May, 2019, Part 1, Political Class Insanity: Social Security Still Going Bankrupt, Bad Priorities, and Minimum Wage Laws and The Hardships They Cause

It is another month which means it is again time to review the latest political class insanity from Washington and around the world. Political class insanity takes many forms including the wasting of taxpayer wealth, criminal fraud within government programs, inane and stupid political quotes and actions, the inability to create and implement effective and efficient government programs, stupid and ill performing economic policies and strategies, and other forms of insanity that continue to evolve and surprise and shock us.

Let’s get started:

1) We have often talked about how quickly Social Security, Medicare and Medicaid are hurtling towards fiscal insolvency with a recent Congressional Budget office report estimating that these three programs have $82 TRILLION in unfunded liabilities over the next 30 years. If you add in the current Federal government national debt, which is over $22 TRILLION, and the $7 TRILLION or so in state government unfunded liabilities, we see that the American political class has run up a debt tab for the next 30 years of over $100 TRILLION. Given that most estimates of the TOTAL amount of wealth in this country is less than $100 TRILLION, we see that we as a country owe more than what we are worth.

But there was a little bit of good news recently coming out of Washington:

• Every year the Social Security Administration does a 75 year view of the fiscal status of the Social Security program.
• In 2017, the estimate for unfunded Social Security liabilities was $43.7 TRILLION over the next 75 years.
• Thus, a rough estimate shows that every American household would have to pay an incremental $4,660 a year for 75 years just to cover the unfunded Social Security liabilities.
• This does not cover the taxes that would have to be paid to cover the funded liabilities of Medicare and Medicaid.
• But good news! The 2018 estimate shows that the unfunded liabilities estimate is now only $42.1 TRILLION.
• This would translate to every American household paying an incremental $4,490 a year for 75 years just cover the unfunded liabilities.

Obviously, the accuracy of predicting something out 75 years is nothing more than a well educated guess. But we now have two separate estimates from two different government organizations who have basically come up with the same conclusion: there is very little chance that Washington politicians will be able to find enough wealth to cover the promises they made for Social Security and Medicare.

2) Given the grave status of the fiscal status of Social Security and Medicare, one would hope that Washington politicians are working diligently to resolve or at least mitigate the dire financial conditions of major government programs that tens of millions of Americans rely on. But readers of this blog know that hoping that Washington politicians do the right thing and have the right priorities is usually a sucker bet. Consider what some of the Democratic Presidential candidates are focusing on recently:

• Social Security is going bankrupt but Bernie Sanders is fixated on giving current murderers, rapists, and pedophiles the right to vote.
• Medicare is going bankrupt but Cory Booker is fixated on giving reparations to the descendants of slaves from over 150 years ago.
• There are tens of trillions of unfunded liabilities for Social Security and Medicare and Elizabeth Warren is fixated on giving away taxpayer wealth to people who have never gotten around to paying off their student loans.

We are doomed when major, major crises are considered secondary to the shallow, selfish political aspirations of politicians.

3) Another topic we talk a lot about in this blog is the continuing reality that whenever a government entity raises the minimum wage, the people that this raising is supposed to help, those in the lower wage levels, actually hurts the economic status of these needier citizens. Almost always the pay rate goes up while the number of jobs available go down, leading to our favorite saying: “the good news is your wage rate went up. The bad news is you are no longer employed.”

Consider recent events concerning the minimum wage in the states of Massachusetts and New York. Warner Todd Huston, writing for the Godfather Politics website on April 27, 2019 explains:

• After raising the minimum wage in their states, Massachusetts and New York found that the net economic change for its workers in those states was negative.
• The raising of wage rates resulted in job reductions, store closings, and reduced hours for those lower wage workers who still had a job.
• Forbes explains: “The ugly side is the payroll tsunami they unleash for smaller businesses, already under stress from soaring healthcare costs and rents.”
• Making businesses pay more for wages is often enough to tip the balance from staying in business and paying workers and going out of business and taking those jobs down the drain with them.
• This is what happened to a 200 year old restaurant in Boston, Durgin-Park, which could not bear the increased minimum wage that state politicians had imposed on the restaurant owners.
• Not only were workers thrown out of work, getting wages now of $0 per hour, but a Boston institution that had survived depressions, recessions, wars, and other challenges was killed off because of the economic ignorance of state politicians.
• A franchise owner in New York state stated his challenge: “First, we have to cut overtime. Next, we have to lay people off, if we want to stay in business.”
• In New York City proper, the minimum wage went up 15% from the 2018 level this year which was on top of a 34% increase in 2018 over 2017.
• These oppressive wage increases caused 76.5% of full service restaurants to cut workers’ hours in order to stay in business and cope with the increase wage expense of their eating establishments, this according to a survey done by the NYC Hospitality Alliance.
• In addition, 36% said they actually cut jobs, putting a lot of people out of work.
• Government statistics support these findings since according to the Bureau of Labor Statistics, while the number of restaurant jobs was growing at a robust 8% annual growth rate in 2012, in the past two years that growth rate has been -2%.

As always: “The good news is your wage rate went up. The bad news is that you no longer have a job.” Unfortunately, the idiots in state governments that exercise their economic ignorance still have their jobs.

Okay that will do it for the first political class insanity for this month: economic ignorance, bad priorities, and Social Security still going bankrupt. More insanity to follow.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at:

https://www.amazon.com/Walter-Bruno-Korschek/e/B002KYU08Q/ref=dbs_a_mng_rwt_scns_share

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Please visit the following sites for freedom:


http://www.reason.com
http://www.cato.org
http://www.bankruptingamerica.org
http://www.conventionofstates.com
http://www.youtube.com/watch?v=08j0sYUOb5w