Posts Tagged ‘Unfunded Liabilities’

Socialism’s Promise: Medicaid for All

Monday, July 17th, 2017

For an example of how government entitlements always expand and never contract, consider what’s been happening to Medicaid.

Designed to provide health coverage for low-income and disabled Americans, Medicaid was signed into law in 1965 during the Johnson Administration.

Today, Medicaid ranks second only to public school education as the largest budget item in most states. Nationally, Medicaid spending now exceeds a half trillion dollars a year ($574.2 billion in FY 2016).

The true cost is higher, though. Both Medicaid and Medicare pay providers significantly less than what they receive from private payers – and Medicaid pays about two thirds of what Medicare pays. That means less access to healthcare, since one in three physicians refuses to see Medicaid patients. It also means non-Medicaid healthcare costs need to be higher to subsidize Medicaid.

Initially, Medicaid covered 4 million Americans. This year, it’s projected to cover 73.5 million Americans. In spite of the more than $20 trillion spent on the War on Poverty over that period, Medicaid enrollment from year to year has almost always increased, regardless of the overall health of the economy. It has also increased even though the poverty level has remained about the same – about 15% of the population.

But the worst is yet to come. (more…)

Unfunded Pension Liabilities Reach $7 Trillion

Monday, July 10th, 2017

The mean average amount saved for retirement by all working-age families in the U.S. is just $95,776, according to a new report from the Economic Policy Institute. The median average – that is, the average for those in the 50th percentile – is just $5,000.

That’s tragic, as it means that many Americans will be unable to afford to retire. At the same time, they are on the hook to pay unfunded liabilities for government employees as they retire.

Most private-sector employees have “defined contribution” plans, such as 401(k) plans, which are self-directed. Employers typically provide matching funds, but if you don’t contribute, you get nothing. Which is why many have saved little or nothing.

In contrast, employees in the public sector often have “defined benefit” plans, which are traditional pension plans. Defined benefit plans, as the name implies, guarantee a set amount throughout a person’s retirement years. (more…)

More Government, Less Manufacturing

Monday, August 29th, 2016

As the first country to mass produce everything from automobiles to computers, America has a well-deserved reputation for innovation, thanks to its manufacturing sector. U.S. government employees, conversely, are most adept at producing paperwork, as we’ve previously noted.

So which sector do you think employs more people in the U.S.—those who produce or those who bog down production with new regulations?

The answer—and it’s not even close—is that government employees outnumber employees working in manufacturing. In fact, as of a year ago, there were 21,995,000 government employees and 12,329,000 manufacturing employees.  That’s 1.8 government employees for each manufacturing employee, or one employee to produce and nearly two employees to regulate.manufacturing_and_government_employees-1939-2015

Granted, not all government employees are regulators and many serve valuable roles … but is it healthy for the economy to have nearly twice as many employees working in government as we have working in manufacturing?

It didn’t used to be this way. Until August 1989, manufacturing employees outnumbered government employees. But that month, government employed 17,989,000 and manufacturing employed 17,964,000. The two sectors have been going in opposite directions ever since. (more…)