Remedy Needed For Social Security’s Structural Insecurity

Social Security is a topic ignored by many, but one that should be of concern to most. Politicians avoid talking about it, as it’s known as the “third rail of politics.” Yet, the system as it is currently structured is not sustainable.

Starting in 2010, Social Security payments began exceeding payroll-tax revenues. The unfunded liability of Social Security is least $13 trillion in present value. To put this in perspective, the entire output of the U.S. economy, the gross domestic product, is $18 trillion, so this is not a trivial number.

The basic design of the system is flawed. Many people think that the way the system works is that your Social Security taxes and that of your employer is set aside, earns interest, and then is returned to you when you claim your benefits. This is not the way it works at all.

Your taxes are used to make payments to those who are currently claiming benefits. Nothing is set aside. This can work in a sense as long as there are lots of people paying taxes and not many claiming benefits. When Social Security was enacted in 1935, the life expectancy was 63 and you collected benefits at 65. There were 50 people working for every person getting benefits. Today, you can claim benefits at 62 and life expectancy is 76. There are about 2.5 people working for every beneficiary.

How should our Congress deal with this? While the problem is difficult, it is not intractable. The best way would be to do as other countries have done, most notably Chile, and privatize the system. In other words, make it as many people think it is: Your taxes go into your account that is invested, and you withdraw at a given age. Unfortunately, this is hard to do since all of your taxes are being used to make payments to existing beneficiaries.

A less difficult step is fairly obvious; namely, extend the age at which you can claim benefits to reflect increased life expectancy. This can be effective in making benefits line up with taxes, but someone who is 60 may not want to hear they will have to wait until 70 to collect. Such a move would have to be phased in and apply to younger age cohorts.

A second approach is to acknowledge that Social Security is really an income-transfer program. Does it make sense to tax the single mom working at the grocery store in Sarasota to pay for Warren Buffet’s benefits? That is effectively what’s happening.

We can make payments to those who are low-income elderly, reduce taxes on all workers, and let people save for their retirement or even require them to do so. Of course, many people who were expecting to get benefits will say they paid taxes and are just getting them back, but as noted above, this is not true. Their taxes were given away to someone else, and now there are not enough people to tax to keep the scheme going.

BREAKING: Panic Spreading Across Financial World After People Wake Up To Nasty Surprise

Fears over China’s economy sent stock markets tumbling worldwide on Monday, the first trading day of the year.

The selloff was sparked by a new report showing China’s manufacturing sector contracted during the end of 2015, according to CNN Money. The Shanghai Composite index plummeted nearly 7 percent for the day before trading was halted, while the Dow Jones Industrial Average and Nasdaq fell over two percent on Monday morning.

“Even though the manufacturing report was disappointing, it’s just the latest sign of a slowdown in China. Analysts said selling in Chinese markets was also driven by other factors, including the scheduled lifting of bans on IPOs (public offerings) and sales by larger investors,” CNN reported.

“With headwinds both domestic and external, investors feared a hard landing may be inevitable and rushed to the exits,” Emma Dinsmore, CEO of R-Squared Macro Management, wrote in a client note.

“More fluctuations in global markets are expected now that the U.S. Federal Reserve has started raising interest rates. The government needs to pay more attention to external risk factors in the short term and fine-tune macroeconomic policies accordingly so the economy does not fall off a cliff,” Caixin chief economists He Fan said, according to Business Insider

Another source for concern with investors is the volatility in the oil markets caused by rising tensions in the Middle East. Oil prices spiked 3.5 percent after news that Saudi Arabia (the world’s second largest oil producer) was severing diplomatic ties with Iran.

House Conservatives Give Two Big Reasons for Opposing the $1+ Trillion Omnibus Bill

The House Freedom Caucus is not happy with the $1.1 trillion Omnibus spending bill, which funds the government through Sept. 2016. The conservative members main beefs center on security issues regarding the Syrian refugee program and the lack of pro-life reforms. President Obama promised to veto any measures which sought to block Syrian refugees from entering the country and any that defunded Planned Parenthood.

“Sadly, this bill does not adequately address the security issue, nor does it have the common sense, widely-supported pro-life riders that we suggested,” said Rep. Jim Jordan, R-Ohio, chairman of the House Freedom Caucus, in a statement to the Daily Signal.

“Many of my colleagues and I still believe the better choice for taxpayers is to redirect Planned Parenthood’s federal funding to the thousands of community health centers that are actually providing health services to women in need,” Jordan told TheBlaze

The Omnibus bill also does not include protections conservatives sought regarding the right of conscience for those religious organizations that, as a matter of conscience, oppose funding abortions through their health insurance.

We are told that the Republican Leadership fought hard for conscience rights and for that I am grateful,” Tom McClusky, March for Life Action Vice President of Government Affairs, said in a statement. “However…[w]ith this spending bill, Congress shoulders the responsibility alongside the Obama Administration for this gross violation of our First Amendment rights.”

House Speaker Paul Ryan defended the bill, saying on Wednesday, “in a divided government, no one gets exactly what they want.”

The speaker touted the victories for conservatives in the bill including: 1) Maintaining strong protections for life, with the Hyde Amendment banning federal funds being used for abortion remaining in place; 2) Lifting the 40 year ban on oil exports, which Ryan tweeted will add $170 billion to the GDP annually, and ultimately a million new jobs; 3) Strengthening the Visa Waiver program, requiring all to obtain visas who traveled to terror hot spots in the last 5 years; 4) Prohibiting any new funding for ObamaCare; 5) Increasing defense spending; 6) Reining in the IRS regarding the treatment of political organizations; and 7) Containing $629 billion in long term tax cuts targeted at job creators to spur economic growth.

Ryan seemed particularly proud of the tax provisions stating they will provide, “Certainty in the tax code so we can create more jobs. This is one of the biggest steps for the rewrite of our tax code that we have made in many years.”

“Democrats were able to cite the absence of more than 150 proposed policy riders they opposed, including provisions to restrict the Syrian refugee program, cut funding for President Barack Obama’s executive immigration action, and defund Planned Parenthood,” as their wins coming out of the negotiations, according to the Daily Signal. 

House Freedom Caucus members gave the process high marks, compared to the past, when members’ ability to offer amendment either non-existent or greatly restricted. “Overall on process, Ryan get high marks,” Rep. David Brat, R-Va., said, “but the product here is an F.”

The bill is expected to be brought up in two parts on Thursday and Friday: first the tax cuts, which will enjoy strong majority Republican support, and then the spending provisions, which may eek out a majority of Republicans, but may have to rely on Democrats for passage, USA Today reports.

The federal government is currently running on a short term spending measure, which runs out on Dec. 22.

While Everyone Was Watching The GOP Debate, Paul Ryan Just Made A Massive Announcement

On Tuesday, while the Republican presidential candidates were taking shots at each other in Las Vegas in the latest debates, Paul Ryan and other bipartisan lawmakers on Capitol Hill were putting forward the omnibus bill, a tax and funding bill.

The 2009-page omnibus bill was approved by a bipartisan committee and is expected to pass on Friday when the House will vote on the massive spending and tax bill. In the meantime, the government is only funded through Wednesday, so lawmakers will expectedly be working on a stop-gap spending Wednesday.

According to some, the omnibus bill is a victory for both Democrats and Republicans with both sides claiming wins.

The “Cadillac Tax” on premium healthcare plans is postponed, along with the medical device tax which was placed under a moratorium for two years. The Obama administration was counting on those two to fund Obamacare. Democrats are happy that the wind and solar energy companies’ tax breaks will be extended for five years. Democrats are also pleased that the wind protection tax credit has been extended for two years. The Republicans claimed a major victory with a lifted ban on oil exportation from the U.S.

However, according to TheBlaze, “The package … would increase the deficit by hundreds of billions of dollars by extending numerous popular tax credits without paying for them.”

Democrats also claimed victory because the child tax credit and earned income tax credits will continue, as well as the continuation of the American Opportunity tax credit.

What is controversial and missing from the budget is any language that would bar funding for President Obama’s Syrian Refugee Resettlement program, which may lead some Republicans to vote against the bill on Friday. Kevin McCarthy (R-CA) told The Hill that “There’s a lot of reason for Republicans to vote for it,” although he would not speculate as to the number of Republicans who would eventually vote for the bill.

Obama Is About To Enjoy A Christmas Vacation, Guess How Much It Will Cost Taxpayers…

I’ll be home for Christmas. You can plan on me. Please have snow and mistletoe. And presents on the tree.” The old song, written by Kim Gannon, Walter Kent, and Buck Ram, was made famous by Bing Crosby in 1943 amid the turmoil of WWII. The beloved Christmas favorite is surely a familiar favorite of the Obama family this time of year as the president and his family plan to return to the president’s home state for Christmas. Going home to Hawaii for Christmas has been an annual tradition for the Obama’s since before they moved into the White House.

It’s rumored that the Obama family will be staying in the old Magnum PI estate, recently purchased by The Obama Foundation chairperson Matt Nesbitt for a price of 8.7 million. Even if the they get to stay in the mansion, which is located on the East side of Oahu, for free, there’s still a massive cost for the Obama’s to travel home for the holidays.

While many Americans may be griping about the high cost of traveling during the Christmas holidays, their gripes are nothing in comparison to the costs the Obama’s will incur to be able to enjoy Christmas in Hawaii. Last year, the Obama Christmas in Hawaii trip cost the American taxpayer a reported 3.7 million in flight expenses alone. Housing and security costs were placed atop that figure.

This year should be no different and the annual tradition doesn’t come without criticism. Tom Fitton, president of Judicial Watch said, “The Obama’s travel is out of control. They are treating the Air Force One like an Uber ride. Our military deserves better. The Secret Service is stretched to the breaking point by President’s Obama’s abusive travel … And President Obama seems oblivious to the burden he is placing on Americans with his continuous vacations, getaways, and political junkets at taxpayer expense.”