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Posts Tagged ‘Entitlements’

Liberalism Fails Society and Those Most in Need

Posted by Steve Markowitz on March 7, 2017

Since the early 1960s liberals have promoted the narrative that people on the Left are more compassionate than those on the Right. This proposition was based on a motion, not empirical evidence. It emotionally seems right that the government should give to those in need. Conversely, those who would withhold government’s largess from the less fortunate lack compassion.

While a governmental safety net has been a part of American society since Franklin Delano Roosevelt’s Administration, it advanced significantly under President Lyndon Johnson. Given we are now a half-century into Johnson’s Great Society, it is reasonable to determine efficacy of the programs.

The Wall Street Journal’s Jason Riley recently published some important statistics since the initiation of the Great Society:

  • In 1962 the percentage of the Americans receiving government assistance in the form of cash transfers was about 12%. Today this has nearly doubled to 21%.
  • In 2012 over 48% of Americans resided in households receiving some form of government benefits. This number was only 30% in 1983.
  • By 2011 the US published property rate remained flat compared to 1965. During the same period, US governmental expenditures on poverty rose by 900% per receiving person (after inflation adjustments).
  • The Heritage Foundation marks 2014 as the 50th anniversary of Johnson’s Great Society. They calculated that federal government spending increased by 16 times, adjusted for inflation, for means tested welfare during this period.

Cause and effect are often difficult to prove. However, in the case of the Great Society Programs and their offspring, the evidence seems convincing that at the very least, much of the spending was wasteful and have not benefited those most in need over the long-term. At the same time, these programs significantly benefited certain industries that serve the programs and distributed their benefits. Those industries offer significant resistance to fundamentally changing governmental spending habits.


 

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Entitlement Mentality Affecting US Military Preparedness

Posted by Steve Markowitz on October 1, 2013

Today the focus is understandably on the US government shutdown.  President Obama blames the Republicans and the Republican Congress blames the President.  Both contentions are political mere sideshows to the real economic problems facing the Country.  The United States’ overall fiscal problem is that we spend too much money, more each year that we bring in in tax revenues.  How the money is spent or wasted is secondary to the fact that we are stealing from our children’s future to our benefits today.

There are times when it is reasonable for a country to spend more than it brings in such as real economic crisis and war.  However, when a Country continues to run deficits year after year and ignores the perils of the excessive behavior, it is a clear sign of a country degenerating, both economically and morally.

As the federal government grew during the past hundred years, accelerating in the past fifty, it found new ways to generate revenues, i.e. taxes.  Some of these revenues were used appropriately to build infrastructure and supply Americans with essential services.  However, more recent the taxation system became a methodology to redistribute wealth from some Americans to others.  This includes corporate welfare with companies given special tax breaks, as well as entitlements to individuals, some of who are deserving and others who are not.  Also, as the federal government grew, a greater number of Americans became employed by that government and are now dependent on it for their livelihood.  Finally, when enough funds tax revenues could not sustain this perverse payments system, the government began running ever larger deficits.

One’s personal views and needs will likely affect who one believes is truly deserve it of the government’s sugar. This is irrelevant to the fact that when a government takes resources from some Americans and gives it to others it is a corruptive force.

Often those on the Right focus on entitlements given in the form of social programs as being corruptive to the capitalistic system.  While this assumption is correct to an extent, the social welfare given businesses, i.e. the military and other pet projects of the Right, are just as corruptive and damaging to the overall economy.

McKenzie Eaglen and Michael O’Hanlon wrote an interesting piece in the Wall Street Journal last summer titled Military Entitlements Are Killing Readiness that reviews how the corruptive entitlement mentality is damaging the United States’ military and its preparedness.  Eaglen O’Hanlon list some of the entitlements military personnel currently receive including: 1) health coverage for life with minimal cost sharing, 2) retiree pensions and 3) housing allowances, grocery discounts, tuition assistance, and tax breaks more.

While many contend that our military personnel deserve such perks for serving the Country, the same argument can be made for many parts of society including police officers, firefighters, etc.  In fact this same argument has often made for municipal workers and has resulted in many cities and municipalities having to cut services in order to honor these entitlement benefits.

Now, the increasing cost of the entitlements is beginning to squeeze out the United States’ military capabilities and preparedness.  Here are facts presented by Eaglen and O’Hanlon:

  • The Navy will retire more ships over the next five years than it will build, with the fleet now at only 285 vessels.
  • The Air Force has one-third the number of bombers it had during the early 1970s and is currently is aging.  The relatively newest B-2 stealth bombers are two decades old.
  • In 2014, active duty Army and Marine Corps personnel are set to decrease by over 10% from 2010.

Should the above decreases be the result of a shrinking budget, while it may be bad policy, it would be an understandable economic decision. However, these decreases are more problematic when considered in tandem with the pay/benefit increases given military personnel that according to Eaglen and O’Hanlon include:

  • From 2001 to 2012, inflation-adjusted compensation cost per active-duty service member grew 56%.
  • From 2000 to 2010, the military’s health-care costs skyrocketed 180%, to $49.8 billion from $17.8 billion—more than double the rate of the national increase.  Tricare, a highly subsidized health care system for military retirees, provide members free health care for life.   This had led to over use. For example, in 2004 benefit recipients used outpatient services 44% higher than in civilian plans; with the inpatient rate 60% higher.
  • Military retirees have very generous pension benefits.  One benefit includes receiving 50% of the average salary for the three highest pay years after only 20 years of service.  This benefit also includes a cost-of-living adjustment.  In 2011 this system cost $20 billion, but also has a perverse impact on combat veterans who rarely serve for a full 20 years and therefore receive no pension benefits.
  • There are currently 760,000 civilians working for the military, a number that continues to increase even though the number of active-duty military personnel has decreased.

Certainly our Country should take care of its military servicemen and women, especially those that served in combat.  However, that does not justify pay scales or benefits that are considered sacrosanct by some.  As these pay and benefit costs squeeze out available funds for weapons and training, we are not only doing the Country an injustice, but also those that serve.

It is politically impossible to rein in the cost of any significant governmental program as long as the government is allowed to deficit spend..  Only when we stop robbing from future generations will true political wrangling and compromise be allowed to assist in bringing government spending under control, a requirement for any successful democracy in the long term.

Posted in Entitlements, Military | Tagged: , , , , , | 2 Comments »

Government Squanders Huge Sums on Telephone Entitlement Subsidies

Posted by Steve Markowitz on February 13, 2013

The Wall Street Journal reported on another government boondoggle related to entitlement handouts.  According to the report the federal government paid out $2.2 billion in 2012 to provide telephones to Americans.

raining moneyThe telephone subsidy program began in 1984, yes under the Republican administration of Ronald Reagan.  The idea behind the program was to allow poor people to communicate with their families and for emergency services.  The handout is subsidized by telephone companies adding an average of $2.50 per month to bills of landline and cellphone paying customers.  By 2008 the program’s cost grew to over $800 million, nearly tripling to over $2 billion four years later.

Typical of “do-gooder” programs invented by the government, many beneficiaries the telephone handouts are not those initially intended.  The Journal reported that over 40% of recipients have not proven their eligibility for the program.  In addition, this program is another example of crony capitalism offering huge benefits to cellphone providers including AT&T, Verizon, Sprint, Virgin mobile and TracFone.

As with many government programs of dubious benefit and with significant abuse, the government telephone handout program continues.  Even worse, big government supporters continue to come up with ideas to redistribute wealth to not only to less wealthy Americans, but also to big corporations and of course politicians.  President Obama is a strong advocate of growing such programs.

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Entitlement Programs’ Bonanza

Posted by Steve Markowitz on February 6, 2013

Former Republican governor, Mike Huckabee, posted brief comments comparing the “benefits” of government entitlements versus the median household income of working Americans.  This simple comparison, posted below, is telling.  Given human nature, the comparison helps explain the change in the work ethic of Americans in recent years.

President Obama often makes the statement that all Americans must pay their “fair share”.  The fact that he refuses to define this by amount proves it is rhetoric.  The President understands that putting a number on this “fair share” will limit government’s ability to take money from some Americans and give it to others.  In addition, such an objective look at the “fair share” might lead to the Country defining what the “fair share” of entitlements is for individual Americans.

Mike Hucklebe

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Crony Capitalism and the Political Class

Posted by Steve Markowitz on December 1, 2012

A remarkable data point to come from the 2012 presidential election was that Republican candidate Mitt Romney received 3 million less votes than John McCain did in 2008.  While neither Republican candidates were extremely attractive, this discrepancy is astounding given that Barack Obama ran against the unpopular legacy of George W. Bush in 2008 that included the Iraq war and economic meltdown.  However, this time around it was Obama who had the legacy of failure, but did not pay a political price for it.

While many conclude that the Republican’s 2012 defeat was the result of changing demographics, this logic is incomplete.  While the style of Romney and Obama were clearly differentiated, the Republicans spent much of their time running against Obama, rather than proposing game-changing policies.

One area that the Republicans failed to present a coherent case was on taxes.  Obama ran on increasing taxes on the top 2%, and easy sell for the lower 98% of the electorate.  Romney countered by offering an undefined promise to end loopholes.  However, without specifics, this sounded to many as protecting the country-club set at the expense of the common folks.

Relating to taxes and income redistribution is the subject of subsidies.  The government subsidizes many special interests.  While this includes programs for the needy, it also includes programs that subsidize wealthier Americans.  Romney and the Republicans were viewed as attacking the programs that mainly benefit the needy.  This caricature could have been avoided with a simple program to eliminate government corporate subsidies, a big part of crony capitalism.  But the Republicans were silent on this issue.

Boston Globe columnist Jeff Jacoby wrote an interesting piece titled: “Yes, slash farm subsidies — but don’t stop there.  Jacoby, a conservative writer, suggests support of a policy being proffered by the ultra-Leftists US Senator-elect from Massachusetts, Elizabeth Warren.  Ms. Warren suggests eliminating America’s federal agricultural subsidies, a view shared by Jacoby and this Blogger.  Jacoby points out the following concerning the subsidies:

  • During the past six years, farm subsidies cost US taxpayers approximately $275 billion.
  • The average farm household income in 2010 was over $84,000, 25% higher than the average for all US households that year.
  • 75% of government payments to farmers went to only 10% of farm businesses.  Some of these funds went to millionaires.

While Ms. Warren’s motivation behind cutting farm subsidies is political rather than altruistic given that few of these subsidies go to her state of Massachusetts, conservatives should back her proposal.  This could then be used as a springboard to eliminate other crony capitalism subsidies that also disproportionately benefit wealthier Americans.  Such a platform, if appropriately presented, would have wide appeal since such programs by their very nature can only benefit a small percentage of the population.

Attacking subsidies to wealthier Americans is but a first step in a broader program to limit the handout and entitlement mentalities that is taken over the Country.  However, it is a prerequisite for cutting the handouts that are the basis of power for the nanny state and the political class that runs it.  Republicans would do well to take a truly conservative position on this bi-partisan issue of the People.  But those already in power have self-interest in perpetuating the political power of handouts.

Posted in Capitalism, Government Handouts | Tagged: , , , , , , , , | Leave a Comment »

“Hope and Change”, Four Years Later

Posted by Steve Markowitz on November 23, 2012

During his first run for the White House, Barack, Obama won on the vague promise of Hope and Change.  Both goals played well on American’s desire for improvement with an unpopular war in Iraq and an economy that was in the midst of a financial crisis.

With Obama preparing for his second four years, it is instructive to review his first term.  Whether “hope” has been delivered likely depends of an interpreter’s circumstance.  On the economic front, hope it is a rare commodity with unemployment in the minority communities and with recent college graduates at well above 10%.  In addition, the household total wealth has dropped significantly during the past four years.  On the other hand, significant government money has been spent on crony capitalism, payments to states for continued payments to government employees and handouts such as extended unemployment benefits have been dished out liberally.  Those on the receiving end of these benefits likely will feel better with the Obama Presidency.

As for change, little is evident.  Obama entered office with a dysfunctional government in Washington, which remains so today.  Crony capitalism existed before the President was elected, but he has used it extensively since.  Backroom deals remain a Washington politician’s favorite tool and the promise of transparency never materialized.  Finally, the President uses the US military liberally, including continuing a war in Afghanistan that cannot succeed.

What will the next four years of the Obama Administration look like?  Given the President’s radical Leftist positions it is likely that Americans will become more dependent on the federal government and government will obtain more power over the People.  However, it is likely that the realities of economics with the Country’s significant debt will have at least some limiting effect on Obama’s power grab.

One Blog reader and past guest writer, James Mahoney, has a less optimistic view of the next four years.  That view is posted below.

The Next Four Years, by James Mahoney

“In this week s news conference he acted like a man who received a mandate.  This myopic approach will result in his second term becoming as disastrous as that of George W. Bush.”

Barack Obama’s second term will be disastrous for the United States, and will likely result in the end of our Country as we know it.  The difference is that anyone who only receives their news from the mainstream media will never hear a word about it.  During the Bush administration an increase in the unemployment rate from 4.6% to 4.7% was relentlessly cited by the media as “evidence” that we were in the midst of a recession.  Under Obama the stated unemployment rate of 8% (actual rate well over 11%) is totally ignored.

If Fast and Furious, the embassy murders and subsequent cover up in Benghazi, crony capital payments to bogus solar companies or any of the antics of Eric Holder had occurred under George Bush, the press would have had him run out of office.  We are in grave danger because instead of being a watchdog, the press are now willing accomplices in running interference for the Obama Administration and preemptively branding anyone who dares to raise legitimate questions as sexist, racist bigoted homophobes.  The press will pretend that Obama has a mandate and it will magically be so.

Of course, the only reason the press can get away with any of this is because we now have a near majority of the electorate who are so dumbed-down they accept the false narrative at face value.  They care about the latest installment of Dancing With the Stars and getting their free Obama phones, but they possess virtually no critical thinking skills.  In the past these uninformed voters usually stayed home on election day and didn’t do any real damage, but in 2008 Obama cultivated them as part of his core constituency.

So let’s review.  Obama will be free to do as he pleases for the next four years without fear of reprisals from the lapdog media, Congress, the courts or a largely clueless public.  He has already demonstrated lawless behavior by illegally using executive orders to accomplish what Congress would not give him the authority to do.  His federal agencies are cranking out an average of 59 new regulations per day.  He will have 2, and possibly 3, appointments of young activist judges to the Supreme Court who will rubber stamp his agenda and leave a scorched earth of legal precedent that will haunt us for the next generation.  Face it folks – it is now Game.

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Governmental Spending and Handouts are Destroying America’s Work Ethic

Posted by Steve Markowitz on October 30, 2012

Thetimes-tribune.com posted a fascinating, yet disturbing article titled U.S. loses to disability gamers concerning the degradation of work ethic in the United States.  It reviews a report by economist Nicholas Eberstadt of the American Enterprise Institute who presents the following evidence/conclusions in his “A Nation of Takers: America’s Entitlement Epidemic.”

  • For 2010 total government transfers exceeded $2.2 trillion in money, as well as goods and services to Americans.  This amounts to $7,200 per individual and $29,000 per family of four.
  • Today’s transfers exceed the total of all other federal expenditures.  Prior to 1960, only in the 1931 and 1935 did federal transfer payments exceed total other costs.  To put this in perspective, during FDR’s presidential years these transfers were less than a third of total spending.
  • From 1960 to 2010 transfers (entitlements) increased from 28% to 66% of total spending.
  • Male work force participation has sunk to 73% today from 89% in 1948 with many men not wanting to work.  At 73% this is lower than its counterpart in Europe.
  • The disability rate has skyrocketed in the United States from 455,000 in 1960 to 8.6 million in 2011, four times the number of Americans on welfare.  About half claiming disability are from “mood disorders” or “musculoskeletal system and the connective tissue” issues.  In 1960 about 134 Americans were employed for every disabled worker.  In 2010 there was one disabled for every 16 employed.

The degradation of American work ethic is a tragedy that is draining the Country’s spirit and wealth.  While many on the Right would blame the governmental programs that helped foster this slide on Democrats, Republicans have been complicit with significant growth in related programs occurring under the Nixon, Ford and George W. Bush administrations.  In fact, Eberstadt concludes that between 1960 and 2010 entitlement spending was 8% higher under Republican presidents.

In addition, many “industries” have benefited from the various governmental handout programs including the medical profession, pharmaceutical companies, lawyers, governmental employees and social workers.  It is telling that with all of these groups supposedly working for the good of society that the disability rate has skyrocketed.  The actions of these special interest groups have either hindered the publics’ health and/or foster a growth in dependency.

As this Blog has proffered previously, the only way to address the evils that come with excessive governmental spending is to strictly limit Congress’s ability to spend in any year more than the government brings in that year’s revenue.  Any spending beyond that threshold is corruptive to a democratic society.

Posted in Entitlements | Tagged: , , , , , | 1 Comment »

Economic Reality Check for Younger Americans

Posted by Steve Markowitz on September 2, 2012

Most Americans do not require more economic data to realize the economy is weak five years after the economic meltdown.  At the same time certain granular data offers a broader context for of the long-term implications of the economy’s challenges.

Economists John Mauldin posted an article titled Boomers are Breaking the Deal that offers interesting data on how different segments of society had been affected by the downturn.

  • According to the Associated Press 54% of bachelor degreed Americans under the age of 25 are either unemployed or underemployed.  It is also projected that by 2020 that the majority of largest job opening occupations will not require college degrees.  This will be caused by ongoing computerization that is eliminating the need for highly trained professionals in many jobs.
  • While President Obama promotes class warfare, the real growth in societal inequities is age-based.  The Baby Boomer generation is taking a greater share of wealth through entitlements like Social Security and Medicare.  They now also take a greater bite of the job market.  The chart below shows the employment level of those 55 years and older since 2007, which has continued to rise at a steady pace.  At the same time, the total employed in the United States has dropped by 4 million, as indicated by the red line showing that Baby Boomers are taking a larger percentage of available jobs.
  • As of June, 2012, the total civilian labor force in the United States was 155 million with 111 million being in the private workforce.  There are approximately 56,000,000 Americans either on Social Security or disability benefits equaling a staggering 50% of the private workforce.
  • One in eight households receive food stamps and over 50% a government check of some form.  It doesn’t take a PhD in economics to understand this trend is a train wreck.

While the above are unsustainable, they continue only because of United States ability to borrow and print money.  Believing that this Ponzi scheme can continue is akin to believing in alchemy.

It is remarkable that younger Americans have failed to understand the implications of the massive entitlements going to Baby Boomers.  The government uses handouts, such as subsidized college loans, to keep mollify them.  This sleight-of-hand is running out of steam as young Americans find it increasingly difficult to find jobs.  When they wake up to reality of their plight they will become a powerful political force that will likely be adversarial to the interests of the Baby Boomers.

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Paul Ryan’s Spanks Debbie Wasserman-Schultz

Posted by Steve Markowitz on August 17, 2012

The video below helps demonstrates Paul Ryan’s understanding of America’s debt problem and the related entitlement programs.  In a September 2010 mini debate with Democratic National Committee chairperson, Debbie Wasserman-Shultz, Ryan refers to the unsustainable trajectory of the debt and entitlements.  In typical Leftist rhetoric, Wasserman-Shultz ignores the argument and instead accuses Ryan of attempting to address the financial problems on the backs of the less fortunate.

Given the trajectory of America’s deficits and debt, without addressing the entitlements problems soon, the money will run out for funding them in the future.  Democrats and some Republicans would continue kicking the can down the road on these serious issues to push them off to someone else’s watch.  Paul Ryan has more character than that.

Posted in Entitlements, Fannie Mae | Tagged: , , , , | Leave a Comment »

The United States of Entitlement

Posted by Steve Markowitz on January 16, 2012

There is much evidence of a change in the basic tenants of the United States from one of self-reliance to one of entitlements.  The election of Barack Obama to a great extent occurred because of his very liberal agenda that included promises for a bigger government with more handouts for all sorts of special interests.  How to pay for these “gifts” from the government was not discussed.

Late last year, professor Jack Chambliss of Valencia College, Florida, held an exercise in his Econ class of 180 students that showed how ingrained the entitlement mentality has become in the United States.  Each student was asked to write a 10 minute essay to explain their definition of the American Dream and how they expected the federal government to help achieve that dream.

According to Professor Chambliss, responses to the first part of the essay included most students indicating a desire to have a good job, a home, a family and the ability to comfortably support themselves in the decades to come.  In response to the second issue as to how they saw the federal government’s role in their future, many students indicated that they wanted government to “pay for my tuition,” “provide me with a job,” “give me money for a house,” “make sure I get free health care,” “pay for my retirement,” “raise taxes on rich people so that I can have more money” and other items related to entitlements or government handouts.  One student went so far as to say: “We all know that there are many bad side effects when regulations take place, but as human beings, we are not really responsible for our own acts, and so we need government to control those who don’t care about others.  It makes sense that our freedom is reduced every day with the new regulations.”  Yikes!  The video below offers more details.

There is straightforward data that supports the notion of significant growth in the entitlement mentality in the United States.  In 1983, only 29% of Americans received some form of government assistance.  Today that number has grown to over 44%.  In addition, it is reported that over 50% of Americans will not pay any income tax for 2011.  However, even with this growth in government, Americans dissatisfaction with the economy, their government and the inequities in society seem to be increasing.  While this is clear evidence of the failure of Progressive government, many of our young people seek more the same failed strategies.  Obviously, their education in the subject of economics is not important to their Progressive educators.  Given some of the radical views expressed by teachers unions, this is not a surprise.

Significant blame for the growth of the entitlement mentality in the United States also rests with us Baby Boomers.  The children of the ’60s grew up to become the greatest materialists of all time.  In addition, the love and peace generation learned how to use credit like drunken sailors, both as private consumers and voters.  Given that we forgot Crosby stills and Nash’s lyrics, “Teach the Children Well“, the video is also posted below.

 

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