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2019-01-02 06:00 by Karl Denninger
in Federal Government , 2350 references Ignore this thread
Cut The Crap - NOW*
[Comments enabled]

I said NOW damnit.

 

12.4% tax for FICA, 2.9% for Medicare.

Total is 15.3%.  Of that 81% is FICA, 19% is Medicare.

The total in "Social Insurance and Retirement" taxes taken in (that is, the entirety) in the first two months of the fiscal year was $179 billion.  Of that $145 billion was Social Security tax and just $34 billion was Medicare tax.

Social Security paid out $167 billion.  That is more than $145 billion but there are bonds that are being cashed -- quite a lot of them in fact -- and the structural deficit for that program is $22 billion or 13% (that is, 87% of the payouts are offset by pay-ins.)  If you got rid of the disability scamming you'd close the gap materially; SSDI has paid out almost $24 billion in the last two months.

The point on Social Security is simply this and anyone saying otherwise is a damned liar:  A 13% structural deficit is fixable without a crazy amount of pain (either by lifting the salary cap, a 13% increase in the tax rate (to 14% total; 7 and 7) or some combination of the two, and that assumes no effort on reduction in disability scamming.)  Further, the load on the Social Security system from the boomers will start to fade as they begin to pass within the next 10 years.

MEDICARE, ON THE OTHER HAND, SPENT $129 BILLION BUT ONLY TOOK IN $34 BILLION.  IT HAS A 74% STRUCTURAL DEFICIT.  YOU WOULD HAVE TO QUADRUPLE, ROUGHLY, THE MEDICARE TAX TO BRING IT INTO BALANCE.

THE REAL OUTRAGE IS THAT TO THE MEDICARE FIGURE YOU MUST ADD MEDICAID WHICH MAKES IT MUCH WORSE AS THERE IS NO TAX FOR THAT COLLECTED AT ALL!  CMS (Centers for Medicare and Medicaid Services) HAS PAID OUT $270 BILLION THUS FAR THIS FISCAL YEAR AND WE ARE ONLY TWO MONTHS INTO FISCAL 2019!  THAT IS UP FIFTY BILLION OVER LAST YEAR'S RATE AT THIS TIME -- AN UNBELIEVABLE 24% INCREASE!  THE TOTAL SPENT BY CMS IS MORE THAN DOUBLE STRAIGHT MEDICARE SPENDING WHICH MEANS TO COVER IT ALL YOU'D NEED TO INCREASE MEDICARE TAXES NOT TO 400% BUT TO MORE THAN EIGHT HUNDRED PERCENT OF WHAT THEY ARE NOW.

While I suspect some of this increase was a result of game-playing with Treasury not paying people right near September 30th in an attempt to "cook the MTS" for the end of fiscal 2018 and thus "announce" a smaller deficit it is extremely unlikely that all of it can be attributed to that sort of gamesmanship.

There is no "entitlement crisis" in Social Security.  It is all in the medical side and it is going to bankrupt the nation and government both at the state and FEDERAL level unless it is stopped right here and now.

These are not my numbers or projections; they are the actual cash flow from the Treasury department.  They do not reflect what someone thinks will happen they reflect what actually has happened and is happening -- right here, right now.

The MTS is truth just as your bank statement is truth because the MTS, as a cash flow statement essentially is the Federal Government's check register!

You can tamper with asset values and you can make all sorts of projections and claims but if you have ever run, examined or done accounting for a business you know that cash flow is always truth.

Any media publication, "pundit" or politician who tries to spin this and claim that Social Security is a "difficult" part of it or that in some way they're connected must be pilloried and run out of town on a rail.  They are lying and intending to bankrupt you and this nation.  They are not only violating their oath of office they are deliberately destroying both you and the country as a whole.

If the government will not enforce the law (specifically, 15 USC Chapter 1), break all the medical monopolies and slay these jackasses with criminal prosecution immediately, driving medical costs down by 80% so the cash flow statement returns to something resembling balance then the only peaceful option remaining for the public is a full-on General Strike to compel the government to do so -- right here, right now, today and forevermore until the government takes that action.

The truth of the nation from a fiscal perspective is simply this: If the medical monopolist crap is not broken now fiscal collapse at local, state and federal levels is a certainty.  There is absolutely no possible way out of this box through higher taxes, cost-shifting, economic "growth", more borrowing or even all of them at once.  "Hide the sausage" games just flat-out don't work.

Time's up.

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Whitehat
Posts: 877
Incept: 2017-06-27

The People's Republic of New York
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thank you for a very clear and succinct article.

a request that it be pinned for future use.

happy new year.

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There are two ways to be rich: One is by acquiring much, and the other is by desiring little.
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"Be not deceived; God is not mocked; for whatsoever a man soweth, that shall he also reap" (Gal. 6:7)
Mickey
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Chic
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Medicaid is part of the problem. We spend 400 billion there for about 75 million people a lot of that increasing as qualifications for medicaid were reduced with obamacare and people preferred free to subsidized.

Karl while you go into detail about what should be done with all this , to my recollection nothing has ever been done to streamline the processes and put in controls to just reduce fraud and waste.

We cannot get to the mentality to cut costs. Let alone take a scalpel to the system which it desperately needs.

I am not certain but I think the 179 billion is net of the monthly premiums paid by participants, and thats not the real cost anyway as we also have prescription drugs and the overall costs of the extension plans.

In other words, we are not working with a full deck.

Even the well intending legislators are incapable of fixing this. Few voters really understand the cost of the programs and that its unsustainable.

Once the so called trusts run out of money and if they implement the 27% automatic reduction in benefits, people will begin to understand.

For Medicare, thats 2022. Stanford and either harvard or Dartmouth did studies on Social Security about 2 years ago saying assumptions for Soc Sec were too optimistic on life expectancy. I thonk so since the life expectancy tables life insurance companies use are several years longer than the Soc Sec tables and thats their business.

Aztrader
Posts: 8179
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Scottsdale, AZ
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Just think if all the states went with expanded Medicaid. This system is completely broken and must be capped immediately. The idea that a leech can go to a doctor or hospital with no copay or deductible any time they want is a big part of the problem. If they even had a reasonable co-pay, a lot of it would stop. We have the left screaming Medicare for all! These idiots don't have a clue and most of them pay nothing anyway. I am wondering how the states that expanded Medicaid are doing. Karl did an excellent job covering the governments deficit spending here, but didn't include the substantial increased costs for the folks buying their own coverage. Here's an article on the subject: https://goldwaterinstitute.org/article/a....
Click
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Incept: 2017-06-26

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"the load on the Social Security system from the boomers will start to fade as they begin to pass within the next 10 years."

Firstly, there probably isn't ten years left before a major recession hits. And by major I mean one as bad (probably worse) than the Great Recession of 2008. Maybe, just maybe, the next recession turns into a depression --- or worse. Mother Nature might actually step in next time and reduce the "load". Some individuals are making the argument that the Great Recession actually never really ended, and the bogus government numbers are just another fraud.

But let's just say, for the sake of ****s and giggles, there is no bogus numbers and that no recession happens within ten years and the "load" of Baby Boomer Socialist Security Recipients meets their maker at the rate of ten thousand per day, starting in ten years from now......That don't mean ****, and by then it won't do **** for SSI. Why? Because people from every generation eat ****, and they ain't going to stop eating ****. Take a good look around you. We live in what I call the "Obese Generation(s)". It's not a "sea of humanity" we live in, it's a sea of ****ing blubber.

I don't care if you cut "healthcare" costs by 80%. I don't ****ing care if you cut costs to zero. We simply can't have a country of fat-asses and expect to maintain (let alone improve) both our standard of living and our quality of life. Ain't gonna happen.

Without our health we have got nothing as individuals or a country. And no amount of needles, pills, medical procedure or operations can replace a healthy diet. And the best prescription for a fat-ass is exercise.

And there's more, so much more, as to why all of the ****ing dishonest Marxist accounting shall fail bigly. For example, "we are only borrowing from ourselves". Remember that one? That's what they said when they raided the SSI trust fund. "Trust fund"! That's a ****ing laugh, isn't it? So, how can we borrow from ourselves when we are broke already?

When the next great recession happens all of the current bull**** projections regarding the SSI Ponzi Scheme and the other Marxist programs shall change so much so that people will start to panic. But I won't be one of them. So even though I follow the government "numbers" rather closely, I know that they don't mean **** to me, personally.

The number I really give a **** about is the one I look at when I step on the scale in my workout room. The number of miles I walk per day is what matters. The number of hours I sleep soundly, without sleeping pills, is what counts. Gold, silver and other tangibles such as food with a thirty year shelf-life is what I stack. Real insurance, not Socialist Security Insurance, is what I'm "counting" on in "ten years" from now.

Happy New Year. Stay buckled-up, because it's going to be a wild ride right on into 2020 when a political climax happens.
Mickey
Posts: 56
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Chic
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a) as part of Obamacare, teh cost of Medicaid is being gradually pushed down to teh states. Its not much over the first few years but pushing costs elsewhere to somebody elses "P&L" is not "productivity" or reducing costs.

b) the concept of insurance used to be to insurance against catastrophic loss. I was Treasurer and risk manager of a 4,000 person manufacturing company. we were able to self insure major medical and workers comp insurance but with "caps". 25 years ago we had a max payout on any loss of 1 million.

same thing with property and casualty insurance. Insurance companies do not want to process small claims. the paperwork is too expensive. The rule of the day was higher deductibles.

there never was any such thing as a free lunch. Somebody always has to pay.
Wa9jml
Posts: 302
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DeKalb, Illinois
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I noticed something at our local clinic shortly after ObamaCare was enacted. Suddenly, their clientele changed quite a bit. There used to be a pretty broad spectrum of the local residents in their waiting rooms, and the place used to be crowded. After ObamaCare was foisted off on the populace, it was no longer crowded, and the people in the waiting rooms were senior citizens like myself and my Dad, who are covered under Medicare, and the rest were obviously on Medicaid. Apparently those high deductibles drove a lot of people away. Were the people with these high deductible policies getting treated elsewhere? I don't know. I suspect that they were just avoiding getting treated at all, which was hardly what was ostensibly supposed to happen with this boondoggle.

I have worked in several truly destitute Illinois municipalities, and it took me a while to realize that a lot of the people in these places did not even have bank accounts. This goes along with the Federal Reserve stating that most families would have difficulty affording $400 in an emergency. Many people simply cannot afford a high deductible medical insurance policy. One of the hardest things for my former students to grasp is that the ability to pay taxes is not obvious. They apparently thought that if a family had a big house and two Beemer SUVs in the driveway, that this particular family was wealthy. My students simply could not comprehend that only the downstairs of these McMansions were really furnished, and that upstairs the family might well be sleeping on the floor in sleeping bags. This situation his hardly new. My late uncle once bought a company from a family that lived in Lake Forest on the North Shore. Only the downstairs was furnished lavishly. Once they married one of their daughters to a Swift, and the other one to an Armour, they sold their house, sold their business and moved to Florida. This was about 50 years ago.
Copernicus-usdd
Posts: 45
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Houston TX
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Social Security may not be as big a problem as Medicare, in fact, as you note it might be savable...but why bother?

My opinion..detailed here:

http://usdailydeficit.com/uncle-madoff-s....
and :
http://usdailydeficit.com/proof-well-cir....


..is that SS was created as a disguise for a broad based income tax in the midst of the great depression...by a government starved of cash and with a not so happy population. Try to raise taxes....you get tarred and feathered.... but call it a "retirement program" for grandma and you might just get away with it....and they have for 80 years now...But that's all it is...a broad based 12.3% income tax disguised as a much loved and much demanded entitlement.

But...even if we don't agree on the roots of social security...can it stand on it's own legs today? Morally...not a chance. Social Security is not so different than obamacare...use government force to require everyone participate in a giant ponzi scheme.
Now...admittedly, it's not such a bad deal for everyone....but for some it is terrible....like if you die at 61.
So I say if it's so great, make participation voluntary. A 30 year old making $50k a year could stay in SS...or keep that 12.3%....about $500 a month. That's not chump change and while sure...many would******it away, that's really none of my business.

One more thing...the odds of the SS trust fund making it through a breakup of the US...something occasionally discussed here is slim to none....I hope that doesn't happen but certainly give it a greater than 0% probability. Personally...given the chance....i would opt out and keep that 12.3%...and my guess is, so would 75% of the population....and the whole thing would collapse on itself in just a few years. Of course...bigger things would crash and break first...which is why it will never be allowed.

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Aztrader
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Scottsdale, AZ
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Obamacare seems to be the culprit of our growing deficits and not a peep out of the politicians about this. It's a political hot potato because it's basically a welfare program that expanded greatly once people understood how to game the system. Now that they are either on Medicaid or subsidized policies, they don't want to give them up. Now that the extortion tax is dead, what holds this mess together? I am hopping that millions of Americans run for cover and just don't buy insurance. Will this increase the load on both the states and the feds to keep all these leeches covered? Where do the states get the extra money to keep insuring the leeches? This unwind should be interesting.
Tickerguy
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smiley

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Winding it down.
Ckaminski
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Quote:
And the best prescription for a fat-ass is exercise.


You can't outrun your fork.

Some wise man said that once.
Drifter
Posts: 198
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Pacific Northwest
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In my area, 3 medicare/medicaid medical and/or dental clinics have opened, with an income-based fee schedule.

Where the money came from to build these I have no idea, probably taxpayers via grants and .gov giveaways. What infuriates me is that these subsidized clinics are taking patients away from private clinics-- so the taxes of private enterprise are being used to squeeze private enterprise.

One new clinic in Pullman, WA, Unify Dental, must have cost $2.5 million to get up and running. It's part of a chain of community health clinics in the state. Big business in Medicaid it seems.
Mickey
Posts: 56
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Chic
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Payroll taxes collected from employees and employers portions--in 2018 were up 0.7% over 2017.

first, that indicates something is wrong with the jobs created number and/or wage increases of over 2%

Second, the Stanford and Dartmouth studies also identified that if we have a recession, not in projections, payroll tax receipts will go down, Currently the CBO is projecting a 10 year average frowth GDP of under 4% including inflation.

Thats another way the independent studies point to larger deficits/debt.

we have been promissed to much to too many and payback time is about to start. for everybody.
Jackrussell
Posts: 21
Incept: 2016-12-10

Austin TX area
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Wa9, Bob had a comment on your question: Where are high-deductible policy people going for care? Couple ideas...

1- Latin american clinics. (Clinica Hispana, Bryan TX, which has huge signs on the front window like "Consulta, $35"). The Latinos here called "BS" on the healthcare billing crap. So they opened a clinic with long hours and prices listed on the front. Talk about transparent! Looks like care with a couple of tests closer to $100, rather than hundreds or more at regular doctors.
2- Sliding scale health clinics. Lone Star Circle of Care, for example. Because they work with lower income, they probably do a better job of letting you know what your bill will be, in advance, when you ask, and what your discount is based on income, as opposed to Chargemaster type healthcare providers, who "run it through your insurance" and then shock YOU with a huge padded bill because of the deductible.
3 - Online consults such as Youtuber, Dr. Ken Berry ($60 consult)
4- Enormous chargemaster healthcare providers will bill you out the kazoo for anything and everything, (building fees, tests of all sorts, facility fees, etc) trying to get maximum insurance money and Medicare/Medicaid money. HOWEVER, i heard some have a new policy: if you make under 200% of federal poverty guidelines (FPG), they ZERO OUT what you PERSONALLY owe for non-emergency care, whether you are insured or not! You just need to go into financial counseling (with proof of income, which they check on all those online credit type agencies) to obtain the "Financial Assistance Policy".

TICKERGUY: Isn't This 4th point interesting, in many different respects! Heck, why buy ANY insurance, with a deal like that, if you are a family making less than around 50k? Perhaps this giant health care company saw that their product was completely unaffordable to "regular" median income families, and just said "Heck, we'll just be FREE." We'll operate from proceeds from medicare/medicaid and insurance co's." Healthcare costs have diverted SO much from what avg. people ACTUALLY make, it is just insanely ridiculous. Perhaps This new policy is addressing this?
BOB
Nickdanger
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Our state declined the Medicaid expansion, at least so far. It's the ONLY thing our RINO governor got right in her time in office. The ones who want expansion have been screaming ever since, not having a clue what it will do to the state's budget and further the downhill slide. Our state is damn near at the bottom of every list of negatives. Now that we have a new governor (yet to be determined how he will be) the pressure is escalating to agree to the expansion. It will be interesting to see if they cave to the pressure.

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Grammar: the difference between knowing your **** and knowing you're ****.
Exppi
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PDX
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The national news was all giddy about hospitals having to post prices starting 1/1/2019 per Obamacare. They implied regulations have it all figured out. smiley
Goforbroke
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The tadpole and I are hunkering down.
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Darker ... disappearing ... just saying.

Again (I forget whether I posted this in TF or The Bar) ...


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Our deepest fear is not that we are inadequate. Our deepest fear is that we are powerful beyond measure. It is our Light, and not our Darkness, that most frightens us. -- Marianne Williamson
Idiom
Posts: 166
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New Zealand
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For only $6B why even bother with corporate tax? Wouldn't corporate accounting be a lot cheaper and more honest strategically if it wasn't playing so many tax games? All for a lousy $6B.
Tickerguy
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Sigh......just shoot me now

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Winding it down.

Mangymutt
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Vancouver WA
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Sigh......just shoot me now

Nahhh, But I will give you one of these.

smiley
Click
Posts: 398
Incept: 2017-06-26

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"You can't outrun your fork".

Yes, very true.

Not as long as "your" fork is covered in ****. Mine isn't, so I could out-walk my fork; I could out-crawl it; I could out-climb it. I could out-swim it (which is my preferred form of exercise just like was Jack LaLanne's). I'm not getting into all of the reasons why swimming is the most superior form of exercise, but suffice it to say that swimming exercises every part of the body with a very low risk of injury --- unless you do something really ****ing stupid like dive in a shallow pool and break your neck.

Currently, we are running an experiment on what goes on my wife's fork and her friend's fork, too. The two of them are eating a diet high in protein and moderate in fat with less than 5% carbs, preferably none. The experiment also includes taking exogenous ketones. Exogenous ketones are a waste of money as far as I'm concerned; however, my wife and her friend want to see for themselves. For now, we are leaving out freshly juiced greens and going mostly with meat, nuts, unsweetened yogurt, cheese, almond milk, etc....

My wife's friend (who had a diet rich in carbs) has lost over 50lbs in three months and reports a boost from the ketones and is feeling in really good health without suffering any ill affects even when first starting out on the diet. My wife just started the diet yesterday after having a check-up and extensive blood-work done just about a week ago. She has deliberately allowed herself to pack on some extra pounds over the holidays from back before Thanksgiving (and had a lot of fun doing it) because gluttony and filling her fork full of **** was a lot of fun.

Now, she's on a strict diet and we'll see what we see.
Tickerguy
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Sigh...

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Winding it down.
Click
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"Sigh", indeed.

I think that the amount of fat in their diet needs to be increased and the and the ratio of protein decreased for best results. And that's probably what my wife will end up doing.

I'm going to end up making a high-fat pemmican.

Kochevnik
Posts: 721
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NE WA state
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Quote:
First, Democrats are allowing the House to approve an increase in the nation's borrowing limit without an actual vote, instead having it deemed approved each time the House approves its annual budget resolution. Under GOP rules, what is often called the debt limit vote was separate and led to many tense battles with conservatives who wanted to hold the federal borrowing authority hostage in exchange for other demands.


This is the first day the Dems are in charge.

The New young liberals are going to kill PAYGO because it limits them from spending trillions in new 'gender-based' justice programs and the New Green Deal.

Not that it matters much - 1.6 Trillion in yearly CMS spending is going to blow the lid off this thing pretty quick I think.

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