Friday, January 18, 2013
Random ruminations from your resident curmudgeon...
There is a concept in economics called "friction costs". These are costs not directly associated with producing a product or service. Friction costs are things such as regulatory costs, the cost of complying with government regulations and reporting requirements. These costs are not part of the manufacturing process or the cost of providing a service, yet businesses must pay them. And this means that those costs are passed on to you and me. How bad are the regulatory or friction costs imposed by the government? They are horrific. According to the American Action Forum (AAF), led by former Congressional Budget Office Director Douglas Holtz-Eakin, American business spent 87 million man hours completing regulatory paperwork at a cost of $236.7 billion in 2012. The total in new regulatory costs after the first term of the Obama presidency is $518 billion according to AAF. These regulatory costs are a drag on businesses and further strain an anemic economic recovery. The intrusiveness and over-reach of government has a lot of consequences, not the least of which is the economic drain on society. It is time to realize that government regulations exact a significant financial toll on our economy, and it is a price that you and I pay.
Men say women should come with instructions, but what is the point? Have you ever seen a man read the instructions on anything?
Here are some numbers that are mind boggling: Since President Obama took office, our economy has created 2.5 million jobs. During that same time frame, 5.9 million new people have been added to the roles of Social Security Disability Income (SSDI) recipients. According to the Social Security Administration, 10.9 million people, the highest number ever, are receiving SSDI. A record 1 in 14 workers now receives disability benefits. And once a worker goes onto SSDI, they rarely leave. In 2011 36% of the recipients died while receiving benefits; 52% reached retirement age and moved over to receiving social security retirement benefits; 6% returned to work; and 3.6% left the program because of an improved medical condition. According to the Congressional Research Service, SSDI cost the American taxpayers $128.9 billion in 2011 and the program operated at a deficit of $25.3 billion. This program is funded by a 1.8% payroll tax on all workers and comprises 18% of all social security spending. CRS estimates that at the current rate of growth and expenditure, the SSDI trust fund will be totally depleted by 2015. While the program has served a legitimate purpose, the explosive growth in the last four years is indicative of a program that has been manipulated for the gain of some at taxpayer expense. When Washington talks about raising your taxes, keep in mind the growth and spending in programs like SSDI.
I have been reading a book on anti-gravity. I can't put it down.
As we debate and argue about the fiscal direction of our country, I want to point out some figures that may cut through the confusing array of numbers and statistics. In 1935, our nation transferred 3% of our GDP to social programs that served as a safety net for those that were less fortunate. As of 2011, that number has grown to 20% of GDP. 65% of all federal spending in 2011 was for payments to individuals under some form of federal program. That is up from 21% in 1955. As we debate taxes and the economic direction of this country, we will need to honestly discuss the explosive growth of the array of entitlement programs. As the item above points out, we can do nothing and the programs will go broke. Quickly. Or we can begin to honestly assess these programs and make them viable. But demogoguing and misrepresenting the facts about the financial weakness of these programs for political purposes does no one any good. And it will make the solutions much more painful if we continue to do so.
I went into a general store once, but they wouldn't let me buy anything specifically.
And that, my friends, is my view.