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Today is School Board Elections…Polls are open 10-8…  If anyone is sponsored by Markell or Rodell or RTTT or WSFS, don’t vote for them.. If anyone is sponsored by DSEA, they are on the students side. They are safe.

So go out and vote like a goat… Be…  B-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-a-D


Google dismantled Safari, to access private data from iPhones.

They deliberately overrode the security setting set by each individual, to find out the browsing preferences of those individuals…

Those individuals specifically set their security setting so their information would not be given out…..

Power corrupts; absolute power corrupts absolutely.

Earlier today I wrote that gigantic penelities need to be levied in today’s world, to protect information.

It is too easy to steal, and any type of security to prevent such stealing is cost prohibitive.

So. fine them… Fine them so it hurts……..

The only reason they tried it, was because they could…

And hat’s off to Murdoch’s Wall Street Journal, for finding, calling Google on it, and forcing Google to disable that program….

I think a proper fine would be a full year’s earnings for Google Inc.

The global markets lost 1% today… Actually that is pretty good. The losses stemmed over the fact that Republicans won’t allow new revenue to enhance our failing budget…….

Like George Washington, they want to apply more leeches (tax cuts) which eventually will bleed the father of our country dry, and kill him dead.

There are great ideas to get around the impasse……

One was so close last week in which Obama and Boehner had come almost to a 4$ Trillion Deal… It was so, so close. Boehner was about to become the Alexander Hamilton of the 21st Century: Historians would forever know him as the man who brought America back from economic ruin…….

But Boehner’s owner, jerked hard on his leash… cracking Boehner’s trachea. He then spun Boehner to the ground, and applied zip strips to his wrists and ankles. He then tazed Boehner repeatedly. For the first time in his life, Boehner did not cry. He was then strapped to a board, tilted backwards into a tank of water, and held for 45 seconds, over 111 times. He was then blindfolded and pummelled with cans of Pepsi, embedded in old cotton socks, leaving no evidence. He then poked with a tube, in his (you know where) and the other end was attached to a fire hydrant.

The next morning, Boehner said the deal was off; he refused to return Obama’s calls.

Leaks from those working for his owners, tell us the taxes on the wealthy 1% were the sole reason Boehner was given “the treatment”… It’s a damn shame; for a package of $3 trillion in cuts, (yes, includes modifications to SS and Medicare) and a Trillion in tax increases on the top 1%… would shake the dynamics of our economy.

It would spur investment here in America.
It would therefore create jobs.
It would stop the uncertainty where America was financially headed.
It would prevent the immediate loss to our economy of $4 billion a day.
It would reduce the deficit over time, and save money spent paying interest, which could then be used for services.
It would be the proper step at this time in the direction we need to go.

But, if the US defaults on its debt, nothing in the financial markets is sacred, and when nothing is sacred, that… causes panics…

And a panic in 1929… caused the Great Depression. A panic in 2008, caused the mess we’re in right now.

The world’s managed wealth is $122 trillion… A one percent drop.. is $1.2 trillion. That is the amount, that one half, of one third our government,… cost the world today.

They are kids, playing with a live junction box… Sticking a screwdriver in the wrong hole, burns down the entire house……

(At $50,000 a job, today’s loss is the financial equivalent of putting 24 million human beings out of work)

Having recently seen the Harry Potter movie, it is scary. Ever since watching…. I now see giants everywhere. Before when I looked, I never knew they were there…

Two giants will be doing battle here in Delaware… (The recession is finally paying off for our little state.)

Papers were filed with the ITC (International Trade Commission) by the South Korean giant Samsung LED against a division of another giant this time from Germany, Siemens….. over 8 patient infringements.

Samsung LED also said it filed a lawsuit in the U.S. District Court in Delaware to seek damages and a permanent injunction to bar Siemen’s subsidary, Osram’s alleged patent infringement from entering this country.

At stake is the financial future of these two companies. One will win, and the other for lack of a better word, will be vanquished.

Since Siemens actually has a plant in Delaware, next to the Glasgow Park off Route 40 and 896, I’m putting my bets on that giant…. if they get hurt, it will cost jobs.

Hotels, restaurants, transportation companies all stand to be a little busier as this gigantic fight, gets under way…. It would be helpful to practice on the Korean and German dialects now, before the event gets under way…

Sprechen sie deutsch?

니미럴 개자식 ….

It should be an interesting fight.

Today the White House issued this Executive Order.

“Should the debt ceiling not be lifted in time by May 16, in order to prevent the Treasury from running out of funds, I am hereby using the emergency powers given to the Chief Executive by the Constitution, to temporarily suspend the Bush Tax Cuts until: 1) either we can legally borrow the funds to continue paying on our commitments, or 2) we bring our debt down to the 2008 level by having much more tax revenue pour in.

This is in effect, immediately, and I have instructed the IRS to recalculate all 2010 tax forms over the level of $2 million dollars, and asses those individuals and companies, for the differences.

We must take this action because Republicans want to pay politics with your lives. As Chief Executive, I am responsible to you, not them. I won’t let that happen.

With these tax cuts out of the way, and with our austerity programs already in effect, that windfall of profit the Treasury will receive, will be entirely funneled towards the paying off our debt.

This policy will continue until Republicans can act reasonably and in a productive fashion.

Barack Obama.

Sometimes to see truth, you just have to sweep away the clutter ….. — kavips

During our previous discussion over the National Debt, it became obvious that our deficit problems stem from these two entitlements: Social Security and Medicare.

Doing away with both will easily bring our national budget into balance, but that act will wreck inconceivable havoc upon the life of every American citizen. Doing just the opposite, offering free unlimited health-care as well as a full blown retirement package to every aging American citizen, unfortunately is no longer affordable when one factors in both demographic and economic factors.

So what do we do?

If one opens one’s mind to possibilities, we have five choices. Simply put, they are these.

a) Keep both as they are:
b) Keep both with modifications
c) Get rid of one; keep the other as is:
d) Get rid of one; modify the other:
e):Get rid of both:.

These are our alternatives. The purpose of this chapter is to look at each one and decide which appears to be the best solution…..

Our first option is to keep these two entitlements as they are without changes. Let’s review the data. In a famous CBS interview, the former head of the Government Accountability Office (GAO), David Walker laid it out clearly. “The cancer”, Walker says, “(is the) massive entitlement programs which we can no longer afford, exacerbated by a demographic glitch that began more than 60 years ago, a dramatic spike in the fertility rate called the baby boom.”

Let’s go straight to the bottom line: how much will it cost us?

The following predictions are based on GAO simulations (2004). If we do nothing about our two entitlements, and if we wish to balance the budget by 2040, we will need to:

1) cut federal spending by 60% (impossible)
2) raise Federal taxes to 2.5 times of today’s intake (impossible)
3) achieve sustainable economic growth in double digit range, every year till 2079 (impossible)

This gorilla-in-the-room problem belies the fact that there will soon be more people collecting benefits, than there will be those contributing. Old estimates (2004) predicted that this year (2009) would be the year when that subtle switch would occur. During 2009, our surplus stops growing, and we start down the other side; the pool from which we pay benefits, begins to shrink. By 2017 (the first year of the next presidency) the costs of paying out benefits, rise higher than the actual taxes bringing in the revenue. By 2041, the Social Security trust fund will be completely gone.

After that, if we truly wish to continue these entitlements, we must so on a pay-as-you-go plan, year to year; today’s current level of taxes brings in only three fourths (74-78%) of the needed annual revenue…

So we wonder: just how much additional money are we discussing per year? For Social Security … we are speaking in the realm of Billions….

Currently (2007) Social Security Benefits cost 4.3% of GDP and are expected by 2035 to peak at 6.1% percent of GDP… If the GDP at that point is close to $15 Trillion dollars, our annual benefits (at that future level of 6.1%) level out at $915 Billion dollars, and the shortfall amount, (25% of that), is extra we need to step up and pay beyond what we pay now….. That total is $228 Billion Dollars more each year, which is half the amount of last year’s discretionary federal budget! … Per person, assuming an estimated 330 million national population, each citizen will pay $690 more per year into Social Security which will amount to a charge of $1.89 per person per day. After 2041… bread winner in a family of four would need to cough up $2760 extra dollars every year.

That is IF….. nothing is done. Which brings us to the second option.

Keeping both with modifications. The Social Security’s own trust report says this:

Social Security could be brought into actuarial balance over the next 75 years in various ways, including an immediate increase of 14 percent in payroll tax revenues (from 12.4 percent to 14.1 percent) or an immediate reduction in benefits of 12 percent or some combination of the two.

It’s a small price to pay for solvency. But we must remember that Social Security is the easier of the two entitlements to fix. As David Walker, (former)GAO is quick to point out.., “the Medicare problem is five times greater than the Social Security problem. The problem with Medicare”, Walker says, “is people keep living longer, and medical costs keep rising at twice the rate of inflation!” No! That doesn’t sound good.

Congress made things worse in Dec. 2003 when they expanded the Medicare program to include prescription drug coverage. “The prescription drug bill was probably the most fiscally irresponsible piece of legislation since the 1960s,” Walker argues.

When asked why, Walker says on tape, “Well,…. we promise way more than we can afford to keep. Eight trillion dollars added to what was already a $15 to $20 trillion under-funding. We’re not being realistic. We can’t afford the promises we’ve already made, much less to be able (to afford those) piling on top of ’em.”

With one stroke of the pen, the federal government increased existing Medicare obligations nearly 40 percent over the next 75 years. Walker says, “We’d have to have eight trillion dollars today invested in treasury rates, to deliver on that promise,” Walker explains. When asked how much we actually have, Walker replies, “Zip.”

So where’s that money going to come from?

It’s gonna come from additional taxes, or it’s gonna come from restructuring these promises, or it’s gonna come from cutting other spending,

As a nation, we have promised unlimited health care to each of our senior citizens who will never see the bill, and our government is borrowing that money (at interest) to pay for that privilege. Obviously this is absolutely unsustainable! More so it is abominably immoral to our children. As a nation we simply cannot keep up.

So what modifications are on the table? Some being mentioned are 1) means-testing supplicants for benefits, 2) increasing payroll taxes, 3) increasing the retirement age, 4) cutting back on benefits, and 5) paying cheaply for preventative health-care so fewer citizens require the more costly operations. But none of these options cover the looming demographic shift of baby boomers who are now beginning to reach retirement. Here is a pictorial representation of the problem….

How Entitlements Eat Up Our GDP
(Right Click on Image for Full View.)

Means-testing supplicants for benefits, is the second surest method to stretch out our resources so those who solely rely on these two Social Services can still have them available despite their catastrophic cost.

But there are two opposing sides to implementing “means testing”. Those with high incomes who paid more of the burden, feel they should at least get something back in return… This group uses social security and medicare at relative high percentage rates. The opposite side argues, that because today’s crises is drying up funding, those with high incomes who can otherwise pay out-of-pocket for their expenses, should have their benefits allotted to those who earned less over their lifetimes… That last argument is a fancy way of bluntly saying that “those with money are funding the health care of those without”…

Whereas we balk at the concept of having the rich pay the costs of the poor, the social cost of returning to the alternative, …. say Victorian England’s version of dealing with the poor, bothers us as well.. It at least opens our perspective that the option we currently have of keeping both social entitlements solvent (even if it is a bad option), may be cheaper and better than the alternative of eliminating either or both Social Security and Medicare altogether. The ultimate answer lies in this one question that needs to be asked? In the future … how much of today’s corporate or small business profit will need to be siphoned off to cover other unforeseen expenses; expenses that the current entitlements prevent from happening?

If you could imagine this futuristic scene: an unsecured retail store just sitting in the middle of a town that is full of people who had not eaten a full meal in months…. How many dollars, how much additional money would be needed to bolster that store’s security, to insure that business was present and ready to do business the following morning? Is the small amount we pay out for entitlements cheaper than the costs we will have to bear for abandoning them?

To find the answer that is required, we need to investigate alternative models to help us determine whether or not, the alternative costs of doing away with our entitlements, would be more, or less costly than keeping Social Security and Medicare as they stand today….

Whereas “means testing” may create a line in the sand and prevent some leakage slipping upward into taking care of the well-to-do, it also may allow a greater problem to become exacerbated. That would be to alienate to our detriment, those few providing the majority of the funding for these two programs in the first place… For they are already paying out far more than they will ever receive… If we push too hard and force them to pay for something they will never use, our American virtue of fairness will one day catch up to this arrangement, and allow them to opt out of the system entirely, because basically, we will all agree it is the fair thing to do. If that event ever happens, our entitlement problem just fell over the canyon wall.

However the surest method of entitlement solvency lies in increasing our payroll taxes. Yes, these are regressive taxes but if we would just be willing to pay 12% to 14% percent more in FICA taxes, which raises their rate from 12.4% to 14.1% percent, it would save social security.. That is an increase of 1.7% per paycheck… At 1.7% percent on an income of $60,000, the average family would receive $1020 less per year in take home pay…. But that extra $1020 would be enough to keep Social Security solvent for years to come…

These are hard facts we deal with. We can write our Congressmen and say “you must protect Social Security”…. But when they follow our orders, and our time comes to ante up $1020 that we do not have…. we begin to wonder how on earth we will ever survive on what little we have left….

The ultimate question is: can you afford an additional $1020 each year of less income? That averages out to $19.61 per week, or .49 cents for every hour you work! That is the unmentioned bottom line that is required to keep Social Security solvent for years to come… Whereas some of you may doubt whether you can afford that increase… those of you still wondering how you can survive on $20 less per week, … must balance that cost against the cost of having no money available to you after you quit working.

Now if that increase is coupled simultaneously with a larger decrease in Health Care costs, then perhaps the 14.1% increase is affordable after all.. This is why all arguments on dealing with entitlements must take place in an open forum. For there are consequences out there that are so remote and yet so overwhelming, that no one person can see all the options while staring at the drawing board… Only with the give and take of offering a plan, and then having it modified under sharp criticism, can we forge from such diverse outtakes as exists across the American spectrum, a solution that is workable over an immense span of time…..

Most likely that increased cost will be split between the business and the employee as is currently done today.. Per person $510 or half of the $1020 will be paid by the employer, with the additional $510 being supplemented by the employee… However we must factor that this too creates a drag upon the economy. Every business must now pay $51,000 over what they currently pay now for every hundred employees on their payroll… A small business with 100 employees and $1 million in sales, loses 5.1% off their margin. If every similar business was losing around 5.1% off their benefit line, it would be hard to convince such a business to re-invest in people in order to get America back to work… Far better instead it would appear for that business to invest in a machine that does the correct job each and every time, and over its work-life costs less than a human being…

However, sobering as this increased cost is, if this moderate increase is dropped into place simultaneously with the exiting of having-to-provide-medical-insurance to each and every one of its employees, this solvency issue could become a big win for business, and the hiring of human beings would be less negative than it was before…

The second option, the one of increasing the retirement age, confronts the Social Security problem in two ways; although it does not completely solve the entitlement problem, it is the best option available to stem some of the ebbing of money away from the trust fund…. Jumping the retirement age upwards by 5 years from 65 to 70, adds 5 additional years of tax money pouring into the system, while also decreasing by 5 years the amount of benefits that are needing to be paid out….. If we garnish 5 years of extra funding and lose up to 5 years of paying out benefits, just moving up the retirement age by 5 years gains 10 years of funding per future retiree.. This is easy to do, and benefits all that do it… Some may protest having to wait longer to retire… It is not so bad if waiting 5 years is framed as helping out one’s country…. Sort of like doing one’s duty as a citizen…. For those fortunate to have private accounts with anything left since November, the additional 5 years of compounding can make a huge difference in how one passes the time during their retirement…..

All evidence points to a net benefit with no negatives, of raising the retirement age.

Cutting back on benefits, the third option, is the normal way unimaginative managers struggle to control costs. Although some monitoring of the government’s money is always required, mandating the spending of every penny and watching every penny being spent, is a costly waste of time. Furthermore, cutting back is the worst option.. for even though it may help balance the budget over the course of one year, in doing so it jeopardizes the balance of all fundamental economic structures that exists today…

Cutting back on our aging population’s social security income places tremendous detrimental effects upon our entire economy. Just as taking one’s foot off a car’s accelerator causes it to slow down, anytime one tinkers with the income flowing into America’s citizens by reducing it, they decelerate the economy… With less income suddenly entering the fuel line, people have no choice but to cut back…

Thereby saying “yes” to Social Security cuts, ie. a reduction of benefits per person, does indeed cut down on the amount of Federal money being paid out; it also depresses the economy by that exact same amount which is being removed… In a booming economy, that cost saving device might have a different consequence than if it were to take effect today. Now, at the historic moment when we desperately need Federal money priming economic transactions all across our country, to diminish the pay-out to those receiving Social Security, hurts the very economy from which we need to acquire the additional income required to pay out those benefits in the first place… Instead of helping solvency, we aggravate its spiraling out of control…

Representing 4.3% of our GDP, we do reap benefits from all that Social Security money moving through the grid of our markets. Cutting back Social Security payments impacts a huge economic detriment. This plan should be used when default has become the last and only option…. When one wants to start a car’s engine, shutting down or decreasing its fuel supply, is the wrong way to get it started.

Our last option, the one of paying cheaply for preventative health-care so that fewer citizens require the more costly operations, is the true, best scenario, long-term approach to our reducing our nation’s future costs… Take just one example: one gastric operation costs as much as 100 colonoscopies. If everyone received a colonoscopy and we had not one gastric operation because of early detection and removal…. consider the savings that would be at our disposal.. If we tackle our top four killers, strokes, heart attacks, breast and prostate cancer with detection and prevention as mandatory practices, then the total payout amount from the Fed to physicians and hospital corporations, could be greatly reduced… Unfortunately there is little data in the United States to verify whether or not this theory has merit upon our human population… But there is large veterinary evidence currently embraced by the United States agribusiness community, that speaks quite well of the cost savings being found through preventative care… Likewise, other countries which decided not to leave something as important as human health care to speculators and money hoarders…. can also provide similar evidence which backs moving health care towards a preventative direction. We can glimpse hope for our own medical future by looking hard at some of their historical statistical evidence….

Lifespans. Obviously as a society we dream of achieving as long as life as possible. It would make sense to find out which form of society has the longest lifespan and then do what they do… As I said, it makes sense.. According to the CIA, the top ten countries ranked by lifespans are as follows…

Macau ……….84.33 years
Andorra………82.67 years
Japan…………82.07 years
Singapore…..81.89 yrs.
San Marino…81.88
Hong Kong…81.77

The United States (78.14 years) is ranked at 46th behind such countries as Bosnia Herzegovina (42), Jordan (39), and Greece (25)… At first glance it appears that living in a small country or municipality can lengthen your lifetime…. Out of the top ten, only five would be considered “real countries”. But if one thinks for a moment, the benefit of having a territory consisting of only urban area, makes sense out of these figures. One has only to remember the access one has to medical care in our metropolitan areas versus what one finds across the vast expanse of rural America, where one might live 30 minutes away from emergency medical care often requiring a full hour round trip. If one looks down the CIA’s list, rural nations as well as those suffering extreme poverty, tend to have shorter lifespans..

But even so, several of the top ten nations have vast expanses of rural areas. Both Canada and Australian do rather well on the chart of life expectancy… France and Sweden also have large areas unsettled by cities and suburbs, as does parts of Japan…. How do they do so well and what take-away can we pull from those five societies who all seem to have discovered the secret of living well….

If one focuses on diet, perhaps there is some magic in eating sushi, or kangaroo, or berries, or drinking wine, or vodka out of bottles with a blue label

But if one focuses on their medical care one sees some interesting correlations… Here is a smattering of several of them as correlated by Wikipedia…

A) In the Japanese health care system, healthcare services, including free screening examinations for particular diseases, prenatal care, and infectious disease control, are provided by national and local governments. Payment for personal medical services is offered through a universal health care insurance system that provides relative equality of access, with fees set by a government committee.

B) The Swedish health care system is a socialized, public health care system. It is informally divided into 7 sections: “Close-to-home care” (primary care clinics, maternity care clinics, out-patient psychiatric clinics, etc.), emergency care, elective care, in-patient care, out-patient care, specialist care, and dental care. A person seeking care first contacts a clinic for a doctor’s appointment, and may then be referred to a specialist by the clinic physician, who may in turn recommend either in-patient or out-patient treatment, or an elective care option. All emergent cases are treated by an emergency department at a hospital.

C) Health care in Canada is funded and delivered through a publicly-funded health care system, with most services provided by private entities. Health care spending in Canada is projected to reach $160 billion, or 10.6% of GDP, in 2007. This is slightly above the average for OECD countries. In Canada, the various levels of government pay for about 70% of Canadians’ health care costs, which is slightly below the OECD average. Under the terms of the Canada Health Act, the publicly-funded insurance plans are required to pay for medically necessary care, but only if it is delivered in hospitals or by physicians. There is considerable variation across the provinces/territories as to the extent to which such costs as outpatient prescription drugs, physical therapy, long-term care, home care, dental care and even ambulance services are covered.

D) Healthcare in France is funded by compulsory national insurance. Social Security in France is calculated as a percentage of income.Doctors and dentists establish private practices. Patients are free to choose which they visit. A patient is expected to pay and claim up to 85% of the cost from the state. France has a high standard of care. The health system was ranked first by the World Health Organization in 1997 and 2000.

E) Health care in Australia is provided by both private and government institutions. Primary health care remains the responsibility of the federal government, elements of which (such as the operation of hospitals) are overseen by individual states. In Australia the current system, known as Medicare, was instituted in 1984. It coexists with a private health system. Medicare is funded partly by a 1.5% income tax levy (with exceptions for low-income earners), but mostly out of general revenue. An additional levy of 1% is imposed on high-income earners without private health insurance. As well as Medicare, there is a separate Pharmaceutical Benefits Scheme that heavily subsidizes prescription medications. In 2005, Australia spent 8.8% of GDP on health care, or US$3,181 per capita. Of that, approximately 67% was government expenditure.

I chose these links because they open up ALL of the questions which we in the US must become familiar before making our “choice of a century”. These show some of the benefits as well as the costs coming from national medical plans which are run and which are funded primarily by government taxation.. Bottom line which should not be missed by pawing at the details, is that in each of these nations, people live longer than they do here… For there, ALL have unlimited access to medical care.

Granted, it is incontestable that the citizens of those nations live longer. The real question now lies in how much does it cost them? Surprisingly for most, the United States spends more on health care per capita than any nation in the world. True, because of it our system does have some benefits. Therefore the real question at hand is for us to weigh the loss of those benefits against the gains brought on by increased affordability.

As of 2008, here is our track record: The World Health Organization (WHO), in 2000, ranked the U.S. health care system as the highest in cost, first in responsiveness, 37th in overall performance, and 72nd by overall level of health. Obviously if one thinks hard about it, concepts such as overall performance and overall health, are purely subjective… However, it should not negate the fact that our current for-profit system guarantees our position as number one in responsiveness.. Other countries in the top ten included Japan, Canada, and Sweden, in part because the study noted that those governments had also invested in enough infrastructure to insure that their patient’s accessibility to health care was sufficient where needed.. For example, in some countries, health care accessibility includes a vast system of air ambulances….

As for filtering out cost factors, by removing the profit piece of 38% that is tacked onto every medical transaction occurring within the United States, other countries are able to provide services to their constituents for less… One method that is successfully used in other societies to keep their doctors happy and on board, is to link a physician’s income to a single fee per patient. Whether one has a cold, or a gastric bypass, the doctor and nurse staff receive the same income per transaction… The fees in most of the nations listed above were set by regional districts, which helped account for those cost differences varying from region to region… Likewise because of those local boards setting fees, some form of petition was allowable for a physician to argue his case among his peers if he felt that the transaction fee for a certain medical practice was set too low…

There are many options out there to minimize costs.. Japan pays a 70-30 split. The government pays 70% and the citizen covers 30%. Sweden’s split is 85-15. Canada is 70-30. France is 85-15. Australia is 67 to 33… But translated to US Dollars, the cost of health in each of these countries is still far lower than it is in the United States.. Japan spent $2908 per capita. Sweden pays $3149. Canada ($5170), Australia ($3181), and France ($3374) which are cheap when compared to the United States per capita health cost ($7900). So where does the difference go?

Total Cost of US Healthcare Compared to Nationalized Medical Plans
Courtesy of ADECRI (Right Click for Larger Image)

In the words of the National Coalition on Health Care: “Experts agree that our health care system is riddled with inefficiencies, excessive administrative expenses, inflated prices, poor management, and inappropriate care, waste and fraud. These problems significantly increase the cost of medical care and health insurance for employers and workers and affect the security of families.” Despite arguments to the contrary, when one looks at the magnitude of cost between our private health systems and those of other government-run health systems, the bang for the buck is simply not there. Anyone who argues otherwise should be suspected of trying to protect his lucrative piece in America’s health care system. For every piece of evidence we now have, shows our system fails at delivering quality health care at reasonable prices, whereas other systems… do just that…

Cancer rates? How does our nation stack up against others when it comes to surviving cancer?

There is good news there: the national cancer rate has declined.. ““The significant decline in cancer death rates demonstrates important progress in the fight against cancer that has been achieved through effective tobacco control, screening, early detection, and appropriate treatment,” said Centers for Disease Control and Prevention (CDC) Director, Julie L. Gerberding, M.D. “As a nation, we must commit to continuing and enhancing these important public health efforts.” Again it was public (not private) health programs, that were responsible for creating this decrease in cancer… However across the board, cancer rates are higher in modern developed countries than in those which are poorly or undeveloped… Not to be shocked, really. Living past the age of 40 opens the door to quite a few strains of cancer that may lie latent but never become diagnosed in an inhabitant from an impoverished country who dies long before reaching that age, thereby improving that nation’s cancer rate statistic in a rather sad fashion. So when measuring the incidences of cancer in many varying societies, those countries with better care and diagnosing abilities, tend to have higher rates of cancers… Meaning that if one goes to one’s physician long enough, eventually some form of cancer will manifest itself….

Currently the US cancer rate as of 2004 (filed 2008 ) averages out at 970.1 cancers per 100,000 of our population…. But what really matters to us is our ranking in the number of deaths being caused by various cancers; the rationale being that a good health care system would have fewer deaths per segment of their population than one that was not so good… So based again on 2004 data, we see that the United States is ranked as the 9th highest at deaths by cancer with 321.9 per 100,000 people, compared to Australia (10th), France (12th), and Sweden (14th). Canada and Japan do not show upon the chart. Again, as for getting the most of our bang for every buck spent, considering that we are paying the most per capita of anyone for health care, we are not doing very well.

Our health system was touted by insurance companies during our last attempt to establish national health care, as being the best in the world… Unfortunately that was a prideful remark appealing to America’s emotions, but had little relevance in fact… It has only been with the soaring of health care costs that corresponded with the time frame of the Bush Administration, coupled with a decrease in hospitalization caused by soaring out-of-pocket costs, that significant data has been made available to America’s citizens making it known to them that this is simply not true..

If one take the statistic of “Percentage Of Life Lived in Ill Health > Female (most recent)” by country , one sees the United States is 6th… following Mexico(1), Poland(2), Turkey(3), Slovokia(4), and Hungary(5). Or that the United States ranks 2nd in child maltreatment deaths, or 165th in Tuberculosis treatment success. But when it comes to obesity, we are number one. Those nations with nationalized health care system treating their citizens to longer lifespans are ranked in obesity: Australia (6th), Canada (11th), Sweden (21st), France (23rd), and Japan (28th).

As expected, when it comes to catering to the wealthy, our health care system stands up fairly well. We rank number one in plastic surgery;

So without going too far off topic, one can see that the argument that states our United States health care is the best system in the world, has some reasonable flaws. It may be good for some endowed with lots of wealth, but when it is stacked against other systems and when one looks at statistics to make their comparison, our system does not rank well… A preponderance of evidence leads one to conclude that money can be saved by switching to a different health care system,… a system that is focused on prevention, and not on gouging the poor sucker who just happens to get sick. It is far cheaper to prevent a costly disease, than it is to treat it… In the United States’ current system, private health insurers shy away from paying out for preventative health care items, knowing full well that the odds are that another provider will be the one who will reap the benefit of their current patient “who will not get sick”… Why should they whittle down their profit margin to enable another company “not” to have to pay out a benefit? Such is the logic in “for profit” health care.

Is there any other proof on this planet that preventative health care on such a massive scale can drop costs considerably? Absolutely. The graphic below (right click to see full image) shows how us humans have capitalized on prevention when it comes to making or costing us money when raising animals….

If It Works For Animals Why In The Hell Can't We Do It For People Courtesy of Journal of Dairy Research
(Right Click for larger image)

That last topic may have gotten us off track. For if you think back we were initially discussing the five options we had to deal with the problem of two entitlements: Social Security and Medicaid/Medicare. So far we have looked at the dismal picture of 1) keeping them as they are… (it doesn’t work).. and 2) keeping both with some modifications…. As we looked, we have seen various modifications as methods of salvaging one or both of the programs… But if you have gotten a good grasp of the numbers, no doubt as we extolled through the changes that could help ease the financial situation in which we find ourselves, you gradually got the sinking feeling down in the pit of your stomach that none of those fixes would be enough…

In an all to familiar setting common to many Americans today, our listing of the options above was sort of like those hopeful scenarios and arguments being made just two weeks before one finds they are about to be laid off.. As soon as that event occurs, when they look back… they see that even two weeks ago that it was inevitable; they simply chose to hope at that time for options that were still open, and they still held out something would turn up to save the day… Then, … came the pink slip. No one getting laid off in today’s world was a being who was not needed. There was just no money left to pay them anymore…. Their output was fine; there were no moral, ethical, efficiency standards that caused the job loss… There was just not enough money to pay them…..

Unfortunately, it is the same with our entitlements. We are paying over $500 Billion dollars a year for each…. Their costs grow as Baby Boomers age, and the number of workers paying into their benefit pool shrinks… Just looking at the costs, and the inability of having the money to pay for it in the future, we need to wise up and figure out a plan…

This is the part of the solution that no one talks about… If you listen to David Walker, he makes allusions but never focuses directly on that question which “must not be named.” Which of the two programs do we scrap… Medicare/Medicaid? or Social Security? Since I have no qualms, we’re going there…

Getting rid of Social Security: Pros and Cons? Most of the literature on Social Security comes from the year 2005, just after Bush’s second term began and he began to privatize Social Security.

Perhaps we should review what Social Security is? And how it’s been abused?

Here is the argument against Social Security…. “The promise of secure retirements is a “hoax.” Taxes paid by workers are “wasted” by the government rather than invested prudently. And “the so-called reserve fund … is no reserve at all” because it contains nothing but government IOUs.” Sound familiar?

If it does you must be at least older than 70. Even then… you would have had to have been just 7 years old when you heard it… It was originally uttered by Alf Landon, who was running as the Republican nominee against Franklin D. Roosevelt’s second presidential term…

Social Security is a tax on employees. They pay part and their employer pays part. But it is still considered by all employers as part of an employee’s compensation and on every financial statement it is included in a category listed under “labor”. The government collects this employee tax and uses it to pay out pensions to those no longer working. Back when Social Security was created there were far more workers working, than retirees who were not… Solvency was not an issue. The government collected what was needed to then pay out….

But in 1982 under Ronald Reagan, Social Security taxes were accelerated to build up future funds in advance to pay for the bubble of baby boomers expected to retire by 2006. The plan authored by Alan Greenspan, sunk accelerated collections of SSA tax into government bonds in the Social Security Trust Fund. Government grew and income taxes went down financed by a long term debt obligation whose repayment horizon lay in the distant future.

Under Clinton, the force feeding of SSA collections into government began to be referred to as the Social Security Surplus. Clinton used it to pay down other national debt, rightly assessing that in order for the debt to the Trust Fund to be repaid, we would need a solvent government. Paying down the extra-Social Security debt and balancing the budget seemed to assure that the government’s indebtedness to the Greenspan plan could be serviced.

Given the apparent surplus created by the SSA tax it became impossible to resist the lowering of other taxes. In 2004 SSA collected $566 billion and paid out $421 billion with the difference of $145 billion going into the Trust Fund, that’s 25% of all collected. Of that $145 billion… the Bush administration used all of it for that year’s current operation of government. The gamble was done. Today we are faced with figuring out how we can pay back that money, lent to our government by the future retirees of the Social Security Trust Fund. The Republican gamble was devious: they never had any intention of repaying the Social Security trust fund…

Instead of reimbursement, we got a noisy push to privatize Social Security; in other words, remove Social Security from out and beyond the control of the government. By relieving the government from their responsibility of having to pay back the borrowed money from the Boomer’s retirement, they could pay off a few benefits to those already in the plan, and quietly shut down it’s operation by turning over the trust fund to investment bankers. This would continue to keep income taxes at low levels. We were using an accelerated tax rate on employees to fund a large portion of the government, and by liquidating the trust fund so we never had to pay it back, we could continue keeping wealthy corporate taxes at very low levels…

But as recent events have shown, putting a nation’s pension solely in the hands of stock market investors and financiers, IS extremely risky. It is far better to put our trust back into the American people themselves.. So once again we need to decide whether paying BACK all that money we cut in taxes just to keeping Social Security solvent, … is worthwhile; or whether we should abandon FDR’s program as a dream whose monthly payments just rose too high…..

In the short term, abandoning Social Security would save over $500 billion a year. Up until this past year, that was more than our yearly national budget. It’s abandonment would quickly bring us back to solvency. Basically it requires that America defaults on a loan it made to itself… which surprisingly is not as bad as it may sound. Really! It is not.

We do it all the time. It is similar to those who borrow hardship loans against their IRA or Keogh plans and never catch up on the chance to pay it back; they just get fewer benefits when it’s their time to cross over… Or to those who borrowed low interest loans from their own life insurance policy yet never get a chance to pay it back; they just get fewer benefits when it’s their time to cross over….. Or those who borrow loans from their parents and it gets deducted from their portion of the last will and testament; they just get fewer benefits when their parents cross over…..

So as long as there are other venues for covering the nation’s elderly, especially those dependent on social security, we could default on that promise made and survive. Like those examples above, we just wind up with a less rosy future than planned… that’s all….

So up to this point in time, all the tricks used to balance Social Security were based on moving money from one sector to another. But as the bill comes due, the revelation slowly dawns that the only way to guarantee that Social Security benefits get into the hands of retirees (both now and in the future), is through increased FICA or income taxes. It’s the only solution that seems to make sense.

The Social Security Administration has numerous plans to mitigate the transition of the baby boomers into the future when fewer people are working. What they lack is control over the political climate that has trended toward naked politically conservative self interest in the last decade. The fix is to answer the question: Is Social Security worth it? Is it worth the gradual doubling of the FICA tax by 2060 to once again become a pay as you go system?

Is it worth the pain? A great question. Perhaps instead, we should switch now and look at the per-person dollars-and-cents cost of NOT raising the FICA tax and of doing away with Social Security all together… If one has no safety net of Social Security there to catch him upon retirement, he has no choice but to save for himself.. He will be in charge of his own retirement…

So how much does one save? Again based on 2004 figures:

According to the Bureau of Labor and Statistics, the median hourly wage of Americans is $13.01 or $27,039 per year or $2,253 per month. Half the population makes more and half make less. Federal taxes on that amount are $3,698. State taxes would be another $811, not enough to be effectively deductible. $3,698 plus $811 is $4,509. $27,039 minus $4509 equals $22,529. So the median take home pay is about $1,877 a month, excluding FICA. Since inflation will be factored into any savings plan automatically, it is not important to adjust the numbers for inflation. At the end of a savings plan, the amount saved will be nominally higher, but the buying power should be about the same. Say a person is very frugal and spends about $500 an month on rent, $195 on utilities, takes the bus to work for $30, $300 on food, buys clothes at the Goodwill for $15, has employer paid health insurance and no dependents, the person might be able to save $877 a month. After 40 years at 3% interest after taxes, the median earner could have $812,000. If a person manages to save $812,000 during his lifetime and retires, he could withdraw about $3,423 a month, at current interest rates, for 30 years before all the money was gone. Good for him.

But…. what if everyone else is doing exactly the same as is our little enterpriser?

Personal consumption being nominally two thirds of the economy,… its drop (by half) would shrink the GDP by a third. Savings (being done by everybody) would be so abundant (because no one was spending), that the total lack of demand (for borrowed money), would cause the local interest rates and prices to collapse. And the frugal individual above would probably lose his job and his savings interest would plummet to nothing. Or put another way, if people start being strictly responsible for their own retirement, it will cause as much or more pain to the economy than the raising of the FICA tax. For if you withdraw money out of the consumer part of the economy in the form of personal savings, it will probably have considerably more negative impact on the economy, than the collecting and redirecting money back into the economy through the raising of the FICA tax.

Or put another way, if we personally saved as much as Social Security takes out and received a 3% return on our investment, at retirement we would receive $355 a month. But, wait. Social Security gives us $937 a month. How?

They do it by absorbing the risk of hundreds of millions of people. Most people won’t live 30 years after retirement, but no one person can behave as if he won’t. This is the unsung beauty of Social Security, it is a giant lottery that you win by living longer than anyone else.

I should mention that other “beauty of Social Security”: one that is certainly to be appreciated in these times of collapsing financial markets. Social Security is not a personal asset… You could be bankrupt; get completely wiped out: have nothing to your name. Social Security will still be there for you.. Unlike any financial annuity or mutual fund, it cannot be taken. It keeps paying long after your personal finances have evaporated over to negative numbers.

But the prime point in favor of keeping Social Security, is that it plays a big role in our economy. Were it to default suddenly, our economy would be (4.3% of our GDP) poorer… That loss would not hold at 4.3% of GDP. It would erode profits, jobs, and cash flow throughout our nation’s commerce. It would be one more tamping of that brake pedal slowing down the nations’ economy… Compared to that, the modest increase in FICA taxes (1.2%) even though it takes some money out of the economy today, would when cashed out, create a benefit 3 times its cost (4.3%), whenever it gets used at some point in the future…

Therefore, when seen over the entire length of its program, the removal of Social Security is more expensive than the cost required to save it, by a factor of three to one.

Which brings us to dissolving Medicaid/Medicare…. What costs or savings would that bring?

We begin with this ancient historical quote referencing Newt Gingrich, then speaker of the House:

“The Speaker says, ‘‘We don’t want to get rid of Medicare in round one because that’s not politically smart. We don’t think that’s the right way to go through a transition. But we believe that Medicare is going to wither on the vine,’’ again talking about section 1862 and talking about the Social Security Act, talking about Medicare. That is very debatable on this floor because that is a serious attempt to dismantle Medicare, Madam Speaker….”

Obviously getting rid of Medicare is nothing new…. but equally obvious (as one can glean from this description of just one little cut to North Dakota’s senior citizens), is that any tweaking of the Medicare Plan that reduces any tiny fraction of a cost saving benefit, expends just far too much political capital to ever get done.

“To their credit, Sens. Kent Conrad and Byron Dorgan and Rep. Earl Pomeroy have resisted enormous pressure from the administration and have taken leadership roles in Congress to stop these cuts, (which) as planned, (will cause) North Dakota seniors to lose over $1.3 million in essential health benefits this year alone. Their joint letter warns they are “deeply concerned that high-quality skilled nursing care for America’s seniors will be threatened – and reductions in spending of this magnitude would severely alter not only the quality of nursing home care, but also access to nursing home care for our nation’s seniors.” The letter also references AHCA’s finding that the Medicare cuts will hurt the state economy and cause North Dakota to lose $2.7 million in total economic benefits and $1.29 million in lost wages.”

Do you see the problem? All that was over the impact of just $1.3 million, (million as in “m”) dollars of cuts made to just one of fifty states. A paltry $1.3 million dollars… out of that year’s medicare budget of $560 Billion (with a “b”) dollars, amounting only to a national percentage of 0.000002.3%. As someone once said, if the government gave away free cars, then stopped the program in mid tracks, it would be impossible to argue that free cars were not necessary for the country’s survival… Even though we survived for how many years without them?

(Editor’s note: a free $20,000 car per household would cost this nation, assuming the Bureau of Census estimate of 113,568 households for 2009, $2.27 Trillion dollars.)

Thus it becomes readily apparent to any savvy politico, that cutting back on entitlements piece by piece, line by line, is an impossibility… Because of that, I am afraid that therefore, it makes more sense to scrap the entire program entirely… (it takes just as much effort as the cutting out of $1.3 million dollars) or …raise the revenue to continue paying for it … as it currently is..

If we scrap the entire program, we are saving our government $560 billion a year. But in doing so we are taking the health care industry off of it’s $560 Billion dollar life support. Yet while doing that, we are simultaneously saving American taxpayers close to $560 Billion a year in payroll taxes… So if one looks at the entire system and sees it as a giant circle, one can glimpse that there is no net gain or net loss to the system that comes out of eradicating Medicare… All we are doing with the Medicare cut, is to interrupt the shuffling of money away from the economy back to the economy….. bypassing the circuitous route that takes the money away from the employee and hands it over first to the government, and from there through the medical profession, where it is then matriculated down to those making their living from the medical field, who then go out and return it back to the economy…

But this is where details matter. Let’s say we stop Medicare immediately… No more taxes. No more reimbursements. Retirees who organized their work lives counting that Medicare would be there for them, do not see the benefit of no longer having Medicare deducted (1.5%) from their pay checks. Yet upon visiting their physician, they are still required to fork over their entire fee with no deductible. Likewise a young 20 year old with no thought of ever going to a physician, would receive his 1.5% weekly tax cut, and never notice its difference… At a wage of $8 dollars an hour, his 30 hour week gives him a tax cut off his $240 weekly gross amount… of three dollars and sixty cents…most of which goes towards the paying of his Verizon bill. No new spending gets created… But to those few still earning $250,000 a year, they in turn get an additional $3750 to play around with (whoopee)…. Which gives us…the moral equivalent of having someone who does not need an additional $3750 (whatever) pocketing the difference while someone older dies from being financially cut off from their medication… The impact on who is affected, greatly distorts the circular argument that no ill effects occur.

That is the problem with all previous talk of dissolving Medicare/ Medicaid entitlements.. Discussion gets focused on what is fair, and no one ever gets to discuss what is it that we can afford..

The total amount of money, both public and private, spent on Health Care within these United States is….. $2.26 trillion. That includes a 6.1% jump over last year. Medicare grew 7.2% to $431 billion; Medicaid grew 6.4% to $329 billion; Private spending grew 5.8% to $1.2 Trillion;

Our first step would be to determine that exact line where Health Care becomes “not affordable”. Once we determine that line, we chose not go over it.. The year 2000 was a very good economical year… If we choose to use that year as a base, we see we spent 13.7% of our GDP back then on health care… Since that seemed to work ok, and until we have a better target, we will let that be our benchmark percent… That means in 2007, our ideal health-care cap (13.7% of 2007’s GDP), should have been at $1.9 Trillion dollars. If so, since we actually spent $2.24 Trillion, we are up $0.34 Trillion dollars over where it should have been, had we kept that line of our budget at target…. So how does one trim $340 Billion Dollars off of our entire nation’s medical expenditures…?

To find that out, we need to first take a look at the roots underlying this question: Why does the United States spend more than other developed countries on Health Care? I can think of three possibilities.

One, is that we are sicker than citizens of other nations. Two, considering that as a nation we are rather wealthy, is it that we seek medical attention much more frequently than do other developed nations? And three, is that our prices for the care which we do seek, are higher when compared to those of everyone else?

Obviously we are not sicker. As a nation, we score well on health. If you examine our health by looking at 130 diseases and charting the incidence we have of those among our population, ….we do rather well.

Secondly, we actually seek medical attention far less than our developed world counterparts.. As this chart shows among civilized nations, Americans actually visit their doctor less per capita than citizens of all other such countries, except for Greece and Mexico…..

Therefore our high expenditures must come from the fact that our prices are simply too high…

McKinsey analysts estimate that, even accounting for more consumption of health care services due to our higher income, the U.S. would spend half a trillion dollars less than it does currently if its medical care prices were comparable to those in OECD countries. Such a reduction in spending would reduce our overall spending on health care from its current level of 16 percent of GDP to 12 percent of GDP.

There you go. In a nutshell, that seems to be the direction we need to pursue… The 12 percent estimate mentioned above is below our target of 13.7% of our GDP. One might expect that as the cost drops, the quality of American health care would increase due to its being more accessible and more affordable.

So how do we drop costs?

There is only one way. Remove the for-profit component deeply rooted in health care from out of the equation, and treat health-care as we do an obligation similar to how we promote commerce, build new infrastructure, and educate our children. In other words, put it under “the people’s” management, meaning government control.

As mentioned above, what works in other nations is the charging of flat fees for each visit. However, to keep physicians from milking the system by returning patients back to their office again and again (the auto repair shop syndrome), an incentive should be placed that tips the will of the physician more towards getting the problem correct on the first try… One suggested method is to reimburse a physician full price for their patient’s first visit, 50% for the second, and 0% for each visit thereafter for the same condition.

A second factor that helps suppress medical prices elsewhere, is the stability that comes from having these prices set by regional boards of the physicians themselves. Since it now will cost the same to go to either Doctor A or Doctor B, if Doctor B has a better success rate, his wealth should increase at the expense of Doctor A… Over time more patients will choose him because of his success. They want to get well faster.

A third factor that suppress prices, is the simplification caused by already having prices preset, and payments quickly transpired based on a simple transaction. American physicians’ largest cost is in obtaining payment. Large staffs are required to deal with a myriad assortment of insurance coverages, none of which have the same requirements. Often it is the physician’s office worker who must themselves become the expert of each individual patient’s insurance coverage; they must do so in order to advise the patient of that patient’s most cost effective options….

But, … if a physician sees 100 patients, and gets $75 dollars per visit, his take that day is $7500. Simple. That extra amount previously charged to pay those massive office staffs, which were required to achieve an 80% recovery, is no longer required.

The CDC estimates that 1.1 billion doctor visits were made in the United States last year.. At a per visit charge of $75 dollars, the net cost ( 1.1 billion X $75.00) equals a meager $82.5 Billion dollars.

So if the government were to begin tomorrow to supersede all current private and insurance payments now covering medical costs and simply charged $75 dollars per visit,…. for a cost less than the AIG bailout, all American medical visits could be free of charge to the patient, and cost the government $82.5 Billion dollars.

As a rough guide, the outlays for Medicare in 2007 amounted to $374 billion dollars which were spread among 43 million participants. The per person average spent on Medicare in 2007, then was $8697 dollars. If an average person went to a physician 4 times in one year, as research by the CCD subscribes… The average visit’s charge would be $2174 dollars.

Of course we are comparing apples to oranges here, for the total outlays cover everything from prescriptions to dialysis… However one can still compare cheap apples to expensive oranges and make a selective choice.. But the primary reason our health care is a higher percentage of our GDP than any other civilized nation, is because our prices are just simply way too high…..

If on top of everything we pay today,…. we were add an extra payroll deduction for government paid doctors visits, nationally, $82.5 billion dollars divided by the number of American taxpayers (138 million), would cost each American taxpayer $597 dollars on the average each year… Per week, that amounts to $11.48 dollars….

So if we assess every American worker $11.48 a week, every American could then visit a physician, either private or in a hospital room, cost free. This does not aggravate the deficit; it is a pay as you go plan. This illustrates the cost savings available to us if we ditch our current system of for-profit medical care.

I don’t know about you, but this saves my household $6500 per year….. How much does it save yours?

As we can see, both entitlements have benefits. Both are extremely costly… But if cutting one entitlement is absolutely necessary, the least damaging one to disappear is that one funding Medicare and Medicaid.. As we previously saw, eliminating Social Security as a government funded pension, impose an additional economic cost that would hit us with another three dollars for every dollar saved…

However eliminating Medicare, or replacing it with a different system of nationalized health care, such as the one above which bypasses the “for-profit” motive behind today’s health care industry, can be done cost effectively while at the same time it improves the health care availability for everyone...The idea of replacing Medicare with a form of nationalized health care based on a per person fee scale, would drop our nation’s amount spent on Health care to a level below our targeted 13.7% of our GDP.

The facts speak for themselves… Eliminate $374 billion. Replace it with an $82 billion plan under which all basic medical care is covered at no cost to the patient. Preventative health care can and will be available, enabling American citizens to take care of small problems earlier before they become costly boondoggles creating a personal financial crises…. No more will large numbers of American have to forgo getting a filling put in their teeth because of financial hardship, and then have to go deep into debt for that root canal over which they have no other choice but to get done… It could have been prevented for only $11.48 dollars per week….

Let’s review where we are. Our choices were to:

a) Keep both as they are:
b) Keep both with modifications
c) Get rid of one; keep the other as is:
d) Get rid of one; modify the other:
e):Get rid of both:.

We have looked at all but the last. So what happens to us if we rid ourselves of both entitlements, as conservatives have been arguing for almost a century? The answer is simple.

Upon retirement, many Americans would have no income and no health-care.

You can figure out your future estimated expenses here. You can customize them to your own situation. In fact if you haven’t done so, you and every American should take the time, use this tool, and figure out your own budget sometime during these next two weeks. (Or if you are smart, print it out and give it to your spouse, friend, or lover to crunch the numbers…) Irregardless, writing down your finances in front of you is good for you to see.. For in today’s world, information is the wisest source of money……

Upon retirement most American couples will need at least $1500 to survive before medical is even considered. So if we were to pull both of those security blankets away, what happens to that person who retires without savings?

If we perhaps look at what other societies do when their old can no longer work, we find something helpful. Elsewhere, the elderly move in with one of their children. If total collapse were to ever come to us on these shores, this option of moving back in with family, would be our natural reaction. After all, what child would turn their parents out on the street? If one currently looks at the Social Security portion missing out of one’s paycheck, and sees it not as an expense but as an insurance policy against having the in-laws move in, …that missing amount should be a little more bearable to endure….

The arrangement of caring for one’s parent works well until a catastrophic sickness strikes … Their child, or guardian, is then faced with the tough choice of either investing in the medical care of their move-in-guest, or investing in their own future… The rule of thumb common to elderly-worshiping societies, is that one freely spends on one’s parents, fully expecting one’s children will freely spend on him…. But to suddenly flip a society away from caring for its children over to caring for its parents, leaves one entire generation out in the cold…. Or… even worse, forces one generation to pay double for both their children and their parents….

Is the cost worth it? How much investment does one put into their parent’s medical care?

Granted, we all die… So somehow extending one’s life beyond its natural progression feels great when one removes himself from all cost of determining its worth… But when one puts a price tag on something that is as priceless as one’s life, and determines that the tragic consequences will force some loved one into bankruptcy to cover one’s profligacy with unlimited medical opportunities, …. then living longer does not have the rosy connotation it once had…It becomes superseded by guilt. Would we go to such great lengths to transplant expensive organs, if it was our very own children who were putting up their house to foot the bill? Perhaps if our last name was Gates or Buffet and we were doing so at their entreaties. But most people would do what every single one of our ancestors did: depart with dignity when their time was due to refrain from draining their children’s fortune.

So what about those few having no children? They would be at the mercy of charitable organizations, whose role would be to provide compassion and kindness, but do little to alleviate any of the effects that old age renders…

Research that was begun in 2006 when the attempt to privatize Social Security was given its go-ahead, used data from the Federal Survey of Consumer Finances during the boom year of 2004 which pointed to a strong dependency of retirees on Social Security. Indeed, 41 percent of older couples and 33 percent of singles would experience a living standard reduction of 90 percent or more were Social Security benefits eliminated. (A surprising finding is the major dependency of very high-income households on Social Security. Indeed, were this upper income household denied of all its Social Security benefits on the eve of its retirement, it would suffer a 35.6 percent reduction in its living standard throughout retirement.)

A reduction of 90% or more.

That is the cost of removing Social Security for two fifths of our elderly couples, and for one third of our elderly singles. The burden of their care would have to be picked up by society, whether it was undertaken by their children or by charitable organizations.

So the question remains… can we afford that budget cut? Is balancing our budget worth the social cost it imposes on our elderly and society?

Actually the moving of one’s parent into one’s house add’s little expense to one’s normal day to day routine. True there would be one more mouth to feed, but if each family member ate less, the cost increase could still be zero. With the sharing of rooms to allow the grandparent to move in, there would be no additional utility charge, no additional property taxes, no additional insurance assessments, and except for medical expenses and psychological wear and tear, no additional cost to society would be incurred by such acceptance of one’s elderly …

But what would change would be America’s dream of freedom after retirement; that moment would switch from finally achieving independence, to one of dependency. We must question whether that privilege, granted one not seen by most of humanity, is worth over $500 billion to our nation every year?

But one thing is for sure. Having the grandparents stay at home would mean the death of America’s preschool childcare industry as we know it….but then again, having that inter generational exchange might actually instill more character in our youth…

If the economy simply stops, and it can… it is nice to know that we can survive without either Social Security or Medicare/Medicaid… But our analysis points to a better solution. To solve our entitlement’s long term boondoggle, our best bet is to keep Social Security solvent by increasing the FICA tax an additional 1.7% to 14.1% of payroll; create, establish and force feed a fee based national health service that charges one fee for each doctor’s visit; then faze out Medicare as we know it, leaving private insurers to cover the cost of high end operations..

Even in the direst storms, it is nice to know the sun is burning 93 million miles away…. — kavips

Despite the gloom there are some exciting bright spots in our current mess.

One, we have proven beyond a reasonable doubt that privatization of Social Security is a very, very, very, very bad idea. That argument, shown by today’s events, is now not only proven to be inane, but extremely dangerous. As briefly mentioned in the last chapter, Social Security whose purpose is to provide our nation with a safety net should the unthinkable ever happen, is the only plan that survives global economic meltdown. For it is funded (as is a ponzi scheme) by newcomers entering the plan and contributing their money. Privatization plans based on savings and investment can make no such claim of constant solvency. So despite all the problems caused by today’s global meltdown, its economic trauma should keep Social Security safe at least through three more generations, ie. those who lived through these trying times and saw Social Security’s benefit with their own eyes…. Anyone foolish enough in the near future to bring up Social Security privatization will over that span be met with a chorus of “uhh…Remember 2008”.

Two, we are now given unlimited opportunities to fix long term problems that before seemed insurmountable under the old system, because back then….. we had to play by “old rules”. One of those old rules was that Medicare and Medicaid were here to stay. As mentioned in the previous chapter, replacing Medicare/Medicaid with a national insurance reimbursing physician’s visits, opens the door to getting one costly entitlement out of way and replacing it with a less costly but far better service…..

Three, today, the collapsed economy because of its severity, forces us into a massive Keynesian economic expansion unrivaled since World War II.. The huge impact of that last expansive episode took us 17 years to get our tax rates back to normal. But because of that wise investment we made back then, the global economy got fixed, which then went on to provide a remarkable 60 years of unparalleled growth and low risk. We can be assured that tax rates will remain extremely high for the next decade in order to pay back the deficit we just recently incurred by cutting them…. And that is a good thing.

Four. It is hard to raise taxes. But that is exactly what is needed. Wealth is good for a society only as long as a portion of it is invested back into to real people, real jobs, and real things. Rewarding the pursuit of “virtual” wealth caused by placing “bets” on rising or falling values may be fun, but leaves no lasting collateral once the fun runs out…. Taxes, on the other hand, serve the noble purpose of recycling money down to where it does its best work… I know, I know; arguments have often been made to the contrary, but today we actually see results; ones we have rendered from following the tax cutter’s plans. Unfortunately today’s economy and events have proved once and for all, that despite the copious amounts of hot air once spouted aloud about their potential, their “cutting taxes” hypothesis turned out to be nothing more than simple “voodoo” economics after all…

But fortunately because of today’s crises, we can again responsibly raise taxes on the wealthy and again fortunately for all (especially the wealthy), return this nation back to real prosperity. (Editors note: For fun, some snark is embedded above but in reality we will be only talking about the increase of a measly 5%).

Likewise for five, today’s crises gives us the opportunity to expand government. Some say that is bad… To them, I say “oh, no, that’s not what bad is… Bad is when you lose 50% of your retirement in 2 weeks because funding was pulled from the regulatory agencies responsible for monitoring the markets. THAT’S BAD!” There may be a point in the future where government does again get too big and too intrusive; but that time is not now… We are now at the point where if our government can’t save us…. there is absolutely no one left who can… Our world is deep in a WWII-mode crises all over again; where only the United States is big enough to mount the adequate defense and then initiate a future counter attack…

Six. Over the past 8 years, it became obvious that our infrastructure most definitely needed reworked. This crises gives us the opportunity to fix it; for now, “progress” will no longer get tied up with cries of “over-spending”… Today’s crises put that argument far, far behind us now… We are now more concerned with getting projects moving forward in the least wasteful manner possible. To our chagrin, it would be pure irony if the winning party that won by chastising the past administration for wasting “so much money” on “their pet project”, were to open themselves to the same criticism, by recycling “the past administration’s argument” in order to justify their “pet project’s” waste of money today….. Putting every expense on line will solve it…. Just as we recently discovered our bailout money going towards a corporate jet… having the ability to sniff out corruption in short time, will over the long term, give us the trust we need to get things moving forward quickly… We desperately need that trust in order to be effective; the quickest route to achieve it…. is openness.

Seven, we have historical accounts of what did and didn’t work during a previous Great Depression and we have at our finger tips a vast information system, allowing anyone to bring forward the next “great idea” which just may turn the tide. This epistle is just one example… The tried and true proposals prescribed herein are options that have been researched against the past economic downturn, and have therefore been tested in real time. The novel solutions incorporated herein were built out of questioning why the American economy of the 1930s took so long to recover… and what eventually caused it to grow. These theories may be untested by time, but then… so is every new idea. At their core however, they hopefully have enough historical data to sway even the most skeptical towards implementing their solutions…

The greatest lesson taught by the Great Depression is that “time” is our greatest foe.. Waiting, or allowing things to break up completely before beginning to rebuild from the damaged pieces, means we live squalid lives for decades. Rapid fixes and follow-up solutions will make our lives more enjoyable… We can deal with the long term problems later. But 1933 tells us we needs to jump start it now…

The second lesson that Great Depression teaches us is that change is hard to accept. Even after receiving a mandate for change as did our current leader, FDR still tried to win over the opposition party… It was to no avail.. Eventually he scrapped his attempts at conciliatory moderation as it became obvious that they would oppose whatever he did. Still under the sway of the capitalist’s philosophy that had ruled the previous decade, Roosevelt himself was guilty of inching far too slowly towards implementing direct government involvement. It took an upcoming war to finally sway him to embrace the direct injection of government borrowing into the economy on a massive scale. That made the difference.

Recently the U. S. House of Representatives voted 244 to 188 to pass the Economic Stimulus package; and every Republican lined up against it… As an observer of history it is interesting to note that the same Republican party made exactly the same political error during the Roosevelt’s first term, virtually guaranteeing a one party system over the next 14 years… It is somewhat sad to see history repeat itself… Republicans, apparently are neither familiar with history, …..nor the internet.

Eight, we have at the top of our government, an extremely gifted group of individuals who are charged with bringing major changes to bear in their respective areas. It would be hard to note a more talented cabinet thorough out our history… ( I can maybe think of perhaps two…) Perhaps we should thank the economic crises that brought this group together.. With current challenges being great, political differences were put aside in the interest of saving our country. Our past president’s litmus test was loyalty. This president’s…. is expertise. There is great deft of political instincts now surrounding this president, as well as expert wisdom, unparalleled in recent executive branch appointments. It’s ability to listen and think, seems to become the defining character trait we will forever associate with this administration..

Nine, we finally have a Congress working in sync with the Executive Branch in order to pass the necessary changes required by today’s events. Thanks to the American people, we were not given a stalemated Congress… Truly, the American people deserve their lion’s share of credit for making quick progress possible… It was they who ascertained that the “right president” backed by the “right” party in Congress, would be the only solution to move this nation forward. Yes, they can change their minds in two years.. but for now when timing is at its most critical, our two branches can work in sync as they were designed to by our Constitution. The antique politics of loyal interference, received a big thumbs down by the American people on November 4th, 2008. The voters were wise. Thanks to the American people, we are given a two year window of opportunity to right our ship of state, repair its structural damage, and unfurl its sails once more to set a course for greatness not even fathomed back in the August of last summer.

This economic cloud does indeed have its silver lining.

But…. sometimes…. just the opposite occurs. We see the silver lining…. and forget the dark cloud lurking underneath…. Today there are several proposals working their way through Congress which could cause harm even in their attempts to brighten our financial landscape.

One is a tax check to spend at will, … most of which will go to pay bills in order to stave off bankruptcy and will do nothing to generate either new manufactured products or new services.

Here it becomes clear just how far removed contributing authors to main stream media publications are from the reality that pervades the livelihood of everyday Americans.

Mr. Lindsey, a former Federal Reserve governor and assistant to President George W. Bush for economic policy, is president and CEO of the Lindsey Group. In a piece written to the Wall Street Journal, he uses this statement to demote the economic stimulus package that was dissed by every House Republican…

For a similar amount of money, the government could essentially cut the payroll tax in half, taking three points off the rate for both the employer and the employee. This would put $1,500 into the pocket of a typical worker!

This bragging about $1500 dollars, shows us they don’t grasp the scale that’s needed. The manager of my almost empty hair salon does… Her plan is exactly the same as Lindsey’s, but adds an extra zero. In her words, “if they would just give us $15,000 dollars to pay our debts, the economy could be rolling in 30 days.”

That’s the need… Sure, anyone desperate for cash will take one tenth of it, or $1500 dollars, for it will buy some time. It won’t create a turnaround in the economy, especially if a person is unemployed and not working. At best, the one tenth we receive will keep us from dropping…”as much..”

(Giving $15,000 to every American household irregardless of income level…at 117 million households: costs twice the Iraq War: $1.75 Trillion.)

But Lindsey’s plan is really aimed at providing bonuses to his base (business interests) . For if you read the details under his plan, they too will get $1500 payroll tax deduction for every employee. Have 10 employees? They just got the $15,000 that you said you needed. His plan sucks money out of the economy; it does not put it back.

Remember this: no business has to make money in order to survive. They just have got… “not to lose it”. On the other hand, working people DO have to make money in order to survive. For them, just “not-losing-money” is not an option that they have.. Whenever money is given out to any business, the benefit is political, not economic. Our economy is not bettered by corporations or companies making excessive profits. In fact, as one can see from the “Roaring Twenties”, the Reagan/Bush1 years and the Bush 2 years, excessive corporate profits are just the symptoms of a swelling bubble that inevitably bursts spectacularly. We’ve seen it three times; just before each time, corporate profits soared. On the other hand sustained long termed growth as accomplished by plans formulated during the Eisenhower and the Clinton years, forces corporate money thorough fear of higher taxes back into the companies themselves, in order to hide their profits from being taxed. That re-investment created jobs, which then created more demand for goods and services, which created more re-investment, which then created more jobs, and the economic circle begins climbing.

One must remember that there are two kinds of investments. One, is investing in the building of a manufacturing plant or service industry that employees people… The other, is simply making bets that certain stock certificate will rise in value… One adds money to the economy, causing the economy to grow. The other, is “virtual”. It does not affect the GDP. It does not create jobs. It has as much effect on the economy as betting on a horse.

For the recovery, if it is to happen, hinges on jobs. We need people who buy things. Giving loans to those at the top, for example a corporation like Macy’s in order to keep that brand afloat, will be wasted because those who do the buying, are the ones who still won’t have any money… Therefore in principal, if we are going to borrow a full $3000 dollars to give to every employee, in order to increase their spending which we hope will generate growth, it only makes sense to put that full $3000 directly into the hands of that employee. Splitting it 50/50 with a business dilutes its impact by half.

Republicans bet. Therefore their policies always help out those who play and bet with them.. Democrats don’t. They work. Therefore their policies always help out those who work hard with them.. That is an over simplification to be sure, but if you are approaching this issue for your first time, this simplification gives you some insight and structure into how each party’s actions correspond directly to their supporter’s motives.

Now back to having a tax check to spend…. Didn’t we just have one of those? Someone once said that insanity is doing the same thing over and over again and each time expecting a different result…

Has anyone ever thought of looking at the economic data from last summer and seeing what it’s net effect was then, then modeling it on what impact it might have on today’s economic situation?

What, no?

Well, now might be a good time! The stimulus of last summer was largely saved or used to pay down debt, despite George Bush imploring us to spend it as fast as we could. What was an annualized stimulus of 3% of GDP in the second quarter — which is quite large — only kept GDP growth positive for 1 quarter.

Considering the past quarter, it’s long term effects were nil. Its impact on savings were wiped out. It’s impact on debt was inconsequential.

As we see from these results, the Economic Stimulus Plan did little but raise the 2nd Quarter GDP 3%. After the funds were used, the collapse continued. All a stimulus plan does if it is not big enough, is buy three months of time…

We need something much bigger. Here is why. In November the average credit card debt alone amounted to $8320 dollars per household. Dropping a measly $1500 down off your credit card bill, will unfortunately, accomplish as little for the economy as if one dropped zero $0 dollars down. For if you still owe, … you still owe… Your minimum payment stays the same. The economy does not improve if everyone’s average debt drops from $8320 down to $6820. In fact, the economy actually gets hurt by those banks dependent upon the monthly 1.5% interest. Under this scenario, they lose (per household) $22 dollars in interest. Times twelve months this drop in income costs banks $264 dollars and if every household were to apply their stimulus check to their credit card bill, the yearly net loss to the banking industry would amount to 30.9 billion dollars; right at the time we are throwing money at them to keep them solvent.

The concept of stimulating the economy with a tax rebate is principally flawed. It is extremely flawed when consumer confidence is at an all time low such as it is now…. Tax cuts work only if the consumer spends all the extra amount that they receive. If the check just gets signed over to a bank, either in the form of an increased savings account… or of paying down debt,…. it doesn’t really help the overall economy.

But one would think so however. After all, with that much money available to be lent out, the supply cost for credit should drop, causing the price of credit to inch downward, thereby increasing the volume of it that is bought and used… The increased borrowing should in principal eventually spur the economy forward….

Aye, now here’s the rub.

If everyone is afraid to borrow because of sagging consumer confidence, the money just sits there. It does not get lent and there is no resulting positive impact upon the economy. Businesses have no customers and won’t borrow; at this time they certainly do not need to invest in new plants and equipment (which is why they need a tax cut least of all). Likewise a consumer who anticipates losing his livelihood, won’t spend and will instead, salt away every bit possible to enable him to survive should that happen.

The only people who will benefit from a tax cut and rebate… are the poor who live day to day.. Give them even a little money; it is spent that day. Unfortunately most of the items that they buy come from China, so the tax cut spurs little domestic manufacturing on these shores.

Realistically there are only two things that actually make the economy grow: population growth and gains in productivity. The former carries a lot of costs; the second is the only real fountain of prosperity. Tax cuts do absolutely nothing to aid our productivity.

On the other hand making a choice to use that money for infrastructure spending, for example rebuilding that I 35 bridge across the Mississippi, does increase efficiency by causing products to move faster between two points and actually does something solid to improve productivity.

For a tax cut to work, it has to spur consumption. The last one didn’t and now that consumer and business confidence is even lower, obviously, this upcoming one will not either…

As mentioned earlier, those touting for the passage of a tax cut stimulus check, are not really looking out for the average American’s interest. Other nefarious motives must be lurking behind their support for the receipt of a stimulus check in the mail….

For if they were truly concerned about our welfare, instead of wringing their limp hands over tax cuts, they should be working together to come up with something serious that eliminates our debt.

All that I am giving you…. is the gift of time…. — kavips

What is a silver bullet? According to folklore it is the only thing that brings down a werewolf. Other bullets, indiscriminate of what weaponry they’re fired from, are ineffective against that monster who possesses an aura of impenetrable magic. Our collective wisdom of doing what we always done, of trying what has always worked before, bounces off the charging entity… As our ineffectiveness becomes apparent in face of our own annihilation, we find ourselves wishing for any magic item that could neutralize the evil about to devour us; something that could slip past, disable and kill it… To everyone’s surprise some unknown face steps out from the soon-to-be-annihilated crowd and fires one single silver bullet into the beast… The day is saved.

Today our global economy needs that silver bullet.

Appropriate measures must be taken to match the challenges set against us.

When one visits a physician to request his help against fighting a severe infection such as strep, staph, or even meningitis, one does not expect their doctor to limit the medicine’s dosage to a level that just barely keeps one from dying; one goes to get cured…

Here is an example of a conversation that one hopes never to hear in a hospital room:

Physician: “Your tests show us that your infection has now reached 99% of the lethal level… Untreated you cross the hundredth percentile in three days and die… We have determined that all you need is 2 micrograms of this antibiotic, which should just kill off 1% of the infection and keep it from growing any further.. As it grows a little, we will kill off a little, and thereby keep your total rate of infection from growing further and holding your lethal level at the mark of 99%. We are worried that if your body gets too much of this antibiotic, some of it may be wasted and pass through your system, and entering into your urine stream without being used effectively. Your insurance company, who I remind you is paying for your medicine, insists that we follow this procedure so they do not flush any of their future profits down your plumbing, if I may put it delicately.

Patient: “Nice meeting you. I’ll find a new doctor now.”

For those not clued in, the Physician represents those Republicans and conservative democrats more focused on waste than on survival. The patient is the global economy.

Survival makes mincemeat out of old priorities. Any paramedic who has pulled out a human being from a burning car, knows full well that there is a time and place to worry about a potential back injury. Burning the victim alive for fear one might damage his spinal cord, is a misappropriation of priorities. Any top gun pilot knows that when entering a dogfight with two boogies on one’s tail, it is not the appropriate time to worry about the taxpayer’s investment lying in each missile underneath his plane’s wings. Exiting the dogfight in order to save millions of dollars is a misappropriation of priorities. Every citizen should know a little about the Heimlich maneuver. When a guest sitting next to you is obviously chocking, and because of your indecision has begun to turn blue,… to not attempt to save him because your inexperienced pressure might break one of his ribs… is a misappropriation of priorities.

The global economy is in a desperate situation.. To not do what is necessary to fix it, because it may cause taxes to rise in our future, is likewise a misappropriation of priorities….

Here is a quick review of those points previously mentioned. 1) We need to appreciate the scale of our sickness: our economy from top to bottom is about stop working. 2) We need to understand that we, the American people as well as those scattered across the planet looking towards us for leadership, don’t care how; we just want the infection to go away… 3) If we don’t die, once healed we can deal with the costs down the road….

Just heal us.

It is no secret that our crises was aggregated by mortgages. Nor is it a secret that the American large banks are the ones responsible for leveraging-out our global economy on the junk of unpaid mortgages. The collapsing housing market itself is a small bump in the road. But basing our entire economic structure upon the marketability of those collapsed mortgages, with the premise that their value would always rise, is the real scam perpetuated by our domestic securities brokers.

What our securities industry did, today defies belief, logic, and common sense. What they did was market unpayable mortgages as being worth lots of money. Despite it’s insanity, those unpayable mortgages were further leveraged at rates 40 to 1 in some cases. As the “one” collapsed; so did the “40” loans which were collateralized with it…

Today people are out of work, because of the securities executive’s lapse of judgment. Today our automobile industry is expiring because of what these people did. Today most of Europe’s banks have been nationalized, because of what these people did… Tomorrow, our taxes are going to be out the roof…. because of what these people did…

As one looks at the facts of how we got here, one gets angry. As one gets angry one looks towards quick justice to punish those responsible. As one looks towards quick justice, lynchings of greedy financiers begin to look rather promising…. Make them pay with blood….

It wouldn’t be the first time. Heaven knows they deserve it.

But we can learn something from those societies who repaid years of poverty with the actual blood of those who financially raped them… Long after the bloodletting was accomplished, they were still in poverty… In fact, leaving no one left who was competent enough to run the finances of their nation, their poverty extended down to absolutely every one living within those borders, for generations after generations…

Recent memory of the Soviet and Chinese blood lettings are examples how such unfettered justice can bring any nation to its economic knees, forcing it into some form of totalitarianism just to maintain any sense of order. North Korea is another example of what happens when a nation is run on anger; as a result, living conditions there are deplorable.

Perhaps a better tack would be to take a conquered population, and use them to help ourselves from out from our quagmire.. To do so would require forgiveness, a trait often associated with America by others living on this planet…. Proof of the effectiveness of forgiveness can today be seen in the rebuilt economies of both Germany and Japan, and to some extent… South Korea. As we saw from our earlier chapter, helping these nations achieve and regain their former prosperity, was one of the best investments and execution of policy ever made by this nation.

Today, we now apply that same tact and wisdom to our own financial internal problem.. It is to our mortgage brokers who we must now turn to bail out our nation; forget our congressional delegations.

It starts with this simple question. What would it take to cause a household to spend again?

Basically it would take a breather… a collective sigh of relief by everyone out there who is behind on their payments. What if ….. they were allowed to skip maybe a payment or two? Just to get some utility bills paid down, some credit card debt back under their cut-off lines, perhaps pay off the new heater, or new stove they were forced to buy. What if….. they were given 3 months with no mortgage payment and could then use that amount to catch up on their personal finances?

Then after three months, with their entire debt portfolio restructured, they could begin resuming payments and finally with sufficient money at their disposal, continue to pay off the entire loan including the added interest which accrued over those three months perhaps tacked on to one last payment at the loan’s end….

There is a surreal beauty in this arrangement. The homeowner who has fallen behind three months, can now catch up.. The homeowner who is out of work, can survive hand to mouth for at least three months without worrying about his mortgage. The homeowner who is still current on his payments, can take care of other financial matters, and pay off his unsecured (credit card) debt currently robbing him blind with its high interest rates. Those doing rather well, suddenly have an opportunity equivalent to a tax refund they weren’t expecting.. They can spend it pumping much needed money into the economy. Those investors (banks or mortgage brokers) who put up the money, actually turn out to make more off of the original loan than was ever anticipated due to the compounding of the three month’s interest,… giving them a much higher margin on their return… The economy of the United States of America, after 90 days, has completely emerged out of its recession.

More details…. please.

The idea was simple. Instead of solving the economic crises by looking at the macro scale, we went to the other end and asked this simple question to a number of families… What do you need to get back on track? Our moment of truth came when one family head said: ” Really, as long as my job holds out, all I need is to skip a couple of mortgage payments… After two months, I’ll be caught up” Naturally everyone in the room looked at each other and thought, “Damn, that would work for me too.” The more we thought about it and explored it from different angles, the better it looked from every perspective.

1) It frees up a large chunk of monthly family income.

2) It does not add to the national deficit.

3) It does not require any new investment.

4) It actually makes more money for those holding on to the titles.

5) It increases spending where we need it… on the household level

6) That spending can begin immediately, in most cases on the first day of each month.

7) It rewards those who have kept up on their payments; and brings back to neutral those who are behind; and freezes foreclosures.

8 ) Once put in place, it immediately reinstates confidence in America’s banking system.

This is almost too good to be true. In fact it took a lot of probing to find any negatives that might arise from this action.. The only negative impact which we could discover was that some small mortgage companies rely on monthly payments to meet their payroll.. If that action was counteracted by part of the $900 billion dollar stimulus package, there would be …. no negatives.

So we began to estimate the impact… to see whether its glowing results would hold up….

We should remind ourselves just how important the US economy is to the economic function of the global economy. To put it into perspective, the Federal government guarantees roughly half of the $12 trillion dollar US mortgage market through Fannie and Freddy: roughly $6 trillion. For comparison purposes only, the entire 27 member states of the European Union in 2006 had an annual GDP of slightly more than $12 trillion, so the $6 trillion already guaranteed by the Fed, would be half the GDP of the combined European Union economies, and almost three times the GDP of the Federal Republic of Germany.

So if our nation’s total mortgage amount is $12 trillion, the Federal Reserve reports roughly $500 billion per month is listed in this nation as a receivable from real estate…. Percentage wise, that is only 1/4th the consumer debt of this country which is almost $2 trillion dollars per month…

So let’s play: “what if” just as an intellectual exercise and see how a one month mortgage holiday pans out….

As of last summer, 11.46% percent of our personal income was tied up feeding our mortgages. If we were to establish a mortgage holiday, what we are discussing is the release of ten percent of our personal income, or roughly half a trillion dollars into the economy each month. There is no way the US Government with its annual intake of $2 trillion, could finance something so massive. But, just by extending everyone’s mortgage for just one month, presto, we suddenly have it in our financial system. Since the monthly GDP jumps between four and five trillion, we are speaking of a substantial jolt to our economy, sort of like an economic Heimlich maneuver with no serious side effects. And if we do this three month in a row, …. 1, 2, 3,…. the recession is gone.

How does this affect the mortgage industry? For one, they lose $500 billion each month for three, for a dip of 1.5 trillion… But, under this plan, all we did was just postpone the payments, not…eliminate them… That same 1.5 trillion WILL BE PAID at the end of the loan as well as the interest that accrued upon it.. Which means that an extra payment will probably be added… Instead of catching up on three payments, we will at the end of our loan’s original expiration date , probably pay four.. an affordable sacrifice to be sure… At a .5% monthly rate (6% annually), the interest on that 1.5 trillion amounts to $7.5 billion a month.

How does this impact financial brokers?

As we saw above each month the mortgage payments make up one fourth of financial brokers income.. The other three fourths are represented by loans to consumers and business. Therefore this action will put them 25% down for just three months… Too high of a cost, perhaps?

Perhaps not. All across this country most businesses are down between 25% and 40% percent as a result of the derivative scam perpetuated by these financial institutions. And now that we have an option to pull ourselves out of the recession in as little as three months, with a $1.5 trillion boost to our economy that affects no one really and actually makes money over the long term of those loans still outstanding, and we fail to exercise that option because the whiners who brought us here, don’t want to suffer their share of the 25% of pain felt across this country?

Well? No pity from this quarter.

Today we are misguided in how we are dealing with the toxic mortgage crises… The U.S. Census chart 1152 shows us the problem, its cause and its solution.

Home Mortgage Holders of Outstanding Debt
Courtesy of US Dept of Census pub.1152 (Right click for full image)

Notice only a $2 billion dollar difference in the household sector between 1990 and 2007….Next look at commercial banks and the jump in their mortgage income from 2002 to 2007.. Notice how the heavily regulated savings institution sector was much more conservative. Next notice the GSE’s ( Fannie and Freddie) jumped 186% in one year between 02 and 03 and since have been cutting back.. Notice how the private pools and security issuers have swelled the market.. All the while the household sector remained constant.

This chart shows that the debt held by these pools is not real debt but was arbitrarily bid up by financial institutions over the past four years… In other words if I have $10 dollars of bad debt that I’m stuck with, that at maturation might be worth $20 someday, and I sell it to you for $15 dollars, after which you then bundle ten separate $20 dollars bundles of debt together that will be worth $200 dollars someday, and sell them for $175 to someone who buys ten $200 bundles and conglomerates them into a bundle worth $2000 but sells them for $1850….. well, you get the idea… and the product being sold is worthless by itself. We discover that fact rapidly when we finally reach the point where no one wants it…

So we are now at the point of discussing whether to bail out banks that bought much more then $1850 of that bad debt…and now that they know it is worthless, they want to sell it to the government (future taxpayers) at their costs….$1850…. Originally the number of $10 debts we used should have fetched $1000, but the bidding war has them now priced at $1850… Which means that: the $850 has already been pocketed as profit by those along the process.. So in the large perspective of things financial, all that this bank bailout amounts to is: …. taxpayers borrowing money at interest, to pay for the previous profits made by financiers…

Bottom line… since we need those financiers, we may have no choice… The alternative scenario, that of “The Great(est) Depression”, scares us even more….. For when 57.6% percent of home mortgages suddenly go into default, that creates a massive shock for our economic system to handle… No civilization ever studied, has remained intact after suffering an aftershock of that magnitude….

The problem and causes of this crises are now hardwired into those financial institutions. But embedded in this chart is not only the magnitude of the problem…. but a clue towards its solution as well. As one sees in this chart, the outstanding debt up to now has climbed… But getting an extension-of-three-months does nothing to alleviate or increase that amount of outstanding debt… For if no payments are forthcoming, and no additional loans are written across that time frame, the aggregate amount remains constant over the entire span of the three month holiday. The level of outstanding debt is not impacted by the policy of “not-paying-of-one’s-mortgage”, except of course by the interest that accrues over that additional amount of time… If you owe me $500 dollars and don’t make a scheduled payment, you still owe me $500 dollars, plus the interest. At the loan’s end, after all the principal is paid off and the additional interest is pocketed by the lender….. There is no overall negative impact.

So let’s review. If we give ourselves a mortgage holiday for three months, we put a stimulus amounting to $500 billion dollars per month into the hands of households. In three months, $1.5 trillion will have flowed though the consumer side of our economy. Jobs will need to be quickly added to accommodate that large influx of money into our system… Those earning money with these new jobs will of course be able to buy more, and the economy begins growing… This stimulus begins instantly on the first day of the month.. Everyone’s checking account is not deducted by their usual mortgage amount, and that money is instantly available to be spent towards other things.

Why three months? If two are necessary?

Again based on interviews with families, the data was presented in this fashion. During the first month, the most pressing bills, including utilities and collection agencies’ unpaid medical and credit card bills would be paid. As per the Bush tax stimulus check, the first month would show little spending. The second month would allow further catching up of other bills, and provide a little excess left over which could then be spent…. The third month, that entire extra amount would be available for spending… By the end of that third month, the economy would be roaring again…

I’m curious as to whether or not you the reader feel the same… In our interviews we came across no one who was not excited by this prospect… Further controlled studies can be done by others who want to compare the enthusiasm between receiving a stimulus check for $500 to that of not paying one’s mortgage for three months. Our results showed skepticism towards the tax check, and popular enthusiasm towards skipping one’s mortgage….

Would not paying your mortgage for three months get you back on your feet? And would you mind tacking on one more month’s payment at the end of your loan, for the privilege of getting your head above the financial flood swirling around us all?

As we looked at all the data and perused all of the options we could anticipate, this model became the closest thing in recent memory to that metaphor commonly used by today’s politicians: a win, win, win situation… And it pulls the economy out of its doldrums without that tremendous amount of government borrowing that percentage-wise, rivals our nation’s indebtedness during and after WWII…..

The concept is new when used on this scale, but it is really based on ancient tried and true principals found at the heart of our financial markets. It’s simple.. If one is bankrupt, it is better to get a little breather, than lose everything… Our global economy is bankrupt. Getting a loan extension on the U. S. Home Mortgage debt for everyone at the same time is unheard of, but can, if chosen, be accomplished rather easily. Extensions are processed daily for individual loans around the country. Even Donald Trump’s empire would not be here if this type of extension had been forbidden during the late 80’s. We are just extending the loan for three months, and making every financial institution more money by doing so…

So who is out there who might oppose this?

Our best guess? Moralists, idiots, and bigots. The rest will see this opportunity as being beneficial to themselves, to their unemployed neighbors, to the stability of our financial institutions, to the country of the United States of America and eventually to the global economy as this nation pulls its head out from under the cloud of recession far faster than anyone ever imagined was possible…

All by just postponing three months of everyone’s mortgage.

How do we do this then?

We came up with three ways, each dominated by a branch of the Federal Government.

Congress could briefly debate and vote overwhelmingly to postpone all single family mortgages for three months. But there may be some bogging down on some of the details.

Or the President could sign an Executive order and issue a directive that his Justice Department would not pursue and would overturn any lower court case punishing non payment of mortgages that occurred during the three month holiday… Effectively no one could collect from an unpaid mortgage, because under US Commerce laws any state ruling contrary against the three month mortgage holiday, could be overturned by Federal Court…

Finally the courts themselves could take it upon themselves, case by case, through either a judge’s or juries’ decision, that not paying one’s mortgage payment during the declared mortgage holiday was not only legal, but one’s patriotic duty.

In any of the three scenarios anyone attempting to collect upon a holiday mortgage payment, would be guaranteed to ultimately wind up paying all court costs, making the attempt to collect, pragmatically fruitless.

Secondly, there is precedent for closing financial down financial institutions and stock markets, whenever the market is spiraling out of control… Upon his inauguration, FDR promptly closed all banks until further notice. Surprisingly none of those closed banks lost money while they were closed… Only open banks facing runs, lost money.. Likewise, we remember the closing for several days of the New York Stock Exchange after 9/11…. While the market was closed, no stocks lost value… The same principal holds forth in putting mortgage lenders on holiday… Ultimately, as it did with banks and the markets, it restores confidence in the entire financial sector.

The moratorium placed on three months of home mortgage payments will get the attention of every financial markets. Coupled with other parts of the stimulus package, and with forecasts that in three months the entire American economy will be back to normal, as well as knowledge that financial institutions stand to make an additional month’s income on all outstanding mortgages, our lending institutions will appear well positioned to reap any future profits… People will certainly be less skittish about dealing with commercial banks, as the money begins to cycle around and around… once again…. If you had the choice of investing either in the US or China, after that $1.5 trillion began flowing….. the United States, would certainly appear the safer bet…..

One additional benefit from arising from a three month mortgage holiday, is that it forces banks into more lending to both businesses and automobile purchases… If no income is incoming from mortgage payments for three months, then all new loans default to becoming the primary method of generating income. Every bank would be forced to scramble in order to find those new customers who were trustworthy, willing and able to borrow its money…. Those who simply sat on their assets for three months while doing nothing, would fail.

So even though the description itself has become a cliche, if there ever was a “silver bullet” developed that would kill a recession dead, it would be this one… : a three month holiday on paying one’s mortgage….. Just try thinking of what you could do if you didn’t have three months of mortgage, and you can plainly see… it would boot up the economy without swamping our children with governmental debt.

Saying a lot is one thing; planning it and executing it is another. — kavips

Here is the “full court press” we recommend…

We recommend dividing our economic gurus into three teams….

Team One’s responsibility is to jump start our economy. In athletic parlance, it is called “winning today’s game” It’s goal is three consecutive quarters showing real GDP growth, coupled with three quarters all showing an increase in the level of personal wealth attained by each of the five quintiles. It then disbands.

The second team’s responsibility is to tackle our longer term problems of our deficit spending, and our ballooning entitlements… In athletic parlance, this is called getting ready for the playoffs…..

The third team’s goal is to focus on how we will one day exit our current, direct and necessary governmental intervention into the economy at some point in our not so distant future…. In athletic parlance, this is called building a team for next year….

These three teams must get started immediately, for successful policy on all of these outreaches is critical if we are to again become an healthy economy. We expect to find that each teams answers may contradict the other teams in both theory and philosophy. What works for today, may not work for tomorrow. If so, we need to recognize that possibility now and lay plans for any upcoming change in the future. But the sad truth is this. Right now, we do not have any plans sitting on the shelf, which we can pull down, and right our keeled-over economy. We need some contingency plans in writing, emanating from experts and experienced thinkers, and not from politicians whose responsibility is to jerk their knees to the mood of the moment.

Again, those teams can be summarized as follows: the “today” team, the “next game” team, and the “next season’s” team……

Here is what we recommend for the first all star team to pursue.

Surprisingly we recommend that we find the proper way to give each mortgage holder a three month holiday from paying their mortgage, one giant loan extension. This break allows them to get their finances in order… There is no way any government can match a stimulus impact nearing the size of this amount. If this is utilized, within three months, America’s economy will have pulled itself out of its depression. We found the proper Executive Order outlining such, if issued by the President, could be enough to put this policy quickly in effect… We also found that it worked best if the benefits were not watered down by any type of means testing, but were given to all homeowners irregardless of their income level… It would be fair to all: a pass for three months on paying one’s primary mortgage.

Secondly, we recommend that a way be found to force lending. We discovered that it was the process of “calling” in one’s loans, that made it difficult for banks to lend, both during the Great Depression and today… We recommend that some agreement be made among principal parties, so that when a loan is ever called, the banks coughing up the funds, have a long span of time in which to acquire that capital… perhaps up to a year…. Removing all fear that a bank may go under, could be accomplished rather quickly by eradicating it’s uncertainty that at a moment’s notice, it might have to give all of it’s money over to another bank…. This could be effectively done by issuing one more Executive Order directed towards the Federal Reserve, which states that banks had up to a year to turn over their assets if their loans were ever called in by another bank…. and that the bank requiring the loan to be returned, could go ahead and place that incoming amount on its books as an asset, since the money was surely on its way…

Thirdly, we recommend direct projects be funded by the government for the sole reason of putting people back to work, and in doing so, inject cash directly into the system… However we recommend some qualifications be instituted on what was built. Building a bridge to nowhere does little good except during the time of the actual construction. Building something like new schools, on the other hand, continues various economic benefits long after the building is finished. New teachers and new administrative personnel are needed for many years thereafter… The best bet, and what should be the primary factor in deciding which of the projects clamoring to be built will get the nod, is to insist that whatever is built, will be something that creates new jobs that last long time after the project has been completed…

Number four: we recommend that unemployment be fully funded… We also recommend that all those receiving unemployment should be required to work in some capacity, on their own time as a volunteer. Currently our unemployed payments are hinged on the proof of “searching” for work… We felt that with no jobs being created by the private sector at this time, that this clause of the Unemployment Act would be a waste of effort; we felt it was far better to help a child read, pick up neighborhood litter, or volunteer to assist a classroom in a neighboring school, and then issue proof of doing so to claim a check, as opposed to filling out applications that would not be seen by employers definitely not hiring…… Therefore we recommend that unemployment be tied to giving service back to one’s community. If unemployment ever reaches 25%, with one out of four out of work as it was briefly during the Great Depression, keeping those unemployed busy, would be good for them as well as for our nation.

Number 5: We found the stimulus plan in the form of a rebate check, went to pay down existing debt and did little to stimulate the economy. We found that tax breaks for corporations were equally a waste of resources and actually hurt the economy far more than helping it.. A better approach we found, one which was historically documented throughout the Eisenhower and Clinton years, was to increase the rates that corporations and the wealthy were required to pay in taxes..and then give them an option out for not doing so. We found the economic growth caused by doing this, was rapid. Higher taxes caused the consistent reporting of lower profits mostly because companies opt to reinvest their money into themselves instead of forking it over to the IRS.. This did two things: this dropped the volume of money leaving the private sector, and secondly it caused increased hiring. Having every business reinvest its own money back into itself, pumps far faster money into research, development, growth, new products, new jobs, than anything the Federal Government could mandate directly with their limited resources. We strongly recommend that corporate rates be quickly increased, coupled with sunset restrictions that are guaranteed to lower the high rates when certain agreed-to economic standards have been reached… for instance 3 consecutive terms of 3% GDP growth in a row… The higher rates would then automatically expire.

Sixth. We encourage the ability of businesses and homeowners to completely and fully write off capital investment within the year that it was purchased. This results in lower taxes being levied upon those businesses during the first year of this policy change, when they sorely need it; and slightly increases the subsequent year’s taxes over the span of several years,… when they don’t… Whereas this can negatively impact the government’s revenues during its first year of implementation, it will serve to increase them during the boom times to follow, assisting us in our long term effort to diminish our national debt.

Seventh. We recommend that toxic assets not be bought by the federal government, but instead have their value guaranteed by the Federal Reserve for a fee. The guarantee simply states that the Fed would ante up the difference if needed, should the asset fall and eventually not meet its purchased value.. These toxic assets would then be marketable, and could then be picked up and held by investors, thereby again infusing banks with capital. It would serve us well by not tying down billions of the Federal government’s money. It would be similar to how we responded to our largest problem during the Great Depression. Back then, we didn’t nationalize the banks; we guaranteed the deposits within those banks… Guarantees, as it turned out, that we rarely had to pay.

Eight. The same type of guarantees should be applied to the process of overloaning. The local bank makes a construction loan, knowing that it is insured by the fed from any defaults. The stipulation is that it uses its own money in its own neighborhood, knowing that were serious default to occur, that the Federal Reserve would guarantee its return… The Federal guarantee allows a bank to loan more money than it has. The bank gets its return as payments on those loans begin pouring in. After the banks regain solid footing, these special loans could be sunsetted… Following this plan, puts capital directly where it is needed: in the hands of those who will rebuild our infrastructure.

Nine. The imposition of a Carbon tax acts like an old fashioned tariff to cheap imports. Although this impacts the cost we may pay for some items we use as a consumer, it makes the option of building in America while still paying higher wages, cheaper than shipping overseas to a sweatshop and importing those products back. Likewise the inflated fuel cost suffered last summer, had the golden lining of making building within the United States and shipping locally, appear more competitive than building offshore and transporting products back. For businesses to stay in this country, their entire cost. from top to bottom, must be cheaper than it is elsewhere. We need to lower all other costs for business just so we can keep our wages higher. For those wages are what drives our economy… The Carbon Tax, if elected by us and opted out by our competitors, can balance our two costs and help us to keep businesses inside this country.

Ten. Removing health care responsibility from being primarily funded by businesses, would assist in cutting labor costs low enough to make our country more competitive in global markets. A good portion of our nation’s economic health, lies in the number of manufacturing jobs it has at its disposal. Dropping costs vis a vis our competitors, would make investing in America again, far cheaper than moving into a plant offshore.

Eleven: Moving our nation rapidly to a source of energy far cheaper than the current costs of carbon fuels, would assist in dropping our businesses’ costs lower than those of our global competitors. It takes a wealthy country to do make such an investment in infrastructure, and as a nation, we the people of the United States of America, have the competitive edge over all other countries to do so. Wind and Solar have free fuel costs. That means applying efforts to use new technology to decrease capital costs, will over time, guarantee a significant drop in the cost of all energy being used within our borders. It’s cost needs to drop low enough to make the option of opening a plant in the US, equal to or cheaper than that of building one overseas.

Twelve. We need to begin planning for our new baby boom’s investment. 2007 was the first year we broke the 1957 record of new births. Increasing population is one of just two ways to increase an economy. That process was started during the nights of 2006 and early 2007. We need to prepare for impact in 6 years, 12 years, and 18 years as that baby boom bubble aims for our educational system… We need to be ready with new schools, new teachers, as well as eventually, more new jobs.

Thirteen. Returning to better and tougher product regulation can also increase the worth of products made in America. Already we see signs that “Made In America” is a quality statement among the wealthy Chinese… Beforehand, we were guilty of making the assumption that quality would remain consistent, no matter from which locality a product was made. Last year with pets dying, poisonous lead found in children’s toys, and other international quandaries, we finally understand how again returning to a tighter system of regulating ourselves, can make our products appear trustworthy and thereby remain more competitive, despite the higher wages we are paying to our nation’s hard working employees.

Fourteen. We must not panic ourselves into protectionism. It was tried and failed; the Smoot Hawley Act aggravated if not instigated the 1930s Great Depression. Protectionism can work on a micro scale, case by case, as it did for Harley Davidson during the Reagan years. But using protectionist philosophy as a broad swipe, drastically drops our nation’s exports, causing the GDP to collapse, thereby raising unemployment to levels currently undreamed of. Protectionism on a broad scale is very bad for our economy.

We now move on with the agenda of that second team: the one responsible for tomorrow’s game. This team’s goal will be to again remake America solvent. The second team must focus on these following problems. As often happens in the financial sector, having two separate teams work independently, could be likened to any corporation which had one team working with the court on its immediate bankruptcy proceedings, and another team working with its creditors on how to alleviate its long term problems with long term solutions.

We must be ready before our depression ends, to jump into phase 2 and prepare for the method on how we wean ourselves off of debt. It is not just the National Debt we need to fix. We also need to tackle our personal, corporate, state and local government’s propensity to spend money we don’t yet have… As a society, we want more! And as consumers we are just not savvy enough to understand that buying now, will cost us more later…. “Oh, I can afford that low payment”, has become our excuse to put off our fiduciary responsibilities…..

We recommend that the compounded power of interest needs to be re-explained to our population; it needs to come from a political figure they trust. We were shocked to find that most citizens of our nation are relatively ignorant about the math behind money, The “bully pulpit”, we think should be used to explain how some debt for houses and building businesses is good, but that too much for personal consumption is not in the best interests of our nation…The accumulation of more and more debt, needs to be framed alongside the political perspective that in doing so … we cripple our country. “By increasing your personal debt, you are not only causing hurt to yourself, but you are eating away the foundation upon which stands this once great nation”….

We recommend the following three step process be used to deal with the personal debt of private citizens. We recommend first dividing the population up into these three classifications of personal debt… 1) Those who can never catch up. 2) Those who can catch up part way, and 3) those who are still living within their means.

For the first group we recommend biting the bullet and processing that whole group through bankruptcy as expeditiously as possible… Let them begin from scratch, and let’s write off their bad debt at once. It makes for a bad month, or two, and it severely impacts one quarter. The alternative to quick action, is to ignore the inevitable by muddling through this malaise, and continuing to have this sickness interfere with our economy for many quarters to come.

For the second group, we recommend the recalculation of their debt according to this formula which is different from whatever loan agreements they originally signed. Recognizing that much of their debt is currently at interest rates well over 25%, and a majority of their debts are carrying over one third of their balance in superfluous late fees, we recommend that each of those debts receive a new recalculation based on the amount of principal they borrowed, plus an average, fair interest rate over the life of the loan. We recommend 8 %, considering the Federal Rate is now close to 0%. We recommend the removal of late fees entirely, and should a payment not be forthcoming by it’s due date, that only, … the accumulated interest be added to the balance. (That was the original plan of the United State’s credit card industry up until 1997). We acknowledge that those still dreaming of a 50% rate of return off some accounts may scream that they are being taken. We simply argue in return that those who have been taken by them all these years, are finally receiving their fair break. 8% interest is still higher than any loss, which in today’s economic world is a very real alternative.

For those who have been consistent in their payments despite these hard times, ie the third group, we recommend that all of past credit records be wiped out entirely and that their credit scores commence immediately at 800, the perfect score. We feel that this would give immense incentive to all those of the top echelon for continuing to pay in a timely fashion, especially as they see others who can’t pay around them receive huge breaks. We recommend that anyone paying off pre 2009 debts, be given a huge positive impact in the formula used for all future calculations of a customer’s credit worthiness.

Although we emphatically agree that some personal debt is necessary, we also acknowledge that there are limits to the debt that we have left. For that reason we further recommend the passage of legislation either on a Federal level or by individual states to again set a high limit on the amount which can be made from borrowing. That decision is a societal one, not a corporate one. Society should reclaim its responsibility to monitor and set its usury guidelines; it’s a responsibility that should have never been delegated to those profiteering from the interest.

Lastly, to assist in personal savings, we recommend the restitution of buying U. S. Savings bonds. We further recommend the use of a mandatory deduction from each person’s payroll for US. Savings bonds at whatever low interest rate shall be determined. This will understandably have the effect of a new tax at first, drawing more money out from the private sector of the economy. But over time it will return that money back and provide all of us the benefit of lower future taxes, especially if it is used as a tool or way to restructure our gigantic, impending national debt. Opposite of a tax, under this plan each lender WILL get a full return of his money back at some future date. Under this plan, our nation is borrowing from each and every one of it’s citizens; it’s citizens in turn are investing in their nation, and accumulating personal savings while doing so. The explicit difference between this new plan and Social Security, is that in this case, all of the amount that an individual actually does put in, will one day be returned to either himself or his dependents. Unlike Social Security which was “supposed” to grow independently within a trust fund arrangement that was completely outside of the regular budget of discretionary governmental spending, this mandatory savings fund is designed to 1) increase the national amount of savings being done by all Americans, by 2) supplementing the national budget by explicitly invested that yearly amount into the paying off of our nation’s obligations. We recommend that this program should have written into its passage, that the yearly amount collected from its citizens, be at least, equal to that segment of debt decreased from our nation’s obligation. In other words, all the money goes to pay down the national debt. It can be used for no other reason.

At first glance this appears as one more obligation. Even if we eliminate a good portion of our National Debt, we will still have large sums sucked out of America’s pockets just to reimburse our thirst for retirement income and medical care of the poor and elderly. Currently discretionary spending is only 1/3 of our budget. Two thirds of our budget has already been committed to be spent and cannot be touched….

It is to that two thirds that we must addressed our concern if we are to EVER achieve solvency as a nation.

To that end, we recommend that Social Security taxes be increased 1.7% from the current amount of 12.4% of payroll up to 14.1% of payroll. We further recommend that Social Security benefits commence at age 70, instead of age 65. Together these will bring Social Security back to solvency.

Cutting back on the amount going out to retiree’s was not an option. Social Security currently takes up between 4 to 5 percent of our GDP. Social Security cuts depress economic activity and depressed economic activity is NOT more of what we need now. Social Security Cuts need to be taken off the table. For every dollar cut out of Social Security, the economy depresses by a factor of three. Social Security can become solvent through the 1.7% payroll increase, and by raising the age of retirement to 70.

Medicare and Medicaid is a different story, however. That entitlement in its current state, will be 5 times more costly than Social Security. That entitlement just simply cannot continue in its current fashion.

We recommend a shift in our nation’s focus towards it’s priorities on health care. Instead of our government guaranteeing unlimited care for keeping the dying alive, we feel its priorities should be shifted towards keeping the living population healthy. Our recommendation is to institute a new version of health care in which the Federal Government pays for preventative care, and leaves the ballooning massive costs of staying alive to private insurers.

We recommend that doctors be paid a flat fee per visit, and that the payment for that visit comes from the federal government. This would release significant savings to medical practitioners who require an inefficient number of staff just to deal with the maze of insurance regulations and requirements for each individual patient who pays a visit.

To pay for this, we are recommending that initially, an additional insurance payroll deduction ($11.48/ week) be applied to each paycheck. Over a short time, we recommend the removal of the Medicare and Medicaid programs as they stand today. By then the current Medicare tax would cover this program. This change will save roughly 400 billion currently paid to cover the Federal government’s responsibility towards our health care… Within four years this savings could pay off our national deficit in discretionary spending, and within ten years it alone could pull us out of debt.

We recommend that screening for the four largest human killers; colon cancer, heart disease, strokes, and prostate , be free of charge to every patient and be performed as perfunctorily as are our vaccinations of toddlers today. Our proposal is similar to health care programs of other wealthy nations. We propose that in one year we progress to step one, which is to have all medical, emergency room, and dental visits covered by the Federal government. Currently we found that a $75 dollar flat fee for the initial visit, irregardless of the ailment was sufficient, but argue that these fees be set regionally by boards of physicians themselves… We further recommend that after first visit is covered in full, if required, the second gets paid only at 50%, and subsequent visits are not covered at all. This provides sufficient incentive for doctors to get it right the first time, and prevents the stringing along by doctors of uncertain hypochondriacs in order to soak up additional federal dollars.

The estimated cost of preventive health care on a fee only basis is around $82 billion. We feel that it is the nation’s responsibility to insure that each of its citizens has the right to live healthy by providing free preventative health care; likewise we feel it is NOT in our nation’s best interest to squander our children’s inheritance just to pay for us to cheat death a couple of minutes more….

The Second team needs a solid goal. Financial solvency by 2020 would be a good start. The two best ideas we found to achieve that goal were to mandate a required national savings policy using Savings Bonds to pay down the national debt, and to revamp Medicare to pay 100% for all preventative and minor health care, but leave to private insurers the responsibility to cover the catastrophes if and when they occur.

The third’s team role will be to shift us away from huge government involvement in the economy, back to an economy that is privately run. Over the course of the past century we can see both benefits and pitfalls in following either privatization or socialism. Each are good in their time, and each if trending too long, comes to the point where each creates more problems than they solve. The smart method is to handle this occurrence by planning for it in advance. That would be the focus of the third team. This team would take the the long term problem of shifting our energy away from Carbon. It would tackle the problem of paying down our National Debt. It would look at our economic viability in the next two or three decades and recommend changes that might be required. It would look at tax policy to determine the ideal amount that creates a three legged system balanced between the government, business, and the people… After all the optimal size of government is relative. If it imposes itself upon businesses and the people, it is too big. If it fails to protect us, it is too little. Our wisdom has been enhanced. No more shall businesses and government expand at the expense of the people; no more should the people expand their government too far at the expense of business. We now understand that each leg’s function is to compliment the other two, and when in perfect balance, all three prosper.

The third team’s goal will be to examine all options available. and restore that balance between all three legs… There is a good chance that they will want to deviate from some of the plays we are calling in today’s game… That’s fine. After all, what is important is that we win today’s game, win tomorrow’s game, and continue to win all of next season’s game….

The play we need is simply the “full court press”

This humble plan is the beginning of getting us there.

Part of it was due to a funeral that came up, but if you remember well, this was supposed to be the official Russ Larson Day…

Of course it was planned in short notice, and with Delmarva announcement of their signing the onshore wind deal, this day of honoring Russ Larson never got off the ground.

So although it is not much, here is what I could accomplish in quick order….

Russ larson day

WHEREAS all acknowledge that as Controller General, Russ Larson wanted to do the right thing and vote for approval of the working agreement between Delmarva and Bluewater Wind,

WHEREAS all sympathize with Russ Larson for having his job and salary threaten by said Tony DeLuca, current Senate Majority Leader.

WHEREAS all understand that instead of voting NO on December 18th, against orders from Senate leadership, with considerable bravery he agreed instead to table the decision until a future time when passage was assured.

WHEREAS all acknowledge that even though no vote has yet taken place within the Senate, the passage was so overwhelming within the House, that over a majority of all legislators have either voted for or sponsored HCR 38, and that Russ Larson is therefore within his rights to vote his conscience knowing that he speaks for the majority of all legislators.

WHEREAS all of Delaware acknowledges the tough spot Russ Larson was put into by the leadership of the Senate, most particularly Thurman Adams, the aforementioned Tony DeLuca, the squirrelly Charlie Copeland, and the buffoon Harris McDowell, and certainly feels for him…

BE IT RESOLVED by all the bloggers following the 144th General Assembly of the State of Delaware, that June 6, 2008, is designated as “Controller General Russ Larson Day” and it is requested that citizens throughout the State join in recognizing the work, effort and contribution that this individual made to improve the quality of life for all families in Delaware.

Controller General Russ Larson Day”. Russ Larson has showed considerable loyalty to Delaware’s citizens, quick thinking, and a steady resolve in supporting Blue Water Wind in Delaware…..

Russ, when this whole thing is over……we are throwing you a party. Sorry we couldn’t get it together in time for the actual date itself