Issue 108 The entitlements part 4 June 27, 2013

  Social Security, Change it!:

            Social Security is the final piece of the entitlement trilogy, that’s if you exclude the other programs created through the Social Security act of 1935.  We talked about sending Medicaid and all the other programs down to the State level and reducing the costs of health care to reduce the financial burden to Medicare, so what do we do with the old age insurance entitlement.  One option to combined Social Security with Medicare, a voucher can also be used, but some sort of system would be developed where a portion of the voucher would go into a HSA while the rest would go into a general savings account.  In this case, bureaucratic waste will be reduced for you are applying for a single benefit rather than two.  There would be a single body to manage the fund with a single bureaucratic body in place to manage benefits.  Additionally, if the fusion of the two were to happen, all money owed to Medicare would disappear from the national debt as it will no longer exist.  This however is an extreme case for if Medicare should fail for any reason Social Security can fill in the gap. 

 Some ideas:   We could allow people to opt out of Medicare for larger Social Security payments.  This would mean higher payouts for people receiving Social Security.  However, this would also mean draining away funds from Medicare which could prove detrimental.  So this idea may never come to pass. 

 Age increase:       The most unpopular idea is raising the retirement age.  At current, the retirement age is slowly being raised to 67 compliments of President Ronald Reagan (so check your eligibility as full benefits are no longer available to those age 65 if you were born in a certain year).  The simplest way to raise the retirement age is to make it 10 to 12 years prior to the average American life expectancy which is currently age 78.  If we set eligibility within 10 years of life expectancy you could receive full benefits at age 68.  You could then set future age eligibility to life expectancy so as the average life expectancy changes when a person can retire will also change.  To provide stability the calculated life expectancy for eligibility would be taken every five to ten years and those under age 55 would be affected by life expectancy fluctuations.  Once you turn age 55 the age at which you can receive benefits would be set unless that life expectancy some how decreases at which time you may receive your benefits earlier.  We are not going to make a group of seniors wait to receive benefits if those younger then them can receive it earlier, as it would be unfair.  This fluctuation should not happen often though as one, life expectancy would be factored in every five to ten years (I recommend ten) and in general life expectancy is supposed to increase not decrease in modern and developed societies. 

 Making calculations accurate:   The next idea is to reduce inflation adjustments.  In other words, change the formula to more accurately calculate for inflation so as to more accurately adjust payments.  A step up from this is price indexing where benefits are based on the price of food or other items.  In this case, the highest priced item, let’s say milk, is used and based on its price your benefits will be adjusted so no matter what you will always be able to afford milk and other produce no matter how much it costs.  (This idea is also used by Paul Ryan and his budget plan)

 Higher payouts?:     Governor Mike Huckabee had a solution where he would have Social Security provide an incentive to work longer by promising a higher pay out when you decide to collect.  The longer you work, the more you will receive.  In addition, Governor Huckabee wanted to offer a lump sum upon death of the retiree to a chosen beneficiary with whatever remained in the account.  A different solution would be ending the cap on Social Security contributions as you can only put in a given amount per year.  This would allow for a continuous flow of funds into Social Security especially from the more financially better off in our society.  This solution will however, hurt the upper middle class and higher who would be suffering the equivalent of a massive tax increase. However, if we decrease the payroll tax (which supplies Social Security and Medicare part A with money) this pain can be mitigated.   We could also tax Social Security benefits across the board without exception, but this again would hurt American citizens this time by decreasing the size of the money they receive ( i am not in favor of any form of double taxation like this).

 Means testing:      Probably the best solution is to means test recipients based on their income after they retire.  So if you are over a certain amount of income you may not receive any Social Security benefits (or Medicare for that matter).  However, if you should fall below the legal limits you would be allowed to receive benefits, but only up to a specified amount.  If you are a person below the poverty line and are receiving benefits you will get supplemental funds from Social Security.  This supplement will decrease as you get more revenue until your income combined with your benefits is equal to the poverty line or greater.  At any time if you should fall below the poverty line or meet the eligibility requirements you should be able to receive benefits. 

Personal Account:      None of these solutions prevent the Federal government from borrowing from Social Security and putting it back in a financial whole.  What does however is replacing the current system with a defined contribution plan, better known as a personal savings (retirement) account.  This comes in two forms, a real account where it is in a persons name with the worker deciding how much is invested resulting in an incentive to save as the worker will get a larger payout and the governments’ incentive to keep benefits in check.  The other form is a book keeping entry where people in the system may be afforded limited choices of investments like government bonds with rates set and guaranteed by the government.  This is a stark contrast to the current system where all the money is pooled and the payout is decided based on how much you put in.  The money in a defined contribution plan is literally yours and because it is yours, the government cannot borrow against it.  However, the government can provide a secondary retirement benefit through the general revenue which will be provided to low income workers who retire without adequate funds in their accounts.  In each form of the defined contribution plan people are taxed at a specific rate and credited to a virtual account with the government setting the rate of return.  Then at retirement, the total is invested in an annuity (no more regular payments) and is then given to the retiree.  This is already working in Galveston Texas where they were allowed to opt out of Social Security for a system that works like a 401k.  As a result, the recipients there routinely get a higher average payout in comparison to those on the traditional Social Security system.  (Paul Ryan's plan does this too).

            The only problem with the defined contribution plan is how to transition to the system.  To properly transition, the current payroll tax would have to continue while the new system is started for people entering the workforce, or payroll taxes would end entirely and benefits paid out of the general revenue.  Either way it costs the American tax payer.  Of course other solutions like means testing, price indexing and Governor Huckabees incentive to hold out longer for a larger payout may reduce the pain of this transition step by saving money.  At the same time the government would have to be prohibited from borrowing from the fund which would be kept to make up for short falls and amass funds for the final leg of the transition.

A voucher can work here too:   Another alternative is to turn the Social Security system into a voucher program using means testing and living conditions in combination to determine how much each individual gets which would always be enough to afford the area you’re living in.  This also can be used to aid in the transition to a defined contribution plan, or be a sensible alternative for those who will never make enough money to retire.  At this point, Social Security could even be turned over to the States to provide even more customized benefits.   

 

Conclusion:  We have a lot of ideas to fix Social Security, but it is all a matter of finding the best

one(s).  We can no longer afford to be fearful of change for the system as we know it is already dead.  

 

See you tomorrow for my Conclusion. 

Issue 107 The entitlements part 3 June 26, 2013

  Medicare: Taking care of seniors:

            Medicare is the next most loved program after Social Security.  While it is hard to bring about change to such a popular program, the fixes themselves are relatively easy.  For one, means test it so that only those who cannot afford health care will receive benefits.  This makes it cheaper to run as less people will be using the system. 

 

Vouchers:  An additional modification can turn Medicare into a voucher system.  How this works is that the enrollee will receive a monthly lump sum into a health care savings account (HSA).  The money in the HSA will be un-taxable as the money going in has already been taxed, unless you want double taxation (they already double tax us with Social Security benefits for we were taxed to put the money in and then we are taxed for taking the money out).  That money in the HSA can then be spent on any medical procedure, medicine, doctor visit or monthly health insurance premium.  The HSA can have its funds supplemented via private funds being put in or as an addition the money can be used to invest in health care related industries to get higher rates of return to further supplement your HSA with the interest earned. An HSA has an even bigger benefit, no paper work for the doctor.  The only potential for abuse would be for who receives the voucher.  This means only recipients would have to be policed and doctors would have more free time to look after patients rather than paperwork.  Think a voucher wont work, well look at Medicare part D which runs using something similar to a voucher program.  Here the retiree is given money which is then used to buy health insurance to provide for their prescription drugs.  Also, Medicare part D is the only part of Medicare that is under budget.

 More solutions:   Other solutions to reduce overall costs to the health care system come in the form of freeing up the health care systems restrictions.  These solutions are; one, allow people to buy health insurance from any company any where in the United States and allow associations and groups to provide their own basic health care customized to their employees should they desire it.  This solution ends the State monopolies on health insurance and the health insurance industries monopoly on health insurance.  Basically each employer would create their own form of coverage for their employees and if the employee wants more coverage of a special type of coverage they can buy out of State without the State government deciding what has to be covered and what shouldn't.  As a result, with this new found competition, health care costs and health insurance costs should drop.  This also makes Medicare far less expansive as it has to dish out less money to cover procedures and medicines.  Two, make it so drug companies can produce their medications in unlimited quantities.  Currently, the Food and Drug Administration (FDA) restricts how much of a medication can be produced in the given year.  This drives up costs on some drugs if demand for a drug peeks, while demand for another drug decreases which causes a financial loss to the drug company causing them to raise the prices of their other medications to compensate.  By doing this you decrease costs on medications which will allow drug companies to have a steady stream of money to develop new medications while making it cheaper for Americans to buy medication and for health insurers and government health care to cover the costs of higher priced medicines. 

  Why are we taxing this stuff:     The next solution to reduce medical costs and reduce costs to programs like Medicare and Medicaid is to stop taxing medical coverage as it is not income.  Currently the IRS treats medical coverage by employers and individuals as income, and thus it is taxed.  The only time an individual should be taxed (if at all) is when we pay our monthly premium.  While the only time the insurance company should pay taxes is on their yearly earnings.  But the coverage itself is not income, and taxing it drives up costs of doctor visits, treatments and health insurance premiums.  The result is a more costly health care system.  (next Monday will explain this issue in greater detail) 

More radical:     The final idea for Medicare is you can bring it down to the State level, which at current is a highly unlikely scenario.  If we were to bring it down to the State level we would have to do something similar to what we talked about with Medicaid.  This would mean means testing combined with the living expenses adjustment, specialized clinics for seniors which can be combined with the ones for Medicaid. Specialist homes for seniors where private ones are unavailable, which also can be combined with the specialist homes for the disabled.  Maybe a system that has seniors treated in their own home to reduce facility costs while maintaining care (some States are experimenting with this model like Ohio). 

Conclusion:    The goal of Medicare is to care for our senior citizens.  There are numerous other options available including changing eligibility requirements and what benefits are provided.   It is really up to us to choose which one protects our seniors the best and make it happen.

 

See you tomorrow for Social Security.

Issue 106 The entitlements part 2 June 25 2013

Medicaid and the rest:

            Let’s start with Medicaid which is currently the most costly component of the Social Security legislation and the other social welfare programs like unemployment, or aid to needy children, which are also bogged down by politics and bureaucracy.  The best way to solve the cost dilemma at the Federal level, and even the State level for they are obligated to provide matching funds for Medicaid, is to turn over all of these programs to the States.  All of these programs primarily deal with the impoverished, save unemployment which is aimed at preventing a family from descending into poverty.  The reason these should be turned over to the States is because they have a vested interest to aid the poor within their own jurisdiction.  It benefits the States community for it removes unfunded mandates and allows States to customize benefits and aid based on such things as a recipient’s income through the lens of what it takes to live in a certain area.  If an area requires less money to live their then the recipient will receive less benefits while an area which is more expensive to live in a recipient will get more benefits.  This is a major improvement over the one size fits all approach of the Federal Government which may be giving too little to some and too much to others.  Without all of the mandates and the Federal bureaucracy States can provide adequate welfare in the form of health benefits, unemployment and financial assistance to those who need it with less waste fraud and abuse.

 Addressing fears:          

          The fear with States taking over for the Federal Government is that people will move around to States that provide the best benefits which in turn overloads the States welfare system.  It is doubtful that such a situation will come to pass however as in addition to the recipients’ income, the amount of benefits is also limited by the expense it takes to live in a given area.  If your income is high, but it does not cost much to live in the area you live in, you will receive little to no benefits.  If your income is low, but the area you moved to is more expensive you will receive more benefits.  That is safety net number one to stave off the nightmare scenario.  Safety net number two is the amount of money it takes to live in a specific area.  If a bunch of welfare families move into an expensive area, the cost of living in that area will go down because the existence of a welfare family has a negative impact on property values which also affects the prices of goods and services.  Therefore if enough people welfare families move causing a negative impact on prices of a giving area, then a lot of individuals will have their benefits reduced or eliminated because the area is now more affordable to live in.  If for some reason the reverse happens with non-welfare families and the like move in raising property values and increasing the costs in the area, people who are on welfare already will have their benefits increased instead.

            Medicaid and unemployment will be generally unaffected.  Unemployment will more than likely be based on a separate set of criteria while means testing in combination with living expenses will ensure only those who need it get the medical coverage they need.  What those medical benefits are will vary from State to State as they add and subtract benefits based on need and affordability.  However it can be for certain that all will include some form of hospital coverage and more than likely recovery from traumatic accidents.  Unemployment may also vary in what benefits are provided.  My modification to unemployment would be limiting where the money can be spent to food, clothing under a certain price, medical bills, debt and utilities.  In this way, food stamps and unemployment can actually be combined; while the restrictions ensure people only spend money on the essentials.

  Dealing with those who slip through:

          For those that have an even harder time getting the treatments they need, the States can establish special clinics to care for the poor who are enrolled in their Medicaid system.  These clinics can be staffed by a combination of volunteers and paid specialists to treat the ailments of the poor.  The benefit of this is it is harder to game the system when those who are enrolled must receive treatment at a government sponsored clinic where their doctors can check if benefits beyond surgical and recovery are actually necessary.  For those with disabilities they could get a voucher with the same limitation on food clothing, medicine debt and utilities, which will allow for them or their care takers to spend on their needs only.  Also, special government run homes or even private ones sponsored by the government that are staffed by professionals can be used to take care of the disabled. 

 Conclusion:          

         This together fixes one of the biggest burdens of the Federal budget.  It provides a platform for innovation in the welfare sector of government as States copy from each other what works and gets rid of what doesn’t.  Stricter criteria from what it takes to get on welfare to what benefits you receive ensure that less people are able to game the system.  Additional, criteria can be placed on recipients like drug testing and welfare to work programs can be put into place to ensure our tax payer dollars are being well spent.  Welcome to the future of Medicaid and welfare benefits, customized State welfare.

see you tomorrow for part 3.

Issue 105 the entitlements part 1 June 24, 2013

Executive summary: 

Social Security is the most popular Federal program offered to the American people.  It provides various benefits to the elderly, unemployed, assistance to needy families as well as Medicare, Medicaid and more which is incorporated into the 20,000 plus page document.  Each aspect of the legislation is run in separate bureaucracies and agencies with old age insurance, what we call social security, in one, Medicare in another, unemployment managed some where else etc.  Our contributions which come in the form of the payroll tax go to pay for the retirement fund, and Medicare part A.  The payroll tax itself is six percent of our income and six percent comes from your employer (which is probably deducted from the pay you could be receiving).  All else in the Social Security legislation is paid out of the General Revenue of the United States.  In other words Congress decides how much money goes into the other programs. 

 The key problem:  The problem with Social Security today is that it is bogged down by new rules and benefits, in addition to Congress raiding its funds resulting in fiscal instability which could collapse Social Security as we know it.  In fact, Congress has borrowed against the Social Security fund and Medicare’s fund that the Federal Government owes approximately four trillion plus dollars and growing to both Social Security and Medicare combined.  All in all, Social Security has become unsustainable thanks to Congress’s combination of irresponsibility with the system and tacking on new benefits without regard to the costs.  So what are we to do to fix this dilemma?

 

Fixing the situation:  Well for one, Congress must not be allowed to borrow from within the federal government ever again.  This will not only prevent Social Security and Medicare from being raided but also prevent other important programs from having money taken and prevent increases to the national debt.  It is because of this problem as to why Social Security and Medicare are going broke, which is estimated to be around 2032.  So stopping the borrowing is a stop gap measure other steps will have to be taken. 

 

Other Steps:  Many of you have heard of Congressmen Paul Ryan and his "Ryan budget plan."

He provided an alternative for Medicare featuring Health care Savings accounts, Social Security with an investment style model so that your money going in is actually your own money, and block granting States to provide money to States to implement Medicaid and other similar programs.  You can find my summary of the Ryan budget in Issue's 26, 27 and 28.  I did like many of his ideas and thought they would give the nation the boost it needed to save the entitlements while making them stronger and at the same time jump start the American economy.

Conclusion:  Paul Ryan was not the only person to want to save the entitlements and as such my next few issues will deal with each one followed by a conclusion that lists the best options that I believe will secure the entitlements for a long time to come.  Stay tuned tomorrow for the first one.

Issue 104 designer baby June 21, 2013

Did you know that science has progressed to the point where we may actually be able to manipulate a baby in the womb? Manipulate is the best word for this as we may be able to choose the sex, skin color, hair color, and even eye color of the baby before the child is ever born. Strange isn’t it, the ability to make a baby to your own specifications and then give birth to a child that appeals most to you. Well I'm against such a dangerous ability.

Advantages: Yes the technology should be perused, but its application limited. This technology can help a child who is diagnosed with severe disfigurement and if they are not fully developed. But these sorts of situations are if and only if these maladies are diagnosed in the womb. So this can help babies who would suffer and offer an alternative to people who would use abortion rather than live with a disabled child (something I am also against for scientific, moral, and religious reasons). Thus, I'm fine with curing Down syndrome before the child is ever born.

Danger 1: The first danger of this technology is that if we cure someone of say dyslexia while in the womb, does this mean they will be prone to another genetic disorder, or even cancer. By putting in a preventative measure say against Alzheimer’s, does this destroy the Childs ability to feel certain emotions. We really don't know what the costs will be to "heal" some one before they ever leave the womb. How can we know how severe a person's autism is until we can physically interact with them? There are major risks to even the changing of a person’s eye color in the womb as we could make them prone to eye cancer for all we know, or some new and unforgiving disease. Changing anything could also make us even more susceptible to diseases that otherwise would not have ever been a problem before like some random strain of flue virus that affects a chicken. Sounds weird, but these genetic changes may allow a disease that only affects one type of species to infect and possibly be lethal to another.

Danger 2: Parents who want designer children are also the problem. What if the majority of parents want boys? What do you think will happen to the overall population? We obviously will have fewer girls and thus less children being born in later generations. There is also the possibility that we may all look too much alike such as all of us having blond hair and blue eyes. How can we know how this will affect the gene pool? For all we know, we can be making us all so genetically similar to the point it is like marrying a relative, you are almost guaranteed to have an increase in genetic disorders. All these are possibilities and may in fact be a worst case scenario, but we could end up using science to actually cause our own extinction simply because we want an ideal child rather than giving birth to what our genes naturally put together.

Conclusion: I am in favor of further study. But I want the application of such technology to be as limited as possible when put into practice. It should only be used in the most severe cases in which we know for a fact the child will be completely unable to live a normal life. For cases that don't meet the standards for this form of genetic manipulation, we have adult stem cell technology which is quickly progressing which should also solve some if not most of the lesser cases of things like autism and aspergers. As to designing the perfect "looking" child, I will now and forever be totally against manipulating a child’s sex and things like eye and skin color. The risks are too great for this technology to be wasted on such things and I believe is a fool’s errand. There is a danger to every new technology and an even greater responsibility to use it responsibly.

Issue 103 IRS Scandal June 20, 2013

Have you heard about the recent scandal involving the Internal Revenue Service (IRS)? For those who don't know, the IRS is America's tax collector. The scandal consists of the IRS targeting pro-Israel groups, conservative and libertarian groups and individuals who support those causes. This is very disturbing but it demonstrates how the income tax can be used as a weapon against the people.

What we know: The IRS target these groups and individuals with their auditing arm. Individuals were audited simply because they donated to the Republican Party or a pro-Israel group. Conservative and libertarian organizations applying for tax exempt status as a non-profit were asked questions about their donors, how much they get from those donors, how big their facilities were and even their member lists. These kinds of questions are normally not asked when applying for such status in the tax code. Normally it is what your goals are and how do you spend your money. We know for a fact that these groups and individuals were specifically targeted because almost all those who applied with key words in their groups name like "patriot", "liberty" or "tea party" were subject to this unusual form of scrutiny. So some of these groups changed their name to be more neutral or sound more ideologically progressive and they received their tax exempt status in about 3 months, the usual time it takes for such approvals to happen. Not to mention that they did not have to answer the same questions that their fellow groups did. The final nail in the coffin for this breach of trust is that the information was handed off to opposition groups. Those opposition groups then proceeded to harass and target members of these organizations and counter there pro-conservative and libertarian advocacy and support for Mitt Romney in the 2012 election. Donors were also subject to ridicule by opposition news papers and publications harming their reputations. Companies like Gibson guitar were targeted by the IRS for their open support for Republicans, while their competitors escaped such harassment due to the fact that they support the Democrats party.

What we don't know: We don't know how far up the chain of command this goes. It could have been ordered by the President himself or just a rouge staffer high enough in the White House to order such things while allowing the President plausible deniability. Either way, it was done by someone high up in the chain of command. Thankfully all those who are in the IRS who were involved are talking because they were literally thrown under the bus by the administration as scapegoats. So we may find out soon who was the real perpetrator behind this grievous display of abuse.

Conclusion: This behavior is not just indicative to a Democratic White Houses we have famously seen it during the Nixon administration with the Watergate scandal. But, every president has used the tax code in one form or another to put down certain groups who oppose them, and when the tax code could not be used other methods of intimidation followed like wire tapping (another growing scandal where the White House listened in on reporter’s conversations). So political party does not matter here at all for all Presidents are guilty of this in some way or another. The founding fathers of the United States originally did not want an income tax as collecting revenue from each individual would be so costly that the government would break itself trying. But they also new it could be used as a weapon, as it was used by the British government in a similar manner as it is being used in the current scandal, to impose fear and intimidate. Money to the founders was a form of property which could not be seized by the federal government, but now we have the 16th amendment to the Constitution which allows this weapon to be employed on the American public. This type of behavior will not stop if we simply get rid of the IRS (as some have called for), but by getting rid of the 16th amendment to the Constitution. We cannot allow our governments such tools of abuse for all governments no matter how benevolent are corrupt and even more corruptible. So I say let us end this weapon known as the Income tax once and for all.

Issue 102 Spys, they see you June 19, 2013

As I'm sure most of you are aware of the scandal going on with respect to the NSA and its data collection. I did not address this issue when it first broke because I knew there would be even more information leaking out. And as a matter of fact more information is still coming out. But for those who don't know, the NSA is an intelligence asset used by the United States to conduct electronic surveillance such as through computers and telephones and they thanks to a "leaker" were found to be spying on the rest of the United States population.

How this is bad: It is bad because this violates the fourth amendment to the United States constitution which prevents unreasonable searches and seizures by government without the rule of law. Aka, they should not do this without a warrant given by a Judge which is only supposed to be given out if evidence suggests that the alleged person in the warrant is a suspect in a crime and the initial evidence leads one to believe that suspect committed the crime with evidence to be obtained through the warrant leading to an arrest. Sorry for the long sentence, but in short, if it means you can arrest the suspect after the search is complete because the evidence says they are the bad guy, then and only then is the warrant given. With respect to intelligence collection, it works in much the same way, just that the justification is that the suspect is believed to have or is plotting to aid and maybe carry out a terrorist plot.

What they did: In the case of the recent events however, there was no warrants issued. The collection of data was handed over by companies like Verizon, Facebook and others simply by the government asking. Why did they hand over phone records, search history data, and other types of information? Well when the government can tax you into oblivion and even force you to comply by other more unethical means then of course you would. So I don't blame them. But, the collection also was carried out by simply taking data by covert means as well and now the government has a bunch of pentagon sized buildings holding all this data on everyone in the United States. Let it be known that no conversations or emails were taken without an official warrant (that we know of). Also, it is unclear if that data was given to political opponents like in the case of the IRS (internal revenue service...the tax collector) targeting Tea Party groups, pro Israel groups and others that run counter to the current administration. But there is more information to come and things look about as bad as it did with President Nixon with Water Gate.

Conclusion: It is unacceptable for any government to take such information without following the rule of law. No President (that is if President Obama actually had a hand in the decision) should be allowed to carry out such an obscene act. The national defense is not a justification to destroy our right to privacy. Some of you may be saying that this is ok, especially as phone companies, and search engines store this data anyway to be used to sell ads and provide for better content and services. But this is our private information being used without our consent by government, we know that Verizon collects our data, but we did not know government had access to it. While in the United States all people are protected by the constitution, both citizen and non-citizen alike, due to tacit consent. Those outside the United States have no such luxury and as such are not subject to the United State's constitutional protections (as such we can listen to whatever we want from a caller over seas again due to tacit consent). This issue will not go away anytime soon and is a disturbing trend. Our society may end up as a panopticon (envisioned as the ultimate prison) but it is up to us the people to keep the government in check.