Ask a D.C. insider what’s the best way to solve the debt crisis. Nine times out of ten, they’ll recommend taking on more debt. That’s how things operate in the Potomac swamp. Up is down, right is left, digging yourself into more debt is the best way to get out of it. But it wasn’t always like this. In fact, there used to be common sense when it came to the economy. So where did it all go wrong?
Politicians talk about the uninsured. Special interests argue on behalf of those with pre-existing conditions. But why is no one wondering how doctors are affected by the new law? They’re the ones on the frontlines dealing directly with new patients, as well as the red tape that makes bureaucracies go round.
Politicians proclaim the benefits of small business while on the campaign trail. But when they meet in the seedy halls of Congress, they have no problem doing whatever they can to stifle, regulate, and subdue their progress. Instead of siding with entrepreneurs, these politicians often side with political allies and cronies that helped put them into office.
Just because you’re retired doesn’t mean you have to stop working. Especially now that you have all the time in the world to do what you really want. Entrepreneurs don’t only come out of Silicon Valley. They come from all walks of life, from all different ages. If you’re retired and want to stay active while you relax, then find out the steps you need to take in order to start, manage, and grow your next small business.
Technology brought the world together. But has it gone too far? Decades ago, mail was delivered by hand. Now it’s delivered in seconds. How has that changed the way you live your life? How has it changed the way people act with each other? These are just some of the questions we need to ask.
The U.S. dollar has been the world's reserve currency for almost a century, and already there are signs it may be in decline. But that doesn't mean it's not still valuable. On the contrary... As Chris Mayer explains, there are many reasons the U.S. dollar will remain relevant on the world stage for years to come. Read on...
Gun control isn’t a modern idea. The rise of gun control laws and limits on your 2nd Amendment freedom go hand in hand with the increase in the size and scope of government. Politicians want you to think the only people who can keep you safe are government forces. But as one renown libertarian economist and thinker will show you, their misguided laws do nothing but take away your freedoms and leave you less safe.
The government will do whatever it takes to make sure it has enough of your money to fund itself. On the surface you might think that means enduring a grueling audit. But the IRS and the government is more than willing to ignore your privacy in the cold relentless pursuit of the money they think they deserve. As they get bigger and bigger every year, the smaller and smaller your paycheck becomes as they leach off it.
The Congressional Budget Office said the government needed to reach 7 million people by the end of March. They claim to have reached the goal and now the debate about Obamacare is over. But what does this milestone really mean in the ongoing healthcare discussion? And more importantly, how will it affect reforms going forward?
If you’re good at something should you be penalized so others have a chance at success? Should award winning actors and actresses be barred from future Oscar ceremonies to give other men and women the chance to succeed? Success should always be rewarded and encouraged. But what happens when you have a government that wants to even the playing field and take away the spoils of success. Gregory Bresiger finds out...
In an effort to cut costs and keep track of patients' records, governments could institute a medical guideline cookbook. Bureaucrats might think they have the best of intentions in mind, but these new rules would drag down the medical process and destroy whatever quality is left in our current system.
Practical people often pooh-pooh fiction reading as a time wasting dalliance, dominated by a Marxist coloring of the world. However, fiction readers were given a scientific reason recently for spending hours absorbing fanciful figments of someone’s imagination.
Argentina is suffering the ravages of government debasement of the currency -- i.e., inflation, the process by which government pays for its ever-increasing debts and bills by simply printing more paper currency. The expanded money supply results in a lower value of everyone’s money, which is reflected in the rising prices of the things that money buys.
When government expansion is allowed to continue unabated or when it casts a heavy regulatory shadow on America’s entrepreneurial spirit, the freedoms that we’ve come to know, and perhaps take for granted, slowly begin to slip away.
The saga of All Saints could soon be coming to a community near you. Thanks partly to the scandal surrounding the IRS’ targeting of conservative groups, the agency has proposed a new set of rules for a huge number of social-welfare groups that claim tax exemption under Section 501(c)4 of the tax code.
The new reality of Obamacare’s tax credits has left finance reporters to pen articles warning readers to “take care” when considering a tax credit and providing strategies for how best to “protect yourself.” So what do finance reporters know that the White House doesn’t?
Nihilo ex nihilo fit. Out of nothing, nothing comes. First put forward by ancient Greek philosopher Parmenides in the fifth century B.C., Thomas Aquinas and St. Augustine later used this axiom to prove that the universe needed a “first mover” to get things going. Even if the whole thing began with some kind of “Big Bang” moment, it still needed a banger to bang it. Who? God, of course.
What positive steps can we take? The energy that is now expended by well intentioned, freedom-seeking individuals on the destructive course of politics can be turned into powerful steps that will have a positive effect on the future. All are moral, right and just. None require aggressing. Consider the following...
The Affordable Care Act creates a new health insurance marketplace (the exchange). But because of the great uncertainty about what buyers will enter the market and who will buy what product, the law creates three vehicles to reduce insurance company risk.
Politicians and bureaucrats are notorious for manufacturing euphemisms -- clever but deceptive substitutes for what they really mean but don’t want to admit. That’s how the phrase “revenue enhancement” entered the vocabulary. Some of our courageous friends in government couldn’t bring themselves to say “tax hike.”
“It is difficult to make predictions, especially about the future,” says a proverb often attributed to Yogi Berra. Imagine the world of freedom, or lack of it. Who could foresee the technologies that make our lives so rewarding and convenient? The same technologies have us all under the government’s giant microscope. Thankfully, the brave have turned the microscope around.
In the months since Edward Snowden revealed the nature and extent of the spying that the National Security Agency (NSA) has been perpetrating upon Americans and foreigners, some of the NSA's most troublesome behavior has not been a part of the public debate.
National Treasury Union President Colleen M. Kelly recently described the 2014 IRS budget allocation as “woefully inadequate.” But the agency has not proven itself to be an efficient steward of taxpayer dollars. Here are ten ways the IRS lost the trust of the American people.
It’s easy to be negative about the U.S. economy these days. Find a glint of silver, and folks come running to point out all of the dark clouds looming about. This, of course, is what we got last week when the monthly jobs report was released from the U.S. Department of Labor (DOL). Folks pooh-poohed the number of jobs and whining that they’re not enough or that it’s less than a bunch of economists thought that it might be. But you know what? Stuff ’em.
Given how poorly states like California and Illinois have funded the pension funds for their own employees, one would think that this would stop dead in its tracks any plan to have the government assist in managing private sector funds too. The spate of recent activity, however, suggests otherwise.
Facts are easy. You can check facts. What supporters of the Affordable Care Act are doing, on the other hand, transcends factual bungling. It’s far more advanced: a warping of reality so debauched it looks like something out of a tale by H.P. Lovecraft.
The problem for NSA apologist is that when guys like Snowden disclose that the government conducts comprehensive surveillance in ways that would have made 1984’s O’Brien drool, it puts the entire progressive agenda in jeopardy.
A huge pool of money lies just beyond the grasp of government’s itching fingers: private pension funds. Various money-grab schemes have been floated, including a legal requirement that all private pension funds contain a set percentage of Treasury bonds. The most innovative scheme comes from California, which is attempting to do an end run around the most powerful obstacle to a government grab: namely, backlash from existing pension holders.
What is Bill 1234?
California Senate Bill 1234 creates America’s first state-sponsored and state-managed retirement program for private-sector workers. Because the scheme creates new pensions for nonunion workers, however, it escapes the wrath of private unions and powerful corporations who would rebel if government grabbed at existing plans. The bill has already been signed by California Gov. Jerry Brown.
The new system addresses private employers with five or more workers who are not already covered by an employer-sponsored pension plan. Such employers must arrange for an automatic deposit of 3% of the income of “eligible employees” into a government-run retirement plan.
Employers can also make additional deposits on behalf of employees in much the same manner as matching 401(k) contributions. An “eligible employee” is defined as any worker who does not go through the process and paperwork to opt out of the retirement arrangement. Otherwise, the employee is opted in. Over 6.3 million California workers are expected to be eligible.
(Note: The bill allows employers to set up private pensions as an alternative, but this would be costly. Private-sector retirement plans are regulated by the federal Employee Retirement Income Security Act, or ERISA. This subjects employers to strict standards, complicated reporting requirements, and significant penalties. Small employers are highly unlikely to implement the private alternative.)
The new retirement plan will be administered by a board headed by the state treasurer, and it will select either a private investment firm or the state’s public pension system, California Public Employees’ Retirement System (CalPERS), to maintain and manage the new funds.
(Newspapers and other accounts seem to take it for granted as a default position that CalPERS will be at the helm.) The scheme is estimated to add $6.6 billion in the first year to the state funds managed by CalPERS, which is already the biggest U.S. pension fund, with 1.6 million public employees and $233 billion in assets at the end of fiscal 2012.
Why Bill 1234?
CalPERS is in fiscal death throes. Writing in opposition to Bill 1234, state Sen. Mimi Walters declared, “California has amassed a terrible track record when it comes to maintaining its public pension systems; the systems are currently a combined $240-500 billion in debt.” The two paths out of the dilemma are a steady and solid return from investments or a raw infusion of cash. CalPERS returned only 1% on investments last fiscal year. Bill 1234 accomplishes the raw infusion alternative in at least two ways:
1) A category of investment explicitly permitted by the bill is “United States government and government-sponsored entity debt obligations.” The government can use the pension funds to purchase its own debt.
2) 3% of the income of approximately 6.6 million private-sector workers will be suddenly under its management.
Walters noted that the infused money might go directly to public employees because “those public employees are obligated [by law] to be paid first from the pool of investment dollars.” She concluded, “SB 1234 looks like nothing more than a cynical effort to prop up the floundering public employee pension debt with new funds from private investors, sent in by employers who are forced to participate under penalty of law.”
The Patina of Bureaucratic Reassurance
Proponents of Bill 1234 offer reassurance to the skeptical.
The employee enrollment is voluntary, apologists say. And it is true that the automatic enrollment has an opt-out feature… for the moment. But as executive director of the government-watchdog California Common Sense Autumn Carter observes, “Opting out of state-run programs is notoriously difficult and bureaucratic.”
Bloomberg estimates the average income of the new pension “subscribers” at $46,420 and Carter guesses “that many at that income level would want to recapture the automatic $1,400 annual paycheck deduction, but for whatever reason, they will not attempt to do so.” While the bill’s author says the private pensions set up by SB 1234 are voluntary, the bill’s language states that private sector employers “must opt out.”
Moreover, employees must opt out every two years. The bill reads that “at least once every two years, participating employers shall designate an open enrollment period during which eligible employees that previously opted out of the program shall be enrolled in the program unless the employee again elects to opt out…”
The additional employer deposits are voluntary, apologists state. And it is true, they are… for the moment. But the eerily accurate investment adviser Michael Shedlock insists, I “don’t buy it. This would be the first step toward mandated involuntary contributions.” Government programs begin with whatever measures the public will accept, and then they grow from there.
The new retirement accounts will not necessarily be managed by CalPERS, apologists observe. CalPERS will bid against private firms for the asset management, with the state treasurer overseeing the process. In the unlikely event that CalPERS does not become the manager, however, the state of California will still have legal authority over the funds. Bill 1234 creates the California Secure Choice Retirement Savings Trust, which will be administered by the California Secure Choice Retirement Savings Investment Board. Bureaucrats will be in charge.
New retirement accounts will be maintained and managed separately from the CalPERS ones, they vow. Frank Keegan, the editor of Statebudgetsolutions.org, responds, “Anyone who believes this money… will be left sequestered should check how well that promise was kept for Social Security.”
Only one barrier to the implementation of Bill 1234 remains. The bill as it stands may not meet the requirements of the IRS or of the Employee Retirement Income Security Act of 1974. And so another bureaucratic board has been established to determine compliance.
Bill 1234 will not prop up the public employee pension for more than a flicker of time. CalPERS is a Ponzi scheme — a scam that returns money to older investors only by acquiring new ones. Private Ponzi schemes have relatively short life spans, after which the perpetrators are fined or jailed. Public Ponzi schemes are longer lived because laws can force more and more new people into “investing.” But after the Ponzi that is CalPERS goes bust, the bureaucrats will collect their protected pensions and go home.
Bill 1234 may well make California go bust sooner, rather than later. The infusion of cash depends upon the continuing existence of small businesses. Shedlock captured well the impact the bill would have on that sector:
1. Immediate large-scale firings by small businesses. No small business owner in his right mind would have over 4 employees.
2. Any business that could would leave the state.
3. Many businesses that do stay would be destined to go bankrupt.
4. California would end up like Detroit or Greece.
The most ominous aspect of this shortsighted money grab? California is a trendsetter not merely in fashion, but also in politics.