Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Tag Archives: Social Security

How Do You Spell Apocalyptic? Don’t Ask the Congressional Budget Office

This article was published by The McAlvany Intelligence Advisor on Wednesday, April 11, 2018: 

All one needs to do is view the first page of the CBO’s 166-page report on its 10-year outlook for the U.S. economy and government spending that was released on Monday to see why: it features a graph that shows better than words just where we’re headed. Two lines diverge: one, showing government revenues; the other, government outlays. The gap, instead of narrowing, widens dramatically into the future. Unfortunately, the graph cuts off in 2028, leaving one wondering: what happens next?

The CBO report reflected the new law, happily called the Tax Cuts and Jobs Act, that was passed in December. Its previous projection, made by the CBO last June, showed a deficit of $563 billion for 2018, rising to $689 billion next year. Now, with the Tax Cuts and Jobs Act behind them, the CBO now projects this year’s deficit to be $804 billion and next year’s to be just a touch below a trillion dollars, at $981 billion.

The CBO, considered by many to be less partisan than projections coming from the White House’s Office of Management and Budget (OMB), covered itself with this disclaimer:

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CBO Update: Trillion-dollar Deficits to Arrive Two Years Sooner

This article appeared online at TheNewAmerican.com on Tuesday, April 10, 2018: 

According to the latest report from the Congressional Budget Office (CBO), released on Monday, the U.S. economy is going great guns. But that growth, no matter how robust, will never catch up with government spending. Hence, despite that growth, annual deficits of a trillion dollars will arrive two years sooner than originally projected.

That previous projection, made by the CBO last June, showed a deficit of $563 billion for 2018, rising to $689 billion next year. Now, with the Tax Cuts and Jobs Act behind them, the CBO projects this year’s deficit to be $804 billion and next year’s to be just a touch below a trillion dollars, at $981 billion.

The CBO is considered by many to be less partisan than most government entities and as likely to create more accurate projections than those coming from the White House’s Office of Management and Budget (OMB). It covered itself with this disclaimer:

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Trump’s Budget a Mixture of Hope, Optimistic Assumptions, and Statistics

This article was published by The McAlvany Intelligence Advisor on Wednesday, February 14, 2018: 

Mark Twain attributed his quote about statistics to British Prime Minister Benjamin Disraeli: “Figures often beguile me, particularly when I have the [freedom] of arranging them myself … there are three kinds of lies: lies, damned lies, and statistics.”

Mark Mulvaney, Trump’s OMB director, must feel the same way. There’s enough statistical smoke and mirrors in the president’s “An American Budget” to, in the words of Tevye [the dairyman in Fiddler on the Roof] “cross a Rabbi’s eyes.”

First, Mulvaney admits that this MAGA budget won’t balance, ever. The government is too big and growing too fast for the economy that funds it ever to catch up. So he and the president decided to ignore a balanced budget and go for the next best thing: show the economy growing faster than the government is growing and someday, eventually, the deficits will start to shrink when compared to the economy itself.

The numbers “prove” the conclusion: for fiscal year 2018 (which ends this coming September 30), government revenues of $3.3 trillion compared to government spending of $4.2 trillion will leave a gap – a deficit – of $873 billion, equivalent to 4.4 percent of the country’s gross domestic product. In the following years that annual deficit is projected to grow to $987 trillion in 2020, equivalent to 4.5 percent of the country’s GDP. Only by 2022 does that percentage begin to decline based on the assumption that government spending is only $4.9 trillion while tax receipts would hopefully be $4.1 trillion.

That is the crux of the new math in Trump’s budget:

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Trump’s Budget Won’t be Balanced, Just Restrained

This article appeared online at TheNewAmerican.com on Tuesday, February 13, 2018:

In his message to Congress describing “An American Budget,” the president started off accurately enough: “The current fiscal path is unsustainable, and future generations deserve better.” Translation: If this budget isn’t approved, wage earners will not only have to hide their wallets but their grandchildren as well.

He added: “Over the next decade, a steady rate of 3-percent economic growth will infuse trillions of additional dollars into our economy, fueling the dreams of the American people and sustaining a new era of American Greatness.” And, hopefully, enough vastly increased tax receipts to pay for it.

He left his Office of Management and Budget (OMB) director Mick Mulvaney to fill in the gaps and pick up the pieces. The budget, apparently, won’t ever be balanced, so we’re changing the goal: grow the economy faster than the budget so that the deficit gap starts to shrink. Said Mulvaney, “As a nation, we face difficult times — challenged by a crumbling infrastructure, growing deficits, rogue nations, and irresponsible Washington spending….  Just like every American family, the budget makes hard choices: fund what we must, cut where we can, and reduce what we borrow.”

Here are the numbers:

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Student Loans in Default Traded for Broken Social Security Promises?

This article was published by The McAlvany Intelligence Advisor on Monday, January 1, 2017: 

On the surface, Representative Tom Garrett seems like an intelligent guy: a freshman member of the House from Virginia, he served previously as the Virginia Commonwealth’s attorney for Louisa County. He’s already earned himself a Freedom Index rating of 80 percent from the John Birch Society for his voting record in the House.

But at age 45 he is still paying off his student loans that helped him

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Craziest Idea of 2017: Let Students Pay Down Their College Loans by Delaying Their Social Security Benefits

This article appeared online at TheNewAmerican.com on Monday, January 1, 2018:  

What a world! Broken promises traded for other broken promises, and offered with a straight face!

Representative Tom Garrett (R-Va.) turns 46 in March and is still paying off his student loans. In less than 20 years he’ll qualify to retire under present Social Security rules. He put two-and-two together and came up with the Student Security Act (SSA): Pay down some of his student loans by pushing back his retirement age.

Specifically, Garrett’s bill (H.R.4584, which has four co-sponsors so far) would forgive

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November’s Federal Deficit 11 Percent Ahead of Last Year’s

This article appeared online at TheNewAmerican.com on Wednesday, December 13, 2017:

Buried in the latest report from the Department of the Treasury is this nugget: Through the first two months of the fiscal year, which began on October 1, the deficit (the difference between revenues and spending) was 11 percent higher than the same two months last year. And this despite revenues (taxes from individuals and corporations) setting records. The $433 billion the government collected in October and November was $13 billion more than it collected in the same period last year, and $11.3 billion more than it collected the year before.

In those two months,

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Venezuela in Default; Can the U.S. Be Far Behind?

This article was published by The McAlvany Intelligence Advisor on Wednesday, November 15, 2017:

Português: Brasília - O chanceler da Venezuela...

Marxist Dictator Nicolas Maduro

Marxist Dictator Nicolas Maduro’s Venezuela owes the world an estimated $140 billion. It’s greatly diminished economy, thanks to his socialist policies, generates barely $400 billion in output. That puts its debt-to-GDP ratio at 35 percent.

The United States government, if government agencies are to be believed,

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Combined Social Security Spending for 2017 Tops $1 Trillion for First time

This article appeared online at TheNewAmerican.com on Friday, October 27, 2017: 

The Monthly Treasury Statement issued on Wednesday from the Social Security Administration showed that total spending for the three social welfare programs administered by the agency — the Old Age and Survivors Insurance program, the Disability Insurance program and the Supplemental Security Income program — topped $1 trillion for the first time in history in 2017.

The program first hit $600 billion in spending in 1997, and it took nine years to hit the next benchmark, $700 billion. From there it took between three and four years to hit subsequent $100 billion spending benchmarks. Accordingly, the agency estimates that it will spend $1.6 trillion in 2026. From there it will be just a few short years before all funds are exhausted.

Most sensible observers have been warning for years that the program is in dire jeopardy, with all manner of schemes being proposed to rescue it from oblivion:

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Treasury Department: $666 Billion Deficit; Sixth-highest in History

This article appeared online at TheNewAmerican.com on Monday, October 23, 2017:  

The federal government ran a deficit of $666 billion in 2017, reported the U.S. Treasury Department on Thursday, thanks mainly to increases in budget items that supposedly can’t be cut: Social Security, Medicare, Medicaid, and interest on the national debt. In addition, military spending is due for substantial increases under the Trump administration.

Translation:

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Herb Stein, Meet Mick Mulvaney

This article was published by The McAlvany Intelligence Advisor on Monday, October 23, 2017: 

English: Official portrait of US Rep. Mick Mul...

Mick Mulvaney

University of Virginia professor Herbert Stein, the father of Ben Stein of Ferris Bueller fame, was known as a pragmatic conservative. But he is best known for his cryptic expression, “If something cannot go on forever, it will stop.”

Mick Mulvaney’s hopeful outlook hasn’t yet been tarnished by his experience in Washington. Serving as a member of the House of Representatives from South Carolina prior to accepting the position of President Trump’s Director of Office of Management and Budget, Mulvaney really thinks, based on his public statements, that things really can go on forever. All that is needed is a little tweaking: “We need to grow our economy again and get our fiscal house in order. We can do that through smart spending restraint, tax reform, and cutting red tape.”

A closer look at the size of that fiscal deficit, however, reveals Mr. Mulvaney’s naiveté: on Thursday the Treasury Department announced that the deficit for the fiscal year that ended on September 30 was

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Tax Reform: The Sausage-Making Begins

This article was published by The McAlvany Intelligence Advisor on Friday, September 29, 2017:

Otto von Bismarck is credited, rightly or wrongly, with two famous quotes about laws and sausages: “Laws are like sausages. It’s better not to see them being made.” And “To retain respect for sausages and laws, one must not watch them in the making.”

One of the more insightful comments on the whole business in today’s Washington comes from the President’s son, Donald J. Trump, Jr., (shown above) who said:

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Tax-reform Plan Called “Tremendous” by Trump, “Fake Math” by Schumer

This article appeared online at TheNewAmerican.com on Thursday, September 28, 2017:

In unveiling the tax reform “framework” cobbled together by the Trump administration, the House Ways and Means Committee, and the Senate Finance Committee on Wednesday, President Trump called it “tremendous”: “This is a tremendous change, and the biggest winners will be the everyday American workers as jobs start pouring into our country, as companies start competing for American labor and as wages start going up [to] levels you haven’t seen in many years.”

On cue, House Minority Leader Nancy Pelosi (D-Calif.) expressed her concerns about deficits, perhaps for the first time in her political career:

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Democrats and Fiscal Reality Present Roadblocks for Trump’s Budget

This article appeared online at TheNewAmerican.com on Tuesday, August 1, 2017:

speaking at CPAC in Washington D.C. on Februar...

Deciding to move on following the failure of the Senate to pass the “skinny” ObamaCare repeal bill, the Trump administration announced on Monday its accelerated plans for passing its budget bill. According to Marc Short, President Trump’s director of legislative affairs, background work on the budget will take place in August in preparation for committee action in the House in September. Assuming little resistance there, Short hopes for a floor vote in October, a Senate vote in November, and the president’s signature on it immediately thereafter.

It’s good to dream big.

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Trump Keeps Another Promise: Ignore Social Security’s Impending Shortfalls

This article appeared online at TheNewAmerican.com on Wednesday, July 12, 2017: 

English: Scanned image of author's US Social S...

During his presidential campaign, Republican Party candidate Donald Trump made it abundantly clear that he would not do anything to restore the financial integrity of Social Security:

I’m not going to cut Social Security like every other Republican, and I’m not going to cut Medicare or Medicaid. Every other Republican is going to cut, and even if they wouldn’t, they don’t know what to do because they don’t know where the money is. I do.

Now that he is president, he no doubt has discovered just “where the money is”: It’s been spent by the government. And likely due to the commitment by the Democrats to oppose anything and everything he’d like to do, he’s just going to leave the failing and shrinking program alone.

This has caused angst among realists who see the federal program failing to meet its promises in less than 17 years and offering various ideas and suggestions on how to “fix” it.

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CBO Raises Its Deficit, Debt Forecasts in Latest Revision

This article appeared online at TheNewAmerican.com on Wednesday, July 5, 2017:  

The Congressional Budget Office (CBO) just revised its January report with new data on spending, revenues, and economic growth. The revision isn’t good:

The projected rise in [annual] deficits would be the result of rapid growth in spending for federal retirement and health care programs targeted to older people, and to rising interest payments on the government’s debt, accompanied by only moderate growth in revenue collections.

In other words, the CBO simply doesn’t believe that President Trump’s plans to reduce regulation, cut taxes, and repeal ObamaCare will amount to much. Instead the government programs on autopilot — Social Security, Medicare, and especially debt service on the country’s $20 trillion national debt — will eat up nearly 80 percent of the government’s total budget in less than 10 years. Said the CBO:

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Gov’t Collects Record $240 Billion in May; Still Runs $88 Billion Deficit

This article appeared online at TheNewAmerican.com on Friday, June 16, 2017:

English: Medicare and Medicaid as % GDP Explan...

Medicare and Medicaid as % GDP Explanation: Eventually, Medicare and Medicaid spending absorbs all federal tax revenue.

The U.S. Treasury announced on Thursday that the federal government collected more money in May than in any other month in history: $240.4 billion. In the same breath, it said that the government spent $328.8 billion, creating a deficit of $88.4 billion.

From a wage earner’s perspective, it meant that in May the average worker paid $1,572 in taxes but the government spent $2,149, making up the $577 difference by borrowing. Such deficit spending is making the S&P Global credit rating agency increasingly nervous.

Just a week earlier, the agency affirmed its best rating — A-1+ — for the government’s “short term” debt, which means, in its own parlance, that the federal government’s ability to pay its current bills is “strong.” But in the longer term, the agency is far less sanguine. While holding its current long-term rating at AA+ (one full notch below its best rating), it said it’s unable to give the United States its highest rating (AAA) because of “high general government debt, relatively short-term-oriented policymaking, and uncertainty about policy formulation” for the future. It explained what it meant about that “uncertainty”:

Some of the [Trump] Administration’s policy proposals appear at odds with policies of the traditional Republican leadership and historical base. That, coupled with lack of cohesion, not just across, but within parties, complicates the ability to effectively and proactively advance legislation in Congress, particularly on fiscal policy. Taken together, we don’t expect a meaningful expansion or reduction of the fiscal deficit over the forecast period.

And what does it say about what’s likely to happen over that “forecast period”?

The U.S.’s net general government debt burden (as a share of GDP) remains twice its 2007 level. While, in our view, debt to GDP should hold fairly steady over the next several years, we expect it to rise thereafter absent measures to raise additional revenue and/or cut nondiscretionary expenditures.

What does that phrase “next several years” mean? How much time before the government’s national debt explodes upward? Says S&P:

Although deficits have declined, net general government debt to GDP remains high at about 80% of GDP. Given our growth forecasts and our expectations that credit conditions will remain subdued, thus keeping real interest rates in check, we expect this ratio to hold fairly steady through 2020. At that point, it could deteriorate more sharply, partly as a result of demographic trends.

Translation: Deficit spending will remain “subdued” for three and a half years, and then Katy bar the door!

Here is where S&P bows out of the picture, giving way instead to the Congressional Budget Office (CBO), which completed the picture in its March report:

Federal debt held by the public, defined as the amount that the federal government borrows from financial markets, has ballooned over the last decade. In 2007, the year the recession began, debt held by the public represented 35 percent of GDP. Just five years later, federal debt held by the public has doubled to 70 percent and is projected to continue rising.

“Continue rising”? By how much? And by when? The CBO is blunt:

Debt has not seen a surge this large since the increase in federal spending during World War II, when debt exceeded 70 percent of GDP. The budget office projects that growing budget deficits will cause the debt to increase sharply over the next three decades, hitting 150 percent of GDP by 2047.

So, that ratio of government debt compared to the country’s economic ability to produce goods and services was 35 percent in 2007, is now 70 percent, and will soon be 150 percent.

And what’s the reason?

The majority of the rise in spending is largely the result of programs like Social Security and Medicare in addition to rising interest rates. For example, Social Security and major health care program spending represented 54 percent of all federal noninterest spending, an increase from the average of 37 percent it has been over the past 50 years.

It appears to be an unstoppable locomotive. Non-discretionary spending (spending already locked into place by past Congresses and fully expected to be received by its beneficiaries) is on autopilot. And interest rates now coming off historic lows are only going to increase those annual deficits into the future as far as the eye can see.

The CBO is about as close as one can get to a truly non-partisan federal agency — one that has no partisan political agenda and is considered by many as the most reliable forecaster of future economic events. So it’s not only willing to cover, analyze, and present its findings candidly, it’s also willing to tell the truth. It asked, rhetorically, “What might the consequences be if current laws remain unchanged?” It answered:

Large and growing federal debt over the coming decades would hurt the economy and constrain future budget policy. The amount of debt that is projected under the extended baseline would reduce national saving and income in the long term; increase the government’s interest costs, putting more pressure on the rest of the budget; limit lawmakers’ ability to respond to unforeseen events; and increase the likelihood of a fiscal crisis, an occurrence in which investors become unwilling to finance a government’s borrowing unless they are compensated with very high interest rates.

Which brings one to the ultimate rhetorical question: What happens when even those “very high interest rates” aren’t enough to compensate those investors for the risks they are taking by loaning their money to a government that increasingly isn’t able to pay its bills and must continue to borrow increasingly massive amounts to cover its deficits? What happens next?

May’s Jobs Report Stronger Than It Appears

This article appeared online at TheNewAmerican.com on Friday, June 2, 2017:

The headline number from the Department of Labor’s Bureau of Labor Statistics’ (BLS) May jobs report, released on Friday, appeared weak: Just 138,000 new jobs were created last month compared to expectations of 185,000 by forecasters. But as usual, a peek beneath the headlines shows an economy growing steadily, providing it with more than enough workers to absorb those leaving or retiring.

After revisions were made to March and April numbers, May’s job creation was more than the last three months’ average of 121,000. Taking into account robust numbers reported from ADP, a national human resources and benefits firm, on Wednesday — it reported that 253,000 new jobs were created in May — Mark Zandi, chief economist at Moody’s Analytics remarked,

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Puerto Rico Headed to Bankruptcy Court, Likely Costing Investors Billions

This article appeared online at TheNewAmerican.com on Wednesday, May 3, 2017: 

English: Map of Peuto Rico, with inset showing...

The federal fiscal oversight board created by Congress last June to fix Puerto Rico gave up on Monday, putting the island country into the hands of a federal bankruptcy judge.

The board, created last June, was designed to help newly elected Governor Ricardo Rossello come to terms with mutual funds and hedge fund owners that own the bulk of the island’s $73 billion debt. Rossello’s first effort, which would have applied a one-third financial “haircut” to them was turned down by the board, which called it too generous.

Rossello’s second effort would have applied a 50-percent haircut, but Franklin Advisers and Oppenheimer Fund, the two largest entities holding the island’s debt, pushed back.

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Former Heritage Economist Stephen Moore Refutes CBO’s Doom & Gloom

This article appeared online at TheNewAmerican.com on Wednesday, April 26, 2017:

Stephen Moore by David Shankbone, New York City

Stephen Moore

The Heritage Foundation’s Distinguished Visiting Fellow Stephen Moore, now a CNN economics commentator, thinks the latest report from the Congressional Budget Office (CBO) is far too pessimistic. Instead, he believes that most of the nation’s fiscal problems can be solved just by prodding the economy.

The CBO report, “The 2017 Long-Term Budget Outlook,” assumed that little would change politically over the next 10 to 30 years, despite promises from President Trump that his policies would “make America great again.” It projected that the Baby Boomers would exhaust the resources of Medicare and Social Security, and then those costs would be shifted directly to the Department of the Treasury.

If nothing changes, said the CBO, the percentage of the national debt held by the public (pension plans, mutual funds, foreign governments, and wealthy individuals) would double over the next 30 years, which would “pose substantial risks for the nation.”

The problem is exacerbated, said the CBO, not only by an aging population demanding that the government keeps its promises to them, but also

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.