren wants to expand an already broken entitlement

Elizabeth Warren

Social Security faces a long-term funding shortfall of $23.1 trillion, according to the most recent report from the program’s trustees, up nearly $3 trillion from last year. Like other entitlements, the program — expected to consume 6.8% of the economy by 2038 — is in dire need of reform to ensure its fiscal sustainability.

But Leftists in Congress are in denial about the fiscal problems with Social Security. Instead of reforming the program to ensure that it’s around for future generations, they want to expand it.

In a speech from the Senate floor on Monday, Sen. Elizabeth Warren (D-MA) endorsed legislation sponsored by Sen. Tom Harkin (D-IA) to expand the fiscally shaky program and warned of, what she called, a “retirement crisis.”

“A generation ago, middle-class families were able to put away enough money during their working years to make it through their later years with dignity. On average, they saved about 11% of their take home pay while working,” Warren, who has been floated as a potential presidential candidate in 2016, told her colleagues.”

“Many paid off their homes, got rid of all their debts, and retired with strong pensions from their employers. And where pensions, savings, and investments fell short, they could rely on Social Security to make up the difference,” she said. “That was the story a generation ago, but since that time, the retirement landscape has shifted dramatically against our families.”

True cost of national debt could be $222 trillion

National debt and funded liabilities

The Treasury Department announced on Monday that the $16.7 trillion debt limit will be reached in mid-October, meaning that Congress will once again have wade into the tumultuous politics that come with the issue.

House Republicans may hold a “clean vote” on the debt ceiling to show that there isn’t support for raising the borrowing limit without some sort of trade off, either further spending cuts or a showdown on ObamaCare. It could lead to a stalemate similar to what we saw in 2011 when Congress passed the Budget Control Act, a compromise between the Congress and the White House that led to the sequester.

Record budgets deficits that President Obama has overseen and a growing national debt are something about which Americans should be concerned. But the focus on the debt ceiling misses the larger point — specifically entitlement spending.

Veronique de Rugy, a senior research fellow at the Mercatus Center, recently took a look at various estimates of the true cost of the national debt, including unfunded liabilities, and what she found is nothing short of speechless:

Fiscal policy discussions generally focus on the current year’s budget numbers: $1.0 trillion budget deficit and $16.0 trillion national debt.

As alarming as these numbers are, they fail to account for the far greater fiscal challenges of unfunded liabilities.  Here is some key evidence from various studies:

Ex-Obama Administration official wants to bailout Detroit

Detroit

Writing at The New York Times, Steve Rattner, who served as President Barack Obama’s “car czar” in 2009, made the case for a taxpayer-funded bailout of Detroit, which has for years been plagued by crime, corruption, and fiscal mismanagement:

Michigan Gov. Rick Snyder has capably overseen Detroit’s march to Chapter 9, neither the state nor the federal government has evinced any inclination to provide meaningful financial assistance.

That’s a mistake. No one likes bailouts or the prospect of rewarding Detroit’s historic fiscal mismanagement. But apart from voting in elections, the 700,000 remaining residents of the Motor City are no more responsible for Detroit’s problems than were the victims of Hurricane Sandy for theirs, and eventually Congress decided to help them.

America is just as much about aiding those less fortunate as it is about personal responsibility. Government does this in so many ways; why shouldn’t it help Detroit rebuild itself?

At some point cities and states are going to have to learn that they are responsible for the messes that they create. This isn’t some unexpected natural disaster that came along and reeked havoc on the Motor City. This mess, this need for bankruptcy was manufactured by corrupt politicians who cozied up to Big Labor and didn’t live within their fiscal means.

It’s time to reform Social Security

Social Security

In a new video from Reason TV, Nick Gillespie explains that it’s time for Congress to get serious about Social Security reform.

Gillespie cites three strong reasons to tackle this problem now. First, Social Security is financially broke and will the surpluses it has amassed will be gone by 2033. That point was recently driven home by a report from the program’s trustees showing $23.1 trillion in unfunded liabilities.

Secondly, Gillespie explains that Social Security is a bad investment because Americans will receive less in benefits than they pay in taxes. And lastly, Americans don’t have any control over their contributions, which is especially unfair to younger workers. This means that they can’t invest their money in retirement account that better suits their needs, nor can they leave what they’ve put in the system to their loved ones.

Check out the two-minute video below:

Nancy Pelosi wants Americans to observe “health independence” on July 4th

House Minority Leader Nancy Pelosi (D-CA) says that you should celebrate ObamaCare when you’re sitting down with your friends and family this Independence Day.

During a press conference yesterday, Pelosi marked the one-year anniversary of the Supreme Court decision upholding major parts of ObamaCare as a reason to “observ[e] health independence” and said that the law “captures the spirit of our founders.”

“Soon we will all be leaving for the Fourth of July recess next week. When we celebrate Independence Day, we also will be observing health independence. This week, this marks one year since the Supreme Court upheld the Affordable Care Act. It captures the spirit of our founders, a spirit they wrote in the Declaration of Independence: life, liberty, and the pursuit of happiness,” Pelosi told reporters. “The Affordable Care Act offers just that, a healthier life, the liberty to pursue a person’s happiness, to be free of constraints, be job-locked because they are policy-locked.”

“So, we have had Social Security, Medicare, and now health independence,” she added. “And that’s something our Members will take home to celebrate over this Independence Day.”

Social Security Now Faces $23.1 Trillion in Unfunded Liabilities

On Friday, former Sen. Russ Feingold (D-WI) lent his name to MoveOn.org, not just to speak out against chained CPI for Social Security proposed by President Barack Obama, but also to call for expanding the government-run retirement and disability program.

“Now that our economy is beginning to recover, it’s time to present a plan not just to protect Social Security, but to strengthen it for our seniors who deserve to retire with the dignity they’ve earned over a lifetime of work,” wrote Feingold. “That is exactly what my friend Senator Tom Harkin has proposed to do with his Strengthening Social Security Act of 2013: boosting Social Security for almost everyone by around $800 a year, extending the trust fund by decades, and paying for it by having millionaires and billionaires owe the same rate as the rest of us.”

The reference to “paying for [the increased benefit payments] by having millionaires and billionaires owe the same rate as the rest of us” is a subtle reference to lifting the cap on taxable wages. This has long been a policy goal of many Democrats in Congress and Leftist organizations like MoveOn.org.

The already troubling picture was brought back into view with the recent release of the trustees report on the United States’ entitlement programs. This report shows that these two programs face $66 trillion in unfunded liabilities, of which $23.1 trillion come via Social Security. Philip Klein has the very sobering story (emphasis mine):

Young Americans Should Support Social Security Reform

Social Security

Since last fall’s election, Republicans have been trying to figure out ways to reach out to young voters. President Barack Obama was successful in courting them by using certain wedge issues that appeal to millennials. To this point, Republicans are unwilling to back away from some of these stances to their own detriment.

Despite their support of President Obama, many of the economic policies he’s managed to push through Congress, including ObamaCare, leave them on the short end of the stick. And his inaction on entitlements — and yes, they are entitlements — leaves them at risk of substantial economic problems down the road.

For example, Veronique de Rugy recently highlighted the long-term funding shortfalls and eventual insolvency of the Social Security system. Here’s the chart she posted that shows the significant fiscal issues that will eventually have to be addressed (click to enlarge):

Social Security Funding

“In 2010, the deficit was $46 billion, and in 2012 the deficits amounted to $49 billion,” de Rudy notes. “To fill the gap, the program is drawing from the trust-fund balances (first using interest, then the principal) to keep payments to retirees going (light red section).”

Cyprus Deposit Levy Idea Could Live On

Cyprus bank

Every now and then, you’ll read a story about how politicians are targeting 401(k) accounts as an extra source of revenue to deal with the long-term entitlement crisis or to guard against losses during an economic downturn. Back in 2009, leftist groups pushed Congress for more government involvement in the private retirement system, including some sort of public alternative — because, you know, Social Security has worked out just peachy.

The proposal out of Cyprus that would give depositors a “haircut,” a high-percentage levy on their deposits, has prompted fears in the United States that some future administration or Congress could eventually put financial assets, such as bank accounts and 401(k), in their crosshairs. Rep. Billy Long (R-MO) has proposed legislation that would prohibit the federal government from taking such an action.

But could something like that ever actually happen in other European Union countries? Over at Reason, Ed Krayewski points to an thought-provoking and troublesome op-ed out of Ireland that wonders what the future of that country’s depositors looks like:

Obama offers no real path forward on entitlements

Barack Obama

During his inaugural address on Monday, President Barack Obama made it clear that he was not willing to negotiate on entitlement programs. “The commitments we make to each other – through Medicare, and Medicaid, and Social Security – these things do not sap our initiative; they strengthen us,” Obama said in his defense of these government-run programs. “They do not make us a nation of takers; they free us to take the risks that make this country great.”

In his first term, President Obama talked about the need to deal with entitlements; however, he brought nothing resembling a credible plan to the table — in fact, he didn’t propose a plan at all.

Rep. Paul Ryan (R-WI), who, despite his recent shortcomings and generally bad record, has offered two credible budget plans that would both reform entitlements and pay down the national debt, responded to Obama’s comments yesterday during an interview on The Laura Ingraham Show:

Ryan said earned entitlements — where you pay your payroll taxes during your working like to get a benefit when you retire, such as Social Security — are “not taker programs.”

“When the president does kind of a switcheroo like that, what he’s trying to say is that we are maligning these programs that people have earned throughout their working lives,” he said. “So it’s kind of a convenient twist of terms to try and shadowbox a straw man in order to win an argument by default.”


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