Regardless of whether you think these bonuses are justifiable from a moral or practical standpoint, the fact remains that these bonuses were not illegal.  They were guaranteed by previous contracts and by a clause in the bailout bill that Congress passed.  Which raises the question: why is Congress so confused about it?  Do the senators not read what they’re voting on?  It’s interesting that members of Congress are so angry at AIG when they’re the ones who allowed it to pay those bonuses in the first place.

The response is also peculiar in light of the fact that the recent spending bill passed by Congress contained over 9,000 earmarks totaling from $3.8 billlion to as much as $12.8 billion according to the New York Times.  In addition, Citizens Against Government Waste found $17.2 billion in pork barrel spending in the 12 Appropriations Acts for fiscal 2008.  Who’s wasting more taxpayer dollars here?  Should Iowa Senator Charles Grassley be calling for AIG executives to “resign or go commit suicide” when according to Citizens Against Government Waste, in 2008, he himself had over $321 million in pork to his name?

This witch hunt for the people who received bonuses from AIG is completely silly.  It’s been played up by the media and being used to fuel populist fire, distracting the public from the real issues our nation faces, while undermining the Obama administration’s ability to fix our economy.  As the citizens of this nation, let’s stop calling for blood and go back to calling for meaningful change.

Assuming that the estimate of $150 million, $160 million, or even $170 million depending on which misleading news source you look at, is valid, the comparison between Obama’s inauguration cost and Bush’s inauguration cost still isn’t.  The $150 million estimate includes security, whereas the figure of $42.3 million does not.  Security makes up the bulk of overall cost.  If we were to include security costs into the Bush figure, the number is actually slightly more than $157 million.  Interesting isn’t it?  That’s more than the estimate of $150 million for Obama’s inauguration.  If we were to believe some news claims that Obama is spending four times more than Bush did, Obama would have to spend over $600 million, something that is obviously not going to happen even by the most outrageous estimates.

Now, we don’t know what the exact cost of Obama’s inauguration will be.  It might indeed be the most expensive in American history.  However, even if it were, it wouldn’t be by the degree the media is marketing it to be.  And that’s a problem.  It’s fine for the media to question whether Obama’s inauguration is too extravagant, but it is not fine for reporters to use false comparisons to sell their point.  We need responsible reporting, not bandwagon sensationalism.

For more on the media’s portrayal of Obama’s inauguration costs, go to
Media Matters

Now, regardless of whether this would technically be considered a bailout (it probably isn’t even though CNN and others have called it one) and whether the industry gets the money (it probably won’t since it’s the porn industry), this publicity stunt raises two important issues the government has to deal with: how do you decide which companies or industries deserve bailouts and how do you deal with the costs? Bailing out every industry that is in trouble simply because we’re in a recession and we need to maintain jobs creates moral hazard, encouraging riskier behavior in the future, and leads to a slippery slope as more and more industries look to the government for help, while also undermining our nation’s future by increasing the national debt.

As Obama’s inauguration approaches, legislators are busy figuring out how to use the remaining $350 billion from the first financial industry bailout, whether to pass a $1 trillion public works program that would bail out the steel industry, and the contents of the new $775 billion economic stimulus package that would bail out America.  Meanwhile, the Congressional Budget Office has projected a $1.2 trillion budget deficit for this year.  On top of this, there has been little progress in Social Security and Medicare reform.

Stimulus to counteract the recession is necessary.  However, as various politicians have already stated, we need to ensure that these bailouts and stimulus packages are used to stimulate our economy, not executives’ pocketbooks.  Simply bailing out every industry is not an effective method of protection against future problems.  With these large dollar amounts being thrown around, it is even more important that Congress be responsible with our nation’s money.

Finally, by guaranteeing eligibility, Obama’s plan enables anyone who seeks health care to have it. Americans don’t have to worry about being rejected from an insurance company because of their dismal medical history. While allowing everyone to have insurance, the Obama-Biden plan makes an effort to provide affordable health insurance for those with low incomes. Through their National Health Insurance Exchange, Obama and Biden will help individuals receive fair and stable premiums.

Looking at just these three aspects of the Obama-Biden plan, the prospects of American health care look good. A significant majority of the uninsured may now have health insurance at an affordable, stable premium. Universal health care can mean different things for different countries. For countries in Europe and Asia it may mean that everyone is insured, and the government plays a mediating role. For the United States, it means something entirely different. With different demographics come different necessities and different desires. Perhaps to the many Americans who voted for Obama, his health plan is their universal health care.

President-elect Obama makes a clear stand on healthcare: he wants to make it affordable for everyone. Perhaps President-elect Obama doesn’t promise universal coverage because it may cause greater strain on the government, which in turn will hurt the economy through higher taxes to sustain revenue. He has many ideas on how to provide affordable healthcare, but three very interesting aspects of his plan are to coordinate and integrate care for patients, increase competition among insurance companies, and guarantee eligibility.

To coordinate and integrate care for patients, the Obama-Biden plan supports providers to establish care management programs and promotes “team care” through setting up medical home type models similar to the coordinated care network system in Bobby Jindal’s health care plan. This would enable patients to get all their treatments at one location and encourage providers to coordinate their treatments more efficiently, especially for patients with chronic conditions.

Many countries worldwide, especially in Europe and Asia, already have implemented universal health care systems. Many people are very happy with the health coverage that they receive. Rarely do citizens ever go bankrupt or neglect to go see a doctor because of the expensive health costs.

There are four different models of health care that many industrialized, wealthy countries follow: the Beveridge Model, the Bismarck Model, the National Health Insurance Model, and the out-of-pocket model. All these models exhibit regulated health care with a lot of government control whether it be on the entire system itself, on health costs, or both . Looking closely at these models, one can infer that there’s a huge amount of government spending to support them. In Taiwan, which uses the National Health Insurance Model, hospitals are going bankrupt and the government spends more to keep the hospitals functioning. Thus, although many people may be happy, the government is not.

We can’t afford it. Not only are people going broke because of rising health costs, but also the federal government because it is preoccupied with paying the medical bills of those who qualify for Medicare and Medicaid. For years, proposals for health care reform have failed, leaving millions of Americans like the old man next door, aunts and uncles, and little children to suffer from illness and injury. What hope is the government giving Americans when there doesn’t seem to be any semblance of progress towards a health care system that could help everyone?

The reason for rising health costs is the same for why other costs are increasing: new medical technology, more people are using the health care system, and because of the aging population. All these costs combined are creating this snowball effect of rising costs. When you take all these different factors into consideration, it’s amazing to realize how our government either didn’t see this coming or didn’t foresee a budget problem in the future.

The United States makes a huge investment in advancing technology to more efficiently treat patients and facilitate their recovery. But what good are these innovations when the treatments that they provide are too expensive for people to receive it? Health costs are rising at a greater rate than inflation and have been rising for years. As a result, the federal government is spending more and more money to support those patients under Medicare and Medicaid.

So when I heard that the US auto industries were going under, totaled, if you will, I thought to myself–Good for the Japanese! Good for the Germans! If we Americans can’t stand the exhaustion, let’s get out from under the hood. I like my Audi anyway.

But now I’m not so sure. With Chrysler, GM, and Ford all on the brink of bankruptcy and the vice chairman of Chrysler telling the Associated Press that the collapse of one of these companies could trigger a depression, Congress has a huge decision to make. Chrysler needs $7 billion just to keep going, and GM asked for $4 billion immediately and $8 billion later, plus another $6 billion if the economy doesn’t get better.

Well, we know we can’t afford it. But do we do it anyway? And if we do it, do we keep bailing out every company that needs financial help to stay afloat? Do we drive ourselves into further debt, or put thousands of Americans out of work, decrease consumer confidence, and potentially kick ourselves back to the 1930s?

It’s an important decision. Get thinking, Congress. I know I am.

But we are in this mess, and at this point, just going for the easy options, like calling for more government efficiency and a stop to earmarks, won’t be enough. What we decide to do next requires a national dialogue to establish what we value and what we can cut. What we can do next depends on how willing we are to sacrifice for a greater future good. Keynes is right. In the long run, we are all dead. But our debt doesn’t die with us, and leaving our kids with that would be irresponsible.

While the nation and the government are figuring out how to deal with this imminent threat, you can try to figure this out yourself from your own computer. Budget Hero and the National Budget Simulator are two games you can play around with to see how hard balancing the budget can be. Of course, these aren’t perfect simulations (Budget Hero has limited options and seems to have a slight liberal bias while the National Budget Simulator is two years out of date) but they still show a lot and Budget Hero has nice animations.

While Americans have long ignored the problems that will arise from an enormous federal debt, namely the insufficient funds for entitlement programs such as Medicare, Medicaid, and Social Security, we will see the manifestation of these problems sooner than Americans might think.  The consequences of our fiscal irresponsibility will be apparent within Mr. Obama’s first term.

In 2011, the Baby Boomers will start to retire, collecting entitlement benefits in overwhelmingly large numbers. By 2010, it is estimated that Medicare and Medicaid will absorb 25% of our federal spending. Medicare spending alone increased by 13% just in 2007 and will continue to increase between 7 and 8 percent a year as the number of Americans over 65 will surpass 62 million in 2025.

Before Mr. Obama has even stepped into the oval office, he has promised the expansion of the health care program. However, before expansion, the federal government must seriously reform the health care system, especially Medicare. Raising taxes and repealing the Bush tax cuts will be necessary to generate more revenue to fund entitlement programs, but it will not solve the problem alone.  The government must focus on decreasing the growth of health care spending. There are many proposed solutions to this problem such as raising the age of eligibility for Medicare and increasing health care cost sharing between the individual and the government.

If there is one lesson we can take from the Wall Street collapse, it is that we cannot rely on nor spend money we simply do not have. Millions of Americans are counting on the fact that they will receive health care benefits when they retire, but if the government continues on this path of recklessness, these promises will be hard to fulfill.

It will not be easy, nor popular, Mr Obama, but these tough decisions are undeniably necessary to ensure the fiscal health of our country and its citizens.

Jindal’s central theme for health care reform is that he wants to give individuals the option of choosing their health care. He wants to give less power to the bureaucrats and more to the local communities, patients, and doctors. This central theme reflects the basic principles of the conservatives, which is less government control, fiscal responsibility, and the free-market. Jindal’s health care plan would politely force an individual to be more accountable for his health and for his spending. If individuals like the current Medicaid benefits package then they can keep it, if not, they have two other great options to choose from. Another great thing about these three choices is that they are designed to be affordable and effective to people of particular income levels. Jindal’s plan sounds like a great solution to the health care issue, but until we see the results from its implementation we can’t accurately judge the success of the plan.

Bobby Jindal, newly elected governor of Louisiana, has had a lot of experience in dealing with health care and his ideas are very interesting. First, he wants to expand Medicaid to cover more low income citizens while also giving everyone three different choices for health care. The first of these choices is that patients can stick with the Medicaid plan that they already have, which is a fee-for-service benefits package. Second, patients can choose a state-designed benchmark benefits package, which is still the Medicaid benefit package but revised to best fit the patient’s needs. Lastly, patients can choose to live in a coordinated care network of medical homes (CCNS). The first two choices are relatively straightforward, but the third choice is one that is most interesting.

The government simply does not have all these billions to throw around.  As noted in my other blog post, “Will Change save us enough change,” Obama had planned to pay for his health care reforms by repealing the Bush tax cuts, but experts feel that repealing the tax cuts would not be enough.  Now, Obama is floating the idea of not annulling the tax cuts at all while at the same time increasing government spending even more. And of course, as evidenced by the $700 billion bailout plan’s mixed results, this stimulus package might not work as well as its supporters intend.

So what will it be?  Tax cuts? Health reform?  Economic stimulus? Providing more aid to Afghanistan?  Our government didn’t have enough money to pay for all this before and it certainly doesn’t have enough money for all these new expenses.  It’s time for change but we don’t have the resources to change everything at once and we have to realize that.  Otherwise, the next few generations will have an impossibly large debt to pay off.  And that crisis would probably be much worse than the one we’re in now.

Why? Why are 28% of government programs “not performing” and 28% only “adequate” according to the OMB? Why has the government failed all of its audits since Congress mandated that outside auditors have to review the finances of federal agencies? We don’t have enough money already; why are we wasting all those billions?

For more on inefficient government programs, check out this link-

The Office of Management and Budget’s assessment of government programs

Government programs like Social Security and Medicare that benefit the older generations are going to bankrupt our nation in the near future.  The baby boomers are retiring and there are fewer middle age workers to pay for the nation’s medical bills and Social Security checks. While you as current retired Americans will receive your benefits, in a few short years, there will be no benefits for your children or grandchildren. There will be a large financial strain on our nation’s economy and tough decisions to make. Middle age workers have paid into Social Security for so long; isn’t it only fair that they receive what they put into it? In order to finance these programs, either taxes have to skyrocket or benefits have to decrease. This is a difficult scenario to imagine, but unless something is done now, this is our future.

Many retirees do not realize how much they are consuming. Older Americans need to realize that if these programs are not reformed, they will be leaving the American economy in a very deep hole. As an 18 year old, I am concerned for my economic future. Obviously, when I am older, I don’t want to be paying so many taxes that I can’t afford for my children to go to college or to live comfortably. You have a responsibility to your children and grandchildren to help find a solution to this problem.

Obama will attempt to reduce the number of uninsured while also cutting costs by eliminating inefficiencies in the system.  Most analysts think that he’ll  get the first part done, with projections showing 18.4 to 26.6 million people becoming insured once his plan is fully implemented.  Considering that the number of uninsured is presently around 45 million, Obama’s plan does a pretty good job.

Obama’s cost cutting proposals are slightly more problem ridden.  Obama plans to cut costs by comparing the effectiveness of different drugs and techniques, investing in health information technology systems, increasing access to disease management programs, preventing private insurance waste and abuse, and importing cheap drugs.  However, the CBO has shown that research on comparative effectiveness will not bring major reductions in health spending within the next decade.  In addition, the CBO has pointed out that adopting health information technology is “not sufficient to produce significant cost savings,” and that Obama’s savings estimates are based on a study that is misleading due to methodological issues.  Increasing access to disease management programs and importing drugs have both not been shown to reduce overall health spending by much and stopping insurance abuse and waste is expensive, providing only minor savings.  Taking everything into account, the Lewin group estimates Obama’s health care plan to increase government spending by roughly $1.17 trillion from 2010 to 2019, and Obama doesn’t seem to have a way to pay for all of it.

As a college student, I am worried that the market will not be able to accommodate my generation and that this country will be so heavily indebted to other growing nations that my peers and I will not be able to compete and succeed at the same levels that my grandparents and parents were able to in previous years. Will people my age be so crippled by taxes in the future that we won’t be able to own homes, or will our health care costs be so high that we will not have access to the medical procedures that we need? We must make Washington realize that this is a severe issue that cannot be ignored any longer. Also, save your money and encourage your children to do the same. Open a trust fund or a college fund for your grandchildren. To learn more information about this topic and other economic issues that affect our nation, visit http://www.concordcoalition.org/. The Concord Coalition is a non-partisan, grassroots organization dedicated to educating Americans about fiscal responsibility. Please, do all that you can to ensure a sound future for yourselves and for your children.

So you’ve been working for over twenty-five years. You’ve watched government expand, spending increase, borrowing from foreign investors reach discomforting levels, and have, perhaps, believed for quite some time that your payroll and income taxes have been sufficient for caring for you and for covering the many public services that you and other Americans enjoy every day. Unfortunately, we are now beginning to experience an era in which, if we do not reform our costly programs and simply stop spending irresponsibly, all generations will begin to feel the negative consequences of years of negligence. Moreover, the working generation is at risk of being the first to feel the faltering of our benefit system and will, with the oldest generation, begin a trend of leaving this nation in a worse state than it was when they were growing up and working.

As you have made the transition from young adult, to member of the work force, to someone who is now looking into retirement plans, the world community has experienced a number of changes while, domestically, the U.S. has received a makeover, and not necessarily one that makes our economic status more attractive. Within the global community, the economic prosperity of the United States has served as a cornerstone for the success of numerous other world states, and, though we will continue to be an economic “superpower” in years to come, we may quickly lose our footing in the future as we empower the other nations that have the potential to challenge us.

I was reading a bit about Social Security and I came across this quote from a Supreme Court case (Steward Machine Company v. Davis: 1937) that affirmed the act:

“[It] is too late today for the argument to be heard with tolerance that in a crisis so extreme the use of the moneys of the nation to relieve the unemployed and their dependents is a use for any purpose narrower than the promotion of the general welfare”.

The problem with Social Security is that it was created right out of the Depression, as a way to help people should times become that bad again in the future. Roosevelt thought he was helping the general welfare for all those in the future. In this way, it’s the same as how we fought World War II– afraid of World War I. The US without Social Security (as it is now) would be much better, because today Social Security is the main cost causing what those who created it were afraid of…a US recession 2nd to the Great Depression. During the 1930s, people didn’t realize that average life spans would get longer and that baby boomers would cause less people to pay for this program than people who need it. And it’s not as if the system is working as it was supposed to. Money isn’t being kept in a lockbox where it can be grown for those who paid the tax in the first place, it is being funneled directly into the government’s tax system. There was less foresight and more hindsight in the act’s drafting.

Social Security should have been privatized from the start. I think during the Depression, people definitely didn’t trust Wall Street or the stock market and that’s a big reason things were set up as a trust. The government was looking for a way to avoid people being ruined by another crash. I don’t think the model of a 401k or IRA system existed at that time because people didn’t want it to exist–they didn’t think it was safe. I understand that the government was trying to show an active role in ending the Depression and preventing a future one, but private Social Security not only would be more effective and less costly, but also would be more in keeping with our capitalistic ideals. I understand that poorer Americans benefit more from the public entitlement program, but they’d probably benefit more from communism as well, and it’s not like we’re going to adopt that.

Obviously that is not an option now, but I do think we should slowly try to privatize Social Security. It wouldn’t be easy, but we should start by telling high income Americans (sorry, folks!) that they are no longer eligible to receive the entitlement. Then it must be phased out. It’s not popular, but people should seriously plan for the future themselves in any case. Things that are unexpected are different, such as medical issues or temporary unemployment. If you know you’re going to age and retire though, shouldn’t you be required to prepare for that?

Medicare and Medicaid are already paying out more than they take in from payroll taxes. Their costs are expected to increase five times faster than Social Security’s. They are also going to be much harder to fix.

If we do nothing, by 2028, the Big 3 will consume all of the federal revenue. This means no other program will be able to get a dollar’s worth of funding. Think homeland security, education, clean energy, and housing. This problem is real so get out there and start taking hold of your future!

Our generation entered this world at an extremely exciting time, when progress and change are not only possible, but happening. But unfortunately this progress might come to a screeching halt. We currently have a debt of over $10 trillion and growing. And we are going to bear the brunt of it. Let’s take a closer look at what makes up most of the debt, entitlements. Currently, Social Security, Medicaid, and Medicare take up 42% of our budget, and that number is projected to grow. Currently our parents’ tax dollars are paying for these entitlements, but soon we will join the workforce, and the government will be leaning heavily on us to keep these programs running.

Many people categorize Medicare and Social Security together. Why? For starters they both take a chunk of your paycheck every month and they both go to serving mainly the elderly. But they are different programs with very different problems: Social Security pays monthly to retirees to help them cover expenses when they are no longer receiving an income. Medicare and Medicaid are health insurance programs for the elderly and those with low incomes, which includes children, people with disabilities, and the elderly again.

Bush missed a chance to eliminate our nation’s debt, but it’s not too late.  Tomorrow, we will have the chance to choose our head of state for the next four years (and in some states, the chance to choose our senators too).  Our next leaders will have to deal with not only the worldwide economic crisis, the constant threat of terrorism. and global warming, but also with a less obvious yet just as dangerous threat, our unsustainable spending habits.  We must urge Washington to act.  We must let them know that we are willing to sacrifice for our country’s well-being.  Because the question isn’t “how many presidents does it take to bankrupt the nation?” The guilt does not lie solely with our presidents or even with our politicians in general.  It is our collective fault for encouraging irresponsible government spending through inaction or worse, active support.  Tomorrow, go out and vote for our future.

For more information on the candidates’ positions, check out these links:
Votesmart

Brookings analysis of candidates on fiscal responsibility

Video Produced by John O’Malley and William Son

Does $700 billion sound like a lot of money to you? How about $9 trillion, which is the current sum of America’s national debt?  With the recent collapse of major Wall Street institutions and a $700 billion bailout, it is apparent that America is facing serious financial problems. However, what you may not know is that there is another economic crisis looming in the near future that will affect every Philadelphian, and if we act now we may be able to prevent it.

Philadelphia’s first baby boomers start retiring in 2012. Over the course of their retirement, the next twenty-five to thirty years, spending on Medicare, Medicaid and Social Security is projected to absorb every other discretionary dollar the government spends, which means no more federal funding for city programs and no more mortgage tax breaks for Philadelphians. It is undeniable that the United States will be unable to provide entitlements promised by these programs to all who are eligible if we do not begin to address the problems with the structure of the federal budget and federal spending. It is not easy to recognize how the federal government’s depleted resources will personally affect us, but we can manipulate these intangible numbers to illustrate the financial realities for each Philadelphian in our communities.

You already owe $32,000 to the Federal government – every American does. If you are the average Philadelphian, it would take almost the entirety of your income to pay off your share of the national debt before taxes. Philadelphia’s share of the federal debt is over $48 billion, which is before baby boomers start to retire and congress writes a $700 billion check to attempt to fix Wall Street.

We must transcend the short sightedness that is ingrained in our culture and insist that our government promotes bipartisanship collaboration and cuts spending growth.

And this is the problem with projections and statistics in general: a lot of the time, they’re just opinions masquerading as “facts.”  Different assumptions lead to radically different numbers and it’s easy to manipulate the same set of data to support completely opposite viewpoints.  We at Pound-It will continue to provide information in what we consider to be a responsible manner, but you should always keep in mind that we have an agenda and will inevitably be slightly biased.  We believe certain things, such as the budget crisis, are real and that’s what we’ll keep talking about.  I urge all of you to go out and learn more about this subject yourself.  Look at the criteria the Citizens Against Government Waste sets for calling a project pork.  Read more about the methods used to get these numbers everyone quotes and find out which organizations are making those statistics.  Go out there and find the whole picture because only you can decide for yourself what is “true.”

So what can you do about all this? A lot actually.  Right now, Pennsylvania has the second largest number of earmark projects according to the government’s Office of Management and Budget and is fifth in total pork barrel spending according to the Citizen’s Against Government Waste, a private non-partisan, non-profit organization.  Write to your representatives and ask them why they aren’t doing anything about this waste. Call Senators Arlen Specter and Robert Casey and ask them why they voted against the motion to stop earmarks for the 2009 fiscal year. We can’t create a responsible government out of pork. This is the first step and the easiest step towards fixing our budget crisis.

Senator Casey’s contact information

Senator Specter’s contact information

Citizen’s Against Government Waste

Office of Management and Budget

So how come no one in the government is doing anything about this even though by 2030, all of our revenue will be used up just by paying for Medicare, Medicaid, Social Security, and interest?  These figures aren’t secrets; in fact, the Congressional Budget Office itself has admitted that “the federal budget is on an unsustainable path.”  So why do the tax policies proposed by McCain and Obama each increase the national debt significantly over the next ten years?  Is the “maverick” just another negligent cow herder?  Is that really “change” we can believe in?  If you’re interested in learning more, come to the “Fiscal Wake-Up Tour” at the University of Pennsylvania in Houston Hall on October 14th, hosted by the Concord Coalition, or check out some of the links listed below.  This is our future.  Let’s fix it.

Committee for a Responsible Federal Budget

Facing Up

Center on Budget and Policy Priorities

Concord Coalition

Office of Management and Budget