Archive for April, 2010

Bailouts and Entitlements Redefine Personal Responsibility

Thursday, April 22nd, 2010

Ezekiel 18:20 clearly teaches that each one of us, as an individual, is responsible for our own decisions and actions.  However, it seems as though our bailout / entitlement mentality has redefined this personal responsibility.  We expect to be bailed out if our poor judgment proves us to be irresponsible, and we expect government entitlements at the expense of other people’s tax dollars. 

We expect to be able to renegotiate our mortgage, even though we willingly (and even eagerly) accepted the original terms of that mortgage.  We expect to be able to pay back credit card companies only a small percentage of the amount we charged, and there are even companies who foster this behavior by advertising their services for this very purpose.  Likewise, other companies help people to renegotiate with the IRS for back taxes owed to the government.  (This is truly ironic, because we then turn right around and expect the government to bail us out in some form or fashion, or to offer us entitlements.) 

Ezekiel 18:30 reminds us that we will each be judged according to our own actions.  1 Corinthians 3:5-15 confirms that God assigns tasks to each person, and we will each be rewarded (or suffer loss) according to our own labor.  Our work will be “shown for what it is, because the Day will bring it to light,” and “test the quality of each man’s work.”

The Peace That Makes No Sense

Friday, April 16th, 2010

I know a young woman whose 31-year-old husband had a severe accident one year ago.  Since then, he has been unconscious, in and out of hospitals and nursing homes.  During this time, she had their first baby, and her husband has never even met his own child.  Yet she somehow has complete peace, through a Christian faith that is too strong for me to understand (Philippians 4:7).  Here are some of her comments: 

The emotions I am experiencing will not make sense to you, but they are real and they are raw.  My thirty-one year old husband is now living in a nursing home.  If insurance decides they will no longer cover him I will be hit with all kinds of bills.  I have no idea if and when that will take place.  This is my life.  What am I feeling?  Peace.  Total peace.  I cannot explain it. 

As I sat in his room, I felt good about it.  In my mind that makes no sense.  There is nothing good about this.  But in my soul all I sense is goodness.  I’m highly emotional–I could cry, but it’s not because I’m sad.  It’s because God is so good.  My life is in shambles, nothing makes sense, I face uncertainty in all directions, and all I feel is the Lord’s love.  The Lord loves me and He is so very very good to pour that love out on me. 

I don’t expect that to make sense, because it doesn’t.  I guess that’s why it’s referred to as “the peace that passes all understanding”.  It’s kind of like how people ask, “How do you KNOW when it’s THE ONE?”  And the person answers, “You just know.”  That answer doesn’t make sense until you meet your “One”.  Then you get it because you’ve experienced it firsthand. 

Please join me in thanking God for his blessings, His guidance, His protection, and his continued presence.  Lord, grant us the complete healing and the miracle we have been praying for. 

I’m the kid in the rear-facing car seat.  I have no idea what’s on the road ahead of us or how many more miles we must journey to reach our destination.  In fact, I have no idea where we’re even going.  And it’s been this way for an entire year.  I’m just a passenger and might as well be blindfolded.

How to Fix Social Security and Medicare

Monday, April 12th, 2010

OK, here’s how to fix Social Security and Medicare.  However, nobody will like it, whether you’re 25, 45, or 65 years old, because benefits need to be cut across the board.  Everybody needs to make a sacrifice.  (“Does not man have hard service on earth?  Are not his days like those of a hired man?” Job 7:1).

So far, most suggestions for saving Social Security and Medicare include the following:

1) Raising the full retirement age for Social Security to 70, and / or raising the early retirement age from 62 to 65 (phased in over five to ten years).

2) Raising (or removing) the salary cap on the amount taxed by Social Security.

3) Increasing the Social Security tax from its present level of 6.2, and the Medicare tax from its present level of 1.45%.

4) Changing the Social Security indexing formula from wage growth to price inflation.

However, I suggest a more radical (and fairer) approach, without raising taxes.  Here’s how it would work:

1) Social Security–Cut benefits across-the-board:  Decrease all Social Security benefits by 10%.  For those who are currently receiving Social Security benefits, ages 62 and above, the cut is immediate.  For those not yet receiving benefits, the anticipated benefits will be cut as soon as they become eligible; i.e., decrease the estimates on their annual statements.

2) Social Security–Implement Fairness Testing:  At the point where a person has received as much as he has contributed, decrease the benefits by an additional 10%.  (Many retirees get back their entire contributions in about five years, and then reap another 300% of that amount over the subsequent 15 years.)

3) Social Security–Implement Means Testing:  At the point where the person’s other income exceeds twice the amount of their Social Security benefit (after he has received as much as he has paid in), decrease the benefits by an additional 10%.  In addition, continue to cut the benefit by 10% increments, completely phasing out the benefit if the person’s other income exceeds $500,000.

For example:

Current Social Security After Immediate Cut After Fairness Testing After Means Testing Other Income Previous Total Income New Total Income
$25,000 $22,500 $20,000 $20,000 $50,000 $75,000 $70,000
$25,000 $22,500 $20,000 $17,500 $75,000 $100,000 $92,500
$25,000 $22,500 $20,000 $0 $500,000 $525,000 $500,000

4) Apply these same fairness testing and means testing to Medicare.  Those who have already collected more from Medicare than they contributed, and who have substantial other means, would pay an additional 10% deductible, with a reasonable cap–maybe $10,000 per year.  This would encourage beneficiaries to take control of their own health care and reduce the many unnecessary and costly tests and procedures.

I would like to see a CBO estimate on the savings that this proposal would generate.  I’m sure that the exact amount of the cuts suggested (10%, etc.) could be massaged in order to make these programs solvent again.

This proposal hurts everybody, across-the-board, and somewhat fairly, because it does indeed affect everyone.  Unfortunately, if we want to fix these programs, everybody is going to have to make a sacrifice.

Entitlements–The Point of No Return

Friday, April 2nd, 2010

Over the course of the past 75 years, the U.S. has strayed from the Biblical model by falling into a trap of massive government entitlements.  2 Thessalonians 3:10 says, “If a man will not work, he shall not eat.”  The Bible calls for each of us to work, and to earn our own way, as much as we are able to do so.  Obviously, the sick and disabled need charity, as well as the poor who have fallen on hard times, but this help should come primarily from the Church (Acts 2:42-47)–not from the government.

Most of our tax money now goes to entitlement programs and overhead.  I believe that the question at hand is:  Have we finally gone past the point of no return?  If you don’t receive a monthly check from the government, you’re in the minority.

A society can reach a point where there are too many people receiving entitlements, because there are too few left who are funding most of that burden.  As an obvious example, if 1% of the population was taxed in order to pay for entitlements for the other 99%, there would no longer be enough wealth generated to sustain that economy.  Although we haven’t gone that far yet, I believe that it is quite enlightening to see just where we are on that scale, including the overhead (government employees) required in order to sustain our current model.

Let’s consider how many people are receiving checks from the government:

Program # of Recipients $/Year–Total $/Month–Each Comments
Totals 235 million $2.101 trillion
Social Security 51 million $615 billion $1,150 Retirees, survivors, dependents, disabled
Supplemental Security Income (SSI) 8 million $41 billion $475 Needy families
Food Stamps 28 million $34 billion $100 Needy families
Unemployment 3 million $4 billion $1,250 Average = 116 weeks
Medicare 42 million $297 billion $600 Primarily a subset of those receiving Social Security checks
Medicaid 52 million $305 billion $500 This number will grow quickly with the new health care legislation
Farm Subsidies 10 million $178 billion $1500 Paying farmers not to grow crops
Government Employees:
Military 2 million $146 billion $5,000 Active and Reserves
Veterans 2 million $84 billion $3,500 Retirees, Medical, etc.
Retirees 22 million $78 billion $5,800 3 million federal; 19 million state and local
Civilian Retirees 15 million $319 billion $1,800 5 million federal; 10 million state and local

(Data from The Statistical Abstract of the United States–online)

The government writes at least 235 million checks each month, to (or on behalf of) about 180 million different recipients (60% of the population).  The average amount of each monthly check is close to $1,000.

This leaves only about 120 million people (40% of the population) who receive no checks from the government.  While it’s true that a good portion of the 60% of recipients of government checks pay a certain amount of taxes, it’s also fair to say that most taxes are paid by the other 40% (and businesses and corporations).

These findings were further substantiated by Dick Morris in January, 2009. When he estimated the effects of President Obama’s economic stimulus package, Morris said that it would result in 57% of Americans being off the income tax rolls, while only 43% would be paying all of the income taxes. Now, with the passage of the health care bill, these numbers become even more unbalanced.

As noted in The Role of Government, the number of people receiving government checks already outnumbers those who don’t (and who are paying most of the taxes).  Furthermore, this trend is continuing, especially with the massive spending of the Obama administration, but it cannot be sustained.  Unfortunately, with over half of our population already dependent upon a monthly check from the government, we have probably already reached the point of no return.  We believe that we can’t cut entitlement programs, because the recipients are dependent upon (and “entitled” to) their monthly checks from the government.  We feel like we can’t reduce the role of the federal government to its proper size because so many government employees would lose their jobs, and retirees pensions would be in jeopardy.

Now, those receiving Social Security benefits can justifiably argue that they are “entitled” because they paid into the system for so many years.  Likewise, government retirees can argue “entitlement” because of their many years of service. However, this still doesn’t change the fact that this trend cannot continue, because soon there simply won’t be enough tax money generated in order to make all of these payments.  (Yes, we’ll print more money, but inflation will destroy the value of our currency.)  Yes, it would be unfair if retirees didn’t receive 100% of their expected pensions, but this is happening in the corporate world every day. It’s also unfair to have most people collecting a check from the government each and every month.

Can we recover?  Probably not.  Over half of our $4 trillion national budget goes to entitlement programs and overhead, and this trend is rapidly increasing.  We have now given in to socialism, like so many of the European countries.  We simply have too many people dependent upon the government.  If you don’t receive a monthly check from the government, you’re in the minority.  As stunning as this sounds, it’s true.