“I got my mind on my money, and my money on my mind.”
~ Snoop Dogg ~
I’ve never taken a finance class. During high school and college, in order to fulfill various bullshit graduation requirements, I took classes like Deconstructing Twentieth-Century Art and Music, Gender in a Global Perspective, The Culture of Hip Hop, and Love and Eroticism in Western Culture. But something actually useful, like a finance or accounting course? Nope. I don’t even remember those even being offered at my college, and if they were, the school clearly didn’t think those were skills we’d need to be functioning adults. Is it any wonder that new college grads struggle so much these days?
I saw this problem firsthand. After four years of high school and a few more years at a decent private university, I still had no clue how to manage money. During my senior year, I received a credit card in the mail. You always remember your first, am I right, ladies? Mine was a sleek, shiny, and blue MasterCard. I’d been preapproved as someone the company just knew was qualified to spend wisely and pay her bills on time.
I rolled my eyes when the card showed up in the mail and my mom said, “Be careful with that thing! It’s so easy to get into trouble.”
How complicated could it be? Moms are such worrywarts.
I started using my credit card for everything. It was great to be able to buy things and not have the money taken right out of my checking account. During the first month or so, I paid off the balance every couple of days. I practically treated it like a debit card. But then I made a few expensive but necessary purchases: a mattress, dining room table, and couch for my new apartment. I logged into my online account that night and saw that I owed over $2,000. Wow, that’s a lot, I thought. I’d better pay part of it now and cover the rest after my next paycheck.
Bad idea.
I’m sure you can see where this is going. By the time I got that month’s paycheck, I had made more purchases, and my balance had swollen to over $3,500. I couldn’t pay the bill in full, so I just took care of what I could and ate the interest charge.
For months, I kicked the can down the road and let the balance grow. I had lost any sense of urgency to pay the bill. This credit card thing was awesome! I could basically buy whatever I wanted and then pay it off when I either got a promotion or married a millionaire (my back-up plan at the time). Using the MasterCard I bought Dre headphones, a Michael Kors bag, a Mia Clarisonic face cleaning brush, Louis Vuitton pumps, tons of overpriced Sephora makeup, and a two-story yacht.
JK about the yacht. But I did buy all that other crap, and it was all stuff that I didn’t need. Well, actually, in my defense, you couldn’t really ride the New York City subway train with dignity in 2012 unless you were listening to your music with a pair of Beats by Dre, so we’ll call that one an “essential” purchase.
The balance on my MasterCard kept getting higher and higher, and I had no money to pay it off. But I didn’t care. No one was beating down my door, threatening to break my kneecaps if I didn’t pay, and I sure was enjoying the luxury of owning things I could never have afforded in the past.
Then I moved to a new city and got a rude wake-up call when I tried to buy a car. I was shocked to learn that due to my less-than-perfect credit score, I couldn’t get approved for a loan. I was forced to go crawling back to Mommy for help, and she swooped in as a cosigner. It was the only way they’d let me have the loan. Smugness oozed out of my mom’s pores; she reminded me that just a few months ago, she had tried to warn me of the dangers of credit card debt. With a bailout from my parents I managed to pay off the balance. And to the delight of my mom, I’ve since learned my lesson and am now extra careful with my MasterCard. I (almost) never buy anything I can’t afford these days.
It’s important for all of us to be fiscally responsible. If you keep putting off your bills, the consequences get nastier as time goes on. You can face steep late fees, delinquency, collections, and even judgment.1 Yes, you can actually get in legal trouble for failing to pay off your debts.
Why, then, is our own government not held to those same standards? You won’t see any judgments against the administration of President Barack Obama for spending our money like a crackhead on payday and then defaulting on its bills. Our government is worse than that proverbial twenty-year-old with her first credit card. They’ve been at it for centuries—literally—wasting tax dollars on things we don’t need and can’t afford. They just don’t seem to get it. And the feds haven’t just racked up a measly three or four thousand bucks in debt. They’ve gotten us over $20 trillion in the hole. Let’s take a look at that figure:
$20,000,000,000,000.00.
Holy crap.
At the time of this writing, if federal spending came to an abrupt halt (which we all know will never happen), each man, woman, and child in the United States would need to shell out $61,000 to repay our debt.2 That’s more than the average working adult makes in a year, and that figure is getting larger by the second. But the reality is even grimmer, since children, the disabled, and the poor don’t pay taxes. Adjusted for that, the debt per U.S. taxpayer balloons to more than $166,000.3 I don’t know about you, but I certainly don’t have that kind of money lying around to bail out Uncle Sam. And even if we were able to put a dent in the debt, the feds would just keep on spending, like a seventy-year-old billionaire at an overpriced strip club.
If you’ve ever visited New York City, you’ve probably seen the National Debt Clock near Times Square. When real estate mogul Seymour Durst first put the clock up in 1989, the federal debt was a shocking, unbelievable, insurmountable… $2.7 trillion.4
The clock was turned off for a few years in the 1990s when we didn’t have a deficit (thanks, Bill!), but other than that, it’s been blowing up faster than Kylie Jenner’s lips. I took a photo of it back in February 2008; at that time, the federal debt was right around $9,200,000,000,000. By October, the clock had run out of digits when the debt surpassed $10 trillion. It had to be replaced with a new clock, which is apparently able to track debt up to a quadrillion dollars (yeah, apparently that’s a real number). Just seven years later, the debt has doubled. If that continues, we’ll be over $36 trillion deep in 2022.
Our government spends more than $10 billion per day.5 Bonkers, right? For those of us who are trying to scrape together $1 for a big ’n’ cheesy, this will help you wrap your mind around just how large one billion is:
• One billion seconds ago, it was 1959.
• One billion minutes ago, Jesus was alive.
• One billion hours ago, our ancestors were living in the Stone Age.6
Yet the government can spend $1 billion several times a day!
What really freaks me out is that most people don’t seem to give a flying you-know-what about this catastrophic mess. When I talk to my friends about the implications of budget sequestration, or the coming entitlement tsunami that will bankrupt the nation, more often than not I get a blank stare and a cannabis-induced grin. I know, I know, it’s a lot of numbers to deal with, but I promise you, this matters. Even though the national debt seems kind of abstract, it actually does affect all of us. More debt means fewer jobs, less economic progress, and lower salaries. The stifled growth is especially hard on young Americans, who are barely making ends meet as it is (assuming they can even find a job). Of course, D.C. sees fit to lean on them with steep tax burdens to fund the latest federal spending spree.
With all this continuing unchecked, the United States is on the fast track to becoming the next Greece, or even a larger-scale Detroit.
What happened in Detroit is the stuff of an epic movie plot. The once-bustling metropolis with the nation’s highest per capita income has since faded into a virtual ghost town.7 America’s manufacturing decline in the 1970s hit the city hard, but rather than implementing sound economic policies and bolstering a diversified private sector, Detroit’s leaders chose to funnel money into the public sector and jack up taxes. Because when folks are strapped for cash, they can totally afford to feed more of it to the government.
As 60 percent of the population fled, the hulking city government continued to swell. Today, 35 percent of Detroit’s remaining citizens are on food stamps, and 40 percent are stuck in poverty.8 The city today looks like a horror movie set. Abandoned homes with broken windows, many of which were once ornate Victorian mansions, line the streets. Former luxury car factories have been stripped of their copper wire and now house squatting criminals and junkies. If you’ve never taken a virtual tour of Detroit on Google Maps’ Street View, do it. Now. It’s seriously creepy.
In 2013, Detroit finally filed for bankruptcy—at $18 billion in debt, half of which came from unrealistic promises to city government workers: $3 billion in pension payments and $6 billion in postemployment benefits for retirees.9 Although the Obama Administration initially said it would avoid a Detroit bailout, it inevitably caved and gave the city $100 million in taxpayer cash, most of which got funneled into city employee pension funds.10
Let’s just put that in perspective for a second: hardworking people in financially responsible cities—like Madison, Wisconsin, and Sioux City, Iowa—are stuck handing over their hard-earned tax dollars to fund the pensions of Detroit bureaucrats. Chief White House economic adviser Gene Sperling said the situation in Detroit was “the largest city bankruptcy in the history of our country, on our watch, and we’ve got to do something.”11
But why couldn’t Detroit solve its own problems? It seems we’ve given up on responsible city management and proven economic policies. But then again, why bother doing things the right way when you can just get a giant wad of cash from Uncle Sam when you screw up? What kind of message is Washington sending?
Detroit set a scary precedent. Now, whenever a state or city government gets itself in financial trouble, it’s expected that the feds will come to the rescue. At the time of this writing, Puerto Rico is over $113 billion in debt that’s supposedly “not payable.” Not surprisingly, many are demanding that the federal government bail them out, too. It’s the same old story: liberal policies have created generations of dependent Puerto Rican families stuck in poverty. Thanks to welfare that often pays better than jobs, Puerto Rico’s workforce participation rate is a paltry 40 percent.12
With our snowballing federal debt, we are well on our way to becoming the next Detroit or Puerto Rico, but on a way bigger scale. Imagine that for a second. If the federal government found itself in such a grim economic situation, who would come to the rescue with a bailout? It’s scary to think about. Almost as scary as what the feds are getting away with right now.
My second year out of college, I was doing relatively well for myself. Working as an independent contractor for several companies, I busted my ass and was able to earn about $125,000. No taxes had been taken out of that income, so I knew I was in for a doozy of a surprise once April rolled around. Early in the month, my tax guy tallied up how much I owed Uncle Sam. Even though I was expecting a high number, when he told me what it was, I may have died inside a little. At twenty-two years old, fresh out of college, I owed the IRS over $26,000. I was told that I didn’t qualify for any of the usual postgrad exemptions because I’d earned too much. My blood was boiling while I wrote that check. Twenty-six Gs. To the IRS.
Excuse my French, but that’s bullshit. We all know how bad the job market is for recent grads—nearly 14 percent are unemployed, in fact.13 An even higher percentage is “underemployed,” or working menial, part-time jobs because they’re unable to find a real career. I was one of the lucky ones, capitalizing on every opportunity and quickly excelling in a well-paying field. It’s puzzling that amid the awful job market, the government goes out of its way to punish success—$26,000 isn’t chump change, especially not to a new graduate who is trying to get her life started.
Currently, the top marginal tax rate is 39.6 percent for individuals making over $400,000. Thirty-nine point six percent seems high as is, but those on the left want to increase that. Some have even called for tax rates as high as 90 percent for the superwealthy.14
Good grief. Shouldn’t success be encouraged and rewarded? Not if you ask our government. The more money you make, the higher percentage of your income you fork over to the IRS. The system makes absolutely no sense when you really think about it.
Remember Herman Cain from the 2012 election? Yeah, I know, the guy was a total loon who didn’t know Libya from Lady Liberty, but he did have one idea worth exploring. Cain was always yapping about his “999 Plan,” the idea that all current taxes could be replaced with a 9 percent business transaction tax, a 9 percent personal income tax, and a 9 percent federal sales tax. This kind of plan makes a lot more sense than the overcomplicated and unfair system we’re burdened with today. With a flat tax, everyone would pay the same rate, so people making $200,000 per year would still be paying a lot more than those making just $30,000 per year, but the higher earner wouldn’t be punished for his success by being forced to pay a steeper percentage. It’s similar to a fair tax, which would replace all income taxes, payroll taxes, gift taxes, and estate taxes with a single consumption tax on retail goods.
Many on the left complain that the fair tax system would hurt the poor most, but that simply isn’t true. Low-income households would receive a monthly prebate on their purchases, which would offset their sales tax purchases. The amount of the prebate would increase for larger families.
Imagine a system with no income taxes, payroll taxes—we’d see a nice boost in economic and job growth from international businesses actually moving here for a change. Businesses would prosper and unemployment would go down. Everyone wins. Granted, the fair tax system isn’t perfect—opponents of both it and the flat tax have valid arguments—but they’re a lot better than the hot mess we have now.
Taxing income in the first place doesn’t make a lot of sense, when you really think about it. Ronald Reagan once said, “If you want more of something, subsidize it; if you want less of something, tax it.”15 It’s common sense. We want to discourage people from smoking, so we put a hefty tax on cigarettes. So wouldn’t it be logical that a hefty tax on working would discourage people from working? Especially when the alternative is to stay at home and collect government benefits for doing nothing, and maybe retire in Puerto Rico.
But with all the flaws in our overzealous tax system, at least we can all sleep well at night, knowing that our money is going to a good cause, right?
LOL.
Yes, some of our tax dollars go toward things that are necessary for our society to function, like building roads and all of that stuff. But you’d be sick to your stomach if you knew what a lot of your money was getting blown on, mostly thanks to irresponsible politicians who are more concerned about their own political careers than solving the problems they were elected to address.
Congressmen and congresswomen are supposed to hold the executive branch accountable and make sure the country is being run in your best interest. The key words there are “supposed to.” But in reality, they often do the exact opposite just to ensure they get reelected. In 2014, the USDA proposed closing a sheep station near Dubois, Idaho, because it was unnecessary and cost federal taxpayers $2 million each year.16 Well, you see where this is going, folks. In stepped local lawmakers who fought for the facility to remain open, no matter how expensive or redundant it was. They didn’t care as long as it would win them votes from the area come election season.
Not all of our politicians are bad, though. There are a few people in Washington who have actually made an effort to end some of the frivolous funding of silly projects and programs. Former Oklahoma senator Tom Coburn practically made his career out of it, and when he retired in 2014, I cried. Really, I did. My boyfriend came over that evening, and when I answered the door, he thought my kitten had died. Each year, Coburn would release a “Wastebook” chock-full of absurd ways our federal tax dollars are spent. Here are a few of my personal favorites from his most recent edition:17
• $387,000 was spent on Swedish massages for rabbits. The National Institutes of Health decided it would be smart to give six figures to the National Center for Complementary and Alternative Medicine (whatever the hell that means) to find out if Swedish massages help rabbits recover from sicknesses. We literally paid for a group of rabbits to receive rubdowns from a machine that simulates the strokes used during Swedish massages.
• $371,026 was spent to figure out if moms love dogs as much as kids. The scientists who conducted this expensive study described their work as “the first report of a comparison of MRI-related brain activation patterns in women when they view images of their child and dog.” Ummm… OK. I think there’s a reason why that’s never been done before.
• $15,000 was spent to conduct a “stoner symphony.” That was the price tag for the Colorado Symphony Orchestra to host a show called, “Classically Cannabis: The High Note Series,” a weed-themed series of musical performances. What were they smoking when they passed this one?
• $307,524 was spent on synchronized swimming for sea monkeys. For all of you who don’t know, sea monkeys are tiny brine shrimp that kids often keep as pets. The government took it upon itself to figure out if sea monkeys were able to follow a beam of light in a group. Turns out, it proved to be “more difficult than it sounds,” according to one of the study’s scientists. Drat! If only we could harness the power of sea monkeys, we could control… children’s aquariums around the world. Or at least within the reach of this flashlight.
• $80 million to build a real-life “Iron Man” suit. No joke. The Department of Defense decided it’d be a good idea to build a suit powered by futuristic energy sources that’s able to withstand bullets. This is what you get when you give overgrown man-children the latest technology and a blank check. The Tactical Assault Light Operator Suit (TALOS) employed not only defense contractors but also Hollywood costume designers (because that shit has to look cool, or there’s no point, right?) After $80 million and no results, one industry professional said that the suit will “need about a billion dollars” to be completed successfully. Because the DoD doesn’t mess around about going a little over budget.
I just want to take a moment to remind you that these are all real things that happened. I mean, who the hell is signing off on these projects? I could go on and on, but we have other fish to fry, and you can read Coburn’s Wastebooks online. Just keep a barf bag handy.
The waste parade extends far beyond this government-sponsored science fair. Exorbitant spending goes all the way down to the basic practices of large government agencies, and few departments are exempt from this. In fact, one of the worst offenders when it comes to wasting our tax dollars is the IRS.
Wait. What?!?
Yup, the very same agency that bends us over and shoves its hand deep into our pocketbooks every April is turning around and spending our cash on dumb shit. Ironic, isn’t it? During recent years, the IRS spent $4 million on office furniture (OMG, spinny chairs!), $8,000 on a “fitness equipment stair climber,” and thousands more on trinkets like stuffed animals and rubber Thomas the Tank Engine wristbands.18 They also spent $60,000 to produce two videos of its employees parodying Star Trek and Gilligan’s Island.19 Another video, which cost the agency $1,600, showed their employees dancing in a line.
If you haven’t seen these videos, you’ve gotta Google them. You’ll laugh your ass off (until you remember that it’s our cash that’s gone to fund Washington’s Funniest Home Videos). As if spending as much as a new BMW costs on parodies isn’t bad enough, the actual quality of the video is about that of Hulk Hogan’s sex tape (don’t act like you don’t know what I’m talking about—we’ve all seen it).
During April 2015, amid the spending sprees, the IRS claimed that devastating budget cuts forced it to ignore calls from the majority of taxpayers seeking help. But of course, they were still able to come up with the money to audit your ass despite your poverty-level income and flawless accounting. Never mind that numerous congressmen and senators have tried to bring some accountability to the agency’s spending habits, IRS Commissioner John Koskinen had the cojones to ask Congress for a larger budget.20
A few years back, the Department of Justice managed to spend almost $500,000 on food and beverages at only ten conferences.21 That’s the kind of menu I’d love to see at my next conference… except it didn’t turn out to be anything special. It was just wasteful. At one conference, they bought muffins at $16 a piece. $16 for a damn muffin! You’ve been to Dunkin’ Donuts or Starbucks. Ever seen a muffin that costs $16? Exactly. Even if you did, would you buy it? But guess what? We did. And we bought the DOJ $8 cups of coffee to wash them down. Must have been some overpriced hotel ripping off the ripe target of a government agency that collects money!
But at least we can assume that they were working at those conferences. It’s not like we’re paying for our government to kick back and sip mai tais, right?
BZZZT! Wrong! Each year, taxpayers shell out around $19 million just for politicians’ vacations.22 And sometimes these vacations go to the least deserving representatives. At normal companies, if you do something wrong, you get fired. In Washington, however, federal employees are often “punished” for misconduct, underperformance, or illegal activity with paid vacations. Yes, you read that correctly. This is the norm at many federal agencies, including the Department of Veterans Affairs (VA).
For example, VA officials were found guilty of manipulating data to get pay raises at the expense of dying veterans. How were they punished? With paid leave, of course! Other VA employees who enjoyed paid leave in 2014 include one who sexually abused a patient, and another who caused a fatal accident while driving drunk. These aren’t isolated incidents; these irresponsible practices happen time and time again on Capitol Hill. In a single year, the Social Security Administration spent $40 million to pay 10,000 employees not to work, while the Department of Homeland Security spent $4.3 million to pay 237 employees not to work, and the U.S. Postal Service spent $3 million to pay 1,500 employees not to work.23 Noticing a trend here?
Milton Friedman, an economist and one of the smartest, most awesome dudes to ever grace the earth with his presence, once said, “Very few people spend other people’s money as carefully as they spend their own.” If you’ve ever had the pleasure of using someone else’s credit card, you get what Friedman was talking about.
Back when I was living with my parents, I would go to the mall for school shopping and buy tons of expensive, brand-name outfits—there was no such thing as too much Abercrombie. I didn’t even look at the prices. Why bother when Mommy was picking up the bill? That all changed when I started earning money and paying my own way.
Suddenly, I began buying clothes only if I truly needed them and looking for good value rather than brand names. The government is operating just like a young me with her mom’s credit card, not giving a second thought to cost or value.
Even though Washington’s waste is blatantly obvious, politicians will do everything in their power to make it seem like they need more and more and more funding. Mention the words “budget cut” around any entrenched bureaucrat, and they’ll swear up and down that none of us can survive without millions of dollars being pumped into the D.C. machine every minute.
Remember when the government shut down in 2013? The sixteen-day shutdown began after the Republican-led House voted to keep the government funded through December 15 of that year, so long as the president agreed to defund a major new burden on the federal budget—Obamacare. Not surprisingly, the Democratic-led Senate rejected all proposals from the House that cut Obamacare’s funding. Commence the federal shutdown! OMG!
In an epic anticlimax that we haven’t seen since Y2K or perhaps the end of the Mayan calendar, all services and payments necessary to ensure national and public safety… continued as normal, without interruption. Huh? All that really happened during this national disaster was that “nonessential” employees and departments were furloughed.24
Ignoring the fact that we’re all apparently paying for nonessential services, it’s rather pathetic that the Obama Administration stooped to closing down services that were most likely to offend the public to make the government shutdown appear to be devastating. The national parks were closed; the World War II Memorial was shut down and barricaded, even though it’s a 24/7 open-air memorial that isn’t regularly staffed; over 100 privately run parks were closed, despite requiring no federal funds to operate; the Amber Alert website was taken down.25 The government even halted the program that offers last-chance cancer treatments to dying children.26 Seriously.
Funny, though, that while the White House was punishing as many people as possible to make a political point, Obama’s personal employees and facilities appeared to be largely untouched.27 The White House chefs weren’t furloughed, and the president’s Camp David and military golf course both remained open. Because, ya know, Obama’s chefs are totally essential. But Amber Alerts? Nah.
It’s clear that there’s no such thing as fiscal responsibility in Washington. Heck, even humanity can be hard to come by in our nation’s capital. But in a painfully ironic twist, that waste and disregard become even more obvious when you look at some of D.C.’s most bloated, ineffective programs that are touted as being necessary to the well-being of all American citizens.
Meet my grandmother, Lucy: She is seventy-eight years old and lives a fabulous life in the New York City area. She studied chemistry at a prestigious university in the northeast but never worked a day in her life after meeting my grandfather, a chemist at a large pharmaceutical company. The two got married and lived a cushy life in New Jersey, where they had two kids, lots of friends and a lovely house. When my grandfather died, all of his money was left to my grandmother. Now, let’s just say my grandfather did pretty well in his day, and Nana Lucy has been living large ever since. I’m not talking Diddy-level wealth here, but enough to live a comfy life in a huge apartment overlooking the NYC skyline. My nana spends her time attending beauty appointments, applying various salves, and making appearances at lavish New York soirees. She’s living it up—and more power to her!
Now I want you to meet my old college roommate and one of my closest friends, Rachel: She is twenty-five years old and struggles to make ends meet in Boston. Rachel graduated with a BA in liberal arts and was finally able to land a job as a travel agent after a year of seeking work. Her $34,000 annual salary allows her to squeak by every month—let’s just say she eats lots of ramen noodles. She spends her weekdays slaving away at the office and her weekends getting herself involved in drunken shenanigans that might give Snooki pause. But that’s what we’re supposed to do when we’re young, isn’t it? It’s not easy out there for young adults right now, and most twenty-somethings like Rachel consider themselves lucky to have even found a job.
Now here’s the crazy thing: Rachel, who can barely get by, is paying my well-to-do grandmother every month. Yup, you read that right. Of course, I don’t mean that Rachel’s making the trek to New York and physically handing her the money with flowers and a tin of shortbread, but a significant portion of Rachel’s paycheck is taken from her every month and put toward Social Security, which is then paid out to old people, including my grandmother. FYI, the government considers “old” (the age at which you can collect these entitlements) to be a mere sixty-two, which might have made sense when the program started back in 1935, but now that we have things like statin drugs, bypass surgeries, and other life-saving technologies, sixty-two is starting to look a lot more like forty-two.
Now, of course I understand that the cases of Rachel and my grandmother are purely anecdotal. There are plenty of old people out there who really need a hand, and plenty of us spring chickens are doing just fine financially. But the point is this: Why the hell are rich old farts (sorry, Nana) entitled to money from those us of who are breaking our backs to pay for our crappy, rat-ridden apartments or, if we’re lucky, fixer-upper first homes?
Here’s a list of a few old-timers receiving checks every month that we’re paying for: Donald Trump, Warren Buffett, Hillary Clinton, Rupert Murdoch, and Hugh Hefner. About 53 percent of all entitlement spending is going to the elderly, which may seem reasonable until you find out that they’re also the wealthiest age group in America. Then it just makes no sense. Moreover, about 15 percent of every dollar we earn is going to Social Security. There should, of course, be a safety net for the elderly who are struggling, but there is no reason why Trump or Hefner (or definitely Clinton) should be taking what I worked for.
Add my seventy-year-old great-aunt to that list. I love her to pieces, but as the wife of a retired surgeon, she’s not exactly spending her days clipping grocery store coupons and waiting for that next check from the government. In fact, there’s this great thing she does at Thanksgiving—you’ll love it: She tells these hilarious stories about giving her Social Security checks to her son, the pot-smoking “artist” who lives a life of leisure in New York City.
You’re paying for this, folks. You’re literally funding the lifestyle of my freeloading second cousin, who grew up in his parents’ New Jersey mansion and never really worked a day in his life.
According to D.C., this is how we should handle retirement. You should pay taxes into a government account, and when you reach your golden years, that same money should come back to you, regardless of how well off you might be.
Sorry to break it to you, but that money isn’t going into an account—it’s being spent by the feds the same year they get it, and at an alarming rate.28 “But don’t worry,” they tell us, “you’ll get the same benefits when your time comes.” I believe that about as much as I believed my roommate when she swore she never drank my Maker’s Mark while I was out.
So how do we know the government will keep its promise to us? Simply put, we don’t. And it doesn’t look good. By the time we hit our midsixties, we’re each projected to have paid almost $400,000 in Social Security taxes, but we’ll only receive about $335,000 in benefits, not factoring in inflation. The program has run cash deficits for years (translation: The taxes collected aren’t covering the released benefits). And as soon as the Social Security trust fund dries up, the feds are expected to start borrowing to dole out the payments (and we all know that when the fed borrows cash, it’s rarely paid back).
Even though it’s clear that Social Security is not sustainable, many politicians are actually pushing to expand the program. Genius, right? Bernie Sanders, the self-described “socialist” from Vermont and a failed 2016 presidential contender, recently said, “We should not be talking about cutting Social Security benefits. We should be talking about expanding benefits to make sure that every American can retire with dignity.”29 His proposed bill would increase Social Security benefits by $65 per month. Yay! We all deserve free stuff! Of course, Sanders made no mention of how we would finance any of this. The same voters who cheer Sanders’s feel-good rhetoric rarely stop to think about the fact that all of that money would come from their paychecks (assuming they have jobs).
When it comes to Social Security, the situation boils down to this: Not only is the system we have in place ineffective and horribly managed, it is a ticking time bomb. Serious reform is necessary to ensure that future generations are taken care of in old age. One solution is to means-test the program (i.e., allow only the elderly with limited resources to collect the benefits). This would potentially solve the problem of cutting checks to high-income seniors who simply don’t need help. Another option is to allow young people to invest their Social Security taxes through individual accounts. Opponents of this idea insist that private investment is “too risky.” Nonsense. The Cato Institute found that “if workers who retired in 2011 had been allowed to invest the employee half of the Social Security payroll tax over their working lifetime, they would retire with more income than if they relied on Social Security.”30
Meanwhile, that time bomb? It’s set for a $21 trillion shortfall.31 Eventually, it will be impossible to dole out the promised cash. Still think private investment sounds riskier?
But folks, we haven’t even gotten started. You’d think the feds would have learned their lesson with this colossal failure, right? Guess again!
Speaking of unsustainable programs that hit us squarely in the pocketbook, I have a real whopper for you: Obamacare. There’s no doubt that Barack Insane Obama was an old school, Great Society, tax-and-spend liberal, just like most Democrats out there. Got a problem? Throw more money at it. Obamacare—sorry, the Affordable Health Care Act, which is anything but affordable—is already causing real harm to people in need of health care.
Democrats continue to complain that Republican politicians are out to control their personal lives, yet in the same breath, they insist that Obamacare is the best solution for the U.S. health-care system. It really is laughable—what could be more personal than your medical care? And they’ve turned it into a government mandate! According to many liberals, it’s barbaric for gray-haired politicians in D.C. to tell a woman that she can’t have an abortion, but it’s totally OK for them to force everyone to pay for health-care services they might not want, need, or even agree with morally. Let me know if you can figure out the sense behind that logic, because I definitely can’t.
And not only is it invasive, it comes as a serious financial drain on our income at a time when we really can’t afford it. Obamacare will cost taxpayers about $1.5 trillion (more than 5 percent of the national debt), and so far it has been nothing short of a disaster.32 Under Obamacare, we’re all forced to either obtain insurance directly through the government or through a private insurance company that offers federally approved plans. Besides being mandated to provide specific services and coverage plans, insurance companies selling through Obamacare must get their premiums approved by regulators.33 Wait a second, this totally reminds me of something… oh, right. Socialism!
Tens of thousands of Americans have received letters in the mail, informing them that they are required to get rid of their “sub-par” insurance plans and must purchase more “comprehensive” (government-speak for “more expensive”) plans even if there’s nothing wrong with the care they’ve been receiving.
My own mother was one of the unlucky souls who received a cancellation notice for her individual health insurance policy (which she’d been perfectly happy with for many years). The government told her that she had to get a more expensive plan that included—get this—maternity coverage. Now, keep in mind that, with me being a millennial, my mother is in her early fifties (sorry for disclosing that, Mom… you don’t look a day over forty!), I won’t be getting a new sibling in this lifetime. But unfortunately the politicians behind this program aren’t bothering to consult doctors (or common sense). So at the end of the day, my mother is stuck paying for coverage she’ll never use.
Now, let’s say that you’re a healthy twenty-nine-year-old with no insurance. You don’t want insurance because you rarely get sick and can’t even remember the last time you went to the doctor. So naturally, you decide not to comply with Obamacare’s mandates. What happens next? You pay up, with a $695 fine.34 That’s a bit too much like extortion for my taste.
Adding insult to injury, we can fully expect the feds to waste all this money once they get it in their grubby little paws. Take a look at the Post Office, for example. In 2013 the USPS was $5 billion in the red despite revenue growth.35 That was its seventh consecutive year operating with a net loss. If any private business produced those results, it would close its doors in a heartbeat. Compared to private-sector options (think UPS and DHL), the USPS is also incredibly inefficient—because they simply don’t care. And they don’t have to. After all, they live off the government teat just like any other welfare case. They’re in no danger of closing because they’ll just keep getting (involuntary) support from us taxpayers. But if you look at the private businesses that live and die by the free market, it’s a different matter entirely. UPS continuously operates at a profit while delivering a superhuman three hundred packages per minute. Private companies like UPS are forced to meet the needs of consumers in a cost-efficient manner or risk going out of business. But in the world of government institutions, profits, efficiency, and productivity don’t matter.
What makes us think it’ll be any different with our health care? Heck, within minutes of Obamacare being launched the feds proved too incompetent to even successfully run the system’s website. Despite spending $840 million for the development of the Obamacare website (I know a pimply guy who lives with his parents who would have created the site for a measly hundred grand), HealthCare.gov was not working properly for more than a year after its rollout.36 The site was even hacked in July 2014, potentially putting personal health information at risk.
Despite then-President Obama insisting that the health-care act had been a roaring success, strong evidence shows that it has been nothing short of a disaster. Despite Obama insisting that the average American family would save $2,500 on premiums each year, the opposite happened: Most families saw increases on premiums after the bill passed. How surprised are you?
The problems were even evident inside doctors’ offices. Many health-care professionals complained that the one-size-fits-all nature of Obamacare jeopardized the doctor-patient relationship. What incentive did doctors have to nurture personal relationships with their patients when they get paid for quantity, not quality? They’re better off scheduling as many patients in a day as possible, even if that won’t allow them to give adequate time to care for each person. The result could easily be sloppy and rushed medical work. Just how is this supposed to make us all healthier?
President Donald Trump has said that he wants to repeal Obamacare and move toward a more privatized system. If he sticks to his word, this would be a remarkable first step toward making our health-care system considerably more efficient and affordable.
I don’t think anyone has embodied “mo’ money, mo’ problems” better than the federal government. So remind me again why we trust an entrenched group of career politicians to know how to spend our hard-earned cash in our best interest. Wouldn’t you think we’d be able to do that ourselves, buying what we need directly instead of being forced into wasteful, bloated, government programs? We’re going to have to if we want to defuse that ticking time bomb of federal deficit spending. Perhaps the time has come to stand up and adopt a new slogan, “Keep Washington out of our wallets!”
“We’re in debt because of George W. Bush and the War on Terror! He’s to blame for the debt, not Obama.”
You say: “Both of them ran up the debt faster than a teenager with Daddy’s AmEx card. Bush went on a spending spree defending us against the ‘bogeyman’ and Obama dropped a ton on an out-of-control health-care plan.”
“We should tax the rich more! They’re greedy.”
You say: “Greedy? More like motivated to succeed! Without the rich creating companies, technology and innovations, we’d be without jobs or the things we love most—our computers, phones, and Xboxes.”
“Your grandma may be rich but Social Security helps tons of poor old people who have no money.”
You say: “Agreed. All I’m saying is the rich old farts don’t need a payout. Stop paying the Donald Trumps of the world who don’t need it.”
“Why are you hating on Obamacare? It gave people access to affordable health care who can’t get it otherwise.”
You say: “That’s a generalization that just isn’t true for the majority of Americans who were doing just fine with their own health insurance.”
“Aren’t you exaggerating about all the crazy government subsidies, I mean come on!”
You Say: “You think I’m cherry picking? Google Senator Coburn’s ‘Wastebook.’ Or for this year’s information check out Sen. Rand Paul’s ‘Waste Report,’ which keeps Coburn’s tradition alive by outlining many (many, many) ways the federal government continues to waste our money. You’ll see there are enough insane subsidies being handed out by the Fed to fill a book!”