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Posts Tagged ‘Social Security’

America’s New Economic Policy: “Screw The Kids”

Posted by Larry Doyle on January 16th, 2013 8:41 AM |

What about me? What is in it for me? How does this work for me? The “ME” mentality strikes me as central to America’s new official economic policy.

Who is “ME”? Our Washington politicos.

What policy is that? Let’s navigate.

Having recently sidestepped the fiscal cliff, and as we continue to navigate the economic landscape, we are now faced, as the FT describes them, with “three enormous gorges.” Sounds ominous, right? What are the three gorges? (more…)

FPA’s Bob Rodriguez Has a Message for Washington

Posted by Larry Doyle on May 17th, 2012 8:05 AM |

First Pacific Advisor’s Bob Rodriguez is a renowned money manager. I hold him in the highest regard.

The only issue I have in regard to Mr. Rodriguez is that he is not in Washington managing our nation’s fiscal policy.

The simple fact is Rodriguez knows of what he talks and relates it in language that is foreign to most politicians, that is, plain English.

With the ongoing budget fiasco, debt ceiling, and accompanying fiscal cliff on our horizon at year end, recent comments by Rodriguez should ring long, loud, and clear throughout Washington.  (more…)

Erskine Bowles: “This Debt Is Like a Cancer”

Posted by Larry Doyle on July 13th, 2010 7:10 AM |

Identifying a problem is one thing. Doing something about it is an entirely different issue. All too often, America’s political leaders have further exacerbated our fiscal disaster by not responsibly managing our nation’s finances. What do we get? Lots of talk. What do we need? Lots of action. Will we get it? Well, why is America poised to throw a large number of incumbents out of Washington? America wants action.

Why do we need action and a man-sized heaping of sense on cents while we are at it? Let’s have a look at what Erskine Bowles (co-head of President Obama’s national debt commission with former Senator Alan Simpson R-WY) has to say. Glen Johnson of the Associated Press writes, Debt Commission Leaders Paint Gloomy Picture:

The heads of President Barack Obama’s national debt commission painted a gloomy picture Sunday as the United States struggles to get its spending under control. (more…)

Public Pension Ponzi Schemes

Posted by Larry Doyle on April 6th, 2010 10:50 AM |

Making promises that can’t be kept.

Garnering support via payback, if not kickbacks.

Effectively misrepresenting expected returns.

Am I talking about Bernie Madoff and every other con artist who has ever perpetrated a Ponzi scheme? No, although I could be. I am addressing the reality of the public pension system in our country. Those participating in public pensions can rail on me all they want. The simple fact is the power and leverage of the public unions combined with the willingness of public officials to sell their souls, while mortgaging our children’s futures, have created a massive gap in the funding of public pension liabilities in our nation today. (more…)

Social Security, Medicare, Increasing Deficits: How Will We Manage?

Posted by Larry Doyle on May 15th, 2009 4:29 PM |

The immediate issues of rising unemployment, increased foreclosures, available credit and the like dominate our economic landscape. That said, the mountainous hurdles on our economic landscape – Social Security, Medicare, and the Federal deficit –  are getting larger and more in focus.

This week we have witnessed the following news releases:

Financial Health of Social Security, Medicare Worsens In Past Year as reported by Fox News. 

Given plunging tax revenues due to increased unemployment, Medicare is actually running a net deficit this year. It will become insolvent at this rate in 2017, two years earlier than previously projected.

Given revised projections, Social Security will start running an annual deficit in 2016, a year earlier than previously projected. The fund will become insolvent in 2037, four years earlier than projected.

Does the American populace believe somehow or other a Wizard in Washington will solve the financial sinkhole represented by these two programs?

Are revenues going to miraculously appear to plug the holes in these funds? Don’t count on it. Without an increase in revenues, the government will obviously have to deal with the liability side of the equation. This liability side is only exacerbated by the soaring deficits. It was interesting to hear President Obama acknowledge the price of soaring deficits, that being higher interest rates, this week. As Bloomberg reported, Obama Says U.S. Long-Term Debt Load ‘Unsustainable.’

While Uncle Sam may spend millions of dollars and thousands of man-hours reviewing these programs and expected future costs, as with any debt, there remain three options: default, devalue, restructure.

I do not believe Obama or anybody else believes default is an option. Devaluing the debt is clearly on the front burner of the Fed, Treasury, and throughout Washington. How so? Keep the Fed Funds rate at 0-.25% until we get inflation going. If the “Washington wizards” believe they can control the inflation monster, that will be a miracle.

In regard to restructuring the debt embedded in these programs, I have no doubt we will see this happen on a grand scale. How so and when? In my opinion, given the magnitude of Obama’s plans across healthcare, energy, education, and the economy, he needs to find real savings somewhere.

In my opinion, I expect the future obligations of Social Security and Medicare to be written down during Obama’s first term by excluding payments to individuals whose net worth exceeds a certain limit. What number may that be? I would have to review analysis of demographics and net worth statistics to venture a guess.

This restructuring would be the greatest redistribution of wealth our country has ever seen. Similarly, it would define these programs as nothing more than government sponsored Ponzi schemes.

I see it happening. What do you think?


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