What I'm Reading Today

The states Government Accountability Board is predicting a possible record-high 28 percent turnout for the Sept. 14 primary election.(author unknown)

Contact: Contact: Duffy Communications Director Wendy Riemann (715) 803-3848 orwendy@duffyforcongress.comSPAN style="WIDOWS:: 2; TEXT-TRANSFORM:: none; TEXT-INDENT:: 0px; BORDER-COLLAPSE:: separate; F...(author unknown)

Representatives from area town boards are eager to have a voice in the committee recommending changes to the state’s system of determining equalized and assessed property values.(author unknown)

WASHINGTON Wisconsin election officials are negotiating with the U.S. Justice Department to try to ensure that American troops and civilians overseas are able to vote in the November midterm election, a spokesman for the state Government Accountability Board said Wednesday.(author unknown)

Two months before midterm elections, American voters may be about to make another course correction, with Republicans poised for big gains in the House and Senate.(author unknown)

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e21’s last editorial on Social Security reviewed some analytical mistakes commonly committed by opponents of Social Security reform. Such mistakes include both implausible hopes that Social Security’s shortfall might disappear by itself, as well as a failure to appreciate the harm done by further delays in its correction. Our last piece addressed both of these areas of confusion in significant detail.

No sooner had we assembled this information, however, than a new argument against reform began to receive additional attention: expressed in various ways by different voices, it is essentially this: instead of arguing that Social Security’s imbalance might not materialize, the program’s financing shortfall shouldn’t be corrected even if it is in fact real.

An excerpt from one advocate exemplifies this standpoint:

“It's a testament to Social Security's efficiency that every option for balancing its books is a bad option. Raising the retirement age hurts real people. Raising taxes also hurts real people. Cutting benefits hurts -- well, you get the point.”

As stated above, this view essentially holds that individuals will be harmed if Social Security’s books are balanced. This necessarily implies that individuals are helped if the program continues to promise far more in benefits than its own tax revenues can finance. The flaws in this line of thinking might seem self-evident, but they are apparently not to everyone. So we at E21 are returning again to the subject of Social Security, to review some basic program realities.

First: The Social Security shortfall consists of a multi-trillion-dollar excess of future promised benefits over future tax revenues.

This shortfall is illustrated on the graph below. The red line depicts scheduled benefit payments; the blue line Social Security tax revenue. Everything is expressed as a percentage of taxable worker wages – basically, the share of each worker’s wage dollar absorbed by Social Security.

 

For now, we’ll put aside the question of what the Social Security Trust Fund really means. The graph shows that the cost of paying benefits will significantly exceed the program’s incoming tax revenue starting in the next few years, with the gap widening markedly after that. But even for those who don’t see a problem until 2037 -- when the Trust Fund is fully depleted -- it should be clear to any observer that there is a significant long-term gap between promised benefits and taxes.

The present value of that financing gap – even after honoring every last penny of the Trust Fund – is $5.4 trillion over the next 75 years, and $16.1 trillion overall. Not everyone agrees on the best measure of the shortfall, but the point is: there IS a gap, and it measures in the trillions of dollars.

Second: One way or the other, this imbalance will be resolved.

Social Security cannot send out a benefit check unless a sufficient amount of tax revenue is provided to cover it. The program has to get the money for payments from somewhere -- it can’t manufacture benefits out of thin air. One way or another, Social Security’s divergent projected income and outgo streams will be brought into line.

Third: Simply declining to address Social Security’s shortfall doesn’t in any way lessen the pain associated with doing so.

If it were possible to send out benefit checks without incoming revenue, then indeed steps to balance Social Security’s books would introduce hardship that wouldn’t otherwise exist. This, however, is not reality. Declining to plan sensibly to address Social Security’s imbalance doesn’t eliminate or even reduce the amount of “pain” to be imposed upon beneficiaries or taxpayers. Social Security will either collect more or spend less than is currently projected -- or some combination of the two -- no matter what. The size of the gap to be closed is the same whether it is deliberately addressed or not.

Fourth: We do not optimize Social Security’s net value to workers by leaving it unchanged.

This point is closely related to the previous one, but it is worth separate attention because of confusion expressed by one advocate in this statement:

“Social Security is adding value. Any change you make will either increase how much we're spending for that value or decrease the total value we're getting from the program.”

This is incorrect. A few numbers from the Social Security Trustees’ report illuminate why:

Let’s explain this table a little bit. It shows that if we change nothing about Social Security in the near term, then future generations will need to put $17.4 trillion into Social Security more than they receive from it ($20 trillion if we include the cost of paying off the Trust Fund). Overall, net, Social Security will subtract roughly 4% from the income of future generations.

Putting aside the question of whether such an outcome is “adding value” for younger generations, the fact remains that under current law this net income loss is there. We can choose that it be manifested by their paying more in taxes, or by their receiving less than scheduled benefits, or by receiving benefits for a shorter period of time (raising the retirement age). No matter what choice we make, however, the net loss is what it is. It is not the consequence of policy decisions we would make to balance Social Security’s books; those choices simply determine how the net benefit loss will be felt.

In fact, what this chart actually shows is why early action is desirable. The only way that we can reduce the $17.4 trillion net benefit loss facing younger generations is for current generations to contribute something to the solution. This doesn’t change the size of the total hole to be filled, but it would make a promptly-enacted solution a fairer one.

Note that none of this is in any way mitigated by Social Security’s vaunted “efficiency.” Granted, Social Security among federal programs has extremely low administrative costs. If Social Security were administratively wasteful, the shortfall would be even higher. But that is basically irrelevant, because even with the low administrative costs, the shortfall is still there.

Fifth: We don’t reduce the pain by funneling general revenues into the program.

Whether we raise $16.1 trillion in new payroll taxes, or by providing additional general revenues, the total tax burden of Social Security is exactly the same. Choosing to use general revenues rather than payroll taxes doesn’t improve Social Security’s net treatment of individuals or generations by even a penny. The only thing accomplished by using general revenues is opacity; instead of disclosing to individual taxpayers how much they are each being charged to fund Social Security, this information would be hidden, submerged into the general budget.

Sixth: Using general revenues to bail out Social Security destroys any continuing rationale for a separate Social Security payroll tax, trust fund, or off-budget accounting.

Once we choose to fill the Social Security shortfall with general revenues, Social Security’s current accounting rationale vanishes. Social Security Trust Fund revenues would no longer bear any tangible relationship to the program’s own tax collections. And, once benefits are deliberately allowed to systematically exceed program taxes, then there is no basis for a separate Social Security budget account. To the contrary, separate accounting would then be misleading, disguising the extent to which the program is financed from general revenues.

General revenue support would end the historic ethic of Social Security as a self-financing program. From that point on, the program’s link between contributions and benefits would be severed, trust fund accounting would become deceptive, and the program would simply compete with others for revenue within the broader unified budget.

Seventh: Even without a general revenue bailout, Social Security will place enormous pressure on the unified budget as it is.

This point is necessary to make in view of the following recent argument:

“If Social Security is proving a drag on the federal budget, then one option is make changes to Social Security, but another option is to make offsetting changes elsewhere in the federal budget. . . there's plenty in the federal budget that isn't so zero-sum: We spend much more on defense than we need to spend. We have an absurdly inefficient tax code that could raise more money while doing less to harm growth if we cleaned it out.”

Let’s have a reality check on this argument. The above assertion is made to support an extension of Social Security solvency through general revenue commitments above and beyond the trillions already obligated to pay off the Social Security Trust Fund.

It may well be that there is significant fat in the federal budget that could be squeezed to support increased Social Security payments. But we’re already on the hook for a lot of such belt-tightening even before we allocate an additional penny of general revenues to Social Security.

Presently, the Social Security Trust Fund has a claim on $2.5 trillion of future general revenues, which the government is obligated to deliver through 2037. Perhaps it will indeed be trivial to find this money by wringing inefficiency from the general tax code and other federal programs. But the Congressional Budget Office is sternly telling us that there is no current plan for doing so, and that under its most plausible projections, the federal budget will be untenable well before 2037. Before we start committing trillions in further general revenues to Social Security that we aren’t sure we’ll have, wouldn’t it be prudent to put the general account on a footing that can handle its current obligations to Social Security?

Eighth, and finally: Delaying action results in a less equitable distribution of outcomes, and in a less effective Social Security program.

We explored this reality at length in our last editorial on this subject. It’s not taking action that subtracts from Social Security’s net value, but rather delaying a resolution of the shortfall that will lessen Social Security’s efficacy. This is because delaying action doesn’t eliminate or even lessen the shortfall – it just exempts people today from contributing to the solution, and hands the next generation the largest bill. It is simply incorrect to argue that we lessen Social Security’s “positive value” by acting, and maximize it by waiting.

By all means, let’s have a reasoned discussion about whether we should have a more generous, more expensive system or a less generous, less expensive one. Let’s indeed have every unconventional viewpoint on the table. But we cannot have a reasoned discussion if many of us propagate the fiction that Social Security can provide benefits without imposing equal costs. Let us not attempt to dignify intellectual laziness as a positive public policy principle.

Let’s be blunt: the argument -- that we should deliberately leave Social Security’s shortfall on its books – would, if heeded, leave us with the costliest, most inequitable, most opaque and most dishonestly accounted-for Social Security system. Americans deserve far better, especially from Social Security’s supposed defenders.

Image:  Author:  e21 Staff Editorial Publication Date:  Thursday, September 2, 2010 Display Date:  09/02/2010 Hide Photo / Caption:  Check to hide photo admin

Interior Secretary Ken Salazar and the Obama job-killing machine get kicked in the ass one more time. They wanted federal judge Martin Feldman to dismiss the drillers’ lawsuit challenging their original moratorium. No dice.

Via Reuters:

A federal judge in New Orleans rejected on Wednesday the U.S. government’s request to dismiss a lawsuit challenging its original 6-month deepwater drilling moratorium…The drilling halt was subsequently amended, so the government sought to toss out the Hornbeck lawsuit, arguing it was no longer relevant.

But U.S. District Judge Martin Feldman, who earlier this summer blocked the first drilling halt, said in a 20-page ruling that the government’s amended moratorium offered “no substantial changes” from the first one.

More scathing criticism for Salazar, via the WSJ:

Judge Feldman also noted that in crafting the second moratorium, Mr. Salazar appeared to have relied heavily on documents and data that he had at the time of the first moratorium order. “Nearly every statement in the July 12 decision memorandum is anticipated by documents in the May 28 record, or by documents that were otherwise available to the Secretary before May 28,” the judge said.

Related: A bipartisan call to lift the de facto shallow drilling ban NOW:

Rep. Gene Green (D-TX) and Rep. Charles Boustany (R-LA) have again written to Department of the Interior Secretary Salazar regarding the issuance of new permits for shallow water drilling in the Gulf of Mexico. The letter, co-signed by 37 Democrats and Republicans from across the country, is the second letter that Rep. Green and Rep. Boustany have sent to Secretary Salazar reminding him of the significance of the Gulf Coast economy and urging the immediate issuance of new permits.

“Before the Deepwater Horizon disaster, new shallow water drilling permits were being issued at the rate of 10-15 per week,” Rep. Green stated. “Since the shallow water moratorium was lifted on May 28, a total of 4 new permits have been issued.”

In a letter to Secretary Salazar sent May 20, Reps. Green and Boustany with 54 of their colleagues warned of the potential impact of losing shallow water oil and natural gas production. Since then, 14 rigs have been idled in the Gulf which represents 30% of the shallow water fleet. If the pace of new permits does not accelerate by the end of September, over 70% of the shallow water rigs will be inactive.

“There are thousands of jobs directly connected to shallow water drilling,” Rep. Green continued. “At a time when the economy is still coming back from the worst recession in recent memory, we just can’t afford to lose more jobs. My colleagues and I continue to share concern over this de facto moratorium and the deepwater moratorium as domestic energy production is not only vital to energy independence, but to the Gulf Coast economy.”

***

Previous:

Obama’s Beltway Chainsaw Massacre
The White House War on Jobs
Pushing back: Thousands of Obama’s drilling moratorium victims rally in La.
Why does Ken Salazar hate our economy? Update: Western Energy Alliance calls for reinstating oil leases
Ken Salazar needs another ass-kicking
Another ass-kicking: 5th Circuit rejects White House drilling ban appeal
Ken Salazar gets an ass-kicking. Over to you, Capitol Hill. 6/24 update: Judge refuses White House drilling ban stay request; judge gets death threat
Breaking: Judge rules against Obamatorium on drilling; link to decision added; Interior Secy Salazar roasted

The Hill reports on how the wealthiest members of Congress fared over the past year. Can you guess who tops the Capitol Hill 50 wealthiest list?

And can you guess which party outnumbers the other on the list?

Hint: Think Thurston and Lovey.

Here are the details on the list:

The 50 wealthiest lawmakers were worth almost $1.4 billion in 2009, about $85.1 million more than 12 months earlier, according to The Hill’s annual review of lawmakers’ financial disclosure forms.

Sen. John Kerry (D-Mass.) tops the list for the second year in a row. His minimum net worth was $188.6 million at the end of 2009, up by more than $20 million from 2008, according to his financial disclosure form.

…There were a few other new faces in the Top 50, including Rep. Patrick Kennedy (D-R.I.), who received an inheritance after his late father, Sen. Edward Kennedy (D-Mass.), died in 2009. Sen. Ron Wyden (D-Ore.) and Rep. Tom Petri (R-Wis.) also made the list.

Twenty-seven Democrats along with 23 Republicans make up the 50 richest in Congress; 30 House members and 20 senators are on the list.

…Rep. Darrell Issa (R-Calif.), with a net worth of $160.1 million, is the second-richest member of Congress under The Hill’s formula, even though his wealth declined by more than $4 million in 2009.

He is followed by Rep. Jane Harman (D-Calif.), who saw her net wealth leap to $152.3 million, a jump of more than $40 million from a year ago.

The rest of the top 10 are Sen. Jay Rockefeller (D-W.Va.), McCaul, Sen. Mark Warner (D-Va.), Rep. Jared Polis (D-Colo.), Rep. Vern Buchanan (R-Fla.), Sen. Frank Lautenberg (D-N.J.) and Sen. Dianne Feinstein (D-Calif.).

Useful facts to keep on hand when the next Democrat class warfare talking points get hurled at ya.

***

Related flashback: People in “fat cat”-infested houses shouldn’t throw stones

***

And via Dan Collins, take a look at the Big Labor fat cat PAC expenditures for 2009-2010 just released.

**Written by Doug Powers

First they had to pass it so we could find out what’s in it, and now they know what’s in it but they can’t talk about it:

The progressive coalition Health Care for America Now fought hard to pass health care reform. Now it’s fighting hard to help reelect lawmakers who voted for the bill — even if it means not talking about it.

While polls show that health reform has become slightly more popular since passage, it’s still a polarizing issue, particularly in districts where Republicans and conservative groups have bombarded voters with negative ads.

Now, HCAN’s field crews are finding that the best way to support reform-friendly lawmakers is to talk about something else: jobs, the economy or other issues likely to resonate more with voters.

Yeah, that’s a good idea — re-direct voters’ focus from the Health Care Bill to something more upbeat, like jobs, the economy and “Recovery Summer.”

That’s a little like punching a guy in the face and then trying to calm his anger by changing the subject and making him aware that you also slashed his tires and slept with his wife.

(h/t HotAir)

**Written by Doug Powers

Twitter @ThePowersThatBe

The La Crosse School District has more administrators than 10 school districts statewide with similar student enrollments, according to 2009-10 state Department of Public Instruction data.
(author unknown)

One in six Americans is now on government aid. Liberals consider this a sign that their system is working.

Via USA Today:

Government anti-poverty programs that have grown to meet the needs of recession victims now serve a record one in six Americans and are continuing to expand.

More than 50 million Americans are on Medicaid, the federal-state program aimed principally at the poor, a survey of state data by USA TODAY shows. That’s up at least 17% since the recession began in December 2007.

“Virtually every Medicaid director in the country would say that their current enrollment is the highest on record,” says Vernon Smith of Health Management Associates, which surveys states for Kaiser Family Foundation.

The program has grown even before the new health care law adds about 16 million people, beginning in 2014. That has strained doctors. “Private physicians are already indicating that they’re at their limit,” says Dan Hawkins of the National Association of Community Health Centers.

More than 40 million people get food stamps, an increase of nearly 50% during the economic downturn, according to government data through May. The program has grown steadily for three years.

Caseloads have risen as more people become eligible. The economic stimulus law signed by President Obama last year also boosted benefits.

Cloward and Piven — and Peggy the Moocher! — approve.

***

Related: The Folly of Subsidizing Unemployment

***

President Obama is scheduled to deliver remarks on the economy at 12:30pm today in the Rose Garden — wherein he will push for more programs to shift more private citizens onto public subsistence in the name of “recovery.”

Update: Hmmm. Obama press event delayed until 1pm. Hmph. I thought his batteries were recharged…

Although there are many scholarly treatments of the Founders’ understanding of property and economics, few of them present an overview of the complete package of the principles and policies upon which they agreed. Even the fact that there was a consensus among the Founders is often denied. Government today has strayed far from the Founders’ approach to economics, but the older policies have not been altogether replaced. Some of the Founders’ complex set of policies to protect property rights are still in force. America has abandoned the Founders’ views on the gold and silver standard, the prohibition of monopolies, the presumption of freedom to use property as one likes, freedom of contract, and restricting regulation to the protection of health, safety, and morals. But in other respects, America continues to offer a surprising degree of protection to property rights in the Founders’ sense of that term(author unknown)

bWith photos:/b Conservative commentator Glenn Beck and tea party champion Sarah Palin appealed Saturday to a vast, predominantly white crowd on the National Mall to help restore traditional American values and honor Martin Luther Kings message.(author unknown)

WINONA, Minn. — A candidate for Winona's public school board has dropped out of the race after she was arrested for domestic assault.
(author unknown)

Create a lean-government commission to consolidate and improve state and local government.
(author unknown)

Grim reaper photoshop credit: Manly Rash

I said yesterday in my Beltway Chainsaw Massacre column that the GOP needs to track the Obama jobs death toll and tell the victims’ stories far and wide.

But there’s no need to wait for the GOP. I’ll keep doing it right here.

The first story of the day comes from the Fort Worth Star Telegram in Texas, where a health insurer called Health Markets has laid off 70 workers and expects up to 180 more as it braces for the costs of Obamacare and other government mandates:

HealthMarkets, the North Richland Hills-based seller of health insurance, laid off 70 employees this month and expects to trim 180 more positions by the end of the first quarter of 2011, according to a recent federal filing.

In the Securities and Exchange Commission filing, HealthMarkets blamed the layoffs on “dropping enrollment levels experienced by the company’s insurance subsidiaries,” along with national healthcare reform and “related legislative developments.”

HealthMarkets provides insurance plans to the self-employed, individuals and small businesses.

The second story of the day comes from the Worcester Telegram in Massachusetts, where a local hospital will slash about 50 full-time jobs:

About 50 full-time jobs will be eliminated at the HealthAlliance Hospital — Leominster Campus, and one of two planned expansion projects may be cut back.

Mary Lourdes Burke, chief communications officer for the hospital, said yesterday the job cuts do not mean 50 layoffs, because some were vacant positions that will not be filled, and some were positions that had hours reduced. Also, she said, some union contracts required moving employees into other posts.

…Ms. Burke attributed the cuts to health care reform, with its reductions in Medicare and Medicaid reimbursements, along with cuts in private health insurance reimbursements and increasing co-payments for patients…David F. Duncan, hospital vice president for facilities, told the City Council earlier this year that the design may be scaled back because the new federal health reform law discourages emergency room visits.

…In addition, he said, health care reform is expected to result in the loss of $24 million in Medicare reimbursements, out of $170 million total, starting in five years. The state’s health insurance reform laws, on which the national model is based, have already resulted in at least that much in losses, Mr. Muldoon said.

Ho, ho, hey, hey. How many jobs did O destroy today?

Residents at the annual meeting of the Holmen School District on Monday gave the school board the authority to levy up to the full amount allowed under the state imposed revenue limit. The district is proposing a local tax levy of $14.8 million.(author unknown)

Residents at the annual meeting of the Holmen School District on Monday gave the school board the authority to levy up to the full amount allowed under the state imposed revenue limit. The district is proposing a local tax levy of $14.8 million.(author unknown)

Residents at the annual meeting of the Holmen School District on Monday gave the school board the authority to levy up to the full amount allowed under the state imposed revenue limit. The district is proposing a local tax levy of $14.8 million.(author unknown)