Socialism Trend Collapsing USA

Written on:September 9, 2014
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Synopsis — “Socialism Trend Collapsing USA” – US and state driven policies have largely turned progressive communist to affect a massive set of liberal programs now overwhelming capitalism, entrepreneurial activity, jobs, and prosperity for the majority of Americans. The US is positioned for economic collapse due to unsustainable, out-of-control government dependency programs and skyrocketing poverty. Solutions are provided for some aspects.

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Imagine a world where the majority of the people require the minority worker-class to go to work and sustain them financially. Imagine no more. Today, there are 146 million non-veterans in the US dependent, in some financial way, on the government yet only 103 million working full time, year round.

Now imagine a majority percentage of 16.6 million government workers (4.0m fed workers/12.6m state & local) and politicians across the US who are collectively engineering, by design or happenstance, the great liberal agenda of “big government” and “dependent citizenry” – a concept once simply called “communism” or as Karl Marx himself preferred, “socialism”. (1)

About 70% of all US government spending is for welfare and entitlements for the 146 million needful Americans. (2) Programs like Social Security and Medicare, Medicaid, Obamacare, etc. are counted because these programs were considered social safety nets for those workers who could not otherwise afford their own post-retirement financial or medical needs. (2) They all represent well intended but poorly executed programs that have ultimately failed on their promises, goals, and objectives from the point of inception.

Meanwhile, President Obama is intending to add perhaps 6 to 25 million more impoverished people to the welfare roles once he executes an unlawful amnesty for illegal aliens, thereby giving them legal rights to suck off the taxpayer nipple. (3)

Yet due to massive redundancies and overhead costs to run so many social and government programs for the poor, it is now estimated by the Census Bureau that the US is spending 4-times more on such programs than is necessary to get a far better result. In fact, for about 25% of the cost of all programs combined, the US could completely eradicate poverty in America, says the Census Bureau. Rather than run such massively costly bureaucratic programs, the government could simply send the poor a check each year–taxpayers could save trillions of dollars in a few short years.

On Sept 9, 2014, the US Debt Clock Org reported US National Debt was over $17.3 trillion with Gross Domestic Product (GDP) hovering at $16.8 trillion. That is 105.5% debt to GDP ratio. According to the World Bank, the US debt ratio is still lower than the average G-7 developed country of 126%. Of course, the major problem with World Bank statistics is that they often fail to account for all forms of debt, like unfunded liabilities such as those with Medicaid and Social Security in the US. Once added into the mix, the debt ratio, for all intents and purposes, becomes meaningless because it is so wildly astronomical. In other words, the US long ago passed the point of no return fiscally but is using creative bookkeeping to keep the world and public fooled (a topic for another conversation someday).

The giant elephant in America’s financial room is the combination of its debt with a volatile mix of oncoming and growing economic and fiscal factors.

One factor is business and home ownership growth rates, which are well known as the canary in the coal mine that economic trouble is brewing. According to a 2014 Federal Reserve Bulletin (5), “Ownership rates of housing and businesses fell substantially between 2010 and 2013,”

Then there is the factor of 2013 retirement plan participation that is also on a downward trajectory, reflecting 2007 to 2010 drop-out figures—the bottom half of income earners faded the most. (5)

Next there is the hard-to-believe fact that median income fell 5% from $49,000 to 46,700 during 2010 to 2013. (5) That means the average median income family lost $2,300 in spendable income to wage drops alone. It shows the US standard of living is falling before the effects of inflation and other factors are tabled.

In 1980, 12.4% of the US population lived in poverty but by 2014 the number rose to 14.8%. (7) An amnesty for illegal aliens combined with a passage of the Senate’s Comprehensive Immigration Reform proposal is expected to jump poverty up another 10% virtually overnight (given most illegal aliens and immigrants coming to the US now live and remain in poverty and require government handouts to survive). That means the US could see a 25%+ poverty rate just a few years from now if progressives get their way.

Another key impact factor is the Federal Reserve’s interest rate. The Fed has artificially held interest rates at nil so once the process of increasing the rate begins (expected in 2015), the US could find it itself triggering incremental hikes that are compounded by dollar escapism in international markets. We are already seeing dollar escapism by China and Russia. (6) And if not for Belgium propping up the US debt market, America would already be in the throws of hyperinflation now, according to the National Inflation Association. (6) In just 2 or 3 years, that could mean 10% or more across the board price hikes on most goods and services, including food, rent, and energy without a matching pay raise to go with it. That will lower demand, hence force more employers to lay-off workers.

If interest rates rise 5% or hits hyperinflation (double-digits), then the revenues the federal government spends on debt servicing could erode 10% or more to reduce spending on entitlements and social programs as Congress is forced to shift spending to pay for the cost of borrowing deficit money. The result will be an over-stressing force on budgets in spite of huge increases in the need for more spending (such as Obamacare, amnesty costs, inflation, etc.–over $1 trillion per year is now expected to be added to our already over-burdensome $1/2 trillion yearly deficit). That will, in turn, force up the national debt at even faster rates. The US could see a national debt of $32 trillion in under a decade–a level that will collapse US financial markets and global markets with it. It could put an end to the entire federal government as we know it because the interest on the money will exceed revenues coming into the Treasury–its a process known by a more common name, “bankruptcy”.

Meanwhile, workers are being attacked from several directions. There are currently 18.7 million unemployed or a 12.2% real unemployment rate (albeit the government likes to report only 9.5 million are unemployed so it can make things appear better politically). (7) The US also has 27.7 million part-time workers. (7) The aggregate underemployment rate is 15.1% for July 2014. (8) That is a level approaching Third World nation status, when combined with our growing poverty rate. (9)

Some of worker declines can be chalked up to wage devaluation. Average wages have dropped per capita. About 50% of those returning to work are reporting they are getting stuck with the same jobs that now pay less, according to a recent Fox News report. Part of the problem stems from over-importing foreign labor (immigration), which, when done too much, tends to force wages down for all workers. Immigrants tend to work for smaller wages thus putting downward pressure on all established wage earners as well. Some of the wage drops come from anti-business tax policies that are increasingly pushing businesses to move higher paying jobs offshore where they can pay workers less and keep more profits outside of America.

With lower wages comes lower discretionary income, which impacts the economy and jobs too.

Lower discretionary income means lower discretionary spending, which is not good for a US economy that is 70% consumer dependent. Less spending lowers demand for products and services and that lowers employer demand for workers. As more workers compete for fewer jobs, employers force wages lower once again, taking advantage of the market labor glut. Meantime, influxes in low wage immigrant flows can also ensure the labor supply glut continues, which again, helps push wages down more.

One of the problems in America today is that employers do not want to pay livable wages to their employees and instead use business models that rely on government subsidies for lower paid workers. The recent fast-food strikes in 60 cities by workers demanding $15 per hour are a direct result of this very issue–workers do not want to rely on the government for help, they want employers to pay them a livable wage instead. We have seen this same thing in the past with food and beverage workers, who often have to rely on tips to survive because employers refuse to pay livable wages.

Yet social welfare and entitlement programs enable bad business models to operate using underpaid and government subsidized labor, which keeps the national poverty rate climbing.

As we can see, all aspects are tied together in some way or another. The problem is that all these factors and more are now converging toward critical mass and the main driver of the oncoming economic disaster will be social welfare and entitlements that undermine livable wages and sound business models as well as create unsustainable levels of debt. (10) In other words, socialism is collapsing our economy. Socialism is out of control to the point that it is overburdening the entire nation and citizenry and economy with unsustainable levels of debt.

What is clear from simple analysis of these issues, free from political lenses, is that America cannot survive much longer unless the national will takes hold and demands a return to capitalism and an economic model that ensure an over-abundance of opportunity and higher paying jobs that are proven to destroy poverty wherever it hides!

Yet the largest stumbling block to such a worthy transformation goal is the nation’s government worker cultures of progressives and self-serving polices that support larger government and programs that they depend on for their own employment well being.

Government workers consider themselves intrinsically as “non-civilians” or an “elite group” of entitled and protected personnel whose jobs and retirements are largely secured in spite of any private sector or larger economic fallout that might occur—they live in a fantasy bubble of their own making, perpetrated by separatism work cultures. In other words, the culture of government itself is entirely corrupted beyond repair and it is this culture that is ensuring the collection of harms pressed on America—they oppose, with all their might, the shrinking of government or social programs. They drank too much progressive Kool Aid and now they cannot see the very problems they have created or why they need to be addressed in emergency fashion.

What the government sector has failed to understand is that once the dollar drops, hyperinflation arrives and the private sector or consumption centers will then fall, as will the government sector itself—and the latter will fall much harder because inevitably, they will be the ones blamed and targeted by the public for their part in the destruction of capitalism and America Herself. It’s a game of Russian turned “American Roulette” and there will be no winners unless we change course very soon. And that will require, to a great, if not impossible extent, the changing of government culture itself to welcome and pursue needed changes and the massive shrinking of government. And to do that, the private sector needs to step and reassure displaced government workers will have good jobs in the new, private business focused economy of the future–an economy that offers the poor more opportunities than they can imagine to secure decent paying employment that completely lifts them out of poverty for good.

Solution Making

This is the United States of America and it has the capacity to permanently end poverty but not via social and entitlement programs, but through unending focus on ensuring a strong and vibrant economy overfilled with good paying jobs. For it will always be better that 1 million businesses struggle and compete for labor (that pushes wages and standards of living up) than have 1 million citizens struggle to survive and require handouts from those 1 million businesses overtaxed to the point of overburdening their home country. We are First World Nation but right now, we are acting like a Third World degenerate beggar society unwilling to take responsibility and ownership of our mistakes so we can start applying the remedies.

How do we fix entitlements and put people back to work, especially those who want to work but who are trapped by regulations that force government dependency like SSI and other benefits programs? These are some of the answers, not all of them:

  1. End all federal social programs, from Social Security to Medicaid to you name it and simply mandate that the States install suitable programs and administer them (this will lower waste by redundancy by 50% automatically).
  2. Make one application (online) that ensures citizens are applying for any and all government programs that they qualify for and establish one government worker contact person in charge of help the citizen applicant from start to finish. This will cut duplication costs dramatically and speed processing and administration time. Everything a citizen is qualified for appears on one government worker’s screen and their status is instantly known or obtainable with respect to all programs. Give citizen access to the same information so that they can monitor their own accounts and, when needed, act as watchdogs to ensure accuracy and timeliness.
  3. End earned income penalties for benefit recipients. Reset programs so that benefits will be paid even if the program qualified citizen goes on to earn an income and try to escape government dependency–simply use a formula such as “any income totaling more than 150% of the federal poverty guidelines shall be deducted from the benefits paid dollar per dollar. This way, people have a safety net as well as an incentive to get back to work and earn more–most Americans polled even today say they would rather work and be fully independent than rely on the government so give them a chance to do that. Current regulations all too often prohibit work because program benefits can be cut altogether–most people do not want to lose their only safety net.
  4. Anyone who is on a program and gets off due to work should be given a simple re-application process (1-page only) and priority status so they can return to their safety net if they lose work and cannot remain off the program for 60-months. This eliminates the stress of government dependent fearing private sector jobs because their long term benefits could be eliminated. And that, in turn, gives them incentive and freedom to escape government dependency.
  5. One of the most harmful things the US government does is steal from its citizen’s retirement and medical accounts or income that should be going toward it. The Congress needs to create a law that requires 67% majority vote in both Houses and approval of the White House in order to change the law–a law that creates Personal Retirement Savings, Investment, and Medical Account (one account for all items) that under no legal circumstances (including the IRS) whatsoever can be attached, offset, confiscated or otherwise taken away from the citizen (except if the money is first legally proven to have been obtained by a felony crime within the 1st 12-months of being deposited). And any money up to 20% of a person’s income or $100k per year should be installed into the account tax free going in and out. This way citizens can work on giving themselves far better retirement incomes and medical savings accounts than the government can or will ever provide. Users of these accounts will have the confidence they need to know that government or IRS or other greed-struck government fingers will not be trying to chip away at their nest eggs due to politics and government mismanagement as we have seen with the Social Security Trust Fund and other programs.

 

REFERENCES

(1) US Census Bureau, quoted from “86M Full-time Private Sector Workers Sustain 148M Benefit Takers” by Terence P. Jeffrey is the editor in chief of CNSnews.com.

(2) It is true that US workers pay a Social Security payroll tax, which was designed to offset the program’s costs. However, workers only paid in about 30% of what the fund needed in order to pay each person out their benefits in our modern era. The system is under-funded. However, had program’s trust fund been untouchable by politicians, and the money in it invested like a pension fund, Social Security would be easily solvent for the next several decades. The politically thievery of the Trust Fund is perhaps one of the least understood issues in the US yet considered by many pundits to be one of the largest ongoing crime sprees ever perpetrated against US worker and public (albeit the way the fund has been stripped clean has been done in such a way as to comply with the law so it is technically not a crime for politicians to drain the fund–but this author would argue it should be).

(3) Previous studies by the INS (now known as ICE) have proven that the average illegal alien, after all benefits paid to the system and economy are tabulated, typically have a net cost to taxpayers of over $10,000 per person, per year. This is mostly due to the fact this group tends to work for sub-par wages because of their illegal status (thus undermining normal wages for others) and thus need government handouts to carry on with their better life in America. In other words, Obama’s amnesty will cost taxpayers from $60 to $250 billion a year more.

(4) “Dependence On Government Has Become Epidemic” by  Gary D. Halbert
April 29, 2014

(5) Federal Reserve Bulletin (2014): “Changes in U.S. Family Finances from 2010 to 2013: Evidence from the Survey of Consumer Finances”. (pdf)

(6) “America Running Out of US Treasury Buyers,” National Inflation Association

(7) US Debt Clock org

(8) Statista: “US underemployment rate from July 2013 to July 2014 (by month)

(9) Note: Globalist prefer the term “emerging economies” to “Third World” but the former term is misleading propaganda while the latter term is far more accurate in reflecting poverty levels and lack of modernisms. However, there are some countries that are “emerging” but not considered 3rd World, like China (but India, by contrast, is still 3rd World due to its massive amounts of poverty and overpopulation and related problems).

(10) Note: Sound business models are businesses that can sustain themselves and create profit and wealth even though they pay their workers a “livable wage”. For example, agriculture has long proclaimed it cannot afford field labor at livable wage levels but studies have shown that the cost increases to consumers is essentially negligible for virtually everything grown or raised in the US. Yes, some businesses may collapse or suffer too much if all businesses are forced to pay livable wages but that is okay—they will be replaced by better business models more appropriate to the needs of workers and the US economy (and if they are not replaced but are considered nationally needed, then, and only then, should the government look into supplementing wages for those unique sets of employers/workers, which should be extremely rare if the criteria is set correctly, with strict national need or security in mind). In nearly most cases, business can raise the minimum wage to $15 across the board and it will not hurt them because their competitors have to do the same thing–but workers will get some needed relief. A more favorable application is to tie the minimum wage to a set of inflation indexes so it can raise or lower itself as the economy waxes and wanes.

 

 

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