Posts tagged with: social security

federal-budget

What is the President’s budget?

Technically, it’s only a budget request—a proposal telling Congress how much money the President believes should be spent on the various Cabinet-level federal functions, like agriculture, defense, education, etc.

Why does the President submit a budget to Congress?

The Congressional Budget Act of 1974 requires that the President of the United States submit to Congress, on or before the first Monday in February of each year, a detailed budget request for the coming federal fiscal year, which begins on October 1.

If it’s due the first Monday in February, why are we just now hearing about it?

President Obama turned in his budget late—again. This will be Obama’s fifth late budget submission in five years, making him the first President to present three consecutive late budgets. According to the House Budget Committee, “All presidents from Harding to Reagan’s first term met the statutory budget submission deadline in every year.” Reagan and Clinton both missed their deadlines once in eight years.

What is the function of the President’s budget request?

The President’s annual budget request serves three functions:
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In a recent interview in the Wall Street Journal, billionaire Stan Druckenmiller discusses his recent university tour sounding the alarm on intergenerational theft. The article paraphrases his case:

[W]hile today’s 65-year-olds will receive on average net lifetime benefits of $327,400, children born now will suffer net lifetime losses of $420,600 as they struggle to pay the bills of aging Americans.

It goes on:

When the former money manager visited Stanford University, the audience included older folks as well as students. Some of the oldsters questioned why many of his dire forecasts assume that federal tax collections will stay at their traditional 18.5% of GDP. They asked why taxes should not rise to fulfill the promises already made.

Mr. Druckenmiller’s response: “Oh, so you’ve paid 18.5% for your 40 years and now you want the next generation of workers to pay 30% to finance your largess?” He added that if 18.5% was “so immoral, why don’t you give back some of your ill-gotten gains of the last 40 years?”

He has a similar argument for those on the left who say entitlements can be fixed with an eventual increase in payroll taxes. “Oh, I see,” he says. “So I get to pay a 12% payroll tax now until I’m 65 and then I don’t pay. But the next generation—instead of me paying 15% or having my benefits slightly reduced—they’re going to pay 17% in 2033. That’s why we’re waiting—so we can shift even more to the future than to now?”

In my recent commentary, I examined the recent projections of the Congressional Budget Office: (more…)

“There has always been a generous spirit in America towards the downtrodden, but it’s time to realize that we are no longer being generous: the government is leading us merrily along the path of fiscal fugue,” writes Elise Hilton. So why are federal officials advising benefit applicants that they shouldn’t be “discouraged by funding issues”? The full text of her essay follows. Subscribe to the free, weekly Acton News & Commentary and other publications here.
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Blog author: jballor
Tuesday, February 19, 2013
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My friend John Teevan of Grace College sends out a monthly newsletter, “Economic Prospect.” He passes along this in the current edition:

I found this note from a newly retired accountant (age 66) who has not gone on social security yet. His income as a part-time accountant in his town was $60,000.

“My income is $60,000 and my IRS taxes are 10,000, my FICA deduction is $8,000, my state income tax is $2500, and my property tax is $6000. So I pay a total of $26,500 in taxes leaving me $33,500.

However, I have additional costs that I would like to (but can’t) deduct from my income. As I watch ‘government accounting’ I realize that these should be considered real costs.

I have saved $200,000 and invested the money in bonds earning 1% ($2000).

I could have invested that money in CDs earning 5% (10,000), but as the Fed has lowered the interest rate the cost to me is the difference: $8000.

In addition I am now entitled to social security and at my level of income over the years I would have received $28,000 this year, but I have chosen not to take Social Security saving Uncle Sam that money.

So I have contributed a total of $36,000 to Uncle Sam in foregone interest and foregone Social Security payments. Who got the benefit of that $36,000?

Uncle Sam; not me.

So if I add up my total contributions to the government this past year I paid $26,500 in taxes and paid $36,000 in lost income. These two come to $62,500…more than the $60,000 I earned.

While I enjoy my new job, when I think about this, I start to feel like one of Pharaoh’s slaves toiling to roll immense stones up from the Nile to his pyramid.”

Send John a message if you’d like to be added to his “Economic Prospect” list. It’s always a great read.

“Our world is overpopulated.” If you repeat something often enough, it becomes “truth”. In 1968, Paul Ehrlich wrote The Population Bomb, warning that we’d all soon be fighting over food, space, and power as the earth sagged under the weight of all those darned people.last book

He was wrong, of course, and not just wrong: spectacularly wrong. It didn’t keep him from being a celebrity or from his ridiculous notion from being believed. But he was still wrong.

In What to Expect When No One’s Expecting: America’s Coming Demographic Disaster, author Jonathan V. Last attempts to point out the fallacies of Ehrlich and his ilk. Last is clear: our world is not overpopulated; we are vastly under-populated, and it’s a problem. He goes so far as to say that America has a self-imposed “One-Child Policy” that is leading us to demographic disaster.

Last is chiefly concerned with the problems under-population will cause America, but he uses several other countries to illustrate where we are headed. There are a lot of numbers in this book: financial figures about the costs of raising children, population numbers, fertility rates, the changing age of marriage. The conclusion doesn’t get lost in all the numbers: we don’t have the ability – population-wise – to take care of ourselves. That is, with programs like Social Security and Medicaid requiring a vast army of workers to keep them propped up and paying out, we can’t keep up. And if there aren’t enough workers to pay into these systems, there certainly aren’t enough people to take care of Grandma and Grandpa as they age and need more and more care. (more…)

Some proponents of limited government understandably yearn to see Mitt Romney’s recently announced running mate, Paul Ryan, as something like the pure intellectual descendent of Friedrich Hayek and Milton Friedman. Some on the left, meanwhile, will be tempted to portray him as a heartless monster who only wants to enrich the 1 percent. Paul Ryan the politician is more complex than either portrait. Far from throwing granny under the bus, his efforts at budget reform are an essential step in saving Social Security and Medicare, along with improving the long-term fiscal health of the nation. On the other hand, and although his American Conservative Union score is a solid 91.69, he did vote for TARP, the bank bailout, and the auto bailout–government intrusions he has said he now partially regrets.

The personal side of Paul Ryan also doesn’t fit neatly into many preconceived categories. His extended family is financially successful, but he lost his father when he was 16, attended a public university, and worked a variety of summer and side jobs during and after college to make ends meet. As a teenager he helped take care of his grandmother who had Alzheimer’s.

He’s a socially conservative Catholic, and a fan of grunge rock, Beethoven, Led Zeppelin, and Hank Williams, Jr. He’s an outdoorsman who bow hunts, does his own skinning and butchering, and kills catfish with his bare hands. And he’s married with three children, with a wife, Janna, who is a stay-at-home mom with degrees from Wellesley and George Washington University.

For more, here is a piece in which Ryan discusses his votes for TARP and the bailouts; here is a breakout of the American Conservative Union’s 91.69 conservative score for Ryan; and here is a short biography.

UPDATE: The Janesville Gazette has just published an Extra that pulls together their local pieces on Ryan and Janesville along with some national stories and policy resources–a nice one stop resource.

Conference: “Free Markets with Solidarity and Sustainability: Facing the Challenge”

Ethical human agency is only possible with freedom. Freely turning to the good, which the Creator has given us, is the highest sign of human dignity. The proper exercise of freedom requires “specific conditions of an economic, social, juridic, political and cultural order”. (Compendium of the Social Doctrine of the Church, n. 137) The free market is one of these institutions. The free market is the most efficient instrument to guarantee the distribution of goods and services in society. Beyond efficiency, however, markets need sound ethical and cultural foundations. Only free markets can be ethical markets, and only ethical markets can function in freedom. One of these primary and universally recognized ethical principles is charity.

Call for Papers: “The State of the Consecrated Life in Contemporary Canada”

We are pleased to announce an extended deadline for the Call for Papers for the “State of the Consecrated Life in Contemporary Canada” Conference to be held on 25-26 January 2013 in Montreal, Quebec. This conference is held as a part of a Social Sciences and Humanities Research Council of Canada research grant that explores the state of consecrated life in contemporary Canada and seeks will bring together leading researchers from Canada and abroad to share research and insights on this important subject. For more information, please see the attached document or the conference website: www.consecratedlife.ca. The new deadline will be 31 July 2012. Please forward this information to any colleagues, students or contacts who might be interested.

Call for Papers: “Mighty Protectors for the Merchant Class: Saints as Intercessors between the Wealthy and the Divine”

International Congress on Medieval Studies, 9-12 May 2013. By the late medieval period, merchants formed an integral part of urban society; among their activities, they facilitated trade between city centers, participated in the governing of cities, and were patrons of churches and monasteries. At the same time, the wealth that they amassed and their sometimes morally dubious activities, such as money lending, often left merchants fearful of what the afterlife would bring, causing them to appeal directly to specific saints for intercession. This session seeks to explore the religious lives of these elite members of urban society, specifically considering the individual saints to whom merchants appealed for their earthly protection and heavenly salvation as well as the manner in which they made these appeals.

Call for Papers: “Technology and Human Flourishing”

2012 Baylor Symposium on Faith and Culture (Thursday, October 25-Saturday, October 27) Technology changes us—and the world around us—in countless ways. It eases our labor, cures diseases, provides abundant food and clean water, enables communication and travel across the globe, and expands our knowledge of the natural world and the cosmos. The stuff of science fiction is now, in many cases, reality, and it can make our lives longer, healthier, and more productive than ever. But technological advance is not without complication, and even ardent proponents of technology recognize that our present age of innovation is fraught with concern for unintended consequences.

Paper: “The Decision to Delay Social Security Benefits: Theory and Evidence”
John B. Shoven and Sita Nataraj Slavov, NBER Working Papers

Social Security benefits may be commenced at any time between age 62 and age 70. As individuals who claim later can, on average, expect to receive benefits for a shorter period, an actuarial adjustment is made to the monthly benefit amount to reflect the age at which benefits are claimed. We investigate the actuarial fairness of this adjustment. Our simulations suggest that delaying is actuarially advantageous for a large subset of people, particularly for real interest rates of 3.5 percent or below.

I recently came across an interesting academic journal, Diaconia: Journal for the Study of Christian Social Practice. One of the sample articles available is by Herman Noordegraaf of the Protestant Theological University in Leiden. His piece is titled, “Aid Under Protest? Churches in the Netherlands and Material Aid to the Poor” (PDF).

The latest issue of the Journal of Markets & Morality is a theme issue on “Modern Christian Social Thought,” and a series of pieces take up a line of recent history in the Netherlands. A significant article by Rolf van der Woude, senior researcher at the Historical Documentation Centre for Dutch Protestantism at the VU University Amsterdam, examines the changes in Reformed thought on the social question from the First Social Congress in 1891 to the Third Social Conference in 1952. As van der Woude concludes, in the post war era, “A new generation believed that the beast of the state, caged for so long, had now been tamed. At the end of the 1950s, Van den Heuvel’s generation retreated, the Netherlands entered a period of economic boom, and a generous welfare state was rapidly erected from the ground up wherein welfare was no longer a matter of charity but a matter of justice guaranteed by the government. The beast of the state had become an ally.”

Noordegraaf’s piece can be read as a companion article to van der Woude’s, tracing the development (or lack thereof) in Christian social thought in the Netherlands over the last half century. As Noordegraaf writes, the situation has largely remained the same, in that the church’s primary responsibility is understood not merely to have to provide material assistance to the poor, but rather advocate for reliance on the welfare state for such provision. As Noordegraaf writes, a declaration on the problem of poverty in 1987 codified the approach of “aid under protest,” in which the churches provide aid to the poor but only under protest that the government was not meeting welfare needs appropriately. The statement reads:

We reject the way people are once again made dependent on charity. We plead for social security that is not charity but a right that is fully guaranteed by government. For this reason, financial aid given by churches in situations of need should be combined with protest against the causes of this need to government and society.

Noordegraaf’s observation is that the churches, both locally and denominationally, have been too concerned with meeting the momentary concrete needs of the poor and need to pay more attention to the mandate to lobby the government for more expansive social welfare programs. The point is that the need for Christian or church-based charity indicts the lack of justice under a modern constitutional state, where freedom from need and want ought to be simply guaranteed.

As Nordegraaf concludes concerning recent trends, “More and more, as the above mentioned reports show, churches have been involved in material aid: when people are in need and ask for help, you give it. It is a kind of safety net under the increasingly porous safety net of the state.” He continues, “The fact that the churches found this problematic reflects their belief that the principles of the welfare state are worth fighting for. This has to do with a vision of the task of the state to promote the general welfare and to secure the basic needs of people in society.” Noordegraaf concludes that “it is in harmony with the calvinist approach of the responsibility of the state that churches try to make clear to government and to society at large that they have helped with material aid. This signalizing can take many forms: in letters, reports, talks, discussions, programmes in the media, articles in newspapers and so on. In this way, individual aid is combined with advocacy in the public domain.”

I commend these two articles to your reading: Rolf van der Woude, “Taming the Beast: The Long and Hard Road to the Christian Social Conference of 1952,” and Herman Noordegraaf, “Aid Under Protest? Churches in the Netherlands and Material Aid to the Poor.”

They will make clear just how much things have changed over the last 120 years in the Netherlands, when Abraham Kuyper emphasized the priority of Christian giving in 1881, arguing that “the holy art of ‘giving for Jesus’ sake’ ought to be much more strongly developed among us Christians. Never forget that all state relief for the poor is a blot on the honor of your savior.” Such emphasis on private Christian charity is now understood to be retrograde and obsolete.

Over at National Review Online, Acton Research Director Samuel Gregg looks at a new study which shows a growing wealth gap between the senior set and those under the age of 35. The boomer generation also has the political clout to protect that security:

… another factor that makes older Americans’ economic position even more secure than that of younger generations is the disproportionate sway exerted by older folks on politics, much of which is directed to maintaining the entitlement status quo. From the narrow standpoint of their own economic self-interest, why should older people vote for the type of entitlement reform that is indispensible if America is to get its public-debt problem under control? Many of this quite numerous demographic will ask, why should they have to scrimp after having paid into Social Security all their working lives?

Members of the supercommittee charged with finding $1.2 trillion to cut from the deficit surely know that proposals such as raising the retirement age are bound to encounter enormous opposition from AARP-like groups — especially the ones dominated by those baby boomers who are now retiring and whose entire lives have reflected an après moi, le déluge mentality. Supercommittee members are also no doubt conscious that older people — many of whom are already very unhappy about Obamacare’s forthcoming changes to Medicare — have an alarming habit of turning out to vote in far greater numbers than their children and grandchildren.

Read Samuel Gregg’s “America’s Gerontocracy” on NRO.

Also see PowerBlog postings on “intergenerational justice” by Jordan Ballor, executive editor of the Journal of Markets & Morality.

Roger Scruton has written an excellent piece on the moral basis of free markets; it’s up at MercatorNet. He begins with the Islamic proscriptions of interest charged, insurance, and other trade in unreal things:

Of course, an economy without interest, insurance, limited liability or the trade in debts would be a very different thing from the world economy today. It would be slow-moving, restricted, and comparatively impoverished. But that’s not the point: the economy proposed by the Prophet was not justified on economic grounds, but on moral grounds, as an economy of righteous conduct.

Our long-term economic malaise may mystify world leaders, but Scruton sees its causes clearly: ways intended to speed economic development have become ways to acquire luxuries without payment; we have confused trade in debts with others’ assumption of our debts. This moral confusion is as much to be found in governments as it is in private markets, because the incentives are exactly the same — anyone who denies it is lying.

If you borrow money you are obliged to repay it. And you should repay it by earning the sum required, and not by borrowing again, and then again, and then again. For some reason, when it comes to the state and its clients, those elementary moral truths are forgotten.

Scruton concludes that morality is inescapable — though we may delay it, judgment will come.

The moral sense emerged in human beings precisely because it has proved to be, in the long run, for their advantage. It is the thing that puts a brake on reckless behaviour, which returns the cost of mistakes to the one who makes them, and which expels cheating from the fold. It hurts to be punished, and states that act wrongly naturally try to avoid the punishment. And since they can pass on their hurt so easily to the rest of us, we turn a blind eye to their behaviour. But I cannot help thinking that the result is at best only a short term economic advantage, and that the long term costs will be all the greater. For what we are seeing, in both Europe andAmerica, is a demoralisation of the economic life. Debts are no longer regarded as obligations to be met, but as assets to be traded. And the cost of them is being passed to future generations, in other words to our children, to whom we owe protection and who will rightly despise us for stealing what is theirs.

Read the full text here.