A Most Dangerous Lie

Last week President Barack Obama asserted that the United States does not face spending or deficit problems, only an ideological divide caused by Republicans that want to slash government programs for health and children's services.

“We don’t have an urgent deficit crisis,” Obama said Friday at a town hall meeting on the campus of Binghamton University in Binghamton, N.Y. “The only crisis we have is the one that is manufactured in Washington and it’s ideological and the basic notion is that we shouldn’t be helping people get health care and we shouldn’t be helping kids who can’t help themselves and whose parents are under resourced, we shouldn’t be helping them get a leg up.”

Now either this president is lying or he has yet to read his own government's reports.

• The Government Accountability Office said earlier this year that "...absent policy changes...the federal government continues to face an unsustainable fiscal path."

• The non-partisan Congressional Budget Office warns that we have less than a decade to rectify the federal spending addiciton: "[a] growing imbalance between revenues and noninterest spending, combined with the spiraling cost of net interest, would swiftly push debt upward in an unsustainable way... The explosive path of federal debt ... underscores the need for major changes in current policies to put the nation on a sustainable fiscal course..."

• The public trustees of Medicare and Social Security continue to sound the alarm that the massive entitlement programs are headed for collapse: "Under current law, both of these vitally important programs are on unsustainable paths."

• Furthermore, government economists in the several states warn that the federal debt "circumstances are dire enough after four consecutive years of trillion-dollar deficits that politicians on each side of the aisle are beginning to realize serious budget repairs are necessary."

• Kleiner Perkins partner Mary Meeker, one of the most respected investment analysts in America, reports that the United States federal government "is on a parallel course to GM before its bankruptcy... [and if entitlement programs are not reformed, the U.S. balance sheet will go from bad to worse... The turning point: within 15 years, entitlements plus net interest expenses will absorb all -- yes, all -- of [federal] annual revenue."

This is just a random sampling. There are many, many more. There are hundreds of similar analyses from the government itself as well as the private sector.

Are the federal government's own actuaries all wrong and Obama right?

Are the federal government's own accountants all wrong and Obama right?

Are generally accepted accounting principles all wrong and Obama right?

Are centuries of mathematics all wrong and Obama right?

Are facts, logic, history and reason all wrong and Obama right?

Whether his actions are, as some have proposed, intentional or whether they are the product of a radical and blinkered ideology, the endgame will be the same.

We are headed rapidly for an economic whirlpool, a hydraulic that will -- like chaotic events that have occurred before throughout history -- catch most off-guard and send the country rapidly into desperately dangerous, uncharted waters.

And which segments of the population will be hardest hit by such an economic catastrophe? Will it be the super-rich, the Beltway elites, or former Presidents of the U.S.? Or will it be the poor, seniors living on fixed incomes, and young people trying to get their careers started?

Of all his countless fabrications, the lies the President tells the American people about spending and deficits are the most dangerous.


Hat tips: Mark Levin and BadBlue News Service.

Helpful Chart Illustrates the Detroit-ification of America

The national treasure known as the Heritage Foundation posts this helpful infographic contrasting the plight of Detroit with that of the United States (via Katie Pavlich):

Unlike Detroit, the Federal Reserve has the option of printing its own currency whenever it needs it. This takes the form of "monetization of the debt", financial repression, and other measures that generally mark the precursors to a financial collapse.

In plainer terms, the average American family of four is on the hook for about $800,000 in payments to others. We refer to this madness as "redistributing wealth", the Cloward-Piven Strategy, or simply Obamanomics.

Anyone who thinks this is sustainable, please raise your hand.

Put your hand down, Krugman, you schmuck.


Hat tip: BadBlue Money News.

Apocalypse In One Picture

Guest post by Monty Pelerin

It is nearly impossible to convince people that an economic collapse is likely, perhaps inevitable. It is beyond anything they have seen or can imagine. I attribute that to a normalcy bias, an inherent weakness of experiential learners. For many, accepting something that has not occurred during their time on the planet is not possible. The laws of economics and mathematics may shape history but they are not controlled by history.

The form of cataclysm and its timing is indeterminable. Political decisions continue to shape both. The madmen who are responsible for the coming disaster continue to behave as if they can manage to avoid it. Violating Einstein’s definition of insanity, they continue to apply the same poison that caused the problem. These fools believe they can manage complexities they do not understand. We are bigger fools for providing them the authority to indulge their hubris and wreak such damage.

Apocalypse In One Picture

James Quinn provided the following graph. If a picture is worth a thousand words, this graph is worth millions. The route to economic demise is depicted below:

The relationships in this graph are terrifying! Debt is shown relative to GDP. GDP growth has been one-third the growth in debt for the period. That is, the economy required $3 of debt to produce $1 more in real GDP. In recent years diminishing returns to debt required $6 of debt to increase GDP a $1. Whatever the benefits of debt, they have clearly diminished, almost to zero. Debt expansion has gone exponential in order to salvage the weak growth in GDP.

To put this into a perspective the average reader can understand, think of GDP as a household’s spending. The “family” depicted above has to borrow each year in order to maintain its spending level. Imagine the condition of your family if you borrow ed 6 times the amount of incremental spending each year. Then imagine the condition of your family after forty years of continuously increasing your debt levels substantially in excess of your income.

It is impossible for a family without a printing press and a cooperative Federal Reserve to engage in such behavior. The government is different, you say? Surely it is, but not necessarily in a meaningful financial manner. Just as you would not survive such behavior, governments cannot either. History is full of examples of government collapses resulting from excessive debt and overspending. A printing press only provides the luxury of more time before the failure.

You may object that a macroeconomy is different from a family. Debt (parroting the political claim) makes an economy grow faster. The evidence shown above does not support this claim. Government reported GDP growth rates are shrinking as the debt expansion accelerates. Since 1965 the growth rate of the economy has been declining.

Even if you accept government GDP reporting, the above chart shows a trend this is pointing to an average declining standard of living. That point will be reached when the GDP growth falls below the population growth.

The US economy has been underperforming since the 1970s according to government’s statistics. That is after all the games have been played with these numbers. How much longer can these trends continue and what happens at the end? No one can reasonably answer either of these questions.

What Is Known And Not Known

Two things are known:

• So long as borrowing increases faster than GDP, the ability to repay diminishes. That has been occurring for more than forty years and the differential growth rates have widened dramatically in recent years.
• Not borrowing at this pace would likely have decreased reported GDP dramatically. While that may have been a proper economic response, it is now politically impossible (or highly unlikely).

Continuing to increase debt at a rate greater than GDP ensures financial collapse. Stopping or slowing down at this point likely leads to the same point. This country has maneuvered itself into a no-escape situation.

What would happen to GDP and the standard of living if borrowing were dramatically reduced? How much of the last $10 trillion in debt borrowed between 2000 and 2009 went directly into reported GDP? Is it possible that reported GDP for this period could have been $10 trillion lower? If there is indeed a monetary/fiscal multiplier as Keynesians insist, then results would have been worse.

Answers to these questions are speculative. Those in favor of more debt argue that a calamity would have occurred had the massive rise in debt and its accompany stimulative effects not happened. For the Paul Krugmans of the world, more debt and stimulus is always the answer. All problems look like nails when you own only a hammer.

Rapidly increasing amounts of debt since 1965 have been accompanied by falling rates of growth. One may speculate what this growth would have been with different rates of debt expansion. Whether the rate of debt expansion increased or decreased the rate of real GDP is moot. Economists can use their competing paradigms to duel over this issue, but cannot come to a conclusion that is acceptable to most.

Mathematics, on the other hand, is definitive. There are mathematical limits that control the ability to service debt. Once these limits have been breached, some amount of the debt will be defaulted on. The breach point is referred to as a debt death spiral. The US has passed this mathematical point and is in a death spiral.

The political class in America, either via misguided economic policies or a deliberate attempt to hide the true condition of the country, has put us here. They will continue to employ whatever policies they believe will keep things going for a while longer. The tragic ending has been cast. Economics cannot trump mathematics.

Monty Pelerin blogs at Economic Noise.

A Modest Proposal [Updated]

Guest post by David Hague

Dear reader, in 1729, Jonathan Swift suggested in his "Modest Proposal" that, "'in order to Prevent the Children of Poor People From Being a Burden to Our Parents or Country, and for Making Them Beneficial to the Publick". He encouraged the starving Irish people generate income and reduce expenses by selling their babies to the rich to be consumed by the rich as new source of food. This Juvenalian satire disgusted his readers but was successful at bringing the plight of the Irish to a wide audience. Perhaps it is time for the Baby Boom [BB] generation to recognize the plight of our children before they decide that we BBs should be sauteed, fricasseed, or boiled and served for dinner.

Guess who is being served for dinner?

I modestly propose that the children of baby boomers [BBs] prepare to eat their parents in order to prevent them from becoming a burden on society. Whether our children fry, boil, roast bake or BBQs all us BBs, the end result would be to put a stop to the BBs incredible and wanton accumulation of global government debt that will be passed on to future generations. In the unlikely event you disagree with my proposal let me explain my rationale.

You got some 'splaining' to do!

Dear reader, As Ricky Ricardo often said to everyone's favorite redhead, "Lucy, You got some 'splaining' to do" I feel that the BB generation, like Lucy, is going to find themselves being asked some hard questions by our children and, like Lucy will have some 'splaining' to do avoid being converted into a soufflé or a stew.

You are not the boss of me

My conviction that we, the BBs will find ourselves under harsh lights in the interrogation room [or the kitchen] came to me gradually. As an imperfect father I felt my children should take responsibility and control of our own lives.

Watch what I do and don't do it

When each of my two daughters turned five, the age at which they felt I was no longer 'the boss of them', I acquiesced and left them in charge of our own destiny. The only advice I gave them was to look them in eye, fully aware of my own imperfections and tell them that if they wanted to be successful they should watch what I do and don't do it. Fortunately for them, their mother is a goddess who kept watch over them.

Our children's future will be significantly less than they could wish for

Flash forward twenty years to the present and to a recent family dinner at which my daughters were sharing our hopes and dreams for the future. Careers, goals, buying a house starting a family were all part of the lively conversation. Much to my surprise they asked my opinion on the myriad choices they faced.

Sadly my compulsive study of economic and financial events left me in an awkward position. I naturally wanted to share their excitement and enthusiasm for all the opportunities and experiences that the future can hold. However there are two gifts that we BBs are leaving our children that will likely ensure our children's future is significantly less than they would wish for.

To my daughters and your children as well: you owe $50 trillion.

The first and most important gift we baby boomers are leaving our children is, according to the highly respected Economist Magazine, is a staggering $50 trillion global government debt. [Canadian federal and provincial debt amounts to a combined eye popping $1.5 trillion, and you thought it was just our southern neighbors who had a problem] There has been no economic miracle while we BB's have been in charge. All that BBs are, all that we have, all that we are proud of, is simply the result of a giant global credit card that the BB's have used with reckless abandon to satisfy our desire for more, bigger, better. Giant stimulus programs, bailing out large companies, no problem, higher pay for bloated civil servants, absolutely. Health care, you got it. Jet fighters and battleships, all BBs would say, Aye, aye sir. Bizarre foreign wars, you betcha! Circuses, stadiums, Olympics, there is no end to the BB's shopping spree. [Unless you have the misfortune to be a BB in a lesser developed country in which case you enjoyed neither the bread nor the circus, only the debt.]

Baby boomers never had a wish they would not grant themselves

The BB generation never had a wish they would not grant themselves even if there was no hope that the BBs could pay for it. You see the BB generation discovered the magic of consume now and let the next two or three generation pay for it. Replace crumbling infrastructure, renew power grids, reduce energy consumption, etc, well not so much. The BB's have no interest in these boring necessities. The borrowed money should be used for museums, Olympics, bizarre wars in foreign lands and in Toronto in 2010, $1.5 billion, 2 day long, G-20 group hug. Those are the items that we BBs like to spend our money on. [Or should I say our children and grandchildren's money] I stand to be corrected but I believe that of you look in the Merriam-Webster dictionary under the word self indulgent you will see a picture of a BB. [Yes, one could argue that narcissist is a more appropriate description of the BB generation but dear reader let us save that debate for another day.]

It is only fun until somebody gets hurt

What this means to our children should be self evident to anyone who has ever been in debt personally. As our mothers used to remind us, "it is only fun until someone gets hurt". Like a family who has arrived at it's own fiscal cliff by taking on too much debt the BB's are desperately scrambling to ensure that the fiscal cliff arrives only after the last BB is dead.

A Tsunami of Cash

The most important tool BBs have to postpone our financial Judgment Day is the printing press. BBs discovered that if our governments could not borrow money they could simply print money. Wisely, to ensure there was no comparison to France's John Law inspired Mississippi Bubble or Germany's Weimar disaster, BBs do not call it money printing. Rather BBs call it Quantitative Easing or Long term stability funds. France in 1720 and Germany in 1930 experimented with the concept of unlimited printing of money to create wealth, In France's case it bankrupt the country, in Germany's case it resulted in WWII. The combined amount of money these two countries printed on their respective roads to disaster would be a mere ripple in the water when compared to the Tsunami of cash BBs are printing. This will land badly but hopefully after all BBs are dead.

The second gift we are leaving our children is ourselves.

BBs will live well into our eighties. More than one study has indicated that the cost to society of heath care for aging BBs will place an unbearable burden on our children and grandchildren.

Hurry up and die

This inevitable crisis recently caused Taro Aso Japan's then 72 year-old deputy prime minister to call the elderly who are unable to feed themselves "tube people," then he proceeded to say the elderly should be allowed to "hurry up and die" to reduce the burden on a country tasked to pay for their medical expenses. This story, reported in ABC news should act as a cautionary tale to baby boomers who expect love and affection and tender care from our children and grandchildren. I suspect our children will view euthanasia, not as an issue for moral or spiritual debate, but as a mandatory form of health care. In all likelihood our children will consider a sneeze sufficient justification to pull the plug on us BBs.

Truth and Reconciliation

Dear reader, these two gifts, our debt and our health care, are I believe enough to ensure the BBs a rather ignominious place in history as well as the contempt of our children and grandchildren. One could argue that the BBs contribution to global warming, peak oil, pollution, crumbling infrastructure, and myriad other social and economic ills should be included in any list of 'gifts' we are leaving our children when one is trying to account for the inevitable enmity toward the BB generation. I am not the arbiter of these issues. I suspect our children will one day organize a Truth and Reconciliation Panel to listen to the evidence against the BBs. That august panel will, I am confident determine which gifts from the BBs made the most difference to the destruction of our children's future.

That is our story and we are sticking to it

In order to ensure some faint hope that I do not end up as some form of stew in the future I would like to apologize to my children and your children for the debt we will be leaving to them. I would suggest that you do the same. In order to ensure that we BBs keep our stories straight, let us simply use the excuse that it seemed like a good idea at the time. That is our story and we should stick to it.

David Hague blogs at Safe Haven.

MR. CLOWARD, MEET MS. PIVEN: Social Security's Unfunded Obligation Rises by $1 Trillion

If you're hoping to expedite the collapse of the progressive welfare state, this should qualify as good news.

Contrary to claims by cheerful news sources, Social Security’s deficit outlook is not “unchanged” or “no worse.” Social Security’s unfunded obligation rose by $1 trillion according to the latest trustees’ report.

U.S. taxpayers now owe $12.3 trillion to pay scheduled benefits—in addition to what Social Security can hope to collect from payroll taxes—over the 75-year horizon. That’s $98,517 for every household in America today.

But who can blame news sources for merely citing Treasury Secretary Jack Lew, who summarized the report in this bright light: The projections in this year’s report for Social Security are essentially unchanged from last year.

The reported unfunded obligation for the combined Social Security old age, survivors, and disability insurance (OASDI) program rose from $8.6 trillion in 2011 to $9.6 trillion in 2012. The $1 trillion increase represents a 12 percent deterioration in OASDI’s funding outlook.

“Essentially unchanged,” huh?

[The figures exclude] $2.7 trillion in IOUs owed to the Social Security trust fund, and adding it in brings the total unfunded obligation to $12.3 trillion. The entire debt held by the public is $11.9 trillion—a $1 trillion in increase in the debt limit would be no big deal then either, would it?

Social Security is in its third year of running cash-flow deficits, and the 2012 gap between revenue raised from payroll taxes and benefits paid was $55 billion. But this is merely the beginning as Social Security cash flow deficits are projected to double in less than 10 years, and continue growing from there.

Shhh... no one tell Doug Mataconis and the other leftists at Outside the Beltway! Everything's just poifect and the president is doin' a bang-up job fixin' all the economomomic problems! Hey, what time are the Kardashians on?


Hat tip: BadBlue News.

A single graph that depicts a society spiraling into the dustbin of history

Why work when you can just collect disability? After all, last month a record 8.9 million took advantage of impossible-to-verify "ailments" like back pain and mood disorders.

...Today, 6.5 workers are on disability for every 100 who have a job. That's double the ratio from two decades ago. The number of people on disability has climbed almost sixfold since 1970.

That influx has caused SSDI costs to climb faster than its dedicated payroll tax revenues. The program has been running a deficit since 2009, and will be insolvent by 2016, according to the program's administrators...


...Last year, the federal government paid $135 billion in disability benefits, which is more money than it devoted to food stamps and welfare combined.

And because those on disability are eligible for Medicare benefits after two years, the sharp rise in SSDI enrollment has put a huge strain on Medicare's budget, costing the program $80 billion in 2012, according to the Congressional Budget Office.

In other words, one-sixth of Medicare's budget now goes to pay benefits for working-age disabled.

Record numbers on disability, a large percentage of which are fraudulent. Record numbers on food stamps, many of those fraudulent. Record welfare payments, many of those also fraudulent. Record income tax credit fraud. In fact, government officials have documented hundreds of billions of fraudulent payments each year laced throughout the federal government's massive, unsustainable wealth redistribution programs.

One might call this the Obama-Krugman-Blodget recipe for national suicide.

But I'll be charitable and simply ask: what is this, the fourth annual "Summer of Recovery"?

Has the Inflation Genie Escaped? "Every nation is about nine meals away from a revolution"

Really good charts spotted at Market Daily Briefing that reflect the real costs of Ben Bernanke's magical printing press, which is spewing out dollars at an unprecedented clip.

Food is important, especially when you don't have it. The rule of 3s says "3 minutes without air, 3 days without water, 3 weeks without food" but another saying is, "every nation is about nine meals away from revolution."

It was posited here that the Arab Spring was due in no small part to high food prices for peoples whose food budgets started out at around 40%. For instance, the Egyptian government had a food price support in place, and when global prices rose, it became too expensive for them to run. Down went the Egyptian government, after being in power for 40 years. Check out the "Food" column in the table below and you'll have a sense.


The CPI that a population feels when prices move depends on where it spends. In the US, the food spend is 7% of our income. So if the food price index moves from 125 to 225 (an 80% move) as it did in 2006-2008, we would see a CPI impact of about 6%. For people whose food budgets account for 46% (such as the average Pakistani), they would see a CPI impact of 36%.

Since Barack Obama took office, the real price of food has increased about 40 percent.

Combined with Bernanke's ZIRP (Zero Interest Rate) policy -- which makes it extraordinarily difficult to generate income on savings accounts, CDs and money markets -- lower- and middle-class senior citizens are among the hardest hit by the irresponsible deficit spending instigated by Barack Obama, Nancy Pelosi and Harry Reid.

MARK LEVIN TRANSCIPT: What happens when the system collapses?

A caller to Thursday's Mark Levin Show [MP3] had an interesting question regarding the inevitable result of Barack Obama's record-setting deficits.

Curtis: We talk about all of this out-of-control spending, we have the CBO reports, the GAO, the Medicare Trustees, I mean how much time do we really have before...

Levin: Well, the Social Security Trustees report that we have only 11 years, that's all.

Curtis: But the government... the government bubble... the government collapse?

Levin: It's hard to know. Hard to know, but at some point... you can see, Curtis, how they're struggling now. They're having to do these little Continuing Resolutions, they have to lie about how much we're in debt and the yearly deficit.

You can see that they're in full cover-up mode like Ponzi or Madoff. But it's hard to know exactly when [it all comes crumbling down]...

Curtis: What will this collapse look like [when it occurs]? What will we experience?

Levin: I can give some indicators. I don't know exactly what it will look llike. But some indicators will be:

- the seizing of assets... oh, they'll say it's done legally, to get "the rich", to close some "unfair loophole". Including, I believe, and I've talked about this extensively, 401(k) plans and private pensions. There's trillions of dollars sitting there and, in the view of the government, you have that money sitting there because they gave you certain tax advantages that they choose to take away.

- also in terms of programs the government offers, those programs will dry up. You'll start to see that.

- you'll start to see hyper-inflation, where the Fed -- through monetary policy -- will try to keep apace with [Obama's] disastrous fiscal policies.

- you'll see promises that the government made, such as Social Security and Medicare, start to disappear.

What you'll see in a more theoretical sense is a breakdown in the social contract. You'll see that all of these welfare programs were not social service and insurance programs, those were just facades. So all of the false premises and pretexts that were used to develop these massive entitlements, all of the borrowing and printing, will have an enormously devastating effect on our financial system.

And what is our financial system? What is the currency? The currency is not just a means of exchange. It represents the fruits of your labor. It's your paycheck. It's your savings. It's your pension. It's your investment. It's what you use to purchase food and clothing and the basics, energy. The government's in charge of the currency. The government's in charge of valuing it devaluing it.

And so my point is, you will see signs... of more and more aggressive central government... this is one of the reasons you hear me, on and on and on, attack class warfare. Because it's not about class warfare. If they can break down the most successful and productive elements of our society, they're going to break you down.

And when they break you down, you're going to ask for help. From whom? The government. Not all of you, but you get the point. When the thing begins to unravel, it collapses.

I'm not Nostradamus here, but the Constitution was set up the way it was set up to prevent this sort of thing. The people in public office today, the president, almost all of the members of his party in DC, reject limited constitutional government.

The lessons of Argentina are especially relevant.


Thanks to Biff Spackle for the transcript.

The sad truth about Social Security

Please hide this particular article from any young hopenchangers who suffer from the delusion that Social Security will be around when they're ready to retire.

Social security is not earned retirement income, an entitlement nor a benefit.

Many people believe that Social Security is an “earned right.” That is, they think that because they have paid Social Security taxes, they are entitled to receive Social Security benefits. The government encourages that belief by referring to Social Security taxes as “contributions,” as in the Federal Insurance Contribution Act...

...However, in the 1960 case of Fleming v. Nestor, the U.S. Supreme Court ruled that workers have no legally binding contractual rights to their Social Security benefits, and that those benefits can be cut or even eliminated at any time.

Nestor sued, claiming that because he had paid Social Security taxes, he had a right to Social Security benefits.

The Supreme Court disagreed, saying “To engraft upon the Social Security system a concept of ‘accrued property rights’ would deprive it of the flexibility and boldness in adjustment to ever changing conditions which it demands.” The Court went on to say, “It is apparent that the non-contractual interest of an employee covered by the [Social Security] Act cannot be soundly analogized to that of the holder of an annuity, whose right to benefits is bottomed on his contractual premium payments.”

The Court’s decision was not surprising. In an earlier case, Helvering v. Davis (1937), the Court had ruled that Social Security was not a contributory insurance program, saying, “The proceeds of both the employee and employer taxes are to be paid into the Treasury like any other internal revenue generally, and are not earmarked in any way.”

In other words, Social Security is not an insurance program at all. It is simply a payroll tax on one side and a welfare program on the other. Your Social Security benefits are always subject to the whim of 535 politicians in Washington. Congress has cut Social Security benefits in the past and is likely to do so in the future...

Unfortunately for the drones (i.e., the Obama Cultists), the math always defeats the political rhetoric. Always. And the fuse on the fiscal time-bomb is fizzling away, without any of our leaders making the slightest effort to douse it.


Hat tip: R.F.

The 10 Stats You Should Never Show a Baby Boomer

ECB has 35 stats you may want to hide from any baby boomers you know. You may ask: Doug, of those 35, which are... the... 10... most... terrifying entertaining?

10. Right now, there are somewhere around 40 million senior citizens in the United States. By 2050 that number is projected to skyrocket to 89 million.

9. 25 percent of all Americans in the 46 to 64-year-old age bracket have no retirement savings at all.

8. 46 percent of them have less than $10,000 saved for retirement.

7. Elderly Americans tend to carry much higher balances on their credit cards than younger Americans do.

6. Americans that are 55 years of age or older now account for 20 percent of all bankruptcies in the United States.

5. In 1945, there were 42 workers for every retiree receiving Social Security benefits. Today, that number has fallen to 2.5 workers, and if you eliminate all government workers, that leaves only 1.6 private sector workers for every retiree receiving Social Security benefits.

4. Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years.

3. Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years. That comes to approximately $328,404 for each and every household in the United States.

2. State and local government bodies in the state of California have 325 billion dollars in combined unfunded pension liabilities.

1. The total amount of unfunded pension and healthcare obligations for retirees that state and local governments across the United States have accumulated is 4.4 trillion dollars.

Bottoms up!

Good News: More and More Seniors Face Reduced Social Security Payments Because They're Late on... Student Loans

Seniors are rightfully concerned about the horrific damage that Obamacare does to Medicare.

Well, the hits just keep on coming.

It turns out that the government's incessant meddling with the student loan business has not only spiked college tuition prices, but those loans are now slamming seniors in addition to kids.

According to government data, compiled by the Treasury Department at the request of SmartMoney.com, the federal government is withholding money from a rapidly growing number of Social Security recipients who have fallen behind on federal student loans. From January through August 6, the government reduced the size of roughly 115,000 retirees’ Social Security checks on those grounds. That’s nearly double the pace of the department’s enforcement in 2011; it’s up from around 60,000 cases in all of 2007 and just 6 cases in 2000.

Many of these retirees aren’t even in hock for their own educations. Consumer advocates say that in the majority of the cases they’ve seen, the borrowers went into debt later in life to help defray education costs for their children or other dependents.

...Roughly 2.2 million student-loan debtors were 60 and older during the first quarter of 2012, and nearly 10% of their loans were 90 days or more past due, up from 6% during the first quarter of 2005, according to the Federal Reserve Bank of New York. “It’s really a unique problem we haven’t had to face before, and it’s only going to grow,” said Robert Applebaum, founder of Student Debt Crisis, a nonprofit advocacy group in Staten Island, N.Y.

The threat of Social Security cuts adds to the overall financial woes faced by the aging baby boomer generation. Almost 45% of people aged 48 to 64 won’t save enough money to cover basic needs and uninsured health care costs in retirement, according to the Employee Benefit Research Institute. Experts say reducing Social Security benefits could set them back even more.

...Compared to present-day retirees, younger generations are in deeper debt, which means stories of Social Security garnishment could become more commonplace when they enter retirement. Borrowers in their 20s and 30s owe roughly $600 billion, according to the New York Fed. They’re also leaving college with more debt than their predecessors: 66% graduated this spring with debt, and their student loans averaging $28,720, up from $9,320 in 1993, according to FinAid.org.

Th-th-th-th-th-th-at's Obamanomics, folks!


Hat tip: BadBlue.com/Money.

Pass this along to a teenager: this is 'one sick labor market'

Some brutal facts from David Rosenberg as relayed by Tyler Durden.

• The share of long-term unemployment is at its highest level since the Great Depression (42%).

• Fully 54% of college degree graduates under the age of 25 are either unemployed or underemployed.

• 45 million Americans are on food stamps — one in seven residents.

• 47% of Americans are on some form of government assistance.

• The employment-to-population ratio for 25-54 year olds is now 75.7%, lower than it was when the recession supposedly ended in June 2009.

• The number of people not in the labour force has swelled eight million since the recession ended; absent that effect, the unemployment rate would be 12% right now (about the same as President Obama's election chances would be).

• The number of people confident enough to leave their jobs fell 11% in May for the second month in a row to 891k, the lowest since November 2010.

• The ranks of the unemployed who have been looking fruitlessly for work for at least 27 weeks jumped 310,000 in May, the sharpest increase since May 2011.

• The unemployment rate for males aged 16-19 is 27% and for males between 20 and 24 it is 13%. Draw your own conclusions from a social (in)stability standpoint.

• One in seven Americans are either unemployed or underemployed...

...A mere 16% of the 2009-2011 graduating class has found full-time work, while 22% are working part-time. Even those hired from 2006-08, just 23% are working full-time.

According to a poll cited in the NYT, just 14% of high-school grads today believe they will have a more successful financial future than their parents Line of the day, as depressing as it is, comes from an 18-year old: "Thank God I had a buddy at Burger King who could help me out".

According to Rasmussen, Obama's approval rating has dipped to only 24 percent.

In spite all of this, America's young people -- who have been hammered by Obama's destructive economic policies -- still overwhelmingly support the SCOAMF. So you and I have a lot of education to do between now and the election.

America's youth are literally having their future earning power plundered by the reckless, record deficit spending of Obama and his sycophants.

Ephemeral dreams of an ideal society

Can Americans trust the claims of temporary politicians who promise that their grand dreams and intricate plans will solve humanity's most vexing issues?

Consider their track record...

Social Security

THEN: President Franklin Delano Roosevelt, 14 August 1935, Washington, D.C.:

Today, a hope of many years' standing is in large part fulfilled. The civilization of the past hundred years, with its startling industrial changes, had tended more and more to make life insecure. Young people have come to wonder what will be their lot when they came to old age. The man with a job has wondered how long the job would last...

...This social security measure gives at least some protection to 50 millions of our citizens who will reap direct benefits through unemployment compensation, through old-age pensions, and through increased services for the protection of children and the prevention of ill health...

...It is, in short, a law that will take care of human needs and at the same time provide the United States an economic structure of vastly greater soundness...

NOW: Social Security Is Failing Even Faster Than We Thought:

In last year's Trustees Report, the Social Security Administration warned that the program's trust fund was likely to run out of money in 2036, leading to deep cuts in benefits. If that weren't bad enough for anyone expecting to be alive then, a more recent projection from the Congressional Budget Office paints a much worse picture.

This year's CBO report forecasts that by the end of this decade, the combined Social Security Old Age and Disability Trust Funds will be about $800 billion smaller than last year's SSA projections. That's a very substantial drop -- and a sign that this year's Trustees Report will likely bring another downward revision to the year it expects those Trust Funds to dry up and benefits to be cut.

Medicare

THEN: President Lyndon Baines Johnson, 30 July 1965, Washington, D.C.

...No longer will older Americans be denied the healing miracle of modern medicine. No longer will illness crush and destroy the savings that they have so carefully put away over a lifetime so that they might enjoy dignity in their later years... And no longer will this Nation refuse the hand of justice to those who have given a lifetime of service and wisdom and labor to the progress of this progressive country...

...During your working years, the people of America--you--will contribute ... a small amount each payday for hospital insurance protection. For example, the average worker in 1966 will contribute about $1.50 per month. The employer will contribute a similar amount. And this will provide the funds to pay up to 90 days of hospital care for each illness, plus diagnostic care, and up to 100 home health visits after you are 65. And beginning in 1967, you will also be covered for up to 100 days of care in a skilled nursing home after a period of hospital care.

NOW: Medicare’s Worsening Finances: The Other Shoe Drops:

A week ago, the Medicare Trustees issued their annual report, which showed that the program is on the fact track to insolvency. The 2011 analysis projected that the Hospital Insurance Trust Fund (which funds Medicare Part A) will be insolvent in 2024, and the program’s long-term unfunded obligations—promised benefits that are not paid for—amount to $24.6 trillion...

...[new] across-the-board cuts would cause 15 percent of hospitals, skilled nursing facilities, and home health agencies to become unprofitable by 2019. This number would climb to 25 percent in 2030 and 40 percent by 2050.

Obamacare

THEN: President Barack Hussein Obama, 23 March 2010, Washington, D.C.:

...And we have now just enshrined, as soon as I sign this bill, the core principle that everybody should have some basic security when it comes to their health care...

...I said this once or twice, but it bears repeating: If you like your current insurance, you will keep your current insurance. No government takeover; nobody is changing what you’ve got if you’re happy with it. If you like your doctor, you will be able to keep your doctor. In fact, more people will keep their doctors because your coverage will be more secure and more stable than it was before I signed this legislation.

NOW: Obamacare's Broken Promises:

Hard times continue for the Affordable Care Act (aka Obamacare). The administration has scrapped the law's long-term care insurance program, covering nursing homes and home health care. The program was deemed unrealistic. This is a harbinger...

...Writing in The New York Review of Books, [Arnold Relman, the former editor of The New England Journal of Medicine] says that "the law does very little or nothing to address some of the most important causes of the high cost of care and its rapid inflation.” Note: Relman isn't a conservative crank. He's a critic of insurance companies and advocates a single-payer, government-run health-care system.

The ACA, Relman writes, doesn't alter fee-for-service reimbursement... [he is also] unimpressed with the ACA provisions intended to control costs: for example, the Independent Payment Advisory Board (IPAB). It's a group of 15 experts who would recommend changes if government health spending rose too rapidly... Relman also dismisses "accountable care organizations” (ACOs) that supposedly save money through coordinated care by doctors and hospitals. The regulations governing ACOs will be so complicated that there won't be many of them, he writes.

...Many of [the ACA's] promises rest, like CLASS, on unrealistic assumptions. Disappointments loom, and the needed debate is deferred.

We are living in Ameritopia

Mark Levin explains:

The reason I say that liberalism is the philosophy of the stupid is because we can look at what's going around in the country today. If, in your own lives, you were pursuing policies that were destroying your own home ownership, that were destroying your own job, that were creating a massive, impossible debt for your family and your children in particular, you'd stop it. You wouldn't keep doing it!

And yet for the liberal, if it's imposed on you -- and they feel that they can be immune from it -- they're for it. They wouldn't do to themselves and their own family what they're doing to you, and your family, and the whole nation! Take Barack Obama. Does Barack Obama conduct himself in his own, personal affairs, in his family's affairs, as recklessly as he conducts the affairs of the nation? No. Would he run up the kind of relative personal debt that he's running up for the nation? No way.

...So they do to us -- and they do to our society -- what they would never do to their own families. They do not live in their own lives as they seek to have the rest of us live. Or as they seek to have our society conduct itself.

The only question that remains is whether the country can be saved. 2012 may be our last, best chance to save this Republic from the Utopian Statists, whose pursuit of impossible, narcissistic dreams have set the country on a course for national fiscal suicide.

Social Security Administration Misplaces Car Keys Plus One Trillion Dollars, But Mostly One Trillion Dollars

How disconnected from reality do you have to be to believe that an enormous federal bureaucracy -- that can't fire anybody, has no competition, and operates like the DMV -- can effectively run the entire health care system?

Answer: You have to be a Democrat.

The outlook for Social Security's trust fund has deteriorated to an astonishing degree over the past year, new Congressional Budget Office projections show... [The] CBO expects the trust fund to peak in 2018 and decline to $2.7 trillion in 2022 — a full $1 trillion less than Social Security's own actuaries predicted last year.

...Under current law, once the trust fund is gone, Social Security could only pay 78% of benefits. Since older retirees and the disabled would be protected, new retirees would face much deeper cuts to a benefit that is not especially generous to begin with... The average retired worker received a $1,200 monthly benefit last year before Medicare premiums were subtracted.

...Assuming a 22% automatic cut, average earners (about $43,000 in 2012) halfway into a 40-year career would have to set aside more than 5% of annual wages, or $2,150 a year, to replace [the] lost benefits.

Already, the next president will have to address a near-term crisis in Social Security's disability insurance program that CBO expects to hit in 2016 — resulting in immediate cuts for many of the neediest beneficiaries.

...Social Security already is cash-flow negative, taking less in revenue than it pays out in current benefits. CBO sees the program's $48 billion cash gap in 2011 rising above $100 billion by 2019... And depressed Treasury rates mean smaller interest payments on the trust fund's official balances.

Like night follows day, bankruptcy awaits each and every one of these Democrat-created programs, all operating outside the Constitution (not to mention the laws of arithmetic and common sense).

Obama Reelection Campaign Thinks You Can Be Bribed For $2.85 a day...

...while robbing the Social Security Trust Fund. Because that's what "the Payroll Tax Cut" is: it's reducing the funds available to Social Security, which is already speeding toward insolvency.

I just received this email from the White House, marketing the president's raid on the Social Security Trust Fund:

The email includes touching stories of families that really, really need that $2.85 a day.

Curious how Democrats never consider the next generation of Americans who will have to repay these debts -- this money borrowed from the future -- that were used to pursue a reelection campaign for a temporary politician.

And notice President Obama's cynical use of official White House email infrastructure to wage his reelection campaign.

Pretty sneaky, eh?

Well, I have news for the president: $40 for two weeks is a "big deal", especially for the next-generation -- which will have to repay this borrowed money with interest.

Barack Obama, Emperor of Insolvency

The lede in today's coverage of the U.S. deficit struggle ("Obama reopens debate on US stimulus") at the Financial Times is troubling on two fronts.

Barack Obama sought to reignite the debate over an ­economic stimulus package on Tuesday, demanding that a bitterly divided Congress pass an extension of payroll tax cuts before the end of the year.

“We still have to give the economy the jolt that it needs,” the US president said on the campaign trail in New Hampshire, a day after a bipartisan committee failed to agree on a $1,200bn deficit reduction package. He added he would do “everything in his power, with or without Congress”.

Consider:

• Fact: the "payroll tax cuts" simply accelerate the collapse of the Social Security system

• And what kind of president talks about operating "without Congress"?

Our beloved Dictator-in-Chief knows that America is insolvent, that Social Security is headed for collapse, and that Obamacare simply hastens the implosion.

But, some believe that was the plan all along.

Obama’s Demagoguery Another Loser in NY-9 [Dan from New York]

Dan from New York:

Overlooked, or at least given short shrift, in the analysis of the Democrat’s stunning defeat in NY 9 has been the age of the average voter. It’s relatively high and the elderly make up an usually large percentage of the electorate in the district.

The losing Democrat, David Weprin, tried to turn that to his advantage by incessantly “warning” that Republican ogres wanted to gut Social Security/Medicare benefits.

Judging by the results, the tactic "flopped in spectacular fashion." And if it won’t work there, it won’t work anywhere. That’s is more bad news for a floundering president who is using “Mediscare” as one pillar of his reelection strategy. It should also send a message to Republicans that there is a lot to be gained by doing what’s right, as long as they take the time to explain their policies to the American people.

Mark Levin: Obama's Hypocrisy Is Off the Charts @MarkLevinShow

Mark Levin:

The president, by God, he's got resolve on one thing: he's going to Martha's Vineyard whether you like it or not!



Nine days! He "wants to be with his children."



Really? Aren't they in the White House? Listen to these idiotic arguments.



No, he wants to be on Martha's Vineyard with the beautiful people; the millionaires and the billionaires. And the private jets and the yachts! This is what kills me: the hypocrisy of how this man lives!



He lives a life of luxury, which you and I subsidize... while he attacks a life of luxury by people who pay for themselves!



He takes the biggest corporate jet in the world -- in terms of its cost, operation and construction -- Air Force One, there's gonna be yachts, millionaires, billionaires. They're going to be eating all kinds of food with salt, fat and all the rest of it, wonderful desserts, cheesecake, chocolate, mousse -- you and I, were supposed to act like we're living in hovels.

The children on the Left enjoy screeching about corporations, "the wealthy" and the high-achievers who have made something of themselves.



What they fail to understand is that the biggest, most powerful, most corrupt and lawless "corporations" in the world are governments.



Case in point: Democrats have constructed the most gigantic Ponzi schemes in world history: Social Security and Medicare, to name but two. Had they done this in the private sector, they'd be serving life sentences in a cell, sharing a bunk with Jethro.



But somehow it's noble if they're in government and they're bankrupting your children and grandchildren with lawless, unconstitutional and mathematically impossible schemes!



No, they're not noble. They're all hypocrites. Every last Democrat.




Linked by: Ace o' Spades. Thanks!

Hanson: the Collapse of Our Failed Welfare State Will Purify Us

Historian Victor Davis Hanson is far more optimistic than I regarding the aftereffects of the impending debt implosion here in the U.S. We are approaching $15 trillion in national debt, which does not even take into account the $60+ trillion entitlement programs that will soon overtake our ability to pay. In that light, Hanson asks:

• "Should those on welfare who have more than three children still qualify for increased assistance for each additional offspring?"

• "Does the affluent class deserve mortgage-interest deductions on second and third homes?"

• "Should U.S. troops subsidize the defense of an allied and rich Germany or Japan 66 years after World War II?"

Hanson observes that the aberration of deficit spending will soon result in a return to rationality:

...the dogma that a teenager with dyslexia or a mature man with a bum knee will receive years of Social Security disability benefits will be assessed as an historical aberration of the last twenty years. A decision by an insurance company or government agency that a 62-year old must settle for arthroscopic surgery on a chronically torn meniscus rather than a complete knee replacement will not be interpreted as social cruelty.

Almost everything that can be said has been said about illegal immigration — and about the sustainability and morality of millions of Mexican and Latin American nationals crossing the U.S. border unlawfully and plugging into the American entitlement system. But an insolvent state like California, despite the liberal protestations, cannot continue to house 50,000 Mexican nationals in its penal system at a per capita cost of nearly $35,000 a year, or to extend free tuition in its broke university system to those without legal residence, or to provide social services to illegal aliens that may well cost the state nearly $10 billion a year. Even to suggest such limits was once considered illiberal. Now, not to state the obvious — that those without education, English, and legality have been expecting far more than what they could contribute in return — will be considered derelict.

Do the almost 50 million people now on "food stamps" all truly need them? Are they all starving to death? Is the program fraud-free and used only to buy bare necessities?

Is 99 weeks of unemployment (or more) reasonable?

Can someone who owns an iPhone, a big-screen television, a laptop computer, and a comfy leather couch really be called "poor"?

We can no longer afford the liberal philosophy of redistribution. Hanson concludes that there "...is a certain brutal honesty about this debt crisis. It is slowly beginning to force us to see the world in the tragic way it is, rather than in the therapeutic way we dream it must be."

But as Greece showed us -- and the public sector battle in Wisconsin hinted at -- civil unrest could be on the horizon rather than a becalmed expiation of liberals' sins.

Hope for the best. Prepare for the worst.


Hat tip: Pundit & Pundette.

Well, THESE look like good investments for the Social Security Trust Fund™, or Lockbox, or whatever the Democrats call their Ponzi scheme now

It would appear that the shell game known as the European Union is nearing an end. Please consider: "Greek Two-Year Note Yield Surges 213 Bps to Record 35.19%, More Italy Stock Suspensions".

It's getting very scary out there. First there has been an unsubstantiated rumor that Spanish PM has resigned based on an El Pais editorial, and then we have the fact that Greek 2 year bonds have just collapsed by another 2% to an all time record 35.19%. The cherry on top are reports that Intesa Sanpaolo and some other volatile bank shares are suspended after continuing their last week plunge. One day soon the entire European stock market will just shut down and not reopen (which will naturally simply be an excuse for the US HFT lobby, which now feels unfairly attacked for being a malicious parasite, to levitate the Russell 2000 to unseen levels).

As usual, this is worth a thousand words:

In short, the market believes that Greece's promises to pay its immense debts are worth roughly the value of the Zimbabwean trillion-dollar note.

Kind of like Social Security's promises to pay. Which reminds me:

How is it that Bernie Madoff is in prison for life, but the enablers of a Ponzi scheme three orders of magnitude larger -- Barney Frank, Nancy Pelosi, Harry Reid and Chuck Schumer among them -- are not only free as birds, but still grasping onto the reins of power with white-knuckled death grips?