Let's All Help to Reduce the National Debt and Fight Gridlock

Well, the election is over, but we seem to still be where we left off.  The United States is rapidly approaching a debt ceiling crisis, and will hit the $16.4 trillion mark at the end of the year.  The debate on reducing the deficit will begin as well.  Obama wants to let the Bush tax cuts expire for those making over $200,000 ($250,000 for those filing jointly).  John Boehner is still opposed to raising any taxes, in spite of the fact that if an agreement isn't made and the debt ceiling extended, we will go into sequestration.  Obama says that will not happen, but I don't know what he can do to prevent it if the Republicans don't give in on the tax issue.  Here we go again with gridlock, and this time it could lead to disaster.

We need to let our elected officials know that they must come to a bipartisan agreement.  Perhaps one of the ways is for all of us to make a donation to the special agency which is set up by the Treasury Department to receive gifts. You can actually make a gift by check or credit card that will be used to directly pay off the national debt.  If everyone who voted gave only $10, our national debt would be reduced by over a billion dollars a year.   After making the gift, we should send a message to our  representatives informing them that Americans of both parties know to take action to lower our national debt, and that they should take our lead and come to an agreement on these critical issues.

I've already made my donation.  If you're interested in this idea, and want to join me, visit the following link:

http://mperrottet.hubpages.com/hub/How-You-Can-Help-Reduce-the-National-Debt-Right-Now

Why Medicare Needs to Negotiate Part B Drug Prices

Allowing private health care providers to negotiate prices for drugs is not keeping drug prices down.  It seems to me that, in fact, it is forcing many drug prices up artificially.   Here are two examples:

When generic Lipitor (atorvastatin)  was first put on the market, it cost much more through many Part B health care plans than it did buying it on the open market.  The private providers had cut deals with Pfizer, the manufacturer of Lipitor, to keep the generic price higher than the price of the brand name Lipitor.  This was meant to encourage members to pick Lipitor instead of the generic.  These artificially high prices lasted for about 6 months, then the price of the generic finally came down.

Now generic Plavix (clopidogrel) has hit the market.  When I checked on how much this would cost my husband through his Medicare Part D plan provider United Healthcare, we were told the price was $70.00 for a thirty day supply of clopidogrel.  My husband is in the doughnut hole, and so we have to pay full price for whatever we purchase.  I checked the regular pharmacy price for this drug, and it was being sold for as low as $15.00 for a thirty day supply.  Why the discrepancy?  I have to think that once again, the negotiated price through our health care provider was ridiculously high because some kind of deal was cut with Bristol-Myers Squibb, although I have no proof.  Whatever the case, the cost of $70.00 compared to $15.00 can't be justified.  Obviously the negotiated price is out of whack.

If Medicare was allowed to negotiate the prices of drugs, this type of thing would no longer happen.  It is a fact that the prices negotiated through the Tricare military health care plan are cheaper than that negotiated through private health care providers.  An analysis by the National Committee To Preserve Medicare and Social Security showed that Tricare prices on the top 10 drugs being used were 48% cheaper than Medicare Part D prices.  That's a huge difference.

Allowing the negotiation of drug prices through private health care providers was passed along with the Part D legislation.  Also, it prohibited the purchasing of drugs from Canada, another bad move.  Initially, the Affordable Care Act had provisions to allow Medicare to take over the negotiations, but this was taken out.   This should absolutely be brought up again, and passed.  Obama has promised to repeal the prohibition and let Medicare negotiate prices, but it hasn't happened yet, and certainly won't even be brought up again unless he gets reelected.  Whoever wins needs to look at this critical issue.  It would greatly help seniors and would bring down the skyrocketing cost of pharmaceuticals.

NAFTA Was SHAFTA

Today I read another installment running in the Philadelphia Inquirer from the book "Betrayal of The American Dream". It discussed the huge loss of progamming jobs that flew out of this country from 2002 and has continued ever since.

Here are the figures:

1990 - 558,880

2002 – 499,000

2006 – 435,000

2008 – 427,000

These were jobs that used to be thought of as used to be high paying jobs – jobs that required a higher education, but ensured a bright future. I worked in this field, and remember when you could look in the Want Ad section and there would be pages of job opportunities. Now it's down to a single page or two.  How sad. 

The book states that for years we have been given misleading information concerning the benefits of outsourcing. The line has always been that outsourcing will bring other jobs back to the country. For example, Gary Clyde Hufbauer, former assistant secretary at the Treasury Department made a prediction that NAFA would generate 7-9 billion dollars in trade, and produce 170,000 jobs. What actually happened? An immediate trade deficit with Mexico that in 2012 has amounted to $700 billion as well as the loss of thousands of decent paying manufacturing jobs in this country.

I voted for Ross Perot, and it seems as if my vote was justified. NAFTA was SHAFTA. And what do our two presidential candidates have to say on the subject?

Well, mostly they're calling each other outsourcers, and giving misleading facts without anything to back their accusations up. Romney is calling Obama the “outsourcer-in-chief” because of green energy jobs in other countries, and Obama is saying that Romney will be an “outsourcer-in-chief” because while he was in charge of Bain Capital, there were lots of jobs outsourced. I checked, and neither claim can be backed up. Check these links:

http://factcheck.org/2012/06/obamas-outsourcer-overreach/

http://www.washingtonpost.com/blogs/fact-checker/post/obama-and-outsourcing-a-guide-to-the-gops-charges/2012/07/11/gJQA1LBIeW_blog.html

What I'm interested in is this - what is either candidate going to do about it? Obama wants to tax companies that take jobs out of the country. He also wants to offer tax credits that would stimulate the manufacturing of goods in this country (especially green energy). However, he reneged on his pledge to renegotiate NAFTA. Romney talks about making fairer trade policies with China, and stopping them from manipulating their currency. Obama has talked about this problem as well.  Romney wants to reduce taxes on overseas profits, which would only increase outsourcing. Mother Jones has an interesing article that claims neither candidate is really interested in changing things, and that both support globalization, and therefore the inevitable outsourcing that is a result of it. I hope that Mother Jones is mistaken. 

The bottom line is that we should be listening carefully for real solutions to this problem, not just name calling.  Let's hope that both candidates can offer concrete policies that can stop the bleeding of our American jobs.

In the meantime, you may want to check out this link to What Went Wrong .  It's a real eye-opener.

Romney Should Release Tax Returns - And So Should Others

It it beyond me why Mitt Romney refuses to release more of his federal tax information.  So far he has only released part of his 2010 tax return, withholding a separate document with the IRS that provides additional details on overseas bank holdings.  The part of the 2010 that he did show revealed that he had a Swiss bank account, but the Report on Foreign Bank and Financial Accounts that is required when such an account is held would show more details concerning the Swiss bank account.  He hasn't released this yet, and seems to be refusing to do so.  Romney says that he will release his 2011 return, but will go no further. 

It seems to me that to quell any suspicions he should reveal more than two years, and he should also make sure to hand over any documentation concerning the Swiss bank account.

Should there be a law requiring a certain number of years of disclosure?  Probably every president as well as members of the Congress and Senate should have to reveal at least three years of tax information when running for office, and should have to produce such information on an annual basis while in office.  Recently members of Congress were asked to reveal tax information by McClatchy Newspapers.  Only 17 of 536 members released their most recent tax information.  This is a disgrace!

By the way, there's a site where you can see tax information from different candidates - 

http://www.taxhistory.org/www/website.nsf/Web/PresidentialTaxReturns/

Barack Obama's returns are there from 2000 on.  Mitt Romney's 2010 and 2011 returns are there as well. Take a look. 

Why Are Medical Costs So High In The United States?

The United States has the highest costs for medical care of any other developed nation, and yet we do not get better health care for that cost. We are not sicker, we don't go to the doctor more often, and yet our costs are sky high, and rising every year. It is projected that we will pay $13,708 dollars per capita by 2020, or 19.8% of our GDP.

In research I did for on my article  “Why Are Medical Costs So High In The U.S.A.?”,  I found that there are four major reasons of these escalating costs:

1. We pay doctors more in the United States – in 2008, general doctors make an average of $186,582 as compared to Australia at $92,844 and France at $95,585. There is an even wider gap among specialists – the average in the U.S. Is $442,450 next to Britain at $324,138, with all other countries coming in at less than $210,000.
2. Drugs are more expensive in the U.S. - In fact we pay 60% more in this country than our European peer countries. Why? Perhaps the power of lobbyists in Washington has much to do with the lack of regulations regarding these prices and with not allowing importing drugs from other countries.
3. Administrative Costs are more – in fact, for every office based physician there are 2.2 administrative personnel, more than the number of nurses, clinical assistants, and technical staff put together.
4. We overuse diagnostic tests – The overuse of diagnostic tests has been estimated to cost about $250 billion dollars a year. This is 10% of the entire cost of health care. Doctors may overuse diagnostic tests because of fear of litigation.

What can be done about these excessive costs? Solutions I've seen have included

1. Encouraging more care from primary physicians rather than specialists
2. Allowing drugs to be imported
3. Better negotiation of drug prices by medicare
4. Adopting more uniform procedures for payment and billing
5. Have centralized database of electronic records
6. Tort Reform to prevent frivolous law suits
7. Promote wellness and preventative medicine

Some of these cost cutting solutions will be introduced under the Affordable Care Act. It has provisions in it to encourage wellness, such as discounted premiums for participants in wellness programs. It also introduces regulations to streamline administrative costs through the use of electronic record keeping. There will be a 15 member Independent Medicare Payment Advisory Board whose task is to study ways to contain Medicare costs and offer solutions. These solutions are supposed to reduce the growth rate of medicare costs while still maintaining or enhancing beneficiary access to quality care. Many are critical of this panel saying that they will ration out health care to seniors and cut access to services. However, it states in the Affordable Care Act that the board is not allowed to offer solutions that ration health care, restrict benefits, raise beneficiary cost sharing or raise premiums. Hopefully their solutions will help bring down the unbearably high cost of medical care, and serve as a model for the rest of the health care industry.

An Example Of Why Medical Costs Are So High

I am very careful about checking on the Medicare site to see what tests and procedures I'm eligible for.  Last November I noticed I was due for an Annual Wellness Exam, and so I scheduled it.  I specifically told the office to make sure it was scheduled as a Wellness Visit, so that there would be no problem with payment.

The Annual Wellness visit is an attempt at preventative medicine.  The purpose of this visit is to sit down with your physician and evaluate your medical history, your current health status and what medications you are taking.  The physician is supposed to check your blood pressure, vision, weight and height, make sure you're current with all your preventative screenings (shots, colonoscopy...).  Further tests may then be ordered depending on what the physician determines from this evaluation.  (For some reason, Medicare doesn't pay for a complete annual physical.  However, I don't think that many doctors are aware of the difference, and incorrectly carry out a complete physical, then bill Medicare incorrectly.)

When I arrived for the Wellness Visit, one of the nurses weighed me, gave me an eye exam, took my blood pressure and gave me a hearing test.  I of course assumed that this was part of the Wellness Exam, and that nothing being done was extra.  The doctor then carried out a brief physical, talked to me about my health in general, and that was the end of the visit.  The visit took probably about 15-20 minutes.

Imagine my surprise when I got a bill for $70.00 six months later.  The office had billed Medicare $160.00 for the Wellness Exam, $45.00 for the hearing test, and $25.00 for the eye exam.  Medicare would not pay for the hearing test and eye exam that was being billed on top of the Wellness Exam.  I wouldn't expect them to - the eye test should have been covered under the $160.00 that they got from the Wellness Exam itself, and the hearing test probably should never have been done at all.

Now it is up to me to fight this bill, and spend possibly hours trying to get things straight.  I have already made six phone calls to the billing department and the doctor's office, arguing that the $70.00 charge should be dropped.  The doctor's office has told me that they don't know what insurance providers cover, that they just go ahead and do a regular physical, and that they are billing the way that they were taught.  They claim that it is not up to them to know what's covered by each patient's insurance.  I tried to explain to them that the Wellness Exam is not a regular physical, and that they should know what's covered so that their patients don't incur unexpected costs, but I got nowhere with that.  I also argued that they are actually double billing for the eye exam, and that the ear exam was something that I never asked for, and that if it wasn't covered they shouldn't have done it.  Again, I got nowhere.

My point to all of this is that in order to bring down costs, the medical providers should know what is covered by Medicare.   It may be difficult to figure out what procedures are covered by other providers, but in the case of Medicare,  it's pretty straight forward.  I believe that there's software to assist the medical establishment with such issues.  Whenever they are going to do anything that will not be covered, they should specifically ask the patient before they carry out a procedure.  Certainly if I had been asked if they should do the ear exam for $45.00 I would have given them a resounding NO!

Under Rick Santorum We Would Have A Theocracy

According to the dictionary, a Theocracy is a a system of government in which God or a deity is held to be the civil ruler. Well, according to Rick Santorum, that is what he wants for this country. Recently in Idaho he stated once again “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their — ” (pausing for the crowd to shout “Creator!”) “with certain unalienable rights.”

“That is who we are, that’s where our rights come from,” he said, eliciting “Bless the Lord!” from the audience.

Based on this, Santorum is saying that the creator should be the ultimate authority that determines our governmental policies, not the constitution. Hmmm – isn' t that a theocracy? With Rick Santorum you can expect that his interpretation of what the creator wants from us will be the rule of the land. Of all the scarry Republican candidates, Rick Santorum is the worst, because he is so firmly convinced that he is capable of interpreting God's will. Therefore, It is his destiny that he march forth with his trumpet and make us buckle under to that interpretation. Don't get me wrong – I have some strong personal religious beliefs, and am not anti-religious. What I am is for the seperation of Church and State. I am also strongly for religious freedom. That means freedom for those that do not believe as I do as well as for those that do. Under Rick Santorum, that is not what we would be getting.

I think that Mitt Romney, even though he is not all that popular with Republicans, even though he is a known flip-flopper, is the best that the Republicans have to offer. Rick Santorum just has too much of a religious agenda, and would cross the line of division between church and state.  

Let's Hope Newt fades out!

It's hard for me to believe that Newt won South Carolina. ( I actually was hoping that Colbert would win, but no such luck!).

Seems to me that the win in South Carolina was a response to Newt lashing out at the press in response the the question regarding his request for an open marriage.  Seems that South Carolina Republicans love it when someone tells off the "liberal Obama loving" press.  It should be interesting to see if Florida feels the same way. I certainly hope not.  Newt scares me more than any of the other Republican contenders.  He is arrogant, impulsive, and morally weak as demonstrated by his past history with wives, past misuse of funds and other suspicious activity, as I stated in my previous blog.  Worst of all, he thinks he is smarter than he really is.  All in all, a dangerous and frightening combination for President.

Guess if he wins Florida the Pac money will follow him.  After all, his past would indicate that he is a man who can be bought.

Newt's Past Will Take Him Down

Although I'm hearing many Republicans on TV say that their latest darling, Newt Gingrich, doesn't have to worry about his past indiscretions, I disagree.  People know a little about his past wives and the extra-marital affairs that he had, but when they are reminded of the sordid details along with the fact that he is the only speaker to have been disciplined by the House since its existence, I think it will sentence him to the same rapid downfall that Bachmann, Perry and Caine suffered from.  He is a morally and ethically weak individual who should not even be considered as a candidate.

Gingrich met his first wife Jackie Battley while in high school.  She was his high school geometry teacher.  He married her at 19 while he was attending college.  Their marriage blew apart when Jackie accused Newt of having an affair with Marianne Ginther, a personnel clerk for the Secret Service.  Jackie was battling cancer at the time, and there are reports that Newt pressed her about the divorce details while she was recuperating from the removal of a uterine tumor (which proved to be benign).  Newt is reported to have said of Jackie "She isn't young enough or pretty enough to be the President's wife".  Newt and Jackie divorced in February of 1981, and six months later Newt married Marianne.  Marianne and Newt seperated in 1987, and got back together in 1993.  However, he had been having an affair with Calista Bisek, a congressional staffer, since the mid-1990's.  Marianne was diagnosed with MS during this time.  In 1999, while Marianne was visiting her mother, Gincrich called her and shocked her by asking for a divorce.  Soon after, he gave her another jolt by confessing that he had been having an affair with Calista Bisek.  Newt married Calista in August of 2000 - she was 34, he was 57.  An interesting twist on the whole series of extramarital affairs was that he publicly flagellated Bill Clinton while he was secretly having the affair with Bisek, which makes him a hypocrite as well as a philanderer.

In 1995 a House Ethics Committee reprimanded Gingrich for having  improper business dealing with Rupert Murdoch.  He had signed a 4.1 million dollar book deal with Murdoch's Harper/Collins press while there was pending legislation in FCA matters that directly affected Fox Broadcasting Company.  Later in 1997 Newt underwent an investigation by the House Ethics Committee again.  There was questionable activity surrounding the use of funds from two tax exempt 501c (3) organizations, the Abraham Lincoln Foundation and the Progress and Freedom Foundation to pay for a college course that he was teaching.   The committee fined him $300,000  for violating House rules barring use of tax-exempt foundations for political purposes and lying to the committee.

Nancy Pelosi recently brought his ethics violations back up, since she had served on the Ethics Committee.  Gingrich has tried to make it look as if the whole matter was a partisan driven matter, a "Pelosi driven effort".  This is untrue - and in fact, the committee was evenly divided by party, and Polosi was only a junior senator at the time.

Americans do not want a person of low moral and ethical character to be President.  I think that utlimately Republicans will reject Newt because of his moral and ethical shortcomings, just as they rejected Herman Caine.

Now Is The Time To Outlaw PACs and Lobbyists

Lobbyists have always had power, but super lobbyist Grover Norquist is an example of how dangerously crippling to our government that power has become. Backed by the multi-million dollar organization Americans For Tax Reform, Norquist is considered by many to be the most powerful man in Washington. The supercommittee tasked with finding a plan to reduce the national deficit by 1.2 trillion dollars over 10 years was crippled by the pledge that the Republican members had made to Norquist to not raise taxes under any circumstances. This should be an eye-opening example of the insidious influence the lobbyists and campaign contributions have on our political process.

This election year will be more influenced than ever by the Super PACS that have formed after the ridiculous Citizens United decision was made by the Supreme Court that allows corportations and unions to spend unlimited sums of money for political messages. They are allowed to donate unlimited sums of money to nonprofit organizations (such as Norquists Americans For Tax Reform) or trade associations (unions) which can then spend huge sums of money advertising.

If ever there was as time that we need to look into the issue of campaign reform it is now.  Robert Steele. a former spy, has urged Occupy Wall Street to make this their most important central issue that they take to the people. I agree with him that this should be their cause. He is pushing for an Electoral Reform Act of 2012  that would eliminate corporations from contributing in any form (including individual contributions from employees) to any political campaign. All air time and media print space would be free and equal to all candidates.

This would be a start. We need strong laws that get rid of the domineering influence that special interest groups have on our government, corporate and otherwise. I think we need to go to a system where all presidential elections are paid for only out of the Federal Presidential Election Campaign Fund, and contributions are limited to $10.00/person. Lobbyists should be done away with. The idea of lobbying was to make sure that the people could petition the government, but it has become twisted and no longer serves its original intent. If we take these steps, the true voice of the people will finally be restored instead of the influence of overly powerful groups.

Super Committee Announces Failure

So the Super Committee just announced its failure, and the blame game begins. I think that the foolish pledge Republicans made to Grover Norquist to not raise any taxes is the main reason that negotiations could not be made.

John Kerry stated: "The pledge to Grover Norquist keeps coming up.  Grover has been the 13th member of the (super committee) without being there. I can't tell you how often we hear about the pledge."

So the pledge to one man superseded the pledge that our congressmen made to America.  (see more in my article Get Grover Norquist Out Of Our Government!)

I am not surprised at this failure.  We have a dysfunctional government that can't seem to solve any of our problems at a crucial time in our country's history.  The members of the Super Committee just couldn't rise above being politicians, and act as concerned Americans for the real problems that this country is facing.  So the stock market responded by falling 248 points.  I'm surprised that it wasn't more, but we still have time to see that happen.

The Super Committee and this Congress and Senate have let America down, and we could be facing some tough times ahead because of their failure.

Rick Perry Shows Serious Lack Of Involvement In His Own Issues

I believe that what we saw from Rick Perry in the last Republican debate was much worse than a senior moment.  I think that his inability to remember all three of the government departments that he wants to totally eliminate - the Department of Commerce, the Department of Education and .....

Oh, yeah - the Department of Energy ends up to be the missing one that he would doom to extinction.

Wouldn't you think that his mind would be full of the evil policies that these malicious government agencies do that cause him to want to get rid of them?  In the case of the Department of Energy, wouldn't you think that somewhere in his mind, if he really know what energy policies the Department of Energy promoted that caused him such angst, that the word energy would have popped into his head, causing him to remember the department's name?

I think that Rick Perry has little investment in what he was saying, and that it was merely policy that had been fed to him before the debate.  This is why he couldn't recall the name - lack of knowledge, lack of investment, lack of real caring.

Republicans May Offer Tax Reform To Raise Revenue In Trade For Lowering Taxes On the Rich

The Republicans on the super committee have reportedly offered a plan to raise revenues that includes putting a cap on itemized  tax exemptions that most middle class tax payers benefit from such as the write off on home mortgages in return for lowering the tax rate on the everyone, including reducing taxes on the wealthy from 35% to 28%.  Democrats are rejecting the offer, and calling it a joke.

Seems to me that once again, Republicans are offering up plans that benefit the wealthiest the most.  Those who gain the most from the current exemptions such as mortgage interest and child tax credits are the lower income and middle income Americans.  If you take these exemptions away, they will feel the most impact.  Do those earning over $250,000 really need their taxes reduced?  Most people think not.  I would have to see the details of the offer, but initially, it looks like a bad deal.  

It looks as if this plan is dead anyhow, since the Democrats have strongly rejected it.  Will the super committee be able to come up with some kind of compromise soon?  Let's hope so.

Will the Super Committee Do Their Job?

The so called congressional “super committee” of 6 Democrats and 6 Republicans has been holed up in secrecy since they were assigned the task of coming up with a way to cut at least 1.2 trillion dollars over 10 years by November 23^rd. There have been two public broadcasts of the hearings, but in general the public hasn't gotten to see what is going on. However, lobbyists have been freely accessing committee members. In fact, the committee has received nearly 180,000 submissions from lawmakers, advocacy groups and ordinary Americans.

So will they be able to do their job and come up with some reasonable recommendations by the November 23^rd deadline? At this point it is looking very doubtful. The Republicans want to only make cuts to the budget, mainly to programs like social security, medicare and education. They insist on NO tax increases. NONE. To my knowledge, they remain immovable on that point. So how can they possibly come to any agreement?  The Democrats have offered plans with significant cuts in social security and medicare, but only if taxes on the wealthy are increased. So here we are at the same old impasse that we have been at for what seems like forever.

So this not so super committee will probably fail in its duty to find some reasonable compromise that both parties can live with simply because the Republicans will not budge about raising ANY taxes.  This is a ridiculous stance to take at a time when the country needs to get serious and not only cut spending but increase revenues as well.

If the committee  fails, there will be automatic cuts (sequestration) that will happen in 2013. The biggest cuts will be in the defense budget (about $60 billion a year) and Medicaid.  Tax rates will go back to the Clinton era taxes, since the Bush tax cuts will expire.   Just as S&P had lowered our credit rating because Congress didn't enact a clear debt reduction plan, Moody and Fitch could follow suit, and S&P could lower their rating some more. Who knows what effect that will have on an already fragile economy.

Hopefully this super committee will pull together and do their job. If they don't America will loose even more faith in what is proving to be a completely dysfunctional government.   It is clear that we should blame the unyielding Republicans for any consequences that may happen.

Sick of the Job Creator Rhetoric

Last night the Senate voted down Obama's $35 billion jobs bill to hire teachers, policeman, firefighters and other first responders.  The bill was to be paid for by taxing those earning over a million dollars and extra  .5% , or $5,000 on a million dollars. The vote was 50-50 with all republicans voting it down.  One of the reasons stated for not passing it was that it would place an unfair tax hike on about 300,000  "job creators".  Every time there is an inkling of taking money from the wealthy, there is a knee jerk reaction  "But you will be hurting the job creators".

First off, jobs are created by demand for goods.  Jobs are created by the 99% of the people not making above one million dollars that are pumping most of their paycheck into the economy.  Taxing those making over 1 million dollars is not going to cost us any jobs.  The richest will probably spend the same amount even after you have reduced their income by .5 percent.  And I highly doubt that this amount would affect any decisions on whether or not to put money into a business.  Businesses have enormous amounts of money that they are holding onto right now, and they will still not hire people.  Adding a small percentage of personal income tax on so called "job creators" will not change that.

As far as I'm concerned, the "job creator" lingo is just code for "Don't dare touch the rich".

Herman Cain's 999 Plan is Unfair to Poor and Seniors

I came across an interesting calculator on the internet, the Herman Cain 999 calculator, and I figured out what my taxes would be if this plan were implemented.  Last year Bob and I paid $335 in taxes.  Under Cain's 999 plan, we would pay about $8,500.   I was so upset I wrote an article "Herman Cain's 999 Plan Threatens Seniors".  The bottom line is that Cain's plan favors the wealthy and penalizes anyone who has to spend a large percent of their money on goods, since practically all new goods are taxed at the 9% rate.  The effective tax will be highest on those who don't make much money but have to pay most of their money out for goods.  Seniors are at an added disadvantage since Cain is taking away the payroll tax.  Those working would effectively get 6.2 percent more than those retired.  How is this fair?

If you want to check out Cain's plan to see how it will effect you, go to the Herman Cain 9-9-9 calculator.  I think that there will be many of you that will find out your taxes will be higher under this plan, not lower.

How We Can All Help Reduce the National Debt

Many of us in this country are disturbed and extremely concerned about the growing national debt in this country.  The super committee is now looking at ways to make reductions in our expenses and bringing in more revenue.  I myself support raising the taxes on the wealthiest, but it occurred to me that all of us could help out.  If a line item was added on our income tax form 1040 to contribute $3.00 or more to the "Reduce the US Deficit Fund" in the same way that we contribute $3.00 to the Presidential Election Campaign Fund, I would readily donate, and I think the majority of other people would too, especially those that were getting money back.

The Tax Policy Center reports that there will be 155.1 million tax units in 2011.  If we collected an average of  $3.00 from all of them, that would bring in $465 million a year, and over 10 years would bring in $4.65 billion - not a trivial amount!  Individual contributions would be such a small amount that hardly anyone would miss it.  However, it would make us all feel as if we were helping our nation dig out from under the tremendous burden of debt that we are in, rather than feeling helpless and frustrated.  If the amount were left open so that we could contribute whatever we wanted, the amount would probably be even larger.

The bottom line is that most of us, Democrats, Republicans and Independents, love this country dearly, and if called upon to donate a small amount to help solve this critical debt problem, we would be more than glad to do so.

Who Doesn't Pay Taxes?

According to the Tax Policy Center, 46.5 of all tax payers will not pay any federal income tax in 2011. Not only will they not pay into the system, but some will actually get money out of the system without putting in a dime. I hear it on the news, I've read articles about it, and I am ready to grab a pitch fork and join the angry mob that is forming against these people that are draining our system.. "How is this possible?" I asked myself. I wanted to find out more about who these people were and how they were avoiding paying their fair share of taxes.

First I made up a spreadsheet based on the numbers from the Tax Policy Center. I wanted to see what the demographics were for each of the financial categories. Then I decided to fire up Turbo Tax 2010 and explore fictitious cases for the largest demographic groups in selected financial categories to see how they made out in 2010. Here's how things fell:

Under $10,000 - 24,300,000 or 31.9% will not pay income tax.
79% single, 7% married, 14% Head of Household, 16% have children, 13% are elderly. Many that fall into this group could be students, workers who just started and only worked part of the year, elderly that just started on social security and haven't received it for the full year.

2010 Case 1: Jeffrey is a college student trying to work his way through college. He has taken out student loans, and is paying the interest on them. He earned $9,000 and paid no taxes because of the peronsonal exemption, education credits and deductions for the interest on his loan.

$10,000 - $20,000 - 22,836,000 or 30% will not pay income tax.
65% single, 12% married, 23% head of household, 25% have children, 38% elderly.

2010 Case 2: Jane is a 67 year old retired widow who collects $1,400 in social security or $16,800 a year. She took $10,000 from her IRA. Her total income is $26,800 a year, but she is only taxed on 1/2 of her social security, and after adding in that amount with the $10,000 she is still below the $25,000 limit for a single person on social security.  Therefore, she paid no taxes.

$20,000 - $30,000 - 12,653,000 or 16.6 will not pay income tax.
43% single, 22% married, 35% head of household, 45% have children, 32% elderly

2010 Case 3: Marie is a single unmarried mother with two children. She works at low paying job, but is going to school to better her future. She earns $25,000 a year, and took out a loan for a $3,000 course in medical terminology. She can deduct her tuition and interest, and gets $2,479 in Earned Income Credits as well as $2,000 for the Child Tax Credit. She also received a Making Work Pay credit of $800. She paid no taxes, and got $3,834 back from the government.

$30,000-$40,000 - 7,112,000 or 9.3% will not pay income tax.
18% single, 43% married, 39% head of household, 61% have children, 23% elderly.

$40,000-$50,000 - 4,188,000 or 5.5% will not pay income tax.
7% single, 71% married, 22% head of household, 58% have children, 31% elderly.

2010 Case 4: Bob has a job making $30,000. Gale earns about $15,000 as a school aid. They have two children. He received an Earned Income Credit, Making Work Pay and a the Child Tax Credit. They own a home and were able to deduct mortgage interest and property taxes.  They paid no taxes and received $947.00 back from the government.

$50,000-$75,000 - 2,858,000 or 3.8% will not pay income tax.
9% single, 77% married, 14% head of household, 66% have children, 23% elderly.

2010 Case 5: Gerry has a $60,000 job, his wife Kay is a stay at home mom. They have a modest house with a mortgage, and four children. They paid no taxes and received $1,629 from the government because of the personal exemptions, dependent child credits, making work pay credits and the standard deduction.

$75,000 - $100,000 - 723,000 or .9% will not pay income tax.
11% single, 82% married, 7% head of household, 68% have children, 16% elderly

$100,000 - $200,000 - 381,000 or .5% will notpay income tax.
20% single, 75% married, 5% head of household, 45% have children, 21% elderly.

2010 Case 6: Ted and Kelly have three children. Ted earns $50,000 and Kelly earns $50,000. They own a $350,000 house with a mortgage They just bought an energy efficient Chevy Volt, and got the full energy efficient car credit of 7500 plus $2,100 off for the new car tax. They also spent $2,000 on new energy efficient doors and windows. They have to send their youngest two children to day care, but get to deduct that cost. They paid no taxes and received a check for $1,665 from the government.

$200,000-$500,000 - 81,000 or .1% will not pay income tax.
22% single, 77% married, 1% head of household, 41% have children, 23% are elderly.

I tried to provide sample cases for those earning over $200,000, but I couldn't come up with enough tax breaks to get them down to 0. I guess that the 110,000 people that earned $200,000 to over $1,000,000 that paid no taxes can afford some pretty good tax accountants.

$500,000 - $1,000,000 - 22,000 or less than .01 percent will not pay income tax.
18% single, 68% married, 14% head of household, 40% have children, 23% are elderly.

More than $1,000,000 - 7,000 or less than .01 percent will not pay income tax.
15% single, 85% married, 0% head of household, 42% have children, 14% are elderly.

What can we surmise from this study?

1. The poor shouldn't be demonized for not paying taxes. Considering that there are so many elderly and people with children earning below $20,000 I would expect that the 61% comprising this group would not have to pay taxes. Between the personal exemptions that everyone gets, child tax credits, earned income credits, and the social security exemptions this group often becomes relieved of any tax burden. Also, let's not forget that all of these people still have to pay payroll taxes, excise taxes and perhaps state and local taxes.
   
2. The tax code definitely favors families with children, students and senior citizens. It also gives incentives to work, and promotes energy efficient homes and cars through cash rewards. These are simple values that most of us support, but it may be questionable if the tax system should be the mechanism to promote these things.
   
3. It is not that hard to make money from the system - not pay any taxes and still get money back. It was easier than you would expect in brackets $50,000 and above. I didn't even think it would be possible in the $100,000 but it was. This seems wrong, and probably needs to be addressed. I don't think any tax system should pay you back money once you have reached 0 tax liability.
   

Perhaps the tax code does need to be reformed to make things more fair and generate more much needed revenue. However, fair is the key word. Nobody that works and falls into the defined poverty levels should have to pay taxes. However tax reform unfolds, those who can pay their fair share should, but we should not put an unfair burden on those who can't afford it and we should not unfairly burden those who can.

Why The Payroll Tax Holiday Should Not Be Extended

Hooray - we may be getting our "Payroll Tax Holiday" extended!  Doesn't the name make you feel like breaking out the champagne glasses and celebrating?  We're getting another holiday!  It seems to be one of the few things that Democrats and Republicans can agree on.

But wait a minute - before we party on, let's look at the facts.  The benefits to the everyday worker are small ,  but the cost to the government in making up the deficit is huge.   The payroll tax holiday reduces worker's contributions into social security from 6.2 percent to 4.2 percent.  To a worker making $50,000 a year this means getting an extra $1000 a year or $19.23 a week.  I am not saying that today's worker's can't use the break and that they wouldn't put the money back into the economy, but I think that the cost to our national budget outweighs the advantages.  Did the tax holiday improve the economy last year?   It doesn't appear to have done much at all.

According to FactCheck.org , last year the Congressions Budget Office's figures projected that the tax holiday will drain the government's general fund of $85 billion in this fiscal year and $29 billion in fiscal year 2012.  All of this money must be borrowed, and contributes to the national deficit.

We need larger scale propositions to get our economy going.  Why don't we look at important issues like the tremendous trade deficit that this country suffers from.  If we could get more of a market for American products, this would be a better way to grow the economy.  We need to look at long term sustainable efforts to grow the economy, not short term solutions designed to give everyone instant gratification.   When longer term solutions take effect I will indeed break out the champagne glasses!

Has Social Security Really Been Raided?

The other day I got concerned about what changes would be passed concerning Social Security since any changes will greatly affect me.  So, I started out by looking at the proposals put forward by the two non-partisan committees (the Simpson-Bowles commission and the "Gang of Six")  to see what they recommended.  In both reports it is stated that changes need to be made to keep Social Security solvent into 2036, because at that point there will only be enough left to pay 75% to social security recipients.  I started to investigate when this shortage was first reported, and I found many reports  from the American Adademy of Actuarials - an association that assists public policymakers on all levels by providing actuarial advice on risk and financial security issues.  One of the earliest publications,  Social Security Options and Their Effect on Different Demographic Groups reported the shortage in  1999, but this shortage has been known about as early as 1980.   In 1983 the tax rate was raised during the Reagan administartion in order to build up enough money into the trust fund for the baby boomers, and you hear repeatedly that there is now 2.6 trillion dollars in that trust fund, and that is what makes Social Security solvent until 2036.
As I continued to read articles concerning all of this, I ran into the ones that rage about Social Security having been raided, and that there is really no money in the trust fund.   I decided to investigate on my own if this is true.

The government buys special government bonds with any surplus that is seen from unspent SSI taxes, and these bonds have to be repaid with interest when needed.  However, once the government puchases these bonds, the money is immediately available to be used for other government needs, usually to pay down the current federal debt.   This surplus actually has the effect of  making  the deficit in the Federal fund look smaller than what it really is.

Therefore, there has never been any cash in the trust fund, but there are bonds that the government is fully obligated to pay back when needed.  The government will have to use federal funds to pay back the trust fund to cover any shortages that exists between social security revenues and Social Security expenditures.   As reported in the 2011 Trustees Report on the Social Security web site:

Social Security expenditures exceeded the program’s non-interest income in 2010 for the first time since 1983. The $49 billion deficit last year (excluding interest income) and $46 billion projected deficit in 2011 are in large part due to the weakened economy and to downward income adjustments that correct for excess payroll tax revenue credited to the trust funds in earlier years. This deficit is expected to shrink to about $20 billion for years 2012-2014 as the economy strengthens. After 2014, cash deficits are expected to grow rapidly as the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers. Through 2022, the annual cash deficits will be made up by redeeming trust fund assets from the General Fund of the Treasury. Because these redemptions will be less than interest earnings, trust fund balances will continue to grow. After 2022, trust fund assets will be redeemed in amounts that exceed interest earnings until trust fund reserves are exhausted in 2036, one year earlier than was projected last year. Thereafter, tax income would be sufficient to pay only about three-quarters of scheduled benefits through 2085.”

So although there is a 2.6 trillion dollar surplus in the Social Security Treasury Fund, that surplus is really a government debt that has to be paid back.  I don't know if you can say the money was stolen or the trust fund raided, but you certainly can say that it was spent, and now it is payback time.

These facts can be used by either Democrats or Republicans who can accuse each other of using the funds for their own purposes.  The fact is that whenever there is a deficit in the federal budget, these funds have been used to pay it down, and there has been a federal deficit through both Democratic and Republican administrations except for Clinton. 

It really is too late to question the wisdom of handling the Trust Fund in such a way since there is no longer a surplus coming in, and there will not be a surplus in the forseeable future.  However, when the discussions come up about how to handle the upcoming shortage in Social Security, keep in mind that it would hasten the reduction of the national debt to reduce current benefits somehow, whether this is fair or not.  The less money that has to be paid back out of what is owed, the less money will have to be borrowed.