The Ticking Time Bomb - Unfunded Government Liabilities

Here's the problem boys and girls - we currently have 121 trillion dollars of unfunded government liabilities. That amounts to $340,000 each for every man, woman, and child in America (or $1,360,000 for a family of four). That doesn't even count the current actual debt of 16 trillion dollars. The current, annual deficits of roughly one trillion dollars a year, would balloon to five trillion dollars a year if the government was forced to put money aside for those unfunded liabilities. The government requires corporations to put such money aside for their future liabilities, but hypocritically never regulates itself to do the same. The problem won't fix itself, will burst someday taking down all entitlements programs with it, and it needs to be addressed now, not then if we are ever to avoid collective financial doom. However, every time a politician finally mounts the courage to even talk about the issue, you liberal Democrats start screaming bloody murder, but you never attempt to enact a solution.

The Hidden Costs To You of Taxes, Government Loans, and Subsidies

Government needs taxes to pay for the military that protects us plus provide beneficial services (e.g. roads, social security, etc.) and unfortunately in some cases, wasteful services (e.g. outrageous pensions for government workers, lifetime welfare for people not handicapped, etc.). Whether or not a new tax directly imposes an additional tax burden for you to pay, it is like a hidden tax increase on everyone. A new tax on only the wealthy – you will pay a hidden tax for it too. A new tax only on corporations - you will pay a hidden tax on it too. Not paying any taxes before or after the new tax - you will pay a hidden tax on it too. How?

Whether some or all people or businesses actually pay the new tax, the impact is the same. They will have less money left to spend for other purposes and also less money to save. Less money to purchase goods or services. That depresses demand for goods and services which in turn means that less people are needed to provide those goods and services. The hidden cost of that to you is:

1. People will either be laid off and/or receive smaller or no raises
OR
2. New people that would otherwise have been hired will not be hired
OR
3. Prices will be raised to cover lost income which, if they stick, means that people will have less disposable income to buy other goods and services further accelerating and repeating this downward cycle.

Therefore, in reality, you've paid for the new tax too.

Suppose the extra tax only decreases savings and doesn't impact spending. Though an unlikely result of new taxes, it still is like a hidden tax on you. Less savings means less capital available to borrow start businesses, buy homes, or otherwise use credit to purchase goods or services. Less capital to borrow also has the impact of raising interest rates which makes loans more expensive to pay back and therefore reduces the amount of money left over to spend and/or invest. Therefore, the same three adverse results previously listed occur again.

What about the impact of government loans? More money loaned to government means less money available to loan to people and businesses. In addition to higher interest rates and therefore payback costs for loans, less loans will be granted to people and businesses. Less jobs created and pay raises occur. Also, the impact of higher payback loan costs reduces the amount of money people have to spend and invest. Therefore, the same three original, adverse results listed occur.

What about government subsidies? To pay for government subsidies, government has to tax you more and/or borrow more. We already listed the adverse impacts of that. All a government subsidy does is literally take the money out of your wallet to pay for something for you that you previously were unwilling to voluntarily pay for at its original price. The net effect is that you paid the original price anyway.

Famous Quotes by our Founding Fathers

“When the people find that they can vote themselves money, that will herald the end of the republic.” -Benjamin Franklin

"There are two ways to conquer and enslave a country. One is by the sword. The other is by debt." - John Adams

"The Constitution is NOT an instrument for the government to restrain the people, it is an instrument for the people to restrain the government-- lest it come to dominate our lives and interests." - Patrick Henry

"The American Republic will endure, until politicians realize they can bribe the people with their own money."- Alexis de Tocqueville (1805–1859)

"Anyone who would trade their freedom for safety deserves neither freedom or safety." - Benjamin Franklin

“The government that governs best ...governs least” - Thomas Jefferson

“A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship” - Alexander Tytler 1787

"I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them." - Thomas Jefferson

"The laws that forbid the carrying of arms .... disarm only those who are neither inclined nor determined to commit crimes. Such laws make things worse for the assaulted and better for the assailants. They serve rather to encourage than to prevent homicides, for an unarmed man may be attacked with greater confidence than an armed man." - Thomas Jefferson

"I think we have more machinery of government than is necessary, too many parasites living on the labor of the industrious." --Thomas Jefferson
Freedom is lost gradually from an uninterested, uninformed, and uninvolved people. ...
Thomas Jefferson

The power to tax is the power to destroy. – John Marshall

Democrats' Unfair Income Tax Cuts Complaints – Its Logical Conclusion

Democrats constantly complain that the Bush tax cuts unfairly favored the rich because they received the largest dollar tax cuts. If you follow their argument to its logical conclusion, then it becomes apparent that the only fair tax cut that Democrats could support is a zero tax cut. Allow me to explain by example.

Taxpayers 1, 2, 3, and 4 (respectively rich, middle class, lower middle class, and poor incomes) currently pay $100,000, $10,000, $1,000, and zero in annual income taxes. An across the board tax cut proposal for 10% is introduced into Congress. That means the four taxpayers would see their taxes cut 10% each for $10,000, $1,000, $100, and Zero respectively in income taxes saved. The Democratic Senator says wait, we can't give the rich taxpayer #1 a $10,000 tax cut when the middle class taxpayer #2, only gets $1,000. Nor can we afford to give all taxpayers a $10,000 tax cut or we will have huge deficits we cannot afford. So they agree to 'compromise' and limit the dollar tax cut maximum to $1,000 for everyone. So now, Taxpayer 1 only receives a 1% tax cut ($1,000) which for him is hardly anything at all.

Then the Democratic Senator from California speaks up and says, hey we can't give the middle class Taxpayer #2 $1,000 or ten times the dollar amount given to the lower middle class Taxpayer # 3. So a compromise is reached to make $100 the maximum tax cut for everyone. Now, Taxpayer #1 receives a $100 tax cut or just one tenth of 1% in tax cuts. Taxpayer # 2 also receives $100 in tax cuts or just a 1% tax cut. Taxpayer #3 receives the full 10% tax cut.

However, the Democratic Senator from Massachusetts chimes in and says this isn't right because Taxpayer #4, who paid no income taxes at all, isn't receiving a tax break. So the Democrats put their heads together and work out a compromise. A zero percent tax break yields the same tax percentage break to all (nothing) and the same dollar amounts to all (again nothing). All the Democrats agree and are happy. They finally came up with a 'fair' tax bill (that is no tax bill at all). But, are you as a taxpayer, happy?

Taken to its logical conclusion, the only tax cut that could satisfy Democrats quest for a fair tax cut to taxpayers is zero tax cuts. Any significant tax cut above zero will always produce different dollar amounts by income level and therefore by Democratic definition would be “unfair”.

Federal Debt -Urgent To Unsustainable To Insane

From an IBD editorial - http://news.investors.com/ibd-editorials-viewpoint/091012-625210-federal-debt-urgent-to-unsustainable-to-insane.htm?nav=EditorialsLatest&p=2
By HOWARD RICH

News of the national debt eclipsing the $16 trillion mark has prompted another round of hand-wringing and finger-pointing from the two political parties responsible for its escalating accumulation.
In fact, one of those parties — in an effort to pick up some election year traction — installed a debt clock inside of its 2012 convention hall to track the skyrocketing tab.
RNC Chairman Reince Priebus said the purpose of the GOP's debt clock was to "draw your attention to the unprecedented fiscal recklessness of the Obama administration."
OK, but what about the then-unprecedented fiscal recklessness of the Republican Party prior to Obama taking office? And what about the inexcusable accommodation of GOP leaders on spending and deficit issues over the last 3-1/2 years?
If Republicans were serious about limiting government, how did their promises of $100 billion in savings last year turn into $130 billion in new spending? And how did we get saddled with $2.1 trillion in additional deficit spending in exchange for modest cuts that may not even materialize?
The unfortunate truth is that both Republican and Democratic leaders have proved incapable of restraining Washington's appetite for bigger promises, bigger budgets and bigger deficits — even as Americans are confronted with fewer jobs, smaller paychecks and a devalued dollar.
Also this problem goes much deeper than just the national debt. At last count the federal government's total unfunded liability tab — i.e., the cost of future promises that lack a dedicated source of financing — stood at a scarcely fathomable $120 trillion.
How much money are we talking about? Consider this: America's combined debt and unfunded liabilities are now nearly twice the size of the $70 trillion gross world product — which is the market value of all goods and services produced in a given year on the entire planet.
And while the $140,100 in debt owed by each taxpaying American citizen is indeed a frightening statistic, the unfunded liability obligation is far worse — just over $1 million per taxpayer at last count.
How long will it take us to pay back these astronomical sums? Well assuming you're repaying at a rate of $1 per second it would take you 31,688 years — and that's just to pay back the first trillion dollars of this growing mountain of obligation. Without interest!
Of course our country isn't paying down its debt or limiting its future liability — it is dramatically expanding both. After once describing our soaring debt as "shifting the burden of bad choices today onto the backs of our children and grandchildren," Obama increased it by $5.4 trillion during his first 3-1/2 years in office. Meanwhile ObamaCare — the president's new health care entitlement — will add another $17 trillion to our already soaring unfunded liability tab, according to data from the Senate Budget Committee.
We are no longer looking at an exercise in unsustainability — what we are witnessing is pure insanity.
"Future spending on these programs will skyrocket far beyond current revenues," writes Daniel J. Mitchell of the Cato Institute, noting that our nation will soon face Europe's fate "if government policy is left on autopilot."
In fact, this is already happening. In the most recent fiscal year Medicare paid out $564 billion in benefits — but only took in $274 billion in taxes and premiums. That's a shortfall of $290 billion.
Social Security is also currently paying out more than it is taking in — with its annual deficit projected to reach $623 billion over the next two decades. Driving this escalation is the fact that the program's ratio of workers-to-beneficiaries is set to drop from 2.8 to 1.9 by 2035 as the number of Americans collecting checks soars from 56 million to 91 million.
"It is time for Congress to take on the task of retooling Social Security for the long haul," SSA Commissioner Michael Astrue said earlier this year.
Wrong. Government's entitlement programs don't need to be "retooled," they need to be either privatized (like Medicare and Social Security) or eliminated altogether (like ObamaCare and the 2003 prescription drug benefit). And these reforms don't need to happen this year — our entitlement mess should have been addressed decades ago.
"Urgent doesn't begin to describe it," Social Security Trustee Chuck Blahous said recently. "We're somewhere between critical and too late to deal with it."
Indeed. Which is why continuing to delay the inevitable — i.e. the "bipartisan solution" — only adds additional destructive force to the fiscal reckoning that's coming.
• Rich is chairman of Americans for Limited Government.

Can Anyone Explain why Blacks and Hispanics overwhelmingly support Democrats?

Let's see, Republicans freed the slaves while Democrats fought against it. Southern Democrats imposed discrimination for 100 years after the slaves were freed, with many of them members of the Ku Klux Klan. 85% of Republicans voted for the Civil Rights laws while less than 65% of Democrats did, yet Democrats get credit for it. Republicans are fighting for better education through vouchers to private schools while Democrats are fighting for teachers unions against the interest of students. Most Republicans, blacks and Hispanics are against gay marriage while Democrats are for it. Can anyone from the Black and Hispanic communities explain logically why the majority are such staunch supporters of the Democratic Party?

The Ice Is Right

The Ice Is Right

Environment: Hillary Clinton made a well publicized trip last week (May 2012)to the Arctic to see for herself the impact of global warming. Less well known, however, are two reports that contradict the climate-change alarmists.

Upon her return from Saturday’s tour of the Norwegian coastline, the secretary of state announced that “many of the predictions about warming in the Arctic are being surpassed by the actual data.” But she omitted a couple of important points:

First, polar ice is now the heaviest “in more than a decade,” reports the Los Angeles Times. It is, in fact, so plentiful it could postpone Shell’s “start of offshore oil drilling in the Arctic Ocean until the beginning of August.”

The Times says the National Weather Service explains it in these terms: “A high pressure zone over the coast of Alaska, cold winter temperatures and certain ocean currents have combined to bring unusually large amounts of ice not only along Alaska’s northern coast, but farther south in the Bering Sea as well.”

Second, photos taken in the 1930s by Danish explorers “show glaciers in Greenland retreating faster than they are today, according to researchers,” tech publication The Register reported.

“It now appears that the glaciers were retreating even faster 80 years ago” when man’s carbon output was far less than today’s, “but nobody worried about it, and the ice subsequently came back again.”

We can understand a U.S. secretary of state visiting a region that’s material to American interests. In this case, there is sea bed mining, oil and natural gas production and vital shipping routes to be considered.

But why throw in a political global warming jab?

Oh, that’s right: Clinton is a Democrat working in a Democrat’s administration that’s used global warming alarmism to push its (failed) green energy agenda. Of course. Mixing the practical — and often forgetting the practical altogether — with the frivolous to make political points is the way Democrats roll.

We prefer to deal in facts, which continue to refute the prophets of global warming, who are always dragging up some point they say indisputably proves their claim. But for every argument they throw out, there’s always at least one fact that wrecks the credibility of their story that man is causing the planet to warm to intolerable levels.

CBS Ignores Climate-Change Truth

CBS Ignores Climate-Change Truth (IBD Editorial)

Climate: While CBS touts a “groundbreaking” government report linking extreme weather and climate change, German researchers find 2,000 years of cooling and warmer temps in medieval times and the Roman era.

This summer’s heat wave has given the global warmongers new hope in conning the hot and the restless into believing the whole thing is due to that SUV parked in your driveway and that coalfired plant down the street.

Not so fast, say German researchers who documented a two millennia cooling trend. Both the Roman legions and Crusaders marched in warmer climes.
On Wednesday’s CBS This Morning, CBS News correspondent Wyatt Andrews breathlessly intoned that a recent study from the National Oceanic and Atmospheric Administration ( NOAA  ) had established “the first-ever statistical connection between extreme weather and man-made climate change” and that the study “found that man-made heat made the Texas drought roughly 20 times more likely.”

Well, you know the adage about lies, damned lies and statistic. We have documented how researchers at Britain’s Climate Research Unit manipulated data to “hide the decline” in global temperatures that other data, such as from satellite observations, had indicated.

The U.N’s Intergovernmental Panel on Climate Change relied on anecdotes from suspect sources to produce carefully edited reports warning about such things as the Himalayan glaciers soon disappearing.
Wyatt’s report featured Tom Karl, chief of the climate office at NOAA, talking about shifts in the La Nina and El Nino ocean currents, which have contributed to our hot summer. But they are naturally occurring phenomena predating the Industrial Revolution.

Wyatt’s conclusion was that “NOAA scientists, meanwhile, are not saying that climate change causes any one specific drought, like the one in Illinois. They are saying the science is good enough now, they can lay odds on the connection.”

Laying odds? The science is “good enough”?
Facts, as Ronald Reagan said, are stubborn things. German researchers at Johannes Gutenberg University used tree-ring density measurements from sub-fossil pine trees in Finnish Lapland to answer how the Romans were able to grow grapes in northern England.

Unlike the manipulated Siberian tree ring data used by researcher Michael Mann at the University of Pennsylvania to support his case for global warming, the German researchers found the Finnish tree data, which let them reconstruct global climate back to 138 BC, showed something quite different, such as a slight cooling trend that has lasted 2,000 years.

In general the scientists found a slow cooling of 0.6 degrees centigrade over 2,000 years, which they attributed to changes in the Earth’s orbit — not CO2.
Lead author Professor Jan Esper of Johannes Gutenberg University in Mainz said: “We found that previous estimates of historical temperatures during the Roman era and the Middle Ages were too low.”

The study showed Britain 2,000 years ago had a lengthy period of hotter summers than today, including 21 AD to 50 AD, when temps were one degree centigrade warmer than today. That might explain the togas.

“This figure we calculated may not seem particularly significant, however it is not negligible when compared to global warming, which up to now has been less than 1 degree centigrade,” Esper said.

He also noted that their “findings are also significant with regard to climate policy, as they will influence the way today’s climate changes are seen in context of historical warm periods.”

We hope so. A Congressional Research Service ( CRS  ) report that showed that from fiscal years 2008 through 2012 the federal government spent $68.4 billion to fight the phantom known as anthropogenic global warming ( AGW  ) or man-induced climate change.

In its name, the war on fossil fuels has decimated our economy, stunting growth and increasing joblessness.

So next time you hear earth is doomed, just think of toga-clad Romans eating grapes in Northern England.

Your Share of the National Debt

Here's the bottom line - there are 312 million Americans today. Each of the 312 million men, woman, and children's share of the national 18 trillion dollar debt is $57,000. That's $228,000 for a family of four. In 10 years, at current spending plans, each of our share of the debt will be $85,000 or $340,000 for a family of four. That doesn't even count the tens of trillions of dollars of unfunded government liabilities for social welfare programs which would triple those numbers at the least. Now, if you took all the wealth from millionaires and billionaires and made them homeless paupers, we could reduce the debt 5 trillion dollars, still leaving 13 trillion in debt plus all those tens of trillions of unfunded liabilities. The math is clear that we cannot tax ourselves out of this problem. The only solution is a huge and permanent reduction in spending.

Sooner or later, the credit to finance the debt will disappear causing interest rates will jump dramatically, and quickly doubling or tripling the interest paid on the debt. the economy will collapse, the entitlement programs will go bankrupt, and there will be no way to be saved from financial disaster because we are too big an economy (unlike Greece which is tiny) for others to even consider saving us.

Put another way that might be easier to understand, imagine a person making only $30,000 a year with a debt of $180,000. Keep in mind that the general rule for long term debt such as mortgages is a maximum of 1 1/2 to two times income. Imagine this person going to a bank to borrow money to finance the $180,000 he already owes. The banker asks him how he is going to pay it back. he says that he doesn't intend to pay it back, but will be borrowing another $5,000 to $10,000 each year from now on, and will only pay interest on the debt - the money for such interest to come from his borrowings. After the banker stops laughing, he escorts the borrower out of his bank without giving him a loan. Now add 8 zeroes to each of those numbers and you have the United States ($3 trillion in annual revenues, $4 trillion in annual spending, and $18 trillion in debt). Worse - that does not include the roughly 75 trillion dollars in unfunded future liabilities.

Cost of a Government Created Job

Compare a government created job that Democrats love to push for to a private business created job that Republicans love to push for. Say they both pay $50,000 a year and income taxes collected for each is $10,000. With medical and pension benefits, the total cost of the government job is $75,000. The net cost to the government and therefore to us taxpayers after income taxes are paid is $65,000 ($75,000 total expense - $10,000 paid in taxes). What's the cost to the government for the private job? Instead of a net expense loss of $65,000, the government receives $10,000 of income taxes plus another $7,000 in social security taxes (paid by the worker and the employer; government workers do not pay SS taxes) at no expense to the government. So a private job is a net gain in taxes received to the government of $17,000 while the government job is an initial net loss in expenses of $65,000. The difference between the numbers is a total net loss to the Federal government of $82,000 (-$65,000 plus -$17,000 = -$82,000) each and every year worked for just one job created by government instead of by private industry.

Better Spouse Survivor Options at No Cost for Social Security

After my wife's two sisters died last year within 13 days of each other, I learned something about Social Security benefits that I had never thought about. It eventually impacts all retired SS age married couples. Namely, when a spouse dies, the surviving spouse receives the higher of their two checks and loses the other check.

For example, if one spouse was collecting $1,500 a month from SS and the other spouse another $1,000 per month from SS for a total of $2,500 a month, the survivor then collects $1,500 a month or a 40% decrease in total SS income. When a spouse dies, your mortgage or rent does not go down by 40%. Neither does your car payment, electric and heating bills, insurance rates, gas for your car, cable TV, phone, and Internet service, etc. go down by 40%. Especially for couples whose retirement income is all or mostly SS (pretty common situation), it may be impossible to keep up their standard of living, including keeping their house if they own one.

It doesn't have to be that way. Without any additional SS expense, beneficiaries could be offered the same options prior to collecting SS, that people lucky enough to collect a pension from a private company are given. That is, to determine up front, if your spouse will collect 100% or 75% or 50% or zero percent of your pension when you die. Based on life expectancy tables and your ages, the pension amount received each month is highest at zero percent survivor benefits and lowest at 100% survivor benefits. No matter what decision you make, the lifetime cost to the company for your pension averages out to be the same. Social Security should offer the same options.

In the example I gave, maybe that couple would have chosen to receive a combined $2,200 a month SS benefits instead of $2,500 so that the survivor would continue to receive $2,200 after the first spouse passed away. That likely would have kept his or her standard of living maintainable for the rest of his or her life.

How much will your Social Security benefit go down when your spouse dies? Answer – it will go down 33 to 50 percent. Where two spouses are each collecting the same amount from SS, one spouse's death will result in a 50 percent decline in SS income to the survivor. When one spouse is collecting half of the higher spouse's SS (that is the least amount a spouse can collect), there will be a loss of 33% to SS income when one spouise dies. Everyone else is between the min-max of 33 to 50 percent.