Tag Archives: Debt

Millennials who elected Obama will face high taxes, poverty and unemployment

We can't raise taxes enough to fix this overspending
We can’t raise taxes high enough to fix this much overspending

My regular readers have probably noticed that I have stopped blogging about day-to-day politics, ever since the Republican primary candidates with conservative records (Cruz, Jindal, Walker) were eliminated from the GOP primary. I have heard though that the mainstream media is going all in to elect Hillary Clinton. My concern is that many people rely on television news and will never think about two really important issues. First, Obama has been the worst President in the history of the country and has destroyed the economy for decades to come. Second, his disregard for national security and weak foreign policy has emboldened the enemies of Western democracies, e.g.  Russia, Iran, etc. We will see the consequences of this (wars and terrorism) for years to come. Those are the real challenges we face as a nation.

This Hoover Institute article by Victor Davis Hanson explains the big picture that the mainstream media doesn’t care about.


Consider the $20-trillion national debt. Most Americans accept that current annual $500 billion budget deficits are not sustainable—but they also see them as less extreme than the recently more normal $1 trillion in annual red ink. Americans also accept that the Obama administration doubled the national debt on the expectation of permanent near-zero interest rates, which cannot continue. When interest rates return to more normal historical levels of 4-5% per annum, the costs of servicing the debt—along with unsustainable Social Security and Medicare entitlement costs—will begin to undermine the entire budget.

Count up current local, state and federal income taxes, payroll taxes, property and sales taxes, and new health care taxes, and it will be hard to find the necessary additional revenue from a strapped and overtaxed middle class, much less from the forty-seven percent of Americans who currently pay no federal income taxes. The Obama administration has tried to reduce the budget by issuing defense cuts and tax hikes—but it has refused to touch entitlement spending, where the real gains could be made. The result is more debt, even as, paradoxically, our military was weakened, taxes rose, revenue increased, and economic growth remained anemic at well below 2% per annum.

The national debt is one ticking time bomb, but there are others. Illegal immigration and Muslim refugees create additional financial problems for the next generation of entrepreneurs and workers:

Illegal immigration poses a similar dilemma. No nation can remain stable when 10-20 million foreign nationals have crashed through what has become an open border and reside unlawfully in the United States—any more than a homeowner can have neighbors traipsing through and camping in his unfenced yard.

Likewise, there are few multiracial societies of the past that have avoided descending into destructive ethnic chauvinism and tribalism once assimilation and integration were replaced by salad-bowl identity politics. Common words and phrases such as “illegal alien” or “deportation” are now considered taboo, while “sanctuary city” is a euphemism for a neo-Confederate nullification of federal immigration laws by renegade states and municipalities.

Illegal immigration, like the deficits, must cease, but stopping it would be too politically incorrect and painful even to ponder. The mess in Europe—millions of indigent and illegal immigrants who have fled their own failed states to become dependent on the largess of their generous adopted countries, but without any desire to embrace their hosts’ culture—is apparently America’s future.

Progressive Christians and  left-leaning Republicans join Democrats in imposing costs on the next generation of taxpayers with open borders immigration policies. The bill for importing people who take more in welfare than they pay in taxes has to be paid by someone. Not only will taxes on individuals go up, but taxes on businesses will cause them to create fewer jobs, or move their production to countries that have lower taxes on business.

The rest of the article talks about more ticking time bombs created by young leftist voters. Obama’s anti-police rhetoric has created a crime crisis that will require more police, more incarceration and higher insurance premiums. Obama’s anti-school-choice policies have made it harder for the next generation to get the education they will need to offer value to employers. Without skills, you won’t have a job, and you will be poor – poorer than your parents’ generation.

Although most young leftists are ignorant about foreign policy, that did not stop them from voting to cause crises that will harm our economy, and may also draw us into war. Territorial disputes involving strong countries like Russia and China could easily lead to war. Sponsors of terrorism like North Korea and Iran have gained strength during Obama’s reign of stupidity. Wars that impact trading partners or allies will cost taxpayers money. And millennials are the ones who are going to get the bill for a failed foreign policy.

The article doesn’t mention other crises like the trillion dollar student loan bubble, or the next mortgage lending crisis, or the unfunded pension programs crisis, or Medicare going bankrupt, and then Social Security shortly after, etc. No one in the mainstream media mentions these things, and the millennials aren’t aware of these problems. It’s not in their culture to put financial concerns above having a good time. But closing your eyes doesn’t make a threat disappear. Millennials can’t study English in college, rack up student loans, spend all their money on alcohol, work minimum wage jobs, then travel to Europe in their 20s, and expect everything to work out when they get serious about career and savings at age 30. These crises – which millennials voted for – are going to make their lives harder than their parents’ lives ever were.

Two Blue Cross plans out of Obamacare, Obama wants taxpayer bailout for insurers

Investors Business Daily reports on the latest big health insurer to drop out of Obamacare.:

Two Blue Cross plans made the stunning announcement in the past week that they were dropping out of ObamaCare markets. If even the Blues — the backbone of the individual insurance market for decades — can’t make it, ObamaCare is truly on the road to ruin.

[…]Despite getting approval on an eye-popping rate hike of nearly 60% for 2017, Blue Cross Blue Shield of Tennessee announced that it was quitting three of the largest ObamaCare markets in the state, which will leave 100,000 enrollees to scramble for an alternative coverage next year.

The state’s Blue Cross had lost half a billion dollars in ObamaCare’s first three years, and the company’s spokesman said “there are too many uncertainties to continue participating on a statewide level as we have before.”

That decision came shortly after Blue Cross Blue Shield of Nebraska’s announcement that it was pulling out of ObamaCare entirely in that state — stranding some 20,000 ObamaCare enrollees — after losing $140 million. “We can’t take another hit,” said CEO Steve Martin last Friday. The decision came after the company had won approval for a 42% premium increase.

These dropouts are on top of the June announcement that Minnesota’s Blue Cross was abandoning the states individual market entirely in the wake of $500 million in losses, which means more than 100,000 people in the state will be looking for a new insurer for next year.

That same month, Arizona’s Blue Cross announced that it was dropping out of two counties — Maricopa and Pinal. It later decided to get back into Pinal County after Aetna fled the state, which would have left Pinal with zero insurers in the ObamaCare exchange.

In North Carolina, Blue Cross was contemplating an exit until other insurers dropped out, leaving it the sole carrier in much of the state.

[…]Even before the latest pullbacks, 974 counties in the U.S. — which represent 31% of all counties — were down to one ObamaCare insurer after Aetna, UnitedHealth, Humana and others pulled out of various states, and after most of the ObamaCare-created insurance co-ops failed, according to the Kaiser Family Foundation. Another 31% of counties will be stuck with just two insurers.

Fewer choices means less competition means higher prices for consumers.

Bloomberg News explains:

Minnesota will let the health insurers in its Obamacare market raise rates by at least 50 percent next year, after the individual market there came to the brink of collapse, the state’s commerce commissioner said Friday.

The increases range from 50 percent to 67 percent, Commissioner Mike Rothman’s office said in a statement. Rothman, who regulates the state’s insurers, is an appointee under Governor Mark Dayton, a Democrat. The rate hike follows increases for this year of 14 percent to 49 percent.

[…]On average, rates in the state will rise by about 60 percent, said Shane Delaney, a spokesman for MNSure, the state’s marketplace for Obamacare plans.

Wow, this is a lot different than what Obama promised in his campaign speeches, isn’t it?

A lot of young people believed Obama’s promises in 2008 and again in 2012:

And you can keep your doctor! And you can keep your health plan! Because Obama! Everything will be fine, don’t ask for evidence that he has ever achieved anything in his life. He’s handsome! He has a nice voice! He’s confident!

Should we pick a candidate based on our emotional response to his confidence?
Should we pick a candidate based on our emotional response to his confident words?

Yes, OK. But what about this problem of health insurance companies taking huge losses and pulling out of Obamacare? I don’t think that the program works as well, if all the health insurance providers stop selling health insurance.

Well, don’t worry! Because Obama has a plan to give all his insurance company friends a big bailout from his private stash of taxpayer dollars.

The Weekly Standard explains:

Obamacare’s “risk corridor” program was designed to redistribute money in the Obamacare exchanges from health insurers who made money to those who lost money. Profitable insurers would pay in; unprofitable insurers would get paid out. With so many insurers losing money under Obamacare, however, the program was positioned to become a bailout, as there was no guarantee in Obamacare’s text that the money paid out wouldn’t exceed the money paid in.

[…][I]n late 2014, congressional Republican leadership took action. Congress put an end to Obamacare’s insurer bailout, as it added language to the CRomnibus spending package stipulating that the risk corridors must be budget-neutral: No more could be paid out to insurers than was paid in by insurers. Taxpayers would no longer be on the hook for bailing out insurance companies. In December of 2014, Obama signed that legislation into law.

Congress had acted just in time. Whereas the Obama administration and the CBO both claimed the risk-corridor program would pay for itself, insurers paid $362 million into the program in 2014 and—if not for Congress’s having stopped the bailout—would have been paid out a cool $2.87 billion. For every $1 that was paid in, about $8 would have been paid out. Instead, insurers received only $362 million, and Congress saved taxpayers $2.5 billion.

Obama now seems determined to change that. He is reportedly planning another end-run around Congress—and the Constitution—by bailout out insurers with taxpayer money that Congress hasn’t appropriated. The Post reports, “Justice Department officials have privately told several health plans suing over the unpaid money that they are eager to negotiate a broad settlement, which could end up offering payments to about 175 health plans.” […]In other words, the administration is “eager” to settle with insurers and provide them the bailout that Congress, with Obama’s signature, expressly denied.

Oh, that’s fine then. Obama is going to give the big insurance companies the bailout they deserve. He is such a generous man!

Obama already doubled the national debt from $10 trillion to $20 trillion in 8 years. We have another $1 trillion in student loan debt, thanks to his nationalization of the student loan administration. And another housing bubble of unknown value on the horizon. When will voters understand that they need to vote for competent people?

Every immigrant without a high school degree will cost taxpayers $640,000

Major welfare programs as of 2012
Major welfare programs as of 2012

I am very much in favor of expanding and streamlining immigration processes for skilled immigrants, especially for areas where there is more demand than supply. But I am not in favor of letting in refugees or other unskilled immigrants, especially if they will be eligible to collect benefits paid for by other working taxpayers.

The Daily Signal explains what the cost is:

On Thursday, the National Academies of Sciences, Engineering, and Medicine will release its report on “The Economic and Fiscal Consequences of Immigration.” According to the report, first generation immigrants as a group increase the nation’s fiscal deficit. In other words, the government benefits they receive exceed the taxes paid.

The National Academies’ report provides 75-year fiscal projections for new immigrants and their descendants. The fiscal impact varies greatly according to the education level of the immigrant. Low-skill immigrants are shown to impose substantial fiscal costs that extend far into the future. The future government benefits they will receive greatly exceed the taxes they will pay.

On average, a nonelderly adult immigrant without a high school diploma entering the U.S. will create a net fiscal cost (benefits received will exceed taxes paid) in both the current generation and second generation. The average net present value of the fiscal cost of such an immigrant is estimated at $231,000, a cost that must be paid by U.S. taxpayers.

The concept of “net present value” is complex: it places a much lower value on future expenditures than on current expenditures.

One way to grasp net present value is that it represents the total amount of money that government would have to raise today and put in a bank account earning interest at 3 percent above the inflation rate in order to cover future costs.

Thus, as each adult immigrant without a high school diploma enters the country, the government would need to immediately put aside and invest $231,000 to cover the future net fiscal cost (total benefits minus total taxes) of that immigrant.

Converting a net present value figure into future outlays requires information on the exact distribution of costs over time. That data is not provided by the National Academies.

However, a rough estimate of the future net outlays to be paid by taxpayers (in constant 2012 dollars) for immigrants without a high school diploma appears to be around $640,000 per immigrant over 75 years. The average fiscal loss is around $7,551 per year (in constant 2012 dollars).

Slightly more than 4 million adult immigrants without a high school diploma have entered the U.S. since 2000 and continue to reside here. According to the estimates in the National Academies report, the net present value of the future fiscal costs of those immigrants is $920 billion.

If you want to take in refugees or unskilled immigrants or sponsor elderly family members, then they should not be allowed to collect benefits paid by other taxpayers. The family that is here already must provide for them, and be held accountable should anything go wrong. Unfortunately, that’s not how the system works now, and it’s not what the Democrats want. They want to import more people who will depend on big government, and then give them the right to vote.

Now, you might think that young American students who expect to find jobs will also expect to keep most of what they earn. It’s very surprising then that they keep voting for a party (the Democrats) that seeks to enslave them with the obligation to pay for other people. I know that the next generation will be paying more in taxes than I ever did during my lifetime.

How exposed is your state to the problem of underfunded pensions?

I am thinking about moving to a new state in the future, and one of the factors I am considering is underfunded pension liabilities. This basically refers to the ability of a state to pay out pensions to retiring public sector employees going forward. I’m going to tell you everything you need to know to solve this problem in this post.

First, Investors Business Daily explains the problem:

A new report by Hoover Institution Senior Fellow Joshua Rauh shows that, unless action is taken soon, many local governments could face bankruptcy because they can’t meet their pension obligations.

[…]The problem is surprisingly simple: States and cities overestimate returns on their pension fund investments, while systematically underfunding them. The result is a growing deficit that will require massive tax hikes or dramatic and painful cuts in government services and promised pensions to public workers.

Rauh’s study looked at 564 state and local pension systems, representing $4.8 trillion in pension liabilities and $3.6 trillion in assets — for an apparent current deficit of just $1.19 trillion.

So far, so good. But Rauh notes the average expected return on pension assets is about 7.6% — which means a doubling every 9.5 years. He calls that assumption “wildly optimistic,” and says a more realistic assumption would be the Treasury bond rate of 3% or lower — less than half the expected return.

Unless pension managers, politicians and voters do something now, the unfunded liabilities of the national system will continue to grow out of control, reaching $3.4 trillion in just 10 years. States and cities across the country would have to raise taxes massively to keep from becoming insolvent.

Right now, state and local governments set aside about 7.3% of revenues for public pensions. To keep the funding gap from exploding and taking down governments across the nation, pension spending would have to rise to  17.5% of revenues on average — roughly equal to a 240% tax increase.

How did things get so bad? Generations of feckless politicians have refused to face down public employee unions, which have negotiated massively expensive pensions for their members while concealing their true cost. Politicians have gone along with it because, heck, it’s not their money and anyway, the problems will take place long after they’re out of office. That’s where we are now.

States and cities will come under intense pressure to raise taxes on local citizens to pay for this travesty. Instead, they should get rid of the public employee unions that have plundered the public for too long and have made local government inefficient, expensive and dysfunctional. If not, they can expect to face the same economy-crippling effects as Detroit, San Bernardino and a number of other cities have — financial insolvency.

Now, obviously states with kick-ass governors like Scott Walker of Wisconsin are not going to have the same exposure to such problems as incompetent governors like Maggie Hassan of New Hampshire. Scott Walker know how to rein in public sector unions.

Let’s get the numbers to confirm this hypothesis.

Bloomberg has the numbers:

Bloomberg ranked 49 U.S. states based on their pension funding ratios in 2014 under GASB 25. (Delaware is not included because of insufficient data for GASB 25.)

Here are the best states… Wisconsin is 100% funded:

States with the best-funded pension liiabilities
States with the best-funded pension liiabilities

And actually there is a comprehensive analysis of the fiscal solvency of all the states right here from George Mason University.

Here’s the map:

Overall fiscal solvency by state
Overall fiscal solvency by state

I notice that the deep blue states like California, Massachusetts, Illinois, Connecticut, New Jersey, etc. are just horrible states. No wonder everyone is fleeing them in droves. Socialism doesn’t work. Eventually, the money runs out.

So, if you’re thinking of moving to a new state, look at that. And if you don’t want to move, then vote for governors like Scott Walker who will take on public sector unions – otherwise, you’re headed for a big tax hike in the future, to pay for the big spending liberals of the past.

Is government good at spending taxpayer money to stimulate the economy?

Canada Election 2015: Socialists in red, Communists in Orange, Conservatives in blue
Canada Election 2015: Socialists in red, Communists in Orange, Conservatives in blue

I’ve been seeing a lot of talk up north in Canada from the substitute drama teacher they elected about how he wants to stimulate the economy by taking money out of the productive private sector and putting into the inefficient, wasteful public sector.

Here’s an example of how he intends to stimulate the economy, as reported by Life Site News. (H/T Kevin the Super-Husband)

It says:

The Liberal government is pledging $81.5 million to the United Nations’ Population Fund to fund “sexual and reproductive health services and rights,” International Development Minister Marie-Claude Bibeau announced Monday.

And that could include access to abortion in countries where it is legal, according to a “senior government official,” who told iPolitics reporter Amanda Connelly that the individual countries in the UN Population Fund (UNFPA) are free to allocate funding to provide access to abortion.

“Sexual and reproductive health services and rights” is well-known UN-speak for contraception and abortion on demand, noted Campaign Life Coalition’s Matt Wojciechowski, who represents CLC at the United Nations.

The Liberals’ decision is a reversal of the Conservatives’ stated ban on abortion funding as part of international aid in the 2010 Muskoka Initiative on Maternal Health.

At that time, the Conservatives pledged $2.8 billion over five years towards improving maternal health and the lives of newborn infants in developing countries, but the initiative, including the Tories apparent refusal to fund abortion, was subject to ongoing criticism.

The Conservatives pledged a further $3.5 billion from 2015 to 2020 for maternal, newborn and child health care projects in developing nations in May 2014, at which time Harper was again criticized when he reiterated that his government would not fund abortion overseas as part of that initiative.

The Liberals promised during the October 2015 election campaign that they would “cover the full range of reproductive health services as part of the [Muskoka] initiatives,” which a Liberal Party official at the time confirmed included abortion where legal, reported Connelly.

“Canada is committed to universal access to sexual and reproductive health services and rights,” Bibeau stated in a press release Monday. “We also believe that programming decisions on these matters should be driven by evidence and outcomes, not ideology.”

Trudeau has been very energetic about how he is going to stimulate the economy by taking money from job creators in the private sector and spending it to “create jobs”. Well, this is what happens when Christians vote for government to “create jobs” by “infrastructure spending”. And they are going to be running budget deficits much worse than what they promised. This is what the vast majority of Canadians voted for in their last election.

But we also waste money down here in the United States, too. Do you ever wonder what happens to the cut that the government takes out of your pay for your private sector activities? The Constitution sets out areas where the federal government is authorized to spend money. But the Democrat Party doesn’t believe in the Constitution, they believe in buying votes and pushing the culture to the left.

Congressional Budget Office: Debt to GDP ratio
Congressional Budget Office: Debt to GDP ratio

Here’s a story from the Daily Caller to explain what stimulating the economy looks like in the United States. (H/T Dad)


Academics at the University of Oregon have determined that glaciers and the science that studies them are deeply sexist.

“Merging feminist postcolonial science studies and feminist political ecology, the feminist glaciology framework generates robust analysis of gender, power, and epistemologies in dynamic social-ecological systems, thereby leading to more just and equitable science and human-ice interactions,” reads the paper’s abstract. The research was published in the peer-reviewed journal Progress in Human Geography in January.

The study, by historian Dr. Mark Carey and some student researchers, was financially supported by taxpayer dollars. The National Science Foundation (NSF) gave Carey a five-year grant which he used to write his “feminist glaciology” paper. Carey has received $709,125 in grants from the NSF, according to his curriculum vitae.

“Most existing glaciological research – and hence discourse and discussions about cryospheric change – stems from information produced by men, about men, with manly characteristics, and within masculinist discourses,” Carey wrote. “These characteristics apply to scientific disciplines beyond glaciology; there is an explicit need to uncover the role of women in the history of science and technology, while also exposing processes for excluding women from science and technology.”

Carey concluded glacier research is intertwined with gender relations, masculine culture, geopolitics, institutional power and racism — these apparently led to to glacier-related academic and governmental jobs being predominantly filled by men. Damages from melting glaciers target women and ethnic minorities, who “are more vulnerable to glacier changes and hazards than are men,” according to Carey.

That’s a shovel ready project, right there. That will create jobs for sure. And no wonder that people in academia tend to support Democrats. They support Democrats for the same reason that people on welfare support Democrats – because that’s where they get their money for sitting around doing nothing. Private sector research into new products and services is more useful, and doesn’t cost taxpayers a dime.

Public Works

Henry Hazlitt’s book “Economics in One Lesson” explains the problem with taxing the private sector to build public works.

Henry Hazlitt’s Economics in One Lesson, chapter 4, entitled “Public Works Mean Taxes”.


Therefore, for every public job created by the bridge project a private job has been destroyed somewhere else. We can see the men employed on the bridge. We can watch them at work. The employment argument of the government spenders becomes vivid, and probably for most people convincing. But there are other things that we do not see, because, alas, they have never been permitted to come into existence. They are the jobs destroyed by the $10 million taken from the taxpayers. All that has happened, at best, is that there has been a diversion of jobs because of the project. More bridge builders; fewer automobile workers, television technicians, clothing workers, farmers.

And consider Chapter 5 as well, entitled “Taxes Discourage Production”.

In our modern world there is never the same percentage of income tax levied on everybody. The great burden of income taxes is imposed on a minor percentage of the nation’s income; and these income taxes have to be supplemented by taxes of other kinds. These taxes inevitably affect the actions and incentives of those from whom they are taken. When a corporation loses a hundred cents of every dollar it loses, and is permitted to keep only fifty-two cents of every dollar it gains, and when it cannot adequately offset its years of losses against its years of gains, its policies are affected. It does not expand its operations, or it expands only those attended with a minimum of risk. People who recognize this situation are deterred from starting new enterprises. Thus old employers do not give more employment, or not as much more as they might have; and others decide not to become employers at all. Improved machinery and better-equipped factories come into existence much more slowly than they otherwise would. The result in the long run is that consumers are prevented from getting better and cheaper products to the extent that they otherwise would, and that real wages are held down, compared with what they might have been.

There is a similar effect when personal incomes are taxed 50, 60 or 70 percent. People begin to ask themselves why they should work six, eight or nine months of the entire year for the government, and only six, four or three months for themselves and their families. If they lose the whole dollar when they lose, but can keep only a fraction of it when they win, they decide that it is foolish to take risks with their capital. In addition, the capital available for risk-taking itself shrinks enormously. It is being taxed away before it can be accumulated. In brief, capital to provide new private jobs is first prevented from coming into existence, and the part that does come into existence is then discouraged from starting new enterprises. The government spenders create the very problem of unemployment that they profess to solve.

We need to realize that outside of Constitutional spending authority, taxes are a waste of money. We’re $19 trillion in debt. We can’t afford talk of “stimulating the economy” through government spending. It’s a lie. Government spending kills job creation. They can hide the impact by adding the spending to the debt, but eventually, we do feel the impact of wasting money. Especially the foolish young socialists, who are going to have to pay it all back.