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Sequester will mean 3 percent cut



Published: Fri, March 1, 2013 @ 12:00 a.m.

Sequester will mean 3 percent cut

I write in response to a few re- cent letters to the editor that have been published in The Vindicator regarding the pending sequester — a mechanism that will reduce federal spending by three pennies for every dollar that Washington spends.

As the president’s own press secretary and several media reports have confirmed, the Obama administration developed the idea and pushed for the sequester. President Obama then signed the sequester into law on Aug. 2, 2011. Last year, House Republicans passed two pieces of legislation that would have replaced the sequester with responsible spending cuts. These cuts would’ve reduced federal spending by the same amount as the sequester, but would not have jeopardized our national security with the deep cuts to defense the president insisted on. The president and the Democrat-controlled Senate refused to even consider those bills. And now, on the eve of the sequester, the president is looking for someone to blame.

Hard-working American families have to live within their means or they can’t pay their bills. Businesses must live within their means or they have to close their doors. The federal government must begin to do the same.

Bill Johnson, Marietta

Johnson is a Republican representing Ohio’s 6th Congressional District.


Comments

1Sensible(118 comments)posted 1 year, 9 months ago

Congressman Johnson,
1) Why did you vote against the Violence against Women act?

2) YOU voted in favor of the "Sequester Act" (aka Budget Control Act) on Aug 1 2011. Since you supported it you only have to look in the mirror to see "who's to blame"

3) How much damage will sequester bring? Time will tell. But it doesn't look too good.

4) How much will sequester help? Time will tell. But it doesn't look to good.

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2borylie(829 comments)posted 1 year, 9 months ago

Sensible, The reason republicans voted for the sequester was for compromise. If the republicans wouldn't of gone for it, then you'd be calling them obstructionists. If this was a good idea, the president would be taking all the credit. Since it was a bad idea, his, and he signed it into law and it was a lousy idea, he now blames the republicans. Can't people see this president is more interested in politics and his party, than the good of the overall country, as he promised?

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3borylie(829 comments)posted 1 year, 9 months ago

Seriously, It was the president's idea and the republicans helped him. The democrats gave the republicans just enough votes to pass and the rest could distance themselves from the sequester. If it worked it was the president's idea, if it didn't turn out well the dems would predictably blame the republicans. President Obama thought he could scare the people thus scare the republicans into no cuts unto increased spending and once again raise taxes. You're only kidding yourself if you think this president is bringing this country together.

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4AnotherAverageCitizen(1175 comments)posted 1 year, 9 months ago

Boehner was fo in favor of the sequester. For some reason, now, that it is taking place, he is against it and sems to Blame Obama for it. He placed the sequester to his Republican Congress and his republican congress passed it.

They ALL need to quit spending so much time pointing fingers. All the Senate, Congress, and Pres Obama neded to statrt working for the ones who elected them.

Johnson is a Republican "MIS"representing Ohio’s 6th Congressional District.

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5AnotherAverageCitizen(1175 comments)posted 1 year, 9 months ago

Republicans Had Praised Sequestration Earlier
In 2011, however, Boehner was among the Republican leaders who expressed support for the Budget Control Act and voted in favor of it. "When you look at this final agreement that we came to with the White House, I got 98 percent of what I wanted," Boehner said in 2011. "I'm pretty happy."

The Budget Control Act including the sequestration cuts passed in the House with 174 Republicans voting in favor, including Boehner, House Majority Leader Eric Cantor and U.S. Rep. and 2012 vice presidential nominee Paul Ryan of Wisconsin.

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6Sensible(118 comments)posted 1 year, 9 months ago

To my confused friends here: My take on this is that everyone had a hand in (and might take the blame for) creating the Budget Control Act. And everyone helped pass it. So they are all equally to blame for the idea and the creation of this deadline.

What the President along with a majority of the Congress wanted to do was to motivate both sides to come to a compromise under the auspices of the supercommittee. But the Congress, both republicans and democrats proved again that they will not compromise for the good of the country.
So that's who I think Obama is trying to blame, the legislators because they refuse to legislate.

The republican legislators cry "show us leadership", and Obama replies that the job of Congress is to legislate. Congress writes the laws, not the President. The President is the head of the executive branch, he does not control the legislature. How many times has he asked Congress to just do their job?

I fault the members of Congress for their failure to reach some compromise over the last 18 months. It's almost like they want the privilege of MOC but don't have the courage to actually do any thing that might lose some constituents votes.

BTW, the actual vote count was 180 Republicans and 95 Democrats in favor, 66 Republicans and 95 Democrats votes Nay. The Republicans carried this bill to victory, they should own it.

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7AnotherAverageCitizen(1175 comments)posted 1 year, 9 months ago

Sensible,

The Repub Congress wrote the bill. The Republican Speaker ( Boehner) brought the bill to the floor. The Republican Congress passed the bill.

But, the Repubs still blame Obama.

It is ALL of them Senate, Congress and the President.

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8HappyBob(285 comments)posted 1 year, 9 months ago

Congressman Johnson,
Will the Oil industry have to close it's doors if they loose their government subsidies?

As former military, I would have expected you to work very hard to prevent defense cuts. I would have expected that you would not be in favor of the sequester and it's consequences.

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9Jerry(519 comments)posted 1 year, 9 months ago

3 percent??

It is my understanding that the sequester measures “cut” $44 billion from the $3.8 trillion spending projections for 2013. This is barely more than 1 percent; and leaves the spending INCREASES from 2012 mostly intact. Please notice I use the words “spending projections” rather than “budget”, because WE DON”T HAVE A BUDGET.

If we can whine and argue like this about spending “cuts” that are this laughably miniscule, and that are not even “cuts” at all, then we truly are doomed.

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10Sensible(118 comments)posted 1 year, 9 months ago

uh Jerry, we are already almost half way through fiscal 2013.

Fiscal 2012 ended last September. So I don't know what your talking about 2012.

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11Jerry(519 comments)posted 1 year, 9 months ago

uh Sensible,

In fiscal 2012 we spent nearly $3.6 trillion.

In fiscal 2013 we are projecting (not budgetting) to spend $3.8 trillion,: an INCREASE of $200 billion, or in other words 5.5 percent.

With the sequester we are whining and arguing about taking $44 billion out of the INCREASE, but still increasing our spending from 2012 to 2013.

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12UsuallyBlunt(105 comments)posted 1 year, 9 months ago

All taxpaying Americans experienced a tax increase as of Jan 1! Therefore PRIVATE spending has been reduced! Sequestration effectively removed a similar amount from the Governments wallet! How they chose to spread the cuts was their decision, no blame to be placed or realized, only loss of funding to be managed...just like private households must do! It looks like there will be no reductions to entitlements...

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13jojuggie(1478 comments)posted 1 year, 9 months ago

Obama: The Affirmative Action President
By Matt Patterson

Years from now, historians may regard the 2008 election of Barack Obama as an inscrutable and disturbing phenomenon, a baffling breed of mass hysteria akin perhaps to the witch craze of the Middle Ages. How, they will wonder, did a man so devoid of professional accomplishment beguile so many into thinking he could manage the world's largest economy, direct the world's most powerful military, execute the world's most consequential job?

Imagine a future historian examining Obama's pre-presidential life: ushered into and through the Ivy League despite unremarkable grades and test scores along the way; a cushy non-job as a "community organizer"; a brief career as a state legislator devoid of legislative achievement (and in fact nearly devoid of his attention, so often did he vote "present"); and finally an unaccomplished single term in United States Senate, the entirety of which was devoted to his presidential ambitions. He left no academic legacy in academia, authored no signature legislation as legislator.

And then there is the matter of his troubling associations: the white-hating, America-loathing preacher who for decades served as Obama's "spiritual mentor"; a real-life, actual terrorist who served as Obama's colleague and political sponsor. It is easy to imagine a future historian looking at it all and asking: how on Earth was such a man elected president?

Not content to wait for history, the incomparable Norman Podhoretz addressed the question recently in the Wall Street Journal:

To be sure, no white candidate who had close associations with an outspoken hater of America like Jeremiah Wright and an unrepentant terrorist like Bill Ayers would have lasted a single day. But because Mr. Obama was black, and therefore entitled in the eyes of liberaldom to have hung out with protesters against various American injustices, even if they were a bit extreme, he was given a pass.

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14Sensible(118 comments)posted 1 year, 9 months ago

To Jerry, So help me with your math.

The OMB memo that was exercised on March 1 states" the President is required to issue a sequestration order on March 1, 2013, canceling approximately 85 billion in bugetary resources across the Federal Government"

So what is the 44 billion dollar figure you mentioned above?

Second question: Each year of the sequester is to "cut back" 109 billion dollars. Since the sequester was supposed to start Jan 1 2013 and there would be only 9/12 of a year during FY 2013, so the amount for FY2013 should be approximately 82 billion. Is this correct?

I believe that the scheme that the House approved was 42.7 billion from Defense, 9.9 billion from Medicare, 28.7 billion fron non-exempt discretionary and 4 billion from other. Is this correct?

Appropriations is where the real action is. All appropriations bills start in the Republican House.
Using the Denfense appropriation as an example; the Defense Appropriation for 2011 was 725.9 billion, 2012 was 662 billion, and for FY 2013 the appropriation was 633 billion.
The House initiated and passed the 633 billion, and Defense is now obligated to reduce by 43 billion (6.7%).

At least for the past few years it looks like there were no Defense increases projected or appropriated.
Is that correct?

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15Jerry(519 comments)posted 1 year, 9 months ago

While politicians and pundits have been claiming that the “cuts” this year total $85 billion, the Congressional Budget Office estimates actual spending will only fall by $44 billion for fiscal 2013. The $85 billion figure refers to "budget authority", including funding that the government can allocate this year, but actually spend over several years.

It really does not matter if you look at the figure as $85 billion or $44 billion, the “cuts” are laughably miniscule compared to what really needs to be done, and they are not “cuts” at all considering that real expenditures for 2013 will still INCREASE over expenditures made in 2012. We’re still spending more money.

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16Sensible(118 comments)posted 1 year, 9 months ago

@ Jerry.
I don't know where you got your information but please refer to the actual CBO document found at:
http://cbo.gov/sites/default/files/cb...

Table 3 on Page 8 clearly says 55 billion from Defense in 2013 and another 55 Billion from non-defense in 2013.

As to the percent reductions, “The estimated reduction in defense funding from those automatic cuts would require reductions in defense appropriations in 2013 to be lowered by 10.0 percent.” - found at Page 9

“Those cuts (in non-defense funding) would represent
reductions ranging from 7.8 percent for 2013 to 5.5 percent for 2021” - found at Page 10

When people talk about lower percent reductions, I can only assume that they are comparing the 109-110 billion per year reduction to the total federal spending. That's somewhat disingenuous as a substantial portion of federal spending does not come under the sequestration process, specifically Social security, Medicaid, VA benefits etc.

One thing that we can be certain of is that Medicare spending will be cut by 2%.

Saying that the reduction is only going to be 1 or 3 percent does not really measure the impact when the actual reductions in non-exempted programs will be closer to 10 %.

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17Sensible(118 comments)posted 1 year, 9 months ago

@ Jerry,
The reason why 2013 resource reduction is 85 billion versus 109 billion is because the sequester did not apply to the entire FY.

I suspect that you got your 44 billion number from the CBO memo on 2/28/13 here:
http://www.cbo.gov/publication/43961

In it's explaination of why outlays might be projected to be reduced by 42 billion it says:
"The $42 billion figure is CBO’s estimate of the reduction in cash disbursements in fiscal year 2013; much of the remaining outlay reductions from the 2013 sequestration will occur in fiscal year 2014, though some will occur later. "

Whether the actual outlay occurs in 2013 or 2014 (or beyond) is irrevalent. There will be reduction in the rate of spending that filters down to the annual deficit.

If what you want is an immediate reduction in spending then attack Social Security benefits being paid in excess of what a taxpayer contributed, attack medicaid, attack medicare coverage, really reduce the doctors and hospital reimbursements so that medicare beneficiarys have to pay more, attack all federal paychecks including the military.

Is that what you want ?

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18Gman(46 comments)posted 1 year, 9 months ago

The Federal Government over-spends by 40%!!! A 2% - 3% lowering of the over-spending is just the START to a common sense approach to not spending more than you make. The Federal Gov't has been over spending for decades. They have been buying votes to get re-elected. I call that legalized bribery. The Federal Government should have never got into the Social Security business or the Medical / Health business. It has run both of them into the ground. The growth of the Federal Government has become a CANCER and its growth needs to be stopped before it kills the USA.
If you have a Government Job that is funded by borrowed money then you really do not have a "JOB" - you are on a WELFARE PONZI Scheme and YOUR children will need to repay your salary with interest!
.

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19Sensible(118 comments)posted 1 year, 9 months ago

@Gman,
My suspicions are that you are not receiving Social Security or covered by Medicare. Most benificiaries think that the Federal Government does a pretty good job with those programs, and would not like to see them abandoned.

Your attack on Federal, State, and local governmental employees (which by the way includes our military personel) is unfair and unwarrented.

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20Jerry(519 comments)posted 1 year, 9 months ago

@ Sensible

What is "disingenuous" about comparing the supposed reductions to the actual total amount being spent in terms of a percentage???? It is, in fact, highly disingenuous and deliberately misleading to compare the supposed reductions to something that is NOT the actual amount being spent.

With regard to the $44 billion, you confirmed my number yourself. This is the CBO's estimate of the actual amount of money that will not be spent in 2013. What could be more clear than that?

The real amount of money spent in 2012 was just shy of $3.6 trillion. The projections for 2013 were for spending to INCREASE to $3.8 trillion. As I said, It really does not matter if you look at the figure as $85 billion or $44 billion, the “cuts” are laughably miniscule compared to what really needs to be done, and they are not “cuts” at all considering that real expenditures for 2013 will still INCREASE over expenditures made in 2012. The fact remains that we are INCREASING spending, not reducing it; and we are whining and arguing about the amount by which it will be INCREASED.

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21Sensible(118 comments)posted 1 year, 9 months ago

Jerry, What is disingenuous is stating that the "sequestered amount" is 3% when it's actually 10%".
As the CBO said, the percent is calculated against the agencies sequesterable total. (see page 9).
What you are doing is comparing the sequestered amount against the entirety of the federal spending. So when observing what the impact is for example on the Defense discretionary there is a huge difference between 2-3 percent and 10%.
I don't disagree with you calculation per se, but choosing to compare against the total spending gives a distorted view of the impact on each budget category.

Let's say that you and your family decide that you need to cut your overall spending by 10%. You tell the wife that she will have to spend less for groceries, she then expects that her grocery budget will be cut by 10%., and she say's OK she can handle that. After she agrees, then you tell her that the money spent on the mortgage cannot be reduced, that the money spent on auto insurance can not be reduced, the money you've committed to the Wednesday poker game can not be reduced, the money spent on gas can not be reduced. So after all these items, her grocery budget has to be reduced by 60%, she says that she can't do that. "But dear, you already agreed to an overall 10% spending reduction."

So when Johnson say's -- it's not so bad, it's just a 3% cut --- he's not telling the whole story. It's actually 10% here and 8% there and 2% here and ZERO percent reduction to
50-60% of the remaining pieces of spending.

So if you are someone who really cares about defense spending, you might (like the wife above) say that yes we can manage a 3 % reduction. So that doesn't look like it will be too painful. Then drop the news that, oh, by the way it's really 10%, just three times as much,

It's just the politician's way of spinning the situation so that it doesn't appear to have as much impact as it really is. That's what I find disingenuous, it doesn't tell all the facts
*************************************

I don't disgaree that 85 or 44 billion is a "grain of sand on the seashore" when compared with the total spending. But the sequester mechanism that the Congress choose to enact is the sequester rules of the Regan era. My understanding of those "rules", is that SS, Medicaid, etc are not sequesterable. If you tried to reduce spending by 200 billion under those rules you would absolutely cripple the defense dept.
(their reduction share would now be on the order of 30% versus 10%).

So did the Congress choose to enact the "wrong" rule set and choose a target reduction that was too modest? If so then, your disagreement is with Congress.

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22Sensible(118 comments)posted 1 year, 9 months ago

Jerry,
Finishing up..
I included the quote from the CBO to validate your comment, but you didn't really tell the whole story. Some spending that is under authority for 2013 will be an actual outlay in 2014. So it's indeed possible that the reduction in actual outlay before Sept 30 2103 may be only a 42 billion , that doesn't mean that items ordered, but not paid for before Sept 30 are not under sequester. Furthermore, as it stands now, the "sequester" for 2014 will be 110 billion, so of which will not be an actual outlay until 2015.
*********************************
Last thought, In your mind, "what really needs to be done" ?

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23Sensible(118 comments)posted 1 year, 9 months ago

Jerry,
see:
http://www.cbo.gov/sites/default/file...

CBO to Paul Ryan 3/4/13. See the table that compares the budget authority before and after sequestration.

FY 2013 Total Budget authority before sequestration is 3.606 billion, after sequestration is 3.519.

You were concerned about a possible 3.8 billion, so you should feel a little better with 3.5. Yes?

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2476Ytown(1302 comments)posted 1 year, 9 months ago

Sequester Cuts have been added to the debt clock.

http://www.usdebtclock.org/index.html

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25Gman(46 comments)posted 1 year, 9 months ago

@Sensible,
"... @Gman,
My suspicions are that you are not receiving Social Security or covered by Medicare. Most benificiaries think that the Federal Government does a pretty good job with those programs, and would not like to see them abandoned.

Your attack on Federal, State, and local governmental employees (which by the way includes our military personel) is unfair and unwarrented. ..."

I did NOT attack the people on Social Security, or the people on Medicare, or the Government Employees. I attacked the FRAUDULENT way the Federal Government has created several PONZI SCHEMES by 1) over-promising retirement benefits, 2) over-promising health care and 3) creating new government "jobs" to appease VOTERS ( just to get re-elected ) by using BORROWED money (with interest) from our children and grandchildren. That is the definition of a PONZI Scheme! We are forced to participate in these illegal PONZI schemes by threat of jail time whether we like it or not. I do not like it! And if you love your children and grandchildren then you should not like being forced into a PONZI scheme either.

And BTW, the SURPLUS Social Security money that has been collected from the Baby Boomers for the past 25 years has all been SPENT by Congress. Every dime has been SPENT! And they still need to borrow 40% of every dollar they spend. You are INSANE to even think that Congress has done a "pretty good job". The UNFUNDED Liability for Medicare is about $30 TRILLION!!! The UNFUNDED Liability for Social Security is about $8 TRILLION!!! If you call that doing "well you" then have no common sense.

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26Sensible(118 comments)posted 1 year, 9 months ago

Gman, Calm down!
You are right you did not attack people on Social Security or Medicare, and I never said you did.
However you did attack these programs, saying that the Federal govt “has run them into the ground”. All I said was that most SS or Medicare beneficiaries think that these programs are good and not “run into the ground”.

You did attack government employees with your statement “If you have a Government Job that is funded by borrowed money then you really do not have a "JOB".

I did say that SS and Medicare beneficiaries “think that the Federal Government does a pretty good job with those (SS and Medicare) programs. “ I will continue to stand by that statement and challenge you to show otherwise.

Regarding the SS trust fund, all money that flows into the SS system is either distributed to beneficiaries or invested in government securities. The law requires that the investment of daily surplus be invested in government securities.
Do you have an alternate suggestion for these funds?
During 2012 SS had revenues of 846 billion, and paid out 785 billion. The remainder was added to the balance making the total invested at the year’s end of 2.7 trillion dollars. Where do you think these funds should be invested?

While I don’t disagree that the SS unfunded liability is about 8 trillion, the part that you fail to mention is that figure is based on no changes in SS laws over the next 75 years. The social security laws have been adjusted many many times in the last seventy five years, there is no reason to expect that there will be many more in the next 75.

Finally, what does your rant have to do with the so-called 3% sequester?

BTW, Can you have a cordial discussion without resorting to name-calling?

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27Woody2(26 comments)posted 1 year, 9 months ago

Johnson just did it again. He just voted to reduce the govnmt spending by 1.2 cents on the dollar.

Is he serious? You can't make much impact on the deficit if you only reduce 1%.

He was supposed to put the brakes on run away spending.

Way to go Bill, you might as well be a dem.

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2876Ytown(1302 comments)posted 1 year, 9 months ago

Sensible: More like $87 trillion in unfunded liabilities to Social Security, Medicare, and federal pensions.

http://www.theatlantic.com/business/a...

http://www.politico.com/news/stories/...

The piggy bank has been raided for years. If we don't come up with a plan to change the system, there won't be any left for ANYONE!

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29Woody2(26 comments)posted 1 year, 9 months ago

Hey, isnt johnson on that federal pension and getting a federal salery. do i hear you say double dipping.

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30Sensible(118 comments)posted 1 year, 9 months ago

76Ytown,
I really liked the subtitle to the atlantic article: "
The problem with budgeting 75 years into the future is that you end up with a lot of numbers that are much more meaningful to actuaries than to other living people"

The article goes on to discuss why the 87 (or 100) trillion is a red herring.

And sums up by saying" Closing this liability gap -- whether it's $87 trillion or $8 trillion -- will require patience. The bad news is that none of these measures to fix our real problem (health care costs) will be easy, few of them will be initially popular, and most of them might not work. The good news is we have 75 years"

The reality is that WE, the people and the government have to work together. The Senate and the House sure don't appear to be able to work together. Republicans and Democrats (at least the loudest of each) don't seem to want to work together. The media (including and maybe especially Fox) keep throwing gasoline onto the fire to keep emotions roiling. It's a sad state of affairs!

On a brighter note, we fail to predict the future constantly. On the bad side, we never saw that comercial airplanes could be used as weapons. On the good side we never expected that North America would (or could be) global leaders in Natural gas.

Predicting what will happen 75 years from now,.. the best one can do is assume that things will continue to follow the same course as they have. Unfortunately they never do.
Have a great day!

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3176Ytown(1302 comments)posted 1 year, 9 months ago

People don't plan to fail, they just fail to plan. By ignoring the fact that our current path is unsustainable, not making painful cuts and change now, we are headed to a point of no return. We've been warned for years that SS will run out by a certain date, now 2031...18 years from now.

Sensible: "The problem with budgeting 75 years into the future is that you end up with a lot of numbers that are much more meaningful to actuaries than to other living people"

The challenges of SS & Medicare include the fact that more than 22 million potential employed persons are not in the workforce paying into the system, the aging of Americans, the baby boomers yet to begin drawing SS, the rising costs of health care affecting Medicare and Medicaid.
http://www.ssa.gov/oact/trsum/index.html

Silver lining...Obamacare should bring health care costs down by limiting access to needed care.

People have been flippant about SS not being there when they reach retirement age. "beneficiaries just now becoming eligible for retirement benefits will suffer huge cuts in their checks by the time they turn 80 — just when most of them will need them the most. And “workers 44 years old [today] face the prospect of retiring after the trust fund is bust.”

http://www.thenewamerican.com/economy...

Our current liability per taxpayer is $1,086,874
http://www.usdebtclock.org/index.html

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32Sensible(118 comments)posted 1 year, 9 months ago

@ytown,
I didn't say the line about the problem with budgeting.... that came from the atlantic article that you directed me to.

You offered that article in support of the concern about a much larger unfunded liability than Gman was talking about.

I'll get back later on the other stuff.

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33Sensible(118 comments)posted 1 year, 9 months ago

@ Hman,
Sorry but I didn't say that. That was quoted from an article that 76Ytown cited.

I agree that the current debt is approx 13.5 Trillion. Of that 2.6 Trillion is held by social security.

The taxpayers are responsible to payoff these IOUs.

Where did the money go, why is there such a debt that we owe to ourselves?
The money was spent by your congress to pay for: wars, roads, police, an Army, a Navy, schools, student loans, medicare, embassies, etc, etc.

If you don't want these things, then tell your Congressman. If you don't think that the spending priorities are correct, then tell your Congressman.

In the meanwhile, the deficit reduction program called the sequester is being implemented. What is what this comment thread is about.

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3476Ytown(1302 comments)posted 1 year, 9 months ago

As long as we are still spending more than we take in we will continue to have a debt problem.

Here is where we are:

http://www.usdebtclock.org/index.html

We have big problems to solve, the national debt, SS, Medicare, unfunded pensions, entitlement programs, unemployment, and now N. Korea wants to drop a nuclear bomb on us which will really ruin our day.

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35HappyBob(285 comments)posted 1 year, 9 months ago

I can understand why North Korea might react that way, we "sent" them Dennis Rodman.
(just kidding)

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36HappyBob(285 comments)posted 1 year, 9 months ago

The year end 2012 assets of OASI &DI (aka Social Security) was 2.7 trillion. All of this is invested in special issue treasury securities (otherwise known as the IOUs).

The debt along with all other treasury securities (Treasury Bills, notes, savings bonds) and intergovernmental debt transfers represents the 16.5 trillion total US debt.

As to the 1960s... I think that SS assets were always required to be invested in US treasury securities... as contrasted with South African gold mines!

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37HappyBob(285 comments)posted 1 year, 9 months ago

Hman,
I'll follow up on the 1960's.
Here is a better breakdown of "who" owes "what" to the debt:
 Social Security (Social Security Trust Fund and Federal Disability Insurance Trust Fund) - $2.72 trillion
 Office of Personnel Management (Federal Employees Retirement, Life Insurance, Hospital Insurance Trust Funds, including Postal Service Fund) - $1.12 trillion
 Dept. of Health and Human Services (Federal Supplementary Medical Insurance Trust Fund) - $69 billion
 Federal Deposit Insurance Corporation - $35 billion
 Department of Transportation (Airport and Highway Trust Fund) - $20 billion
 Department of the Treasury (Exchange Stabilization Fund) - $23 billion
 Department of Labor (Unemployment Trust Fund) - $21 billion
 Other Programs and Funds - $933 billion. (As of September 2012. Source: Treasury Bulletin, Monthly Treasury Statement, Table FD-3:Government Account Series)

 Foreign - $5.311 trillion
 Federal Reserve - $1.66 trillion
 State and Local Government, including their pension funds - $709.1 billion
 Mutual Funds - $864.9 billion
 Private Pension Funds - $605.2 billion
 Banks - $305.2 billion
 Insurance Companies - $259.1 billion
 U.S. Savings Bonds - $184.7 billion
 Other (individuals, government-sponsored enterprises, brokers and dealers, bank personal trusts and estates, corporate and non-corporate businesses, and other investors) - $1.14 trillion.

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3876Ytown(1302 comments)posted 1 year, 9 months ago

"On January 21, 2005, David Walker, Comptroller General of the Government Accountability Office (GAO), made a public statement that was designed to make it clear that the trust fund did not hold any real assets. Walker said, “There are no stocks or bonds or real estate in the trust fund. It has nothing of real value to draw down.”

The intent of the Social Security Amendments of 1983 was not followed. The surplus Social Security revenue from the tax hike was supposed to be saved and invested in marketable Treasury bonds to build up a reserve with which to finance the retirement of the baby boomers. But that didn’t happen. From the time the first surplus revenue arrived in 1985, until the surpluses ended in 2009, all of the Social Security surplus revenue was deposited into the general fund where it became indistinguishable from other federal tax revenue. The Social Security money helped to finance wars and other government programs. But none of it went to Social Security. The actual money was replaced with non-marketable government IOUs, called “special obligations of the Treasury.” These IOUs are not at all like the marketable Treasury bonds held by China and other U.S. creditors. They are nothing more than an accounting record of how much Social Security money was spent for other purposes.

http://www.fedsmith.com/2012/09/21/go...

"If anyone still had doubts about whether or not the trust fund holds real money, President Barak Obama inadvertently set the record straight during an interview with CBS News on July 12, 2011. It was during the stalemate over raising the debt ceiling. President Obama was asked if he could assure the American people that Social Security checks would go out on August 3 as scheduled, even if the debt ceiling dispute was not settled. President Obama said, “I cannot guarantee that those checks go out on August 3rd if we haven’t resolved this issue. Because there may simply not be the money in the coffers to do it.”

If Social Security had its own bank account with surplus money, why couldn’t the Social Security payments have been paid with that money? Why would Social Security payments be dependent on an increase in the debt ceiling? The answer is that, since 2010, the Social Security tax revenue has been insufficient to pay full benefits. The government had to borrow $49 billion in 2010 and $45 billion in 2011 in order to pay full Social Security benefits. And the amount of money that will have to be borrowed in the future to supplement the inadequate Social Security tax revenue will increase at an increasing annual rate.

There is no money, or assets of any kind, in the trust fund. The only thing it has is those worthless IOUs that cannot be used to pay benefits or anything else."

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39HappyBob(285 comments)posted 1 year, 9 months ago

I haven't looked (googled) for 13.5 Trillion owed to SS, so I can't respond to that. What I can agree with is that the money to redeem the IOUs in the trust fund must come from the taxpayers themselves. So the part of the statement that "we owed the most of the debt to ourselves" is fairly accurate, but not completely accurate. The really accurate statement would be 'we owe all of the debt' to ourselves'

I'd also agree that it might look and smell like a ponzi scheme. But itt differs with a ponzi scheme in several significant ways.

In a ponzi scheme the "investors" are typically promised that they will receive more money in the future than their initial (or ongoing) investment. Social security never makes that promise.

In a ponzi scheme the "investors" are never told that the promised yield is dependent totally on bringing in future investors. Social Security has constantly told (via trustees audits) the participants that future benefits are reliant on a expanding economy.

Lastly, the typical ponzi scheme has no back-up when the plan flounders. Social Security's backup plan is the full faith and credit of the USA.

Social Security is a promise made by the American people to themselves, while benefits or future eligibility may be to meet conditions the notion that SS will renege on that basic promise would truly be apocalyptic.

All very interesting, the discussion about SS, but it is a distraction from the more central discussion of the sequester being a 3% cut.

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40HappyBob(285 comments)posted 1 year, 9 months ago

@Hman,
Since you don't want to discuss the sequestration and it's impact, I'm leaving this thread.

You seem to be fixated on how bad you think the US is. Until you can have a rational discussion, it's not worth my time to respond or converse with you.

Sorry, but have a Happy day anyway.

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41Jerryl(105 comments)posted 1 year, 9 months ago

57 is a myth.
Life expectancy for the average white male worker in 1939 ranged from 67.4 to 75
Life expectancy for the average white female worker in 1939 ranged from 71.2 to 87
Actual historical data.

Not for mainly widows & orphans, for retired workers. consult http://www.socialsecurity.gov/history......

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42Jerry(519 comments)posted 1 year, 9 months ago

Jerry to Jerryl

Your link did not work for me, but what I suspect is that you were looking at life expectancy age ranges for people BORN on or around 1939, not people living (or dying) in 1939. Please correct me if I am wrong.

Per Berkly http://demog.berkeley.edu/~andrew/191...
life expectancy in 1939 was 62 for men and 65 for women..

The point is, retirement age was deliberately chosen so that most people (the average person) would be dead before collecting benefits.

We are now well beyond that, with the average person living a decade or more after "retirement" age. This, however, is just part of the problem.

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43Jerryl(105 comments)posted 1 year, 9 months ago

Hi Jerry,
The link was for the brief history of Social Security. Cited to show that Social Security was not limited to, nor mainly intended for widows and orphans.
here is that site again:
http://www.socialsecurity.gov/history...
-------------------------------------------------------
The reference on life expectancy was from:
http://www.infoplease.com/ipa/A000514...
If this link does not work use www.infoplease.com > US > US Statistics > Mortality > Life Expectancy by Age

The Berkley site says 62.1 years was the life expectancy for a male in 1939
The infoplease site says 62.8 years was the life expectancy for a male in the period 1939-1941.
Essentially identical.

The problem is that the Berkley data includes infant and child mortality, when this is excluded the life span becomes longer.

For purposes of Social Security, you would only want to see what the typical life expectancy would be after they came of working age. So the numbers I gave before were based the approximation of a person who began work at 15 years old.

From the infoplease data an 20 year old in 1939-1941 era would have typically an additional 47.76 years of life making their age at death 67.76 years. A 50 year old typically would have a death age at 71.5 and so forth.

The story that SS designed so that most would die before reaching 65 is just a myth that has been perpetuated by SS detractors.

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44HappyBob(285 comments)posted 1 year, 9 months ago

KSUgrad wrote: "The story that SS designed so that most would die before reaching 65 is just a myth that has been perpetuated by SS detractors."

Are you referring to Hman?

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45Jerry(519 comments)posted 1 year, 9 months ago

Jerry to Jerryl,

But in 1939 they would not have known that a person entering the workforce at the age of 15 or 20 was GOING TO HAVE an increased life expectancy IN THE FUTURE. The information they did have, at the time, indicated that people generally died by age 65; and they set the age for collecting benefits at 65.

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46Jerryl(105 comments)posted 1 year, 9 months ago

Dear Jerry,
Demographers have been projecting future life expectancy since the dawn of life insurance.
This is not politics, it's seroius business. The very fortunes of the insurance companies rests on the foundations of demographics and actuarial tables.

If you can provide more about how you know what SS knew and did in the 1939 era, I;ll be happy to read and learn. But please don't send junk from a blogger, talk show host or ideogogical foundation.

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47Jerryl(105 comments)posted 1 year, 9 months ago

Additional for Jerry:
"If we look at life expectancy statistics from the 1930s we might come to the conclusion that the Social Security program was designed in such a way that people would work for many years paying in taxes, but would not live long enough to collect benefits. Life expectancy at birth in 1930 was indeed only 58 for men and 62 for women, and the retirement age was 65. But life expectancy at birth in the early decades of the 20th century was low due mainly to high infant mortality, and someone who died as a child would never have worked and paid into Social Security. A more appropriate measure is probably life expectancy after attainment of adulthood.
As Table 1 shows, the majority of Americans who made it to adulthood could expect to live to 65, and those who did live to 65 could look forward to collecting benefits for many years into the future. So we can observe that for men, for example, almost 54% of the them could expect to live to age 65 if they survived to age 21, and men who attained age 65 could expect to collect Social Security benefits for almost 13 years (and the numbers are even higher for women).
Also, it should be noted that there were already 7.8 million Americans age 65 or older in 1935 so there was a large and growing population of people who could receive Social Security. Indeed, the actuarial estimates used by the Committee on Economic Security (CES) in designing the Social Security program projected that there would be 8.3 million Americans age 65 or older by 1940 (when monthly benefits started). So Social Security was not designed in such a way that few people would collect the benefits." source:
http://www.ssa.gov/history/lifeexpect...

Now, can we get back to the sequester issues?

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48jojuggie(1478 comments)posted 1 year, 9 months ago

Yes, back to sequester issues.

It's another Govt lie that the sequester will cut the natl debt by 85B this yr. It's an even bigger lie that the cuts will create havoc if imposed.The truth is the budget cut produces no savings at all. It doesn't cut the natl debt - it merely decreases the size of the debt increase. Even if the cuts remain in effect, the nations debt will increase by a staggering 845B (CBO), almost 4 times as fast as the economy. So folks, shutting down our Whitehouse is a joke just like the incumbent.

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49IslandMike(757 comments)posted 1 year, 9 months ago

HEY NEO-COMMIES,

Don't forget to blame the rising housing, car market, falling unemployment and record setting numbers on Wall Street on Obama's failed economic policies. I thought that you all said that raising taxes would create fewer jobs. Where are all those so called 'job creators?' You better adopt a universal dental care program, because Obama just kicked your teeth in!! Congress is to blame for the sequester, the neo-cons in Congress have said we need smaller government, but now that it's time to make cuts, they haven't mentioned cutting one dollar from the federal budget. They're truely are The Party of NO!!

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50jojuggie(1478 comments)posted 1 year, 9 months ago

C'mon IM. The real unemployment is about 17% & you know it. The record numbers, on Wall Street are true, but do you realize that these numbers don't reflect the cash on hand of corporations.
They are hoarding cash. They are not expanding. They have no idea what the future holds because of obamacare. etc, etc, etc.

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51jojuggie(1478 comments)posted 1 year, 9 months ago

In between her two jobs, an average American takes a moment to celebrate the Dow hitting a new high.

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