Obama Using Accounting Cheat to Hide $761.5 Billion in Deficit Spending

Posted on February 21, 2013 by Jim

Federal Times reports an OPM announcement that the unfunded liability for federal employee pensions is $761.5 billion– the size of a TARP bailout.

Today private companies, like Ford, have been pouring their profits into pension liabilities instead of new jobs, new products, and new productive infrastructure.  In contrast, the Obama Administration has been failing to account for the federal government’s growing debt by not “paying” into worker pensions.

If Obama was running a private company, his deceit (lies, damn lies, statistics, and government accounting) and cheating of employee pensions would have him burned in effigy by unions across the country and in the evening news.  However, since this is the government, he is cheating the taxpayers, evading the law limiting federal debt, and lying to the American people about how much his Administration is really spending.

Are you cool with that?  Can the President spend an extra $761.5 billion off the books on top of all the other spending and it is no biggie for you?

To understand how these accounting shenanigans amount to corruption benefiting unions and other factions backing the Democratic Party, look at what assets back the funded aspect of the federal government employee pension system…IOUs from future taxpayers (some too young to vote) in the form of government bonds.  The Obama Administration is so corrupt that it will not put more IOUs into the pension funds, because then we selfish citizens would know how much his Administration is actually spending to benefit his political supporters; instead Obama is increasing federal liabilities and not reporting it as an expense.

To the point, the Congress will have to increase the federal debt ceiling by almost a trillion dollars just because of these unfunded pension liabilities, which make promised spending cuts look like the ephemera that they are.

Should President Obama’s willfully corrupt misreporting of true federal expenses and liabilities trigger a downgrade of federal debt by S&P and the other rating agencies?  Will the courts protect the rating agencies’ free speech?

What are the lesson’s to be learned by selfish citizens?

  1. Government control does not eliminate risks; see frequent government cover ups regarding the consequences of its policies created by our present politicians.
  2. While actors in the private sector behave responsibly by fulfilling agreed commitment to employees and planning long term, our current politicians do the opposite.
  3. Especially, in the Obama Administration, our federal government has become so corrupt (think modern spoils system) that it is becoming more dangerous to our polity than the media is willing or able to identify.

Extra Point:  See problems that Illinois (Land of Obama) is having with its underfunded state employee pensions and the downgrading of that state’s debt.

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Raising the Debt Ceiling, a False Controversy

Posted on February 20, 2013 by Jim

In January 2013, our Congress voted to temporarily suspend the federal debt ceiling [HR 325].  This political grandstanding was designed to stick President Obama with the tar baby of our federal debt and distract Americans from that fact that Congress is irresponsible for our current public debt growth.

As this issue of the debt ceiling will be coming up again very soon, let’s look at it for the moment in the context of a statement by U.S. Rep. Mo Brooks (R-AL).  Before I examine Brooks’ statement, let me praise him on two points: (1) he said that he would vote against the bill if certain conditions were not met and in the end he was consistent, and (2) instead of simply making a media statement, he actually has sponsored legislation to further the policy that he champions [see HR 371 and HR 443, Protecting America’s Solvency Act of 2013].

In his statement opposing Speaker Boenher’s debt ceiling scheme, Brooks made three points:

  1. Today’s debt is a national security risk;
  2. Continuing deficits at the present level are unsustainable; and
  3. He would vote against the debt ceiling increase unless: a) Congress passes a balanced budget amendment, or b) sizable spending cuts are made.

His first two points are correct; however, his third one is poorly reasoned.

First, Republican calls for a balance budget amendment are a distraction from the real issue, which is cutting spending by revising past legislative mandates.

U.S Rep. Frank Wolf (R-VA), a cardinal of the Appropriations Committee that controls spending, has previously advocated for the balanced budget amendment by saying that his legislative colleagues are so corrupt that they can not simply vote for real and significant spending reductions without the political cover of a constitutional mandate that they can blame; while I do not doubt the honesty of Wolf’s effective condemnation our elected representatives, we as selfish citizens should demand a higher standard from them.

It takes fewer votes to pass a balanced budget (including overcoming a Senate filibuster) than it takes for the Congress to initiate an amendment to our Constitution.   Our representatives should stop making excuses for not doing the easier thing because the harder and unnecessary thing has yet to be done.  Unfortunately, this evasion of responsibility does accurately represent the electorate and we, as citizens, need to choose to change that fact.

Second, the arguments and debating over the debt ceiling is political kabuki in which legislators responsible for runaway spending, deficits, and debt attempt to fool the electorate into believing that it is our President’s fault.  The President only spends money authorized by Congress.  When the congressional Janus says from one mouth that the executive must spend on specific expenses and with the other mouth that he can neither have the tax revenue nor the borrowing authority to actually pay those expenses, what is our President to do?  This kind of congressional contradiction left our patriots wintering at Valley Forge naked.

It would be better for Congress to abolish the faux debt ceiling and not appropriate for expenses for which they are unwilling to pay.  As an alternative, the Congress could revise the Congressional Budget and Impoundment Control Act of 1974 to restore broad presidential rescission authority to unilaterally order that spending be cut to maintain constraint on the growth of federal debt.

In summary, no one has been forced to serve in Congress.  Having sought and won the position, it is time for our representatives to do their job.  In part, that means stop blaming our President for overspending problems creating by Congress.  Continued evasion of this responsibility weakens not only the Congress within our separation of powers, but has become dangerous to our country and government.

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Solve Social Security Underfunding – End Retirement

Posted on February 19, 2013 by Jim

Is Social Security in financial trouble?  Politicians and pundits evade, dissemble, and argue around the problem.  Instead of me just being another average citizen pointing out that the Emperor has no clothes, what do the Social Security Trustees have to say?

The long-run actuarial deficits of the Social Security and Medicare programs worsened in 2012…Both Medicare and Social Security cannot sustain projected long-run program costs under currently scheduled financing, and legislative modifications are necessary to avoid disruptive consequences for beneficiaries and taxpayers.

Lawmakers should not delay addressing the long-run financial challenges facing Social Security and Medicare.

Personally, I have been writing about the need to privatize Social Security since before the Greenspan Commission; in that time, I have made several suggestions, and now I offer a new one.

Beside the underlying corrupt nature of the program, there are three legislative factors for addressing this program’s underfunding:  (1) revenue from payroll taxes, (2) returns from invested assets, and (3) benefits to be paid.  Frankly, the cowards on the Hill lack the integrity to soberly address any of these three.  Beyond my name calling of our legislators (which I prefer to think of as an identification and judgment upon their character), the two parties have entrenched themselves in seeking political advantage by opposing solutions on these points.

In an effort to get around this legislative log jam, I ask our Congress to respect our rights by allowing us individually to abolish retirement.

Retirement is fine for someone that is independent through their own savings and investment.  The current Social Security program unchanged would be available for the elderly who are unable to work due to physical or mental infirmity.  However, for everybody else, keep working and support yourself.  Essentially, the government imposed retirement age would be abolished and Social Security would be paid to the disabled elderly.

Because of interventions into the economy by the Congress, this will require legislative support to be more effective.  Congress should abolish payroll withholding and employer matching related to entitlements for individuals who are eligible to retire but continue to work.  While individuals could still choose to go on the Social Security dole, government imposed penalties for continuing to work should be removed.

Of course, this is not an optimal solution.  For example, the disparity over employer matching of payroll takes will encourage discrimination against younger workers in favor of the elderly.  However, as an interim solution, I think that it is valuable to change the notion of retirement from an autopilot course to idleness and financial support from others.

Extra point:  Based upon changes in life-expectancy, Longevitas reported that the retirement age in the UK would be 80 years old to be consistent with the purpose of the original state pension program.

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Obama Attacks Free Speech Again

Posted on February 18, 2013 by Jim

Is there anything that Barack Obama hates more than freedom of speech?  If you can think of anything, please comment.

In any point of domestic public controversy related to the freedom of speech has the Obama Administration ever taken the side of freedom of speech?  I can not think of a single occasion.  Please Obama partisans enlighten me in the comments below.

Remember the Obama’s Truth Squads to facilitate partisans to snitch to the government about people exercising their free speech to criticize Obama Administration policies?

Remember the Obama partisans labeling the Tea Party participants as terrorists for exercising free speech?

Remember Obama Administration attacks against Florida pastor Terry Jones, who planned to publicly burn a Quran?

Remember the Obama Administration prosecution and condemnation of Nakoula Basseley Nakoula for posting a YouTube video that criticized Islam?

Remember Barack Obama’s anti-American attacks on the Supreme Court for recognizing the protection of political speech in Citizen’s United?

Establishing that pattern of attacks against freedom of speech by an administration led by a reported constitutional scholar and civil rights activist, the newest case is the (In-)Justice Department’s civil suit against Standard & Poor’s.

According to the Justice Department, its actions are based upon S&P’s failure in rating mortgage securities prior to the financial crisis; unspecified is why S&P is singled out when the other rating agencies made the same errors.  Further, as noted in the Economist:

Since the crisis, 41 legal actions targeting S&P have been dropped or dismissed. The company and other ratings agencies have prevailed by asserting their rights under the first amendment of the constitution, which states that “Congress shall make no law…abridging the freedom of speech”.

This free speech protection attributed to the ratings is not a surprise.  All of the credible accounts of the role of the rating agencies in the financial crisis have all mentioned this well known protection.

So why has Obama committed to this suit?  Aside from the benefits of a political show trial to temporarily boost the Obama Administration for attacking an object of legitimate public scorn and contempt, what is really going on in targeting S&P in this suit?

Recall that it was S&P that lead the cut in our government’s credit rating.  Further, observe the fiscal cliff and sequestration controversies that the Obama Administration has failed to resolve responsibly; these issues are directly tied to conditions that S&P is tracking related to a potential further cut in our government’s credit rating.  Finally, see that this suit has negatively impacted the stock price of S&P’s parent company, and the parent company’s bond ratings.

Putting it all together, the Justice Department’s frivolous lawsuit against S&P is an extortion designed to suppress, or discredit, S&P’s future exercise of freedom of speech related to downgrading U.S. government bonds.  Further, President Obama’s political allies and supporters are subject to the downgrading of their state’s government bonds related to unfunded state pension liabilities; for example, see Illinois.  At the state and municipal level, the exercise of freedom of speech by S&P will likely disadvantage President Obama’s union supporters who are being pressured to lower excessive public pension expenses.  Welcome to Chicago politics.

Although I personally condemn S&P for their failure to account for the political risk in the housing market that led to the 2008 collapse, I will offer them some advice related to the Obama Administration’s attack on S&P’s freedom of speech.  Downgrade U.S. bonds, plus those of states and municipalities with dangerously underfunded pension liabilities.  In the downgrade of the U.S. bonds, cite the Obama Administration’s attack on the Bill of Rights and explicitly commit to lower ratings so long as he remains in office.  This change would not be revenge, but punishment for abuse of power.

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Extra Point: A satire from 2009 related to Obama’s anti-freedom of speech efforts: ”Reporting Counterrevolutionary Propagandist to the White House”

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Question #7: If we ‘privatize’ Social Security, what would happen to people that recklessly invest their retirement and lose it?

Posted on February 17, 2013 by Jim

The following question comes from Reddit:

If we ‘privatize’ Social Security, what would happen to people that recklessly invest their retirement and lose it?

First, in the question, there is an unfounded premise about risk as in:  government control of our retirement funds entail no risk.

Our state public pension funds are underfunded by $1 trillion, because of failure to actually fund them, low interest rates caused by the Fed, and in some cases bad or politicized investment management.  Meanwhile federal retirement programs are underfunded, increasingly being supported from general revenue, and wholly dependent upon future taxpayers to somehow pay bonds held in the “trust” funds.

Instead of millions of potential points of failure, government control creates a few points of failure that will impact millions of people; see historical pension crises in Russia, Greece, and other European government-centric retirement schemes.

Returning to the original question, let us clarify another premise that should be more explicit; these poor investment returns are the consequence of an individual being stupid, ignorant, or having bad luck from a failure to manage investment risk.

Finally, in the question, there is the erroneous “What do we do…” premise.  We don’t have to do anything, but we could choose to do something.  If we choose to do something, should we implement that action through force (government) or through individual voluntary choice (civil society)?

The current system is based upon force…force individuals to pay for future retirement benefit eligibility and force other individuals to pay to supplement retirement benefits for those that did not make enough money during their productive years; more exactly, it is to force the productive young to give money to the idle and relatively wealthy elderly.

So what would a wholly private alternative be?  Individuals would be free to not retire if they could not support themselves through their own savings (augmented by eliminating payroll taxes) or the aid of loved ones.  Those few who are too physically or mentally disabled to work would be dependent upon voluntary charity provided through civil society, but not government.

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