Posts Tagged ‘tax reform’

Captain Rick: U.S. entitlement programs are going broke. Disability will be broke by 2016, followed by Medicare by 2024 and Social Security by 2035. These sobering projections were made by the U.S. Social Security Administration. This report presents an in-depth study of the U.S. Disability program.

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Disability recipients in jeopardy
Nearly 11 million people depend on federal disability payments.
Unless changes are made, beginning in 2016, the revenues coming in would not be sufficient to cover all of the disability payments.
Unless taxes are increased, disability benefits will have to be cut or the number of claimants reduced.

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Disability soared 27% since the beginning of the Great Recession
The number of people collecting federal disability has soared to nearly 11 million, up from 8.7 million in April 2007.
The federal government spent nearly $250 billion in 2011 paying more than 23 million Americans some type of disability claim. That’s about 7% of the overall population, and 16% of the workforce.

Causes for the Disability Program Increase
The Great Recession pushed many people into the disability program because it was a safety net to save them from economic disaster.
The aging of the baby boomer generation is one of the primary drivers. Workers typically enter the disability program in their 50s.
Disability claims among veterans are up 28% since 2008, according to the Department of Veterans Affairs.
With better surgical techniques and body armor, soldiers are ten times as likely to survive today’s wars, according to the Veterans Administration. But soldiers often come home with severe injuries. The recent decision to recognize post traumatic stress disorder as a disability has also lifted the number of benefits claims. The Veterans Administration noted that illnesses tied to the cancer-causing chemical defoliant Agent Orange used in Vietnam are also now viewed as a disability.  
More women have entered the workforce in recent decades, making them eligible for the program should they become disabled.

Americans are abusing the system because of the ease of entering the program. It’s morphed from a program that pays benefits to stroke victims and cancer patients to people with mental illness and chronic pain.

Prognosis for a Disability Program Solution
The disability program … the smallest of the three, will be the first that Congress has to deal with.
There is not much consensus about entitlement reform on Capitol Hill these days. Attempts to rein in Medicare spending have gone nowhere recently.

Disability Program Solution Possibilities

Solution 1
Congress could authorize increasing the amount of payroll tax supporting the disability program from its current 1.8%. An increase paid by workers and employers by 0.2% each would keep the program solvent for 75 years. But there’s little appetite among lawmakers to raise taxes these days.

Solution 2
Congress could authorize increasing the share of Social Security payroll tax going toward disability, instead of Social Security. Currently, the combined rate paid by employers and workers is 12.4%. The disability program’s rate is 1.8%, while the retirement system’s rate is 10.6%. Congress could authorize increasing the share going toward disability payments to 2.6% for two years and then slowly cut it back to 1.8% by 2030. This would keep the disability fund solvent until 2033, but it would shorten the retirement system’s predicted lifespan by two years, to 2033.

Solution 3
Congress could take the most controversial approach by raising the bar for eligibility for disability benefits.

Captain Rick’s Disability Solution Preference: I believe Solution 3 is the most intelligent solution … but considering how welfare-oriented the U.S. Congress is becoming, I do not hold much hope for this solution. I believe Congress will take the most cowardly path … Solution 2 … and rob money from Social Security to pay the rapidly expanding crowd who are abusing Disability. Do you agree/disagree? I welcome you to comment below.

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Associated ATRIDIM NEWS JOURNAL Report Categories:

Entitlement Reform: https://atridim.wordpress.com/category/entitlement-reform/

Medicare: https://atridim.wordpress.com/category/medicare/

Social Security: https://atridim.wordpress.com/category/social-security/

Medicaid: https://atridim.wordpress.com/category/medicaid/

Tax Reform: https://atridim.wordpress.com/category/tax-reform/

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Captain Rick: The House passed the “No Budget, No Pay Act,” a Republican bill that would effectively suspend the debt ceiling threat for several months.
The bill would let the Treasury Department borrow new money until mid-May so that obligations like Social Security and Medicare can be met.
In exchange, the legislation would require lawmakers in both chambers of Congress to pass a budget resolution or have their pay withheld until they do.

The vote was 285 to 144. The bill passed largely on the back of GOP support — 199 Republicans voted for it. But Democrats were needed, and 86 backed the measure.
Leading Senate Democrats said they would support the legislation because it takes the immediate threat of default off the table and divorces the debt ceiling from Republican demands for spending cuts.
President Obama will not oppose the bill if it reaches his desk, even though he would prefer a longer term debt ceiling increase.

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Here’s how the bill would work:

The proposal would suspend the debt ceiling until May 18. Treasury could continue to borrow for payments that have to be made during the suspension period and nothing else.

The debt ceiling would then be restored at its current level of $16.394 trillion plus however much Treasury borrowed during the suspension period.

After May 18, Treasury likely could again use “extraordinary measures” to stave off the prospect of default for awhile, giving Congress extra time to raise the debt ceiling. Treasury could have “sufficient funds to meet all federal financial obligations through at least the end of July.

The bill would also open a path to a longer term increase: It would require the House and Senate to each agree by April 15 to a budget resolution for fiscal year 2014.

If the House and Senate don’t meet the April 15 deadline, lawmakers’ pay would be withheld until they pass a budget resolution or until the current Congress ends in January 2015, whichever comes first.
So it’s not that lawmakers won’t get paid if they miss the deadline. Their salaries would be held in escrow and paid out at some point later.

House Republicans, in coming up with the temporary debt ceiling solution, are in essence conceding that the debt ceiling fight is not their best shot at securing spending cuts and substantive deficit reduction.

Pending Deadlines:

1: Unless Congress acts by March, the pending sequester would trigger close to $1 trillion in defense and non-defense spending cuts.
2: If lawmakers fail to act by March 27, federal funding will expire entirely and the government would be shut down until lawmakers can find some way to agree on spending and taxes for the next year or at least another few months.

Captain Rick’s Words of Caution:

Many Americans are getting sick of hearing about all of the subject of the fiscal cliff, national debt and the debt ceiling. I hold little hope for our representatives in Washington to fix America’s fixation for debt anytime soon. The above measure only kicks the problem down the road for a few months. Soon, America needs to wake up to the reality that we can not keep spending like ‘there is no tomorrow’  and cutting taxes at the same time. Democrats need to get off of their ‘high horse’ and realize that American can not keep providing money and grants for everything that ‘sounds cool’. Republicans need to get off of their ‘high horse’ and realize that taxes need to be increased to cover the costs America is facing today. Hopefully, somewhere along the line they will come together and actually agree on a balanced budget…before its too late. America still has some time left to ‘get it right’ financially while our foreign friends are still willing to invest in America… but the ‘candle is growing dim’. The continual act by our government of ‘kicking the fiscal can down the road’ philosophy must end soon, or America will be eventually be faced with an unsolvable problem of how to cope being a third world country.

If you want to learn more about the serious financial problems that face America,

CLICK: Captain Rick’s Fiscal Cliff Course 101 … The course starts at the very bottom.

Captain Rick: Here we go again. Treasury Secretary Tim Geithner warned Congress in a letter that U.S. borrowing will hit the debt ceiling on Monday, and that Treasury will begin using ‘extraordinary measures’ to prevent government spending from exceeding the legal limit of $16.394 trillion. On Monday, debt subject to the limit was just $95 billion below the $16.394 trillion debt ceiling. That allows for spending over $13 billion a day through next Monday. It makes my head spin thinking about how fast the U.S. spends money and that over $1 trillion of what it spends each year is borrowed money (deficit spending) that adds to the U.S. National Debt.

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The extraordinary measures include suspending the reinvestment of federal workers’ retirement account contributions in short-term government bonds. All told, the extraordinary measures can create about $200 billion of headroom under the limit — normally about two months worth of borrowing.

If America begins going over the ‘Fiscal Cliff’ on Tuesday, January 1, as all indications point to now, $600 billion in annual spending cuts and tax revenue increases will kick in and slow the generation of debt to half speed. This would double the period of time to 4 months remaining before extraordinary measures would be exhausted.

After the extraordinary measures run out, Treasury won’t be able to pay all the country’s bills in full and on time. At that point, the United States will run the very real risk that it could default on some of its obligations, such as making interest payments on America’s National Debt which total a staggering $260 billion per year. This would have a severe negative impact on America’s credit rating which would have a ripple effect of making it more costly for the U.S. Treasury to borrow money. At some point foreign governments, like Japan and China, which hold large sums of American debt, would slow lending or even curtail it. The American economy would grind to a halt and be thrust into a deep recession, dragging all world economies along with it.

Other solutions could be to default on Social Security, Medicare, Medicaid and other government program payments. We all can comprehend the immediate, massive, destructive effect that would have on society.

Thus, we can conclude that default of any kind  is not an acceptable solution. The only immediate solution will be to increase the national debt again. Those who have studied Captain Rick’s FISCAL CLIFF Course 101, know that its just a matter of time before raising the national debt ceiling will no longer be a workable option. This is why it is so important that the ‘Fiscal Cliff’ spending cuts and tax revenue increases take effect on January 1.

Captain Rick’s Dream for America

I find the manner in which the President and Republicans and Democrats in Congress are trading off fiscal ‘trinkets’, in an effort to fool America that they can come up with a better solution than the ‘Fiscal Cliff’ to solve America’s serious problem of thirst for debt … almost laughable.

The President and Congress should stop playing fiscal games. The current members of Congress should stay home on vacation for the rest of the year. A new slate of legislators will be sworn in on January 3, hopefully with a work ethic that is void of politics (I am holding my breath), and work towards raising the debt ceiling along with the creation of Fiscal Cliff 2 … another painful round of spending cuts and tax revenue increases that would finally balance America’s budget and eliminate deficit spending. Ideally, it would start on January 1, 2014, when the next raise of the national debt ceiling will most likely be required. Hopefully that would be the last need to raise the America’s National Debt Ceiling.

Perhaps Fiscal Cliff 3 could kick in on January 1, 2015 with another round of spending cuts and tax increases that would begin reducing America’s National Debt and its interest on the debt which will be well over $300 billion per year by then.

If America were to follow this painful fiscal road, our children and grandchildren could have a realistic chance to make a descent living and recapture some of the Great American Dream that kids growing up in America back in the 1950’s and 1960’s once had. I was one of them. They were great times that are ‘long gone’, but can be rekindled if we, the generations who helped create America’s fiscal ‘nightmare’, accept some sacrifices. I urge everyone in America to accept the ‘Fiscal Cliff’ with a ‘grain of salt’ as it becomes effective on January 1, 2013 and urge your legislative representatives to work towards achieving Fiscal Cliff 2.

View Captain Rick’s entire FISCAL CLIFF Course 101: https://atridim.wordpress.com/category/fiscal-cliff-course-101/

Captain Rick: 2012 is drawing to a close with no congressional deal in sight, which means the ‘Fiscal Cliff’ will happen automatically, by law, on January 1, 2013. The ‘Fiscal Cliff’ is a combination of the expiration of temporary tax cuts and spending extensions and other spending cuts from laws passed previously. In total, it reduces half of Americas deficit ($600 billion per year…approximately $7 trillion over the next 10 years). Previous laws allowed America’s staggering national debt to be raised to keep the U.S Government running in exchange for the ‘Fiscal Cliff’ if the congressional appointed ‘super committee’ did not produce a better solution. No agreeable alternative solution was found, as appears likely with current negotiations…so America will most likely witness the ‘Fiscal Cliff’, by law, on January 1, 2013.

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‘Fiscal Cliff’ Solution Scenarios:

Scenario of Congress agreeing to stop, postpone or ‘water down’ (lower) the ‘Fiscal Cliff’

Captain Rick’s chances of this happening: Near 0%

Captain Rick’s rating for such action: “F” (FLUNK)

Captain Rick’s prognosis: While this is what is being portrayed by the news media as the best solution, it is mathematically impossible and fiscally irresponsible…because America’s National Debt Clock continues to tick. Its just a short time before America will need to raise the debt ceiling again, because it spends $1.2 trillion more per year than it receives in revenue. That will foster ‘Fiscal Cliff 2’…perhaps twice as high as ‘Fiscal Cliff 1’. Keep in mind that even if America were to balance its budget (a far off dream), it would be left with its staggering debt of $16.2 trillion and its annual interest of $258 billion, the 5th largest U.S. expenditure of tax revenue. This money is paid to America’s debt holders…the largest being Japan and China.

Scenario of America going over the ‘Fiscal Cliff’

Captain Rick’s chances of this happening: Near 100%

Captain Rick’s rating for such action: “B” (Best possible current solution, but America can and must do much better in the future)

Captain Rick’s prognosis: As horrible as the news media has made the ‘Fiscal Cliff’ sound, it is Americas best hope to get ‘back on track’ to prosperity. Yes, it might mean a small drop in GDP and small rise in unemployment…but that is far better than a large drop in GDP and large increase in unemployment and possible recession or even depression a few years from now if America does not confront its extremely serious debt problem ‘head on’ NOW.

Captain Rick’s hope for the future of America

Once we go over the ‘Fiscal Cliff’ and begin to realize the shock of it all, our Congress needs to ‘come to bat’ for America and produce constructive legislation to fix a few urgent, very serious problems like the Medicare ‘Doc Fix’. Historically congress provides for a periodic ‘cost of living’ adjustment for reimbursement to Medicare doctors. This years adjustment has been stopped by the ‘Fiscal Cliff’. If this is not fixed, eventually many doctors might stop seeing Medicare patients, leaving them without a doctor. Congress will also need to begin serious reform to its entitlement programs…Medicare, Medicaid, Social Security and federal pensions, which have expenditures growing at astronomical speed in comparison to tax revenue. The U.S. fiscal problem is monumental and deserves our immediate attention now, in an effort to ward off significant fiscal failure of the U.S. with a ripple effect to the entire world in years to come.

View Captain Rick’s entire FISCAL CLIFF Course 101: https://atridim.wordpress.com/category/fiscal-cliff-course-101/

Captain Rick: The term “Fiscal Cliff” is a newly coined term that represents the effect of a number of laws that become effective in January 2013 that will cause $600 billion in spending cuts and tax increases, meant to reduce the U.S. deficit beginning in 2013. The deficit (the negative difference between what the government receives in revenue and what it spends) is expected to be reduced about 50% in 2013. That’s a good start, but lots more effort is needed to get America back on track to a balanced budget, so that America’s monumental debt is not just “kicked like a can down the road” for our younger generations to manage.
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America is currently spending $1.1 trillion more each year than it receives in revenue. This continues to increase the U.S. national debt, that stands at a staggering $16.2 trillion. America’s debt is financed by other countries like China and Japan. Interest on the national debt is $259 billion per year … an alarming 16% of the U.S. GDP … growing at a reckless rate of speed. Each year the foreign debt holders own a larger hunk of America.
The “Fiscal Cliff” is a “baby step”, but an important one, towards curbing the growing fiscal catastrophe that will face America’s future generations.
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America’s fiscal problems need to be addressed now, while the American dollar is still recognized by world investors as a strong currency. The value of the dollar will continue to degrade over the next few years if this fiscal crisis is not addressed appropriately. If not, at some point the American Dollar will no longer be recognized as a strong currency. When that day comes, America will have no more “cards left to pull out of the hat”. It will be too late to save America from economic destruction. I believe the “Fiscal Cliff” needs to happen as current law provides, without interference from legislators. America can handle the “Fiscal Cliff”. The economy might slow a bit, but that is far better than the ugly economic consequences that will assuredly result if this serious fiscal problem is not addressed now.
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FISCAL CLIFF Course 101 EXTRA CREDIT: The economic math in support of the “Fiscal Cliff”
Many economists pick 20% of GDP to be a respectable point to balance America’s budget for revenue and spending. I agree!
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Current U.S. annual fiscal situation:
Value of the economy (GDP): $15.5 Trillion
Revenue: $2.4 trillion (15.5% of GDP…needs to be raised 4.5% to 20% of GDP to balance the budget and be equal to expenses)
Expenses: $3.5 trillion (22.6% of GDP…needs to be lowered 2.6% to 20% ($403 billion) to balance to budget and be equal to revenue)
Deficit: $1.1 trillion (this is the amount added to the national debt each year)
National debt: $16.2 trillion ($52,000 per citizen / $142,000 per tax payer)
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U.S. Revenue:
Income Tax: $1.129 trillion
Payroll Tax: $843 billion
Corporate Tax: $238 billion
Total revenue: $2.438 trillion (15.5% of GDP…needs to be raised 4.5% to 20% ($698 billion) to balance the budget and be equal to expenses)
Required revenue to reach 20% of GDP and balance budget: $3.1 trillion
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U.S. Expense:
Medicare/Medicaid: $728 billion
Social Security: $759 billion
Defense: $653 billion
Interest on national debt: $259 billion
Federal Pensions: $212 billion
Other expenses: $889 billion
Total expenses: $3.5 trillion (22.6% of GDP…needs to be lowered 2.6% to 20% ($403 billion) to balance to budget and be equal to revenue)
Required expenses to reach 20% of GDP and balance budget: $3.1 trillion
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Revisions required to reach a balanced budget (based on above figures):
$698 billion increase in revenue
add
$403 billion decrease in expenses
$1.1 trillion total increase in revenue and decrease in spending required to balance the budget
subtract
$600 billion – increase in revenue and decrease in spending produced by “Fiscal Cliff”
$500 billion – amount of correction needed beyond “Fiscal Cliff” to balance the budget
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Bottom Line: The “Fiscal Cliff” is a “baby step” … but, a good one  towards fixing America’s monumental fiscal problem. The “Fiscal Cliff” is monumental legislation that all Americans need to embrace in an effort to save America from inevitable fiscal ruin. Any action by legislators to reduce tax increases or cuts established by the “Fiscal Cliff” legislation will be counter productive. Let’s all hope our legislators in Washington go home for the holidays with no agreement to “water down” the “Fiscal Cliff”. Hopefully, they will start working on “Fiscal Cliff 2” when they return in January 2013.
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Captain Rick: Wal-Mart, the world’s largest store, with 1.3 million workers, fights back as workers are preparing for a Black Friday walkout. Wal-Mart has filed a complaint with a federal agency accusing one of America’s largest labor unions of unlawfully organizing picket lines, in-store “flash mobs” and other demonstrations. Unions and union backed groups are calling for America’s largest employer to end what they call retaliation against employees who speak out for better pay, fair schedules and affordable health care.

A Wal-Mart spokesman said: Black Friday is the “Superbowl” for retailers and that Wal-Mart is ready. If employees are scheduled for work, we expect them to show up and do their job. If the don’t, there could be consequences. While Wal-Mart respects its workers federally-protected right to express concerns, it will act to protect its stores and customers from illegal and unprotected conduct that threatens the safety of our business operations… such as protestors trespassing on Wal-Mart grounds and interfering with business.

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OURWalmart, one of the main union groups says it has 1000 events planned this week. It has a Facebook page with 28,000 likes and  YouTube video with over 103,000 views. I have viewed both and do not find them worthy to pass on.

Captain Rick’s thoughts: I feel for those who work for Wal-Mart and don’t feel they make enough money or receive enough medical benefits. Keep in mind, you always have the option to find employment somewhere else. Where? Wal-Mart or no other company has an obligation to better yourself. Only you can do that. Stop whining and take control of your own destiny. Don’t rely on the unions and associated groups to save you. They have only one goal in mind… to make themselves rich… and destroy America as a by product. History shows that unions have played a huge role in the destruction of entire American industries. They are directly responsible for the execution of thousands of high paying jobs in America…jobs that are now being fulfilled overseas at much lower costs. The only sector that the unions have not killed in America is the service sector…jobs like those in retail sales…like Wal-Mart. With stupid efforts like this, it wont be long before unions destroy it too.

Another example is civic government. This is perhaps the worst of all sectors for unions to attack and kill…it’s the last American stronghold, one that is protected by our ‘warped’ government laws. In the private sector, unions can cause companies to fail. In the public sector, failure is not possible…so unions have free rain to pillage them to an endless extreme with the total cost transferred to the tax payer. America’s laws are reckless in this regard and are in serious need of change…hopefully before the unions are finally allowed to totally destroy America.

Captain Rick:  Click and Play the video below to get an excellent 3 minute summation of the world’s 5 Global Risks, each of which can completely change the global outlook. There are two in Europe, one in the Far East, one in the Middle East and one in the U.S. … the pending Fiscal Cliff … potentially the biggest global risk of them all. 3 Fiscal Cliff scenarios are discussed of which one is following the current course of doing nothing. This would cause a 4% contraction in GDP and cast the U.S. into Recession. For the first time in a very long time our kid’s generation would be worse off than ours. Two other scenarios are discussed that offer hope. The conversation includes a statement that a fix must include compromise of tax increases and entitlement cuts. Mathematically, the problem can’t be fixed by addressing one side only.  We are fortunate that we have a currency that everybody still wants, so we still have some time to get it right by enacting proper tax and entitlement reform. We just need politicians that are willing to compromise, which could be the most difficult job of all.

FORTUNE Video by PIMCO CEO: http://money.cnn.com/video/magazines/fortune/2012/10/04/f-el-erian-pimco-ceo-global-risks.fortune/