Taxes, Chicago-Style

City Of Chicago Bag Tax - Goes In Effect February 1, 2017

Edtior's Note: This is not a price charged by the store for a bag but a tax applied by the city to each bag that a store uses to bag your purchases, which is payable to the city of Chicago.

To encourage customers to bring their own reusable bags, the City of Chicago is implementing a $.07 tax on each paper and plastic bag provided by stores to customers to carry out purchased items.  Businesses will start collecting the tax on February 1, 2017.

Some exemptions, include:

Paper and Plastic bags used to package loose bulk items, such as fruit, vegetables, nuts, grains, candy, cookies, or small hardware items or to contain or wrap frozen foods, meat or fish, whether prepackaged or not.

Bags Provided by a pharmacist to contain prescription drugs, dry cleaning, or garment bags and newspaper bags.

Bags sold in packages containing multiple bags intended for use as garbage bags, pet waste bags or yard waste bags.

Bags provided by a dine-in or take-out restaurant to contain food or drink purchased by the restaurant's customers.

It is a good time to start the new habit now.  Take your bags to the store with you!

Paper and Plastic bags used to package loose bulk items, such as fruit, vegetables, nuts, grains, candy, cookies, or small hardware items or to contain or wrap frozen foods, meat or fish, whether prepackaged or not.

For more information, visit: https://www.cityofchicago.org/city/en/depts/fin/provdrs/tax_division/news/2016/december/NewCheckoutBagTax.html

Chicago property tax bill double whammy: Increases plus an assessment hike

August 1, 2016

Illinois Cities and Counties Await Tax Disbursements from the State, Which Has Been Operating Without a Budget for Sixth Months

New Republican Governor Bruce Rauner and the Democratic-controlled General Assembly in Illinois are embroiled in a fiscal standoff. As the state enters its sixth month without a budget, Gov. Rauner wants structural changes to make running business cheaper, curb union power, and restore faith in politics; Democrats say those issues are unrelated to the budget and the state needs a tax increase and spending cuts to fill a multibillion-dollar hole. The House approved a Rauner-endorsed plan this month to release already-collected tax revenue from sources such as motor fuel and 911 taxes, but the Senate left town before taking action. A spokeswoman for the Governor said that Rauner understands the frustrations in the town halls and county board rooms; she explained that because the (Democratic) super majority in the Legislature failed to pass a balanced budget, the state lacks the appropriation authority to disburse the funds. 

Cities, counties demand action amid Illinois budget mess

December 1, 2015

AP - Nervous mayors and county officials are piping up about the Illinois budget crisis, with one city even threatening to turn off the lights at a state garage because of an unpaid electric bill.

New Republican Gov. Bruce Rauner and the Democratic-controlled General Assembly are embroiled in a fiscal standoff. As the state enters its sixth month without a budget, local governments are becoming more vocal with their concerns that Springfield isn't passing along the tax revenues it collects for such things as road improvements and emergency dispatch — or paying bills for power or water.

At least three counties have sued over emergency-service tax disbursements, and the board that governs the village of Mundelein, a suburb 40 miles northwest of Chicago, formally asked the state to release an amount which will soon approach $1 million.

"We wanted to at least send a message that it's not lost on us that they're holding our money," Mayor Steve Lentz said. "They have to get off the dime. The trustees and I feel it's not a partisan thing — we need both parties to come together to resolve this and fix our state."

Rauner and legislative leaders are scheduled to meet Tuesday, although expectations are low.

They have been unable to agree on a spending plan that should have taken effect this past July 1.

Rauner wants structural changes to make running business cheaper, curb union power, and restore faith in politics. Democrats say those issues are unrelated to the budget and the state needs a tax increase and spending cuts to fill a multibillion-dollar hole.

The House approved a Rauner-endorsed plan this month to release already-collected tax revenue from sources such as motor fuel and 911 taxes, but the Senate left town before taking action.

Congress Could Cut Social Security Disability Insurance (SSDI) Payments 19 Percent by 2016

To shore up the SSDI, Congress could redirect payroll taxes from Social Security's much larger retirement fund — as it has done in the past. However, the House adopted a rule Tuesday blocking such a move, unless it is part of a larger plan to improve Social Security's finances, by either cutting benefits or raising taxes. If Congress doesn't act, benefits for 11 million disabled workers, spouses and children would be automatically cut by 19 percent. The average monthly payment for a disabled worker is $1,146, or a little less than $14,000 a year. Advocates for older Americans are warning that the rule could be used to help push through benefit cuts, especially since House Republicans have opposed raising taxes. 

"It is difficult to believe that there is any purpose to this unprecedented change to House rules other than to cut benefits for Americans who have worked hard all their lives, paid into Social Security, and rely on their Social Security benefits, including disability, in order to survive," said Max Richtman, president of the National Committee to Preserve Social Security and Medicare. 

David Certner of AARP said it would be a mistake to eliminate the option of redirecting money from the retirement fund, which Congress has done in the past. Social Security has more than $2.7 trillion in reserves, but the retirement program has been paying out more in benefits than it collects in payroll taxes since 2010. The disability program has been paying out more than it collects since 2005. Social Security is supported by a 12.4 percent tax on wages up to $118,500. Half is paid by workers and half is paid by employers. Most of the payroll tax — 10.6 percent of wages — goes to the retirement fund. The remaining 1.8 percent of wages goes to the disability fund. [Source]

The GOP majority adopted a procedural rule to bar legislators from using Social Security retirement funds to support the disability program unless the move is accompanied by measures that stabilize the overall Social Security system. The Disability Insurance Trust Fund is projected to be unable to pay full benefits at some point in 2016. The 2011 Budget Control mandates automatic spending cuts.

Republican Congress Launches With Back-Door Attack On Social Security Benefits

January 7, 2015

Think Progress - Republicans are starting the new Congress by attacking Social Security funding through a subtle, obscure policy measure buried in the gigantic bill that establishes parliamentary rules for the new session.

The rules measure, passed late Tuesday after other day-one business like formal swearing-in ceremonies for members were completed, escalates the threat of a significant cut to Social Security Disability Insurance (SSDI) within the next two years. The measure bans a common accounting technique that the people who manage Social Security funding have used many times in the past to prevent benefit cuts. The two funds that comprise the Social Security system have essentially borrowed from one another as necessary over the years to ensure that benefits can be paid in full each year. SSDI, which is the primary program for providing federal benefits to people unable to work due to disability, is projected to hit a shortfall in late 2016. Reallocating revenue from the much larger Social Security retirement benefits fund to SSDI would cover the shortfall, and trust fund managers have performed such reallocations 11 times since the late 1950s.

But the Republican rules package prohibits Congress from authorizing such a transfer. That will force a showdown over how to finance disability benefits sometime in the next two years, with the threat of a nearly 20 percent cut to SSDI payments looming over the debate. The measure was overshadowed in the news by a separate rules package measure that threatens to rig the legislative process in favor of trickle-down tax policy, until the beginning of this week when critics began to decry the change.

The Center on Budget and Policy Priorities called the rule an “attempt to pit retirement and disability beneficiaries against each other” that misrepresents how the two funds operate, and pointed out that the only reason SSDI is in funding trouble next year is that it got short-changed by the past two reallocations of funding between disability and retirement benefits. Sen. Elizabeth Warren (D-MA) accused the GOP of “inventing a Social Security crisis that will threaten benefits for millions & put our most vulnerable at risk.” Sen. Sherrod Brown (D-OH) called it “a dangerous new rule” that will “set the stage to cut benefits for seniors and disabled Americans,” and pointed out that reallocating funds between the accounts is so uncontroversial that President Reagan oversaw four of the 11 times it has been done in the past.

Rep. Tom Reed (R-NY), who is taking credit for engineering the rules change, has received significant campaign financing from at least one well-heeled conservative supporter of cutting Social Security. Reed has gotten over $134,000 in contributions from people tied to vulture capitalist Paul Singer’s firm Elliott Management, according to the Center for Responsive Politics. Singer is most famous for his battle to force the nation of Argentina to prioritize debt payments to Elliott Management over public expenditures for its 41 million citizens. But the generous Republican donor is also a sharp critic of American government spending and has called for cutting benefits in Social Security, Medicare, and Medicaid.

Reed told the Associated Press that his rules proposal is intended to force a reckoning over social insurance spending. “We need real reform,” he said, and “this makes that real reform that much more likely.” Leaving aside the question of what Reed means by “real reform,” and the fact that the proposed reallocation would have extended disability funding by 17 years while reducing retirement funding by just one year, the move is raising serious procedural concerns among retiree advocates.

Social Security experts Nancy Altman and Eric Kingson labeled the move “hostage-taking to force changes that the American people do not want to a vital program” in a piece for the Huffington Post. Reed’s rule means that “we could be facing a deadline, and certainly over the last couple of years ,we’ve seen Congress seemingly unable to pass bills, even with deadlines in front of them,” the American Association of Retired Persons’ David Certner told the AP.

The other political ingredient in the debate Reed and the GOP are trying to force is years of skewed media coverage of the disability insurance system. Reports that SSDI is riddled with fraud and overrun with false claims have showed up in an ideologically diverse array of news sources over the past two years, from public radio’s This American Life to CBS’ 60 Minutes to the conservative media machine. The reality is that just 41 percent of those who apply for disability benefits receive it thanks to the program’s uniquely strict eligibility rules and stringent, multi-layered application process. Among those who do clear the program’s hurdles and enroll, fraud is extremely rare. A 2011 Government Accountability Office report found an erroneous payments rate of just 0.6 percent, among the lowest of any government program, and President Bush’s Social Security Administrator estimates waste, fraud, and abuse account for less than 1 percent of SSDI spending. But the reality of the program — such as the fact that disability insurance is getting more expensive because of long-anticipated demographic shifts — has likely already been lost in the trans-partisan furor over a supposed epidemic of freeloading.

Downsize the Government on All Levels - Reduce the Burden on the Taxpayers by Letting Us Keep More of Our Hard-Earned Wages and Decide for Ourselves How Best to Spend Our Income

Overpaid Federal Workers

By Chris Edwards, Cato Institute
August 2013

Introduction

With projections of large federal deficits for years to come, policymakers should scour the budget looking for places to cut spending. One area to find savings is the generous compensation paid to the federal government's 2.1 million civilian workers.¹ Total wages and benefits paid to executive branch civilians will be about $248 billion in 2013, indicating that compensation is a major federal expense that can be trimmed.²

During the last decade, compensation of federal employees rose faster than compensation of private-sector employees. As a consequence, the average federal civilian worker now earns 74 percent more in wages and benefits than the average worker in the U.S. private sector.³ A job-to-job comparison found that federal workers earned higher wages than did private-sector workers in four-fifths of the occupations examined.⁴

The federal workforce has become an elite island of secure and high-paid workers, separated from the ocean of average American workers competing in the global economy. Policymakers have taken actions in recent years to partially freeze federal wages. The next steps should be to overhaul federal benefits and downsize the federal workforce through program terminations and privatization.

Federal Pay Advantage

In 2012 federal civilian workers had an average wage of $81,704, according to data from the U.S. Bureau of Economic Analysis.⁵ By comparison, the average wage of the nation's 104 million private-sector workers was $54,995. Figure 1 shows average federal- and private-sector wages since 2000.

When benefits such as health care and pensions are included, the federal compensation advantage over private workers is even larger, according to the BEA data. In 2012, federal worker compensation averaged $114,976, or 74 percent more than the private-sector average of $65,917. Figure 2 shows that average federal compensation has grown rapidly over the last decade.

An analysis by USA Today revealed particularly fast wage growth at the top end of the federal workforce.⁶ By 2009, there were 383,000 federal civilian workers with salaries of more than $100,000, 66,000 with salaries of more than $150,000, and 22,000 with salaries of more than $170,000.

Rising federal compensation stems from legislated increases in general pay, increases in locality pay, expansions in benefits, and growth in the number of high-paid jobs as bureaucracies become more top-heavy. Compensation growth is also fueled by routine adjustments that move federal workers into higher salary brackets regardless of performance, and by federal jobs that are redefined upward into higher pay ranges.

Politics also plays an important role. Federal workers are a powerful special-interest group, and they are very effective lobbyists. Members of Congress who have large numbers of federal workers in their districts push relentlessly to expand pay and benefits. Another factor is that the George W. Bush administration supported large pay increases for the uniformed military, and that prompted federal unions to demand similarly large increases for civilians.

Some people argue that the federal government has a unique high-end workforce, which deserves to be paid handsomely. But let's consider some ordinary and mundane offices in the U.S. Department of Agriculture. In 2012, the USDA's Office of Communications employed 59 people and paid $8 million in wages and benefits. That works out to $136,000 each for these public relations workers.⁷ Or consider that the 49 employees of the USDA's Office of Chief Economist earned an average $184,000 each in wages and benefits in 2012.⁸ It isn't just rocket scientists that are earning high federal compensation, it is also workers in many run-of-the-mill bureaucratic jobs.

More importantly, the federal workforce has always had a heavy contingent of skilled professionals such as lawyers. So that does not seem to explain the faster growth in federal compensation than private compensation shown in Figures 1 and 2. In 2000, the average federal worker earned 50 percent more in total compensation than the average private-sector worker. By 2012, that ratio had risen to 74 percent.⁹

Another way to evaluate federal pay is to compare average compensation in 72 industries tracked by the U.S. Bureau of Economic Analysis.¹⁰ In 2008, federal civilian workers had the seventh-highest average compensation level of the 72 industries. The federal workforce had a higher average compensation level than such high-skill industries as computer systems design, chemical products, and legal services. See these industry data charted here.

In the past, there was a view that because it was a privilege for citizens to serve the public in a federal agency, federal pay should be fairly modest. Unfortunately, that sort of thinking has gone out the window as the federal pay advantage continues to increase.

Job-to-Job Wage Comparisons

Despite the escalation of federal compensation, federal labor unions and some government officials continue to claim that federal workers are underpaid. Indeed, they claim that federal workers suffer from a large "pay gap" with private-sector workers. The government's Federal Salary Council releases an annual memo reporting on the size of the supposed pay gap, which in 2009 was 26 percent.¹¹ The gap is supposed to be determined based on job-to-job comparisons, but the results rest on calculations that are non-transparent and subject to a large amount of statistical modeling.

One reason why the official pay gap results are suspicious is that they don't square with Bureau of Economic Analysis data on overall pay trends. The BEA data show that average federal wages have grown faster than average private wages in most years, yet the official pay gap has remained very large. The official pay gap was 22 percent in 2001 and 26 percent in 2009, thus supposedly indicating that federal workers became a bit worse off relative to private-sector workers during that period.¹² Yet the BEA data show that average federal salaries rose 47 percent between 2000 and 2009, which was much faster than the 29 percent increase in the private sector. Since the BEA data are authoritative, there must be something wrong with the official pay gap methodology.

The other problem with the official pay gap data is that simple job-to-job comparisons show that federal workers are generally overpaid, not underpaid. A recent USA Today analysis of more than 200 occupations revealed that—rather than suffering from a 26 percent pay gap in 2009—federal workers typically have wages 20 percent higher than private-sector workers.¹³ The analysis found that "federal employees earn higher average salaries than private-sector workers in more than 8 out of 10 occupations... accountants, nurses, chemists, surveyors, cooks, clerks, and janitors are among the wide range of jobs that get paid more on average in the federal government than in the private sector."¹⁴ And note that the USA Today analysis did not include benefits, which are very generous in the federal government.

Employee Benefits

Comparisons of federal and private pay often just look at wages and do not consider the superior benefits received by government workers. The Bureau of Economic Analysis provides data showing the average value of federal and private-sector benefit packages.¹⁵ In 2012, federal workers enjoyed average benefits of $33,271, which compared to average benefits in the U.S. private sector of just $10,921. That huge advantage stems both from more federal workers receiving certain types of benefits and from particular federal benefits being more lucrative than those available in the private sector.

Federal workers receive health insurance, retirement health benefits, a pension plan with inflation protection, and a retirement savings plan with a government match. They typically receive generous holiday and vacation schedules, flexible work hours, training options, incentive awards, generous disability benefits, and union protections.

Lily Garcia, a human resources specialist who contributes to the Washington Post, noted: "The primary advantages of working for the federal government are generous benefits, solid pay, and relative job security, a combination that is challenging to find in the private sector, even in the best of times.¹⁶

Garcia summarized the federal benefits package:¹⁷

• "Health Care: The Federal Employee Health Benefits Program offers the widest selection of health care plans of any U.S. employer. Federal employees also have access to vision and dental plans, life insurance, flexible spending accounts, and long-term care plans."
• "Paid Time Off: Federal employees enjoy liberal amounts of paid time off, including 13 days of sick leave per year, 10 paid federal holidays, and 13 to 26 days of paid vacation, depending on years of service."
• "Retirement Benefits: Federal employees have access to retirement benefits through the Civil Service Retirement System or the Federal Employee Retirement System. Under both plans, retired employees receive an annuity, which is complemented by Social Security benefits and participation in the Thrift Savings Plan that offers 401(k)-type investment options."
• "Family-Friendly Policies: Another notable benefit of federal employment is family-friendly policies, including flexible work schedules, telecommuting, part-time jobs, and job sharing. Not to mention the fact that federal employees enjoy first priority and subsidies at a number of top-notch day care facilities."

There is another important benefit of federal employment: extremely high job security. U.S. Bureau of Labor Statistics data show that the rate of "layoffs and discharges" in the federal workforce is just one-quarter of the rate in the private sector.¹⁸ Only about 1 in 5,000 federal nondefense workers is fired for poor performance each year.¹⁹

It seems clear that federal wages and benefits have grown to excessive levels in recent years. But we can "market test" that proposition by looking at the worker quit rate—at what rate do workers voluntarily leave the federal government to take other jobs? It turns out that the quit rate in the federal government is only one-quarter the quit rate in the U.S. private sector.²⁰ Federal workers know that they have a gold-plated compensation package and high job security, which is hard to match in the private market, and so they stay put.

Conclusions

It is often assumed that the federal government should have the nation's highest-skilled workers, and that it should pay top dollar to get them. But federal hiring of the very best workers imposes an "opportunity cost" on the economy by drawing talented people away from higher-valued activities in the private sector. Unlike, say, France, where the best university graduates historically have gone into government, the United States has historically prospered because the best and brightest have flocked to places such as Silicon Valley.

Federal pay should be reasonable, and we certainly need competent workers in federal jobs, assuming that they are jobs that are really required. But the government industry shouldn't be one of the highest-paid industries in the nation. Indeed, an advantage of reducing federal pay would be to encourage more turnover in the currently very static federal workforce. That would get more young and energetic people in government, which would be a good thing.

Another way to help solve the federal pay problem would be to privatize federal jobs where possible. For example, the average compensation of federal air traffic controllers is remarkably high.²¹ Is it too high? We can find out by privatizing air traffic control—as Canada has done—and let the market decide. Does the government pay postal workers too much? Let's privatize postal services—as Germany has done—and let the market decide.

With regard to immediate policy reforms, Congress should overhaul the federal benefits package to reduce costs. It should, for example, phase-out defined-benefit pension plans, as most private-sector employers have. To deal with today's large budget deficits, we need to restrain all areas of spending, and so it is reasonable to cut federal pay packages and better align them with private-sector practices.

EDITOR'S NOTE: 

The same holds true for salaries of local, county and state government employees over the past decade - compensation has risen faster than compensation of private-sector employees. Public sector workers across the board earn 40 percent or more higher wages than their private-sector counterparts; plus they have generous benefits packages and traditional pension plans that enable them to retire after 30 years of service, which are not available to the vast majority of private sector workers.

Uncle Sam's Plantation: How Big Government Enslaves America's Poor (and Rewards the Bureaucrats)

Uncle Sam's Plantation

UrbanCure.org - Star Parker, freedom fighter and social policy activist, has written a blistering indictment of today's culture of government dependency.

"Uncle Sam's Plantation: How Big Government Enslaves America's Poor and What You Can Do About It" traces the benign origins of the welfare state and its evolution into a $400 billion plus monstrosity of programs that effectively enslave America's poor.

Parker, a former welfare mother, has seen first hand the damage that a life of dependency renders. Years of massive government spending have left America's inner cities in shambles, black families destroyed, and youth uneducated and directionless.

It's time to cut our losses, get government and bureaucrats out of the way, and return our precious and limited resources to where Americans know how to use them best - to the control of private citizens. Perpetuation of the lie, says Parker, that government programs can solve the problems of individuals has left a generation of black Americans with a loss of a sense of self, hope, and responsibility.

In Uncle Sam's Plantation, Parker reveals how:

• The welfare system enslaves the poor on a subsidized, legal plantation
• The left and right continue to look in error to government approaches to poverty
• Government undermines the framework of morality and values without which poverty and adversity cannot be overcome
• Politicization of welfare, education, our tax system, and our retirement system perpetuates the cycle of poverty

"Thirty-five years of Great Society social engineering have forced the disadvantaged to live under the control of the federal government.

Politicians control their housing, their food supply, their schooling, their wages, and their transportation.

A centralized government makes decisions about their childcare, healthcare, and retirement. It controls their reproduction through abortion and wants to control their deaths through euthanasia."

Through the welfare system, "Uncle Sam has developed a sophisticated poverty plantation, operated by a federal government, overseen by bureaucrats, protected by media elite, and financed by the taxpayers. The only difference between this plantation and the slave plantations of the antebellum South is perception."

Welcome to the Narcissistic Nanny State

Monopolies and Manipulated Stats by JJ3 The Liberty Bard

Joel Jenkins, The Liberty Bard (via his comment at TheCommonSenseShow)

Welcome to the narcissistic nanny state
It’s a bureaucratic feudalistic magistrate.
It’s got an ego powered artificial mad mandate,
If you’re full of self importance than you think it’s great
If you love to control others then you can relate
But the only thing a government can ever create
is a central banking system a destructive tax rate,
and a craving for power they can never satiate.

CHORUS:
Governments and bureaucrats,
Monopolies and manipulated stats
Bureaucracies and men in black,
Well help you fund your coup de’tat.

They’ll offer you destruction and democracy,
They’ll give you money if you follow policy,
They’ll never let you know it’s all a fallacy
They’ll even let you pretend that you’re truly free
As long as you don’t ever go and disagree
Then they won’t shock and awe you very viciously.

We’re regulated by fickle fabulous fools,
Who love to dominate you with their government rules.
They’re in it for the power and perhaps the glory,
Manipulate the media to sell their story

The military industrial complex,
Enforces all their orders regardless if they wreck,
The lives of ordinary people by mistake,
To get your vote they’ll give but they prefer to take.
To offer up a little bit of clarity,
You just can’t print prosperity.
I just want a government that’s sensible,
And follows a non aggression principle,
But every day leviathan increases in size,
Truth is treason in an empire of lies.

Who Owns You? America’s Descent into Feudalism in 10 Easy Steps

America’s Descent Into Feudalism In 10 Easy Steps

Dave Hodges
The Common Sense Show
February 8, 2014

Who Owns You?

Who owns your life? Who retains the fundamental authority over your resources, speech and even thought processes? Prior to reading American Feudalism in Ten Easy Steps, I strongly suggest viewing the following four minute video which raises the question of who owns you?

Whatever Happened to the Consent of the Governed?

The founding fathers notion that our elected leaders only expressed power so long as they had the consent of the governed, has seen its day and the notion is as dead as a doornail.

Today, Americans are subjects, not citizens. We are enslaved, not free. The authority of the elite, as expressed through the collective power of the government, constitutes the sovereign authority in this country. The People are no longer sovereign.

When one steps back and looks at the brilliant strategy being used to enslave us as concocted by the global elite, one can only marvel at their cleverness. The subjects of this country are being turned into feudal slaves in ten easy steps.

America’s Descent Into Feudalism

First, Wall Street Banksters play the reckless derivative debt game and collapses the world’s economy with a domestic American debt of 1.5 Quadrillion debt. The entire value of the planet is estimated at between $66 trillion to $75 trillion dollars. Since your government has so generously decided, on your behalf, that it is your obligation to support the banksters, you will pay endless tribute to the very group responsible for this debt. Congratulations, you are a debt slave!

Second, home values dramatically dropped and foreclosures reached record levels. The MERS mortgage fraud continues unabated where there exists up to 30-40 separate fraudulent title notes on your home, any of which can be used to seize your property at a moment’s notice, even if you are current on your mortgage payments. In reality, you own nothing.

Third, the banks begin seizing underwater properties with money printed out of thin air by the Federal Reserve. As has been reported in this column, multiple times, the Federal Reserve is printing $40 billion dollars per month to buy up as much American real estate as possible. The elite are preparing to rent you back your property for the privilege to live on their feudal manor.

Fourth, the economy will eventually collapse from printing 40 billion dollars of mortgage backed securities every single month. Every mortgage goes into receivership after all home loans are called in and the elite will own every single property in the country.

Fifth, global currency and global government are ushered in following the collapse of the dollar which lead to a domino effect in which all other fiat currencies will collapse like a house of cards. If you don’t think that an economic collapse is in our future, you have obviously never heard of these three numbers:

National Debt of $17 trillion dollars

Unfunded liabilities of $240 trillion dollars

Derivatives debt of $1.5 quadrillion dollars

Those of you, most of you, who are not resource independent, will be at the mercy of the elite when the currency collapse arrives. When this moment occurs, you will further be at the mercy of the elite’s minions, the government. When they control your food, water and safety, they can do anything they want to you. If the elite wants population reduction, by any means possible, they will have the ability to carry it out. If they desire slave labor, as called for in Executive Order 13603, they can create a modern day version of Roman slavery.

Sixth, Obama will soon move to enforce the previously adopted UN gun ban treaty, which will leave the emerging American serfs totally defenseless as the DHS uses the newly purchased 2.2 billion rounds of ammunition on the dissenters. This may be the key step in our demise, as most Americans will willingly give up their guns when told to do so. History shows that all gun confiscations opens the door to eventual genocide.

Seventh, with Americans forced out of their homes, with the help of the MERS mortgage fraud, displaced Americans can be forced into the new stack and pack cities complete with their 200-500 square foot Agenda 21 style micro-apartments. This is when the nightmare of Agenda 21 will come into play in a very brutal form. The Hunger Games scenario will become reality while the elite live and play in their version of Capitol City which will most likely be  located in Denver.

Eighth, Americans will be subject to forced vaccines and real depopulation will begin in earnest. The mercury laden cocktails will continue to lower IQ’s, reduce fertility and lead to premature decline and death. I find it stunning that our fellow countrymen have so willingly acquiesced to this illegitimate authority which forces vaccines upon us with only a minimal amount of protest.

Nine, will consist of one child limits that will be placed on families. Our future has been foretold in a 1998 young adult novel by Margaret Peterson Haddix concerning a fictional future in which overly drastic measures have been taken to quell overpopulation. In reality, there is no overpopulation. However, there are too many of us to be effectively controlled and we will soon see some very draconian population control methods put into place. Are you surprised? Bill Gates is calling for the sterilization of the third world.

Tenth, the 10% who survive this vicious depopulation transition will live in the darkest days of humanity in a hellish nightmare that even George Orwell could not have foreseen. Under the banner of Fabian Socialism, it is not hard to predict that mandatory life span restrictions for the peasant class, which will someday be imposed on the subjects who reside on the new feudal manor. The existence of GMO’s, fluoridated water and chemtrailed skies have pushed us a long way towards accomplishing this goal. Despite paying the most for healthcare in the world, Americans only have the 51st longest life span. Cubans live one year longer than we do. You decide if it’s by design. And while you are deciding, consider the role that the overarching overlay of governmental tyranny will consist of as the government begins to fully exercise their brutal authority under the auspices of the NDAA and Executive Order 13603.

Conclusion

There is one viable way out of becoming a subject of the feudal manner. We could collectively engage in civil disobedience. We could grind down the elites control over us by refusing to play in their game. If this is going to happen, it needs to happen now for when the feudal manor is fully constructed, there may be no escape from its clutches.

Military and Federal Workers Are Living the Good Life While the Ones Who Pay Their Salaries Struggle

Between 2001 and 2009, per capita spending on three major components (basic pay and allowances for housing and subsistence) of cash compensation for active military personnel rose by 37 percent in inflation-adjusted dollars.

Government Would Save Billions by Capping Pay, CBO Says

March 15, 2011

GovExec.com - Reducing annual pay increases for federal civilian workers and military personnel would save the government billions of dollars during the next decade, according to the latest figures from the Congressional Budget Office in a report on trimming the burgeoning deficit.

CBO estimates the deficit will rise to $7 trillion during the next 10 years if mandatory and discretionary spending is not reined in across government. Capping military pay increases and reducing the annual across-the-board adjustment for civilian raises are two available areas, among several others, for cuts, the March 2011 report said.

The nonpartisan CBO said if the government capped the basic pay increase for service members from 2012 to 2015 and set raises at a rate 0.5 percentage points below the increase in the employment cost index,

it would save about $6 billion between 2012 and 2016, and $17 billion between 2012 and 2021. Since 2001, lawmakers have approved military pay raises for the average service member that exceeded the ECI by 0.5 percentage point.

President Obama's fiscal 2012 budget request proposes a 1.6 percent pay raise for military personnel and allocates an overall $8.3 billion for education, housing and other quality of life programs for service members.

"Between 2001 and 2009, per capita spending on three major components of cash compensation for active military personnel rose by 37 percent in inflation-adjusted dollars," the report said, citing basic pay, and allowances for housing and subsistence, as the primary compensation categories.

Overall, the Defense Department accounts for more than half of all annual discretionary funding, and any significant deficit reduction needs to take into account Defense appropriations, CBO said.

Nearly 40 percent of all spending is discretionary, totaling more than $1.3 trillion in 2010.
As for civilian compensation, CBO says the government could save about $10 billion during five years and $50 billion during 10 years by reducing by 0.5 percent the annual across-the-board pay raise expected under the 1990 Federal Employees Pay Comparability Act from 2013 to 2021. Obama has called for a federal civilian pay freeze in 2011 and 2012. Compensation costs for civilian personnel make up about 15 percent of federal discretionary spending, according to CBO.

But the report said the bigger savings would come from capping military pay.

According to CBO's analysis, "median cash compensation for military personnel -- including the tax-free cash allowances for food and housing -- exceeds the salaries of most civilians who have comparable education and work experience."

CBO acknowledged that reducing pay for service members and civilians could hinder recruitment and retention.

"That effect might be more pronounced for federal agencies that require workers with advanced degrees and professional skills."

To offset some of the pain associated with lowered base pay for service members in particular, CBO suggested expanding reenlistment bonuses. 

The report highlighted other areas for spending savings that would affect the health care benefits of Defense personnel, among them:

• An increase in cost-sharing in TRICARE for military retirees who are not yet eligible for Medicare;


• A limit on the TRICARE benefit for military retirees and their dependents (many enrollees who already have employer-sponsored insurance through a civilian job opt for enrollment in TRICARE Prime, which has the lowest out-of-pocket costs within the TRICARE system);


• An increase in cost-sharing for prescription drugs under TRICARE.

NSPS Employees Can Expect 2.26 Percent Pay Boost

January 11, 2011

GovExec.com - Defense Department employees still under the National Security Personnel System will see a pay boost this month, according to Pentagon leadership.

A Dec. 27, 2010, memo from Undersecretary of Defense for Personnel and Readiness Clifford Stanley clarifies the funding available for performance-based pay increases for more than 54,000 workers and creates a salary "control point," designed to match pay limits with those that will apply when employees transition out of NSPS.

According to a Defense spokeswoman, 2.26 percent of salaries within a given pay pool are available for performance-based pay increases. Employees will be eligible for performance-based bonuses that individual agencies will determine, but those awards are neither automatic nor guaranteed. According to the spokeswoman, agencies are still compiling the pay pool data for the 2010 payout, but employees must have received a rating of "3" or higher to be eligible for a performance award.

The 2.26 percent is used for calculating and budgeting the available funds for NSPS annual performance awards. Performance-based increases and raises under Accelerated Compensation for Developmental Positions, which recognizes improvement of employees in training programs and other developmental capacities, might be included in pay raise calculations, according to the memo.

A mandatory control point, however, prevents employees from receiving a performance-based raise if the increase will push their salary above Level IV of the Executive Schedule, or $155,500.

The control point does not apply to physicians or dentists, who will be eligible for higher salaries matching those paid by the Veterans Affairs Department and the private sector, Stanley wrote.

Defense transferred nearly 172,000 employees, or 76 percent, back to the General Schedule in fiscal 2010, in keeping with department estimates. The remaining NSPS workers will move into alternative pay systems this spring, and all employees must transition by the end of 2011.

Congress repealed NSPS in the fiscal 2010 Defense authorization law, giving the department until Jan. 1, 2012, to roll back the controversial pay-for-performance system completely.

CLARIFICATION: This story was updated to reflect that some, but not all, NSPS employees could receive performance-based pay increases.

Concerns Over Pay Loom as Pentagon Returns to General Schedule

May 17, 2010

GovExec.com - The Federal Managers Association is asking lawmakers to ensure Pentagon employees do not lose salary as a result of the transition from the department's defunct pay-for-performance system.

"While the [2010] law explicitly states no employee shall lose or see a decrease in pay as they transition, I am concerned that this language will allow DoD officials to freeze future pay of top performers due to current [General Schedule] rules on pay retention," FMA National President Patricia Niehaus said in a May 14 letter to the leadership of the House and Senate Armed Services Committees.

According to Nieuhaus, since the average pay raise under the National Security Personnel System exceeded raises under the General Schedule, many NSPS employees are now, in terms of salary, a GS level above where they were when they entered NSPS. When these employees return to the GS grade they occupied prior to their conversion into NSPS, it is likely their salary will exceed the GS Step 10 level, Niehaus said. Under pay retention rules, these employees would receive only half the annual pay raise until the GS system catches up with them.

"We are increasingly concerned with the rush of DoD officials to transition employees out of NSPS without taking a close look at the number of employees likely to be subject to pay retention rules," Niehaus said.

An FMA survey of its members showed an average of 20 percent to 25 percent of employees are subject to pay retention rules. If FMA's members are representative of NSPS employees as a whole, then about 40,000 employees could face a decrease in pay.

"Many of these dedicated employees have crunched the numbers and determined that the General Schedule will not catch up with them by the time they retire over the next decade," Niehaus wrote. "This is unacceptable."

FMA is most concerned that pay retention would have the greatest effect on employees who were top performers under NSPS, which Niehaus said would send the message that above-average performance is not rewarded in the federal workplace.

"As members of the Federal Managers Association prepare to transition out of NSPS, I respectfully request that you take action to ensure high-performing DoD civil servants receive the compensation they have rightfully earned before they are forced to endure the effects of this unjust policy," the letter said.

The House Armed Services Committee will mark up the 2011 Defense authorization bill on Wednesday. Spokespeople from both the majority and the minority sides said they were unable to discuss the legislation heading into the markup. But it's likely the bill will address the NSPS transition, given the requirement that all Defense employees leave the system by Jan. 1, 2012.

Related:

Number of Federal Employees Getting Automatic Grade Promotions Jumped 75 Percent in Past Three Years, with Raises of 10 Percent to 20 Percent in One Year

Read More...

U.S. Food Stamp Program Doubled in the Past Five Years

House rejects farm bill, 62 Republicans vote no

House rejects massive farm bill that would have cut food stamps; 62 Republicans vote no

Chart shows federal food stamp participation since 1969

June 20, 2013

AP - The House rejected a five-year, half-trillion-dollar farm bill Thursday that would have cut $2 billion annually from food stamps and let states impose broad new work requirements on those who receive them.

Those cuts weren't deep enough for many Republicans who objected to the cost of the nearly $80 billion-a-year food stamp program, which has doubled in the past five years. The vote was 234-195 against the bill, with 62 Republicans voting against it.

The bill also suffered from lack of Democratic support necessary for the traditionally bipartisan farm bill to pass. Only 24 Democrats voted in favor of the legislation after many said the food stamp cuts could remove as many as 2 million needy recipients from the rolls. The addition of the optional state work requirements by Republican amendment just before final passage turned away many remaining Democratic votes.

Majority Leader Eric Cantor, R-Va., and No. 2 Democrat Steny Hoyer of Maryland, both of whom voted for the bill, immediately took to the House floor and blamed the other's party for the defeat. Cantor said it was a "disappointing day" and that Democrats had been a "disappointing player."

Hoyer suggested that Republicans voted for the food stamp work requirements to tank the bill.

"What happened today is you turned a bipartisan bill, necessary for our farmers, necessary for our consumers, necessary for the people of America, that many of us would have supported, and you turned it into a partisan bill," he said.

The Senate overwhelmingly passed its version of the farm bill last week, with about $2.4 billion a year in overall cuts and a $400 million annual decrease in food stamps — one-fifth of the House bill's food stamp cuts. The White House was supportive of the Senate version but had issued a veto threat of the House bill.

If the two chambers cannot come together on a bill, farm-state lawmakers could push for an extension of the 2008 farm bill that expires in September or negotiate a new bill with the Senate and try again. Some conservatives have suggested separating the farm programs and the food stamps into separate bills. Farm-state lawmakers have for decades added food stamps to farm bills to garner urban votes for the rural bill. But that marriage has made passage harder this year.

House Agriculture Committee Chairman Frank Lucas, R-Okla., said Thursday that the committee is assessing all its options and will continue its work in the "near future."

Just before the vote, Lucas pleaded with his colleagues' support, saying that if the measure didn't pass people would use it as an example of a dysfunctional Congress.

"If it fails today I can't guarantee you'll see in this Congress another attempt," he said.

Minnesota Rep. Collin Peterson, the senior Democrat on the House Agriculture Committee, said he believes the work requirements and a vote that scuttled a proposed dairy overhaul turned too many lawmakers against the measure.

"I had a bunch of people come up to me and say I was with you but this is it, I'm done," Peterson said after the vote.

House Speaker John Boehner, R-Ohio, voted for the bill but lobbied for the dairy amendment that caused some dairy-state lawmakers to eventually turn on the legislation. Cantor vocally supported the amendment that imposed the work requirements, coming to the House floor just before that vote and the final vote to endorse it.

Though passage has been in the balance all week, the vote against the bill was larger than many expected. When the final vote count was read, House Democrats cheered loudly, led by members of the Congressional Black Caucus who had fought the food stamp cuts.

The defeat is also a major victory for conservative taxpayer groups and environmental groups who have unsuccessfully worked against the bill for years. Those groups have aggressively lobbied lawmakers in recent weeks, hoping to capitalize on the more than 200 new members of the House since the last farm bill passed five years ago. Many of those new members are conservative Republicans who replaced moderate rural Democrats who had championed farm policy.

Those groups were emboldened after the vote.

"We need to put farm subsidies on a path to elimination and we need to devolve food stamps to the state level where they belong," said Chris Chocola, president of the conservative advocacy group Club for Growth.

Bureaucrats Vote for Whomever Promises Them the Most from the Public Treasury

"The American Republic will endure until the day Congress discovers that it can bribe the public with their own money." -- Alexis de Tocqueville (1805 - 1859)

"The State is that great fiction by which everyone tries to live at the expense of everyone else."

"A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship. The average age of the world’s greatest civilizations from the beginning of history, has been about 200 years." -- Alexander Tyler, a Scottish history professor 1787

"I place the economy among the first and most important virtues... and public debt as the great danger to be feared. To preserve your independence, we must not let our leaders load us with perpetual debt. We must make our choice between economy and liberty... or profusion and servitude." -- Thomas Jefferson -- Frederic Bastiat

"It is the duty of the patriot to protect his country from its government." -- Thomas Paine

"Who will govern the governors? There is only one force in the nation that can be depended upon to keep the government pure and the governors honest, and that is the people themselves. They alone, if well informed, are capable of preventing the corruption of power, and of restoring the nation to its rightful course if it should go astray. They alone are the safest depository of the ultimate powers of government" -- Thomas Jefferson

"If the American people ever allow the banks to control the issuance of their currency, first by inflation, and then by deflation, the banks and corporations that will grow up around them will deprive the people of all property, until their children wake up homeless on the continent their fathers conquered. The issuing power of money should be taken from banks and restored to Congress and the people to whom it belongs. I sincerely believe the banking institutions having the issuing power of money, are more dangerous to liberty than standing armies." -- Thomas Jefferson

[Source]

IRS Not the Only Biased Federal Agency, Welch Says

Former GE boss Jack Welch explains why he believes the man who exposed secret U.S. surveillance programs should be brought back to the U.S. and prosecuted. He also talked about his skepticism over the employment report.

June 11, 2013

CNBC - Former General Electric Chairman and CEO Jack Welch said Tuesday on CNBC that the IRS scandal sheds light on how political biases play a part in decisions made by government agencies, including the Bureau of Labor Statistics (BLS).

"When the government unions and the government employees are in subjective jobs, no matter how decent the people are—let's assume they are all perfect—their biases have to come through," he contended on "Squawk Box."

In 2012, public-sector workers had a union membership rate of 35.9 percent—more than five times higher than the private sector's 6.6 percent participation rate, according to the BLS.

"The IRS: They want bigger government, better wages. The BLS wants more government and better wages," he continued. "Now you're asking them to make subjective [decisions]. You don't ask firemen to do that."

In the case of the BLS, Welch said he's not claiming the government's monthly employment report is being manipulated, just that he believes human nature makes it impossible for the data-collection workers to check their personal views at the door.

Fueling his skepticism, Welch cited the September employment report, which was announced in October 2012—one month before the presidential election.

At the time, he ignited a firestorm with a Tweet that questioned the growth of nonfarm jobs by 873,000—the largest one-month increase since Ronald Reagan's presidency in 1983—and the unemployment rate drop to 7.8 percent.

@jack_welch wrote:

Jack Welch        ✔ @jack_welch

Unbelievable jobs numbers..these Chicago guys will do anything..can't debate so change numbers

8:35 AM - 5 Oct 2012

Reflecting on those numbers Tuesday, Welch said they had indicated strong fourth-quarter economic growth that never materialized.  In fact, he added,

GDP in the final three months of 2012 was the "lowest number in the whole recovery."

Obama Cannot Match Germany's Jobs Miracle

Why Obama Cannot Match Germany's Jobs Miracle

May 5, 2013

Forbes - In 2002, Chancellor Gerhard Schroder appointed a jobs council headed by Volkswagen’s Peter Hartz to solve Germany’s high unemployment. In 2011, President Barack Obama similarly appointed a jobs commission headed by General Electric GE -1.19%’s Jeffrey Immelt to achieve the same goal.  (At the time, Schroeder headed the SPD, the equivalent of America’s Democratic Party.)

Germany’s labor market turned around in a dramatic fashion after Schroeder implemented the Hartz Commission’s sweeping reforms between 2002 and 2005. In contrast, Obama’s Immelt Council quietly disbanded without making substantive proposals, and America’s worst jobs recovery of the postwar period continued.

Obama cannot duplicate the German reforms. The Germans reject Obama's Keynesian belief that jobs are created by government stimulus.  Instead, the Hartz reforms rest on the common sense notion that people take jobs when work, rather than welfare, pays.

Such an approach violates Obama’s core belief that government must make the lives of the unemployed as comfortable as possible. No, the Germans say. If the state gives too much, the unemployed will have no incentive to take jobs, even when they are available.

Just as Germany alone pushed back against the anti-austerity complaints of Southern Europe, so it rejects the Keynesian blame of deficient demand for unemployment.  Instead of stimulus, the Germans raise incentives for unemployed workers to take jobs.  They believe that welfare programs must be calibrated to “make work pay.” Otherwise able-bodied persons will be tempted to take the easy way out of pay without work.

The Germans would characterize President Obama’s “jobs program” of fiscal stimulus and generous and extended unemployment benefits as well-intentioned medicine that kills rather than cures the patient. They would laugh off the Obama team’s odd notion that higher unemployment benefits create jobs by putting money in the pockets of the unemployed. Surely, Obama can’t be serious.

Germany’s labor market reforms have made Germany’s economy  a rare bright spot in a troubled world:  While German newspapers headline:  “Germany on the Way to New Full Employment,”  the rest of Europe records a 12 percent unemployment rate, and the United States settles for a “new normal” of high unemployment. 

Posters in German subways are full of job offers, while Spanish, Italian, and Greek workers take to the streets to protest the lack of jobs. A German political cartoon shows a well-groomed executive sweeping the factory grounds for lack of employees.

The origins of Germany’s labor-market turnaround dates back to the mid-1990s, when its ruling class decided that things could not continue to go on this way.  A humiliated Germany, of “Wirtschaftswunder” fame, had joined the rest of Europe in recording double digit unemployment rates, peaking at 13 percent in early 2005.  The fabled German engineering machine was sputtering and needed new life.

Chancellor Gerhard Schroeder called for labor market reforms in his 1995 “Agenda 2010.”  He appointed a reform commission, headed by Peter Hartz, the head of personnel at Volkswagen. Hartz and his fellow commissioners were ordered to devise a plan for reducing unemployment and restoring German competitiveness.

Unlike the United States where grand bargains are talked about and then forgotten, the Hartz reforms were actually implemented first by Schroeder and then by his successor Angela Merkel of the rival Christian Democrat Party.

The fourth and final phase of the Hartz reforms went into effect in 2005 under Merkel. Within less than a decade, Germany halved its unemployment rate, while the rest of the Euro Zone remained stuck with double-digit unemployment.

Prior to “Hartz IV” – as the Germans call it — Germany was noted for its generosity to those without jobs. Unemployment benefits preserved as much of former earnings as possible. Unemployed workers could turn down jobs that did not correspond to their specific qualifications without losing benefits. (Taxi drivers could refuse jobs as truck drivers). The unemployed could refuse jobs that required a change of location. 

Prior to "Hartz IV", unemployed workers received unemployment checks alongside generous welfare benefits. The unemployed even received money for their vacations.

“Hartz IV” turned Germany from one of the most generous welfare and unemployment systems into one of the stingiest.  

Workers who lose their jobs receive unemployment benefits based on their previous earnings and time on the job for six months to two years. Once unemployed workers exhaust their regular unemployment benefits, they enter the Hartz IV program. (Germans use “Hartz IV” to describe the long-term unemployed who are in the program, often derisively, as well as the program itself.)  If you have never been employed, such as a graduating student, you go immediately into the Hartz IV program.

Hartz IV recipients receive about $400 per month for living expenses. Their rent and health insurance are paid directly by the state, subject to limitations on square meters of living space. If a “Hartz IV” turns down job offers, he or she stand to lose part or all their benefits. In addition to the $220 per month of “children’s money” that all families receive, a “Hartz IV” receives a monthly supplement of about $130 per child. With these benefits, a single unemployed woman with one child has less than $750 per month for expenses, after the state directly pays her rent and health insurance.

Unlike other unemployment insurance programs, the Labor Office (renamed the “Jobs Center”) considers the Hartz IV recipient’s “need community” (Bedarfsgemeinschaft in bureaucratic German).  A spouse or a partner with earnings reduces benefits according to a published formula. A recipient sharing a common refrigerator also can experience reduced benefits because basic needs are being met by others. Hartz IV recipients must go through a complicated bureaucratic procedure to replace essential household items such as a refrigerator or television set. The Labor Office conducts unannounced inspections to check for the presence of other adults or other signs of unreported earnings.

The Germans devised the Hartz IV system to limit benefits to a subsistence level of living. The only way to rise above subsistence is to work. Once the chronic unemployed reach retirement age, they switch from Hartz IV to a state pension. In effect, Hartz IV recipients put their lives in receivership to the omnipresent Jobs Center. Hartz IV recipients are allowed to keep a maximum of $13,000 in savings. Any savings over that amount must go to pay their expenses before they can receive Hartz IV money.

The Hartz IV program increases jobs and “makes work pay” for the low-skilled by taking advantage of Germany’s lack of a minimum wage. Hartz IV recipients who take “Ein Euro jobs” that pay one Euro per hour keep their entire earnings without losing benefits. They can also take so-called mini jobs earning $530 per month or more with a graduated loss of benefits.

Of course, the Hartz IV reforms are not universally popular. The labor unions hate them as does the “Party of the Left.”  A female Jobs Center employee became a folk hero, when she refused to reduce the benefits of a Hartz IV recipient who had broken its “barbaric” rules.

The most remarkable feature of the Hartz reforms is that the German political class had the courage to make hard choices. Gerhard Schroeder’s support for labor market reform was the equivalent of Nixon going to China. Only a Social Democrat could push through such a reform. It cost his party two elections as his angry left wing (including Germany’s Teddy Kennedy, Oskar Lafontaine) split from the Social Democrats to join splinter parties.

The American political class should look to Germany for two reasons:

First, Germany provides a natural experiment of Keynesian versus Non-Keynesian labor market policy. I would challenge those continuing to push stimulus in the United States as an answer to unemployment (versus raising incentives to take jobs) to explain the halving of Germany’s unemployment rate in such a short time.

Second Germany is a lesson in political courage – to do the right thing regardless of the political consequences. Such courage is sorely lacking on both sides of the aisle in the United States. Few if any American politicians have the courage to risk the demagoguery that would accompany their support for lower welfare or unemployment checks.

Related:

• Italy's Youth Unemployment Rate is 40 Percent; Germany's is 8 Percent
• The Rise of Germany Again: Germany to Emerge as the World’s Next Superpower
• A Fourth and Final Global Empire Will Arise Out of Chaos, Just as the Third Reich Arose from Chaos for Hitler 
• Ex-Hitler Youth's Warning to America

Welfare Spending Between State and Federal Governments Up More Than 30% Since Obama Took Office and Topped $1 Trillion in 2011

Is Welfare Becoming a for-Profit Business?

April 21, 2013

Motley Fool - The social health and financial buffer put in place in the United States to protect the basic human needs of all individuals, collectively known as welfare, is gigantic. Some 47.8 million people are currently enrolled in the Supplemental Nutritional Assistance Program, which you may know better by its short-hand term, food stamps. Also, as of mid-January, close to 5.6 million people were receiving some form of unemployment benefits.

The scope of welfare is difficult to comprehend, but the amount of money spent by federal and state governments on social and health programs is plain as day. According to Sen. Jeff Sessions (R-Ala.), welfare spending between state and federal governments is up more than 30% since President Obama took office and topped $1 trillion in 2011, based on a study released last October.

We've definitely seen certain companies angling themselves to take advantage of the increasing government dollars flowing into welfare -- especially in the health-care sector.  

The passing of the Patient Protection and Affordable Care Act (aka Obamacare) is going to bring upwards of 16 million newly insured low-income individuals and families under the umbrella of government-sponsored Medicaid, so insurers have been doing everything they can to get their slice of the pie.

WellPoint (NYSE: WLP  ) ponied up $4.5 billion to buy Amerigroup and hurdle past UnitedHealth Group to become the nation's largest private Medicaid insurer. Aetna (NYSE: AET  ) followed suit shortly thereafter in August with a $5.6 billion purchase of Coventry Health Care, aimed, similarly, at gaining more Medicaid-based customers.

Is the game about to change?

The point is we've expected this of health insurers and certain medical service providers for years. But, the way I see it, a completely different set of circumstances currently making their rounds throughout the states could greatly broaden the scope of welfare from simply a basic human-needs service to a for-profit business.

What I'm talking about is the ongoing debate over mandatory drug testing. Certain states, including Michigan in 1999, Florida in 2011, and Georgia in 2012, passed laws that allowed them to mandate that everyone receiving welfare be drug tested before divvying out their monthly disbursement. In Michigan, this law was overturned in 2003, and in Florida, the American Civil Liberties Union successfully argued for, and had a federal appeals court uphold, a temporary ban against the encompassing drug screenings for everyone on welfare. Other states, including Arizona, Missouri, Utah, and Oklahoma also test welfare recipients, but only if there's a reasonable cause for suspicion according to The Wall Street Journal.

As with all political battlegrounds, there are two sides to this issue. On one hand, with government budgets tightening because of the sequester, it would be nice to know that members of society who need a helping hand are getting it. Mandatory drug testing would keep that money out of the hands of illicit drug dealers and put it in the hands of people who need the assistance.

Conversely, mandatory drug testing is expensive and time consuming, and it hasn't proved to be a money-saving effort in its short history. According to USA Today, Arizona's "suspicion-driven" testing was effective only 0.00001% of the time, with only one person of the 87,000 tested coming back positive. The head-banger of the Arizona test is that applicants had only to answer a question "yes" or "no" to whether they had used illegal drugs in the past 30 days. If they answered "no," then Arizona couldn't test them! Even in Florida, where everyone is testing everyone, only 2.7% of applicants have failed the drug screening. Worse yet, the test costs $30-$40 and is to be paid by the applicant. The applicant is reimbursed if he or she passes, but $30-$40 can sometimes be hard to scrape together for welfare recipients.

The real question is whether other states will catch onto and adopt this idea -- and the answer seems to be leaning toward "yes." In 2011, 36 of 50 states considered adopting some form of drug testing for welfare recipients, based on figures in The New York Times -- a dramatic increase from previous years. If adopted on a large scale, it could push welfare from being just a battleground for health-service providers to a free-for-all across a myriad of sectors.

Welfare as a driver of profits

First of all, drug diagnostic companies would be the logical winners under a larger adoption scenario. Regardless of whether these companies are paid by the state or by the recipient, it's guaranteed money in their pocket. Under a wider adoption scenario, I wouldn't even be surprised if diagnostic companies switched gears and developed their own drug-testing kits in order to join the fray.

Another winner under this scenario would be the nation's prison system. Even as some states begin to legalize the use of recreational marijuana in a person's home, the federal government still views it as an illegal substance.

The premise here would be that any increase in nationwide drug testing would be bound to turn up additional drug users and could boost the prison population. That would be great news for the GEO Group (NYSE: GEO  ) and Corrections Corp. of America (NYSE: CXW  ) , which are contracted out through the government to run and service prisons around the country.

Finally, legal alternatives to "getting high" should see a boost -- namely, spirit producers. Since most drugs are traceable in the human body for weeks and alcohol tends to leave your system long before 24 hours is up, domestic beer behemoths such as Anheuser-Busch InBev and Molson Coors (NYSE: TAP  ) , as well as hard-liquor producers such as Brown-Forman, the maker of Jack Daniels and Southern Comfort, should be primed to benefit. For the domestic beer producers, this would be an incredibly welcome sign, as stagnant take-home pay has weighed heavily on beer consumption.

Where do we go from here?

There's no question in my mind that these industry groups would benefit from expanded welfare drug screening. The question comes down to whether it's ethical and worth spending the added government funds and resources on expanding this program to additional states. Furthermore, aside from the health-benefits industry, should businesses in these industries be gearing up for increased testing to essentially "stay ahead of the curve?"