Who cares about public pension liability? Well, you should – after all, it’s the reason entire cities and even states are facing bankruptcy. Joshua Rauh, professor of finance at Stanford and Senior Fellow at the Hoover Institution, paints a startling picture of just how broken the public pension system really is, and what will happen if we continue to ignore it
Her vision of ‘accountable capitalism’ would destroy savings built over a lifetime—and sink the economy.
By Phil Gramm and Mike Solon Mr. Gramm, a former chairman of the Senate Banking Committee, is a visiting scholar at the American Enterprise Institute. Mr. Solon is a partner of US Policy Metrics. September 11, 2019
Who owns the vast wealth of America? Old folks. According to the Federal Reserve, households headed by people over the age of 55 own 73% of the value of domestically owned stocks, and the same share of America’s total wealth. Households of ages 65 to 74 have an average of $1,066,000 in net worth, while those between ages 35 and 44 have less than a third as much on average, at $288,700.
A socialist might see injustice in that inequality. But seniors know this wealth gap is the difference between the start and the finish of a career of work and thrift, making the last mortgage and retirement payments rather than the first. Seventy-two percent of the value of all domestically held stocks is owned by pension plans, 401(k)s and individual retirement accounts, or held by life insurance companies to fund annuities and death benefits. This wealth accumulated over a lifetime and benefits all Americans.
That means it’s your life savings on the line—not the bankroll of some modern-day John D. Rockefeller—when Democrats push to limit companies’ methods of enriching their shareholders. Several Democratic congressmen and presidential candidates have proposed to limit stock buybacks, which are estimated to have increased stock values by almost a fifth since 2011, as well as to block dividend payments, impose a new federal property tax, and tax the inside buildup of investments. Yet among all the Democratic taxers and takers, no one would hit retirees harder than Sen. Elizabeth Warren.
Her “Accountable Capitalism Act” would wipe out the single greatest legal protection retirees currently enjoy—the requirement that corporate executives and fund managers act as fiduciaries on investors’ behalf. To prevent union bosses, money managers or politicians from raiding pension funds, the 1974 Employee Retirement Income Security Act requires that a fiduciary shall manage a plan “solely in the interest of the participants and beneficiaries . . . for the exclusive purpose of providing benefits to participants and their beneficiaries.” The Securities and Exchange Commission imposes similar requirements on investment advisers, and state laws impose fiduciary responsibility on state-chartered corporations.
Sen. Warren would blow up these fiduciary-duty protections by rewriting the charter for every corporation with gross receipts of more than $1 billion. Every corporation, proprietorship, partnership and limited-liability company of that size would be forced to enroll as a federal corporation under a new set of rules. Under this new Warren charter, companies currently dedicated to their shareholders’ interest would be reordered to serve the interests of numerous new “stakeholders,” including “the workforce,” “the community,” “customers,” “the local and global environment” and “community and societal factors.”
The Secure Act which is before the U.S. Senate for a vote can impact the taxes of many of us and our children and grandchildren. Take the time to look at this information and contact your senators if you would like to comment on how you want them to vote on this bill. Nancy
The Secure Act would upend 20 years of retirement planning and stick it to the middle class.
By
Philip DeMuth Mr. DeMuth is author of “The Overtaxed Investor: Slash Your Tax Bill and Be a Tax Alpha Dog.” July 10, 2019
Like grave robbers opening King Tut’s tomb, Congress can’t wait to get its hands on America’s retirement-account assets. The House passed the Setting Every Community Up for Retirement Enhancement Act, known by the acronym Secure, in May. The vote was 417-3. The Secure Act is widely expected to pass the Senate by unanimous consent. While ostensibly helping Americans save for retirement, the bill would actually reduce the value of all retirement savings plans: individual retirement accounts, 401(k)s, Roth IRAs, the works.
The main problem with the Secure Act is that it eliminates the stretch IRA,the fixed star in the financial-planning firmament since 1999. The stretch IRA lets savers leave their retirement accounts to children, grandchildren or other beneficiaries. Under current rules, the recipients can parcel out the required minimum distributions from the accounts over the course of their actuarial lifetimes. Payouts tend to be relatively small for children but grow in size over the decades until the inherited IRA might comfortably provide for the child’s retirement through the power of tax-deferred compounding. A parent could die with the knowledge that, whatever vicissitudes their children might experience in life, they won’t have to worry about retirement.
Congress wants to kill this.The Secure Act gives nonspouse beneficiaries 10 years to pull out all the money in an IRA. The effect would be to make more of an IRA subject to higher taxes sooner, as distributions are made in supersize chunks. As much as one-third more of an inherited IRA would get gobbled up by taxes than under current rules. When the Tax Cuts and Jobs Act expires in 2025, taxes will rise across the board. If President Trump signs the Secure Act into law, the stage will be set for a taxpocalypse sometime in the next decade.
In exchange for its windfall under the Secure Act, Congress will push back the age at which retirees must take their first required minimum IRA distributions from 70½ to 72. This isn’t the deal American savers were promised when they made contributions to their IRAs the last 20 years. Before, the optimal approach was for savers to leave their IRAs to their children or grandchildren and stretch the payouts over decades.
THIS URL is important. There are various petitions on the White House site…many are from left wingers…but there are ones there we should ALL think about signing. The one at the very end is the one re Hillary’s emails. There are others such as declaring Black Lives Matter for what it really is and one for Soros….to indicate what HE’s doing. I have no clue what the ramifications will be for putting your name on such a petition but the Hillary one is certainly one that needs support.
Congress should stop this venture in bad medicine and flawed economics.
By
JEFFREY L. VACIRCA Dr. Vacirca is CEO and chief of clinical research at NSHOA Cancer Center
Federal bureaucrats announced earlier this year that they plan to upend the way Medicare Part B pays for drugs. The goal? To save money by getting doctors to alter their treatment choices. That’s bad medicine, flawed economics and destructive public policy—and Congress should pass legislation to stop this ill-conceived experiment.
Medicare plays a crucial role in the lives of more than 55 million Americans. It is the only way some seniors can get access to the drugs that keep them alive. The new policy from the Centers for Medicare and Medicaid Services will jeopardize this access by inserting the government between doctors and patients in an unprecedented way.
ENLARGE
PHOTO:GETTY IMAGES
The idea is to use financial incentives to push doctors to make “value-based care” decisions and prescribe cheaper treatments. Unfortunately, modern-day medicine isn’t as black and white as the administration seems to think. Take cancer care, my specialty. There are very few instances when the substitution of a less expensive cancer drug is appropriate or safe for patients. After all, there is a reason the newer, more advanced drugs—such as those that helped former PresidentJimmy Carterput his cancer into remission—are considered groundbreaking.
Perhaps the most unpleasant aspect of my otherwise quite enjoyable job as a college professor has been the requirement to assign grades to students. Given that we’re now about halfway through implementation of the Affordable Care Act—which even President Obama is happy to call “Obamacare”—it seems appropriate to assign midterm grades. These are not intended as a forecast of the final grade; moreover, implementation of Obamacare is the responsibility of many thousands of individuals, not just one. Nevertheless, as President Truman’s legendary Oval Office desk sign reminds us, “The buck stops here” when it comes to presidential leadership. So whether President Obama likes it or not, the public and historians are likely to base their assessment of his performance on how well his “signature piece of domestic legislation” is implemented.
First Grading Standard:
Promises vs. Performance
Both as a candidate and as president, Barack Obama has made at least 80 promises related to health care. For purposes of grading, I have focused on the 8 most consequential.
Promise #1: Universal Coverage. Candidate Obama promised on June 23, 2007: “I will sign a universal health care bill into law by the end of my first term as president that will cover every American.” The latest CBO projections last May show that as of the end of 2013, Obamacare will have reduced the number of nonelderly uninsured by less than 4 percent. This figure excludes 11 million unauthorized immigrants (51 percent of whom are uninsured). Even when Obamacare is fully implemented in 2017, it will cover only 92 percent of the nonelderly population who are not unauthorized immigrants (nearly everyone age 65 and above is already covered by Medicare), and 84.7 percent of that group already had coverage in March 2009, a full year before Obamacare was signed into law. Even if we concede that other countries relying on an individual mandate have failed to drive their uninsured rates below 1 percent (Switzerland) or 1.5 percent (Netherlands), Obamacare will close only 53 percent of the gap that existed when President Obama was sworn into office. Grade: F.
Promise #2: No New Taxes on the Middle Class. Candidate Obama promised on September 12, 2008: “I can make a firm pledge under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.” Using official estimates from the Congressional Budget Office and the Joint Committee on Taxation, the House Ways and Means Committee projects that Obamacare will increase federal revenues by $1.058 trillion between 2013 and 2022. Only 30 percent of this total will be raised from taxes that exclusively target taxpayers earning over $200,000 (singles) or $250,000 (married). The remaining 70 percent will be borne by households at all other income levels. Tax Policy Center figures show that such households do not account for more than half of all federal taxes. So even if we generously assume such households will bear a similar share of the myriad levies to be imposed on health insurers, medical device manufacturers, and drug manufacturers—levies which will be passed onto consumers—that still leaves at least 35 percent to be borne by families at or below middle-class incomes.
And these figures do not include the hundreds of billions of dollars in new revenue that will have to be collected by states to pay for their share of Obamacare-induced growth in Medicaid. Nor do they include the impact of “taxation by regulation”—i.e., the tens of billions of dollars in higher premiums that young Americans are being forced to pay under Obamacare’s modified community rating rules in order to subsidize predominantly higher-income people who happen to be older. In short, President Obama’s promise at best was 65 percent true and more likely 50 percent or less true. Grade: F. (more…)
Something strange is happening in Washington. We are slowly dismantling the federal government, even as its spending is growing larger. The paradox is that governmental competence is being systematically degraded while the government’s size, as measured by its budget, is increasing. We are spending more and getting less, and — unless present trends are reversed — this will continue for years. It threatens the end of government as we know it.
The cause is no mystery. An aging population and higher health spending automatically increase budget outlays, which induce the president and Congress to curb spending on almost everything else, from defense to food stamps. Over the next decade, all the government’s projected program growth stems from Social Security and health care, including the Affordable Care Act. By 2024, everything else will represent only 7.4 percent of national income (gross domestic product), the lowest sharesince at least 1940, says Douglas Elmendorf, head of the Congressional Budget Office.
This is the central budget story, and it’s largely missed — or ignored — by political leaders, the media, political scientists and the public. The welfare state is taking over government. It’s strangling government’s ability to respond to other national problems and priorities, because the constituencies for welfare benefits, led by Social Security’s 57 million, are more numerous and powerful than their competitors for federal support. Politicians of both parties are loath to challenge these large, expectant and generally sympathetic groups.
The United States, of course, is not the only advanced society grappling with aging, but it is extreme in its stubborn denial of the obvious. The Pew Research Center recently polled people in 21 countries about whether aging is a problem. The United States ranked 19th in its unconcern, ahead of only Indonesia and Egypt, whose populations are young. Only 26 percent of Americans thought aging was a problem. The share was 87 percent in Japan, 55 percent in Germany and 45 percent in France. (more…)
Before Obamacare, before individual mandates, before exchanges, there was Medicaid. Started in 1965 under President Johnson as part of his War on Poverty, Medicaid extended health insurance coverage to low-income Americans.
Today, Medicaid is the largest publicly funded insurance program in the country. It serves low-income families, the elderly, and disabled. One In five Americans is on Medicaid, more than one-third of the births in the United States are covered by Medicaid, and one-fourth of U.S. children get health care through Medicaid.
Medicaid covers one in nine North Carolinians — 1.6 million of us — and 51 percent of births are covered by Medicaid, the sixth-highest rate in the nation.
Medicaid is funded jointly by the state and federal governments. North Carolina’s share of the program is about $3 billion, while total Medicaid spending in N.C. is closer to $14 billion.
Medicaid spending has grown 90 percent over the last decade and is the fastest-growing part of our state budget, with spending rising by 15 percent in 2011-12; 16.8 percent in
2012-13; and a projected 17.2 percent in 2014-15.
North Carolina’s Medicaid costs are the highest in the South and among the highest in the nation. We have more people enrolled and spend more per patient than neighboring states. Twenty-five percent of the state’s primary care physicians aren’t accepting new Medicaid patients, limiting access, reducing health outcomes for patients, and driving up costs.
Uncontrolled expenses result in consistent budget overruns. Just this year, legislators faced a $400 million shortfall. Since Medicaid is a federal entitlement program, it has to be funded before anything else. Medicaid is the biggest driver of state budget decisions, crowding out other priorities. (more…)
Thanks to Laura Gutman for sharing her letter to the editor to the Herald Sun newspaper of Durham, North Carolina. Nancy
Letters to the editor
Oct. 07, 2013
Shabby treatment of veterans
Soldiers who were 17 at the end of World War II (1945) would now be 85, and would be the youngest veterans of that war. Other survivors are now older, often sick, and with a short life expectancy. Veterans have been traveling to D.C. as part of Honor Flights, a program that enables WW2 veterans to have an expense-paid trip to the World War II memorial that they themselves made possible. The memorial is outdoors and stunningly beautiful.
National parks were closed for the 10/1 shutdown. The House Republicans, who are honoring campaign commitments to voters to delay and defund Obamacare, had passed a bill funding national parks, which the Senate refused. Expecting Honor Flights from their districts, Congressman Palazzo and others requested repeatedly, including to the President, that the WW2 Memorial be made available,. Requests were refused, and the entrance blocked.
The House has passed over five bills to fund specific components of the government including NIH cancer programs for children. The House has passed three bills fully to fund all aspects of the government with the exception of Obamacare, also all refused. The Democrat Senate is preferring to inflict maximal pain on our citizens, including elderly veterans of the Greatest Generation, rather than allow the government to function.
The Senate is trying to protect an unpopular bill so dysfunctional that the sign-up site has been withdrawn. It is using shabby treatment of veterans as a tool. I urge readers to express support for our veterans despite Senate manipulations.
