The GAO just released an update to its long term projections about the health of the U.S. economy. The report indicates that the long term outlook is improved from its last analysis, but a structural imbalance still exists.

The GAO has published simulations of the economy since 1992. The model produces two projections, a baseline projection, and an alternative projection. In any projection, the assumptions of the analyst are key to understanding and evaluating the conclusions.

In the case of the baseline projection, the GAO follows the CBO’s baseline projections of August 2011 for the first 10 years, then projects most spending  will maintain a constant relationship to GDP. Interest on the national debt, and Social Security, Medicare and Medicaid payments use projections supplied by Social Security and Medicare trustees.  Adjustments were made in accordance with the deficit reduction plan passed by congress when they increased the debt ceiling.

The alternative projection adjusts the baseline projection with assumptions that congress will continue to act in a fashion similar to the way they have always acted. If tax loopholes are set to expire, the alternative projection assumes that congress will not allow them to expire, but rather will extend them. If reimbursement exceptions for providers of Medicare and Medicaid services are set to expire, the alternative projection assumes that congress will extend them.

In the baseline case, spending on Social Security, Medicare, and Medicaid trends up to about 15% of GDP, then remains relatively constant. In the alternative, and more realistic projection, spending on the three programs trends up to 14.5% by 2013, and almost 20% by 2080.

The report concludes:” The United States recently suffered from the most severe recession since the end of World War II. The economic downturn along with the federal government’s response to it and other actions taken to stabilize financial markets contributed to a rapid buildup in federal debt held by the public—increasing from roughly 36 percent of GDP at the end of 2007 to roughly 62 percent at the end of 2010—adding to the size and urgency of the federal government’s long-term fiscal challenge. Our simulations show that the Budget Control Act of 2011 will help reduce deficits. However, the longer-term fiscal challenge remains.”

The largest drivers in the long term are retiring Baby Boomers and the GOP’s continuing determination to repeal “ObamaCare” even though it has cost reductions for Medicare and Medicare built into it. Personally, I ‘d like to see some of the military spending cut so that Social Security, Medicare, and Medicaid are available to all Americans. Holding it steady at its current percentage of GDP is folly, considering that we already spend more on our military than the rest of the world combined.

Homework

Long Term Fiscal Outlook, Updated Fall 2011

Bob Shrum, GOP political analyst, described Texas governor Rick Perry as a barracuda on Meet the Press on Sunday. I’d say it was an apt description. He’s officially been in the race for less than a week and there’s already blood in the water.

I have to hand it to him; he has a knack for political drama. He stole the Iowa straw poll headlines by making his official announcement on the same day. Then he stole Michelle Bachmann’s victory lap by attending the annual official GOP fundraising dinner in her hometown. While she was out in her bus powdering her nose, and planning her grand entrance, he was in the room glad-handing and good-ole-boying every person in the room. He instantly jumped into the position of front-runner with his bigger than Texas persona.

Today reports are coming out about his fundraising prowess. He has deep ties to the oil and gas industry, no surprise in Texas, but that industry is made up of the richest companies in the history of the world. They have the ability to pour even more money into his pockets.

A friend recently commented that Perry is so slick he could sell ice to Eskimos. He certainly does have charisma, but I wonder how his position on Social Security is going to go down with seniors? He claims that Social Security is unconstitutional despite some activist Supreme Court judges ruling otherwise in the 1930’s. I can’t imagine 50,000,000 senior citizens buying much of that argument either.

Homework

The Atlantic Story About Rick Perry

CBS Analysis of Perry

Everything You Never Wanted to Know About Rick Perry VS Social Security

Yesterday I managed to get into a discussion with a couple of conservative voters who read and commented online about the same Sentinel story. The net result was that I was accused of engaging in class warfare. No denying it. I am. I am sick of those who “have” always getting more and those who have nothing doing without.

Over my lifetime salaries for ordinary working people have left them in the same old rut while the richest Americans saw their incomes constantly increasing.  The income gap has been increasing for decades, not decreasing. We thought the American Dream was real and we could be good citizens and work our way up the socioeconomic ladder. We thought that the income gap would decrease. We thought all we had to do was study hard and work hard and we’d find the pot of gold at the end of the rainbow. Except that’s a fairy tale.

But here’s what really torques my jaws: the Republican Party has convinced people who are at the bottom of the ladder that it is their own fault that they can’t get ahead. They are convinced that only the wealthy create jobs. (News alert: teachers and firemen and cops are real jobs that are created by governments.) “If we tax the wealthy, there won’t be any jobs for us, and we’ll never get ahead.” They’ve taught us to fear our own strength in numbers. “Don’t rock the boat, those rich bastards won’t give us jobs.” The wealthy have divided working people. We need to unite. There is strength in numbers.

The reality is that we’ll never get ahead until we start demanding the same benefits that accrue to those at the top. Damn it, I paid into Social Security and Medicare my whole life. We should be calling Social Security an annuity, not an entitlement. I also put as much as I could afford into deferred payment plans. I worked long hours at a very good job for a very long time. Yet I am only marginally better off than my parents were. I had two strikes against me, being born with girl parts and being born into a poor family.  And now some assholes in Washington are trying to take away my Social Security and Medicare so that the wealthy can keep their wealth and the military industrial complex can wage war all over the planet, assuring that even more money trickles up, not down.

You bet I’m ready to engage in class warfare. It is time for middle class Americans to stop pandering to the extremely greedy oil and gas companies and hedge fund managers and financial giants, and demand that they share in the sacrifices that we’ve been making for at least the past 40 years. It is time for ordinary Americans to cast their lots with the unions and other workers and tell the Koch Brothers and the National Chamber of Commerce and Dick Armey and Americans for Prosperity (what a joke!) and the corporate funders of ALEC and the richest companies this planet has ever known to stop being unpatriotic, greedy bastards. It is time to share the wealth instead of hoarding it. And keep your Cut, Cap and Balance crap away from my Social Security and Medicare.

Homework:

History of Wage Inequality

Record Gap Between Rich and Poor

Workers Keep Getting More Productive

Racial Wealth Gap

People who don’t believe in government shouldn’t try to govern. Eric Cantor, the Majority Leader, in the house is a walking talking April Fool. Two days ago he made an outrageous statement at a press conference, proving that he is clueless about the government that he is trying to lead.

Cantor isn’t just any fool who lucked out and got elected to office in an off year. He is a leader of the Republican Party in the House. And yet he actually said that if the House passes a bill it becomes law. Period. And now he’s trying to pass a bill that says that if the Senate doesn’t pass a bill by his deadline, then by default the House law will become the law of the land. You know for a Tea Party darling, he sure is clueless about the Constitution. Why does he think there are three separate, but equal, branches of government? Better yet, how did such a fool get elected by his own party into a leadership role?

This is the fool who insisted that the Constitution be read aloud in the House. Then they left out all the parts about slavery, which may explain why fellow Tea Party darling Michelle Bachman thinks that the founding fathers abolished slavery. Guess she missed the dates when she learned about the Revolution and then the Civil War. She thinks they happened at the same time, I guess.

These are the fools listening to the Tea Party about not compromising on a bill that would prevent the shutdown of the federal government. I’ve noticed that a lot of Tea Partiers are senior citizens. Most likely they are on Social Security and Medicare. Rumor has it that Cantor wants to kill both of them. And if the government shuts down a lot of seniors may find out what it means to live without one or more Social Security checks, especially since no bill has passed that would pay for the people who actually process the checks.

While it is April, and there are a lot of fools in this story, this is no joke.

Homework

Forbes Blog With Video of Cantor Being a Fool

Washington Post Story With Cartoon Teaching How a Bill Becomes Law

Blog With Story About Cantor Wanting to Kill Social Security

Will the government shut down on March 4? And if it does, will 60-million seniors, including me, receive their Social Security checks in March?

Before dawn today the House approved a budget bill for the Fiscal year that actually started back in October 2010. It is important to keep this in mind: The House is working on the budget that should have been passed in the last congress. The government has been running on authority from a continuing resolution (CR), which kept all spending at levels appropriated in the fiscal year ending 9/30/2010.  As soon as they are done finalizing the budget for the fiscal year we are in the middle of, they will start trying to agree on a budget for the coming fiscal year.

For the government to continue running, the Senate has to pass a bill, which must then be reconciled with the House bill by March 4. On that date, the current continuing resolution expires. Absent a budget or a new continuing resolution, the government will shut down. The bill approved this morning in the House has little chance of being approved by the Senate. All Democrats in the House and three Republicans voted against the bill. The Senate is controlled by Democrats who are likely to vote the way the Democrats in the House voted. But if they don’t, President Obama has already promised a veto of any bill hitting his desk resembling the House bill.

Yesterday, Nancy Pelosi introduced a bill to temporarily extend spending appropriations, saying,“In light of the hundreds of amendments to the Continuing Resolution, the President’s Day week-long recess and the need for the House to establish priorities and reconcile this legislation with the Senate by March 4, we are proposing a short-term extension of the current CR until March 31.”

On February 17, the Social Security Administration discussed with the press plans the agency is making in the event of a shutdown. For starters the government would start negotiating with the American Federation of Government Employees (AFGE) to talk about employee furloughs during the shutdown. That’s a twist not many people in the press are talking about. If there is a shutdown will the 600,000 government employees represented by the union take to the streets the way that union workers in Wisconsin have been doing all week? AFGE represents employees in the Department of Defense, the Department of Veterans Affairs, the Social Security Administration and the Department of Justice. And they are one of the unions of the almost 15-million strong AFL-CIO.

So, now we’ve populated the streets of Washington with 600,000 federal union workers, and expanded into the streets of other American cities with 15-million AFL-CIO workers, but we still don’t know if Social Security checks will be in the mail. If they aren’t 60-million senior might be in the streets too. But, I digress.

I’ve read conflicting reports about what happens to Social Security checks in the event of a government shutdown. One says that the government can continue with “essential services,” and payments to America’s seniors are essential. Another says that payments, which have not been appropriated, may not be made (Antideficiency Act). So, are funds from the Social Security Trust Fund already appropriated? A September 2010 report by the Congressional Research Service to Congress says, “Programs that are funded by laws other than annual appropriations acts (e.g., entitlements like Social Security) also may be affected by a funding gap, if program execution relies on activities that receive annually appropriated funding.”

The report goes on to describe how money may be available to fund things like Social Security, but if the staff needed to process the payments is subject to annual appropriations, the payments may not be made-- because of lack of staff. In the 1996 government shutdown, about 5,000 employees were originally not furloughed in order to process payments. Social Security had to go back to congress and ask for almost 50,000 additional employees three days into the government shutdown and employee furlough, in order to process checks and new claims and things like address changes. Because of the debacle in 1996, government agencies are required to have written plans detailing how they would implement a government shutdown. It is unknown if these plans have been updated and/or are adequate to ensure that the nation’s seniors aren’t out in the cold protesting any shutdown.

Homework

House Votes to Cut $60-billion from 2010-2011 Budget

Who Are the Losers in a Government Shutdown?

American Federation of Government Employees

Unions of the AFL-CIO

September 2010 Report About What Happens in A Government Shutdown

Antideficiency Act