Weekly Comments Archive
Archived Issue
Sunday, March 12, 2023
ISSUE #1151
Budgeting for Social Security and Medicare, and Arguing Global Warming

Did you see the Budget for Fiscal Year 2024 submitted by President Biden? He wants to spend $6,700,000,000 and raise a slew of taxes. It is more of a political ad for Democrats than a budget because the Republican House will never approve it.

But suppose Democrats were still in control of Congress, and this budget passed. Low-income folks and maybe half of middle-income earners would be cheering, “Yes, make the rich and corporations pay their fair share!”

However, the wild applause would end in a few months. Instead of the mild Recession we now seem to be entering, raising these taxes would dump the economy into a full-blown Depression. Companies would raise prices, reduce worker benefits, and lay off employees to compensate for lower net income. The wealthy would pull back, reducing their investments in stocks. The stock market would go down. The result would cut the value of retirement accounts. And shockingly, because big investors would have fewer capital gains (and more capital losses), in a year or two, federal tax receipts would decrease instead of increase.

But Democrats are not in control of Congress. So, most of the proposed tax increases will be voted down or only increased slightly. The top 1% of wage earners already pay 42% of income taxes, so it’s hard to claim they don’t pay their fair share. (The bottom 50% pay only 2.3% of federal income taxes according to the IRS.) What we need is more people working and paying taxes.

Most people know that Social Security and Medicare are going to run short of money in 10 or 12 years if nothing is done. I’ve heard that Social Security checks would have to be cut by a fourth for all retirees. Medicare payments would also be cut.

So, except for minor increases in taxes to support Medicare, President Biden and Democrats in Congress offer no plan to solve this long-term problem. They ignore it, except to criticize anyone who dares to make a reasonable suggestion, such as increasing the age for Social Security eligibility slowly to age 70 or 72. Workers are living 15 years longer than when the retirement age of 65 was set for Social Security in 1935.

What is the President’s reaction to another long-term problem, global warming? It is the opposite to Social Security and Medicare. To paraphrase the President, “I’m going to cut all fossil fuels. No more oil or natural gas pipelines. No more drilling on federal land or offshore. Electric vehicles are here and now. No gasoline powered vehicles can be manufactured after 2030.”

The result is the supply of energy from fossil fuel is being squeezed (meaning higher prices) and billions of tax dollars are being spent on solar and wind energy, Electric Vehicle subsidies, and 50,000 charging stations. Americans are paying higher prices and more taxes to solve a problem that may not have any substantial economic impacts for at least 50 years.

And it’s called “global warming,” not “USA warming.” Our contribution to global warming is only 15%. If we eliminated ALL fossil fuels here, the global impact would be minimal because China and India are the major contributors. Despite claims by our Secretary of Energy, China shows no intention to reduce global warming. They continue to build coal-burning power plants and import natural gas and oil.

Working on long-term national problems should always be a priority for the President and Congress. Unfortunately, politics determines which ones are essential and skews the proposed solutions.

The failure of the Silicon Valley Bank is directly connected to Democrat policies. The bank invested heavily in government bonds when the interest rates were near zero. Because of excessive federal spending since 2020, inflation went up. To get inflation below 7%, the Federal Reserve was compelled to raise interest rates to about 5%, which dramatically lowered the value of the bonds. When depositors started to withdraw their money, the bank was forced to sell bonds at a loss, resulting in failure.

Historic quote by Will Rogers:

          “The budget is a mythical bean bag. Congress votes mythical beans into it and then tries to reach in and pull real beans out.” DT #2047, Feb. 24, 1933


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