by Dr. Thomas Patterson | Nov 9, 2024 | Opinion
By Dr. Thomas Patterson |
Here are the hard truths of our threatening situation with Social Security and Medicare. We have a looming major fiscal crisis which no one denies. There are solutions but no politically easy ones, and our options get worse with time.
Yet every time a working politician suggests considering even mild changes, the formidable senior lobby and AARP erupt in outrage and beat down the hapless reformer. Former allies of responsible reform flee, and the status quo is again preserved.
Facts, as they say, are stubborn things. Social Security is by design a mandatory government administered defined-benefit retirement trust, funded by payroll taxes. However, the inflows to the trust are insufficient to support the benefits promised and, unlike private pension plans, there is no corpus of funds earning compound interest to make up the difference. Thus, the fund will become insolvent in nine years. As matters stand, benefits across the board will need to be reduced by 23%.
Worse, deficits in Social Security and Medicare comprise the overwhelming majority of future anticipated federal debt accumulation. So, the courageous politicians who assured seniors in this and every election that they will “protect” their Social Security (i.e., do nothing) were not protecting anything except their own political skins.
The problem nobody wants to face is that either benefit levels are too high, payroll taxes are too low, or retirees are retired for too long. Politicians long ago raided the “surplus” and replaced the funds with non-income generating IOUs.
Reducing benefit levels, even for high earners, is politically toxic. The mere suggestion evokes hyperbolic charges of “pushing granny over the cliff” and “giving the middle finger to senior citizens.”
On the other hand, raising taxes would be nearly as unpopular. It would take a 25% hike in the payroll tax to fill the hole once insolvency occurs. Economic growth and consumer spending, the drivers in our economy, would be crowded out as would several federal programs.
Clawing back the Social Security trust funds so that income could be generated would be nice. But that train has left the station. The funds have long since been spent on other priorities
That leaves only shortening the length of retirements that Social Security supports. This option is also massively unpopular, as public demonstrations against it here and around the globe attest.
Yet when Social Security was established in 1935, the average life expectancy was just 63. Today it is nearly 80. We are now down to just three workers paying into the system for every retiree, compared to 16 at the beginning of Social Security.
These workers’ earnings are paid out as current benefits in what amounts to a giant Ponzi game. Like Ponzi schemes before it, this one is also doomed to failure.
The concept of retirement was basically unknown until recently in human history. Everyone worked as long as they could, and the rest were cared for primarily by families. So why is delayed retirement, even modest (two years) and gradually phased in, violently opposed?
Part of the reason is that government subsidies are never “enough.” Free money is always popular, and beneficiaries quickly develop an entitlement mentality.
Since retiree benefits are funded by payroll taxes, the notion of being “owed” is understandable. Unfortunately for proud seniors, the facts now are that the money flows in Social Security are essentially like other government welfare programs.
Fortunately, most jobs today are not as physically demanding as in the past. Medical care for job related injuries is much improved. Disability insurance and retirement accommodations for workers in occupations like law enforcement and the military are already in place. For the rest, many able seniors experience work as manageable and even enriching.
Regardless, the do-nothing option, so wildly popular in this last election, is no longer feasible. The “private account” reform offered by George Bush in 2005, which was demagogued into the ground by the same crowd proudly blocking all reforms this go-around, would have resulted in the average worker having three times more retirement income by now.
This can has been kicked down to near the end of the road. Our options now are to defer retirement or face serious program cuts. Sad.
Dr. Thomas Patterson, former Chairman of the Goldwater Institute, is a retired emergency physician. He served as an Arizona State senator for 10 years in the 1990s, and as Majority Leader from 93-96. He is the author of Arizona’s original charter schools bill.
by Dr. Thomas Patterson | Oct 11, 2024 | Opinion
By Dr. Thomas Patterson |
Free-market economist Milton Friedman was hardly anti-immigration. He acknowledged that, pre-1914, immigrants came “for a better life for them and their children. In the main they succeeded,” broadly benefiting their adopted country.
But there was an important caveat. “It is one thing to have free immigration to jobs. It is another thing to have free immigration to welfare.” Immigrants dependent on public benefits don’t boost their host country. They have the effect of “a reduction of everybody to the same, uniform level.”
Leftists may not like it, but Friedman was right. We’re about to learn the lesson good and hard.
The tens of millions of “undocumented” immigrants now arriving in America have a much different outlook than immigrants of a century ago. In short, today’s immigrants don’t work that much.
A study of Census data by the Atlanta Federal Reserve reported that while over half of new jobs created in the last two years have gone to illegal immigrants, so many have come that barely half of working age, non-college immigrants are in the labor force. Five of six native Americans 25 through 64 regularly work.
The Border Patrol recorded over 10 million illegal immigrants processed during the Biden years plus countless millions not detected. Yet foreign-born employment increased by only 2.32 million. So, who is supporting the rest? We are.
California is the poster child for dependent illegal immigrants. There they get taxpayer-funded health insurance, food stamps, housing allowances, and myriad other benefits, costing $22.8 billion in state and local taxes alone, according to the pro-immigration Institute on Taxation and Economic Policy. Yet this for a population that generated just $8.5 billion in income.
Moreover, many of the programs are direct federal subsidies which means we all participate in their funding. Beyond all this is the escalation in spending by NGOs and philanthropic agencies to house, clothe, and feed the millions of “newcomers” being bused around the country, again at our expense.
The increased pressure on the federal budget, which immigration “hawks” warned against not long ago, has already been normalized. The discussion has subtly passed from whether illegal immigrants should be included in public benefits to how this should be accomplished. Deportation, once assumed for those who failed their asylum hearings (which most do), is now regarded as logistically and morally impossible.
It’s no mystery why our welfare system is a worldwide magnet. Average benefits received by working age households have risen from $7,352 in 1967 to $64,700 in 2022, adjusted for inflation. Welfare spending now consumes 72.6 percent of unobligated revenues (an accounting which doesn’t count payroll taxes or mandatory interest payments) while defense spending has fallen by half.
Most Americans don’t realize that official poverty statistics distributed by the Census Bureau don’t count as income. 88% of the transfer payments made to alleviate poverty. As noted by Gramm and Arrington in the Wall Street Journal, “The census doesn’t count refundable tax credits, food stamp debit cards, free medical care through Medicaid or benefits from about 100 other transfer payments as income.”
When these benefits are deemed to be income, 80% of those today who are counted as poor are no longer poor and the bottom three income quintiles in the Census Bureau all have approximately the same spending power.
With the abundance of means-tested transfer payments available, the percentage of working age persons in the bottom quintile who work has fallen from 68% to 38%. For about the same income, 2.4 times as many workers in the second lowest quintile actually work—and on average work 85% more hours than those in the bottom quintile.
Welfare beneficiaries in the main aren’t liars or cheaters. They are making rational decisions in an irrational environment. America is unfortunately a nation deeply in debt, living on anticipated income from the future. We spend money as if we still had it. The kids will figure it out.
The driving motive behind immigration policy is still to permanently alter the political landscape. The ultimate victims may be the migrants themselves, attracted by promises that in the long run can’t be kept.
As Friedman pointed out, we can’t enrich others by impoverishing ourselves. We all just become more poor.
Dr. Thomas Patterson, former Chairman of the Goldwater Institute, is a retired emergency physician. He served as an Arizona State senator for 10 years in the 1990s, and as Majority Leader from 93-96. He is the author of Arizona’s original charter schools bill.
by Dr. Thomas Patterson | Sep 27, 2024 | Opinion
By Dr. Thomas Patterson |
American elections were once comparatively modest affairs. They were conducted in the autumn every fourth year, beginning about Labor Day until Election Day, when everyone voted.
We went to a designated polling place and cast our confidential votes under the watchful eyes of fellow citizen volunteers. The ballots were transported under strict chain-of-custody procedures to be counted by election officials.
Accommodations were made for those physically unable to vote, but most Americans didn’t regard voting as especially onerous. We were grateful for the privilege and willing to overlook minor inconveniences. There were racial and gender barriers to voting for too long, but those are now thankfully corrected.
Elections are the process, in our democratic republic, by which we choose our governing officials. But they also play an important role in ensuring the unity of citizens by providing a process for fairly reconciling our differences.
Americans have always had strong, often contrasting opinions about how they should be governed. It once took a catastrophic war to resolve our differences but normally elections serve well to determine our way forward. Ideally, all sides get their say, nominate the best candidates they can find and then we vote. The results are conclusive and binding until the next election.
Customs change, rules evolve, and elections today look very different than a few decades ago. Yesterday is never going to come back, but it’s worth remembering that not all changes represent progress. Our elections could use a thorough overhaul.
Campaigns simply last too long. The presidential campaign is now continuous, with candidates beginning to compete by the previous Inauguration Day.
As one result, campaigns have become horrendously expensive. They are endurance contests in which the most successful fundraiser is favored. Insiders can’t get enough of the “horse race,” but ordinary citizens become bored. Considerations of ongoing policy decisions are filtered through their possible effect on the campaigns and the ever-present polls.
Perhaps this extended attention could be justified if the result was more carefully examined and higher-quality candidates. But recent elections have featured generally weak choices. This year’s candidates are widely considered to be laughingstocks, the least qualified candidates in memory. Each is fortunate to have the other for their opponent.
More importantly, Americans have lost faith in the integrity of our election processes. Fully one-third of all Americans believe Biden was not legitimately elected in 2020. In another poll, 81 percent believe democracy to be threatened.
“Not my President” buttons sprouted after Trump’s surprise victory in 2016, and left-wing pundits freely disputed the legitimacy of his presidency. Four years later, rule changes attributed to the COVID lockdowns resulted in looser security procedures and widespread suspicion of fraud. Almost half of Americans and a clear majority of Republicans believe fraud may have been extensive enough to alter the result of the elections.
This level of distrust is toxic to a government “of the people.” Whether or not you believe fraud is widespread, “innovations” like vote counting long before election day, poorly monitored drop boxes, ballot harvesting, slipshod or absent identification procedures, citizenship verification by affirmation only, and voter rolls puffed up by automatic registration at welfare offices leave many non-partisan observers skeptical. Election officials deny any problems and brand those with honest doubts as “deniers.”
The gaping hole in our defense against slipshod practices is bulk-mail voting. There is no possible way we can mail out millions of unsolicited ballots to poorly maintained voter rolls, addressed to people who presumably once lived there, and then count all the ballots that are mailed back and pretend we have a reasonably secure system.
Signature matching, far from perfect, is our main defense against cheating. Yet no signature can possibly assure the vote inside was made without undue influence by a mentally competent person for whom the ballot was intended.
Reliable data is unavailable for logistical reasons, but in a recent survey about one-fifth of bulk-mail voters admitted to some illegal behavior in their handling of the mailed ballots – and those were the ones willing to admit it.
Your precious vote only counts if it is not canceled by fraud. We need Easy to Vote, Hard to Cheat.
Dr. Thomas Patterson, former Chairman of the Goldwater Institute, is a retired emergency physician. He served as an Arizona State senator for 10 years in the 1990s, and as Majority Leader from 93-96. He is the author of Arizona’s original charter schools bill.
by Dr. Thomas Patterson | Sep 13, 2024 | Opinion
By Dr. Thomas Patterson |
“I am not a charter school fan,” Joe Biden declared in his 2020 presidential campaign. That’s disappointing, but not surprising, coming from the self-declared “most pro-union president” in history.
His would-be successor, Kamala Harris, claims to still be equivocating, as is her wont, over her position on charter schools. But she has the enthusiastic support of the teachers’ unions, so that’s a bad sign too.
Her dilemma is that the teachers’ unions, the political partners of the Democrats, are dead set in their opposition to charter schools for two reasons. They expose the education failures of the union-dominated district schools, and most charter school teachers aren’t unionized and therefore don’t pay union dues.
Charter schools, first created in the 1990s, are publicly funded but independently administered. They don’t charge tuition and aren’t allowed to “cherry-pick” the best students.
Charter school opponents once could claim that charter schools “don’t work” to improve academic outcomes. But we know now that this is simply not the case.
Stanford’s Center for Research on Education Outcomes (CREDO) released a 2023 report tracking charter school outcomes over 15 years. The study covered 2 million charter school students in 29 states with a control group in district schools. It is arguably the most comprehensive, credible study ever done of charter schools.
The conclusion was decisive. Most charter schools “produce superior student gains despite enrolling a more challenging student population.”
CREDO’s first study in 2009 showed no improvement in student outcomes from charters, a result still cited as evidence that charters fail to help those deemed “uneducable” by some. But each subsequent CREDO report has shown improvement and superior performance overall.
New York charter school students gained 75 days reading improvement and 73 in math each year compared with traditional schools. In Washington state, the numbers were 29 days in reading and 30 in math. In Illinois, it was 40 in reading, 48 in math.
The recent study also showed that black and Hispanic students achieved disproportionately large gains. A section in the CREDO report described several “gap-busting schools” which educate students from underprivileged backgrounds to perform at the same level as white peers. So much for the myth of “uneducable” students.
The overall statistics would be even better if not for the 15% of charter schools that underperform their local district schools. The telling difference is that failing charter schools can be and are closed. Failing district schools just keep on failing year after year.
There is even more good news. Charter schools benefit even those students who do not attend them. According to an analysis by the Fordham Foundation, at least 12 studies indicate that the scores for all publicly enrolled students in a geographic region rise when the number of charter schools increases. Moreover, neighboring schools which don’t experience academic improvement often showed progress in school attendance and behavioral problems due to competing with charters.
The reason is obvious. The mere presence of choices for parents breaks the district school monopoly. Competition brings more accountability and a “customer orientation” that benefits everybody.
It’s no coincidence that, while traditional public schools have lost students, charter schools have gained over 300,000 students over the last five years. But the institutional opponents of the charter schools are unmoved by the good news. The growth of charters would undoubtedly be even greater if not for the relentless opposition of the teachers’ union/Democratic Party axis.
Ironically, for charter school opponents, charters are highly popular with the working class, ethnic minority constituencies they claim to champion. A poll this May by Democrats for Education Reform found that 80% of black parents and 71% of Hispanics had a favorable view of charters, as well they should.
But the teachers’ unions don’t give away their formidable political support, and they clearly dominate educational policy making with today’s Democrats. The Biden/Harris administration has continued a program of budget cuts and onerous regulations for charter schools, including a proposed reduction for the Charter Schools Program, which provides grants and was even supported by the Clinton and Obama administrations.
The Democrats – and all of us – have a clear choice to make between the needs of students versus the demands of the teachers’ unions.
Dr. Thomas Patterson, former Chairman of the Goldwater Institute, is a retired emergency physician. He served as an Arizona State senator for 10 years in the 1990s, and as Majority Leader from 93-96. He is the author of Arizona’s original charter schools bill.
by Dr. Thomas Patterson | Aug 29, 2024 | Opinion
By Dr. Thomas Patterson |
Kamala Harris in her nomination acceptance at the Democratic National Convention assured the roaring crowd that she would “never stop fighting” for the American people and that she would “blaze a new way forward.” The speech disclosed no details, but she appeared to have in mind merely adding to the benefits that the welfare state bestows on grateful voters.
Subsidies for home mortgages, forgiveness of student loans, and free universal preschool have been dangled as possibilities. However, Harris and the other purveyors of free stuff have a big problem. They are running out of other peoples’ money to give away.
It’s not just America but the world’s advanced economies who are seeing the bill come due for decades of social spending exceeding revenue. American leftists like to chide fiscal conservatives for fretting about high tax rates, but economists now note that some high-tax European states are approaching the peak of the Laffer curve, the point at which raising tax rates fails to raise additional revenues. That means hitting the wall.
Western politicians over the last century developed a different style of campaigning for office. Rather than emphasizing the common good and overall strength of the nation, they competed on the basis of what government services they could provide to individuals and groups.
The responses to the Great Depression and the COVID crisis were especially harmful. The New Deal failed to end the depression. We have WWII to thank for that. But the traumatic experience convinced many Americans to think of government as their benevolent caretaker.
The economic deprivations caused by the COVID crisis were due to mostly self-inflicted wounds like the economic and educational shutdowns. Worse, long after the crisis had passed, the checks kept coming to Americans who were not impoverished. The “emergency” expenditures morphed into entitlements.
America has developed a culture of spending which caused the national debt in 2023 to exceed 120% of GDP while 100% has long been considered the outer limit of acceptable indebtedness. We also have hundreds of trillions more in future obligations to beneficiaries with no funding source available.
Time and demographics are not on our side. In just the next 12 years, aging baby boomers will reduce the ratio of workers (25 to 64) to retirees (65 and older) from 3:1 to 2:1. The fastest growing demographic group is those 85 and older, who require extra funding. Moreover, increased security risks like war and terrorism will create additional budgetary stresses.
There are fewer alternatives to reduced spending than ever available. Tax increases are politically unpopular and often don’t produce the hoped for outcomes because they reduce productivity. European countries have about 50% higher tax revenues than America, yet their real GDP per capita is lower, even factoring in the government services and subsidies they receive.
The era of low interest rates and the accompanying “sugar high” is over. The higher cost of debt financing will inevitably impair the ability of succeeding generations, already tapped out, to shoulder the burden of our selfish spending.
By now, we’ve breezed past all the easy fixes. We are facing severe warning signals, and all the red lights are blinking. Yet in spite of the urgent need to change our ways, both political parties studiously look the other way. Getting elected is still the imperative that trumps all others.
The general accounting office (GAO) recently made recommendations for minor adjustments to federal government procedures that would save $208 billion over the next decade. The major one was equalizing payment rates for offices determining Medicare benefits. The proposals are non-controversial and politicians supporting them could take cover by pointing out that they are endorsed by a non-partisan agency. The response has been…crickets.
Scores of scholarly papers have been written on how to reduce government waste, how to expedite permitting, and how to recover COVID over-payments, all to no avail. The politicians just aren’t that interested and, sadly, neither is the public.
We’re hearing a lot about democracy lately. Both parties claim the other one is an existential threat. Advice to would-be political leaders who are courageous enough to go beyond pontificating and do something that might actually preserve our democracy is simply this: cut the spending.
Dr. Thomas Patterson, former Chairman of the Goldwater Institute, is a retired emergency physician. He served as an Arizona State senator for 10 years in the 1990s, and as Majority Leader from 93-96. He is the author of Arizona’s original charter schools bill.
