There are two budgets in the United States: one is the entitlement budget and the other is the Federal or operating budget. The entitlement budget has been tweaked, I believe 72 times. As LJP has stated, most people want their benefits, because most people have older parents, and or sick or disabled friends and relatives. Most people like Social Security and believe that since they have contributed, like their parents and grandparents, they deserve and earned an additional safety net to help or supplement their savings or pension. But in truth, many are damn glad to have SSI because it keeps them in a home, not in the street, and not eating dog food. Many recipients are women who never worked, and their husbands either pissed away their money, never knew had to save, never made big money, never had a defined benefit, or their defined benefit was small, went bankrupt, had a catastrophic illness themselves or in their family, were impoverished by long term care, were flooded out, were a victim of Mother Nature’s wrath or were victims of some other unforeseen problem. In fact, a huge percentage of Americas are one paycheck away from the poor house, and have very little savings.

Let us not excuse Madison Avenue and the boob tube for encouraging the profligate lifestyle. Our savings rate here in the US of A is horrible and the mutual funds, which hold 99% of their 401Ks and 503bs, no less IRAs, go up moderately in Bull markets, and tank in Bear markets. Generally no one knows what are in these funds or how they work. Our schools abhor teaching financial responsibility. The average student graduates high school, then maybe college without any knowledge of insurance, annuities, the bond or stock market, and even how to manage a credit card. The credit card companies thrive on ignorance, and are happy to put usurious, almost loan shark interest rates on most folks because others are constantly behind the “payment 8-ball” and there are many defaults.

Therefore, with regards to the “entitlement” budget, Secretary of Labor Frances Perkins wanted health insurance tied to the bill, but with the huge struggle FDR faced, that provision was sacrificed. We probably should have had a “single payer” system from day one. In fact, the Blue Cross/Blue Shield system, state by state, basically served as that type of universal semi-private-public insurance and did not cover office visits and drugs. The system was gutted by insurance (Oxford and many others) raiders, who took away the healthier clients and promised office visit and drug coverage. Part of this tactic was to bundle doctors into competitive groups who would be fed by these pools new clients, provided by businesses. This practice also encouraged doctors to raise rates, to buy expensive machinery, and fatten their pockets by passing along each expense to the insurance companies, who passed it along to the businesses. This fed the inflation of health care. As insurance coverage became more complex, doctors had to hire more staff and computer programs to process the claims. The result was more “pass a longs” to the patient and thus the insurance carrier. The insurance executives didn’t complain. They make millions. The doctors banded into group practices, to lower their costs, shared nurses, shared billing, bought more equipment, and shuffled patients in and out as fast as possible. Care improved for the upper middle classes and above, and become rationed for the lower middle class. Their co-premiums have increased, private coverage is unaffordable, co-payments have doubled, people cannot leave their jobs, and hospitals are going broke. Great sytem!

Meanwhile, with regards to SSI, by 1950 the ratio of workers to recipients was 8-1 and it has been shrinking since, Political leaders, especially Democrats, want to be more inclusive regarding the disabled, orphans, and widows. Is that terribly wrong? In fact, the GOP “fiction writers, inside and outside of Congress,” as FDR termed them, opposed every “decent” step forward. The GOP did not hate big government or the nanny state, it basically believed in Social Darwinism, felt they could game the system better, and despised people other then their own. They never looked at SSI or Medicare, or Medicaid as a responsibility of government and they are basically opponents of liberal democracy. The GOP talked of everyone having to pull their own oar or have to drift out to sea in no uncertain terms. In fact, they don’t give a good goddamn, plain and simple. Also, coincidently, the “uncertain times” have been created mostly by economic “bubbles” caused by the GOP sponsored hand maidens on Wall Street.

Meanwhile the demographics have changed, people are aging, the trade unions which fought for pensions, economic balance and democracy, and fair wages have been destroyed by cheap Asian (foreign) labor and manufacturing here has been gutted. The next target of the union-busters is civil service, and one day it will be the minimum wage, and when people are desperate for jobs, the GOP-supported industrial magnates will be happy to offer jobs at a dollar an hour. Yesterday, McDonald announced that it will hire 50,000 workers on one day! More cheese burgers for the growing obese population that will be rupturing Medicare and Medicaid. Also, the working poor and the civil servant are now less Western Eurocentric and more Black, Hispanic, African, Eurasian and Micronesian. Therefore, why pay taxes to help this different brand of immigrants and foreigners who do the scut work. Even the issue of abortion has been one less of religion and more of demographics. The GOP could care less what the Bishops say. The average old-line Roman Catholic practices birth control and would use an abortion if necessary. Just look at how few children the Irish, Italians and Poles have produced in the past few generations. The hypocritical right-wing is only concerned that more whites still have abortions then non-whites, and if it were the other way they would double the funds for Planned Parenthood and repeal the Hyde Amendment. In truth, there are still many more whites born, but the problem is that the white birth rate is very low and the non-white birth rate is much higher, along with an immigrant population which is heavily weighted to non-whites. So in my view this whole big government, liberal-conservative fight is all about race and demographics. In fact, no matter who the GOP alienates, and no matter what they oppose, the numbers are against them. Their answer is to lock in generational wealth for their heirs, weaken the democracy and become citizens of the world with assets in banks all over the planet. In fact, look at how they blackmail the majority in the Senate and the presidency. They just tell the country, we’ll defund the whole government if you don’t fall into line and give us our tribute. Wouldn’t it be great, if the next time there is a Republican president the Democrats filibuster and defund their government? That reminds me more of the Weimar Republic.

Since business refuses to pay more taxes and there are still incredible loopholes allowing GE, Exxon and others to pay no taxes last year, the temporary answer is raise the payroll tax on the recipient, and consider long and hard, Governor Brewer’s idea to add surtaxes to smokers and the obese in Arizona to fund Medicaid. I am for that. But on the other hand, who encourages smoking and obesity? Certainly not the liberals and the Democrats, who have generally better health habits than the typical Okie form Muscogee. So let’s raise payroll taxes until there is some solvency going forth, and put this one too bed. Then we can look to how to adjust benefits to cover the baby boom bubble!

As to the operating budget, how about a special “war tax” to support our large, expensive standing forces and our need to intervene, here and there, over the short and long term? What happened to the media’s memory of who engaged us in these wars, who didn’t pay for them, who encouraged our spending binge, who decried regulation, who manned the toothless SEC, who allowed the super heated derivative market to flourish? I ask who? The Media depend on a system that pays their owners, shareholders, and spokespersons zillions and when the truth intrudes, now and again, they make it quite clear, “get out of the way, and get with the program!”

I believe in high taxes on the rich. We not only have 400 billionaires, who are paying less taxes then ever, but we have millions Americans who have holdings and earnings way above $10 million to $999 billion. They benefit by a low top tax rate, they have caps on their payroll taxes, have all sorts of deferred income, stock options and pay most of their incomes at the capital gains rate. They utilize tax loss carry forwards, not any differently then what GE did to earn $14 billion and not pay any taxes last year. Just read it in the NY Times. I also believe that everyone who earns money must pay a minimum tax, no matter how many deferments and exemptions they have. The only group who should be exempt from all taxes are accredited students, of any age, up until and through college and to age 22. I would also consider partial exemptions for graduate students and hospital interns. I would tax earnings by college sports programs at the current corporate tax rate. These colleges want to pay coaches millions of dollars, and use cheap labor, let them pay taxes. The abuses by these bowl committees and athletic conferences are disgusting. Just read about the Fiesta Bowl and their practices. If we are so concerned about insolvency, along with cutting government fluff, especially in the defense budget, with crop subsidies, and the oil depletion allowance, cut the staffs of all the departments and the Congress by 50%, lower salaries by 25%, and let them pay their own benefits. Institute a partial draft to take the gangs off the streets, and reduce the professional army to a more manageable level, and return the Reserves and National Guard back to their previous roles. Along with enhanced revenues through higher taxes, closed loopholes, and the shutting of offshore tax shelters we will be more solvent and comfortable with the future.