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Paul Ryan and a Republican Non-budget

February 11th, 2014 · No Comments · Budgets, Economics, Politics, Populism, Social Security, Taxes

We must address a current issue on today’s Neo-Conservative agenda…the Paul Ryan Republican Budget.

Paul Ryan announced a Republican Budget on March 12, 2013 and it fell with a clank on the floor of the House. It is very clear at the outset that this is less of a budget than it is a political statement to the rich, Right-Wing backers of the Republican Party. Nonetheless, it is a statement of what Republicans feel is a legitimate budget proposal. Of course it won’t work. It is merely a political statement to financial supporters.

First Ryan point:
– A balanced budget achieved in a decade by not allowing the government to spend more than it collects in revenue, which Republicans set at 19.1% of gross domestic product. By their measure, the federal government will spend $4.6 trillion less over the next decade.

Response:
Two strong revenue sources are missing in this budget to balance any budget in the next decade. The first is higher taxes on everyone…to achieve a 20.5 or higher revenue base. We need to virtually double income tax revenues. That’s just the way it is. It is the result of electing a President (Bush) who was an irresponsible idiot and a Vice President who was a world-class criminal.

Let’s be clear about revenues. We need more than merely income tax revenue. We need tax policy change. The current changes in tax policy which were introduced starting in 2001 and were again modified in 2003 have caused a huge hole in our finances. Because these policies were supported by the rich, they gave the Right Wing two specific political advantages.

First, because the deficits would be bigger because of their tax cuts (otherwise, the government is actually smaller under Obama than it was in 2001) the Right could claim that we needed “austerity” which means basic cuts in Social Security and Medicare and Medicaid. Those costs were fine under Clinton. We balanced the budget and had a surplus under Clinton. But we gutted tax revenues under Bush.

The second advantage is that it is harder to raise taxes than it is to cut them. So the Republicans have been able to persuade a big segment of the American people that we can cut our way out of debt. We cannot. We can cut some things. We have already done so in the last two years. But we cannot cut too deeply and keep the same kind of social system we have today. We can become a Third World Country, with no investment, a tiny upper class and a huge lower class an no middle class.

The solution is somewhere in between. We need to raise taxes high enough on the big income earners so that to actually take home that income (say, perhaps, anything over $500,000 per year) rather than pay Uncle Sam half of it, they must invest it and take the profits as capital gains, taxed at only 25% (rather than the current 15-20%).

Then, with growth and lower unemployment (it can’t go much lower than 5% any longer) we can start to balance the budget and create new industries. We can create industries again. Where there were 5,000 jobs there will now be only 500. That is technological progress. But we can eventually regain the 5,000,000 jobs lost under Bush.

And finally, we can increase our revenues as many other solvent economies have done, by not giving away our natural resources to greedy billionaires who use the money against the Middle Class. What we should do, although it may sound harsh to some, is simply to remove national resources from those who have exploited them until now and return them to all the people.

All these things will not only return our country to a balanced budget, it will pay down the national debt and make the United States the richest country in the world, only with an appreciably fewer billionaires and a great many more members of the middle class, earning between $40,000 and $200,000 per year. Republicans like Ryan talk about jobs. But jobs require businesses, even industries, and businesses require investment and investment requires support from those with the greatest amount of Capital. Those investment companies are not acting to develop new corporations here in the U.S. They are developing those industries silently, obscurely, and in our opinion, somewhat traitorously.

Second Ryan point:
– Authorizes construction of the Keystone XL pipeline.

Response:
This is somewhat laughable. Why this would even be in the Ryan-Republican budget shows how shallow and political a statement it is. Why not developing oil in ANWAR? Whatever happened to that? Well, it is simply not a current political argument. The Keystone Pipeline, whether it is developed or not, will never be a major factor in our economy unless it ruptures and somehow seeps into our water system in the West. Only then will it be a major factor. It creates only temporary jobs and even then a few compared to the potential damage it could cause to our water supply. It creates jobs in an industry which ten years from now will be on its way out or we will all be too busy with the effects of climate change to notice.

Third Ryan point:
– A full repeal of Obama’s health care law.

Response:
First, this is not going to happen. Obamacare will never be repealed. So it is irrelevant. Second, the Affordable Care Act has already begun to “bend the curve” on health care costs. Since 2009, the rise in health care costs has been cut in half. And that was before 2014, when we will now have the health insurance exchanges bringing much more cost control into the system. Now, with some small companies, with 50 to 99 employees, throwing their employees into the health care exchanges and with some other categories being tossed into the health care exchanges, the public is very soon going to begin to demand that states get involved. Even in Florida, where the gigantic crook and scrooge, Ric Scott, one of the most evil men on the planet, has denied the poor health insurance, the worm is turning. The basically moronic populace of Florida, who elected one of he greatest health care fraud artists on history as governor, is now reconsidering. Of course it took the realization that all their poor relatives would be coming to them for money to pay health care bills and that there are  more white people in poverty than blacks before they woke up. Apparently in Florida, if you’re not being racist, you’re just not holding up your end of society.

About 6 million people, many of whom could not get health care at any cost even remotely affordable to them, now have health care and many, especially in the blue states, at very reasonable costs. Remember, as we move farther and farther towards “government” health care, as the Republicans like to call it, that Medicare and VA administrative costs are at most only about 5%. Private industry overhead is 30%. When you have health insurance industry CEOs making $14,000,000 per year on average….you know you are going to get a much better deal from a system that is more like Medicare.

Next Paul Ryan point:
– Support for new laws to limit medical malpractice liabilities.

Response:
Again, a point so laughable that it begs the question…is this a serious proposal? In malpractice suits, which comprise only .4% of all medical transactions, only 42% of the cases are won by the plaintiff and the average settlement is less than $500,000. Once the Affordable Care Act is fully in place, there will quite likely be an amendment that will take care of all medical disputes.

This is what has happened in all other countries with universal health care. When the financial considerations have changed, that part of tort law will change also. Tort law is about compensation. Once government is more involved in medical care with all citizens, there will be no need to have huge lawsuits because there will be no fiscal danger to citizens. Citizens basically only want compensation for potential costs tat could leave them destitute. Over 500,000 bankruptcies per year for medical reasons attest to that. Those things will go away as will large torts for medical malpractice. Because medicine is a business here in the United States, citizens and attorneys treat it as a business. Businesses have liability insurance. The more the risk of large lawsuits, the more a company must pay for liability insurance. Just because a company employs doctors doesn’t make them any less liable for business mistakes. ACA will eventually do away with all that.

Finally, it should be pointed out that, in a report by all state insurance commissioners, malpractice awards were determined to have no relation whatsoever to insurance rates for doctors.  Only .46%, or in other words less than one case out of 2000 ever results in any verdict for the plaintiff. So, apparently, this is a battle between doctors and their insurance companies and so far the doctors are being hoodwinked. This is simply a bogus issue, created by the health insurance companies to raise rates.

Next Paul Ryan point:
– A fundamental overhaul of the Medicare system for future retirees. Starting in 2024, seniors would be given a federal subsidy to purchase health care from the private market, instead of the guaranteed benefit system that currently exists. It also calls for wealthy seniors to pay more for premiums.

Response:
Ryan’s plan would pretend to lower the national debt by shifting 68% of the costs of Medicare to patients and away from providers. Currently, on average, Medicare patients still pay about 25% of costs, which for retirees who often live on Social Security , is a substantial amount. Medicare privatization is not going to happen. What is going to happen is this: Medicare, Medicaid and VA health care will eventually be drawn into the Affordable Care Act over a longer period of time and we will have national, non-profit health care for everyone. The problem with health care costs is very simple. CEOs of health insurance companies are making an average of $14 million a year, and their senior executives are making similar wages. They add about 12% onto health insurance costs. Once we do away with health insurance, which will take a few years and other similar wages to hospital CEOs, pharmaceutical CEOs and other senior private health care executives costs will drop dramatically. Nobel Prize winning economist Kenneth Apple said many years ago that health care is not a good private business model because there is a disincentive for success in taking care of sick people.

Elevated wages in the health insurance industry amounts to about 40% of health insurance costs which are 30% of your bill. Sooner or later there will be a Democratic House and Senate and President. When that happens, health care costs will drop by about one-third and health care will cease to be a profitable business.

Health insurance is a profitable business now only because companies have been able to pick and choose their customers from people who are healthy and because they have been able to simply disallow many charges or cancel unprofitable policies at will.

Next Ryan point:
– A transfer of power to states to determine how Medicaid and other funds should be spent on programs, including food stamps.

Response:
We already have fundamental federal-state relationships that work very well.  We have discovered now that many Southern states have gone into hiding but remain basically Segregationist in political viewpoint. Laws on the books now require that, rather than getting over their racism, they hide their true intent in laws like, “stand your ground” laws meant to allow whites to kill black people, and voting ID laws that restore the old Black Codes and their poll taxes. We need a stronger, not weaker, Federal government. It is pretty clear that when governors turn down 100% Federal aid to the poor for health care, that they are racist pigs who know that most of those people in those states will be Black. We still have about 20 states whose Republican governors act like adolescent children.

Next Ryan point:
– An increase in defense spending over current law.

Response:
Another reason to wonder if this is a budget or a “non-budget” political gesture.

We already spend more than the combined military budgets of all other countries in the world…all of them…combined! By a wide margin. This point is so idiotic that it doesn’t bear any further discussion. We have over 70 different military locations around the world. We cannot even get rid of a military fighter aircraft—that the military said that it does not want–because the manufacturer deliberately put the manufacture of its components in every single Congressional district or state.

Next Ryan point:
– A plan to transform the tax code to simplify it from seven individual tax brackets to two, as well as a repeal of the Alternative Minimum Tax and a 25% corporate tax rate.

Response:
We do need tax reform. And here it is. Tax any personal income over $500,000 at 50% on the next dollar and up with no deductions except for business investment within the United States with all full and part-time employees within the United States. The tax rate on people with a million and up should be 70% on all income over $1,000,000 per year with the same stipulation on deductions.

Next, U.S. corporations should pay one dollar for every ten dollars they make as American corporations from money that they earn here in the U.S. Market. In addition, they should pay at least a 5% import tax on any product they make abroad and import back into this country for sale. Capital gains should be at 25% and inheritance tax should be a standard 25% on everything over $5 million for singles and $10 million for couples. No deductions.

Those tax changes plus just the current pending budget cuts, no more, will move the U.S. back into surplus. If we do not hire another bumpkin like Bush or Ryan we should be good to go for another 50 years without budget cuts.

Next Ryan point:
– A requirement that the president and Congress offer respective proposals for the long-term solvency of Social Security.

Response:
We do not need to make complicated changes to Social Security. Social Security can be made solvent by simply raising the payroll deduction limit to those making $200,000. That will fix Social Security for 75 years.

We  should make an important change Social Security over time. What we do now is that each individual pays Social Security out of payroll—basically insurance premiums—that go into a self-funding operation that pays people retiring now and before now from the existing fund. Republicans, playing on the dim wits of the weak minded call it a “Ponzi scheme.” The reason they can even make that accusation is the astonishing fact that during Bush’s tenure, they took the country so far into debt that they don’t have the money to return to the fund that we all paid into. They borrowed, or stole, that money to pay for government expenses that were not paid by tax revenues, which they had cut twice, during very expensive wars.

The way the system is supposed to work is that people from 1980 were paying for people who retired in 1970, knowing that their Social Security payments would come as a result of more payroll deductions as the population of the country grew and more people paid into Social Security. There’s a name for that and it is not “Ponzi Scheme.” It is called insurance. You pay premiums so that you can share in a larger pool of money than yours alone when you need it.

Between 2001 and the end of 2009, the Republicans spent more than they took in by $12 trillion. Some of that $12 trillion is owed to you. Interestingly, the Republican “Ponzi scheme” was to spend three times as much of your money as came into government. There were two tax cuts and the costs of two wars. Clinton, remember, left a government not only in balance but with an annual surplus.

So the Republican idea has been to blame people who need Social Security—which has always taken in more than it paid out, leaving a huge accounting surplus, not debt. So you are being blamed for wanting the “entitlements” you paid for, and are entitled to and have never had to borrow from other departments—in fact it is illegal to do so.

To give an idea of Social Security revenues and costs, according to the SSI data itself, in 2012, Social Security took in $731 billion and paid out $645 billion. This has been going on forever. So the net amount that has been accrued is $2.7 trillion in excess of what is necessary to pay out. The problem is that government has not kept your Social Security trust fund separate from the overall treasury funds. As a result, with government deep in debt, unless Social Security funds were paid first or had first claim on Treasury revenues, Social Security would not be paid.

This is why increases in taxes and increases in revenues from national resources are so important. If we try to cut government to the size that our current revenues can afford, we will be living in a country poorer than Brazil or many Latin American oligarchies. Only the rich will survive and they will survive and grow richers.

But remember this one very important fact. To this day, the Social Security funds paid in over time are more than those paid out by a wide, wide margin. Your money should be there. But the government (the Republicans under Bush) literally stole your money and want you to take a cut in benefits so that their rich friends and military contractors will not have to pay back the money they were given under Bush and Cheney. That is why no one under $100,000 in income annually should ever, ever vote for these current Republicans. You are basically voting to increase the wealth of the rich and to cut your retirement income.

What we really need to do is make it a real retirement program. Part would be savings and part would be stocks. Now…What we need to do is take a small tax on investments or a small tax on natural gas and use it to fill the gap in Social Security to convert it to a retirement program. That tax, which could be expired when the Social Security fund is full and paying forward, would allow individuals to actually pay into their own retirement account, a annuity on retirement, but one that would not be passed on as part of their estate.

As a result, within 30 years, not only would Americans have annuities that would pay at least 50% more than current Social Security payments adjusted for inflation, but the United States would have the strongest bond market ever known, would be the richest and fiscally strongest government in the world, more than China, Europe or any other country per capita, oil rich or not, in the rest of the world.

We need to not only change tax structure to make it more friendly to U.S. business development and less friendly to the idle rich but we need to change our entire thinking about government and really take on those principles that Lincoln spoke of—of the People, by the People and for the People.

 

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