December 31, 2012

Tennessee Senators waltz all over earned benefit interests of its citizens

Tennessee has the 12th highest rate of poverty in the United States. In August 2012, its rate of unemployment as of July this year was reported at 8.4 percent . The overall percentage of the state's population over 65 is 13.4 percent. Links for these stats can be found at the end note.

This is a state known for its friendly people, beautiful landscapes and volunteerism.

Yesterday, December 29, its U.S. Senators Bob Corker and Lamar Alexander offered a plan to cut Medicare:

http://www.knoxnews.com/news/2012/dec/29/corker-alexander-offer-plan-to-cut-medicare-up/

With that confidence, Tennessee's senators turned to spending cuts and offered a proposal to exchange a $1 trillion reduction in entitlement spending — mostly from Medicare — for a $1 trillion rise in the federal debt ceiling.

***

The plan, which the senators have dubbed the "Dollar for Dollar Act," was introduced by Corker on Dec. 12. Its details include reforming Medicare to include competition from private health-care options, gradually raising the eligibility age to 67 by 2027, requiring high-income beneficiaries to pay higher premiums and giving flexibility to the states to manage the program.

Additionally, Corker and Alexander endorsed other changes to earned benefits:

http://thehill.com/homenews/senate/274783-eyeing-debt-ceiling-deadline-senate-republicans-offer-entitlement-reform-plan

It would gradually raise the Social Security retirement age and use the “chained CPI” formula to calculate cost-of-living adjustments, curbing the growing cost of benefits.

In exchange, it would direct the debt limit be increased by the same amount as the savings generated from entitlement reform.

"Unfortunately for America, the next line in the sand is going to be the debt ceiling,” said Corker, predicting it could be used as leverage in negotiations with Democrats.

Read that last quoted paragraph as Republicans are thinking "starve the beast."

The 16 Trillion Dollar Deficit Americans now face, along with the Great Recession, is greatly due as a result of the George W. Bush* legacy. He left the Oval Office with a 10.5 Trillion Dollar Deficit which he had kept off the General Ledger. Additionally, our annual budget was in deficit. Each annual accrual of our budget shortfall contains a substantial part of interest on that debt.

What Corker and Alexander (both Repubicans) failed to explain in offering their plan was why seniors should sacrifice Social Security and Medicare coverage to help offset a deficit incurred mostly during a Republican's eight years in the White House. They also failed to explain why corporations such as Halliburton and The Carlye Group, two of the largest profiteers from Bush's preemptive war, pay near zero income taxes -- yet Medicaid as well must be compromised.

Also unexplained, why they termed Social Security and Medicare the "biggest drivers of our debt" when the experts say it is the cost of two wars, the Bush* (unfunded) tax cuts, Medicare Part D (also referred to as Bush's gift to the pharmaceutical companies) and current economic conditions, such as high unemployment.

Alexander called on Obama to show more leadership on reforming entitlements or earned-benefits programs such as Medicare and Medicaid, which are the biggest drivers of federal debt. (also from The Hill link)

The State of Tennessee deserves much better representation than Corker and Alexander are rendering. Its people are hurting from unemployment, a high poverty rate and an aging population. It is not exactly to the Tennessee Waltz Corker and Alexander are dancing, and rather than "Dollar for Dollar", it looks like dollars for more doughnut holes.

Sam

http://www.bizjournals.com/nashville/blog/2012/11/tennessees-poverty-rate-12th-highest.html
http://news.tn.gov/node/9405
http://usliberals.about.com/od/Election2012Factors/a/Senior-Citizen-Population-By-State.htm

December 19, 2012

Who or what exactly is the biggest holder of the U.S. Government Debt?

China? Japan? Take a look at the slideshow at this link. Please note the arrow slightly left to the title. As you click the arrow, it starts at #15 and proceeds down to #1. You might be surprised at #1.

http://www.cnbc.com/id/29880401/page/1

Hopefully, you will not miss #9 (this will probably surprise you).

Just to titillate your curiosity, I am posting now #6:

"6. Pension Funds

U.S. debt holdings: $903.4 billion

Pension funds control large amounts of money, reserved for personal retirements, and thus are obligated to make investments that are considered to be safe. This group includes both private and local government pension funds, totaling $903.4 billion. The private pension fund category also includes US Treasury securities held by the Federal Employees Retirement System Thrift Savings Plan "G Fund." (emphasis added)

It seems to me that if the Federal Employees Retirement System is the sixth largest holder of the public debt, slowing that growth down might be accomplished with restricting the COLA increases over a number of years, but that is just my narrow perspective.... Add that to the portion of the debt you see in #1, a pattern starts to emerge. Both of these holders, numbers 1 and 6, have been accessed by Uncle Sam to defray expenses such as in the case of #1, the Iraq war -- among other things, and #6, in the aftermath of 911. Problem: when the bill becomes due to be paid back, the U.S. economy is in recession and selling additional Treasury Notes to replace the portion redeemed is very difficult at this time.

Yes, that is a big problem but connecting the dots does give one clues as to why we hear the things we hear today.

Comments?

Sam

December 19, 2012

Where on this chart are entitlements listed as contributing to the deficit?

Specifically, please look at the chart on the top right-hand side and view the contributing factors in order. It seems to me that if cutting the deficit is the number one priority, the best approach would be to tackle those items listed in this chart.

Looks to me as if going over the fiscal cliff would take a large bite out of the problem, but, hey, that is just me.

http://www.cbpp.org/research/index.cfm?fa=topic&id=121

Comments?

Sam

December 18, 2012

Obama Counter-Offers on Fiscal Cliff (updated with stats on a chained COLA)

http://www.jacksonfreepress.com/news/2012/dec/17/obama-counter-offers-fiscal-cliff-raise-taxes-earn/

This appears to be the story Ed Schultz just reported.

Here are a couple of paragraphs:

"WASHINGTON (AP) — President Barack Obama has proposed a deficit-reduction package to House Speaker John Boehner that would increase the top tax rates on taxpayers earning more than $400,000, cut more spending from health care programs and add $200 billion more in spending cuts over 10 years to his earlier offer.

***

"People familiar with the plan said Obama is proposing lower cost-of-living adjustments for Social Security. He also abandoned his request to extend a payroll tax cut — a move that would result in a tax increase for many Americans."

I hope to expand this thread shortly regarding the chained COLA.

Sam

Update: See this link: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x1436970

Granted it was written in July 2011, however, it will give you an idea how much financial damage can be done to participants of Social Security. When the Bowles-Simpson Plan recommended the chained COLA, I did some research on the issue and posted this thread. I then contacted Bernie Sanders' office and asked that the data be reviewed, and if they agreed this would do substantial harm to Social Security participants to advocate against the implementation. To his credit, Bernie Sanders has not let up on the issue. He gathered the support of many of other Democrats. Here is a small portion of that thread:

"Switching to the chained CPI would reduce Social Security COLAs by about 0.3 of a percentage point each year, the Congressional Budget Office estimates, saving the federal government more than $200 billion over the next 10 years. Most of the savings would come from lower Social Security benefits and lower retirement benefits for federal employees, whose increases also are tied to the CPI.

The Senior Citizens League calculates that such a change would reduce Social Security benefits by an estimated 7 percent over a 25-year retirement. For a senior who retires in 2011 and receives the average Social Security benefit -- about $1,100 per month -- this would reduce benefits over 25 years by $18,634. The cuts would be very small in the beginning but escalate as recipients age." (emphasis added)(see http://www.tscl.org/action/emergencycola.asp .)

Additionally, the Senior Citizens League issued a emergency petition, the first three bullet points of which are:

"• The Social Security COLA should not be calculated from the consumer price index (CPI), since the CPI is based on the purchases of young urban workers and does not reflect the actual expenses of senior citizens.

• Even when CPI-based inflation is very low, the expenses that form the backbone of senior citizens’ budgets – medical insurance, prescription drugs, fuel – continue to rise alarmingly.

• The federal government itself recognizes the inequity of a CPI-based COLA by calculating a senior-specific CPI formula, which it never uses, that shows our cost of living rises faster than that of most young people."

http://www.tscl.org/action/emergencycola.asp"

I hope the Democrats do not agree to this but I have a sinking feeling I am going to be disappointed....