from a WASHINGTON POST Staffer

30 04 2011

I write today about the looming debt limit challenges currently facing Congress. This is a pivotal moment for our country as it sets the tone for future spending behavior. Similar to the FY 2011 budget, this presents an opportunity for Republicans to show real leadership and to define the difference between the two parties by actually restricting spending deficit levels. In the last election cycle, voters unmistakably were intent on having a different type of governance in Washington. This is a serious issue as reflected by Treasury Secretary Tim Geithner’s letter to Senate Majority leader Harry Reid on January 6, 2011 which stated that the consequences of defaulting would mean payments would be “discontinued, limited, or adversely affected.” Although Geithner’s letter may have been using emotional political rhetoric, it represents the significance of the problem. Although President Obama is in agreement with Geithner, at one he was opposed to this type of action. Obama recognized the dangers associated with continually increasing the debt limit. In 2006, Obama, then Senator, voted against raising the 2006 debt ceiling stating, “the fact that we are here today to debate raising America’s debt limit is a sign of a leadership failure… Washington is shifting the burden of bad choices today onto the back of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.” Although he now claims that vote was a mistake, it is interesting that he was able to recognize the implication of raising the debt limit, perhaps now he is willing to ignore the repercussions in order to continue his pro-government programs.

The government will soon run up against its limit of $14.294 trillion in debts, which the Treasury expects will occur before May 16, 2011, although with a few short-term tools, they could extend their borrowing capacity until July 8, 2011. Congress and the President must decide whether or not to raise the limit and thereby permit continued borrowing. The debt limit has already been raised 10 times since 2001. Based on Obama’s budget proposals, the deficit is projected to reach $26,200 billion by 2020, an increase of over $1 trillion in each fiscal year now until 2020. Under current estimates, the government would essentially need to issue an additional $738 billion in debt above the current statutory limit in order to finance obligations for the remainder of FY2011. Congress has the power to deal with this as granted in the Constitution, Section 8 of Article 1, where it states they are vested with the “Power…to borrow money on the credit of the United States.” Congress then delegates the exercise of this power to the Treasury Department, with a statutory limit on the amount of federal debt that the government may issue at any one time. Legislation adjusting the debt limit takes the form of an amendment to 31 U.S.C. 3101(b), usually striking the current dollar limitation and inserting a new one.

The deficit is one of the most significant problems facing America and should be dealt with using a cautious hand. Currently, the gross domestic product (GDP) is at nearly 10%, representing the largest budget deficit since World War II. Several factors including excessive spending levels, the recession, stimulus bailouts, and lowered tax revenues are all to blame for the massive shortfalls. The federal government borrowed borrowed nearly 40 cents of every dollar that it spent in 2010. Additionally, increased debt limits inherently mean that America must spend more on interest payments. Instead of putting this money towards the military or other essential programs, America would pay $260 billion in interest alone in FY2012 under the President’s budget plan. This is the equivalent of all the spending by the Departments of Education, Homeland Security, Housing and Urban Development, Justice, and State, combined. Under Obama’s proposals, America would owe nearly a trillion in interest payments by the year 2021. This resultantly weakens the country’s credit rating. America’s health as a world power is in jeopardy if the financial train is not redirected onto another track.

If the debt ceiling is not increased, the Treasury would face two very contradicting mandated laws which would present a significant legal quandary that even perplexes most scholars. The Treasury is prohibited by law from issuing additional debt above the statutory limit yet it is also obligated by law to spend money for several specific purposes. The Treasury would be limited to incoming receipts, and would face a sizable conflict in which something would have to give. It is likely that the Treasury would prioritize paying on interest costs first to preserve the full faith and credit of the U.S. government and avoid defaulting on debts due. However, after this, the Treasury would be forced to prioritize what gets paid now and what gets put aside for later. Although it is not designated by law and would appear to contradict America’s central democratic principles, some believe that the President would step in to set the priorities for which bills ought to be paid. It would become a media circus with the President undoubtedly pointing his finger at the Republicans and pronouncing that they are irresponsible and don’t really care about Americans.

A final consideration for Congress should be how the debt limit will affect the markets. The publicly held debt stood at $9.018 trillion at the end of 2010. The credit markets would likely falter in the face of uncertainty as the U.S. government’s debt is used by many as a measure of the health of the global market. The shakeup caused by the uncertainty could have detrimental implications on interest rates and even the dollar exchange rate.

Congress ultimately has three options in dealing with this issue. First, they can opt to hold the debt limit in place which would force an immediate massive restructuring of federal spending. This would be a reduction in non-interest spending averaging about $125 billion each month, or 1.5 trillion for the year 2011. This would be roughly equal to all security and non-security discretionary spending which would have to cease instantly. Given this possibility, Congress would be advised to legislate clear guidance as to the broad prioritization of federal spending to avoid massive confusion. Otherwise, as mentioned, the Treasury would be left with no choice but to exercise their own judgment on how to use the insufficient funds. Again, it does not behoove House Republicans to allow Obama’s appointees, such as Timothy Geithner, a man who is considered to have a populist agenda at times- notably when he pushed for ending the Bush tax cuts, to be in such a powerful role. One such bill has already been introduced, The Full Faith and Credit Act, H.R. 421, a companion to S. 163 in the Senate, would effectively direct the Treasury to pay principal and interest due on the debt held by the public before making any other payments. This has wide support by many including Federal Reserve Chairman, Ben Bernanke who stated this could “reduce the risk with the debt limit.”

A second option is to increase the debt limit but to do so with substantial, immediate spending reductions. Each cut would translate into less debt the federal government must issue and that much less net interest it must pay in the future. An automatic incentive would be built in as Congress could use these required changes as leverage before agreeing to the debt limit increases in 2012. This would be a great way for the House Republicans to display long term foresight that this Country has been lacking for so long.

Lastly, another option is to raise the limit and enact significant budget reforms, possibly in addition to deep, immediate cuts. Congress could adopt strict spending caps for total spending each year, including caps on entitlement programs, backed by automatic sequestration triggers and other protections to prevent Members from waiving the rules.

The second two options are most viable as part of a compromise between Congress and President Obama. If Speaker John Boehner can effectively compromise to increase the debt limit with major budget reforms attached, it would be a notable success. Just like the debate over the budget, the most significant thing is the fact that for the first time in several years, the discussion is not about whether or not to cut, but rather, how much can we effectively cut. It appears that House leadership is aware of the need to have a unified Conservative voice on this as things progress, as opposed to how the party fractured over the budget issue. Currently, Republican aides claim the core of the GOP’s position will also include mandatory immediate reductions in discretionary and mandatory spending. A GOP leadership aide also indicated that proposed cuts that Republicans view as immediate include hard caps on discretionary spending, cuts to Medicaid spending and reductions in the overall size of the federal workforce, potentially by limiting the number of new workers hired to replace retiring workers. The negotiations will be contentious, but hopefully the end result is a significantly altered approach to spending in this country. Additionally, this Congress needs to find ways to deal with the deficit in such a way as to avoid the yearly increases the Treasury will otherwise demand.

Sincerely,

Hill Observer





I WILL TAX THE RICH VOTE FOR ME

25 04 2011

Authored by William Robert Barber

So, according to Obama, if we increase the tax to those that earn $250,000 or more a year the deficit will notably abate. Of course Obama is not explicit in this presumption he only implies that taxing the rich “a little more” will notably abate the deficit. On-its-merits this Obama tax-a-little-more proposal is contentious and the conservatives do have a viable alternative. Just as one looks both ways when crossing the street, in the interest of prudence, contemplation is reasonable. Certainly, to endorse such a proposition, simply on the presumptive scaffold that taxing the rich will notably abate the deficit, requires more methodologically applied scrutiny than Obama’s campaign motivated rhetorical declarations.

Obama acts as if there was no viable counter-argument. Is it that the conservative’s emphasis on excessive government spending is actually on target?

I have noticed that whether the economy is good or bad, federal and state governments, waste taxpayer monies. With purposeful intent (motivated by trying to win office or to stay in office) politicians broaden old entitlements and at every opportunity creates new ones. The elected, mostly, Democratic pay explicit homage to unions; just take a peek at state pension obligations; I do believe that spending is the true basis of our deficit? Or is the Obama tax-the-rich proposal more an appeal to those who pay no federal income taxes to vote the status quo. Possibly this tax the rich scheme is nothing less than an offer to purchase votes in the upcoming 2012 election rather than a genuine proposal to decrease the deficit? Imagine a politician acting to better the odds of winning an election as a reason to act?

But then, one must appreciate that for Obama and his confederates within the progressive league, their real intention has nominal to do with deficit abatement and a great deal to do with servicing their agenda of social-justice. Indeed, once this tax-the-rich plan is implemented and thereafter (years later) analyzed for effectiveness even if the legislation had no effect on the deficit. The progressive ideal of fairness will have triumphed. And most importantly for Obama a progressive ideal has been in-placed.

The marketing of progressive persuasion is purposefully premised on invoking class-struggle onto the talking-points of electoral persuasion; the idea is to tie their political aspirations into an alignment with moral righteousness. After all (the Obama progressives deceptively preach) the poor and disenfranchised have no power; as Obama has pointed out they have no lobbyist to express their frustrations. It is therefore the obligation of Obama and his progressives to represent their interest. Now where have we heard this plea for the poor people before? Lenin comes to mind.

I do find it interesting that political leaders never advocate for the rich and the privileged although all of these leaders are rich and privileged. Inclusive to these pleas for those who have less every political leader throughout the 1900 hundreds up to the present have declared that the poor are poorer and the middle class is economically stymied. Naturally, what follows is the popular declaration that they will rectify this injustice as a matter of policy. This rectifying of injustice has been a politically enriched constant of Republican as well as Democratic leaders for a very long-time. Has no political party or political leader made progress in this endeavor to rectify this supposed clear injustice? Or is this rectifying of mostly economic injustice simply a popular campaign issue?

Obviously, withstanding whether this issue is real or imaginary, the politicians love the issue so much both political parties have used it. Of course Obama and his progressives have a particular infinity for the concept of the rich getting richer and the poor poorer. Without it they would have no social injustice to rectify. Hmm… that could drastically change their political crusade to emancipate the downtrodden from under the thumb of the rich and powerful.

Over the years I have heard the adage: We always get the government we deserve. I now believe this adage to be a truism. The forces of bonne chance aligned with the failures of President Bush’s administration, Secretary Paulson’s response to the financial crisis, the Bush endorsement to fund the car companies, as well as, their unions. And bingo President Obama was voted into power. The anemically pathetic campaign of the senator from Arizona also made a significant contribution to Obama’s victory.

Well, respective of the serendipitous outcome of the community organizer’s 2008 election, by November of 2011 the voters will truly understand the meaningfulness of what a vote for Obama means. If he wins this time, big government, ObamaCare, and most likely another liberal Supreme Court justice appointment is a definite. Conservatives will lose big time; we just cannot let that happen…





THIS POLITICAL CONFRONTATION IS SERIOUS

19 04 2011

Authored by William Robert Barber

I do think that in the foreseeable future the likelihood-of-result favors a series of very nasty political confrontations between our competing political parties. Indeed, the 2012 election, regardless of the victor, will not settle the abrasively aggressive behavior of the contending political ideologies. The facts of the matter will not settle the political argument because facts (by the ideologues) are bent to satisfy the particulars of ideological predetermination. Such ardent predetermination (for the believers) is coupled with an unshakable belief in the righteousness of their cause; therefore stymieing any rational tendency for counter-party consideration.

Currently, for the White House, because of a looming election, Obama’s reelection is the single dominant interest. By a default of priority, the interest of the nation is secondary because the ideological ethos of each political party cannot rationalize the reasoning of the other. As a consequence, conservatives and liberal progressives will always fail to understand the economic, fiscal, political, or even practical sensibility of the others’ political agenda.

The nation’s budgetary and debt-limit argumentative is not in its core a matter of negotiating variant plans. This quarrel between the Republican Conservatives and the Democratic Liberal Progressives is an ideological confrontation; debate over the abatement of the deficit is an ideological cause to engage. There is much more at stake for this nation state than reducing federal government expenditures for the 2011 and 2012 budget. In bold-black, graphically clear penmanship, the current political fight is over the definitive understanding of what kind of an American government we are going to have in January of 2013. The grand question in simple terms: Is this government of ours to be small and limited in operational scope as the Conservative desire? Or is the government to be large and unlimited in operational scope as favored by the Liberal Progressives? This is the essence of our nation’s disagreement and the answer will be affirmatively declared, for one or the other, post the count of the November 2012 Electoral College vote.

With President Obama’s recent reelection announcement, political gamesmanship is formally afoot. The Republicans have put forth their fiscal remedy. The Democrats, instead of designing a detailed plan of their own, have decided to sit back and disdainfully criticize. These liberal progressives have decided that fiscal disciple and reforming entitlements, for the general population, is confusing. Inclusive with the confusing nature of the entitlement issue is the general unpopularity of reform. If one considers that abatement or elimination of ‘nanny state’ policies will have measurable consequences for those dependants of entitlement funding, such as illegals, as well as those that pay no federal income taxes, those that believe government owes them a free education, and a stipend for living expenses, one can understand who the opposition is. Remembering that for the Democratic Party, less the illegal element now that ACORN is busted, this is their voting constituency. So instead of servicing the clear and present danger for the nation by helping to clear up the confusion or explaining the non-sustainability of the present entitlement programs, liberal progressives have determined that winning the next election by endorsing a policy of abandonment and denial, and promising a continuance of the ‘nanny state’ is their strategy for election victory in 2012.

The forthcoming national election will prompt scurrilous attacks; personal meanness, noting the President’s recent remarks, will be part of the Obama believers’ daily talking points. Prudent discovery of facts will be set aside as unwarranted and for the progressive politicians, the mainstay of their rhetoric will, in the majority, contain misdirection and half-truths. Considering the context of the Democratic Party leadership, one can righteously ascertain that rhetorical gunmanship is valued over truthfulness. I do predict that the upcoming election will be 100% negative. I also believe that provocateurs from the political left instilled with bloodthirstiness for victory at any price will nullify the effectiveness of civil persuasion, and the nation’s institutions will be forced to decide if this is a nation of laws or of man. Tolerance and consideration will be ostracized into suspension. This electoral process will be evidenced as never before for its dishonesty, bombastic hype, and statutory non-compliance.

Beware! The Obama inspired liberal progressive machine whiles striving to implement a European-style socialist society with one side of the mouth, with the other he will say what needs to be said. Our President has proven to be very flexible when it comes to his word and words in general; he is unscrupulous as to concerns for their factualism. His money raising reelection show is steamrolling its way through America’s highways and byways. Machiavelli, sit up in your grave and standby to witness Chicago’s brand of the end justifying the means!





PRETTY FACES AND PROMISING WORDS

11 04 2011

Authored by William Robert Barber

The contesting for political power is older than government itself; for thousands of years onto the present contestants have utilized physical force, dexterous manipulation, pecuniary leverage, and the subtleness of covert tactics to win over their competitor.

However, in America, there is an addition to the traditional option of standard power-seeking weaponry. There is a bustling industry of Internet delivered technology. This technology supports a drama-driven main stream-media that reports the news with an inclination that mimics predetermined principles; the same media seem to take special pride in their ability to stable copious opinion-makers while flaunting the perspectives of numerous political pundits. Indeed, the amount of politically specific information broadcast or printed is voluminous; this information is disseminated in a form integrated, interloped, and convoluted to such disingenuousness that the truth of any particular is so opaque it sums into the indiscernible.

Now when the voter couples the indiscernible with the politician’s rhetorical sleight-of-hand, definitive truthfulness, is displaced with ambiguity; creating befuddlement; at that moment, the steadfast constant of an impenetrable Byzantine structured bureaucracy impedes clarification and clarity. This is the identical bureaucracy that platform the workings of a monstrous federal government with its thousands of rules, regulations, and surreptitious procedures. For the voter, confusion and befuddlement follows; politicians and their bedfellow bureaucrats embrace the indiscernible and camouflage the displacement of truthfulness. The elected and appointed then masquerade the truth of the particular with misdirection; they costume their deception with pretty faces and promising words.

Fast forwarding to the present all-important 2012 elections; the electoral contest is, for the conservatives, the idea of fostering a limited, regulation-less, healthcare mandate free, less intrusive federal government that favors individualism, personal liberty and freedom (which includes the freedom to risk and loose without the assurance of a government bail-out or subsidy). For the liberal progressives, an election victory will sanction the idea of an ever-increasing in size and operational scope of an Obama lead federal government. A 2012 election victory will eventually mean a progressive reinterpretation of the constitution, a government managed by regulators, the codification of wealth redistribution, and the legislative induction of a comprehensive Europeanization of American society.

Politics is as much about gamesmanship as it is of prudent substantive issues and measures. Remembering, at least 40% of American citizens pay no federal income taxes, many on federal/state assistance will vote for its continuance, unionists will vote Democratic, the majority of black Americans will vote for Obama, a healthy percentage of browns will follow suit, white liberal progressives, the youthful, and the naïve are attracted to the sublimity of utopian ideals. The main-stream media just loves the liberal progressive ideals.

Conservatives must harness their collective resources, unite, influence, and fight hard to win this 2012 election. Every American value and principal is at risk…noting that considering the stakes pretty faces and promising words are and insult to reason.





IS IT IMMORAL TO CUT THE BUDGET? by Roger Pilon

7 04 2011

Is It Immoral To Cut the Budget?

The Good Samaritan parable instructs us to attend to the afflicted voluntarily, not through coercive government programs.

By ROGER PILON

‘What Would Jesus Cut?” So read the headline of a full-page ad published in Politico last month by Sojourners, the progressive evangelical Christian group. Urging readers to sign a petition asking Congress “to oppose any budget proposal that increases military spending while cutting domestic and international programs that benefit the poor, especially children,” it was the opening salvo of a campaign to recast the budget battle as a morality play.

Not to be outdone, Catholics for Choice took to Politico on Tuesday to run “An Open Letter from Catholic State Legislators to Our Colleagues in the US Congress.” The letter condemned “policies that unfairly target the least among us,” echoing a blogger at the National Catholic Reporter who averred last month that the federal budget is, after all, “a moral document.”

Even House Speaker John Boehner seemed to agree with that, albeit with a twist, when he told a National Religious Broadcasters convention recently that “it is immoral to bind our children to as leeching and destructive a force as debt.” He added that “no society is worthy that treats its children so shabbily.”

Well, if morality is the plain on which the federal budget battle is to be fought, let’s get on with it. At the least, as the Sojourners say, the budget is a statement about the nation’s priorities—much like a family’s budget reflects what its members think important, or not.

But the similarity ends there because a nation, unlike a family, is not bound by tendrils of intimacy and affection. America, especially, is not one big family.

“We the People” constituted ourselves for the several reasons set forth in our Constitution’s Preamble, but chief among those—the reason we fought for our independence—was to “secure the Blessings of Liberty to ourselves and our Posterity.” Yet nowhere today is that liberty more in jeopardy than in a federal budget that reduces us all, in so many ways, to government dependents.

Our tax system sucks the substance and spirit of entrepreneurs and workers alike, filters that substance through Washington, then sends it back through countless federal programs that instruct us in minute detail about how to use the government’s beneficence. Manufacturing, housing, education, health care, transportation, energy, recreation—is there anything today over which the federal government does not have control? A federal judge held recently that Congress can regulate the “mental act” of deciding not to buy health insurance.

The budget battle is thus replete with moral implications far more basic than Sojourners and Catholics for Choice seem to imagine. They ask, implicitly, how “we” should spend “our” money, as though we were one big family quarreling over our collective assets. We’re not. We’re a constitutional republic, populated by discrete individuals, each with our own interests. Their question socializes us and our wherewithal. The Framers’ Constitution freed us to make our own individual choices.

The irony is that Jesus, properly understood, saw this clearly—both when he asked us to render unto Caesar what is Caesar’s and unto God what is God’s, and when he spoke of the Good Samaritan. The ads’ signers imagine that the Good Samaritan parable instructs us to attend to the afflicted through the coercive government programs of the modern welfare state. It does not. The Good Samaritan is virtuous not because he helps the fallen through the force of law but because he does so voluntarily, which he can do only if he has the right to freely choose the good, or not.

Americans are a generous people. They will help the less fortunate if left free to do so. What they resent is being forced to do good—and in ways that are not only inefficient but impose massive debts upon their children. That’s not the way free people help the young and less fortunate.

And it’s not as if we were bereft of a plan for determining our priorities as a nation. Our Constitution does that quite nicely. It authorizes a focused but limited public sector, enabling a vast private sector of liberty. But early 20th-century Progressives— politicians and intellectuals alike—deliberately shifted that balance. Today the federal government exercises vast powers never granted to it, restricting liberties never surrendered. It’s all reflected in the federal budget, the redistributive elements of which speak to nothing so much as theft—and that’s immoral.

Mr. Pilon is vice president for legal affairs at the Cato Institute and director of Cato’s Center for Constitutional Studies.





from a WASHINGTON POST STAFFER

2 04 2011

Growth of Dependence on Government

At a time when everyone is willing to talk about budget cuts, there seems to be an ever present white elephant in the room. That white elephant is entitlement programs in our country, especially our failing Social Security program. Even the most fiscal conservative Republicans have been hesitant to go near this topic since getting coming into office this January. Even the right wing of Congress, the Republican Study Committee, has had little to say in this area of spending cuts. This has perhaps become such an unpopular topic politically as many of those whom would be negatively impacted by cuts to these programs are part of the electorate. Politicians see this as a risky endeavor to take up as it could cost them their next election. Perhaps these serious financial cuts will not occur until there is at least a Republican majority in the Senate where members can take “riskier” moves without imminent threat of defeat at the polls.

Increasing Entitlement Beneficiaries

Today nearly half of the U.S. population is living to some degree off the other half. Those who are receiving entitlements are shifting from parasitism, whereby an organism lives off of a host species, to a parasitoid, an organism that lives off a host and in doing so, kills the host. This unsustainable growth is now a constriction on business and the free market as a significant contributor to the high unemployment rates. The entitlement programs go against America’s founding principles as a land of freedom and opportunity. These very programs are stripping citizens from the ability to work hard, produce, and create to support themselves. It was this incentivizing system that allowed America’s industries to innovate and grow at rapid speed. America needs elected officials to exhibit true leadership by initiating real reform efforts of these programs and by reshaping the entitlement mentality.

There are two major trends that coincide on this issue. First, there is the dramatic increase in the number of Americans who rely on the entitlements, which was about 64.3 million as of 2009. Second, there is decreasing number of citizens paying taxes, in 2008 43.6% of citizens were not paying any taxes. The Social Security crisis will slowly unfold over the next 23 years as 77 million baby boomers begin collection social security checks as well as pulling from the Medicare and Medicaid programs. As America begins to see the largest generation in our Nation’s history go into retirement, an unsustainable drain on federal funds will have detrimental effects as thus I will take a closer look at the Social Security reform debate.

Currently, Medicare, Medicaid, and Social Security make up over 40% of all non-interest federal program spending. That spending is expected to grow to over 60% by 2030 as 10,000 baby boomers retire per day and begin cashing in on these benefits. Together these programs will allow for government dependence of nearly 80 million baby boomers. Social Security is based solely on age and not financial class and therefore, millionaires and billionaires will collect checks as well as receive drugs at a subsidized cost. Allowing for equal benefits regardless of financial class is slightly more democratic in that it does not act as a disincentive to people to provide for themselves in order to qualify for the funds. However, this does create a much larger class of people that the government is now on the hook to support. The projected cost of these programs is $184,000 per person. The vicious cycle of dependence will only increase as these levels of funding burden the economy and cause younger generations to go on welfare. These three mega programs go virtually unchecked as they operate outside of the annual budget process. These programs are given automatic priority over all other budgetary costs or needs. This is why Congress would need to create specific legislation to shorten the budget period and allow for debate over these programs on a regular basis.

The Remedies

Congress’s authority to modify provisions of the Social Security program was affirmed in the 1960 Supreme Court decision in Flemming v. Nestor, wherein the Court held that an individual does not have an accrued “property right” in his or her Social Security benefits. The Court has made subsequent decisions that clearly state that the payment of Social Security taxes conveys no contractual right to Social Security benefits. This is a significant point because in essence if an individual does not have a “property right” in regard to his or her Social Security, then the government can revoke that benefit without having to give the individual due process. The underlying moral duty to fulfill Social Security promises does not trump the basic constitutional principle that a legislative enactment such as this cannot bind a future Congress in the sense that the legislative enactment cannot be repealed or altered.

Our current legislature faces as a quandary as the entitlement pay outs have exceeded the amounts available. The entitlement programs by definition legally obligate the U.S. to make payments to any person who meets the eligibility requirements established in the statute that creates the entitlement. However, a provision of the Antideficiency Act prevents an agency from paying more in benefits than the amount available in the source of funds available to pay the benefits. Although these laws have not been followed by Congress, the Social Security Act states that Social Security benefits shall be paid only from the Social Security Trust Funds, and the act appropriates all payroll taxes to pay benefits. Legally, if there were insufficient funds in the Social Security Trust Funds to meet pay out obligations, beneficiaries would have to wait until the Trust Funds receive an amount sufficient to mail out checks, unless Congress made amendments to the laws. This is something that the Social Security Trust Fund has noted will come about, stating in August of 2010 that the combined OASI and ID Trust Funds are projected, “to become exhausted and thus unable to pay scheduled benefits in full on a timely basis in 2037.” The Trustees best estimates show that in this year the

The first option for reform is to move the retirement age from 65 to 70. This is clearly one of the simplest ways to improve, legislatively, the broken system. The biggest impediment to this option is the push back from soon to be retirees. Americans claim they want a smaller government, however, individually; most citizens are not willing to give up any benefits they currently receive from our large government. The AARP is willing to recognize that Social Security will run out of funds in the next few decades, however, even still they state in their literature that with social security reform measures, “extreme policy solutions aren’t necessary.” They have pieces that do state that the age should be pushed back; however, their moderate approach only seeks to push the age to 68 by 2028 and to increase the age to 70 by 2040. This is an easy proposal for AARP to make, considering the majority of their members may not be living in 2028, and even fewer will be living by 2040. It is essentially kicking the ball down the field to a time at which people are comfortable discussing. The AARP has also suggested, not surprisingly, increasing the payroll tax to fill the shortfalls. They have suggesting raising the payroll tax raised by nearly another 2%, further funding the expansion of government. It is a stance that liberals frequently take in this country, even when a government system is failing, the answer for them seems to always be: throw more money at the problem. There are few if any good examples of when increasing revenues for the government increased the effectiveness or efficiency of a social program. When Social Security was created, the life expectancy was much lower than it is today, and therefore, it was never intended to pay out to individuals for twenty years as it does today. By legislatively pushing the eligibility requirement to the age of 70, the money would be spread over a thinner pool of eligible retirees, a change that is especially needed for our retiring baby boomer class.

The second frequently discussed option is to privatize social security. One of the biggest threats to our economy is not only entitlements, but the dependency on entitlements. The modern trend of dependency includes the utter refusal of citizens to create and maintain private retirement accounts. The vast majority of adults either chose not to think about or partake in retirements plans or they do not worry about retirement funds as they have grown accustomed to the government bailing citizens out. Studies have shown time and time again, that if workers could invest what is currently taken from them in the form of Social Security payroll taxes, they would retire comfortably. The reason the U.S. government does not choose such an approach, is that they simply to not believe people to be smart enough or capable enough to do this for themselves. It becomes a debate over the chicken or the egg. Are the adults in the U.S. truly not self-sufficient, or have they grown this way after the many decades our society has been nurtured and cared for by the federal government? In his 1999 State of the Union Address, President Clinton proposed what he called Universal Savings Accounts, a market-based retirement account plan that would be dubbed an “add-on”. Proposals were for these add-ons to be funded through workers paying additional amounts of money into the accounts, mandatory increases in the payroll tax, and general tax revenue. Most proposals included combinations of voluntary individual contributions and general tax revenue. These proposals ultimately failed, but proved that Republicans and some Democrats recognized the need for some form of privatization. The Democrats are divided on this as many see any form of privatization as a threat by way of the fact that it diverts money away from social security and literally weakens the program. However, this is likely one of the better solutions as it would divert money out of the hands of the Federal government who often takes money out of this program for other purposes. By allowing the money to be invested privately, it would have a chance to grow and mature, without the need to raise the payroll tax. Additionally individuals should be able to own their specific private accounts. This could also motivate and persuade individuals to begin saving money in separate private markets after seeing the growth of their private payroll tax retirement accounts.

The Old Age Survivors Insurance and Disability Insurance program is a statutory entitlement program. Beneficiaries do hold a current legal right to receive benefits if they meet the Social Security Act’s eligibility requirements. However, Congress has reserved the “right to alter, amend, or repeal any provision of this Social Security Act.” and the U.S. Supreme Court has also affirmed the authority Congress holds in modifying provisions of this program. Due to the fact that it negatively impacts retirees directly, one of the largest voting groups, it will likely take real change initiated in the Senate and White House where terms are longer and give more cushion before entering the next election cycle. Congressmen and Congresswomen and have unfortunately shown that they are more concerned about re-elections than they are about drafting legislation to fix America’s failing financial wellbeing.