Geezer Votes Matter

http://www.wsj.com/articles/when-older-people-do-better-than-those-of-working-age-1458498054?mod=e2fb

Watching the economic crackup of the grand Ponzi Scheme of FICA and all the other "buy people's votes with promises of better benefits when they are dead" debacle is as unexpected as hearing about a drunk getting another DUI, the government running a deficit, or the sun rising in the morning.

“It’s a perfect storm of sudden increases in longevity, combined with the global financial crisis, combined with the greater voting power of older generations,” said Liz Emerson, co-founder of the Intergenerational Foundation, a London-based think tank that argues the political clout of seniors—an age group with high voting turnout—has damaged the interests of the young.

We have seen this coming for at least 40 years -- really since it was created in the 1930's. 2/3 of people were supposed to die before they got benefits, the population was supposed to always grow (more people paying in) and the economy was always supposed to grow. All three of the assumptions are wrong now -- the first HUGELY, the send significantly, and the third sometimes a little true, but WAY slower than would have been imagined.

But the old vote -- so like blacks, their VOTES matter!

“We are redistributing income within the family,” said Frank Field,who heads a British parliamentary panel that in January announced an inquiry into the issue of intergenerational fairness. “It isn’t fair and it isn’t sustainable.”

Except popular government is NEVER about "fairness" -- it is either about voting for things that cause the economy to expand which some people want because they think they will succeed and do better than others, OR, it is about dominant political parties buying votes to gain more and more power with no concern for anything other than the vote buyers winning.

The fact that BOTH the right establishment and the left establishment hate Cruz the worst and Trump the 2nd worst shows what the vote buyers on  BOTH sides are thinking!

Call 911! Red Star Sniffs $$$ Reality!

Boomers, millennials need wake-up call on deficit - StarTribune.com:

Ok, apparently hitting the floor restarted my heart!

Whose face do you picture when you think of history’s greatest thieves? If you are an old movie buff, perhaps Butch and Sundance or Bonnie and Clyde come to mind. Maybe Bernie Madoff and his $65 billion Ponzi scheme? 

Well, even that staggering amount is paltry compared to history’s truly greatest theft. And the face of the greatest thief might surprise you. If you are over 50 take a look in the mirror. History’s greatest thief is you!

The United States is $18 trillion in debt, an amount that continues to rise at an alarming rate with no end in sight by anyone’s calculation. But that is dwarfed by the $128 trillion in “unfunded liabilities.” Unfunded liabilities are the amount by which future obligations exceed the present value of funds available to pay for them. 

To put that in perspective our nation’s unfunded liabilities come out to $1.1 million per taxpayer.

Folks, this is the RED STAR TRIB! Massive endorser and supporter of Wellstone, Dayton, Franken, Klobuchar, BO!  This column sounds like **ME** ... only I've been understating the unfunded liabilities as "$40-$60T"! I've lost touch with how bad this really is.

The CBO calculated that for debt in 2040 to equal the historical 50-year average of 38 percent of gross domestic product, Congress would need to cut spending by 13 percent or raise revenue by 14 percent beginning in 2016. Needless to say, neither of those is going to happen.

Right ... and if we had done something EARLIER, it would not be this bad, **BUT** the left and papers like the Strib have been demagoguing this for DECADES. Talk of imaginary "lock boxes", complete derision of plans like W's to privatize a portion of FICA, or against Paul Ryan's plan which was basically the idea that they now assert that Boomers need to adhere to.

Is there any way to save the millennials and subsequent generations from this continuing theft? The final irony is that the heroes must be the thieves themselves. It is up to the baby boomers to vote for politicians who will make the fundamental budgetary changes to alter the current path. But this is asking such voters to reject the political pandering that tells them government can keep expanding benefits without paying their full costs. 

I wouldn’t hold my breath. The older generations are addicted to receiving benefits without paying for them. The younger generations are being robbed blind and don’t even know it.

I covered the Madoff - FICA similarity back in 2008 in this blog -- now seeing the Red Star agreeing with me a mere 8 years later is enough to make me think I ought have just stayed on the floor!

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Progressives on Hypocrisy

Forward Progressives — Paul Ryan: The Ultimate Hypocrite:

Ran into this nice little screed on Paul Ryan that is a pretty good example of the "alternate universe" that "progressives" live in. To be "Progressive" or "liberal" is to have a keen sense of "hypocrisy" in others, but no mirror at all.

For a "progressive", the W deficits were horrible, but BO's are fine. Any use of military power under W was worthy of a protest, where under BO any military use, even without congressional approval is fine. Gitmo was a constant source of animus under W, now it is fine. Killing even Americans with drones? No problem with BO in the WH, under W? Killing ANYONE was "chilling" ... even terrorists deserved "constitutional rights", now not even Americans do if BO decides against it.

Now, let it be said that ANYONE with ANY standards is in fact a hypocrite -- or else your standards are so low as to not be worthy of being called "standards". ALL sin -- in many and various ways, so the only true non-hypocrites are guys like Slick Willie that never claimed to have any standards and did an excellent job of proving it!

The big difference here is that Ryan nor any Republican I know of ever said NO government!! Smaller than it is now, yes ... but maybe 15-20% of GDP vs the 25% it is today. Dealing with government is more like dieting than quitting smoking or drinking. Unless someone starts talking ZERO government or railing against having public schools, or benefits for children whose parents have died it is ridiculous to bring them into the discussion.

FICA **IS** a Ponzi scheme -- it just hasn't crashed yet. If we don't fix it, there will be no money for ANY. What Ryan wants to do is means test it to keep it helping those that truly need it and to characterize his approach otherwise is either stupid or disingenuous.

On budgets, spending and deficits, it is a discussion of degree. It is certainly hypocrisy to have railed against W deficits that were less than half BOs smallest to date at WORST, and in some cases 10% of BOs, and now be completely unconcerned and in fact cheering for larger deficits as is the case with Paul Krugman. Being OK with deficits that are smaller but concerned with those that are larger seems quite reasonable in may contexts -- two beers vs 12 for example makes a difference.

Do I believe that Ryan, W, and many Republicans were in the wrong to do medicare part D? Yes, I thought it was a fools errand at then and still do. I believe that their much smaller, but still excessive government spending was wrong. The problem is that government is often a "lesser of two evils" problem, ESPECIALLY if you are a conservative. The only folks that are going to be elected and be at all effective are POLITICIANS, so one is always hiring the equivalent of the fox to guard the henhouse!

To be a Christian means that I need to recognize that **I** am the "ultimate pile of garbage" ... but reading columns like this does provide the temptation to believe that some folks are worse! ;-)

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Generational Storm

I finished up “The Coming Generational Storm” (CGS) while up on a fishing trip to Winnibigosh. The weather is actually beautiful on our fall trip, maybe a good reason to do it a bit earlier in the future as we have this year.

CGS can be summarized as saying that we have been far to profligate for far too long in making promises to the old and eventual old, and the house of cards is about to crash … soon. Interestingly, we are better off than Japan and most of Western Europe with the exception of Great Britain. These guys try somewhat hard to be even handed, so I’d say they are “mostly in the middle” politically. They do their share of Bush bashing, but they point out that unlike the rest of Western Europe, and thanks to Margaret Thatcher, England has kept a lid on Government pensions and the growth of their medical system so they have a decent chance to avoid the perils of ever increasing liabilities and reduced population to keep paying that beset Japan, the rest of Western Europe, and to a lesser degree, the US.

The core of their claim is that we have an unfunded future liability of $51 Trillion listed in decreasing order of severity when Medicaid, Medicare, Social Security, and the national debt are counted. They maintain that there is no way we are going to cut benefits or raise taxes at anything like the rate required to pay that liability so the most likely outcome is hyperinflation and a wrecked economy. If we were so inclined, they propose the following plan that could still work:

1. Immediately stop accrual of benefits under the current Social Security(SS) program.
2. Current retirees and workers get whatever they have already accrued under SS.
3. The SS payroll tax is eliminated and replaced with equivalent investment into Personal Security System (PSS) accounts
4. A new federal retail sales tax of 12% that would reduce over time is initiated to pay off the benefits under the old system.
5. Workers PSS accounts are shared 50/50 with their spouses.
6. The government does PSS accounts on behalf of disabled and unemployed
7. The government matches PSS accounts on a progressive basis.
8. All PSS balances are invested in a single market weighted global index fund of stocks, bonds, and real estate.
9. The government guarantees the real principle that workers contribute to their PSS accounts.
10. Between ages of 57 and 67, workers PSS balances are gradually sold and transformed into inflation protected pensions.
11. If a worker dies prior to 67, any remaining PSS balances are transferred to PSS accounts of the workers heirs.

They spend a lot of time on the whys and wherefores, and I’d have to say that while I don’t agree with it all, they make rational arguments and it does have a bit of “pain for everyone” so if the world was rational, there is some chance it would be accepted. It doesn’t appear that the world IS rational however, so they indicate that it is time to “buy land and stock ammo”. Well, they aren’t actually that morose, but somewhat close.

In preparation for hyperinflation downsize but own your home, save, save, save, but not in 401K accounts since the government is going to be taxing those like crazy. Get in inflation adjusted securities, very broad market indexes that have an overseas component as well, and even some gold. While the pre-industrial life tended to be “Nasty, Brutish and Short”, they seem to be setting up for a case where the boomer old age will be “Nasty, Brutish, and Long”.

The book is a depressing but worthy read. I like to be a bit more optimistic than they are, but they do an excellent job of making the future look dark and knocking down any hopeful ideas one might have on how it could get better; technology/productivity improvement, globalization efficiencies, smarter immigration, people working longer … etc. In their world nothing works and doom wins. That is always a hard view to completely ignore, for it is certainly true that in the long run we are all dead.