Wintery Knight

…integrating Christian faith and knowledge in the public square

Should we care that Democrats ran up the debt from 8.5 to 18.1 trillion?

In 2007, Democrats seized control of the House and Senate after winning the 2006 mid-term elections. The last Republican budget through 2007 had a 160 billion deficit. What followed next was years and years of trillion dollar deficits under Nancy Pelosi and Harry Reid. The Republicans only gained back the House in 2011, and the Senate in 2015.

Here’s what happened to the deficit while the Democrats had control of spending:

National Debt and Deficit 2007-2013

National Debt and Deficit 2007-2013

Now let’s take a look why this is a problem going forward, especially for young people. We’ll use this article from the Wall Street Journal.

It says:

The U.S. has come a long way since the days of trillion-dollar deficits, just a few years ago. The White House projects 2016 will have the smallest budget deficit in eight years. Yet the budgetary impact of the debt that’s been accumulated–$18 trillion in total, $13 trillion of that owed to the public–will reassert itself.

Currently, the government’s interest costs are around $200 billion a year, a sum that’s low due to the era of low interest rates. Forecasters at the White House and Congressional Budget Office believe interest rates will gradually rise, and when that happens, the interest costs of the U.S. government are set to soar, from just over $200 billion to nearly $800 billion a year by decade’s end.

By 2021, the government will be spending more on interest than on all national defense. according to White House forecasts. And one year later, interest costs will exceed nondefense discretionary spending–essentially every other domestic and international government program funded annually through congressional appropriations. (The largest part of the budget is, and will remain, the mandatory spending programs of Social Security, Medicare and Medicaid. Mandatory spending is over $2 trillion and is set to double to $4 trillion by 2025.)

The advice I would give to young people just entering college is to make sure that you don’t vote for more spending and borrowing. Because you’re the ones who are going to have to pay it off!!! Also, don’t waste your money on a discipline for which there are no jobs. Stay away from anything that is not STEM – science, technology, engineering, and math. Try not to borrow money. One lady I know just completed a couple of years of community college, before heading into a computer science program at a university. That is smart – I really recommend that.

Be willing to move if a good job presents itself, because earning money now before the storm is really important. Work while it’s day, in other words. Try not to stay in school any longer than you have to, because work experience is usually worth as much or more than school, and you get paid to work – you don’t get paid to go to school. Don’t think that things are going to be as good as thy are now, or that things are good enough to take unnecessary risks. This probably isn’t the time to “follow your heart” unless your heart is telling you to take the job that pays the most, regardless of how much you like it.

It’s very important to start saving as early as possible so that you can take advantage of interest rates when they go up to earn interest. The earlier you start to save, the more you earn in interest. The key is to never miss a chance to earn and save. Always keep working, and never go to school unless you really need to and you are sure that it will produce a return on investment. Your priority has to be working and saving, and not spending money on frivolous things like travel or thrills. We are not at the right time in history for concentrating on sky-diving, zip-lining and surfing. Now is the time for saving.

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Obama said Obamacare would not add to the deficit, CBO says it adds $1.35 trillion

In the video above, Obama promised the American people that his health care plan would not add one dime to the deficit. And the low-information voters who voted for him believed him. Just like they believed that they could keep their doctor, that they could keep their health care plan, that Obamacare would lower the costs of health care, that Benghazi was caused by a YouTube video, and so on.

So how much did Obamacare add to the deficit?

The UK Daily Mail has the latest numbers from the Congressional Budget Office.

Truth:

It will cost the federal government – taxpayers, that is – $50,000 for every person who gets health insurance under the Obamacare law, the Congressional Budget Office revealed on Monday.

The number comes from figures buried in a 15-page section of the nonpartisan organization’s new ten-year budget outlook.

The best-case scenario described by the CBO would result in ‘between 24 million and 27 million’ fewer Americans being uninsured in 2025, compared to the year before the Affordable Care Act took effect.

Pulling that off will cost Uncle Sam about $1.35 trillion – or $50,000 per head.

The numbers are daunting: It will take $1.993 trillion, a number that looks like $1,993,000,000,000, to provide insurance subsidies to poor and middle-class Americans, and to pay for a massive expansion of Medicaid and CHIP (Children’s Health Insurance Program) costs.

Offsetting that massive outlay will be $643 billion in new taxes, penalties and fees related to the Obamacare law.

That revenue includes quickly escalating penalties – or ‘taxes,’ as the U.S. Supreme Court described them – on people who resist Washington’s command to buy medical insurance.

It also includes income from a controversial medical device tax, which some Republicans predict will be eliminated in the next two years.

If they’re right, Obamacare’s per-person cost would be even higher.

Did Obama know that he was lying when he said that his health care plan would not add one dime to the deficit?

Well, his buddy Gruber, the architect of Obamacare, certainly did:

But we should not be surprised, either by the low intelligence levels of Democrat voters or by the lies of Democrat politicians. After all, they want single payer health care – look what Harry Reid says:

“What we’ve done with Obamacare is have a step in the right direction, but we’re far from having something that’s going to work forever,” Reid said.

When then asked by panelist Steve Sebelius whether he meant ultimately the country would have to have a health care system that abandoned insurance as the means of accessing it, Reid said: “Yes, yes. Absolutely, yes.”

And they know – from looking up North to Canada – that single-payer health care will necessarily involve massive increases in taxes.

CTV News describes a recent study on the costs of single-payer health care in Canada:

A typical Canadian family with two parents and two kids will pay up to $11,786 for public health care insurance this year, according to a new study from the conservative think tank Fraser Institute.

Using data from Statistics Canada and the Canadian Institute for Health Information, the Fraser Institute study estimated the amount of taxes Canadian families will pay for public health insurance this year.

What do you get for $11,786?

You get to be on a waiting list for a primary care physician, and you get to wait months for treatment. You can pay taxes your whole life, and then wait behind people who want sex changes – people who have never paid a dime into the system. And sometimes, you die while waiting for treatment. That’s “fairness” and “equality”. And that’s where the Democrats want to take us.

Remember when Obama said that we could keep our health care plans and our doctors?:

Democrats voters looked at this man, and they just knew – without any studies or any evidence – that he was telling the truth.

But the Congressional Budget Office says that TEN MILLION people will lose their employer health plans under Obama by 2021.

Look:

The Congressional Budget Office now says ObamaCare will push 10 million off employer-based coverage, a tenfold increase from its initial projection. The “keep your plan” lie just gets bigger and bigger.

The latest CBO report is supposed to be a big win for the Obama administration because the projected costs are 20% below what the CBO first projected in 2010.

But the CBO report also shows that ObamaCare will be far more disruptive to the employer-based insurance market, while being far less effective at cutting the ranks of the uninsured, than promised.

Thanks to ObamaCare, the CBO now expects that 10 million workers will lose their employer-based coverage by 2021.

This is in addition to the FOUR MILLION who already lost their health care plans in 2013.

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Young Texan earns $140,000 a year, with a two-year degree and hard work

I love this story from the Wall Street Journal. I’m linking to the free version on Yahoo News, though!

Excerpt:

Justin Friend ’s parents have doctoral degrees and have worked as university lecturers and researchers. So Mr. Friend might have been expected to head for a university after graduating from high school in Bryan, Texas, five years ago.

Instead, he attended Texas State Technical College in Waco, and received a two-year degree in welding. In 2013, his first full year as a welder, his income was about $130,000, more than triple the average annual wages for welders in the U.S. In 2014, Mr. Friend’s income rose to about $140,000.

[…]The risks of a mismatch between costly university degrees and job opportunities have become clearer in recent years. Anthony Carnevale, director of the Center on Education and the Workforce at Georgetown University, said nearly a third of people aged 22 through 26 with a Bachelor of Arts degree either don’t have a job or are working at one that doesn’t require a university degree. The numbers are similar for young people with vocational degrees, but those lower-cost degrees don’t typically lead to heavy debts.

Student loan debt outstanding in the U.S. totaled $1.13 trillion as of Sept. 30, up by $100 billion from a year earlier, according to the Federal Reserve Bank of New York. (Mr. Friend has no debts.)

[…]Mr. Friend, who is single, typically works 72 hours a week, usually including at least one day of the weekend, often on an overnight shift. His base pay is more than $25 an hour, up from about $22 when he started in 2012. He gets overtime after 40 hours a week. Pay is doubled on Sundays and tripled on holidays. He receives health insurance, a 401k retirement plan and paid vacation.

With little free time, expenses are low. He rents a one-bedroom apartment for $1,080 a month in a building with a pool and gym. To stay in shape for mountain-climbing trips, he sometimes runs up and down steps wearing a weighted backpack.

He showed an early inclination to make things. “At three years old, he was using a screwdriver and a hacksaw skillfully,” said Dr. Vaughan, his mother. Later, dyslexia made writing and math a struggle for him.

In junior high school, he took a course in welding. Within a few years, he was earning money repairing fences and doing other welding jobs for neighbors.

A documentary on World War II stirred Mr. Friend’s interest in pulse jet engines, which were used by Germany to propel bombs. He and his father, Ted Friend, a professor of animal science at Texas A&M, together built such an engine. “We used a leaf blower to start it,” pumping in air needed to ignite the engine, the younger Mr. Friend said. “It ran on propane.” When he attached the engine to a golf cart, he said, the vehicle proved difficult to steer after reaching 30 miles an hour.

“Mom didn’t like it,” he said. “She thought I was going to blow myself up.” One of his goals is to put a jet engine on a motorcycle, he says, adding: “I’d try to make it as safe as I could.”

On a recent day, while country music played on a colleague’s radio, Mr. Friend used gas tungsten arc welding techniques to attach two steel parts destined for an oil apparatus. Wearing a T-shirt and Wrangler jeans, he hunched over work requiring the precision of a jewelry maker. After welding, he buffed the part with a wire brush. Colleagues would later X-ray the part to make sure the weld was flawless.

The long hours mean “it’s hard to have a life,” Mr. Friend said. Eventually, he said he may pursue an advanced degree in metallurgy and research welding materials and techniques. For now, he’s building up his savings.

He’s debt-free, and probably didn’t even need student loans for this program. You couldn’t say that about most college students these days – and the ones in non-STEM fields will never be able to pay their loans back. What causes people to go into programs that don’t produce a return on investment? I think I know why. I think that many Americans have the idea that life should be about personal fulfillment, and not about doing things that don’t feel right to them. Hard work doesn’t “feel” right to many young Americans. They want work to make them famous, and to make them happy. Well, work isn’t supposed to be like that. Work is about making money, and very often the most difficult degrees and jobs are the least fame-making, and the least happiness-inducing. This guy is a welder! It’s not glamorous.

I would advise my younger readers, especially my male readers, to take a page out of this welder’s handbook. Make a plan to avoid debt, and stick to it.

Filed under: News, , , , , , , , ,

National debt up more than $10 trillion since Pelosi/Reid budgets of 2007

This post is from Red State.

Excerpt:

Despite his promises to cut the deficit in half by the end of his “first” term, Obama  racked up the largest deficits in U.S. history:

  • FY2009: The federal budget deficit was $1.413 trillion, the highest in U.S. history. (“Monthly Budget Review: November 2011,” Congressional Budget Office, 11/7/11)
  • FY2011: The federal budget deficit was $1.299 trillion, the second highest in U.S. history. (“Monthly Budget Review: November 2011,” Congressional Budget Office, 11/7/11)
  • FY2010: The federal budget deficit was $1.294 trillion, the third highest in U.S. history. (“Monthly Budget Review: November 2011,” Congressional Budget Office, 11/7/11)
  • FY2012 The federal budget deficit was $1.090 trillion, the fourth highest in U.S. history. (“An Analysis of the President’s 2013 Budget,” Congressional Budget Office, 10/5/12)

You shouldn’t be shocked by Obama’s failure to reduce the deficit in half by the end of his first term in office. He did warn us there would be “trillion-dollar deficits for years to come.”

Interest expense on the national debt is what sinks countries. The zero interest rate environment we have today masks the problem. When we return to normal interest rates, say 6%, our interest expense will jump to approximately to 25% of tax receipts. We have recently seen what happens to countries with debt problems similar to ours. Spain, Portugal, Greece, and Argentina all brought to their knees by excessive debt.

Heritage Foundation economist Stephen Moore:

Here is the biggest worry about an $18 trillion debt: What happens if/when interest rates start to drift back upward? Answer: This is the economic equivalent of the nuclear option.

Each 1-percentage-point rise in interest rates causes the U.S. deficit to rise by more than $1 trillion over ten years. So a 300-basis-point rise in rates — nothing more than a return to normalcy — would mean about $5 trillion in federal deficits.

If that happens, the debt-servicing costs grow astronomically and interest payments would become the biggest expense item in the budget. We start to pay more and more taxes just to finance past borrowing. This is what happened in Detroit; look at how that turned out.

Maybe this debt bubble won’t burst. Let’s pray that it doesn’t. If it does, the 2008–09 real-estate crash could look like a picnic by comparison.

[…]Oh, and we’re still borrowing half a trillion a year, so the debt will likely hit $20 trillion sometime before 2018. Have a nice day.

In 2007, when Nancy Pelosi and Harry Reid took over the spending, the national debt was only 8.5 trillion!

I am really hoping that interest rates will go up. Not only would it help me personally to get a predictable return on my investments, but I would like the people who voted for the Democrats to perceive (when it blows up) that lowering interest rates and borrowing trillions of dollars was not the right way to achieve real economic growth. The economy looks better if you throw 10 trillion dollars of borrowed money at it, but it’s not sustainable. In fact, it seems as if the left is always trying to wreck the economy with one bubble or another. It’s not just reducing mortgage lending requirements to create a housing bubble, it’s reducing student loans requirements to create a higher education bubble, and it’s reducing interest rates to create a debt bubble. It’s almost as if they were trying to destroy the economy.

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Will the Social Security and Medicare programs be there for young Americans?

Of course not, and the voting in Democrats that they seem to like to do is making it worse.

Here’s an article from the Daily Signal to tell about it.

Chart first:

Social Security insolvent in 2024

Social Security insolvent in 2024

And now the story:

Social Security’s trustees projected in 1983 that the recently enacted Social Security reforms would keep the program active for at least the next 75 years, through 2058. However, according to research by Rachel Greszler, a senior policy analyst, and James M. Roberts, research fellow for economic freedom and growth at The Heritage Foundation, that approach date has accelerated.

“If the trend since 1983 continues, the program will become insolvent in 2024—34 years earlier than originally projected,” Roberts writes.

Now you might think that the way Democrats appeal to younger voters, that they are taking care of this problem for them.

Well, here’s an article from Investors Business Daily.

Excerpt:

The White House recently conceded that President Obama’s executive order effectively legalizing an estimated 5 million undocumented immigrants means that newly legalized workers will contribute to Social Security and Medicare and be eligible for benefits.

Does the president have any idea how much money his action could cost the country — i.e., taxpayers?

[…]The Social Security and Medicare Trust Fund trustees estimate the two program’s combined long-term unfunded liabilities — the estimated amount the government will have to pay in benefits above what it expects to receive — at about $49 trillion. Obama’s amnesty action greatly exacerbates the problem, because retirees get back far more than they pay in.

[…]Because the U.S. pays hundreds of thousands of dollars in retirement benefits, on average, for each new retiree, whether part of Obama’s amnesty program or not, the president has just vastly worsened the long-term financial condition of the country’s two primary retirement safety nets.

But Obama’s newly legalized workers will impose even heavier losses than Steuerle’s examples.

Most workers pay into the programs for their working careers, between 40 and 50 years. But millions of Obama’s newly legalized are working-age adults with children, so many could be in their 40s or older.

Thus they could pay FICA taxes for the next, say, 15 or 20 years — less than half the average American worker — and be eligible for the full array of Social Security and Medicare benefits.

In addition, most will be lower-income workers. The U.S. Bureau of Labor Statistics estimates that foreign-born, full-time workers earn about 80% of native-born Americans ($33,500 vs. $41,900).

Social Security is a social insurance program and is structured to provide disproportionately more benefits for lower-income workers. Medicare pays the same regardless of how much a worker pays in.

To be sure, these new workers’ entry will likely help the trust funds initially, because most will be paying in rather than taking out.

Under current rules, workers must pay FICA taxes for 40 quarters (10 years total) before being fully eligible for the programs. But within a few decades the oldest will start retiring.

Given the demographic unknowns, estimating the amnesty’s financial cost to our retirement programs — and so to U.S. taxpayers — can only be approximate.

But using a basic simulation model, we believe the government will receive about $500 billion in payroll tax revenue (including Part B and drug premiums), and expect it to pay out some $2 trillion in benefits over several decades.

Yeah, so they are actually making it worse. But hey, at least we have redefined marriage, right?

As if that were not enough, there’s this lovely story from CNS News.

Excerpt:

The Daily Treasury Statement that was released Wednesday afternoon as Americans were preparing to celebrate Thanksgiving revealed that the U.S. Treasury has been forced to issue $1,040,965,000,000 in new debt since fiscal 2015 started just eight weeks ago in order to raise the money to pay off Treasury securities that were maturing and to cover new deficit spending by the government.

The only way the Treasury could handle the $942,103,000,000 in old debt that matured during the period plus finance the new deficit spending the government engaged in was to roll over the old debt into new debt and issue enough additional new debt to cover the new deficit spending.

This mode of financing the federal government resembles what the Securities and Exchange Commission calls a Ponzi scheme. “A Ponzi scheme,” says the Securities and Exchange Commission, “is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors,” says the Securities and Exchange Commission.

“With little or no legitimate earnings, the schemes require a consistent flow of money from new investors to continue,” explains the SEC. “Ponzi schemes tend to collapse when it becomes difficult to recruit new investors or when a large number of investors ask to cash out.”

Now you might ask yourself – are young people aware of these things? Of course not. What they learn in university is how to escape their repressive religious backgrounds by experimenting with risky, irresponsible sexual behavior. They are not aware of the situation, and when they vote, they vote like they were picking candidates on American Idol. I guess I can understand why young people act stupidly. They are concerned with what the culture tells them to be concerned about, and that’s legal baby-killing, redefining marriage to separate kids from their mom or dad, police shooting people who commit crimes, a nonexistent gender pay gap and global warming. What is appalling to me is when their parents vote Democrat… which is basically voting to have a higher standard of living for themselves, then passing the bill onto to their kids. It’s especially amazing when married women do this to their own kids. What are they thinking?

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