Who's Taking Care of Grandma?

Somewhere around Scottsdale, Arizona four senior gentlemen are finishing their putts on the 4th green on an early Tuesday afternoon. It’s sunny…of course. They’re growling about the safety of their Social Security payments and the obvious government conspiracy to take those payments away, probably through taxation. Later after the game they’ll have a couple of beers at the clubhouse, mount their Acuras and ride home to wait on dinner. At the same time, somewhere just outside Columbus, Ohio a couple in their early 70s sit at the kitchen table in their small apartment trying to figure out when they can afford front tires for their 10 year old Sentra. Each golfer (with his wife) receives about $26,000 a year in Social Security, representing 30% of his current income. The Columbus couple receives $15,600 annually which represents 91% of their total income - they worry even more about their Social Security.

Social Security, your politicians explain, is fully funded through…well…a run-out-of-money date, no-viability date, buy-the-ranch date, or whatever date floats, so much so it isn’t worth remembering. Just assume it’s some time out there, so they say, which is also so much horse poopee. The reality is that it isn’t funded at all and hasn’t been as long as this nation has run deficits and accumulated debt. How can that be, you ask? They’ve got that account with those trillions of dollars of bonds in it, that bastion of security – the Social Security Trust Fund!!

The Social Security Trust Fund was born in 1983 because the original concept of Social Security in the 1930s as a pay-as-you-go system was no longer functional. It started well, but ended up bad, I guess when nobody was looking. Benefits currently paid exceeded receipts and when you ran the numbers out over decades of aging workers, they got pretty ugly to look at. Alan Greenspan spearheaded the policy to increase payroll taxes essentially replicating the early years of Social Security when current revenues exceeded current payout, but this time we decided to put the surplus in a nice safe place to fund projected claims as the population grew older. Ergo, the Trust Fund. Moreover, it preserved the concept (dare I say: illusion for the conservatively minded) that Social Security was some kind of paid in retirement plan - not the horrid W-word plan. Of course, this contrived concept was not reality; primarily because the nation’s low tax/ high spend mania could not be abated.

To give you an example of this shell game: say you wanted to fund your own retirement plan, but as luck would have it the idea of doing so would put a crimp into your lifestyle, especially when that lifestyle exceeds your income. But, being sensible and thinking of the future (which was looking pretty bleak), you decide to go ahead and put 10% of your income into your retirement plan account. Then you realize that your flat screen is way too small, the green fees down at the club just went up, you know you’d feel a whole lot safer if you drove a Hummer, and all those plans are in jeopardy because you’d be short on cash. Then you come up with a great idea. You can fund your retirement with IOUs…with interest! Now you’ve got this great retirement plan, with great interest bearing notes in it, you can even pay the interest to yourself with more IOUs, and you still get to buy all that crap you can’t live without. Does it get any better than that? One small problem: when you want to start receiving those nice fat retirement checks, you’ll have to keep working to pay for them.

National debt is simply and purely nothing more than deferred taxes (which includes fees and divestiture of public assets). There is virtually only one way to eliminate debt without the transfer of real assets (taxing), and it’s not default. A nation cannot really default, at least not American style; there is no international Chapter 11. The debt doesn’t go away. People just stop lending you money. The only real way to dodge paying it all back is by devaluing what you owe, i.e. inflation. When a $100,000 Treasury bond buys you one quart of milk the Treasury is pretty much out of debt. As it happens, as a citizen and taxpayer you’re pretty much out of debt as well. Of course, there is also a lot of other really nasty stuff that goes along with that - but let’s not dwell on economic Armageddon.

Social Security (funded through whenever) is comprised then of deferred taxes, essentially the same if there was no Social Security Trust Fund at all. We’d either cover the tab on Social Security (and OASI) by taxing the bejeebies out of subsequent generations or (as in the current scenario) taxing the bejeebies out of subsequent generations to pay off the debt - sounds kinda similar to me. Of course we could continue to borrow more and more, but that boat ain’t gonna float...not without taking a broadside from the inflation torpedo.

The only way to deal with Social Security and all so called entitlements in which future benefits are unfunded is to begin to accept what it is and what it has always been since its inception. Someone who bends to the left might call it welfare; someone who bends to the right might call it insurance. It’s the same either way.

Our politicians enacted and we have subsequently accepted that, as a nation, we don’t want people, who because of age or health can no longer work, to be left in the streets to rot in public view. Historically that was actually the case, especially in the early immergence of urban industrialization. Social Security, even with our chest pounding raw dedication to free enterprise, was created during a brief, admirable embrace of humanity. Yet very soon it was subverted into a notion of a personal investment, by those who opposed it from the outset.

Personally I like to call it insurance (does that mean I lean to the Right?). No one can project who is ultimately subject to misfortune. Some perhaps by chance, some by their own hand, but what difference does it make? By paying into a concept of spreading the risk, as we should be doing with healthcare, we cover ourselves, our parents, and our children. With any luck at all we may never need a penny of it, and when that’s the case we shouldn’t get a penny.

The solvency of Social Security should be attained by continually reducing the projected unfunded benefits to those whose needs don’t meet its purpose. There ought to be set target limits on benefits, with benefits providing an honorable lifestyle. Using the Tax Code, Social Security payments should be taxed at rates up to 100% once income reaches and exceeds those levels. There could be some minor means testing of benefits, but it is still reasonable that those who paid in more should still receive higher benefits, since their qualification to receive benefits would presume a greater lifetime drop in living standards.

It should again be pay-as-you-go and be funded through a flat tax, as it currently is, but that tax should not have income limitations. Another dumping on the wealthy, you say? Hardly. The economic and social stability of a society always has and always will benefit the wealthy most. That’s because it increases predictability, which is the cornerstone of investment.

My Pool

I hated my pool.
I didn’t want it, it came
With the house, laying in the
Back yard like an old
Slobbering dog, exacting
Squeals of delight from my
Young children, humming and
Gurgling a ditty of “feed me
With your fortune” and “caress
Me with your time”.
And I relented,
Seduced by images
Of shared joy and clear, warm
Nights where light breezes
Cool my wet hair and I am
Near weightless of care. But
The years passed and I did not
Count on the winters, the
Fallout of nature’s endless
Cycle of death to life and
Back to death again. And I,
Immersed in the struggle to
Keep the waters clear, felt no
Longer capable of finding the
Delicate balance between a
Chemistry of desire and the
Tension that suspends debris
In places I could hardly reach.
I wanted to cover it, permanently,
Or fill it with something
That blended with the landscape.
Perhaps become a place
Where I could plant seeds, seeds
That said “feed me with your
Fortune” and “caress me with your
Time and I will grow for you”.
And in the spring, I did.
With great machines and trucks
Of dirt, it vanished from sight.
It no longer waits to be cleaned and
The shriveled brown leaves of fall
Blow across it unhindered.
It is gone, or good as gone.
Even if the wet earth of winter
Sinks ever so slightly in what was
The deep end.

Is Anybody There? Does Anybody Care...?

…“Does anybody see what I see?” Those are lines in a song from the 1969 Broadway musical 1776. The actor playing John Adams sings this soliloquy lamenting why members of the Continental Congress can’t see what is so obvious to him, namely the need for independence from Great Britain. There are times when any of us might arrive at a conclusion that seems both obviously correct and contrarian at the same time. Later, more often than not, additional information can have us viewing things differently, perhaps even causing a touch of chagrin. Don’t you hate that, when things appeared so certain?

I currently find myself burdened by such a view and have seriously struggled to find reasons why that view might not be correct. I haven’t found any…at least not yet. I’m talking about Health Care in America. I have written about it previously, but, frankly, it cannot be brought up enough. It is the single most import issue in the United States today, because it impacts so many aspects of life simultaneously.

It is the single biggest expenditure for the Nation’s people, dwarfing Defense. It’s the single biggest hindrance for freedom to seek employment. It is possibly the most inefficient system of any kind (based on size) in the history of modern man. It’s the single biggest inhibitor for small business expansion. It is a major cause of disabling anxiety for the middle class. It is the single biggest transfer of wealth in the history of this Country…or any other country. I’m not making this up. Currently $1.8 trillion annually comes out of your pocket (directly, in taxes, public debt – which is only deferred taxes - or for you by your employer) and ends up…well, somewhere else.

Yet the negative nature of this system in its entirety is nearly oblivious to large segments of our population. More amazingly, there are segments which have been convinced to actively support this System against their own best interest.

The wealthy can self-insure and since they are (unwittingly or not) the beneficiaries of the transfer they are hardly inclined to admit what is happening. Their surrogates in Congress will repeat that we have the best health care system in the world, over and over. The employed insured are annoyed but at the same time blinded by not being able to understand the true cost of what they’re paying. The poor have little incentive, because they can tap into existing welfare and have little (materially) to lose. The elderly actively resist change because they already receive universal coverage and are frightened by those who say change will take that away. The young (those say 18 to 30) for the most part are comatose on the subject, primarily kept unconscious by their natural good health.

The opinion of the wealthy will not change; moreover they will do whatever it takes to retain the status quo. The employed insured, most notably working Conservatives, will not challenge the System, unable to recognize their own deleterious behavior, even as they unload every bullet they have into their own feet. They are too malleable by use of fear. It is for the youth of America that I’m writing this piece. They are the only ones who can effect change and they are ones paying the price right now, by the accumulation of extraordinary debt and lost opportunities. They should be shouting from the roof tops or stampeding in the streets. Is anybody there?

The universal dispensation of health care cannot exist in a large modern economy today as a for-profit, free enterprise system…period. It might appear to work if you’re willing to give up the universality. You’d have to let a segment of your economy go without health care regardless of their desire to get it. More metaphorically, you have to let people die in the streets, so to speak.0

Yet even then it wouldn’t work effectively or efficiently. There is nothing in a for-profit health care system that can control the cost because, in economic terms, there is almost no elasticity in demand. That means individual demand for health care services does not drop no matter how high the price goes up. Total demand might drop simply because people can no longer afford health care, fall out of the system and die, but for those paying with their remaining assets the costs would continue to spiral up. The whole concept is not self-sustaining and it is ripping apart the fabric of our nation. Does anybody care?

A young person might ask what is so different now compared to decades past…a lot actually. First and most critical, the population of the United States has more than tripled in the last 100 years. Modern medicine as we know it now is relatively new. The technological changes that have transformed medicine (micro biology, pharmaceuticals, genetics, and numerous others, for example) have mostly occurred during the lives of living generations.

Further, historically through most of the 20th century, the practice of medicine was mostly non-profit. Most doctors worked independently in conjunction with hospitals that were publicly or charitably owned. The massive change toward capitalization of health care with the rise of professional corporations and huge hospital corporations has taken place mostly over the past 30 years. The bones of the beast became the medical insurance corporations, and the life blood of the beast is debt, public and private.

No other large advanced economy in the world has had this experience. Universal public health care in Europe and Asia is as old as the medical industrial complex is in the United States, most originating in their current form just after World War 2. Canada tried the American approach but soon realized the obvious and converted to universal public health care in the early 60s. 

Now Americans pay multiples of what other modern economies pay, on a per capita basis, for health care that barely rates above third world countries for the nation as a whole. And even with all these resources spent, the fear of being turned out on the streets by the insurance companies due to a job change, or contracting a disease, or having an accident, and end up running out of assets pervades the middle class like a perpetual black cloud. Can anybody see what I see?

There should be a revolution between the young people of American against those who are on the receiving end of that annual $1.8 trillion transfer. When Mitch McConnell, John Boehner, and Eric Cantor endlessly repeat the phrase “government takeover of health care” to describe the recent health care law (that only modestly modified the health care insurance industry) they are using fear to maintain the status quo. 

Such should be heard as clarion call for American youth to demonstrate against the hypocrisy. Young people did it during the Vietnam War because they felt personally at risk. Well…they’re at risk now, as we all are. But the youth of America will bear the brunt of the disaster, the longer they wait to show up and open their eyes.