National Underwriter - December 6, 2010

EAGLE EYE

BY tREvoR tHoMAS

Scrooge Lives!

WE CAN TRULY SAY the country is moving in the right direction—the far right, that is. The reason for the madness: concern over the big, bad deficit. Of course we have a huge deficit. We are in a huge
recession, for Pete’s sake. How does one get out of such a hole?
By doing stuff that puts people to work. Instead, we get exactly
the wrong response, such as Congress’s failure to approve an ex-
tension of unemployment benefits. Or President Barack Obama’s
As of this writing, the National Commission on Fiscal Respon-
sibility and Reform is getting ready to release a plan to cut the na-
tional debt. The commission seems to be having trouble agreeing
on just how to do that. It appears some members have balked at
calling for more give-backs by the American middle class.

The commission co-chairmen are Erskine Bowles, former
chief of staff for President Bill Clinton and one-time Democratic
senator from North Carolina, and Alan Simpson, a former Repub-
lican senator from Wyoming. This pair of Scrooges has called the
growing national debt a “cancer.”
A headache, maybe, but not a cancer. If someone did some-
thing imaginative to move the economy along, the deficit would
eventually abate to a manageable level.

Nov. 29 announcement of a two-year pay freeze for federal workers.

“The hard truth is that getting this deficit under control is going to require some broad sacrifice, and that sacrifice must be shared by employees of the federal government,” Obama said in announcing his decision.

My problem with that is no one has asked Wall Street and the wealthy to sacrifice anything. So far, only civil servants are kicking in.

If the final document released by the commission is anything like its draft, it would recommend raising the retirement age to 69, slashing retirement benefits by up to 35% for middle-income earners, cutting annual inflation adjustments for Social Security, reducing healthcare benefits, including Medicare, and raising fees paid by veterans.

The pay cut is being portrayed as a compromise with Republicans. If that’s a compromise, then what did the other side give up? If the answer is “nothing,” it’s not a compromise; it’s a surrender of

As Scrooge might say, “Go away you bum, you’d only use it to buy food.”

Apparently, Bowles and Simpson believe Americans are saving way too much for retirement and spending far too little on health care, because some of the reductions would come by eliminating tax breaks for company retirement savings and health care programs.

Obama’s values.

In return for the Federal pay cut, the administration might have demanded an extension of unemployment compensation for those whose benefits are about to run out. Congress’s failure to continue these payments allows hundreds of thousands to plunge into poverty. That hurts the rest of us, because it means the feeble rate of economic recovery will slow even more.

Scrooge-like politicians can be heard explaining their opposition to extending unemployment benefits as a way to help curb the deficit. Some are actually saying that having a regular check coming only encourages the unemployed to slack off in their search for a decent job.

Or as Scrooge might say, “Go away you bum, you’d only use it
to buy food.”
Yes, the jobless do use those checks to buy food and other
essentials, thus keeping many others employed. The failure to ex-
tend those vital checks means more people will be thrown out of
work in grocery stores, gas stations and other small businesses.

Among other hysterical drivel in the
draft recommendations is a proposal to stop the tax-deferred
buildup of cash value within life insurance policies. Producers
who sell life insurance will find that idea downright depressing.
Meanwhile, when are we going to hear about what Wall Street
would give up to eliminate the deficit? Most proposals we have
been hearing lately seem to be dumped in the laps of working
Americans. (The same people, lest we forget, who regularly cite
price as a major reason for not buying life insurance. –Ed.)
There is one notable exception. Just last week, another organi-
zation came out with a plan to revive the economy that is far fairer
and less painful than cutting pay and benefits or raising taxes.

The plan, titled “Investing in America’s Economy,” was a joint effort of the think tanks Demos, the Economic Policy Institute and the Century Foundation.

By the way, unemployment means many will let their insurance policies lapse. As if the life-health business needed another setback.

The plan calls for actually increasing spending to create jobs and spur investments while moving to a budget surplus by 2018, ultimately leading to sustainable public debt levels beyond 2025. It also outlines a way to establish a solid financial foothold for Social Security, Medicare and Medicaid for the long term and proposes revisions to the tax code that would raise revenues fairly.