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.

Filed under: News, , , , , ,

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.

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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CBO report: Social Security to be bankrupt by 2030

From Investors Business Daily.

Full text, because this matters:

The $2.8 trillion Social Security Trust Fund is on track to be totally spent by 2030, the Congressional Budget Office said Tuesday.

That’s one year earlier than projected in 2013 and a decade earlier than the CBO estimated as recently as 2011.

The CBO delivered the warning in a gloomy long-term budget outlook that shows federal debt reaching 106% of GDP in 25 years, up from 74% now.

The rising debt would come despite revenue rising by 1.8 percent as share of GDP (from 17.6% to 19.4%)from 2014 to 2039 and despite spending other than health entitlements, Social Security and debt service shrinking by 2.5% of GDP (9.3% to 6.8%).

The challenge: Health care spending will rise by 3.1 percent of GDP (4.9% to 8%) and Social Security 1.4 points of GDP (4.9% to 6.3%), which will in turn push interest on the debt up to 4.7% of GDP from 1.3%.

Social Security’s cliff, now just 16 years away, is one that Washington would be crazy to approach. At that point, incoming revenue would be enough to pay less than 75% of scheduled benefits for all beneficiaries, whether just reaching retirement or 100 years old.

Up until the point of exhaustion, the trust fund provides legal authority — though no resources — for the government to pay all benefits despite Social Security’s burgeoning cash-flow deficit, which the CBO expects to reach $320 billion in 2024 alone.

The rapid deterioration in Social Security’s finances has a number of contributing factors. The drawn-out recovery from the deep recession and the extended period of low interest rates have sapped revenue and lowered the interest that Treasury pays to the trust fund based on program surpluses from 1984 to 2009.

On top of that, the CBO expects the underinvestment and long-term unemployment associated with the less-than-stellar recovery to have a lasting impact, boosting the natural rate of unemployment.

In February, the CBO significantly reined in its economic optimism, slashing its projection of the total amount of wages and salaries over the 2015-2023 period by about $3.2 trillion, or 3.6%.

Among the factors that the budget scorekeeper cited was ObamaCare’s work-diminishing effect, which the CBO now estimates to be three times as large as it supposed in 2010.

The CBO said that ObamaCare would reduce employment by 2 million full-time-equivalent workers in 2017, rising to 2.5 million in 2014.

This reduction would result in a decline in aggregate employee compensation averaging 1% from 2017 through 2024, or $1.05 trillion.

An IBD analysis pegged the revenue hit to Social Security from ObamaCare work disincentives at about $120 billion through 2024.

The reduced payroll-tax contributions into Social Security would, over time, result in modestly lower benefits for those who choose less work, but the cost savings from reduced benefits would offset only a portion of the lost revenue.

The nature of Affordable Care Act subsidies — they rise as income falls and decline as income rises — will make work “less attractive” by “creating an implicit tax on additional earnings,” the CBO said.

The work disincentive will lead some people to choose to work less, in part because subsidized health care will enable them to get by with less work.

In addition, the CBO expects ObamaCare to depress wages for lower earners when employers, over time, pass along the cost of the law’s employer-insurance mandate by holding back on wage increases. Lower wages, in turn, will provide another reason for some people to opt for less work, the CBO says.

While the CBO expects compensation to be lower “almost entirely” because people will choose to supply less work, the CBO also expects that some employers “will respond to the penalty by hiring fewer people at or just above the minimum wage.”

Another important factor clouding Social Security’s future: A greater share of earnings goes to those with income above the maximum subject to payroll taxes ($117,000 in 2014).

As a result, while rising longevity and the retirement of baby boomers will make benefits grow faster than the economy, Social Security’s tax revenue is expected only to keep pace with economic growth.

Look. I think there’s practical wisdom in this CBO report for Christians. We have to take into account data like this when making our life plans. And it’s not only Social Security we need to be scared of, Medicare is even MORE insolvent than Social Security. If you are under 40, these programs are not going to be there for you. You have to make other plans. You can’t be running your life plan as if these threats do not exist, because they do. Now I want to talk about how a defensive plan can be better than an offensive plan.

The neutral zone trap

Think of ice hockey and the neutral zone trap defense:

The defending team sets up so four players-usually both wings and both defense-remain in the neutral zone, while the center forechecks into the offensive zone. The center’s job is to block the passing lanes from the puck carrier, forcing him to carry the puck forward into the neutral zone. Once the puck carrier reaches the neutral zone, the center stays toward the center of the ice, forcing the puck carrier along the boards. Two of the other defending team’s players collapse in on the puck carrier, forcing him to dump the puck into their zone, forcing a turnover.

This plan allowed the New Jersey Devils to win the Stanley Cup against the high-powered Detroit Red Wings in 1995:

The following season, shortened by 34 games because of a lockout ordered by NHL owners, the Devils entered the playoffs as the No. 8 seed in the conference, with only a 22-18-8 record. In the West, the Detroit Red Wings looked invincible, cruising to the Stanley Cup Finals behind a galaxy of offensive stars.

But that’s when Lemaire went to work, putting his Devils through daily lessons in the trap, preaching constantly about being in the right defensive position at all times. It was hard, but it worked. The Devils upset three higher seeded Eastern teams to get to the Stanley Cup Finals, but remained prohibitive underdogs against the Red Wings.

Many predicted a sweep – and that’s what happened. What nobody predicted was that it would be the Devils who did the sweeping, thanks to a stifling trap that limited Detroit to seven goals in four games.

“They frustrated the heck out of us,” former Red Wings defenseman Mike Ramsey told the St. Paul (Minn.) Pioneer Press. “You weren’t trying to beat one guy. You were trying to beat four. They had enough talent and size where they didn’t have to play that way. But they knew what they were doing. Every player was on the same page.”

When coaches across the NHL saw how Lemaire was able to totally shut down such a great offensive team, the trap began to be copied by almost everyone. Roger Neilson had implemented a form of the trap with the expansion Florida Panthers from 1993-95, and his successor, Doug MacLean, took it even further. The neutral zone became almost impossible to navigate against the Panthers in the 1996 playoffs, and Florida suddenly found itself in the Stanley Cup Finals against the offensive-minded Avalanche. Criticized by the media about the trap, MacLean responded, “I like boring”.

Yes, and he likes winning,too. Sometimes people who appear to be risk-averse seem “scared” to others… but what matters is the scoreboard.

I hate to see young people making life plans while ignoring real life obstacles. The national debt, the demographic crisis, fertility (for women), etc. are real problems. Let’s take these threats into account when we are planning our lives. It’s just unwise to think that we can do whatever we want and then count on God to bail us out. We need to be practical. We live in challenging times, and we need to have prosperity and stability in order to protect our faith from external threats which are so often the root of despair and apostasy. The score on the scoreboard is not related to who took the biggest chances and felt the most excitement, it’s related to who actually scored. I feel excited when I win.

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