What Is The Biggest Problem Facing The United States?

If you were asked to identify the biggest problem facing the United States today, what would be your answer? I think that the answer is obvious: out-of-control entitlement spending that threatens to bankrupt the country.

Reasonable people might differ about this assessment. For example, some might cite the threats posed by international strategic adversaries, like China or Russia or Iran. Or the threat of a rogue power like North Korea or Iran getting, and maybe using, nuclear weapons. I’m not saying that these aren’t serious problems, but just that there’s not much that can be done about them that we aren’t already doing. Also, I don’t think the chances of any of these guys doing something really stupid, like launching an unprovoked nuclear strike, are very high.

By contrast, the entitlement funding problem is gigantic, and obvious, and by no means imaginary, and currently nobody is doing anything about it whatsoever. The bonded national debt — currently around $20 trillion and about 100% of annual GDP — is often cited as a big problem. But the unfunded future liabilities of the Social Security and Medicare programs are far higher. The 2018 Trustees’ Reports for the Social Security and Medicare programs put their 75-year unfunded liabilities at approximately a combined $50 trillion (approximately $13 trillion for Social Security and $37 trillion for Medicare). And many analysts give credible reasons why those figures represent substantial low-balling of a much bigger problem. For example, James Capretta of the American Enterprise Institute, in a June 2018 post following release of the Trustees’ Reports, points to highly optimistic assumptions about ability to control future Medicare costs (“the Medicare projections assume deep, permanent, and ongoing cuts in payment rates for physicians and hospitals that are difficult to believe will be implemented”), as well as equally optimistic birth rate assumptions. Other credible observers think the shortfalls, particularly on the Medicare side, could easily be double or more the government’s official projections. For example, from Michael Tanner of the Cato Institute in 2015 (“[I]f we return to double digit health care inflation, we could see Medicare’s liabilities swell to more than $88 trillion.”).

You may recall that President George W. Bush made a serious effort at least to begin to address this problem. During his first term, he appointed a Commission to come up with some solutions on the Social Security side, and the Commission proposed a series of reforms. None of them went anywhere in Congress. W did not try again in his second term. President Obama, and now President Trump, have showed no interest in this subject.

Anyway, I mention this subject today because not only is nobody paying any attention whatsoever to the huge problem, but over on the Democratic side, with the 2020 presidential sweepstakes just getting started, there has suddenly erupted some kind of a bidding war as to who can offer the most grandiose and completely impossible set of proposed expansions to the existing entitlement state.

It was Bernie Sanders, of course, who laid down the original marker for the bare minimum list of new entitlements for a true “progressive” Democrat to embrace. Bernie’s list in his campaign for the 2016 nomination included the following:

  • Medicare for all.

  • Social Security benefit increases

  • Infrastructure program

  • College affordability (free tuition for all!)

  • New paid leave fund

  • Bolster private pension funds

  • Youth jobs initiative

In a September 2015 article, the Wall Street Journal put a ten-year price tag on that list of $18 trillion. Others put the figure at $30 trillion or more. Whichever it is, Bernie’s list has turned out to be merely the small opening bid in what is quickly becoming a much grander game.

Credit new “it” Congressperson Alexandria Ocasio-Cortez with launching the advocacy for what she calls the “Green New Deal.” We’ll eliminate all fossil-fuel energy within 10 years! With government spending and subsidies tossed out left and right, of course. Next thing you know, the presidential candidates are lining up to get on the bandwagon: Elizabeth Warren, Cory Booker, Beto O’Rourke, Kamala Harris. Do any of them have a clue how much this might cost, let alone how it could be engineered? Not a chance. A recent study by Roger Andrews at the site Energy Matters put the cost of batteries alone for a wind/solar/battery system just for California at about $5 trillion. Multiply by about 8 to get a cost for the full U.S.: $40 trillion. As you know from your cell phone, the batteries would need to be replaced every few years. The cost of the wind turbines and solar collectors is extra.

Where to from here? Ms. AOC is never short of other bright new ideas. How about “Housing as a human right”? She must be inspired by the great “success” of the New York City Housing Authority — an infinite sink for about $2 billion a year in federal funds and in desperate need of some $30 billion for capital repairs. Multiply those numbers by about 30 if you want to replicate on a national scale. Oh, and the 170,000 units of NYCHA housing somehow never make a dent in the “homeless” problem.

And then there is the proposal for “reparations” for black Americans, most prominently pushed by Representative Maxine Waters. She has recently become the Chair of the House Financial Services Committee. Any price tag for that? It’s whatever you want it to be. Make your bid!

These are people who talk endlessly about “sustainability.” They just have a different definition of the word than I do.

New York City Housing Authority: Can Anyone Do Socialism Better?

Readers of this blog know that you don’t have to travel to Venezuela or North Korea to watch socialism failing. Right here in New York City, we have the New York City Housing Authority (NYCHA), run in a classic socialist model consisting of public ownership, most costs covered by taxpayer subsidies, and absolutely no one who ever gets an extra nickel in their paycheck for keeping the place from falling apart. Result: costs go up and up and up, and the place is falling apart. For a few of my previous posts about NYCHA, see here, here and here.

In February 2017 I asked the eternal question, “Which Will Collapse First: North Korea Or The New York City Housing Authority?” Close to two years later, they’re still running neck and neck.

If you’re wondering if NYCHA is really falling apart, the daily newspapers will give you plenty of evidence. As just one example, here’s a report from ABC News on November 24, headline “NYCHA tenants living without heat fed up, want answers.” Excerpt:

The tenants in the Grant Houses in Harlem are suffering, and it is not even winter yet. They have frigid tap water and cold, dead radiators. "I have a right to expect heat, I have a right to expect hot water. If I have a complaint, I expect for it to be repaired," says resident Barbara Stevens. Tenants are outraged, and they're not alone. At one time or another last month, tens of thousands of apartments in the city's public housing system were without heat, hot water or both - and thousands more in the past few days alone. Comptroller Stringer is demanding answers. "This is a citywide disgrace!" he said. . . .

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More On The "Morality" Of Throwing Money At The Problem Of Homelessness

After reading the comments to my post on Friday about the upcoming voter initiative in San Francisco to cure “homelessness” by throwing lots more money at the problem, it occurred to me that there were several more points that I should have made.

Here is a quote that comes near the end of Mr. Benioff’s New York Times piece:

It’s also time to put to rest the claim that more generous support for the homeless will only attract more homeless people to our community. The city’s own analysis found “no research” that expanding homeless services increases homelessness. An overwhelming majority of homeless people in San Francisco are from San Francisco. They are our neighbors and they desperately need our help.

Interesting. I don’t know if it rises to the level of “research,” but did San Francisco’s genius analysts look at the data from New York City, where since 2013 annual city spending on services for the homeless has soared from about $1 billion to well over $2 billion, and the number of people counted as “homeless” has gone from about 43,000 to about 76,000? Other cities that have greatly increased spending on services to the homeless, only to see the number of people counted as homeless skyrocket, include Los Angeles and Seattle. Cause and effect? I can’t even think of how, after looking at the data from New York, Los Angeles and Seattle, you could say with a straight face that “no research” supports the proposition that expanding homeless services increases homelessness. I guess that theoretically somebody could always make the argument that without all the extra spending the number of homeless people would have been even higher; but at some point such a contention becomes completely preposterous. . . .

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The Morality Of Our Progressive Elite

Have you heard of Marc Benioff? He’s one of those tech billionaires out in San Francisco. After becoming the youngest vice-president of Oracle back in the early 1990s, he went on to found Salesforce.com, where he continues to serve as Chairman and co-CEO. Today, Salesforce has a market cap of over $100 billion, and Bloomberg puts Benioff’s personal net worth at over $6 billion. Not quite Bezos or Zuckerberg territory, but still impressive. Benioff clearly deserves credit for starting and building a very successful business. Like many others of the tech elite, he also exemplifies the progressive world view and sense of morality.

Yesterday Benioff put that all on display in a big op-ed in the New York Times, headlined “The Social Responsibility of Business.” The immediate reason for the op-ed is to advocate for something called Proposition C, which will appear on the ballot in San Francisco on November 6. Proposition C will impose a gross receipts tax — one half of one percent on revenues in excess of $50 million — on large businesses in San Francisco. The purpose is to raise revenue to combat the explosion of “homelessness” in that city. The projection is that the annual revenue from this tax will be in the range of $300 million per year.

Benioff pitches his case in terms of basic human morality. With human suffering all around us, businesses must now stand up and take “social responsibility”!

Back . . . in the 1980s, I was taught . . . that the business of business is business. . . . [But t]he business of business is no longer merely business. Our obligation is not just to increase profits for shareholders. We must also hold ourselves accountable to a broader set of stakeholders: to our customers, our employees, the environment and the communities in which we work and live. It’s time for the wealthiest businesses and business owners to step up and give back to the most vulnerable among us.

Yes, it is the classic statement of the morality of our progressive elite: There is an important human need that must be addressed, and therefore “we” must “hold ourselves accountable” and “step up” and “give back” in the form of a tax.

Am I the only one who sees a problem with this? Here’s my problem, Marc. . . .

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They're Freaking Out Down On Manhattan's Lower East Side Waterfront

They're Freaking Out Down On Manhattan's Lower East Side Waterfront

One of the important functions of this blog is to keep you hicks in the hinterlands up to date on what’s going on here in Manhattan. And by the way, don’t try to figure out what’s going on in Manhattan by reading the New York Times. They have more or less given up on the topic of local news, unless maybe it relates to some avant garde art show.

So consider one of those slices of Manhattan where no one who works for the Times editorial departments has ever ventured, namely the approximately three miles of waterfront on the Lower East Side, from the Manhattan Bridge up to East 14th Street, occupied almost continuously by low income New York City Housing Authority “projects,” totaling about 100 buildings in that stretch. When they put these buildings here in the 1930s through 1970s this was a recently-abandoned shipping area, thought to be of no value — a perfect place to warehouse the poor, out of sight, out of mind.

Then, somewhere along the line, somebody got the idea that a waterfront condo in Manhattan might be a desirable place to live. . . .

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This Time Socialism Will Work Because We Are Going To Do It Right

I know that this week everybody’s attention has been diverted to the Kavanaugh confirmation circus. Have we missed anything important? Before we all move on, I want to draw readers’ attention to one of the more preposterous items to appear in the New York Times this week (I know that’s a low bar). The article appeared on Monday (October 1) with the headline “Detailed New National Maps Show How Neighborhoods Shape Children for Life.” The sub-headline is “Some places lift children out of poverty. Others trap them there. Now cities are trying to do something about the difference.” The reporters are Emily Badger and Quoctrung Bui.

What makes this article preposterous? It’s preposterous because it’s yet another exemplar from the genre of “this time we’re going to do socialism right and finally it’s going to work.” Of course, the word “socialism” itself is not used. But the subject of the article is publicly-subsidized housing for the poor — classic “to each according to his needs” redistributionism. We all know that this sure hasn’t worked so far.

Let’s start with some background so that you will understand where this article fits in. . . .

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