Top Five Surprises in Obamacare
Top 5 Surprises in Obamacare
The more the American people have learned about Obamacare since it was passed the more they dislike it. And with good reason. Here is a list of some recent surprises buried in the 2,300 pages of legislation.
1. Beginning in January 2012, businesses are required to file with the IRS for every business to business transaction over $600. This includes all transactions, not just health based ones. (Section 9006).
2. A new program (the Community Living Assistance Program) was established that is woefully underfunded by the bill and will eventually require much more money than allocated. (Section 8002).
3. As of January 2014, states must expand Medicaid coverage to all individuals under the age of 64 with family incomes at or below 133% of the federal poverty level. States already do not have the resources to provide adequate Medicaid coverage and this law will add millions more to Medicaid rolls. (Section 2001, as modified by 10201 and H.R. 4872; Sec. 1004 and 1201).
4. Beginning January 2011, individuals are not allowed to use Flexible Savings Accounts, Health Reimbursement Accounts, and Health Savings Accounts to purchase over-the-counter medicines. The law also caps annual contributions at $2,500, down from $5,000. Many Americans (especially younger ones in relatively good health) rely on FSAs, HRAs, and HSAs to help pay for healthcare. This law makes these consumer-oriented tools that encourage smart shopping less convenient and provides a perverse incentive for individuals to buy expensive prescription medicine instead of over-the-counter alternatives. (Section 9003).
5. Verizon, AT&T, Caterpillar and other companies publicly acknowledged that the tax structure of the new law actually encourages companies to stop providing coverage for their employees beginning in 2014. (Section 1003).
Furthermore, despite promises from President Obama, Nancy Pelosi and the Democrats that the bill would not add a dime to the deficit, the most recent CBO study confirms that the projected deficit has increased by $71 billion due to newly enacted legislation (namely healthcare reform). Read more here.
H.R. 4972: A beautifully crafted 40-word solution
But as expected, House Democrats have tied up the legislation in committee to avoid voting on it before the fall elections.
Excerpts taken from Newt Gingrich’s August 25, 2010 E-mail Newsletter
This Week in American Military History: From the King’s Proclamation to Richie’s MiG
This Week in American Military History:
by W. Thomas Smith Jr.
08/24/2010
Aug. 23, 1775: Less than two months after the Second Continental Congress issues its “Declaration on the Causes and Necessity of Taking Up Arms [against the British]” in which the Congress resolves “to die free men rather than live as slaves,” King George III issues his own proclamation declaring the American colonies to be in a state of rebellion.
The king adds, “not only all our Officers, civil and military, are obliged to exert their utmost endeavours to suppress such rebellion, and to bring the traitors to justice, but that all our subjects of this Realm, and the dominions thereunto belonging, are bound by law to be aiding and assisting in the suppression of such rebellion, and to disclose and make known all traitorous conspiracies and attempts against us, our crown and dignity.”
Aug. 23, 1864: Union Naval forces under the command of Adm. David Glasgow Farragut – best known for purportedly uttering the command, “Damn the torpedoes! Full speed ahead!” – take Fort Morgan, effectively ending the near-month-long battle of Mobile Bay.
Aug. 24, 1814: British forces under the command of Maj. Gen. Robert Ross close-with and defeat a mixed American force of Continental Army regulars, Marines, sailors, and militia under overall command of U.S. Army Brig. Gen. William Henry Winder in the battle of Bladensburg, Maryland on the road to Washington, D.C. during the war of 1812.
The disastrous defeat of the Continentals at Bladensburg will enable the British to march on, sack, and burn the nation’s capitol within a few hours. But according to legend, the British are so impressed by the indomitable stand of the American Marines and sailors – who “broke two British regiments” during the fighting – that the commandant’s house and the Marine barracks will be spared the torch when Washington is burned.
Aug. 25, 1944: U.S. and French Army forces liberate Paris. The Germans fall back.
The BBC reports: “This evening French, American and Senegalese troops marched triumphantly down the Champs Elysee to ecstatic cheers of Parisians, young and old.”
Aug. 28, 1862: The Second battle of Bull Run (known to many Southerners as Second Manassas) opens between Union Army forces under the command of Maj. Gen. John Pope and Confederate Army forces under Maj. Gen. Thomas J. “Stonewall” Jackson (Gen. Robert E. Lee in overall command).
Within days, Confederate forces will drive Union forces from the field, not unlike what happened at First Bull Run/Manassas on July 21, 1861.
Aug. 28, 1972: U.S. Air Force Capt. Richard Stephen Richie, flying an F-4 Phantom, shoots down his fifth MiG over North Vietnam, becoming the Air Force’s first ace of the war.
But to hear Richie tell it, it was just a ride. “My fifth MiG kill was an exact duplicate of a syllabus mission, so I had not only flown that as a student, but had taught it probably a dozen times prior to actually doing it in combat,” he says.
Let’s increase awareness of American military tradition and honor America’s greatest heroes by supporting the Medal of Honor Society’s 2010 Convention to be held in Charleston, S.C., Sept. 29 – Oct. 3, 2010 (for more information, click here).
Mr. Smith is a contributor to Human Events. A former U.S. Marine rifle-squad leader and counterterrorism instructor, he writes about military/defense issues and has covered conflict in the Balkans, on the West Bank, in Iraq and Lebanon. He is the author of six books, and his articles appear in a variety of publications. E-mail him at marine1@uswriter.com.
Intel CEO Otellini: The Democrats Are Destroying our Economy
This is a stunning indictment from the leader of one of America’s most successful technology companies:
Unless government policies are altered, he predicted, “the next big thing will not be invented here. Jobs will not be created here.”
The U.S. legal environment has become so hostile to business, Otellini said, that there is likely to be “an inevitable erosion and shift of wealth, much like we’re seeing today in Europe–this is the bitter truth.”
Not long ago, Otellini said, “our research centers were without peer. No country was more attractive for start-up capital… We seemed a generation ahead of the rest of the world in information technology. That simply is no longer the case…”
Otellini singled out the political state of affairs in Democrat-dominated Washington, saying: “I think this group does not understand what it takes to create jobs. And I think they’re flummoxed by their experiment in Keynesian economics not working…”
As a result, he said, “every business in America has a list of more variables than I’ve ever seen in my career.” If variables like capital gains taxes and the R&D tax credit are resolved correctly, jobs will stay here, but if politicians make decisions “the wrong way, people will not invest in the United States. They’ll invest elsewhere.”
Take factories. “I can tell you definitively that it costs $1 billion more per factory for me to build, equip, and operate a semiconductor manufacturing facility in the United States,” Otellini said…
“If our tax rate approached that of the rest of the world, corporations would have an incentive to invest here,” Otellini said. But instead, it’s the second highest in the industrialized world, making the United States a less attractive place to invest–and create jobs–than places in Europe and Asia that are “clamoring” for Intel’s business.
The most disturbing part of Otellini’s comments is that he says nothing groundbreaking, nothing unexpected, and nothing that we have not heard many times before. Otellini talks about regulation, taxation, litigation and transparency – all issues that have been cited by business leaders for years. But our ‘leaders’ in Washington ignore these concerns, and instead pile on more taxes, more regulation, more litigation costs, greater uncertainty about the climate going forward. And they do all this while claiming to be ‘pro-jobs.’
Will Congress and the White House ever realize that business leaders are telling the truth? As our government continues to make it more difficult to do business in the US, companies must increasingly look to more favorable climates abroad. If Washington really wants to spur job creation here in the US, they should repeal the health care overhaul, reduce spending, cut the corporate tax rate, give up on cap and trade, and reform litigation. Instead we have been treated to an extended experiment in government control – one that is obviously not producing new wealth, new jobs, or any real hope for the emergence of the industries of the future.
Recovery in danger as firms, homebuyers cut back
By DAN WAGNER and ALAN ZIBEL
Wednesday, August 25, 2010
WASHINGTON — The economic recovery appears to be stalling as companies cut back last month on their investments in equipment and machines and Americans bought new homes at the weakest pace in decades.
Overall orders for big-ticket manufactured goods increased 0.3 percent in July, the Commerce Department said Wednesday. But that was only because of a 76 percent jump in demand for commercial aircraft.
Taking out the volatile transportation category, orders for durable goods fell at the steepest rate since January. And business orders for capital goods took their sharpest drop since January 2009, when the economy was stuck in the deepest recession in decades.
Separately, Commerce said new home sales fell 12.4 percent in July from a month earlier to a seasonally adjusted annual sales pace of 276,600. That was the slowest pace on records dating back to 1963. Collectively, the past three months have been the worst on record for new home sales.
The weak sales mean fewer jobs in the construction industry, which normally powers economic recoveries. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.
The two reports are likely to stoke fears that the economy is on the verge of slipping back into a recession. They follow Tuesday’s report that showed sales of previously owned homes fell last month to the lowest level in decades. Unemployment remains near double digits and job growth in the private sector is slowing.
“The rebound in manufacturing was one of the bright spots in an otherwise disappointing recovery,” said Paul Ashworth, senior U.S. economist at Capital Economics. “Take it away, throw in a relapse in housing, and you don’t have much left.”
Factory orders are a key measure of the economic recovery. Manufacturers have helped to lead the rebound. They filled orders for businesses that were building up stocks after whittling them down during the recession.
But many companies are done restocking, cooling demand for factory goods.
Demand for durable goods has mostly risen in recent months. Orders are 15.6 percent higher than they were a year ago. Excluding transportation, demand has increased in all but two months this year.
Overall orders in June declined by a revised 1.0 percent. But excluding transportation, orders rose 0.2 percent. Spending by businesses increased 3.6 percent that month – a rare bright spot.
Durable goods are expected to last three years or more. The full survey of factory orders will be released next week.
Housing has never fully recovered from the recession. Builders have been forced to compete with foreclosed properties offered at significantly lower prices.
New home sales made up only about 7 percent of the housing market last year. That’s down from about 15 percent before the bust.
The industry received a boost this spring when the government offered tax credits to homebuyers. But since they expired in April, the number of people looking to buy homes has dropped, even with bargain prices and the lowest mortgage rates in decades available.
More than 600,000 new homes were sold annually from 1983 through 2007. After the housing bubble popped, sales plunged to 375,000 last year. That was the weakest yearly total on record.
Builders have sharply scaled back construction in the face of weak sales. The number of new homes up for sale at the end of July was unchanged at 210,000, the lowest level in about 40 years.
Due to the sluggish sales pace, it would still take more than nine months to exhaust that supply, above a healthy level of about six months.
New home sales were down nationwide. They fell by more than 25 percent from a month earlier in the West, 14 percent in the Northeast, 9 percent in the South and 8 percent in the Midwest.
The median sales price in July was $204,000. That was down 4.8 percent from a year earlier and down 6 percent from June.
Meet the New Boss, Same as the Old Boss
Posted by Erick Erickson
August 24, 2010
Has the GOP learned its lessons from 2006?
That’s the big question many on the right are asking themselves. After all, on the Senate side the same leadership that led the GOP out of power will be the same leadership leading the GOP back into power if they take back the Senate.
In the House of Representatives, the members did a good job replacing their failed leadership. Hastert retired, DeLay quit, Blunt left leadership. Blunt’s Deputy Whip, Eric Cantor, moved up to Whip. Kevin McCarthy and Mike Pence came in underneath. In fact, Eric Cantor is the only member of the Hastert-DeLay-Blunt-Cantor House GOP Leadership team to remain.
On the House side, as a very public repudiation of their past, John Boehner led the GOP to refuse earmarks — the bribes both sides have used for so long to grow government and get their pet programs passed.
Earmarks were used to bribe Republicans to support the prescription drug benefit and TARP. Earmarks were used to bribe Democrats to support Obamacare. Earmarks are a drug and the GOP, to absolve itself of its own sins, publicly declared that House Republicans would give up the very corrupting practice.
But it was all for show, or so it seems. House Republican Whip Eric Cantor (R-VA) declares earmarks will be back in full swing once the GOP takes back Congress.
Cantor said, “Republicans may roll back their ban on earmarks, as long as the spending items have ‘merit.’”
“Merit” is a focus grouped way to obfuscate the reality that Eric Cantor and the House Republicans are perfectly happy to be wallowing back in the mud pit once they get back in charge. If the earmarks actually had merit, they could withstand the entire appropriations process, including review by committee, etc. instead of being added in.
In other words, the GOP has learned nothing and forgotten nothing. They’ll merely bank on our preference for them to Pelosi as a block against Obama, but will otherwise keep expanding government and lining the pockets of preferred interest groups with bridges to nowhere save high deficits.
As I wrote back in March, “Earmarks are certainly not the only issue, but they are the most telling as to whether Republicans really have learned their lesson in the minority.”
Eric Cantor, at least, has not. Remember, this is the guy who attacked the stimulus while lobbying for stimulus money to build a high-speed railroad between Richmond and Washington. It’s also the same guy who tried to play cheap parliamentary tricks to stop Rep. Steve King’s discharge petition to repeal Obamacare.
And this is the guy who will be the House Majority Leader if the GOP takes back Congress.
View Source Article
Minority leader Boehner: Fire Obama’s economic team, extend tax cuts
By Paul Kane and Michael D. Shear
Tuesday, August 24, 2010
CLEVELAND — House Minority Leader John Boehner (R-Ohio) called Tuesday for the mass firing of the Obama administration’s economic team, including Treasury Secretary Timothy F. Geithner and White House adviser Larry Summers, arguing that November’s midterm elections are shaping up as a referendum on sustained unemployment across the nation and saying the “writing is on the wall.”
Boehner said President Obama‘s team lacks “real-world, hands-on experience” in creating jobs that are needed for a full economic recovery. The Republican lawmaker cited reports that some senior aides complained of “exhaustion,” including the recently departed budget chief Peter Orszag.
(44: Boehner not the only one who wants Geithner out)
“President Obama should ask for – and accept – the resignations of the remaining members of his economic team, starting with Secretary Geithner and Larry Summers, the head of the National Economic Council,” Boehner said in the morning speech to business leaders at the City Club of Cleveland. The mass dismissal, he added, would be “no substitute for a referendum on the president’s job-killing agenda. That question will be put before the American people in due time. But we do not have the luxury of waiting months for the president to pick scapegoats for his failing ‘stimulus’ policies.”
Vice President Biden lashed back at Boehner, called his “so-called” economic plan nothing but a list of what Republicans are against and devoid of innovative new ideas that can help move the country forward.
In a sarcastic tone, Biden thanked Boehner for the suggestion that the president fire his top economic advisers.
“Very constructive advice and we thank the leader for that,” Biden said.
With President Obama on vacation Martha’s Vineyard, the White House largely left it to Biden to respond to the speech. He accused Boehner and the GOP of wanting to take the country back to failed policies of the past.
“Mr. Boehner is nostalgic for those good old days, but Americans are not…We’ve seen this movie before Mr. Boehner,” Biden said. “We’ve seen it before. And we know how it ends.”
Calls for Cabinet officials to be fired is nothing new for the party out of power — during the Bush administration many Democrats called for the ouster of Defense Secretary Donald Rumsfeld, a demand that was not met until Democrats swept the 2006 midterms.
Bill Burton, the White House deputy press secretary, said he had reviewed Boehner’s speech and found “what was most surprising was his full-throated defense of the indefensible,” a reference to the congressman’s proposal to give tax breaks to companies that Burton said “ship jobs overseas.”
He rejected Boehner’s call for Obama to dismiss Geithner and Summers, saying the “irony of this is that Boehner would fire the people who made the tough decisions, who did the hard work to get the economy going again.”
In his speech, Boehner sought to personalize mounting concerns among voters about Obama’s handling of the economic recovery – arguing that Obama’s advisers unfairly highlight brief signs of marginal improvement to suggest a coming surge in job creation.
“The American people are asking, ‘where are the jobs?’ and all the president’s economic team has to offer are promises of ‘green shoots’ that never seem to grow,” Boehner said. “The worse things get, the more they circle the wagons and defend the indefensible.” After the speech, he held a question-and-answer session with business leaders in this economically distressed Rust Belt city.
Democratic National Committee officials organized a conference call Monday to critique what they consider a lack of new proposals from the GOP and unveil a Web ad rehashing attack lines against the minority leader, including a 15-year-old story about handing out campaign checks from tobacco companies to Republicans on the House floor.
“It was John Boehner and Republicans who invented the ways of Washington,” the narrator says in the ad.
House Republicans do not plan to unveil a detailed policy agenda until late September, and Boehner’s speech did not expand the GOP’s existing economic proposals in any significant way. The speech was part of a bus tour of battleground House districts, focusing on manufacturing-centric regions such as Indiana, Ohio and western Pennsylvania.
Boehner told the City Club officials that the key to sparking job growth is extending the tax cuts implemented by then-President George W. Bush in 2001 and 2003. Republicans want to extend the tax cuts across the board, while Democrats have argued for extensions to all but the top 2 percent of income earners. Both proposals would result in sharp increases in deficit spending — more than $3 trillion under the Democratic plan and $3.7 trillion for the GOP plan — but both sides argue that some extension of tax cuts would provide an additional stimulus to spur consumer purchasing power.
Boehner needs a net gain of 39 or more Republican seats to seize control of the House and fulfill his self-proclaimed campaign of “Boehner for Speaker.” No issue will be more key to that effort than the economy. In Boehner’s home state of Ohio — a critical battleground in the past two presidential campaigns — unemployment has remained higher than the national average, at 10.3 percent in July. Neighboring Indiana is barely better, at 10.2 percent.
Vulnerable House Democrats from Ohio have embraced Obama’s stimulus legislation as something that has, at the least, helped mitigate the damage to the region. Rep. Zack Space (D), elected in 2006, last week hailed a $66 million grant from the Recovery Act to expand high-speed access to the Internet in his eastern Ohio district. Rep. John Boccieri (D-Ohio) trumpeted a $1.6 million grant to a local port authority for a project that would ultimately create 500 jobs in his district. Republicans, however, say Obama’s Recovery Act has been a failure.
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Boehner said that extending the tax cuts for all income brackets would help small business owners, who have been the toughest hit since the financial collapse of 2008. “Raising taxes on families and small businesses during a recession is a recipe for disaster – both for our economy and for the deficit. Period. End of story,” he said. “That’s why President Obama should work with Republicans to stop all of these job-killing tax hikes.”
View Source Article
Staff writer Scott Wilson also contributed to this report. kanep@washpost.com
Congress Links
August 23, 2010 – by Hilary Worden
The CBO issues a report on the Bush-era tax cuts, Sen. Lindsey Graham forms a new opinion on Afghanistan, and more in today’s Congress links.
* The Congressional Budget Office says that a short-term extension of the Bush tax cuts would boost GDP 0.6 to 1.7 percentage points and reduce the unemployment rate by 0.3 to 0.8 percent, but that extending them for too long would create “daunting long-term fiscal challenges” and “reduce long-term economic growth”. (The Hill)
* On the topic of tax policy, Senate Minority Leader Mitch McConnell asks “when did it all of a sudden become something that we, quote, ‘pay for?’” (Washington Post)
* House Democrats will be pushing their small-business agenda this week. (The Hill)
* After a trip to Afghanistan, Sen. Lindsey Graham [R-SC] says he thinks some U.S. troops could begin withdrawing next July. (Senatus)
* The Obama administration is rewriting medical privacy rules, after criticism from Congress members of both parties, as well as consumer groups. (The NY Times)
* Senate Majority Whip Dick Durbin [D-IL] voices his support for the Islamic community center in Lower Manhattan, saying its opponents are trying “to divide America with fear and hate over this issue” (The Hill). Rep. Eric Cantor [R-VA] says its builders are “insensitive” and “not interested in healing” (Politico).
Democrats Told To Stop Campaigning on Obamacare
Posted by Erick Erickson
Friday, August 20th
The Politico headline is actually New Dem message: ‘Improve’ health care, don’t talk cost , but that is not wholly what is going on. What is going on is a recognition from the Democrats that after a year of trying to sell Obamacare as a panacea of right thinking and improvement, the voters headed to the polls in November disagree and are angry.
Consequently, the Politico notes that Democrats are abandoning all pretenses of selling Obamacare to the public and have cut and run back to “if you don’t replace us with the Republicans, we promise we will improve it.”
The confidential presentation, available in full here and provided to POLITICO by a source on the call, suggests that Democrats are acknowledging the failure of their predictions that the health care legislation would grow more popular after its passage, as its benefits became clear and rhetoric cooled. Instead, the presentation is designed to win over a skeptical public, and to defend the legislation — and in particular the individual mandate — from a push for repeal.
The presentation concedes that groups typically supportive of Democratic causes — people under 40, non-college-educated women and Hispanic voters — have not been won over by the plan. Indeed, it stresses repeatedly that many are unaware that the legislation has passed, an astonishing shortcoming in the White House’s all-out communications effort.
Note just how bad it must be for the Democrats and their messaging if “many are unaware that [Obamacare] has passed.” This is consistent willful naivety by the Democrats. The public that will most likely vote does know Obamacare passed and they are mad as all get out because of it.
And the kicker — the revised talking points counsel that Democrats should avoid making the claim that Obamacare will reduce costs and cut the deficit. In other words, the two main selling points are being tossed out the window.
Quantifying National Debt- Just the Facts
Citation
“Quantifying the National Debt.” By James D. Agresti. Just Facts, July 29, 2009. Updated 8/16/10. http://justfacts.com/nationaldebt.asp
Introductory Notes
This research is the first in a series of topics pertaining to the national debt. Future research will entail:
• Causes of the National Debt
• Accuracy of Government Accounting and Projections
• Voting Records and Promises of Politicians
• Economic Consequences of Government Debt
• Who Owns the National Debt?
• Media Coverage of the National Debt
• Indebtedness of State and Local Governments
• Personal Debt and Savings of Individual Americans
Quantifying the National Debt
* As of August 12, 2010, the official debt of the United States government is $13.3 trillion ($13,317,048,837,517).[1] This amounts to:
• $43,377 for every person living in the U.S.[2]
• $113,645 for every household in the U.S.[3]
• $284,113 for every U.S. household that pays more in federal taxes than they receive in benefits from the federal government[4]
* Publicly traded companies are legally required to account for “explicit” and “implicit” future obligations such as employee pensions and retirement benefits.[5] [6] [7] The federal budget, which is the “federal government’s primary financial planning and control tool,” is not bound by this rule.[8] [9]
* As of September 30, 2009 (the end of the federal government’s fiscal year), the federal government has:
• $6.5 trillion ($6,544,700,000,000) in liabilities such as federal employee retirement and veterans’ benefits[10]
• $18.5 trillion ($18,538,000,000,000) in projected shortfalls in the Social Security program
• $33.5 trillion ($33,467,000,000,000) in projected shortfalls in the Medicare program
• $140 billion ($140,000,000,000) in projected shortfalls in other “social insurance” programs[11]
These projected shortfalls are referred to as “closed group present values” and are calculated in a manner that approximates how publicly traded companies are required to calculate their debts and obligations.[12] [13] [14] The figures represent how much money must be immediately placed in interest-bearing investments to cover the shortfalls between projected revenues and expenditures for all current taxpayers and beneficiaries in these programs.[15] [16] [17]
* Combining the figures above with the national debt and subtracting the value of federal assets, the federal government has $63.6 trillion ($63,604,500,000,000) in debt, liabilities, and unfunded obligations as of September 30, 2009.[18]
* This shortfall exceeds the combined net worth of all U.S. households ($53.5 trillion), which includes all assets in savings, real estate, corporate stocks, private businesses, nonprofit organizations, and consumer durable goods such as automobiles, televisions, and furniture.[19] [20]
* This shortfall equates to:
• $207,176 for every person living in the U.S.[21]
• $542,789 for every household in the U.S.[22]
• $1,356,971 for every U.S. household that pays more in federal taxes than they receive in benefits from the federal government[23]
* These figures do not account for future deficits implied by any federal programs outside of the “social insurance” programs detailed above.[24]
* These figures depend upon several assumptions, including the following:
• government projections about future economic conditions are accurate. (The “2008 Financial Report of the United States Government” projected unemployment would average 5.6% during fiscal year 2009.[25] During this period, unemployment averaged 8.5%.[26])
• the total shortfall ($63.6 trillion) is immediately placed in investments that consistently yield about 2.97% above the rate of inflation.[27] If this money is not set aside immediately, the interest compounds.[28] [29]
Years
$63.6 trillion compounded at 2.97%
(in 2009 dollars)
Increase
10 $85.2 trillion 34%
20 $114.2 trillion 80%
30 $153.0 trillion 141%
40 $205.1 trillion 222%
50 $274.8 trillion 332%
Footnotes
[1] Web page: “The Debt to the Penny and Who Holds It.” Bureau of the Public Debt, United States Department of the Treasury. Accessed August 16, 2010 at http://www.treasurydirect.gov/NP/BPDLogin?application=np
As of 8/12/2010, the “Total Public Debt Outstanding” is $13,317,048,837,517.
[2] Dataset: “Annual Estimates of the Resident Population for the United States, Regions, States, and Puerto Rico: April 1, 2000 to July 1, 2009.” U.S. Census Bureau, December 2009. http://www.census.gov/popest/states/NST-ann-est.html
July 1, 2009
United States 307,006,550
CALCULATION: $13,317,048,837,517 debt / 307,006,550 people = $43,377 debt/person
[3] Dataset: “Average Number of People per Household, by Race and Hispanic Origin, Marital Status, Age, and Education of Householder: 2009.” U.S. Census Bureau, January 2010. http://www.census.gov/population/www/socdemo/hh-fam/cps2009.html
Total households = 117,181,000
CALCULATION: $13,317,048,837,517 debt / 117,181,000 households = $113,645 debt/household
[4] Calculations performed with data from the following sources:
a) Dataset: “Average Number of People per Household, by Race and Hispanic Origin, Marital Status, Age, and Education of Householder: 2009.” U.S. Census Bureau, January 2009. http://www.census.gov/population/www/socdemo/hh-fam/cps2009.html
Total households = 117,181,000
b) Article: “Accounting for What Families Pay in Taxes and What They Receive in Government Spending.” By Scott A. Hodge. Tax Foundation, September 21, 2009. http://www.taxfoundation.org/publications/show/25195.html
[I]n 2010, before any of Obama’s major policy initiatives-such as health care reform, cap and trade, and tax rate increases-are enacted, the bottom 60 percent of American families will as a group receive more in government spending than they pay in taxes. …
By contrast, the top 40 percent of families pay more in taxes as a group than they receive in government spending benefits.
NOTE: For details, see Table 3: “Net Income Redistribution per Family (Constant 2010 Dollars)”
CALCULATIONS:
117,181,000 total households × 0.40 households paying more in federal taxes than they receive in federal government spending = 46,872,400 households paying more in federal taxes than they receive in federal government spending
$13,317,048,837,517 debt / 46,872,400 households = $284,113 debt per household paying more in federal taxes than they receive in federal government spending
[5] Report: “Enron: Selected Securities, Accounting, and Pension Laws Possibly Implicated in its Collapse.” By Michael V. Seitzinger, Marie B. Morris, and Mark Jickling. Congressional Research Service, Library of Congress, January 16, 2002. http://fpc.state.gov/documents/organization/7960.pdf
Page 2:
Among the disclosures of publicly traded companies are accounting statements. Since financial information is of little use to investors unless all firms use comparable accounting methods, the securities laws give the Securities and Exchange Commission broad authority to establish standards for financial reporting. The SEC has delegated the task of writing accounting standards to private sector bodies, and since 1973 the Financial Accounting Standards Board has been charged with formulating accounting and financial reporting standards.
[6] Summary of Statement No. 106: “Employers’ Accounting for Postretirement Benefits Other Than Pensions.” Financial Accounting Standards Board, December 1990. http://www.fasb.org/st/summary/stsum106.shtml
This Statement establishes accounting standards for employers’ accounting for postretirement benefits other than pensions…. It will significantly change the prevalent current practice of accounting for postretirement benefits on a pay-as-you-go (cash) basis by requiring accrual, during the years that the employee renders the necessary service, of the expected cost of providing those benefits to an employee and the employee’s beneficiaries and covered dependents. …
… The Board believes that measurement of the obligation and accrual of the cost based on best estimates are superior to implying, by a failure to accrue, that no obligation exists prior to the payment of benefits. The Board believes that failure to recognize an obligation prior to its payment impairs the usefulness and integrity of the employer’s financial statements. …
The provisions of this Statement are similar, in many respects, to those in FASB Statements No. 87, Employers’ Accounting for Pensions, and No. 88, Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits. …
This Statement relies on a basic premise of generally accepted accounting principles that accrual accounting provides more relevant and useful information than does cash basis accounting. …
[L]ike accounting for other deferred compensation agreements, accounting for postretirement benefits should reflect the explicit or implicit contract between the employer and its employees.
[7] Book: Finance for Managers. By Richard Luecke and Samuel L. Hayes. Harvard Business School Press, 2002. Page 39:
In contrast to cash-basis accounting, accrual accounting records transactions as they are made, whether or not the cash has actually changed hands. Most companies of any size use accrual accounting. This system provides a better matching between revenues and their associated cost, which helps companies understand the true causes and effect of business activities. Accordingly, revenues are recognized during the period in which the sales activities occur, whereas expenses are recognized in the same period as their associated revenues.
[8] See the three notes above for details regarding the manner in which publicly traded companies are required to calculate their debt and obligations using accrual-based accounting. The following note explains that the federal budget, in contrast, is calculated on a cash basis. More details are spelled out here.
[9] “2008 Financial Report of the United States Government.” U.S. Department of the Treasury, 2008. http://www.fms.treas.gov/fr/08frusg/08frusg.pdf
Page 21 (in pdf): “The President’s Budget (Budget), the Government’s primary financial planning and control tool, describes how the Government spent and plans to spend the money it collects.
Page 30 (in pdf): President’s Budget … Prepared primarily on a ‘cash basis’
[10] “2009 Financial Report of the United States Government.” U.S. Department of the Treasury, February 26, 2010. http://fms.treas.gov/fr/09frusg/09frusg.pdf
Page 49: “United States Government Balance Sheets as of September 30, 2009, and September 30, 2008″
Liabilities
2009 (billions $)
Accounts payable 73.2
Federal employee and veteran benefits payable 5,287.3
Environmental and disposal liabilities 341.8
Benefits due and payable 160.8
Insurance program liabilities 166.2
Loan guarantee liabilities 69.4
Liquidity guarantee 91.9
Other liabilities 354.1
Total of above (excludes national debt) 6,545
[11] “2009 Financial Report of the United States Government.” U.S. Department of the Treasury, February 26, 2010. http://fms.treas.gov/fr/09frusg/09frusg.pdf
Page 14: “Table 3, Social Insurance Future Expenditures in Excess of Future Revenues”
2009 (billions $) 2008 (billions $)
Totals 52,145 49,135
NOTE: The figures below, which are the components of the totals above, were included in the 2008 report but not in the 2009 report. The 2009 figures were provided to Just Facts by the Department of the Treasury on March 9, 2010.
Social Security (Closed Group) 18,538 17,188
Medicare (Closed Group) 33,467 31,810
Other (Closed Group) 140 137
[12] See here, here, and here for details regarding the manner in which publicly traded companies are required to calculate their debt and obligations using accrual-based accounting. The following two notes show that the federal budget, in contrast, is calculated on a cash basis. These notes also show that accrual-based accounting is used in the “Annual Financial Report of the United States Government,” which is the source for the shortfall figures cited above.
[13] “2008 Financial Report of the United States Government.” U.S. Department of the Treasury, 2008. http://www.fms.treas.gov/fr/08frusg/08frusg.pdf
Page 21 (in pdf):
Each year, the Administration issues two reports which detail the financial results for the Government. The President’s Budget (Budget), the Government’s primary financial planning and control tool, describes how the Government spent and plans to spend the money it collects. By comparison, the accrual-based Financial Report of the United States Government (Report) includes the cost of operations, the sources used to finance those costs, how much the Government owns and owes, and the outlook for its social insurance programs.
Page 30 (in pdf):
President’s Budget Financial Report of the U.S. Government
Prepared primarily on a ‘cash basis’ Prepared on an ‘accrual basis’
[14] Report: “Understanding the Primary Components of the Annual Financial Report of the United States Government.” U.S. Government Accountability Office, September, 2005. http://www.gao.gov/new.items/d05958sp.pdf
Page 5:
Accrual accounting, which is also used by private business enterprises, is the basis for U.S. generally accepted accounting principles for federal government entities. It is intended to provide a complete picture of the federal government’s financial operations and financial position. The federal government primarily uses the cash basis of accounting for its budget, which is the federal government’s primary financial planning and control tool.
Page 6:
The accrual basis of accounting recognizes revenue when it is earned and recognizes expenses in the period incurred, without regard to when cash is received or disbursed. The federal government, which receives most of its revenue from taxes, nevertheless recognizes tax revenue when it is collected, under an accepted modified cash basis of accounting.
[15] “2008 Financial Report of the United States Government.” U.S. Department of the Treasury, 2008. http://www.fms.treas.gov/fr/08frusg/08frusg.pdf
Page 51 (in pdf):
The [social insurance] estimates are actuarial present values2 of the projections and are based on the economic and demographic assumptions representing the trustees’ best estimates as set forth in the relevant Social Security and Medicare trustees’ reports and in the relevant agency performance and accountability reports for the RRB and the Department of Labor (Black Lung). …
2 Present values recognize that a dollar paid or collected in the future is worth less than a dollar today, because a dollar today could be invested and earn interest. To calculate a present value, future amounts are thus reduced using an assumed interest rate, and those reduced amounts are summed.
Page 60 (in pdf):
Participants for the Social Security and Medicare programs are assumed to be the “closed group” of individuals who are at least age 15 at the start of the projection period, and are participating as either taxpayers, beneficiaries, or both, except for the 2007 Medicare programs for which current participants are assumed to be at least 18 instead of 15 years of age.
Page 105 (in pdf):
The present values of future expenditures in excess of future revenue are the current amounts of funds needed to cover projected shortfalls, excluding the starting trust fund balances, over the projection period. They are calculated by subtracting the actuarial present values of future scheduled contributions and dedicated tax income by and on behalf of current and future participants from the actuarial present value of the future scheduled benefit payments to them or on their behalf.
[16] Report: “Social Security and Medicare Trust Funds and the Federal Budget.” By James Duggan and Christopher Soares. Office of Economic Policy, U.S. Department of Treasury, March 2008. http://www.treas.gov/offices/economic-policy/reports/…
Page 16: “The resulting present value is the amount that would have to be put in the bank today at the assumed interest rate to fund the future cash flows.”
[17] “2009 Financial Report of the United States Government.” U.S. Department of the Treasury, February 26, 2010. http://fms.treas.gov/fr/09frusg/09frusg.pdf
NOTES:
a) In this report, starting trust fund balances of the various social programs are not included in the shortfall calculations.† Just Facts accounts for this in footnote 18 when all these figures are totaled to calculate “debt, liabilities, and unfunded obligations” for the federal government as a whole.
† Page 125: “The present values of future expenditures in excess of future revenue [for the social insurance programs] are the current amounts of funds needed to cover projected shortfalls, excluding the starting trust fund balances, over the projection period.”
b) In addition to the “closed group” projected shortfalls, this report also contains projections for the “open-group” and “infinite horizon.” Details are below.
Page 14:
‘Closed’ Group and ‘Open’ Group differ by the population included in each calculation. From the [Statement of Social Insurance], the ‘Closed’ Group includes: (1) participants who have attained eligibility and (2) participants who have not attained eligibility. The ‘Open’ Group adds future participants to ‘Closed’ Group.
Page 125:
Current participants in the Social Security and Medicare programs form the “closed group” of taxpayers and/or beneficiaries who are at least age 15 at the start of the projection period. For the 2007 Medicare projections, current participants are at least 18 years of age at the beginning of the projection period. Since the projection period for the Social Security, Medicare, and Railroad Retirement social insurance programs consists of 75 years, the period covers virtually all of the current participants’ working and retirement years, a period that could be more than 75 years in a relatively small number of instances.
Pages 157-158:
[W]hen calculating unfunded obligations, a 75-year horizon includes revenue from some future workers but only a fraction of their future benefits. In order to provide a more complete estimate of the long-run unfunded obligations of the programs, estimates can be extended to the infinite horizon. The open-group infinite horizon net obligation is the present value of all expected future program outlays less the present value of all expected future program tax and premium revenues. …
In comparison to the analogous 75-year [projection], extending the calculations beyond 2083, captures the full lifetime benefits and taxes and premiums of all current and future participants. The shorter horizon understates financial needs by capturing relatively more of the revenues from current and future workers and not capturing all of the benefits that are scheduled to be paid to them.
Pages 14, 158:
Program 75-Year Closed Group
(billions $)
75-Year Open Group
(billions $)
Infinite Horizon
(billions $)
Social Security 18,538 7,677 17,500
Medicare 33,467 38,107 89,500
Other 140 94 ?
Total 52,145 45,878 107,000 + ?
[18] “2009 Financial Report of the United States Government.” U.S. Department of the Treasury, February 26, 2010. http://fms.treas.gov/fr/09frusg/09frusg.pdf
Federal Debt, Liabilities, Obligations, and Assets as of September 30, 2008
Category (Billions $)
Publicly-Held Debt † ‡ 7,583
Other Liabilities § 6,545
Social Security Projected Shortfall # 18,538
Medicare Projected Shortfall # 33,467
Other Social Insurance Programs
Combined Projected Shortfall #
140
Assets £ -2,668
Total 63,604
NOTES:
† Page 49: Federal debt securities held by the public and accrued interest as of September 30, 2009 = $7,582.7 billion
‡ The “Publicly-Held Debt” differs from the “National Debt” in that it excludes “intergovernmental debt,” which is money the federal government owes to various trust funds such as Social Security’s. Hence, to be consistent, the social program shortfalls shown in the table above do not include their starting trust fund balances. Facts regarding why and how the federal government keeps its books in this manner will be covered at a later date in the section of this paper entitled “Real National Debt.” In the meantime, to understand this issue, visit our Exclusive News Service article: The Impact of Social Security on the National Debt.
Page 125: “The present values of future expenditures in excess of future revenue [for the social insurance programs] are the current amounts of funds needed to cover projected shortfalls, excluding the starting trust fund balances, over the projection period.”
§ See here.
# See here.
£ Page 49: “United States Government Balance Sheets as of September 30, 2009, and September 30, 2008″
Assets 2008 (billions $)
Cash and other monetary assets 393.2
Loans Receivable and Mortgage- Backed Securities, Net 538.9
TARP Direct Loans & Equity Investments, Net 239.7
Property, plant, and equipment, net 784.1
Other assets 712.0
Total 2,667.9
[19] Report: “Flow of Funds Accounts of the United States.” Board of Governors of the Federal Reserve System, March 11, 2009. http://www.federalreserve.gov/releases/z1/current/z1.pdf
Page 2 (in pdf): “Household net worth—the difference between the value of assets and liabilities—was an estimated $54.2 trillion at the end of the fourth quarter, up $0.7 trillion from the third quarter.”
Page 104 (114 in pdf):
B.100 Balance Sheet of Households and Nonprofit Organizations
Billions of dollars; not seasonally adjusted
2009 Q3 2009 Q4
Net worth 53,493.5 54,176.2
NOTE: Household assets detailed in this table include items such as real estate, corporate equities, mutual funds, equity in noncorporate businesses, life insurance, pension fund reserves, and consumer durable goods. Nonprofit organizations are explicitly named in the title of this table because their assets are not considered household property, whereas assets of for-profit entities are considered household property.
[20] Web page: “Updated PPI Commodity Weight Allocations to Stage-of-Processing Indexes.” Bureau of Labor Statistics. Last modified February 18, 2009. http://www.bls.gov/ppi/ppisopallo.htm
“SOP 3130 – Consumer Durable Goods: contains nonfood products, ready for final consumption, with a life expectancy of more than three years. Examples of durable goods include furniture, passenger cars, and appliances.”
[21] Dataset: “Annual Estimates of the Resident Population for the United States, Regions, States, and Puerto Rico: April 1, 2000 to July 1, 2009.” U.S. Census Bureau, December 2009. http://www.census.gov/popest/states/NST-ann-est.html
July 1, 2009
United States 307,006,550
CALCULATION: $63,604,500,000,000 / 307,006,550 people = $207,176/person
[22] Dataset: “Average Number of People per Household, by Race and Hispanic Origin, Marital Status, Age, and Education of Householder: 2009.” U.S. Census Bureau, January 2010. http://www.census.gov/population/www/socdemo/hh-fam/cps2009.html
Total households = 117,181,000
CALCULATION: $63,604,500,000,000 / 117,181,000 households = $542,789/household
[23] Calculations performed with data from the following sources:
a) Dataset: “Average Number of People per Household, by Race and Hispanic Origin, Marital Status, Age, and Education of Householder: 2009.” U.S. Census Bureau, January 2010. http://www.census.gov/population/www/socdemo/hh-fam/cps2009.html
Total households = 117,181,000
b) Article: “Accounting for What Families Pay in Taxes and What They Receive in Government Spending.” By Scott A. Hodge. Tax Foundation, September 21, 2009. http://www.taxfoundation.org/publications/show/25195.html
[I]n 2010, before any of Obama’s major policy initiatives-such as health care reform, cap and trade, and tax rate increases-are enacted, the bottom 60 percent of American families will as a group receive more in government spending than they pay in taxes. …
By contrast, the top 40 percent of families pay more in taxes as a group than they receive in government spending benefits.
NOTE: For details, see Table 3: “Net Income Redistribution per Family (Constant 2010 Dollars)”
CALCULATIONS:
117,181,000 total households × 0.40 households paying more in federal taxes than they receive in federal government spending = 46,872,400 households paying more in federal taxes than they receive in federal government spending
$63,604,500,000,000 debt, liabilities, and unfunded obligations / 46,872,400 households = $1,356,971 debt, liabilities, and unfunded obligations per household paying more in federal taxes than they receive in federal government spending
[24] “2008 Financial Report of the United States Government.” U.S. Department of the Treasury, 2008. http://www.fms.treas.gov/fr/08frusg/08frusg.pdf
Page 28 (in pdf):
The SOSI [Statement of Social Insurance] provides additional perspective on the Government’s long term estimated exposures and costs. However, it should be noted that the Government’s financial statements do not reflect future costs implied by any current policy, such as national defense, the global war on terrorism, and disaster relief and recovery.
[25] “2008 Financial Report of the United States Government.” U.S. Department of the Treasury, 2008. http://www.fms.treas.gov/fr/08frusg/08frusg.pdf
Page 148: “Table 10 shows present values of 10-year projections of revenues and expenditures for the Unemployment Insurance Program…. For expected economic conditions, the estimates are based on an unemployment rate of 5.58 percent during fiscal year 2009, decreasing to 4.80 percent in fiscal year 2013 and thereafter.”
[26] Table: “Unemployment Rate – Civilian Labor Force – LNS14000000.” Bureau of Labor Statistics, U.S. Department of Labor. Data extracted March 11, 2010. http://data.bls.gov/cgi-bin/surveymost?ln
Unemployment Rate – Fiscal Year 2009
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Average
6.6% 6.9% 7.4% 7.7% 8.2% 8.6% 8.9% 9.4% 9.5% 9.4% 9.7% 9.8% 8.5%
[27] Calculations performed with data from Table VI.F6: “Selected Economic Variables, Calendar Years 2007-85, Intermediate Cost Assumptions.” United States Social Security Administration, May 12, 2009. http://www.socialsecurity.gov/OACT/TR/2009/lr6f6.html
NOTES:
The economic assumptions contained in this table are those used in the Social Security Trustees’ Report. The “Adjusted CPI” (inflation) and “Compound Interest Rate Factor” (yield of investments) were annualized and averaged over the 75 year projection period. The result is an average annual interest rate of 5.75% and an average annual inflation of 2.78%, the difference between these two figures amounting to 2.97%.
The other social insurance programs use approximately the same assumptions, as evidenced by pages 128-129 of the “2009 Financial Report of the United States Government,” which show that 7 out of 8 comparable demographic and economic assumptions for Social Security and Medicare are exactly the same in all years, and 1 of the 8 is exactly the same in all years except 2009 and 2010.
[28] “2008 Financial Report of the United States Government.” U.S. Department of the Treasury, 2008. http://www.fms.treas.gov/fr/08frusg/08frusg.pdf
Page 51 (in pdf): “Present values recognize that a dollar paid or collected in the future is worth less than a dollar today, because a dollar today could be invested and earn interest. To calculate a present value, future amounts are thus reduced using an assumed interest rate, and those reduced amounts are summed.”
[29] An example of how this interest compounds can be seen in calculations performed by the U.S. Social Security Administration. The “75-year open group unfunded obligation” is listed at $4.3 trillion in the 2008 Trustees’ Report.† Yet, if these same projected deficits are allowed to accumulate, the shortfall would amount to $36 trillion (in 2008 dollars) by 2082.‡
† “The 2008 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds.” The Board of Trustees of the Federal OASDI Trust Funds, March 28, 2008. http://www.ssa.gov/OACT/TR/TR08/tr08.pdf
Page 59: “The present value of future cost less future tax income over the long-range period, minus the amount of trust fund assets at the beginning of the projection period, amounts to $4.3 trillion for the [Social Security] program. This amount is referred to as the 75-year ‘open group unfunded obligation’.”
‡ Calculation performed with data from the following sources:
a) Report: “Combined OASDI Trust Fund Operations: 2008 Trustees Report Intermediate Assumptions.” Office of the Chief Actuary, United States Social Security Administration, October 16, 2008.
The Social Security Trust Fund end of year assets are projected to be -$277,143,351,000,000 in 2082.
b) Web page: “Selected Economic Variables: Table VI.F6.-Selected Economic Variables Calendar Years 2007-85.” United States Social Security Administration. Last reviewed or modified March 25, 2008. http://www.socialsecurity.gov/OACT/TR/TR08/lr6f6.html
[The adjusted CPI (consumer price index) from this table is 769.36 for 2082.]
CALCULATION: -277.1 trillion (2082 $) / (769.36/100) = -36.0 trillion (2008 $)
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