ObamaCare Asks the Question: How "Dumb" Are the Young Adults? ... ObamaCare's "Subsidized Funding" Proposition Tries to Stick It to the Young

How dumb are the young adults among us? That's a central question to be answered at the outset of the ObamaCare legislation.

Obama boosters think the correct answer to the threshold question is "really dumb" or at least gullible and naïve. I disagree.

For the young, much of ObamaCare funding is about fooling and/or forcing the youngsters into subsidizing the oldsters by paying more for health care than they would otherwise have to pay for their own care.

In turn that means the old can pay less, and ObamaCare will therefore be "less unaffordable" to We the People as a whole. It's an intended ripoff, pure and simple. But will it play in Peoria? I doubt it very much, but we'll soon see.

To repeat, how dumb (or you can substitute for dumb either or both of the words gullible or naïve if you prefer) are the young is one big question that will be answered by ObamaCare in the coming months and years.

The Young Won't Buy ObamaCare is subtitled 'It makes scant financial sense for them to subsidize others' financial care:'

"Media outlets lately have emphasized the challenge of enticing healthy young adults to sign up for ObamaCare, "exactly the type of person insurance plans, states and the federal government are counting on to make health reform work," as the L.A. Times put it. These pieces are useful as far as they go, but miss a key point that Supreme Court Justice Samuel Alito managed to convey in many fewer words during last year's Supreme Court argument on ObamaCare.

Mr. Alito pointed out that young, healthy adults today spend an average of $854 a year on health care. ObamaCare would require them to buy insurance policies expected to cost roughly $5,800. The law, then, isn't just asking them to pay for "the services that they are going to consume," he continued. "The mandate is forcing these people to provide a huge subsidy to the insurance companies . . . to subsidize services that will be received by somebody else."

Since he puts it that way, why would they sign up for ObamaCare, especially since the alleged penalties will be negligible and likely unenforced? . . .

For 30 years, journalists have been "investigating" hospital pricing, which is neither competitive nor closely related to cost, invariably throwing up their hands and saying government must fix matters. Yet any reasoned analysis shows that government policy is why we have such a byzantine payment system in the first place, in which an ever-inflating health-care bill is allocated among "payer" groups via opaque political bargaining.

Why isn't the same mess seen in other realms of the economy? In the automobile market, dealers publish prices on their websites and in ads that are always lower than the sticker prices. Why?

Independent websites like Edmunds.com, AutoTrader.com and Kelley Blue Book publish detailed pricing information for consumers and do so for free. Why?

The answer is obvious. Consumers want such information and businesses see opportunity in providing it, even for free, in order to attract eyeballs for advertising.

Such information doesn't exist in health care because consumers don't demand it, because somebody else is almost always paying for our health care. Those of us who aren't subsidized directly by Medicaid, Medicare and the Veterans Administration are subsidized through the tax code to channel all our aches and pains through a third-party payment mill, disguised as employer-provided "insurance.". . .

Medicare is portrayed as getting the best deal from the system because Medicare pays less per service. But remember how the system works. Who's to say Medicare doesn't pay less per procedure because it's being billed for many more procedures, because that's how providers are allowed to maximize their revenues from the payer known as Medicare?

In fact, plenty of evidence suggests this is exactly how Medicare operates. And Congress understands as much, hence the 25% cut in physician reimbursements it keeps threatening to impose is informed partly by expectations that physicians could maintain their incomes by charging for more services."

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In a similar vein, ObamaCare Trail of Tears is subtitled 'Auditors say HHS isn't close to being ready to launch in October:'

"Set aside the IRS or the National Security Agency—the most secretive part of the government is the Health and Human Services Department and the black box that is implementation of the Affordable Care Act. For years HHS has stonewalled the congressional oversight committees about its progress, and now we're starting to learn why. . . .

The entitlement's "exchanges," or subsidized insurance bureaucracies, are supposed to open in October, but HHS will run 34 federal versions in whole or part as Governors continue their ObamaCare resistance. The GAO attempted to track "key activities" necessary to set up exchanges and identified "more than 100." But the auditors can't give a precise number because "the nature of the activities that [HHS] and the states will conduct has not been finalized and may continue to evolve.". . .

But ObamaCare supporters should also have night sweats about the haywire launch that the GAO suggests is in the offing. The entire Rube Goldberg apparatus depends on young, healthy people signing up to cross-subsidize more expensive patients and prevent health plans from going into a death spiral in which premiums don't cover claims.

Yet the June Kaiser Family Foundation health tracking poll—which also found that public support for ObamaCare hit a new post-passage low of 35%—reports that nearly one of three Americans between the ages of 18 and 30 do not believe that insurance "is worth the money it costs." And persuading young, healthy people to sign up for coverage requires them to act against their own economic interest, since they can always enroll later when they need it as a result of ObamaCare's mandates.

Good luck getting millennials to sign up when plans aren't merely more expensive but when the exchanges malfunction, or doctors don't accept exchange coverage because someone checked the wrong box, or any number of myriad administrative problems. HHS is promising an iPhone and app store, and what it is about to deliver is a rotary dial and switchboard that doesn't work."

Summing Up

Government control always leads to higher cost and lower quality.

In the case of ObamaCare, it will be much higher cost and much lower quality, all cloaked in secrecy.

It's part of the elitist government knows best monopolistic and socialistic way.

So will the young still opt to buy ObamaCare policies? Only if they're dumb, uninformed or fearful of the potential legal consequences of not doing so.

Politics sucks and big government knows best elitism does, too.

My guess is that the ObamaCare implementation and costs will be a real doozy of a failure in every conceivable way.

And that when the dust has finally settled, whenever that may be, the truth will set us free.

At least that's the fundamental idea behind a fiscally responsible and transparent self governing free society of equals.

That's my take.

Thanks. Bob.

"The Great Degeneration" ... Government Debt in Total ... $16 Trillion or $238 Trillion? ... You Be the Judge

We "know" the "officially" recognized U.S. government debt by our politicians is $16 trillion, going on $17 trillion. We also "know" that cities and states are required to balance their books. Similarly do we "know" that as workers we pay for our own Social Security and Medicare" benefits during our working years.' We also "know" that ObamaCare will provide health care for more Americans and save money at the same time, thus reducing government spending and deficits. And finally, we "know" that government is there to serve us and that stimulus spending by government is beneficial to economic growth and American prosperity.

The facts are otherwise, of course. These "known" pieces of political propaganda and conventional wisdom are fundamentally untrue.

Let's begin with a few basic numbers. Instead of our various governments, and therefore taxpayers, being $16 trillion in debt, it's closer to $238 trillion and growing each day.

But how much is $238 trillion? Well, if we were to borrow that $238 billion at 4% interest, that amounts to almost $10 trillion in required annual interest payments without paying off one single dollar of the total indebtedness. Currently federal tax receipts are considerably less than $3 trillion annually and federal expenditures are less than $4 trillion annually.

Adding another $10 trillion to the annual government spending or citizens' tax bills would blow the budget deficits completely out of sight and obviously be a killer economicially, but that's the path we're on with our American dysfunctional political system.

And since we have no realistic immediate, intermediate or even long term plans to reduce that indebtedness, the indebtedness will only grow. Until default, depression, inflation, real strong economic growth led by the private sector or some combination of those things occurs.

Am I being an alarmist? Probably. But am I painting an unfair picture? Definitely not, at least in my opinion, but consider the facts and then judge for yourself, please.

A Jeremiad to Heed is subtitled 'U.S. future obligations exceeed future revenues by $200 trillion, and state and local governments face $38 trillion in unfunded obligations.'

This all reminds me of what former Illinois Senator Everett Dirksen reportedly once said tongue-in-cheek about excessive government spending and deficits, "a billion here, a billion there, and pretty soon you're talking real money." Well, today we need to substitute TRILLION  for BILLION to deliver the same message.

Will the Dirksens of today continue to be ignored? Not for much longer, I would argue. The day of reckoning with our indebtedness is nigh. Let's see what Niall Ferguson has to say in his new book "The Great Degeneration":

"Doomsayers are never popular, but sometimes they're right. The original jeremiads uttered by the biblical prophet Jeremiah were on the money. His fellow Judeans were vanquished and enslaved by the Babylonians, just as he had warned. Moral: Don't take jeremiads lightly.

That maxim applies to the writings of the economic historian Niall Ferguson....

 

With a focus on the United States, "The Great Degeneration" warns that Western civilization has entered into a period of decline due mainly to the strangling of private initiative by the ever-encroaching state. "We are living through a profound crisis of the institutions that were the keys to our previous success—not only economic, but also political and cultural—as a civilization," he writes.

The threatened institutions are representative government, the free market, the rule of law and civil society. Mr. Ferguson is dismayed at the explosion of public debt, the destruction of markets by excessive regulation, the replacement of the rule of law by "a rule of lawyers," and the decay of civil society as represented in part by the decline of thousands of private, voluntary organizations (Rotarians, Elks, et al.) that have contributed so much to social order and progress in America. . . .

The most worrisome evidence of decline, he believes, is the "crisis of public debt," with government budgets out of control in the U.S. and Europe. He sees outsize debt as a symptom of the "betrayal of future generations: a breach of Edmund Burke's social contract between the present and the future." Should this news leak out to college-bound American youths they might well be moved by resentment to challenge the progressive orthodoxies that infest so many campuses.

When it comes to health care and Social Security in its various forms, it is not at all clear that the government will be able to keep its promises. By Mr. Ferguson's reckoning, U.S. future obligations under present law exceed future revenues by $200 trillion (calculated at current value), "nearly thirteen times the debt as stated by the U.S. Treasury." That figure doesn't include the unfunded obligations of state and local governments, estimated at $38 trillion.

Of course, future obligations stretch over many years, and the burden consists mainly of debt service, not the debt itself. But the numbers are so huge that just the carrying charges will likely make them unmanageable without painful adjustments. One adjustment that already seems inevitable is a reduction of Medicare and Social Security benefits to future generations. The Federal Reserve also has a solution—inflation, yet another form of pain. And then there is the Obama all-purpose remedy, higher taxes. One way or another, tomorrow's citizens will pay for today's excesses. . . .

The author's argument that civil society is undergoing decay is no less depressing. As government has grown, civil society has withered, he asserts. Robert Putnam's "Bowling Alone" (2000) recorded a sharp decline in participation in civic organizations between the 1960s and late 1990s—for example, a 61% drop in PTA membership. The French author Alexis de Tocqueville marveled at the scope of American civil society in the 19th century, the many associations that owed their "birth and development" not to law but to individuals freely joining forces. Mr. Ferguson agrees with Tocqueville that "the state—with its seductive promise of 'security from the cradle to the grave'—was the real enemy of civil society.". . .

"The Great Degeneration" won't be popular in the Obama White House or other centers of power."

Summing Up

Whether it's $100 trillion, $238 trillion or some higher number approaching $300 trillion, the debt we owe is nowhere near $16 trillion. It's many multiples thereof, and that's real money indeed.

And it's a real problem too, even if we continue to ignore it for now and try to "stimulate" the moribund U.S. economy out of its sleep state.

And our indebtedness dilemma is definitely one that can't be lessened by more government spending.

In fact, more government "help" will only make what seems an impossible problem now an even greater one for the future taxpayers and citizens of America. It's sure some legacy we're leaving them.

That's my take.

Thanks. Bob.

The Government Money Tree and Public Sector Unions

The public sector union leaders are always trying to find new ways to fleece the taxpayers, thereby increasing their revenue, aka dues, and perpetuating their leaders as a political force and strong allies of the Democratic Party. That helps Democrats win elections and grow government. In turn that means less MOM and more OPM spending.

That makes our economy and society weaker.

The public sector unions and Democratic Party represent a political and taxpayer ripoff alliance that is both troubling and even sickening, at least for me. But then, I'm just a non-dues paying taxpayer.

So when I came across the latest example of public sector union arrogance, I decided to share it with you. The government spends only the money it collects from We the People. And the more money the union collects from government workers in the form of dues, the less money those workers have and the less money We the People have as well.

But now the unions are playing the zero sum game of trying to extract more money from the elderly who are in need of government sponsored and subsidized home health care. That's because the more that goes into the pockets of the unions or the workers, the less is left for the other needs of the elderly. In my view, the unions have reached a new low here, but you can decide for yourself.

Unions Target Home Workers is subtitled 'Health Aides Seek Higher Wages, Benefits; Others Push Back on Organizing Move' has the story:

"As the population ages, more people are being paid by the government to care for the elderly in their homes. That has prompted unions to try to organize more such workers, who typically receive modest wages and few or no benefits.

But others question whether these workers even qualify to join a union, noting that many are caring for their relatives and could be considered self-employed. Battles have broken out in many legislatures over moves to allow, or bar, these workers from organizing.

After seven years as a home health aide in West Haven, Conn., Terrell Williams, 34, earns about $12 an hour, without health-care or retirement benefits. He attaches a lift used to help Michael Whalen, a paraplegic client with cerebral palsy, get in and out of bed.

The number of home health-care workers is expected to reach 3.2 million by 2020, up 68% from 1.9 million in 2010, according to the Labor Department.

Also known as personal-care aides, the workers typically bathe, dress and feed the elderly and people with disabilities, for a median wage of $9.70 an hour in 2010, the Labor Department says. Many have no health-care coverage themselves.

A large percentage of these workers are hired directly by people with disabilities or their families, rather than being employed by private agencies. Workers typically are paid with Medicaid or Medicare funds administered by states.

In many cases, home-care workers are relatives of the people they care for. A 2011 study commissioned by the state of Michigan found that 75% of home-care providers there went into the field to help a family member or friend.

Unions and many Democratic lawmakers say workers receiving public funds are state employees and can be unionized. Many Republican lawmakers and opponents of unionization argue that home-care workers are independent contractors, and therefore ineligible to join unions.

Last month, Democrats in Minnesota passed a bill over Republican objections giving 15,000 home health-care workers, as well as 7,000 home child-care providers, the ability to join unions. In Vermont, Democratic Gov. Peter Shumlin signed a measure last month permitting the state's 7,000 home health aides to unionize. In Connecticut, Democrats have passed measures enabling unions to represent the workers. . . .

"Home-care workers are the new face of labor," said Eileen Boris, a professor of history at the University of California at Santa Barbara. She compares organizing these workers to the unionization of factory workers in the 1930s and '40s. . . .

Amid declining union membership, home-care workers are an increasingly important source of union strength. SEIU represents about 600,000 home-care workers—a major chunk of its 1.9 million members—in about 20 states, including Democratic strongholds like California, New York and Massachusetts.

About 25% of home-care workers nationwide belong to unions, estimates Ms. Boris of the University of California. . . .

But success in winning higher pay and benefits has been mixed. In Michigan, SEIU organized 41,000 home-care workers in 2005. Today, many of them earn $8 an hour, slightly more than the federal minimum wage of $7.25 an hour, according to the union's most recent contract. During eight years of union representation, the workers didn't gain health benefits, vacation time or sick leave.

Michigan workers paid dues representing 2.75% of their income, yielding $35 million for the union since 2005.

SEIU says it won a big pay increase for Michigan workers and helped set up a training program, and that it also helped workers by lobbying against budget cuts to home-care programs.

Last year, Michigan Republican Gov. Rick Snyder signed a law barring home health aides from unionizing, saying that "private individuals cannot become public employees simply by receiving government dollars." The move erased about 45,000 members from SEIU's rolls and $6 million in annual dues.

Some home-care workers in Michigan are glad they are no longer part of SEIU.

Chet Junker, 78, of Evart, Mich., said he and his wife receive a bit more than $1,000 a month from the state to bathe, dress and feed their 46-year-old son, who was left severely disabled from seizures suffered as a boy. The state stopped deducting about $17 a month in union dues in April.

Mr. Junker, a retired insurance agent, said he never supported the union even though he believes it lobbied successfully for a pay increase for home-care workers. He said he opposed SEIU's political stands and wasn't informed that a union election was going to be held.

"I had no choice when they wrote to me and said you're going to be in the union," he said. "I'm happy I'm not in the union anymore.""

Summing Up

Government gets its money from taxpayers.

Many elderly need health care paid for by the government.

The unions get their money from dues.

The more dues the unions get, the less money union members receive.

In this case, that means less money to care for the elderly, too.

Government and public sector unions are fleecing the taxpayers and making our country more indebted and weaker.

That's my take.

Thanks. Bob.

One Local Government Makes Sense By Investing Its Pension Funds Passively and in Low Cost Funds

We've long recommended DIY investing for individuals. Passive equity index funds like the Vanguard or Fidelity 500 are great places to put your long term money and watch it grow over time.

Now even cities are getting the message about low cost investing, and that's a good sign for being able to meet the needs of future retirees. Let's hope more individuals chose that route, too.

Pension Fund Take Neighborly Advice says this:

"When officials with Montgomery County, Pa., became troubled by their pension fund's investment fees and recent performance, they turned to a neighbor for advice. His take: Park money in low-cost index funds.

And that is what they are doing, a move that highlights the growing frustration many pension officials feel toward expensive Wall Street investment managers. The county is now shifting nearly all its $470 million in pension assets to a handful of index funds run by Vanguard Group Inc.

But the neighbor's strong opinion on this issue wasn't a surprise either: He is John C. "Jack" Bogle, Vanguard's founder and the godfather of index funds, which track the broader stock and bond markets.

"It's not pie in the sky," says Mr. Bogle, 84 years old, whose office on the Vanguard campus is about 13 miles from the Montgomery County courthouse. "The arithmetic says it's all indexing."

The county, in the Philadelphia suburbs, says the move is expected to reduce investment fees by roughly two-thirds. It will be paying about 0.13% of its pension assets in investment fees by switching 90% of its assets to Vanguard's funds. It had been paying about 0.43% in fees to its current crop of so-called active and passive managers. . . .

As of March, Montgomery County's pension fund had an annualized return of 8.22% in the previous three years. Over that same period, a Vanguard index fund tracking the S&P 500 returned an average of 12.51%.

Index funds aren't just cheap but also offer one of the simplest types of investing, which is why they have become staples for individual investors. But pension funds have long been privy to the most sophisticated, complex financial products money can buy. . . .

Providence, R.I., Mayor Angel Taveras is similarly concerned, and asked a consultant to explore alternatives to his city pension's 15% allocation to hedge funds. "To me, it's a question of whether we can get the same performance for less risk and fewer fees,'' says Mr. Taveras, who heads the pension investment board.

Most pensions aren't ready to forsake Wall Street entirely. Desperate to hit high annual-return targets, but worried about big swings in the stock market, pensions have sought so-called alternative investments to reduce volatility.

Officials in Montgomery County and other experts admit that the index-fund approach increases the risk of volatility.

"We'd all love to flip a switch, shut off the lights and go home,'' says Keith Brainard, research director for the National Association of State Retirement Administrators. "But it's more complicated than that."

Officials in Montgomery County, home to about 800,000 people, started pondering changes when a new crop of pension board members took office in early 2012, and consulted with a number of investment experts. . . .

The county is moving 90% of its assets into Vanguard stock and bond index funds ....

In recent months, Mr. Shapiro has been spreading the word. He has talked to about a dozen Pennsylvania lawmakers about switching the state's pension assets into index funds . . . ."

Summing Up

It's time for investors, both institutional and individual, to wise up and face the facts.

Low cost DIY investing results in the best performance over the long term.

And that's because DIY investors don't have to subtract costs that they don't pay for results that they don't get from the "pros."

So if the shoe fits, wear it.

Thanks. Bob.

The Single Biggest Issue Being Ignored in the U.S. Today? ... GOVERNMENTS' DEBT LEVELS ... Many Cities and States Are Broke and TRILLIONS of Dollars in Debt

Cities and states across America are in effect flat broke. They owe almost half as much as the $16 trillion the federal government ADMITS to owing.

{NOTE: Of course, the promises made which are unfunded by all governments run in excess of $100 trillion. In fact, the latest credible estimate that I saw for cities, states and the national government, including unfunded promises, was $238 trillion. But whether it's $100 trillion. $200 trillion, $238 trillion or even more, it represents a TAX mountain that is going to be extremely difficult, if not impossible, for future American taxpayers to climb.

Think of it this way. If interest rates rise to 4%, that's $4 trillion annually for each one hundred trillion in liabilities, and that doesn't pay back one single cent in principal. And by the way, we currently spend less than that $4 trillion nationally for EVERYTHING, defense included. Thus, a doubling or tripling of taxes collected will be necessary, and as you know, private sector growth is not exactly an Obama administration priority. It's a PLANET GOVERNMENT world.}

Still, these astronomical liabilities and obligations remain pretty much a mystery and unknown to the American people. Transparency and candor we don't have.

Our government elitists, accompanied by their public sector union allies, also play stupid and expensive games with respect to how their books are kept. If private businesses did likewise, their leaders would be jailed.

Yet the government knows best elitists continue to spend more money that we don't have, and to borrow more money that we shouldn't borrow, and make unfunded promises that can't be kept, and they continue to do all this without first even trying to get the citizens to approve a doubling or tripling of the current taxes paid.

The political game being shamefully endorsed by We the People is actually a very simple one. Dig the DEBT hole deeper and deeper, in other words, and leave it for future taxpayers and politicians to worry about.

But let's look directly at the "smaller" problems facing cities and states across America herein. We'll leave the much larger biggie of the federal government for another time.

Time has run out for "can kicking" and something has to give, and SOONER RATHER THAN LATER. The delay and ignore game is about over for our cities and states.

The Many Ways That Cities Cook Their Bond Books is subtitled 'The $3 trillion municipal debt market is rife with creative accounting:'

"It has been a busy few weeks for the Securities and Exchange Commission. In May, the SEC charged two cities—Harrisburg, Pa., and South Miami, Fla.—with securities fraud for allegedly deceiving investors in their municipal bonds.
This follows similar fraud charges against states, New Jersey in 2010 and Illinois in March, after SEC investigators uncovered what they called "material omissions" and "false statements" in bond documents related to those state's pension funds. . . .
The Harrisburg charges are part of a broader SEC effort to scrutinize state and local government issuers in the nation's $3 trillion municipal-bond market. "Anyone who follows municipal finance knows that budgets can sometimes be a work of fiction," says (a) consulting firm to local governments. "Harrisburg is the tip of the iceberg."

And a mighty iceberg it is. The 2012 State of the States report . . . found state and local governments are carrying more than $7 trillion in debt, an amount equal to nearly half the federal debt. Often, the report said, "States do not account to citizens in ways that are transparent, timely or accessible."

Consider the practices of Stockton, Calif., which last June became the nation's biggest city to file for bankruptcy. In 2011, Stockton's new financial managers issued a blistering critique of past accounting practices and acknowledged that the city's previous financials had hidden significant costs, including the real cost of employee compensation and retirement obligations. Bob Deis, the new city manager, declared that Stockton's financials bore "eerie similarities to a Ponzi scheme."
If so, the city's bondholders have been taken for a ride. In bankruptcy court earlier this year, a judge ruled that Stockton could suspend payments on its bonds even while continuing to fund its employee retirement system.
Similarly, when another California city, San Bernardino, went bust last year, some city officials alleged that it had been filing inaccurate financial records for nearly 16 years. . . . Meanwhile, the city has defaulted on bond payments, leaving investors in the lurch.
One area that has come under special scrutiny is pension-fund accounting, because states have latitude in choosing how to value their retirement debts. The SEC noted that Illinois used accounting that funds a larger percentage of an employee's pension costs near the end of his career, a method that increases the risks that the system could go bust. The SEC said Illinois didn't properly reveal the risks posed by this sophisticated accounting wrinkle.
The SEC accused New Jersey of failing to disclose to investors that it wasn't sticking to a plan to adequately fund its pension system. In this, the Garden State isn't alone. Many states underfund their pension systems, even by their own accounting standards.
A June 2012 study by the Pew Center on the States found that 29 states didn't make their annual required contribution for pensions in 2010, the last year for which data were available. It isn't clear how many of the more than 3,000 local government pension systems follow the same practice, although a survey this January by Pew of 61 large cities found nearly half didn't make their full contributions. . . .
Municipal investors have often ignored such questionable practices thanks to a generation of low default rates. Many also assume that even when a local government gets into financial trouble, bondholders are always first in line to be paid.
But officials in some troubled cities are pushing back against the notion that investors should get the best deal among creditors. . . .
Investors will hear more of this talk as municipalities face growing budget pressures. Recently, former New York Lt. Gov. Richard Ravitch warned the municipal bond industry that the promises governments have made to repay investors may not take precedent over other obligations. States and cities face "a unique challenge," he said, "in trying to maintain services and meet their retirement commitments to workers," emphasizing that this was "not necessarily a good message" for investors.
Under these circumstances muni-bond investors should be practicing a stronger form of "buyer beware." Yet even that is difficult if governments issue reports designed to disguise their true financial condition. If investors finally catch on to this, it might put an especially deep chill on the market for municipal securities. Less than forthcoming city and state governments will deserve the consequences."

Summing Up

Money is drying up across America. As a nation, our various governments are borrowed to the hilt and then some.

As a result, additional borrowings by cities, states and the federal government will become harder to get and more expensive to repay as well.

We're fast approaching the time when living within our means will be required of our governments, just as it has become a necessity for our citizens.

And that's a good thing, despite the painful, lengthy and necessary adjustment to a future of governmental fiscal sanity that eagerly awaits us.

That's my take.

Thanks. Bob.

America's Overreliance on "Planet Government" ... We've Gone from From a Nation of Freely Associating Individuals to Government Dependence

America was founded on the premise of abundant opportunities for its citizens, entrepreneurs and risk takers supported by a society based on limited government interference and intrusion. Things have certainly changed and not for the better.

Let's review what Niall Ferguson, Harvard professor and author of the just published book "The Great Degeneration" has to say about what he refers to as "Planet Government."

Ferguson is not some kind of a quack, and neither is he an alarmist. He's thoughtful, well grounded in the facts, and is definitely one highly intelligent, concerned and well informed individual.

Of course, the "progressives" among us won't want to hear about the many negatives of our country's overreliance on big government today, but they're just flat wrong in believing government knows best solutions will work to make our country stronger. That's simply not the way the world works.

The Regulated States of America is subtitled 'Tocqueville saw a nation of individuals who were defiant of authority. Today? Welcome to Planet Government:'

"In "Democracy in America," published in 1833, Alexis de Tocqueville marveled at the way Americans preferred voluntary association to government regulation. "The inhabitant of the United States," he wrote, "has only a defiant and restive regard for social authority and he appeals to it . . . only when he cannot do without it."

Unlike Frenchmen, he continued, who instinctively looked to the state to provide economic and social order, Americans relied on their own efforts. . . .

What especially amazed Tocqueville was the sheer range of nongovernmental organizations Americans formed: "Not only do they have commercial and industrial associations . . . but they also have a thousand other kinds: religious, moral, grave, futile, very general and very particular, immense and very small; Americans use associations to give fetes, to found seminaries, to build inns, to raise churches, to distribute books, to send missionaries to the antipodes; in this manner they create hospitals, prisons, schools."

Tocqueville would not recognize America today. Indeed, so completely has associational life collapsed, and so enormously has the state grown, that he would be forced to conclude that, at some point between 1833 and 2013, France must have conquered the United States.

The decline of American associational life was memorably documented in Robert Puttnam's seminal 1995 essay "Bowling Alone," which documented the exodus of Americans from bowling leagues, Rotary clubs and the like. Since then, the downward trend in "social capital" has only continued. . . .

Instead of joining together to get things done, Americans have increasingly become dependent on Washington. On foreign policy, it may still be true that Americans are from Mars and Europeans from Venus. But when it comes to domestic policy, we all now come from the same place: Planet Government.

As the Competitive Enterprise Institute's Clyde Wayne Crews shows in his invaluable annual survey of the federal regulatory state, we have become the regulation nation almost imperceptibly. Excluding blank pages, the 2012 Federal Register—the official directory of regulation—today runs to 78,961 pages. Back in 1986 it was 44,812 pages. In 1936 it was just 2,620. . . .

The last time regulation was cut was under Ronald Reagan, when the number of pages in the Federal Register fell by 31%. Surprise: Real GDP grew by 30% in that same period. But Leviathan's diet lasted just eight years. Since 1993, 81,883 new rules have been issued. In the past 10 years, the "final rules" issued by our 63 federal departments, agencies and commissions have outnumbered laws passed by Congress 223 to 1. . . .

The cost of all this, Mr. Crews estimates, is $1.8 trillion annually—that's on top of the federal government's $3.5 trillion in outlays, so it is equivalent to an invisible 65% surcharge on your federal taxes, or nearly 12% of GDP. . . .

Next year's big treat will be the implementation of the Affordable Care Act, something every small business in the country must be looking forward to with eager anticipation. . . .

President Obama occasionally pays lip service to the idea of tax reform. But nothing actually gets done and the Internal Revenue Service code (plus associated regulations) just keeps growing—it passed the nine-million-word mark back in 2005, according to the Tax Foundation, meaning nearly 19% more verbiage than 10 years before. While some taxes may have been cut in the intervening years, the tax code just kept growing.

I wonder if all this could have anything to do with the fact that we still have nearly 12 million people out of work, plus eight million working part-time jobs, five long years after the financial crisis began.

Genius that he was, Tocqueville saw this transformation of America coming. Toward the end of "Democracy in America" he warned against the government becoming "an immense tutelary power . . . absolute, detailed, regular . . . cover[ing] [society's] surface with a network of small, complicated, painstaking, uniform rules through which the most original minds and the most vigorous souls cannot clear a way."

Tocqueville also foresaw exactly how this regulatory state would suffocate the spirit of free enterprise: "It rarely forces one to act, but it constantly opposes itself to one's acting; it does not destroy, it prevents things from being born; it does not tyrannize, it hinders, compromises, enervates, extinguishes, dazes, and finally reduces [the] nation to being nothing more than a herd of timid and industrious animals of which the government is the shepherd."

If that makes you bleat with frustration, there's still hope.""

 

Summing Up

 

Yes, Planet Government is real.

 

We have become a nation that has joined with the rest of the world of government dependents and government knows best elitism.
 

A society that looks outward to the government instead of inward to ourselves for the real and lasting solutions to our problems.

 

Alas, that simply doesn't work, and each day more and more of us are beginning to realize that profoundly simple and inescapable fact.

 

And that's a good thing. Facing reality precedes creating a better reality, and a better reality is definitely what is needed in America today.

 

That's my take.

 

Thanks. Bob.

Europe's Leaders Have No Clue ... Government Mandated "Redistribution" Has Made Europe Weak ... Americans Take Heed

Europe is in recession and has been for a considerable period of time now. The future doesn't look bright either. More of the same, in other words.

So what do the politicians and pundits want do do?

Have more government spending, aka "stimulus." However, that's been tried for several decades now and has failed completely. Heavy government spending is exactly the wrong prescription for what ails Europe (us too) and will only prolong the agony of the citizenry.

What Europe needs instead, as does the U.S., is less government spending and more individual economic freedom and personal responsibility. To keep beating the government spending drum is to keep the economies of Europe from expanding. And economic expansion is the only sustainable way out of the financial mess they're made for themselves.

Here's the truth. Higher government spending equals higher taxation, which may be in the form of (1) increased taxes today, (2) increased borrowing today (leading to necessary interest and principal repayments in the future), (3) a weaker currency today as a result of more money being printed --- or some combination of all three "taxes."

In the end, one dollar of new government spending will always require at least one additional dollar in required taxes.

And higher taxes cause a reduction in economic growth unless those taxes are the result of increased economic growth. So the choice for society is to emphasize either redistribution which causes weak economic growth or market led economic growth by private sector entrepreneurs. In that regard, Europe chose the road to redistribution long ago.

Europe's Social Contract, Lying in Pieces should be a cautionary lesson for all Americans, including the "progressives" and redistributionists among us. That said, the real  solutions aren't the ones prescribed in the following editorial. In fact, more government "stimulus" will lead to even weaker economic performance. But let's look at what the article says, even though it's wrong:

Europe’s Social Contract, Lying in Pieces

A homeless woman in Athens. With millions in Greece and the rest of Europe facing long-term poverty, fringe movements are rising.

What began as a debt and currency crisis in the European Union risks becoming a crisis of liberal democracy itself. Four years of grinding austerity across much of the Continent has caused millions of middle- and working-class voters to lose faith in the ability of mainstream political parties to protect their basic interests. It would be a sad paradox if the European movement, conceived in the ruins of fascism and two world wars, and for decades democracy’s best advertisement to the Communist East, undermined its democratic achievements in pursuit of a perverse economic dogma.       

With few exceptions, Europe’s mainstream center-left parties, which long positioned themselves as defenders of society’s most vulnerable, are taking it in the teeth politically. The Democrats in Italy, the Socialists in France and Spain, and the Greek socialist party known as Pasok, having committed to many more years of cuts in social spending, are increasingly out of touch with the desperate situation of young people without job prospects, homeowners unable to keep up with their bills, and older workers facing long-term unemployment, later retirement ages and pension cutbacks.       

The victims are visible almost anywhere you go in Mediterranean Europe. You see shuttered groceries and clothing shops, abandoned restaurants, idled factories and half-built housing developments overgrown with weeds. Newspapers carry heartbreaking stories of families evicted from modest apartments, people losing their jobs and then their health benefits, young and not-so-young women turning to prostitution to make ends meet, even suicides by self-immolation.

Most people in Greece, Portugal and Spain personally know someone whose former middle-class life has been destroyed by the combined effects of recession and government austerity policies. In the midst of this destruction, many mainstream politicians still prefer to pretend that this is just a normal business-cycle downturn that will pass.

The European Union’s recent offer to let Spain, France and five other hard-pressed nations extend their budget-cutting deadlines is not nearly enough. These countries need to stimulate their economies, not merely slow down their economic contraction. . . .      

Perhaps it is not surprising that millions of disillusioned supporters of centrist parties now cast protest votes for populist fringe movements that echo popular anger even though they offer few practical policy alternatives. Movements as diverse as Greece’s neo-fascist Golden Dawn, Italy’s anarchist Five Star Movement, France’s anti-Arab National Front and Britain’s Europhobic United Kingdom Independence Party have little in common ideologically. Their one shared feature is that they have little respect for the liberal democratic values that have defined and shaped postwar Europe. And growing electoral support is turning them into powerful players. . . .  

After World War II, Socialist and Christian Democratic parties jointly fashioned safety net programs that reduced poverty, enhanced living standards, reduced inequality and made European social policy the envy of much of the developed world. That social contract now appears to be shredded."

       

Summing Up

Europe has run out of time, and its socialistic economy has become uncompetitive in the world.

The sad truth is that Europe's "social contract now appears to be shredded" because its redistributionist programs and policies have over time run its economy into the ground. As a result, Europe is now unable to manage its affairs in a fiscally sound manner while creating economic growth and private sector jobs. The fat lady is singing while its economy continues to shrink.

Europe's lessons for us are many, and the fixes are possible, but they're not the ones generally offered by the Europeans, either government officials, pundits or the electorate. As a result, they're likely headed toward economic oblivion and irrelevancy in the world, even though they don't yet know what they've done to themselves. It's not a pretty picture.

When economies contract over time and more government spending is always the prescribed 'medicine' used to fix those ailing economies, more long term weakness occurs. A vicious downward cycle is the inevitable result.

So after more than six decades of the post World War II grand social-democratic experiment, Europe has run out of time. Since something can't go on forever, it won't.

But the culture apparently won't allow serious and permanent change from a government run to an individual self reliant economic model based on private sector led risk taking initiatives, innovation and entrepreneurialism.

Thus, Europe is failing right before our eyes. I only wish our politicians and fellow citizens would take heed while there's still plenty of time to do so.

That's my take.

Thanks. Bob.

Looks Are Deceiving ... The Story Behind the Story ... The Financially Secure Old versus the Financially Insecure Young

Overall, our economy is recovering, albeit slowly. Unemployment remains unacceptably high, and government debt and unfunded pensions, Social Security, Medicare and ObamaCare obligations are at historic and unaffordable levels as well.

But that doesn't begin to capture the unfairness involving the growing financial conflict between America's old and young.

Because if we take the time to look below the surface of our recovering American economic situation, we'll see a very troubling picture.  It's about what government benefits for the old are doing to the future opportunites of our young. And in my opinion, it's time we put the issue squarely on the table and out in the bright sunshine.

In other words, the unintentional but very real intergenerational conflict where the oldsters are taking advantage of the youngsters must not be ignored any longer. Let's look directly at entitlements, the effect of the housing bubble and future financing burdens being placed on the young folks. It's not fair.

The young pay for the old. That's the way our entitlements funding works. The generation at work pays for the prior generations that are retired. Pass it on, in other words. At least that's the theory and practice of funding entitlements in America until now --- when baby boomers, early retirees, generous guaranteed benefits and a declining workforce are all contributing to the financial mess in America.

As a result, government spending has grown and the economy grows at a slower pace due to the shrinkage of the private sector necessitated by the growth in the government. It's not a pretty picture, and what we're doing to the younger folks among us needs to be changed. It's not only unfair. It's also unaffordable and making a slow growing economy even slower. That means fewer jobs, less income and so forth. A vicious cycle, to be sure.

 Younger Households Are Slower to Make Gains in Net Worth clearly illustrates the dismal developing intergenerational story. The charts accompanying the article are especially revealing:

"THE total wealth of American households has recovered from the financial crisis and Great Recession, according to the Federal Reserve Board. But that recovery has not been enough to keep up with inflation, and many Americans, particularly younger adults who took on heavy debt to acquire homes before the housing bubble collapsed, are lagging.

Multimedia

Graphic

Off the Charts: The Old Get Richer, but Not the Young

The Fed said last week that household wealth rose by $3 trillion in the first quarter, to $70.3 trillion. It was the first time the total exceeded the $68.1 trillion total posted in the third quarter of 2007, before the recession began, and was the largest quarterly increase since 1999, when the stock market was rising rapidly.

In the first quarter, a third of the gain in wealth came directly from rising values of corporate stocks owned by households. That was a little more than the gain attributed to rising real estate values.

The Federal Reserve Bank of St. Louis pointed out that there are more households now than there were in 2007, and that there has been inflation as well. As can be seen in an accompanying chart, the average household wealth at the end of the quarter was $613,635, a figure that is 11 percent below the peak of $689,996 (in 2013 dollars) set in the first quarter of 2007.

Those averages are deceptive, in that they are raised by the high wealth of a relatively small number of households. A very different picture emerges from looking at the median — the level at which half the households are richer and half poorer. That statistic can be calculated from the Fed’s triennial survey of consumer finances. In the studies conducted in the 1990s, the median net wealth was about one-quarter of the average. In the 2000s, the median fell to about one-fifth of the average, and in 2010, it was down to about one-sixth of the average.

During the housing boom, said William R. Emmons, the chief economist of the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis, “exactly the people you would think need to act conservatively were doing the opposite.” Homeownership rates, and mortgage debt levels, rose for younger households, as well as for less educated and minority ones. Those groups suffered more during the crisis, he said, and have been slower to recover.

Mr. Emmons compiled average wealth figures for different groups from the triennial surveys, and estimated how they have changed since the 2010 survey. . . . While all age groups have yet to recover to their 2007 wealth, when adjusted for inflation, older households are down just 3 percent on average, while those headed by middle-age people are down about 10 percent. But the decline is nearly 40 percent for the younger group.       

During the housing boom, households ended up with more of their wealth in real estate than before, and mortgage debt rose to record levels relative to the size of the economy. The proportion of wealth in homes is now back to close to the level of the 1990s, but the debt levels remain high by historical standards."

Summing Up

The long lasting effects of the housing bubble on the young are tremendously negative and will be for years to come.

The American dream has turned into a nightmare for far too many Americans, and especially the younger among us.

If it's true that the truth shall set us free, and I believe it is, then taking a hard look at what government subsidies and programs are doing to the chances for younger Americans to have the same opportunities that prior generations, including mine, have enjoyed is a fundamental necessity.

As is understanding that the benefits going to the oldsters in the form or retirement income and health care are not "investments" that will make the future brighter for younger Americans.

They will only burden them further.

Only worse.

That's my take.

Thanks. Bob.

Why the U.S. Economy Could Be in a Long Term Slow-Go Mode ... It's Too Hard to Do Business Here ... IT'S THE GOVERNMENT, STUPID!

{NOTE: I'm a long term optimist about the U.S. and our economy's ability to grow. Risk taking entrepreneurs operating in a market based economy will assure us of that future. But we definitely need less government and more personal freedoms, including the freedom to fail.

By  first halting, and then reversing, the now 80+ years movement in America toward redistributionist socialism, the future can and will be a bright one indeed.

But we have to get started and to do that, we have to agree we have a problem of too much elitist government and therefore too much government spending. That, of course, means too much in taxes paid and too much borrowing at all levels of government, which are both harmful to our citizens' personal freedoms, well being, and long term prosperity.}

.................................................................

With all that said, let's discuss today's current situation.

...................................................................

Our economy continues to struggle. Stimulus spending programs, tax cuts, sequester centered spending cuts, tax increases on payrolls and efforts at making the "rich" pay their "fair share' (whatever this is, other than more) have all been tried as fixes. And they've all failed.

Yet our economy is still stubbornly weak. So what's the problem? Too much government and too litle private sector freedom and risk taking, in a nutshell. Government spending and taxes go together and private sector investment and economic growth go together. When government spends more, it takes more from the private sector.

In addition to less private sector investment and entrepreneurialism, more government spending creates an environment where non-work is often more "profitable" than work.

The "progressive" playbook of taking and redistributing works for some period of time in a strong and growing economy. But after the bubble has burst, it kills any propects of strong economic activity when there's less to redistribute and less left for private individuals to invest.

Stated another way, the economy now is pretty much like us trying to tread water indefinitely with a weight on our back. We can continue to stay afloat for a period of time, but at some point exhaustion sets in and we have to resume swimming, assuming we don't want to drown. Getting at least some of that heavy "redistribution" weight off ALL our backs would be the first smart thing to do, but that's not the way the "progressives" govern. So for now we're stuck.

Economies trying to get unstuck and resume strong growth are like swimmers treading water. When contraction sets in, politicians try to stimulate the economy and get it growing again. Too often they do that by raising taxes (on current taxpayers) or borrowing money (for both current and future taxpayers to repay) to "stimulate" the economy. Then when that doesn't work as intended, they try even more of the same. Nothing improves. In fact, things get worse.

That's pretty much where the "progressives" find themselves today and therefore We the People find ourselves as well. Treading water in what has been for far too long a contracting economy when compared to its potential for growth. The more government spends to soften the blow, the longer it takes for the U.S. economy to resume swimming at its previously normal pace. The "new normal" has set in and it's not a normal we want to leave to our kids and grandkids. The "old normal" works much better.

How America Lost Its Way has the gory story:

The decline of America's institutions, and the related rise in red tape that hinders business, may spell the nation's economic doom. Harvard's Niall Ferguson talks to WSJ's Charles Forelle about the theory outlined in his new book "The Great Degeneration."

"Not everyone is an entrepreneur. Still, everyone should try—if only once—to start a business. After all, it is small and medium enterprises that are the key to job creation. There is also something uniquely educational about sitting at the desk where the buck stops, in a dreary office you've just rented, working day and night with a handful of employees just to break even.

As an academic, I'm just an amateur capitalist. Still, over the past 15 years I've started small ventures in both the U.S. and the U.K. In the process I've learned something surprising: It's much easier to do in the U.K. There seemed to be much more regulation in the U.S., not least the headache of sorting out health insurance for my few employees. And there were certainly more billable hours from lawyers.

By the Numbers

• 433: Total number of days it takes in the U.S. to start a business, register a property, pay taxes, get an import and export license and enforce a contract
• 368: Total number of days it took to do the same in 2006
• 7: U.S. ranking, out of 144 countries, on the World Economic Forum's 2012-2013 Global Competitiveness Index
• 1: U.S. ranking on the 2008-2009 Global Competitiveness Index
• 33: U.S. ranking for its legal system and property rights in 2010 on the Fraser Institute's Economic Freedom index, out of 144 countries
• 9: U.S. ranking for its legal system and property rights in 2000

Sources: 'Doing Business'; World Economic Forum; Fraser Institute

This set me thinking. We are assured by vociferous economists that economic growth would be higher in the U.S. and unemployment lower if only the government would run even bigger deficits and/or the Fed would print even more money. But what if the difficulty lies elsewhere, in problems that no amount of fiscal or monetary stimulus can overcome?

Nearly all development economists agree that good institutions—legislatures, courts, administrative agencies—are crucial. When poor countries improve their institutions, economic growth soon accelerates. But what about rich countries? If poor countries can get rich by improving their institutions, is it not possible that rich countries can get poor by allowing their institutions to degenerate? I want to suggest that it is. . . .

Seven years of data suggest that most of the world's countries are successfully making it easier to do business: The total number of days it takes to carry out the seven procedures has come down, in some cases very substantially. In only around 20 countries has the total duration of dealing with "red tape" gone up. The sixth-worst case is none other than the U.S., where the total number of days has increased by 18% to 433. Other members of the bottom 10, using this metric, are Zimbabwe, Burundi and Yemen (though their absolute numbers are of course much higher).

Why is it getting harder to do business in America? Part of the answer is excessively complex legislation. A prime example is the 848-page Wall Street Reform and Consumer Protection Act of July 2010 (otherwise known as the Dodd-Frank Act), which, among other things, required that regulators create 243 rules, conduct 67 studies and issue 22 periodic reports. Comparable in its complexity is the Patient Protection and Affordable Care Act (906 pages), which is also in the process of spawning thousands of pages of regulation. You don't have to be opposed to tighter financial regulation or universal health care to recognize that something is wrong with laws so elaborate that almost no one affected has the time or the will to read them.

 

NOW READ THIS: A Senate aide pushes a stack of documents bound in red tape. They were used as a prop during a debate on the budget on March 22.

Who benefits from the growth of complex and cumbersome regulation? The answer is: lawyers, not forgetting lobbyists and compliance departments. For complexity is not the friend of the little man. It is the friend of the deep pocket. It is the friend of cronyism. . . .

What is the process at work here? Perhaps this is a victory from beyond the grave for classical Western political theory. Republics, after all, were regarded by most ancient political philosophers as condemned to decadence, or to imperial corruption. This was the lesson of Rome. Democracy was always likely to give way to oligarchy or tyranny. This was the lesson of the French Revolution. The late Mancur Olson had a modern version of such cyclical models, arguing that all political systems were bound to become the captives, over time, of special interests. . . .

Whatever the root causes of the deterioration of American institutions, smart people are starting to notice it. Last year Michael Porter of Harvard Business School published a report based on a large-scale survey of HBS alumni. Among the questions he asked was where the U.S. was "falling behind" relative to other countries. The top three lagging indicators named were: the effectiveness of the political system, the K-12 education system and the complexity of the tax code. Regulation came sixth, efficiency of the legal framework eighth.

Asked to name "the most problematic factors for doing business" in the U.S., respondents to the WEF's most recent Executive Opinion Survey put "inefficient government bureaucracy" at the top, followed by tax rates and tax regulations.

All this should not be interpreted as yet another prophecy of the imminent decline and fall of the U.S., however. There is some light in the gloom. According to the most recent United Nations projections, the share of the U.S. population that is over 65 will reach 25% only at the very end of this century. Japan has already passed that milestone; Germany will be next. By midcentury, both countries will have around a third of their population age 65 or older.

More imminently, a revolution in the extraction of shale gas and tight oil, via hydraulic fracking, is transforming the U.S. from energy dependence to independence. Not only could the U.S., at least for a time, re-emerge as the world's biggest oil producer; the lower electricity costs resulting from the fossil-fuel boom are already triggering a revival of U.S. manufacturing in the Southeast and elsewhere.

In a functioning federal system, the pace of institutional degeneration is not uniform. America's four "growth corridors"—the Great Plains, the Gulf Coast, the Intermountain West and the Southeast—are growing not just because they have natural resources but also because state governments in those regions are significantly more friendly to business. There are already heartening signs of a great regeneration in states like Texas and North Dakota.

"In America you have a right to be stupid—if you want to be." Secretary of State John Kerry made that remark off the cuff in February, speaking to a group of students in Berlin. It is not a right the founding fathers felt they needed explicitly to enshrine. But it has always been there, and America's leaders have frequently been willing to exercise it.

Yes, we Americans have the right to be stupid if we want to be. We can carry on pretending that our economic problems can be solved with the help of yet more fiscal stimulus or quantitative easing. Or we can face up to the institutional impediments to growth I have described here.

Not many economists talk about them, it's true. But that's because not many economists run businesses."

Summing Up

We have many things going for us, but the government is the biggest thing holding us back

That said, and as always, America's best days lie ahead. But how far ahead is the relevant question to be asked and answered.

To get to that better future which awaits us, we have to start heading in the right direction, and that means limiting government spending. Only by doing that will we will be able to limit taxes and encourage the needed burst of entrepreneurialism and private sector investment to make America's economy perform up to its potential.

As it is, we have huge structural problems which won't be solved with the "tried-and-true" political short term fixes. We've finally reached the tipping point.

Those "tried-and-true-progressive-redistributionist" remedies aren't working this time, and they won't, simply because our fundamental economic problems aren't cyclical -- they're structural.

More government equals less freedom. Less freedom equals less risk taking and private sector growth. Less private sector growth leads to fewer jobs, less income and a growing national debt burden.

That leads all us directly back to the "progressive" playbook calling for more government "assistance." That only makes us weaker.

Let's reverse  course.

Thanks. Bob.

Happy Father's Day

Happy Father's Day to all the fellow Dads out there.

And if you want to take advantage of "our day" and act or even genuinely feel sorry for yourself or even neglected, here's your chance to do so. The facts about Father's Day gifting presented below can be used for some self pity, although I doubt if they will be enough to get any sympathy from our children or spouses.

But what the heck, it's our day, so here goes with the self pity routine. It's worth a shot.

And let's each resolve to do "whatever it takes" next year to break the negative four year losing streak we're on with respect to gifts received. Mom shouldn't win all the time. Or come to think of it, maybe she should.

Americans Spend 41% More on Mom Than Dad presents the totally unsurprising details:

"41%: How much more on average Americans planned to spend on Mother’s Day compared to Father’s Day.

It must have been a bad year for Dads. For the first time in four years, the gap between what Americans plan to spend on Father’s Day and what they plan to spend on Mother’s Day widened.

People always spend more on Mom than they do on Dad. This year on average Americans said they planned to spend about $169 on Mother’s Day compared to about $120 for Father’s Day, according to the National Retail Federation. But this year the disparity is the biggest it has been since the depths of the recession in 2008. While people boosted spending plans for Mom by 11%, the money expected to be shelled out for Dad rose a measly 2.3%.

Granted more people celebrate Mother’s Day than Father’s Day. Some 92% of survey respondents planned to buy for a special lady, compared to about 87% who were spending money for a father. But those averages for planned spending are only among those expecting to take part in the holiday.

Of course, Mom probably does deserve some premium. There is the whole pregnancy and childbirth thing, after all. Mothers also spend much more time on child-care. Even when both parents work full time, 81% of mothers are taking care of kids on an average weekday compared to 59% of fathers.

For their part, fathers do spend more time at work, but they also spend more time in leisure activities (such as watching TV, playing games, socializing and exercising) than mothers — 28 hours compared to 25.

But leisure is all relative. Fathers get three more leisure hours a week than mothers, but they get nine fewer hours than childless men. So Dad may not care that you’re spending less money on him, as long as you leave him alone for a couple of hours."

Summing Up

Just kidding about the sympathy stuff.

Happy Father's Day.

Thanks. Bob.

Government "Help" Facilitates Middle Class "Learned Helplessness"

Throughout my life of nearly seventy years, government at all levels has grown in its influence and invasiveness. America has increasingly become a cradle to grave government dominated society.

As a result, that's made our country weaker and our people less self reliant and free to choose.

We're familiar with the negatives of the hand out versus the positives associated with the hand up approach to helping people.

And we all know too that 'conservatives' are heard to complain about government freebies which often work to encourage non-work among the recipients of those goodies. There's truth to all that.

So why do we choose more government? Well, the fact is that most of us tend to choose working only when it's more attractive for us to do so compared to the relative attractiveness of not working. That's just human nature --- at work. So if we make it "easier" to choose not to work, that's what we'll do. Not take "bad" jobs, work less, save less, retire early and so forth.

But my problem is that government is unintentionally fostering "learned helplessness" among the majority of Americans with programs such as underfunded public sector pensions, Social Security and Medicare promises throughout "middle class" America.

So let's discuss briefly our growing dependence and underfunding of K-12 schools, college loans, Social Security, Medicare and now ObamaCare. What role should government play in our lives? And how much personal responsibility should future Americans assume for their financial health and "general welfare?" Don't we need to have a national debate about the long term nature of these programs and their effect on the long term well being of We the People as a whole?

I think we do. Otherwise we'll never come to recognize the simple fact that for each dollar of government deficits incurred by the taxpayers of today, there's an inevitable tax increase to be paid down the road by future taxpayers, including our kids and grandkids. In other words, deficits today equal tax increases tomorrow, assuming those deficits aren't related to investments creating future economic growth.

And the deficit and unfunded debt creating Social Security, Medicare and ObamaCare payments of today won't lead to future economic growth of tomorrow. They'll have just the opposite effect, in fact.

What brings this government dependency issue front and center for me at this time is the realization that Social Security is now a must and not a supplemental benefit for most Americans. And the realization that if we reduce the benefits anytime soon, we'd do great financial harm to the vast majority of our fellow Americans, since far too many of us have become virtually totally dependent on Social Security for our retirement income. It wasn't suppoed to be that way, but that's the way it's worked out.

But what about the future? Do we want to encourage and perpetuate this cycle of government dependence indefinitely and as a way of life for future generations? Or stated another way, do we want government to have vast power and control over our individual lives and those of our kids and grandkids?

In other words, won't we choose to trust ourselves to pick the schools our children attend (with vouchers, for example), decide how to invest our money for our retirement years (with individuals and not government deciding how to invest our and our employer's current payroll deductions and Social Security 'contributions") and empower individuals to select the amount and kind of medical care that we determine is best for ourselves and our families?

Or have we arrived at such a state of "learned helplessness" that we're willing to cede to the government the control of those matters? And even if we do, are we willing to have our kids and grandkids paying to fund the benefits to us that we didn't fully fund ourselves?

The truth is that the taxes we've been willing to pay have long been insufficient to pay for the American K-12 schools and colleges (including the public sector pension promises that are underfunded). And the underfunded amount is overwhelming for Social Security and Medicare promised benefits we've promised to ourselves, even if we set aside ObamaCare for now. And you can be sure that the poorly named "Affordable Care Act," aka ObamaCare, will be a much more costly proposition than we're being led to believe, too. Yes, we've run up quite a bill for future generations to pay. Why don't we stop?

You see, the simple fact is that in the end, somebody has to pay to fund the promises we make to ourselves but don't fund fully during our working years. That means we're sticking our kids and grandkids with the bills coming due down the road. And we're giving the current government knows best gang control over that future instead of preserving those decisions for future generations. That's what debt does, recognized or not.

But for the Grace of Social Security serves as an unintended advocate for this aforementioned learned helplessness approach for We the People and granting unlimited power to the government elitists to take care of "the helpless" as only government 'do-gooders' can do. Read on and see if you agree with me:

Protesters on December 10, 2012 in Doral, Florida.

"Back in the 1980s and 1990s, when it was still possible to believe that steady investments in 401(k) plans would lead to a comfortable retirement, the notion took hold that the best way to pay for old age was to leave your tax-deferred plan untouched for as long as possible, allowing it to grow into a formidable nest egg.

It still makes sense to save as much as you can during your work life. But the idea that you should hold off breaking into your account even after you’re retired no longer makes sense for most people, if it ever did. 401(k)s have largely failed to generate sums anywhere near sufficient for secure retirements. Long stretches of wage stagnation, high unemployment and widespread underemployment have made it impossible for many people to save for tomorrow while surviving today, and serial stock market busts, repeated financial crises, high fees and prolonged low interest rates have devastated what savings many people had.

Today, less than half of households aged 55 to 64 have retirement savings, and of them, half have less than $120,000.

The reality of dismally low savings has turned conventional retirement advice on its head – and, in the process, highlighted the vital importance of Social Security.

A recent research paper from the Center for Retirement Research at Boston College shows that, today, the best deal for many people with modest 401(k)s is to live off those low balances in the early years of retirement and to delay claiming Social Security. That’s because monthly Social Security benefits are higher the later benefits are claimed.

You get bigger benefits at your full retirement age — 66 for people born from 1943 to 1954, rising to 67 for people born in 1960 or later — than you do if you claim them early.

In addition, for each year you delay taking benefits beyond your full retirement age, up to age 70, you earn a bonus.

Monthly benefits are 8 percent higher if claimed at age 67, rather than age 66, and 32 percent higher if claimed at 70. For example, if your monthly benefit would be $2,000 a month if claimed at 66, it would be $2,160 at 67 and $2,640 at 70.

That’s an attractive return in any case, and especially now, when interest rates are at rock bottom.

What is truly stunning, however, is that retirement experts are saying that the best use of modest retirement sums is to spend them in the near term, in effect buying time for one’s Social Security benefit to grow.

There is a larger lesson in that: If Social Security is strategically important for those with 401(k)s, it is obviously indispensable for the majority who have little or no retirement savings. Benefits need to be preserved and enhanced, not cut."

Summing Up

The long term solution must be a choice between dramatically higher taxes during our working years or the assumption of greater personal responsibility for our financial retirement needs.

If we choose the dramatically increased taxes route, we're admitting that we want more government in our lives and that government bureaucrats will do a better job investing our MOM than we will.

Either that or we're willing to burden future generations with paying for the promises we've made to ourselves in order to fund our retirement years.

I strongly believe this prevailing attitude and approach must change and that we must choose the road leading to greater personal responsibility and control of our own lives and well being.

We have too much government "help" already.

What do you say?

Thanks. Bob.