Cut, Cap, and Kill

“The Cut, Cap and Balance plan that the House will vote on next week is a solid plan for moving forward. Let’s get through that vote, and then we’ll make decisions about what will come after.”

— John Boehner, July 15, 2011

“Next week” is here. 

Tomorrow, Republicans in the House of Representatives will vote on and pass HR 2560, The Cut, Cap, and Balance Act of 2011, the latest gimmick the GOP has concocted to keep its attack on the New Deal and the Great Society alive and well.

Now, no one seriously believes this bill will come within a Limbaugh butt cheek of passing. After all, the bill,

Requires the passage of a Balanced Budget Amendment before raising the nation’s debt limit.

As they say out here in the hinterlands, that aint gonna happen.

So, while the country is begging for something to be done about jobs, the House is taking up valuable legislating time with this nonsense.  Why?  

The conventional wisdom has it that the futile vote is designed  to give hard-headed teapartiers in the House a political reach-around, to eventually soften them up so GOP leadership can push through the Mitch McConnell compromise on the debt ceiling increase.  Republican leadership is hearing from the business community and Wall Street about the calamitous effects of defaulting, and they are listening.

But I believe there is more going on here than giving the Ozark Billy Long’s in the House a feel-good day in D.C.  It is also about selling this dangerous elixir to the public in 2012.

The Cut, Cap, and Balance Act is barely dry behind the legislation ears. It was dreamed up in June of this year by the Republican Study Committee, which its website describes as:

…a group of over 175 House Republicans organized for the purpose of advancing a conservative social and economic agenda in the House of Representatives. The Republican Study Committee is dedicated to a limited and Constitutional role for the federal government, a strong national defense, the protection of individual and property rights, and the preservation of traditional family values.

In other words, the RSC is the voice of the Tea Party extremists in the House.  Area members include, of course, Missouri Representatives Billy Long and Vicki Hartzler, as well as Kansas Rep. Lynn Jenkins and Arkansas Rep. Steve Womack.

The basis for the RSC’s adoption of the draconian Cut, Cap, and Balance Act seems to be the conviction that the public supports the idea. I extracted the following from a summary of the bill I found on the RSC’s website:

In an On Message, Inc. survey of 1,000 likely voters nationwide, large majorities support: 

Cutting next year’s deficit in half through spending cuts. (Favored 69%-20%) 

Capping federal spending to no more than 18% of GDP. (Favored 66%-17%) 

A Balanced Budget Amendment to the Constitution. (Favored 81%-13%) 

The survey also found that Americans support a supermajority requirement to raise taxes (Favored 60%-30%).

Thus, the Cut, Cap, and Balance Act was designed to and would essentially do all those things, were it to become law.  

Now, the “survey” conducted by On Message, Inc –a campaign consultant firm that specializes in electing Tea Party Republicans—is what it is, whatever it is. But there can be no doubt that there is considerable angst among the hoi polloi regarding our debt situation. That’s understandable, given all that Republicans, using consultants like On Message, have done to scare the public.

And having sufficiently scared the public, conservative Republicans sense it is time to mount their final assault on Big Government, using, oddly enough, the public to justify and support its dirty work, a public that benefits in so many ways from the size of our government, as a lot of folks in Joplin have discovered recently.

It is true that the Cut, Cap, and Balance Act technically exempts Social Security and Medicare (but not Medicaid) from budget cuts—which is how the bill is being sold—but as the Center on Budget and Policy Priorities points out,

The legislation would inexorably subject Social Security and Medicare to deep reductions.

The reason it would is that the massive cuts in other parts of the budget necessary to meet mandatory spending caps would cripple “key government functions.” Thus, politicians would have to make cuts to Medicare and Social Security to keep those other key government functions alive.

But more important for those most vulnerable in our society is this, from CBPP:

Adding to the extreme nature of the measure, the legislation also reverses a feature of every law of the past quarter-century that has contained a fiscal target or standard enforced by across-the-board cuts.  Since the Gramm-Rudman-Hollings law of 1985, all such laws have exempted the core basic assistance programs for the poorest Americans from such across-the-board cuts.  “Cut, Cap, and Balance,” by contrast, specifically subjects all such programs to across-the-board cuts if its spending caps would be exceeded.

It is an ingenious scheme, the Cut, Cap, and Balance Act. It uses the considerable debt-angst Republicans have ginned up to accomplish something that conservatives have yearned for since November of 1980, when the radical Ronald Reagan was first elected. 

The Act’s mandatory caps and the supermajority provision to prevent tax increases, especially on the wealthy, would essentially shrink government to a size small enough that Grover Norquist could indeed drown it, and the poor and the working class, in his bathtub.

And despite the fact the Act is doomed to fail this year, Republicans intend on using it as a bludgeon to pummel Democrats next year, as the GOP attempts once again to convince anxious Americans to vote against their own economic interests and elect representatives of the moneyed class.

More than anything, that’s what the vote tomorrow is about.

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23 Comments

  1. An interesting discussion here, Duane. Thanks for your work – I look forward to any other comments on it.

    The current disease (malaise is too mild a word) will require strong medicine that will be very painful to the body politic. I see the rancor and turmoil in both parties as symptomatic of this. Neither wants to offend their constituents. In fact, I would predict that even many of the Tea Party constituents would have second thoughts their fixes became reality. All this stuff, including the Balanced Budget Amendment, is in my opinion just avoiding fixing the underlying causes, as I have posted before:

    http://jwheeler59.wordpress.com/2011/06/14/the-elusive-palace-of-wisdom/

    I’m thinking the system will have to break before it can be fixed. There ain’t enough duct tape in the world to mend it. :cry:

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  2. “Cutting next year’s deficit in half through spending cuts. (Favored 69%-20%)

    Capping federal spending to no more than 18% of GDP. (Favored 66%-17%)

    A Balanced Budget Amendment to the Constitution. (Favored 81%-13%)

    The survey also found that Americans support a supermajority requirement to raise taxes (Favored 60%-30%).”

    I guess the RSC must have missed this recent Pew Research Center Poll released on July 7th.

    “Poll:

    Social Security: Good for the country says 87%, Bad for the country 11%, Don’t know 2%.

    Medicare: Good for the country 88%, Bad for the country 10%, Don’t know 2%.

    Medicaid: Good for the country 77%, Bad for the country 20%, Don’t know 4%.

    As policymakers at the state and national level struggle with rising entitlement costs, overwhelming numbers of Americans agree that, over the years, Social Security, Medicare and Medicaid have been good for the country.”

    In short, Americans are willing to look at fixes that in no way cause harm to the above entitlements. Statistically those numbers above include virtually all Democrats, Independents and more than half of all republican registered voters. I have to believe that republican representatives are not so stupid as to believe their own doctored numbers.

    http://people-press.org/2011/07/07/public-wants-changes-in-entitlements-not-change-in-benefits/

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  3. ansonburlingame

     /  July 18, 2011

    Duane,

    I posted “This is a Big Week” before you posted the above. Glad I did so as I would have spent all my time arguing with you.

    Here however is my bottom line on this whole mess, cap, cut and balance, being only a part (that will be defeated for sure) of the problem. I posted the below as a comment to a reader on my own blog:

    “The really SAD part of all of this is the continued stalemate. Since we all stopped arguing over Obamacare as it was being debated, we have been on the topic, by and large, of deficit spending.

    God only knows what will happen if the Supreme Court does not rule Obamacare unconstitutional. I hear but do not know for sure, that we have about a $1.3 Trillion increase in spending driven by Obamacare alone in 2013. Is that a FACT, I wonder?

    We had a voter referendum in 2010 and NOTHING of substance has changed. We simply have stalemate by majority (in the House) instead of stalemate by filibuster in the Senate, now.

    Does anyone really believe such a stalemate will be broken in 2012? I don’t. At a minimum we will return to a stalemate by filibuster in the Senate, except now from the other side, even if Reps sweep, again, the next election.”

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  4. Randy

     /  July 18, 2011

    Duane, I’d love to hear your analyses of this article:

    http://www.rove.com/articles/327

    Seems spot on to me, but I am open to other perspectives.

    randy

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  5. ansonburlingame

     /  July 18, 2011

    HLG,

    You wrote something with which I agree, whole heartedly. You said, “In short, Americans are willing to look at fixes that in no way cause harm to the above entitlements. Statistically those numbers above include virtually all Democrats, Independents and more than half of all republican registered voters.”

    THAT is really the problem. Americans want their cake and eat it also, by and large.

    Most would agree that we cannot balance the budget without changing, fairly drastically, Medicare and SS over the long haul (or short haul on Aug 2nd!!!). But NO ONE wants to do it.

    So there we are, stalemated between “wants” and ability to pay for those wants. And don’t you dare tell me taxing the “rich” makes those problems goes away, all in one fell swoop!!! $70 Billion per year is a drop in THAT bucket and you know it.

    Now go reread the above comment from yours truly.

    Anson

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  6. The reality is as simple as this, there can be no fix on the backs of America’s people, and those entitlements are here to stay. So we have to deal with it from that perspective instead of looking for “pie in the sky” solutions.

    You stated in another post in another blog that you believed that President Johnson was the first to borrow from the Social Security trust fund, but that’s not what happened. The Social Security trust fund didn’t even exist until 1983. It was put into place out of a growing concern that it would become insolvent when “baby boomers” began to retire which would see more money paid out than was coming in. In 1981 the congress and President Reagan appointed the National commission on Social Security reform, headed by Alan Greenspan.

    “The changes to federal law enacted in 1983 pursuant to the recommendations of the Greenspan Commission merely advanced the time frame for previously scheduled payroll tax increases (though it raised slightly the payroll tax for the self-employed to equal the employer-employee rate), changed certain benefit calculations, and raised the retirement age to 67 by the year 2027.[7] As of the end of calendar year 2010, the accumulated surplus stood at just over $2.6 trillion.”

    The plan was simple. If the government had a Social Security surplus then they could dip into it to make up the difference in funding not met by payroll taxes. Reagan was the first president to dip into the trust fund but Bush 1, Clinton, Bush 2, and now Obama have all had their hands in the till. The problem is that without the trust fund the government can’t make up the difference in payroll taxes and Social Security payouts. The republicans want to get rid of SS altogether so that the debt would be effectively erased as means to reduce pressure on our current national debt. The other solution is to increase payroll taxes to cover the difference.

    So let’s get this into perspective. We were asked by our government to pay higher payroll taxes as a means to create a trust fund. The government then borrowed it all in the form of IOU’s to eliminate the need to borrow from foreign sources. Since the money is only there on paper that difference has to be made up. The government’s solution is to either get rid of Social Security, increase retirement age and or reduce benefits, or to increase payroll taxes to pay back the previous taxes that we’ve already paid. In the end Reagan who didn’t like taxes found a loophole to tax us with a smile and started feeding frenzy that is still “drawing the hogs to the trough.”

    http://en.wikipedia.org/wiki/Social_Security_Trust_Fund

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    • HL, you said,

      You stated in another post in another blog that you believed that President Johnson was the first to borrow from the Social Security trust fund, but that’s not what happened.

      I am not sure to whom you were addressing this, but the impression may have come from my post, The Blame Game, link:

      http://jwheeler59.wordpress.com/2011/07/15/the-blame-game/

      In that post I referenced columnist Dan K Thomasson, who said,

      Not to give LBJ too much credit here, he also initiated the policy of counting Social Security Trust funds as part of the revenue stream and a hedge against excessive debt.

      I am unsure of the distinction here, but it seems that LBJ did fiddle with the accounting and planted a bad seed. Do you agree?

      Jim

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      • hlgaskins

         /  July 20, 2011

        Jim

        Sorry for making things confusing and it wasn’t my intention to criticize your post. I probably confused context in my use of “Trust Fund.”

        This is a rather long article from a rather outspoken economist who freely criticizes both democrats and republicans. I’ll add some quotes then a link.

        “For the past 25 years, crooked politicians, from both political parties, have been violating the public trust, and federal law, by diverting money, collected exclusively for Social Security, to the general fund and using it for tax cuts, wars, and other government programs. A total of $2.6 trillion of surplus Social Security revenue, which was earmarked specifically for paying benefits to baby boomers, has been spent for general government operations. The money was replaced with government IOUs, which are not marketable, have no monetary value, and cannot be used to pay benefits.”

        ‘The United States of America had been gradually heading toward economic crises for a full quarter-century, ever since Ronald Reagan abandoned traditional economic policies in 1981 and launched the nation in a dangerous new direction.”

        “Essentially, Reagan switched the federal government from what he critically called, a “tax and spend” policy, to a “borrow and spend” policy, where the government continued its heavy spending, but used borrowed money instead of tax revenue to pay the bills. “

        “The 1983 payroll tax hike has generated approximately $2.5 trillion in surplus Social Security revenue which is supposed to be in the trust fund for use in paying for the retirement benefits of the baby boomers. But the trust fund is empty! It contains no real assets.”

        “But that is exactly what Reagan did, with the help of Alan Greenspan. Consider the following sequence of events:

        1) President Reagan appointed Greenspan as chairman of the 1982 National Commission on Social Security Reform (aka The Greenspan Commission)

        2) The Greenspan Commission recommended a major payroll tax hike to generate Social Security surpluses for the next 30 years, in order to build up a large reserve in the trust fund that could be drawn down during the years after Social Security began running deficits.

        3) The 1983 Social Security amendments enacted hefty increases in the payroll tax in order to generate large future surpluses.

        4) As soon as the first surpluses began to role in, in 1985, the money was put into the general revenue fund and spent on other government programs. None of the surplus was saved or invested in anything. The surplus Social Security revenue, that was paid by working Americans, was used to replace the lost revenue from Reagan’s big income tax cuts that went primarily to the rich. “

        http://www.thebiglie.net/

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  7. ansonburlingame

     /  July 18, 2011

    HLG,

    You usually avoid my “big” points and go for specifics as you did above with an argument over who started and when the SS trust fund. I don’t really care who did so or when. The fact of the matter is that for a long time I (mistakenly) thought we had a trust fund based on political assurances.

    But I jumped all over your first paragraph while then trying to read all the rest. You said “there can be no fix on the backs of America’s people” meaning no fix for entitlements for “America’s people”.

    Did you really mean America’s POOR or NEEDY people?

    And now we are trying to preserve those entitlements, entitlements that I support IF WE COULD PAY FOR THEM (which we cannot with any conceivable level of taxation alone).

    We the people “want” those entitlements but cannot pay for them.

    So what must “give” in the long term I ask? Remember, just like the tides, economic forces are ultimately not controlled by men. WSTMM is one of them.

    Anson

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  8. Randy

    “Duane, I’d love to hear your analyses of this article:

    I know I’m not Duane but I can answer that question in one sentence. Karl Rove is an amoral bald-faced-liar that even when he appears to be telling the truth (which he does so rarely), he still can’t be trusted.

    http://www.rove.com/articles/327

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  9. ansonburlingame

     /  July 18, 2011

    HLG or anyone else,

    HLG seems to tacitly agree with me that WSTMM. He even supports, it seems the President’s call for a reduction in spending of 75% (or maybe 70%) and tax increases of 25% (or maybe 30%) as a solution. Or did I misread those comments HLG?

    Great. Let’s work together and come up with the specific cuts and taxs need to reach those goals and zero the budget or bring it down to a “sustainable” level. You define “sustainable” at least for starters and tell me when we must be there?

    Recall I tried to do this about six months ago to increases taxes and cut spending by 50% EACH to get control of deficit spending. NO LIBERAL, not a single one even tried to meet that challenge. I forget all the reasons why they chose not to attempt such a feat of fiscal maneuvering but refuse to try it, they did, outright.

    Are you up to this challenge HLG. Put up or …..

    Anson

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  10. ansonburlingame

     /  July 18, 2011

    HLG,

    I will even give you a “freebie”. You raise Medicare and SS tax withholdings and Medicare premiums on those over 65 to whatever level you choose. Double them, triple them, do all you like to bring Medicare and SS to the maximum level of taxation for those two programs alone that you believe is possible. Then tell me the sustainable annual funding year to year based on such taxes. I won’t argue.

    But then I get to cut benefits and/or age at which benefits become available AND means test your programs as well to achieve your funding goals through taxation alone.

    That would be a big “whack” would it not. So let’s get out our calculators, go into our own corners and have at it.

    Anson

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  11. “You usually avoid my “big” points and go for specifics as you did above with an argument over who started and when the SS trust fund. I don’t really care who did so or when. The fact of the matter is that for a long time I (mistakenly) thought we had a trust fund based on political assurances.”

    The post above didn’t just focus on who started the trust fund but who also began dipping into it. Borrowing from the trust fund is not new information. Al Gore made it one of his priorities in the 2000 presidential campaign when he discussed keeping the funds in a “lock box.”

    “Did you really mean America’s POOR or NEEDY people?”

    Everyone who’s paid into it because the poor are the only needy. Greater than 40% of our retirees would become impoverished without Social Security and bereft of hope without Medicare.

    “And now we are trying to preserve those entitlements, entitlements that I support IF WE COULD PAY FOR THEM (which we cannot with any conceivable level of taxation alone).”

    If your had read more carefully through my last post you would have noted that we’ve already paid for them, and now we might be asked to pay for them again.

    The real solution isn’t in destroying programs that our people need. The real solution in my view is better management such as getting rid of private health insurance, creating single payer system, get everyone covered, and redirect all funds currently funding healthcare to since administrative body.

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  12. ansonburlingame

     /  July 18, 2011

    Duane,

    Pardon me for dominating these comment for now but I am trying to get HLG into a corner, which he tries with me all the time.

    Here is another freebie, HLG.

    REMOVE THE CAP on SS withholdings for anyone. Whether one makes $10 an hour or $10 Million a year is not the point. All earnings from “working” should be taxed to support both Medicare and SS, all of it. That is FAIR is it not? I would also include stock options and bonuses in such withholdings each year.

    Wonder how much that alone would “save us” in deficit spending. I’ll let you do the math but I will check your figures, for sure.

    anson

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  13. “HLG seems to tacitly agree with me that WSTMM. He even supports, it seems the President’s call for a reduction in spending of 75% (or maybe 70%) and tax increases of 25% (or maybe 30%) as a solution. Or did I misread those comments HLG?”

    What I said was that I liked your 70%:30% to Obama’s 75%:25% since yours asked for fewer cuts and more in taxes.

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  14. “Pardon me for dominating these comment for now but I am trying to get HLG into a corner, which he tries with me all the time.”

    If it helps, I just let you “paint yourself into a corner.” Have fun with trying to get me “into a corner,” I know I am.

    “REMOVE THE CAP on SS withholdings for anyone. Whether one makes $10 an hour or $10 Million a year is not the point.”

    Since I’m in a somewhat higher income bracket I would be willing to pay a little more. The upper income CAP of $102,000 should be reviewed. That would place the largest share of the burden on those that are in the upper 15% of wage earners. I feel a personal obligation to our country and people, and so should we all by giving what we can afford.

    “All earnings from “working” should be taxed to support both Medicare and SS, all of it.”

    Lower class workers don’t make enough money to take on any more taxes. They may not be major financial contributors to Medicare and SS directly, but indirectly they give their bodies and lives to keep our economy going, and our wars fought. That’s a physical tax that those of us in higher income brackets don’t want to pay, but we can pay with our earnings.

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  15. ansonburlingame

     /  July 19, 2011

    to everyone,

    I rest my case with HLG. He obviously does not want to get down to real numbers to debate the issue. He wants to stay generic over the “big picture”. The President is doing exactly the same thing.

    for example, tax the “rich” seems to be to only remove the Bush tax cuts for the rich. Poor people cannot afford any more taxes but they give their body and soul to the country. OMG.

    I am one of the 40% that would be in a world of hurt without Medicare and SS today. So why am I so “dumb” to call for cuts would seem to be the question. Well for “today” I don’t call for cuts but do call for means testing right now. Cuts to the basic programs or making them more responsive to forcing patients to “have some skin in the game” is for later generations that have time to plan for such changes.

    How about this one. Go ahead and raise taxes BUT make it the LAW that such revenue increases ONLY go to paying down the deficit with NO NEW programs implemented, period, until the deficit reaches zero and stays there.

    Bet you won’t take that one either, any of you liberals.

    Finally, as posted in a blog, I doubt that the Emancipation Proclamation would have passed as a bill in Congress in 1860 and thus prevented a war. Is there a similarity with the rhetoric against a BBA today?

    Ultimately it is NOT about politics, it is about our country.

    anson

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    • Anson,

      You said,

      Well for “today” I don’t call for cuts but do call for means testing right now. Cuts to the basic programs or making them more responsive to forcing patients to “have some skin in the game” is for later generations that have time to plan for such changes.

      How about this one. Go ahead and raise taxes BUT make it the LAW that such revenue increases ONLY go to paying down the deficit with NO NEW programs implemented, period, until the deficit reaches zero and stays there.

      I don’t know about “you liberals”, but I for one would like to go on the record as fully supporting these ideas. I hope you know that at least so far not a single Republican, so far as I know, has endorsed such.

      Jim

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  16. “I am one of the 40% that would be in a world of hurt without Medicare and SS today. So why am I so “dumb” to call for cuts would seem to be the question. Well for “today” I don’t call for cuts but do call for means testing right now.”

    Why are you working so hard to save money for people such as my wife and I who are more than willing to pay more. Paying a little more is not going to hurt my lifestyle on bit. I think that you’ll find most upper middle class and wealthy liberals all agree on this point. It’s the republicans and their supporters who don’t want to pay so maybe we should have social services for liberals paid by liberals and let all the conservatives fend for themselves.

    “How about this one. Go ahead and raise taxes BUT make it the LAW that such revenue increases ONLY go to paying down the deficit with NO NEW programs implemented, period, until the deficit reaches zero and stays there.”

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  17. hlgaskins

     /  July 19, 2011

    Sorry I got sidetracked and posted before I was finished.

    “How about this one. Go ahead and raise taxes BUT make it the LAW that such revenue increases ONLY go to paying down the deficit with NO NEW programs implemented, period, until the deficit reaches zero and stays there.”

    I will agree to that since increased taxes will help somewhat, but not nearly as much as fixing our broken healthcare system will.

    Take note that republicans have an aversion to entitlements just as liberals have an aversion to unneeded wars. The major difference is that entitlements improve conditions for millions of Americans while unneeded wars take their lives. On top of that millions of those voting for the right are just like you, (Anson) in need of those services.

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  18. ansonburlingame

     /  July 20, 2011

    HLG,

    Entitilments do NOT improve long term conditions for millions of Americans. They only make millions of Americans dependent on government which is now unaffordable. It is the old teach a man to fish….. thing.

    Entitlements are short term fixes. The long term fix is to create Americans that can take care of themselves. We used to do that. Why can we not do that today?

    Jim,

    I disagree with your last assertion that republicans do not call for what I expressed at least to a degree. The “voucher” system for Medicare in fact would force people to put their own skin in the health care game by only using the amount alloted by voucher rather than an open ended commitment, no matter what happens.

    Anson

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  19. hlgaskins

     /  July 20, 2011

    Anson

    “Entitilments do NOT improve long term conditions for millions of Americans. They only make millions of Americans dependent on government which is now unaffordable.”

    You’re confusing Medicare, Medicaid, Social Security, and even education with Welfare. There’s a strong argument to support a reliance of some on Welfare which why it’s now time-limited which all changes supported by Clinton since it occurred during his administration.

    Unfortunately many of those who’ve found jobs don’t make enough money to purchase healthcare for their family and Medicaid is the only choice that they have under the current system. Even more unfortunate is that many more counting into the millions make too much money for medicaid and still can’t afford it, which makes them a part of growing sore on the body of America’s conscience.

    Without Medicare uninsured seniors in this country would count in the millions and left without hope. Those who can’t afford to pay for an expensive healthcare plan (factoring in age) would add millions more to emergency waiting lines. The death rate among the elderly would rise while the business and health services that served them would go out of business and add to the unemployment lines. In the end it would cost us more to lose Medicare than will to keep it.

    Without Social Security millions more (40% of retirees) would fall below the poverty line and all our currently overtaxed charity organizations would amount to nothing. The money that goes to Social Security ultimately goes into the economy as well so imagine how that will be affected. Do you want to give your entitlements up?

    The loss of public education would dissolve the very glue that binds this country and makes us a people. Force people to pay for their children’s schooling and it won’t be long before you see Catholic Schools, Baptist schools, Muslim schools, Buddhist schools, atheist schools, poor people schools, more rich people schools, and on and on. America’s children would grow up in little ideological Islands disconnected from all the other Islands or if will a disorganized array of ideological tribes. As always of course the poor kids will be shoveled scraps and reduced to a life of servitude. Since U.S laws requires our children to go to school education would become an unfunded mandate.

    Anson, when say entitlements without specifics you throw a blanket over them all and not just Welfare. If you want to know more then look up the “Personal Responsibility and Work Opportunity Reconciliation Act of 1996,” and then report back. HLG

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