…House Speaker Nancy Pelosi (D-CA) said she would support President Obama’s proposed Social Security benefit cuts — even arguing that using the “chained CPI” would not be a benefit cut after previously telling President Obama “that House Democrats will not vote for any trims to future benefits in Medicare or Social Security, even a tweak to the cost-of-living index,” according to her hometown paper.
A defiant Congressional Progressive Caucus — which has 75 Members in the House — pushed back, releasing a statement declaring:
Members of the Congressional Progressive Caucus (CPC) are standing up against a proposal to cut Social Security benefits by changing the way we calculate inflation…Tying Social Security to chained CPI is a benefit cut and members of the CPC will not vote for a deal that cuts the benefits that millions of Americans rely on.
This Progressive Caucus statement follows similarly bold statements from individual Caucus members in the preceding 36 hours. Some are below (emphasis added):
Rep. Raul Grijalva (D-AZ), CPC co-chair:
“Chained CPI makes life harder for millions of retirees, weakens Social Security and doesn’t reduce the deficit by a penny. It’s a Beltway fig leaf that I will never support, and I call on my colleagues to make their feelings known as soon as possible before this becomes yet another piece of conventional wisdom that makes things worse.”
Rep. David Cicilline (D-RI):
“I will vote against any agreement that imposes cuts to already modest Social Security benefits and does not ask millionaires and billionaires to pay their fair share.”
Rep. Jim McDermott (D-WA):
“Reducing cost of living adjustments is a Social Security benefit cut. Any deal that cuts Social Security, Medicare or Medicaid benefits is unacceptable and I will oppose it.”
Earlier today on radio, Glenn told the audience about the artist in Boston who displayed a painting of Obama crucified on a cross like Jesus. And while many have protested the art, including people in New York City, Glenn actually agreed with the artist that the first amendment should override people’s hurt feelings over the image. That’s why he decided to create some art of his own.
“Art is in the eye of the beholder and this guy has a right to do this. I think its offensive. I don’t think its close to reality but whatever floats your boat. I support his right to do exactly that. I agree with him that people who are upset should not trump his right to be able to do it and be able to hang it wherever he wants – as long as its wanted there,” Glenn said.
And while some may find it surprising that Glenn would support the right for a person to paint a picture of Obama as Christ, he said it all goes to the Constitution – the one irrefutable piece of art which gives people the freedom.
“That document says I can’t stop him, and the spirit of that document is that I shouldn’t try,” he said.
But would people on the left agree with Glenn? In the same way that the artist pushed the buttons of conservatives and people of faith with his painting of Obama, Glenn decided to create his own piece of art with Obama.
After a day drinking a lot of water, Glenn had a mason jar filled with…his own special brew of yellow liquid on set. Glenn took a Obama figurine, and then placed it in the jar. The result? “Obama in Pee Pee” – which will soon be up for sale for $25,000.
Spending Daily | December 20, 2012
New Video: Santa Claus Inc. Fears Fiscal Cliff
Bankrupting America, a project of Public Notice, released a new video looking at how the uncertainty surrounding the fiscal cliff is impacting Santa Claus Inc., a large international toy manufacturer located in North Pole, but incorporated in Delaware. Owned and operated for the last 1,700 years by long-time president and CEO Kris Kringle, Santa Claus Inc. is currently the largest employer north of Greenland, but now facing the possibility of another recession if Washington fails to reach an agreement on the fiscal cliff, that could all change. Click here to watch the interview.
Why Taxes Aren’t the Problem
Caroline Baum editorializes in Bloomberg, “If we could just restore those Clinton-era tax rates on top earners, why, happy days would be here again! Not exactly. The $1.2 trillion of revenue President Barack Obama hopes to generate by raising taxes on the rich, revised from an initial $1.6 trillion, represents only a small down payment on a budget solution. By minimizing the real source of the problem, which is runaway growth in entitlements, especially health care, Obama isn’t doing the country any favors. Yes, tax receipts have been depressed as a result of five years of recession and slow growth. But even if they were to revert to their historical average of 18 percent of gross domestic product, the dollar amount would be $2.8 trillion, 14 percent more than actual 2012 revenue. Meanwhile, spending has more than doubled since 1998…”
“Fiscal cliff: The lowest point”
Politico reports, “President Barack Obama and House Speaker John Boehner opened their negotiations last month by pledging to work constructively to avert the fiscal cliff. But on Wednesday, the two men at the center of the talks traded blame, not counteroffers. Obama and Boehner hit their lowest point yet during a day of sharp words and legislative confusion — and the outlook significantly darkened for reaching a deficit-reduction deal before the new year. The talks are stalled, and Boehner is scrambling to muscle his own bill through the House — a proposal the president has already promised to veto. With 12 days to go until the deadline, the president faulted Boehner for wasting time on a bill that will never reach the Oval Office. … Boehner responded with a curt statement from the Capitol, where he told the president to ‘get serious soon,’ or else Obama ‘can be responsible for the largest tax increase in American history.’”
Senate Republicans Aim To Cut ‘Slush’ From Sandy Bill
The New York Times reports, “ Republicans in the Senate, seeking to substantially trim a Hurricane Sandy aid package being sought by Democrats, are planning to unveil a $23.8 billion emergency spending plan to finance the recovery efforts of states devastated by the storm. The move byRepublicans comes as the Senate has opened debate on a $60.4 billion aid bill brought by Democratic leaders. But some Republicans are concerned that the emergency spending bill was cobbled together too quickly without the benefit of extended review, and that it consists of a few projects they say may not beneeded.
Feds Recover Only Fraction Of GM Loan
The Wall Street Journal reports, “General Motors Co. took its biggest step yet to escape the shadow of bankruptcy and a government bailout, saying it would spend $5.5 billion to buy a chunk of its stock held by the U.S. Treasury, which now plans to unwind itself from the auto maker within the next year or so. The agreement moves the federal government’s bailout of U.S. auto makers into its final chapter and comes as the Obama administration works to wind down financial-crisis era programs—with mixed results. In the bailout of the automotive industry alone, the U.S. Treasury provided a total of $79.1 billion in loans to GM, GM’s former financing arm Ally Financial Inc., Chrysler Group LLC and Chrysler’s former lending arm Chrysler Financial. It has recovered a total of $45.6 billion.”
No Budget Deal Could Stall 100 Million Tax Returns
According to Bloomberg, “As many as 100 million U.S. households, or two-thirds of the total, may not be able to file their tax returns until at least late March 2013 if Congress doesn’t reach an end-of-year budget agreement, according to the Internal Revenue Service. … With less than two weeks left in the year, Congress hasn’t prevented expansion of the alternative minimum tax, or AMT, for 2012. Tax filing is scheduled to start in January and run through mid- April.”
Boehner Pushing Plan B in House
The Hill reports, “Fiscal-cliff talks deteriorated into dueling press conferences on Wednesday as Speaker John Boehner (R-Ohio) scrambled for enough Republican votes to pass his backup tax plan over a presidential veto threat. … Boehner’s proposal would prevent much of the ‘fiscal cliff’ of tax hikes from going forward in January, but would allow tax rates on income over $1 million to increase. Under pressure from its members, GOP leaders decided late Wednesday to allow a separate vote on a measure replacing the automatic cuts from sequestration. Several members had said they might not otherwise support the measure.”
Kerry Holds Sandy Aid Hostage For $150 Million in Aid to Fisheries
The Hill reports, “Sen. John Kerry (D-Mass.) said the emergency-spending bill for Hurricane Sandy recovery efforts won’t pass unless money for fisheries is included. ‘This legislation is not going to pass without the inclusion of this money, point blank,’ Kerry said on the floor Wednesday. The Senate started consideration this week of H.R. 1 as a vehicle to provide $60.4 billion to Hurricane Sandy recovery efforts, but some conservatives have said the bill has unrelated and unnecessary spending measures, during a time when lawmakers are trying to make spending cuts. The bill includes $150 million for fisheries in states that have disaster declarations, including Mississippi and Alaska — states not hit by Hurricane Sandy. In October, Hurricane Sandy hit the Northeast hard, affecting several states and their infrastructure. Kerry, along with Sens. Jeanne Shaheen (D-N.H.), Sheldon Whitehouse (D-R.I.), Mark Begich (D-Alaska) and Barbara Mikulski (D-Md.), said Sen. Tom Coburn (R-Okla.) has introduced an amendment to the bill that would jeopardize the funding for these fisheries that have been hit by bad weather and reduced stocks this year.”
On Wednesday, the conservative ForAmerica political organization and other groups threatened House Republicans who are considering voting in favor of House Speaker John Boehner’s tax-hiking “Plan B” fiscal proposal not to do so.
ForAmerica chairman Brent Bozell told reporters at a Wednesday press conference that he’d put “primary challengers” up against Republicans who vote for Boehner’s “Plan B.” Boehner’s “Plan B,” an unsolicited offer, is a tax hike on all Americans who make more than $1 million per year. Boehner’s plan was originally proposed by New York Democratic Sen. Chuck Schumer – and later endorsed by House Minority Leader Nancy Pelosi – in early 2012.
“I’m going to make a prediction, right here and now, and write it down – and call me on it. If the Republicans support this tax increase, they will lose control of the House in the 2014 elections,” Bozell said.
They will lose control of the House. Not only that, but a whole lot of members who thought they were safe and who thought they could get away with this will lose in their own districts. It doesn’t take a rocket scientist to figure this one out. This is precisely what happened to them six years ago and they’ve already forgotten that message. The Republicans were tossed out of the majority when they broke their word on spending. Now they’re breaking their word again but it’s not just spending. It’s taxes on top of that. Fiscal conservatives will not stand for this. This is a terrible bill. This is a terrible box Republicans have painted themselves into, in this corner. They’ve got to try to get themselves out of it. But going for higher taxes and trying to play “Democrat-lite” is the worst possible solution and the negotiations that are going on right now between the Speaker’s office and the Obama administration is the stuff of Keystone Cops. It is embarrassing how badly this has been negotiated. Real fiscal conservatives would simply walk away from this mess.
A GOP operative told Breitbart News that House Republicans had better heed Bozell’s warning: “ForAmerica has built the closest thing the Republicans have to Obama’s online machine.” The GOP operative claimed, “They’re able to get millions of conservatives aware and active on specific issues at the drop of a hat. I’d worry a lot more about ForAmerica than Grover.”
Americans for Tax Reform, Grover Norquist’s group, issued a statement on Wednesday saying they don’t support or oppose Boehner’s “Plan B,” and they empathize with Republicans who will support it. That said, ATR said it does not endorse Boehner’s plan.
Congressman Tim Huelskamp (R-KS), ForAmerica Chairman L. Brent Bozell III, Heritage Action CEO Michael Needham and others speak about the fiscal cliff. | http://heritage.org
Located on the corner of Figueroa and 101st Street in South Central Los Angeles, Tam’s Burgers has been a part of the neighborhood for almost thirty years. Nick Benetatos took over the restaurant in the late ’80s after his father retired. Tam’s has withstood multiple recessions and even the 1992 LA riots.
“When the markets were burned down, liquor stores were burned down, everything was burned down, people had nowhere to go, they came to us. We were handing out loaves of bread for free.” says Benetatos. “We have much love for the community. And the community obviously has much love for us.”
But Tam’s is now facing its most daunting challenge yet: being deemed a “public nuisance” by the city of LA. The Los Angeles Police Department believes that Tam’s is a magnet for drug dealers, prostitutes and violent criminals.
“It has a nexus and a connection to a disproportionate amount of criminal activity,” says Detective Eric Moore, head of LAPD’s Nuisance Abatement unit.
But Benetatos says that he is simply making the best of a tough situation. He’s even tried to work with LAPD before, honoring their requests that he remove payphones on the property and remove tables for outdoor seating, which he says resulted in a 15 percent decline in revenues. The city’s zoning board has since ordered him to comply with 22 separate conditions, such as hiring a full-time security guard, fencing in the entire property and installing a security camera that links directly to LAPD’s electronic surveillance system. Benetatos says that the cost of compliance would put him out of business.
“The LAPD wants to control my business and run it in their view of how it should be run, and I’m trying to run it in the view that I’ve been here for 30 years and know how it should be run, and I’m successful,” says Benetatos, who appealed the zoning board’s conditions at a recent city council meeting.
Entrepreneur vs. LA’s city government: Who will prevail? Watch Reason TV’s video above to find out.
Abstract: The United States faces a real fiscal crisis, and the impending fiscal cliff of massive tax hikes and spending cuts in January is only the first act. In early 2013, the federal government will exhaust its ability to issue debt legally. Yet as large and as major a concern as federal budget deficits are today, they are of secondary consequence compared with the fiscal quagmire of unaffordable entitlement spending in the next decade. Fortunately, the entitlement problem can be resolved by six simple reforms to improve the fiscal future for Social Security and Medicare. But to implement these reforms, President Barack Obama must lead.
A high-stakes fiscal policy debate of unique size and import has just begun. Absent congressional action to the contrary, a massive slate of tax hikes and spending cuts will take effect on January 1, and that is only the first act. The second act will occur early in 2013 when the federal government will exhaust its ability to issue debt legally. Both acts need prompt solutions.
Speaker of the House John Boehner (R–OH) made the first move. After congratulating President Barack Obama upon his reelection, Boehner promised a willingness to work with him, giving Obama the additional revenues he desired through pro-growth tax reform accompanied by reforms in entitlement programs. President Obama’s counter, while unsurprising, was unhelpful because he focused exclusively on fiscally meaningless and economically harmful tax hikes on upper-income taxpayers. The President repeatedly has argued for a balanced approach, but he has yet to offer a single meaningful proposal on spending reductions.
While the President prepares to start his second term, he should set about negotiating in good faith with Republicans, especially in the House where Republicans were returned to office in the majority with expectations of cutting spending without increasing taxes. The voters, we are told, expect it. This means the President cannot sit back and just harp on revenues. He needs to address spending and in particular entitlements.
Fortunately, the President has occasion and opportunity to lead by proposing some simple yet transformational reforms in two of the prime sources of the nation’s fiscal problems: Social Security and Medicare. Better yet, many such reforms have already been thoroughly considered and enjoy broad bipartisan support, lacking only the moment and the leadership to become a reality. These proposals will not resolve either program’s key structural flaws—they constitute a start of the reform journey, not the conclusion—but they would be a powerful start that would markedly alter the nation’s fiscal trajectory.
At the start of a President’s second term, the political stars are in the best possible alignment for solving big problems. All the President needs to do is seize the moment. This is the moment; President Obama must lead.
Fiscal Cliff: By Design, Not by Chance
Many events arrive by chance, but the present fiscal spectacle is not one of them. The fiscal cliff results from explicit actions by Congress and the President to push difficult fiscal policy issues past the recent election. In this, they succeeded, although it took a series of legislative acts to accomplish it. With regard to taxes:
- The payroll tax cut, extended in the spring of 2012, will expire on December 31, 2012.
- The extension of the Bush tax cuts, signed into law in December 2010, will expire at the end of the year.
- This same law also established a new structure for the death tax with a 35 percent rate and a $5 million exemption per spouse, which will expire at the end of the year.
- Various Obamacare tax hikes begin at the start of 2013.
The same pattern holds for the spending cuts. For example, the sequester slated to gouge defense spending while making modest cuts—such as a 2 percent across-the-board cut to Medicare providers—reflects the final leavings of the earlier Budget Control Act, which created the failed “supercommittee.” Early in 2012, Congress also prevented deep and disastrous reductions in Medicare provider payments, but this “doc fix” remedy expires at the end of the year.
In May 2011, the federal government exhausted its legal authority to finance deficit spending by issuing debt. The U.S. Department of the Treasury exercised its typical but limited authorities for temporarily creating more room under the “debt limit,” allowing policymakers to postpone action until early August. A brutal and economically risky political battle ensued, eventually resulting in legislation that raised the debt limit by $2.1 trillion, sufficient to fund the federal government past the November election.
Projections now suggest that the government will reach the debt limit late in 2012, after which the Treasury will again deploy its limited authorities. This will trigger what could be another difficult negotiation for Congress and President Obama—a negotiation that will be heavily influenced by what happens with the fiscal cliff.
No Time for Distractions
President Obama clearly believes in raising taxes on upper-income taxpayers, and he is willing to weaken the economy, slow job growth, and constrain wage growth to do so. It is difficult to fathom his acceptance of this trade-off of economic security for an ideological doctrine of social justice, especially considering that this long-standing debate likely will rage indefinitely. However, these tax hikes are a distant sideshow in the present context, a political distraction that diverts attention from the central fiscal issue of runaway spending, which gives rise to persistent and economically dangerous deficits.
In his own budget, the President proposed to extend the Bush tax cuts except for those making $250,000 or more, raising $836 billion over the next 10 years. His companion proposal to limit the value of deductions for upper-income taxpayers would raise another $574 billion, for a total of $1.4 trillion. In absolute terms, that is a lot of revenue. However, even allowing for all the other budget gimmicks and tax hikes in Obama’s budget, the federal debt would rise by $7.7 trillion over the next 10 years including these tax hikes and by $9.1 trillion without them.
Obama’s tax hikes would reduce the rise in federal debt over the next 10 years by about 15 percent. The President is silent about the remaining 85 percent. The numbers confirm that President Obama’s tax hike demands are at best tangential to attaining a balanced budget.
Fiscal Cliff Today, Entitlement Crisis Tomorrow
As large and as major a concern as federal budget deficits are today, they are nevertheless secondary in consequence to the fiscal quagmire of unaffordable entitlements. Social Security and Medicare in particular share certain vital characteristics. Both programs are extraordinarily complicated, having been built up in complexity over the years one Congress at a time. Similarly, each program badly needs programmatic reforms. For example, the minimum benefit in Social Security is woefully inadequate to protect low-income seniors from poverty, and Medicare still lacks a catastrophic benefit. These are only some of the many shortcomings that must be addressed in fundamental overhauls of each program.
Of most immediate concern, however, is that Social Security and Medicare are unaffordable in their current forms. When this year’s kindergarteners enter college, just 13 years away, spending on these two programs plus Medicaid and interest on the debt will devour all tax revenue. (See Chart 1.)
Social Security will lack the funds to pay full benefits beginning as early as 2033. Medicare’s unfunded promises in current dollars reach into the many tens of trillions of dollars. These facts are not in dispute. Solutions to our fiscal challenges are needed, urgent, and inevitable.
Carpe Diem, Mr. President
The fiscal cliff and the debt limit have set the stage, but there is also the reality of the rhythms in the American political system. There are certain windows in every four-year or eight-year cycle when bold leaders can achieve bold things. The first few months of a reelected President’s second term is one such window, but it closes fast, and lame-duck status arrives quickly.
Thus, the President must adopt the mantle of leadership, rather than brinksmanship, to steer the nation away from the fiscal cliff and all that is set to follow, and he must start with spending. However, the critical silver lining is that simple, commonsense, and thoroughly vetted solutions such as the four listed below constitute a strong start on the journey to more complete programmatic reforms remedying acknowledged flaws in these programs, and they already enjoy broad support across the political spectrum.
- Raise the Social Security eligibility age to match increases in longevity. Originally set at 65, the normal eligibility age is rising two months every year until 2022, when it will reach 67. According to the Social Security actuaries, continuing to increase the eligibility age to 69 by the year 2034 and allowing it to rise more slowly thereafter to reflect gains in longevity could go a long way toward reducing Social Security’s funding shortfall. While this would not reduce today’s budget deficit, it would strengthen Social Security’s finances and dissipate far more important long-term budget pressures.
- Correct the cost-of-living adjustment (COLA). The annual COLA benefit adjustment is determined today by the Bureau of Labor Statistics’ Consumer Price Index (CPI). However, the CPI, an antiquated measure, generally overstates inflation, meaning that benefits are increased a bit too much each year to offset inflation. The effect on benefits in a given year of switching to a more accurate inflation measure is minute, but Social Security spans generations. Again, according to the Social Security actuaries, using a more modern inflation measure would substantially reduce Social Security’s shortfall over time.
- Raise the Medicare eligibility age to agree with Social Security. Medicare has an eligibility age problem, but unlike Social Security, the Medicare eligibility age remains stuck at 65. An obvious solution is to wait five years and then slowly raise the eligibility age to align eventually with the Social Security eligibility age. While the short-term budgetary savings would be negligible, the long-term savings in Medicare would be profound.
- Reduce the Medicare subsidy for upper-income beneficiaries. In 2012, the average Medicare beneficiary received a subsidy of about $5,000. The subsidy is the per capita amount of Treasury revenue that is used to fill the financial hole arising each year because Medicare’s premiums are inadequate, in conjunction with its other revenue sources, to cover Medicare’s total costs. Subsidizing Medicare benefits for low-income seniors—and perhaps for some middle-income seniors—makes sense, but upper-income seniors do not need and should not receive a $5,000 subsidy to buy Medicare health insurance. The Medicare subsidy was first cut for the wealthiest seniors in legislation signed by President George W. Bush in 2004 by income-relating premiums so that higher-income beneficiaries pay a higher share of their Medicare cost. It was cut further in Obamacare, and President Obama proposed to pare it back still further in his budget proposals of February 2012 with still-higher premiums for upper-income beneficiaries.Medicare has many programmatic problems that demand attention, and the sooner the better, but the immediate fiscal problem is straightforward: It is the subsidy. The total cost of the Medicare subsidy—about $230 billion in 2012—will soar over time as health care costs rise and the baby boomers retire. Paring back the subsidy for well-to-do retirees is an obvious step toward reducing the budget deficit today and shoring up Medicare for the long run.
The four foregoing proposals for Social Security and Medicare meet the test of simplicity, being relatively easy to communicate to the American people, having been thoroughly vetted, and enjoying widespread support. Together, they would dramatically improve America’s fiscal future for the better. Two additional proposals, one each for Social Security and Medicare, meet the tests of simplicity and effectiveness but have not been considered as intensively. Yet they should also garner bipartisan support and consideration.
- Phase out Social Security benefits for upper-income retirees. Everyone who has ever paid into Social Security is entitled to the benefits prescribed by law. However, as a nation, we need to ask whether today’s working families should pay payroll taxes so that upper-income retirees can continue to receive their checks. We need to ask why phasing out the Medicare subsidy to upper-income seniors while continuing to send them their full Social Security check would make sense. In short, Social Security should be social insurance against poverty rather than a government-run pension scheme.Some might charge that this is redistributionism, but would anyone suggest that millionaires should receive food stamps? Food stamps and other welfare programs are specifically intended to operate as part of the social safety net, yet their existence constitutes a form of redistributionism that most Americans accept. Social Security (and Medicare) should become real insurance against poverty, meaning that only those seniors who need help should receive help. On the other hand, if Social Security remains a universal government-run pension, then it remains a vastly larger program built on an entirely different redistributionist principle: redistribution from workers to retirees, including the wealthy.
- Consolidate Medicare’s elements and collect a single higher premium. Medicare is actually three distinct components, referred to generally as Parts A, B, and D, reflecting the fact that Medicare was built up over many years. This antiquated structure is confusing and inefficient. An obvious reform is to consolidate the three distinct parts into a unified Medicare program.Medicare Parts B and D each require beneficiaries to pay a premium covering 25 percent of the cost of the programs. As the Medicare Parts are consolidated, the premium should be consolidated as well and then raised to 35 percent of the relevant costs.
The nation’s fiscal problems, today and beyond, derive entirely from excess spending, especially entitlement spending, not a dearth of revenue. While current revenues are exceptionally low as a share of the economy, this is due almost entirely to the weak economy. As analysis by the Administration’s budget office and the Congressional Budget Office affirm, revenues will return to a more normal 18.5 percent of the economy as the economy recovers. Given these facts, President Obama’s insistence on an economically harmful tax hike for what is essentially a fiscally meaningless increase in revenues will not help policymakers navigate successfully around the fiscal cliff.
A hopeful sign, however, is that the political timing is propitious, and important policy reforms in Social Security and Medicare are simple, straightforward, and well known. These proposals, while not correcting more fundamental programmatic flaws, would materially correct the spending excesses in these programs. Better yet, these proposals are not partisan in nature, but have been supported on a bipartisan basis in the past.
All that is lacking to avoid the fiscal cliff, profoundly stabilize the nation’s public finances, and shore up these critical entitlement programs is for the President to take the lead. The nation waits.
—J. D. Foster, Ph.D., is Norman B. Ture Senior Fellow in the Economics of Fiscal Policy in and Alison Acosta Fraser is Director of the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.
Originally posted at Heritage Foundation.
Later today the Republican-led House of Representatives will vote on “Plan B,” the latest unsatisfactory proposal put forward by Speaker John Boehner (R-OH) to avoid the fiscal cliff. Boehner’s plan would protect most Americans, except for millionaires, from a tax hike. But even this is a poor fix because it ignores the real problem: spending.
While lawmakers from both parties squabble over tax rates, a fiscal crisis is looming on the horizon. Entitlement programs — Social Security and Medicare to be precise — have unfunded obligations of $48 trillion. By comparison, the fiscal cliff carries a price tag of roughly $650 billion. As lawmakers talk about another debt-limit increase, they need to think seriously about America’s long-term obligations.
So what can our elected leaders do about it?
The first step is recognizing the problem exists, which for some Democrats is mighty difficult. A story in Politico reveals that liberals are having “heartburn” and doing “some painful soul-searching” over a relatively simple fix to Social Security’s annual cost-of-living increases.
Heritage’s David John, senior research fellow in retirement security and financial institutions, believes the time is ripe for a few Social Security fixes. Any fiscal cliff settlement, John writes in a new Heritage report, should address Social Security’s grim financial future.
Over the next 75 years, Social Security will owe an estimated $11.3 trillion more in benefits than it will receive in payroll taxes. It has been running deficits since 2010, according to the Social Security Administration.
To make up the difference, Social Security will need “massive annual injections of funding in addition to what the program receives from payroll taxes,” John writes. Don’t believe the liberal myth that Social Security is on solid financial footing. The numbers don’t lie. It’s very much part of the spending debate facing Washington.
The longer Congress delays action, the harder it will be to solve the problem.
There is already bipartisan support for two of the three ideas recommended by John. All three are simple fixes that should be included in any fiscal cliff deal.
1) Fix the annual inflation adjustment. The current index used to determine Social Security’s yearly cost-of-living adjustment does an inferior job of measuring inflation. A better solution is a “chained” index, which more accurately measures inflation. This change would immediately result in savings for Social Security. And it’s easy to do — the new index can be implemented quickly and without complication.
2) Increase the full retirement age. Americans are living longer thanks to advances in medicine. And yet Social Security has not kept pace. The important number here is the how much longer people who have reached age 65 will live. That number is trending upward, by nearly a year, according to recent government data. Congress should gradually increase the full benefits age to 68 and then index it to life expectancy in the future.
3) Focus benefits on those who most need them. It’s time to return Social Security to one of its original purposes: protecting seniors who face economic hardship. In order to make Social Security a true insurance program, upper-income seniors would face reduced benefits or none at all. This would strengthen the program’s finances and prevent future tax hikes on younger workers.
There’s more to do beyond these three solutions, but they would provide a solid foundation for future reforms. Heritage’s plan, Saving the American Dream, redesigns Social Security and other entitlement programs to guarantee assistance to those who need it — and keep the American dream alive for future generations.
Arlington, Va. – Bankrupting America, a project of Public Notice, released a new video looking at how the uncertainty surrounding the fiscal cliff is impacting Santa Claus Inc., a large international toy manufacturer located in North Pole, but incorporated in Delaware. Owned and operated for the last 1,700 years by long-time president and CEO Kris Kringle, Santa Claus Inc. is currently the largest employer north of Greenland, but now facing the possibility of another recession if Washington fails to reach an agreement on the fiscal cliff, that could all change.
“If Washington doesn’t do something about the fiscal cliff by the end of this year, my taxes are going to go up and the economy will tank again,” said Kris Kringle, president and CEO of Santa Claus Inc. “If those Jack Frosts in Congress keep punting on solving our problems, I’ll have to cut back on services and lay off employees. That’s bad for business, bad for their families and bad for our customers.
“Washington can help small business owners and all Americans if they solve the fiscal cliff by keeping taxes low and find a way to cut spending with careful deliberation, not reckless slashing,” Kringle continued.
Gretchen Hamel, executive director of Public Notice, issued the following statement on Kringle Corp. and the fiscal cliff:
“Whether you’re a small business on 34th Street or a global enterprise in the North Pole, the prospects of plunging back into a recession are devastating. We can’t afford to jingle all the way off the fiscal cliff because lawmakers are beholden to ‘die hard’ special interest groups that refuse to touch entitlement programs. Americans understand that you can’t get everything on your wish list; it’s time for Washington to get off Santa’s lap and come around to reality.”
In November of 1924 Calvin Coolidge who came to the White House the year earlier after the death of Warren G. Harding, was elected in his own right to the presidency taking 35 states, 382 electoral votes and 54% of the popular vote vs John W. Davis’ 136 Electoral votes and 28.8% popular and Progressive Robert M. La Follete who managed 16.6% of the popular vote but carried only Wisconsin.
Despite the prosperity of the nation and his own personal popularity Coolidge did not choose to run for president in 1928 and would retire from public life dying in 1933 at the age of 60.
Twelve days after Coolidge’s election in the state he served as governor, a Sicilian woman named Grazia gave birth for the seventh and final time. Grazia had come to America shortly before the eruption of Mt. Etna and follow up earthquake that destroyed the city where she and her future husband Antonio had lived. He had left Sicily before her and after a brief time in Brazil, would settle in Fitchburg Massachusetts There he would become a barber, marry Grazia, and raise their family at the end of a dead end street.
Two of their 4 girls and two boys did not live to see their sister Mary born. Steven died at birth and the oldest girl had died at age three. Mary would be baptized at the fairly new Italian Catholic Church, St. Anthony di Padua that her parents had been married in and would live her entire single life in the house on Matthews street where she was born.
On February 22, 1937 Congressman James Paul Buchanan of the 10th District of Texas died. His wife was considered a shoe in for the special election but had not yet decided to run. A congressional aide named Lyndon Johnson, wanted the seat. He visited his father a former three term state Rep Sam Johnson for advice. The elder Johnson as Biographer Robert Caro put it, didn’t have to think twice. “She’s an old woman. She’s too old for a fight. If she knows she’s going to have a fight she won’t run. Announce now—before she announces. If you do she won’t run.” Lyndon listened to his father. Mrs. Buchanan didn’t run and after a hard fought victory he took his first step on the road to the White House.
In August of that year Angelina Garbarsi and her husband came from Boston to stay with their relatives on Matthews Street for two weeks as they did every year for the Annual two day Madonna Della Cava festival at Saint Anthony Di Padua celebrating a 13th century Marian Apparition in Sicily.
While Mary & her family (including older sister Lucy, Angelina’s Goddaughter) were strong Catholics, the childless Angelina was considered particularly devout and saintly, even for her time. She attended daily Mass and had taken the vows of devotion in honor of the Madonna Della Cava including abstaining from meat on Wednesdays for life. She had spoken to Mary and her godchild Lucy about the faith often during her annual visits and while Lucy’s devotion to prayer and her Godmother would be strong and lifelong, that November it would be Mary who would take that same vow on her 13th birthday that Angelina had taken the previous century. She would never break it.
June 1942 was a pivotal time for America at war. Off the Island of Midway the American Navy under Admirals Fletcher and Sprague would win the critical battle of Midway sinking four Japanese Aircraft Carriers and destroying the cream of the Japanese naval air force.
That same month Mary graduated from Fitchburg High School. Many members of the class of 42’ would go directly to war. Some would not come back. Mary’s older brother Johnny was already serving in Patton’s Army and would eventually be awarded the Silver Star for gallantry. A cousin that Mary corresponded with regularly would be killed in action. Mary would use her math and typing skills sharpened on a Royal Typewriter that her father skimped to buy her to good effect as a secretary but he drew the line when one of her friends offered her a chance to join her in the program flying military aircraft domestically freeing up the men for combat It would be one of the biggest disappointments of her life and she would speak of it whenever an air show came to town.
In 1946 Winston Churchill gave the speech coining the term “Iron Curtain” to describe the state of countries made puppets under Soviet control at the end of World War 2. It was a public declaration of the new reality of the conflict between the free west and the enslaved nations of the Communist world that would dominate life on the planet until the end of the 20th century.
In 1946 Mary would lay out an ultimatum to a 25 year old sailor named Dominic. They had met through a comedy of errors a few years earlier and when that sailor, who was a hardworking, gregarious carpenter returned from the Pacific he was anxious to marry her. Mary bluntly refused if he remained in the navy. Dominic wanted a future in the navy, but he wanted one with Mary more. They would marry the next year and raise five children in their 40 years of marriage.
1968 would begin with the Tet Offensive in Vietnam a military disaster for the Communists but a Propaganda victory leading to the defeat of South Vietnam and causing Lyndon Johnson to not seek re-election. Martin Luther King and Robert Kennedy would be assassinated within a few months of each other and in November Richard Nixon would win his first term as president.
Just before Christmas in 1968 Mary & Dominic would move their five children to a much larger house built next door to Grazia who had been widowed the year before. It was largest home the family had ever had with 4 bedrooms three bathrooms to be shared by the children ages 5-20. Ironically, within a few years 3 of the five children would be married and gone.
In 1974 Richard Nixon resigned as a result of the Watergate scandal, a transformative event in American political history that is still felt today. Nixon was ill in body and mind at the end. He would recover physically and pols would consult him privately on serious matters but the miracle necessary to recover his public reputation would not come in his lifetime.
It would be a different story in 1974 for Mary. For the second of three times the miraculous would intervene in Mary’s devout catholic life. This occasion was in a near empty basement chapel at St. Bernard’s Catholic Church.
After Sunday Mass at St. Anthony’s Mary would attend the healing services of Fr. Ralph DiOrio at St. Bernards making prayer intentions for her ailing mother.
Mary didn’t tell Fr. DiOrio about illness that reduced her to an all milk diet keeping her from the spicy Italian foods that she so loved. After all she had somehow survived a horrific gas explosion more than a decade before, her terrible burns inexplicably healing without scaring thanks to a cream nobody heard of, purchased by her husband days before, from a salesman nobody knew that he applied directly afterwards from a jar nobody could find. That explosion and two unrelated illnesses had brought her so close to death that by age 50 she had already received the last rites three times. Between that and a life that included some gunplay in defense of her business & children during a long incapacitation of her husband, a limited diet was certainly not going to elicit complaint.
But that particular Sunday after the service ended Mary’s son approached the priest telling him of her illness and asking him to pray for his mother. Fr. DiOrio calling Mary over declaring: “You’ve been coming here all these weeks and you never told me you were sick?” When Mary deferred citing her mother’s illness the priest insisted on praying over her. At the touch of his hand she collapsed. When she revived 15 minutes later he ordered her to go home and eat “A good Italian meal” She went home and feasted on Italian food. To the amazement of her doctor who she visited that week, her illness was gone.
Later that same year she would get a job at the Safety Fund Bank in Fitchburg. Before the end of the year her experience from the business they owned brought her the position of head teller. She would stay their till her retirement.
1994 was a year of political change in the country. For the first time since the 50’s the GOP controlled the House of Representatives and the country would shortly move from deficit to surplus. The Republican Revolution and Contract With America would mark a resurgence of the GOP for years.
1994 would be a year of change for Mary. Her mother had died in 1986, Dominic died in 1987 and her final child would marry and move out the very next year. With an empty house Mary had thrown herself into her work but at age 70 she decided it was time to leave. Her life remained busy. She worked the polls for the city, attended daily Mass, and served the church in the senior’s group, and as a Eucharist Minister to the sick & homebound where one final time the miraculous would visit.
But the biggest change in her life was, for the first time in her life she had abundant free time for her grandchildren. Most were now teens, some had children of their own, but the two youngest 1 & 3 would get considerable attention from her in their formative years. By 2006 both of them and their father would take the Madonna Della Cava vow Mary had taken almost 60 years before. For her it was a source of considerable pride.
2012 was a big election year for America; Barack Obama was re-elected and in Massachusetts Scott Brown was defeated after winning a special election two years before.
2012 was a full year for Mary. She watched her youngest grandson graduate from her Alma Mater 70 year after her class of 42. Her oldest daughter watched over her living in the house Mary was born in 88 years prior helped by a grandchild and his family. She spent the year surrounded by her children, grandchildren and great grandchildren and her older sister Lucy still active at 91.
She still had her New Testament, falling apart from daily reading as two others had before. She had her pistol, but not her bullets, unknown to most and over her objections her oldest son had taken her ammo. She never owned a computer, a cell phone (let along a smart phone), a credit card or cable TV and she was happy.
On Nov 6th Mary voted for Scott Brown, Two years earlier Brown was the first member of the GOP she had ever voted for in 64 years and talked of it to Robert Stacy McCain.
This year after voting for a Republican for president for the only time of her life she greeted the poll workers whose tasks she had once shared still angry her Scott Brown sign had been stolen.
10 days later on her 88th birthday she renewed her license but a few days later took ill. She was hospitalized. Her daughters never left her side and her children and grandchildren visited her daily.
16 days after her initial doctors visit and five days after returning home, my mother Mary died in the house next door to the one she was born in. She lived a long useful eventful life full of faith and family and had positively touched the lives of others.
Her life might seem an anachronism to people today, I think America would be better off if they saw it as an example.