Death Panels and Taxes

President Obama had barely finished outlining his proposed budget yesterday when FoxNews’ Sean Hannity turned a crimson shade of apoplectic.

Hannity could barely get words out around his outrage:

This is a cowardly budget! I'm going to tell you why because he didn't, he didn’t … and I think there's a set-up going on here! He didn't deal with all the entitlements … and here's what I think he thinks he's going to do, he thinks he can pull off a Clinton! That … he's not going to deal with entitlement reform which is where the real savings would be. He's going to let the Republicans do it! And then he'll, you know, send all the Democrats out there to say Republicans want old people in this country to die and eat dog food!

(Hannity obviously hasn’t priced a can of dog food lately, but I digress).

See it?

Right there in that last sentence? 

Hannity is outraged because he realizes that conservative pundits like himself have been hoist on their own petard. 

He had his rebuttal all set, script written, guests booked – and then the President didn’t cooperate. Ooooh that wraskely wabbit!

A quick review of Fox’s other talking heads confirms the basic observation and you can reverse engineer the pre-game strategy meetings from their universally sucker-punched expressions.  It’s the same slapped-in-the-face look Muhammad Saeed al-Sahhaf, otherwise known as “Baghdad Bob,” had on his face when he finally realized Saddam’s army had been outflanked and American tanks were rolling through the streets of Baghdad directly behind his TV studio. 

Hannity and the usual FoxNews Rogue’s Gallery were all set for the President to propose cuts to the sacred cows of Medicare and Social Security, then they could have launched the Mother Of All Battles: Death Panels II, Obama Killed My Mama!

Instead, the President suggested that Republicans, those supposed flinty-eyed fiscal conservatives, make the first proposal.

House Budget Committee Chairman, Paul Ryan, was also outraged.  Ryan claims the President “punted” by not proposing cuts to entitlement programs.

Conservatives love to be on record hating entitlement programs – but you’d be hard pressed to find a middle class conservative over 65 who doesn’t depend on both Social Security or Medicare for their very existence. You hear a hell of a lot of talk lately about “privatization” and “getting the government out of healthcare,” but the simple truth of the matter is that prior to entitlement programs, when both healthcare and retirement were private affairs, the vast majority of elderly Americans had neither.  American Seniors today damned well remember how their grandparents struggled back in the 30’s and 40’s and 50’s when there were no government run social programs for retirement. They damned well remember the Great Depression when there were no government safety nets and they remember the destitute and the poverty and the hopelessness. And, by God, they damned well depend on those programs today, yes they do.

And yet, and yet, perversely they rail against “entitlement programs” and hate the liberals who made the very programs they depend on each and every single day. 

Of course, to be fair, Democrats hate the President’s proposed budget as well. Democrat Kent Conrad, the Senate Budget Committee chairman criticized Obama’s plan, saying:

"We need a much more robust package of deficit and debt reduction over the medium and long-term. It is not enough to focus primarily on cutting the non-security discretionary part of the budget, which accounts for just 12% of spending this year."

Conrad is correct, however note that he also didn’t specifically mention Social Security or Medicare by name – because whomever does that first is going to get burned in effigy by the opposing party, the public, and the media (which is, of course, exactly what Sean Hannity was so pissed about when Obama didn’t do it). You’d have to be an idiot, or a true patriot, to commit that kind of political suicide.

Here’s the funny part, it’s all a smoke screen.

Well, a lot of it anyway.

Social Security has no impact on the national debt, the deficit, or the budget.  Medicare and Medicaid do, but not exactly in the manner folks like Hannity would have you believe.

Social Security is funded via the Federal Insurance Contributions Act (FICA) from a dedicated Social Security withholding tax on every US worker’s paycheck.  Let me spell that out for the slow people in the class, Social Security is not funded from Federal Income Tax, but rather from a specific income withholding with matching funds from employers. A separate payroll tax funds Medicare. The combined tax for both of these programs is 15.3%, half (7.65%) paid by you, half by your employer. If you’re self-employed, you pay all 15.30% but the “employee” part (since you’re both the employer and employee) is deductible from your federal income tax (so, technically if you wanted to argue the point, I’m wrong – a small, very small, percentage of federal income taxes do, in a way, go to Social Security. Sort of. If you’re self employed).  FICA withholdings are paid into a trust fund, the Federal Old-Age and Survivors Insurance Trust Fund.  Each month Social Security checks are issued and paid for out of Social Security revenues, any shortfalls are made up from the trust fund.  Under most circumstance, Social Security takes in more, a lot more, than it pays out – for example in 2007 the fund, between FICA tax revenue and interest on the fund, took in $2.2 trillion more than it paid out.  Last year, because the economy sucked, the fund lost a bit – but not much in the grand scheme of things.  When the program first started way back in the 1930s there were roughly four people paying into the program for every one person collecting a check. Now a lot of folks likened Social Security to a Ponzi scheme – which it is, after a fashion. But see a Ponzi scheme works, as long as there are more people paying in than checks being sent out.  Currently there are about three people paying in for every check going out, and as the Baby Boomers retire that ratio will drop to roughly two to one where it will hold and then slowly climb back up over the next couple of decades as the Boomers die off. There’s a lot of talk of Social Security “going broke” and it will, about 30 years from now, if nothing is done or if the population continues to age without regaining a more natural balance – both of which are extremely unlikely.

Whoa, hold on there, Jim, I hear you say in that outraged tone you use when you’ve watched too much FoxNews, the Trust Fund is joke, those filthy bastards in Congress keep raiding it!  Um, yes, that’s how it’s supposed to work.  The trust fund isn’t some huge pile of cash stashed under Ben Bernanke’s mattress.  Social Security revenue is converted into Special Series government bonds, sold to the public, and used to finance the business of the United States. That’s how it’s supposed to work as defined by Title 42 of United States Code, Section 401(a).  At the moment, the Fed has about $15 trillion in outstanding obligation, i.e. the amount the government would have to pay if every single one of those bonds were cashed at once.  And yes, that would most certainly bankrupt the country, just as if every member of a bank chose to withdraw all their funds at the same time would bust the bank – which is why there are certain safeguards in place to prevent both events.  Yeah, ok, Jim, but why then all this hoopla about the trust fund? Because currently Social Security payments are made from revenue (those FICA withholdings you see on your check stub each week), when outputs exceed input the difference will have to be made up from the trust fund – that point, if nothing else is done at all – will be decades from now. And even then, all it means is that the US Treasury would have to make up the difference from its obligation, in other words we’d have to use federal tax dollars to make up the shortfall.  Again this is assuming that nothing is done, at all, in the next couple of decades.  A tiny increase in the percentage of FICA withholding, for example, would shove that deadline back another decade, or further. So would upping the retirement age from 65 to 65.5 or 66 or even 70 – you know, as the population ages and people remain active longer and longer and want to stay in the work force. A restored economy would also significantly add to the fund.  There are many, many simple and painless and even desirable solutions to this distant problem – most of them are those “common sense” solutions you hear so much about from Conservatives pundits.

Now, here’s the part nobody ever mentions: it could go the other way just as easily. I.e. if we were to experience another sudden population increase, another Baby Boom (perhaps at the end of this war) the fund would eventually get another huge increase pushing the date of accounting back many decades – and that is if no modifications to the current program is made in any way – add that to the current projections and you’ll find that the program could remain solvent for nearly another century.  Here’s the really funny part, you don’t need to have more babies, a population surge could be induced in other ways – say by encouraging large scale legal immigration.  Something else to note: a lot of illegal immigrants pay into Social Security via stolen or falsified Social Security numbers; very very few get anything out, that’s like free money for the rest of us – to the tune of billions – which more than offsets the cost of those who defraud the program, illegals and valid US citizens alike. Kick out the illegals who contribute to the Social Security fund, and you get to pay for the cheats. Didn’t think of that, did ya?  That’s OK, neither did Rush, or Glenn, or Sean, and Palin is making the derp derpa derp noise in her head  – which is just another reason not to listen to any of them. Just saying.

To review, Social Security does not affect the current debt, deficit, or budget. Social security is in no immediate danger.  The Social Security Trust fund is functioning exactly as designed.  And social security is not an entitlement, or a freebee, or redistribution of wealth, or any other such bullshit, it is retirement insurance backed by the US Government and nothing more.  It’s not a crisis – though pretending that it is makes good political hay with a rather large conservative voting demographic that spends most of its time being scared shitless of one damned thing or another.  If the Obama budget had mentioned Social Security in any way whatsoever, today you’d be hearing the words “Death Panels” on every conservative talk show in the county – and Hannity’s reaction is proof positive of how disappointed those conservative pundits are that it’s not.

Medicare is another story.

Medicare was designed to function much like Social Security (and was, in fact, created as part of the Social Security Act of 1965).  Because of massive increases in medical costs, far beyond the annual cost of living increases covered by Social Security, Medicare spending increases significantly from year to year and this year will make up over 20% of the Federal budget.  As of 2008, costs exceed revenues and the program will go broke within the next ten years if nothing is done, and likely sooner if medical costs continue to increase at the rate they have historically.  Americans pay on average double per capita in medical costs what the citizens of every other advanced nation in the world do.  And this nonsense of “the best medical system in the world” is exactly that, utter nonsense. That is a complete and total myth, a lie Americans tell themselves so they can feel superior instead of facing the easily proven truth – and the idiots repeating this lie loudest are the ones without medical care. The American medical system isn’t even in the top ten, hell it isn’t even in the top thirty, and is in point of fact this year ranked 37^th by the World Health Organization, barely above Slovenia in things like access, life expectancy, preventable deaths, basic health, rate of infection or sickness, prevention, immunization, education, infant mortality rates, affordability, long term care, pre-natal care, and so on in nearly every single category that matters.  And the costs of medical entitlement programs are the second largest cause of our current financial woes.

Again, to review, we pay twice as much for about one third the medical care that all those “socialist” countries do.

Which was the whole damned point of healthcare reform.

You remember healthcare reform, right? The same exact reform that Sean Hannity and others of his ilk protested so vehemently? The same reforms that Sarah Palin condemned as Death Panels? The same reforms that Conservatives fought so hard against and the reforms they’re trying to repeal and defund right now? Oh, yes, that healthcare reform. Heh heh. Oops. Perhaps they should have participated in the process, instead of acting like spoiled children.  The President tried to make decent healthcare available to all Americans for a price we all could afford and the Right not only vilified him for it, they labeled him an enemy of America. 

Now they’re upset that he didn’t bend over so they could rape him some more? 

Ryan’s wrong, Obama didn’t punt, he did an end run.

If Conservatives want a realistic budget, they will have to fix healthcare. 

Healthcare reform is a dirty word in America specifically because Conservatives made it a dirty word.  So, if they want to fix the second largest expenditure we have, they are going to have to be the bad guys. 

You makes your bed, you lies in it – those are the rules.

And that takes us to the final piece, the single biggest expenditure we have and the Conservatives’ biggest and most bloated sacred cow: Defense.

You want to talk about entitlement programs? You want to talk social welfare? Government bailouts? The money loaned to the auto industry, the money given to Wall Street, the money spent on every single welfare cheat and Social Security fraud and illegal alien anchor kid sucking up space in one of our public schools combined is nothing compared to amount of taxpayer dollars thrown at the defense industry.   We cannot balance the budget, we cannot pay off the national debt, we cannot reduce the deficit, unless we drastically reduce defense spending. Period. 

The Secretary of Defense knows this, he has taken steps to significantly reduce his budget.

It won’t work.

Here’s why:

Conservatives will do everything in their power to put that money right back.

Let me give you an example:  Speaker of the House John Boehner condemned the President’s budget for not going far enough, for being cowardly, for not trimming away the fat and the pork and the things a deeply indebted nation must do without.  The Speaker feels so strongly about this that he threatened to shut down the government, actually shut down the government, shutter the doors and turn off the lights.

But what Boehner failed to mention is that while he castigated the President for not cutting non-essential programs, Boehner himself is the leader of a large group of congressmen who insist that the military buy an “alternate” engine for the already enormously expensive F-35 Joint Strike Fighter.  That airplane was supposed to be a jack-of-all trades military fighter, a single ring to rule them all if you will. Stealthy, fast, fighter, bomber, vertical take-off, carrier capable, multi-mission configurable, and etcetera and everything including the kitchen sink and a cappuccino maker – and it was going to do all that at half the cost of the very, very expensive F-22.

Yeah. Sure.

Today, the F-35 is single most costly weapons program in the history of the United States.

Yes, you read that correctly, the F-35 program is costing us more than the Manhattan Project, the crash program which created the first atomic bombs during WWII. The F-35 airplane program costs more, enormously more, than the nuclear powered aircraft carriers it will someday land on. The airplane, which was supposed to save us money, is now years overdue, uncounted billions over cost, and mired in technical problems that will probably kill a few dozen pilots before they’re fixed – if they ever are – and it won’t do one goddamned thing to help our soldiers, sailors, and airmen fight the conflict they are currently engaged in any way whatsoever.  

If ever there was program ripe for some trimming, it’s the F-35.

Instead, Boehner wanted to spend $450 million of your tax dollars to develop and manufacture an “alternative” engine for the airplane that will never be used. Why? Well, because that engine would be manufactured in his home state, that’s why.  Just for reference, that $450 million is more than twice what Alaska’s Bridge to Nowhere would have cost.  The difference being that bridge would have eventually paid the money back in tolls, the F-35 program won’t.  Worse, having two different engines, made by two totally different competing manufacturing lines, would require two differently trained ground crews, logistics chains, and technical schools to maintain and operate – oh, and by the way, the parts aren’t interchangeable. Those of you experienced in military operations, especially maintaining military systems at combat ready in a war zone, should understand exactly what I’m getting at here – sooner or later, this kind of bullshit kills people, usually pilots. Taken far enough, it will lose the war for you. (There’s also a certain degree of irony here, given that the folks behind this nonsense think that multiculturalism and pluralism are bad for people, but good for airplane engines.  Again, I digress. Excuse me).

But wait, it gets better.

President Obama, President Bush before him, the last three secretaries of Defense, the heads of the Air Force, Navy, and Marine Corps,  and dozens of lawmakers have repeatedly tried to kill this goddamned worthless engine – but John Boehner, who trumpets fiscal responsibility, insists that it be made. Over the next three years, that engine would have cost you, the taxpayer, more than $3 billion – the cost of one Nimitz class aircraft carrier.

$3 billion.

That’s one airplane.

No, strike that. That’s one component of one airplane.

Now, take the entire Department of Defense and multiply it times 100 Senators times 435 Congressmen and you’ll have some idea of where your money is actually going and why we’ll never, ever, ever, ever, ever, ever get a balanced budget unless we first do something about Defense.

John Boehner would have you believe that the tiny handful of women who get some government assistance for their $90 Planned Parenthood abortions are robbing you blind.  The Tea Party wants you to believe that teachers are stealing your money, that paying the highly educated professionals who are teaching the next generation how to successfully compete in an ever more complex world (not to mention giving them the basic skills they will need to maintain the technological marvel that is the F-35) aren’t worth paying a living wage and that our schools aren’t worth funding. Conservatives would have you believe that it’s the National Endowment for the Arts, or after school programs for poor kids, or government cheese that is bankrupting the country.

But it’s not.

It’s arguing over programs that aren’t broken.

It’s paying twice as much for half as much healthcare.

It’s billion dollar jet engines.

It’s trillions in greed, and selfishness.

It’s self serving hypocrites just like Sean Hannity and John Boehner. 

That’s exactly what it is.

 

 

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Note: in a late vote today, the alternate jet engine for the F-35 was finally killed by Congress.  John Boehner voted to keep the program.