J. Alex

I've been increasingly political in my old age.

Dec 092012

So with all this cliff talk and the “growing”/theoretical insolvency at some point in the future, I got to thinking and doing a little math as it relates to entitlements and alike since the statistics aren’t hard to find, with much of my baseline math coming from general welfare statistics and budget allocations.  My assumption is that we don’t fundamentally change any benefit – just the qualification of said benefit.  Modest changes and only for those that are able bodied.  The goal is a better educated population, a more productive economy and a better sense of community through participation.

  • Why Should we provide entitlements for anyone regardless of their contribution?
  • Shouldn’t some amount of return be provided from the citizenry receiving entitlements?
  • Shouldn’t there be some minimal baseline requirements around education or directional intent from participants?
  • Is there a minimum contribution required for all?


We need a basic floor by which no citizen falls, but that citizen needs to provide some contribution back and into the system and we need a fiscal policy which rewards active participants in the community/economy, while balancing the load across the wage base.  To that end, I’ve done some analysis which might make entitlements more appropriate, bring in more revenues and support equal opportunity for those producing for the country.

Entitlements: BIG DOLLARS, no constraints!

Source: http://upload.wikimedia.org/wikipedia/en/2/2b/U.S._Federal_Spending_-_FY_2011.png

It’s About Contribution and Participation to Gain Benefits

1.56T is a big number, but there are also the tax credits we provide for producers and consumers alike.  Mortgage deductions, earned income credit and charitable contributions.   The challenge I have with entitlements, isn’t that they exist.  We owe a minimum to our citizens – SNAP, Housing assistance, education, security and opportunity, but it’s a trade – they have to produce and contribute to our society.

Perhaps we should consider the following minimal qualification for any government program or credit:

  1. Minimum Education levels
  2. Minimum Production: Monthly Hourly Contribution
  3. Citizenship
  4. Limits on eligible dependents
  5. Minimum hours/investment into your social security account

Minimum Education levels

Perhaps it should be a requirement that all household members have a GED or equivalent for ANY entitlement, including social security.  Let’s say that all people over 45 are exempt.  Roughly 42% of ALL recipients of welfare have no GED.  So let’s say that 70% of these folks obtain their GED during some grace period, say 18 months.  That could be a savings of $100B annualized going forward which would probably decrease over time where worst case EVERYONE gets a GED and we are in theory better off with some increase in overall education levels and skills.

Minimum Production: Monthly Hourly Contribution

The average welfare recipients hourly contribution to production is on average 800 hours per year.  That pretty low.    To that end, anyone under Social Security qualification age must have say 1400 hours in wage generation or community service.  Hours spent in education would qualify for participants under a given age – say 35.  Let’s say that 3% of the people fall off the dole due to this – that’s a cool $25B savings forever and at $8 an hour in value let’s call it $100B in increased contribution to the community and production annually.


Even with the somewhat paltry number at $10B annually, it’s still a reasonable thing to stop.  This would include people claiming dependents on their tax returns, even if not receiving traditional entitlements.

Limits on eligible dependents 

The concept here is that, we all make choices for good or ill.  Whether they are faith based, desire to have kids or just out of unpreparedness, there is a limit the government should support with tax credits and entitlements.  Do whatever you want, but credits are applicable to the number of children associated with say – 3 birth events.  You have three deliveries for 3 kids, it’s 3 kid limit.  If you have 6 with 3, you get 6.  Fourth birth event equals ZERO.  I know this is a rounding error, but it’s a good constraint.  Choices have consequences.  Let’s call this – $50M.

You Have to Pay Something to Get Social Security

I’m not including disabled folks, they are out of the equation.  It is however reasonable to think you can’t get social security unless you’ve paid in at least $80,000 over your lifetime, as an exception you can just right a check for the gap to be included.  Let’s say 3% don’t hit that, that’s ~$20B in ongoing savings.

Qualifications for entitlements shouldn’t be just that you live here, it should center on your participation while your living here – socially and economically.

The Credit Problem

While we look at entitlements, there are credits which represent a challenge from a cost perspective.  Two of the biggest which should be closed/modified are non-trival – the earned income tax which costs $269B a year and the mortgage tax credit @ $83B according to NPR.

Earned Income Tax Credit

I agree this is important, but should only be applicable to tax owed and allow no refunds based on the credit.  Which to the best of my ability looks to be $59B.

Mortgage Interest Deduction

Can we just eliminate this? “About two-thirds of the total benefit go to that group in the 80th through the 99th income percentiles,” so if you want to own a home, you should be able to afford the taxes.  Stretching home ownership creates a bubble and risk of collapse, I think we learned that.  So let’s take the current $83B back.


By requiring a certain set of criteria and limits on entitlement consumption all productive community members will have a minimum amount of subsistence and the subset who don’t reach the bar, that’s a sad thing, but that should be the domain of charity, not community.

My math indicates that these measure, at conservative math saves about $295B or reduces entitlements by over 18% which providing value back to the community.  Worst case, it stays flat and we have more production.  Couple that with law and taxation changes I’ve talked about before, we can get to a budget which pays down the deficit by as much as $.5T more than what we are paying now in as quickly as 7 or 8 years, while running a no deficit budget from year 1.

Dec 052012

I clearly think that tenure is an issue and labor unions need to be reformed to support a new economy, but in general this is a fairly accurate representation.  Why is it that people that make the average wage feel beholden to there employer?  Don’t YOU contribute to the success and profit?  Shouldn’t we hold some responsibility for the less educated and those with less opportunity?

It is unreasonable to think EVERYONE will be rich.  It’s a math thing.

Dec 042012

The most amazing part is this is from a Fox New Clip.



Dec 032012

With all the skewed poll discussion pre-election, hopefully folks have finally realized that math and polls typically are a reasonably fair representations of the citizenry, as long as partisanship doesn’t enter the mix.  A recent poll from Gallup looks at positive and negative perceptions on key concepts which drove the election, our economy and our culture.

Most folks see the federal government as positive, despite the alleged fair and balanced reality over at Fox which makes one thinks that the Fed is evil.

Nov 302012


Nov 272012

With the election over, I thought it might be beneficial to look back into the archives and see just what this Obama guy has done and he’s done a bunch!  That being said, what has he done which helped avoid catastrophe, improved core foundational items in our citizenry and economy which many have under valued.

  1. Better roads are a good thing and the Obama administration move to support $60B in funding for infrastructure, regardless of the job outcome which is targeted at 2 million direct and indirect jobs is a good thing.
  2. The American Recovery and Reinvestment Act at least didn’t allow our educational system to decline more.  The effort saved 300,000+  jobs in education – think – teachers, principals and folks like that.  That has to be beneficial to both the economy and our future.
  3. With SNAP’s $20B increase, we may question the massive numbers on food stamps, but do we really want families starving?  If not SNAP/the Fed, then who is going to do it?
  4. The Iraq war exit provides much needed cost relief and bring our kids/brothers/sisters/fathers/mothers back home to their families.
  5. He’s used technology to open up access and improve visibility – streaming White House events, discloses white house visitors online, portal for government services and increased visibility/access to Freedom of Information Requests.  Transparency is a nice thing.
  6. Renewable energy targets are in place to drive innovation and energy independence which help strengthen our economy and provides improved national security. Be nice to the planet and producing jobs which can’t be outsourced has to move us forward in the right direction.
  7. Drove improvements to NAFTA to improve trade, environmental and labor compliance.