Saving America, Sharing The Pain

… save our country from utter fiscal ruin. The vote fell three short of the fourteen votes required by rule to send the plan to Congress for an up or down vote. Voting in favor of the plan were the co-chairmen, former senator Alan Simpson (R-WY) and former Clinton chief of staff Erskine Bowles; along with Senators Tom Coburn (R-OK), Mike Crapo (R-ID), Jud Gregg (R-NH), Dick Durbin (D-IL), and Kent Conrad (D-ND); Rep. John Spratt (D-SC); former Federal Reserve vice chairman Alice Rivlin; Honeywell Corp. CEO David Cote; and Ann Fudge, former CEO of Young & Rubicam. Voting against the proposal were Senator Max Baucus (D-MT); Representatives Paul Ryan (R-WI), Dave Camp (R-MI), Jeb Hensarling (R-TX), Xavier Becerra (D-CA), and Jan Schakowsky (D-IL); and Andy Stern, president of the Service Employees International Union (SEIU).

If Obama expected courage from his commission members he might have skipped over members of the House of Representatives, all of whom run for reelection in 2012, and union leaders such as Andy Stern, who could never be trusted to put the national interest first. Without going into detail, the commissioners recommended what can best be described as a little pain for everyone. They suggested cuts in Social Security and Medicare, the elimination of tax breaks for mortgage interest and child care, and, surprisingly, a reduction in tax rates for individuals and corporations.

As expected, howls of protest could be heard immediately from the right and from the left, but in each case from those who apparently would rather see the entire nation go down the drain while they scramble for the last remaining seats in a sinking ship of state. So, for those who are serious about saving a bit of the American Dream for our children and grandchildren, what are some of the things that could and should be done almost immediately?

Repeal Obamacare

The first item of business should be to repeal Obamacare, replacing it with meaningful reform that eliminates fraud, waste, and bureaucratic paper-shuffling, protects families from financial ruin in cases of catastrophic illness, eliminates free healthcare for illegal aliens, charges patients only for justifiable doctor and hospital services, and focuses on strengthening the doctor-patient relationship.

Cancel Unspent Stimulus Funds

Of the $787 billion authorized by Congress under Obama’s ill-fated economic stimulus plan, some $292 billion remains unspent. These funds have been allocated to various government departments and agencies but have not been spent and could be withdrawn by act of Congress.

Establish Social Security Means Testing

In order to save Social Security for current and future generations, we should begin by answering this question: can we morally justify sending monthly Social Security checks to Warren Buffet and George Soros while millions of ordinary Social Security recipients must choose each day between the cost of food, healthcare, utility bills, and prescription drugs? Anyone who believes in the sustainability of the current system, or who wishes to argue that, since an individual has paid into the system for forty or fifty years, he/she has a right to withdraw full benefits for a lifetime, regardless of personal wealth, should please stop reading now… we’ve heard that silly argument before and it is of little or no value in the current debate, given what is at stake.

An individual taxpayer born in 1945, who entered the workforce in 1965, and who retired in 2010 at age 65 with an annual salary of $110,000, will have paid a total of $126,715.89 into the system. With a monthly benefit of $2,135, that individual will receive that same amount in benefits in just four years and eleven months. If he/she lives to be 85 years of age, the total amount paid to that individual will be $512,400… four times their total contributions.

A graduated reduction in Social Security benefits, beginning with annual incomes of $50,000 and zeroing-out benefits for those with annual incomes of $150,000, or more, would provide long-term sustainability for the system while not causing any undue amount of pain for current and future beneficiaries, regardless of income level. We simply must find the courage to do it.

Reduce Supplemental Security Income (SSI) Payments

The SSI program guarantees a minimum level of income to financially needy individuals who are aged, blind, or disabled. However, the program has been substantially liberalized by extending benefits to many who are disabled by reason of addiction to drugs, alcohol, and gambling. The State of California will soon reduce SSI outlays for more than 1.1 million low-income seniors and people with disabilities to their December 1, 2008 level. For an individual recipient, this means the maximum grant will drop from $907 per month to $870 per month, a 4.1 percent reduction. The Congress should direct the Social Security Administration to follow California’s lead. SSI benefits should be available only to U.S. citizens and only to those who are unable to work due to age, blindness, or physical incapacity.

We cannot continue to raid the Social Security System by paying benefits to able-bodied citizens who are many years away from retirement age.

Eliminate Mandatory Retirement Age

One of the greatest mistakes our nation has ever made was to set a mandatory retirement age at 65. Telling our most knowledgeable, most experienced, and most skilled workers to go home and sit on their behinds until they die, when the vast majority of workers are capable of being productive until age 70 or 75, makes no economic sense and only serves to swell the ranks of government entitlement recipients. The age of retirement should be left to negotiation between the individual and his/her employer, not dictated by government or corporate policy.

Reduce Federal Workforce

The Congress should take immediate steps to reduce the size of the non-military federal workforce by ten percent over ten years. According to 2009 data provided by the Office of Personnel Management, the total federal workforce for calendar year 2009 stood at 4.43 million… comprised of 2.77 million executive branch, 66,000 legislative branch, and 1.59 million uniformed military. Excluding our uniformed military, the federal workforce numbers approximately 2.84 million people. A 10% workforce reduction would require the elimination of 284,000 non-military jobs.

The elimination of the U.S. Department of Education (5,000 employees, 2010 budget of $56 billion) and the U.S. Department of Energy (16,000 employees and more than 93,000 contract employees, annual budget approximately $25 billion), both unnecessary and unproductive organizations, would provide a good starting point.

Roll Back Federal Government Salaries

Recent news reports indicate that: a) salaries of federal workers are roughly double the salaries paid for similar work in the private sector, and b) the number of federal jobs paying in excess of $150,000 per year has doubled under Barack Obama. Using the “power of the purse,” the Congress should begin immediately to roll back federal salaries to private sector levels.

Roll Back Minimum Wage to 2006 Levels

Since gaining control of Congress in 2006, Democrats have pushed through three increases in the minimum wage, a 40% increase from $5.15 per hour to $7.25 per hour. Studies show that, for every 10 percent increase in the minimum wage, the overall number of jobs available decreases by as much as 2 percent. The impact on entry-level jobs is even greater. For each 10 percent increase in the minimum wage, the number of entry-level jobs for teenagers and unskilled workers is reduced by from 4 to 5 percent.

At the very least, the Congress should establish a two-tier minimum wage… a $5.15 per hour minimum wage for teens and unskilled entry-level workers and a $7.25 per hour minimum wage for those with marketable skills who find themselves temporarily unemployed.

Eliminate Waste, Fraud, and Inefficiency

It is clear we cannot rely on Obama to eliminate waste, fraud, and inefficiency. He has identified only $140 million from his $3.6 trillion 2010 budget request as wasteful. He has also proposed a partial offset of the cost of Obamacare by cutting $622 billion in Medicare and Medicaid “waste and inefficiencies” over the next ten years. We’ll never know if that is a hard number or if it was merely a “blue sky” number invented to help sell his healthcare program. Either way, it’s a good place to start. We only need to inject a bit of courage into those who represent us in Congress.

The dire predictions of where we are headed if we fail to take decisive action now should scare the pants off every thinking American. Let’s take our medicine now so that our children and grandchildren won’t find themselves having to swallow a far more bitter pill in years to come.

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