Obama's War Against the Elderly

It's hard enough being old, with your faculties declining as you become a prime target for scammers and hucksters. But to make matters worse, you are also being cheated and persecuted by your own government.

I don't think "persecuted" is too strong a word. The present Democratic regime is throwing you under the bus, in favor of the young (and often unemployed) voting groups that they depend upon to keep them in power. And as to "cheating", bankers and financiers, whose ranks include greedy pillagers of retirement funds, are being joined by the government itself, which has developed its own methods of cheating.

To begin with, you are probably aware that the nest-egg you saved is being undermined by inflation and lowered interest rates. But let's consider how much and why this has happened, by doing some arithmetic.

Let S equal the best available FDIC-guaranteed interest in savings or CDs. Let F be the inflation rate. Therefore, in the course of a year, your savings account increases in dollar value by a factor of (1+S) but, because of inflation, the value of those dollars decreases by 1/(1+F). Therefore, the actual value of your account changes each year by

(1+S) / (1+F) = 1+R

where R* (the Retiree Equity Normalized Accrual, or RENA index) is the rate at which the actual value of your account is increasing or decreasing. Thus, if R is positive, say 5% or more, you may derive a decent income from your savings. But if R is negative, as it has been for several years, your retirement account is steadily losing value. Here are some sample figures:

 

 

YEAR

ST (%)

MONEY MARKET (TAXABLE)

SE (%)

MONEY MARKET

(TAX EXEMPT)

F (%)

INFLATION

RATE

RT

TAXABLE

RE

EXEMPT

1985

7.7

4.9

3.6

 4.0

 1.3

1990

7.8

5.5

5.4

 2.3

 0.0

1995

5.5

3.4

2.8

 2.6

 0.6

2000

5.9

3.5

3.4

 2.4

 0.1

2005

2.7

1.9

3.4

-0.7

-1.5

2010

1.0

0.4

1.6

-0.6

-1.2

2012

0.1

?

2.1

-2.0

?

 

I cannot explain the drastic drop in interest rates that started around 1995. I do not understand the "explanation" offered by the Federal Reserve Board Economic Letter, but until about 2001, it was exclusively an American phenomenon. Now, throughout the world, interest rates are low and R is negative. Your savings are leaking away, like sand through an hourglass.

To make matters worse, your Social Security inflation adjustment is falsely low. According to Wikipedia

In January of each year, Social Security recipients receive a cost of living adjustment (COLA) "to ensure that the purchasing power of Social Security and Supplemental Security Income (SSI) benefits is not eroded by inflation. It is based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)".[6] The use of CPI-W conflicts with this purpose, because the elderly consume substantially more health care goods and services than younger people.[7] In recent years, inflation in health care has substantially exceeded inflation in the rest of the economy. Since the weight on health care in CPI-W is much less than the consumption patterns of the elderly, this COLA does not adequately compensate them for the real increases in the costs of the items they buy.

The BLS does track a consumer price index for the elderly (CPI-E). It is not used, in part because the social security trust fund is forecasted to run out of money in roughly 40 years, and using the CPI-E instead of CPI-W would shorten that by roughly 5 years.

You can read more about this little scam here. Moreover, if you have an inflation-adjusted pension, they may be using an even lower index, such as the core price index that ignores "volatile" items such as food and oil, which have been the principal inflation leaders in recent years.

Inflation will probably get worse if Janet Yellen is appointed Federal Reserve Board chairman. She is reputed to be a devout believer in the Phillips curve -- the idea that inflation causes a lower unemployment rate. This concept was challenged by Milton Friedman and experimentally refuted by the stagflation of the 1970s but, despite widespread criticism and modification, it still has some devout liberal adherents. Therefore, Yellen would undoubtedly, for the sake of lowering unemployment, strive to increase inflation. To some extent, this could be hidden, since, as of January 2012, the Federal Reserve uses the core price index as their measure of inflation.
The Obama administration would encourage Yellen to do so, since inflation would have the advantages of blunting the national debt and easing public pressure about student loans, minimum wages, and underwater mortgages. But heaven help the poor retiree!

In desperation, you might try to get higher return rates by investing in securities or real estate. But practices such as arbitrage, day-trading, and exorbitant executive salaries cause the money invested in the stock market to be stealthily siphoned off in a manner similar to the sweating and clipping of coinage. Moreover, trust has vanished. Nowadays, investing in stocks is like being invited into a poker game with a group of friendly strangers. And I hope you didn't get caught in the housing bubble.

But you may even be denied those options. It has been plausibly argued that the government might raid your retirement account and replace your investments with Treasury bills or bonds, thereby compelling you to accept low interest rates and increased danger of inflation. This has already been done in several other countries.

All of this is discouraging enough but so far, we've considered only half the story. You may remember the old Jack Benny joke about "your money or your life." Well, the government seems to want both.

You and your life insurance company want you to enjoy a long life. But frankly, your government wishes otherwise. If you are a typical retiree, your income tax has probably shrunk to the point where it's scarcely worth collecting. On the other hand, you've become an expensive liability, eating up Social Security and Medicare funds at an alarming rate.

This problem -- and you are considered a "problem" -- has been exacerbated by ObamaCare, which requires that two healthy young people enroll to support three older sign-ups. The young are not cooperating; in fact, many of them will have to be subsidized. The Democrats won't dare antagonize them, since they are one of their most important supporting groups. So guess who's going to get thrown under the bus. You are living too long and spending too much healthcare money to do so. You must be persuaded to gracefully depart.

One way is healthcare rationing. You probably laughed when Sarah Palin began talking about ObamaCare death panels. But perhaps the numerous articles in this website have induced you to consider them seriously. I fear that the coming year will vindicate Nancy Pelosi's famous prediction; we shall find out more about healthcare rationing as the ramifications of ObamaCare unfold during the coming year. (A shocking example of Obamacare discrimination against the elderly was exposed here.)

But that may not be enough to balance the budget. Old people who should die and won't die may have to be persuaded to die.

It will take time for our nation to become accustomed to assisted suicide. So far, only three states have legalized it and only a few hundred people have availed themselves of the opportunity. At present, the public is about equally divided on the issue while doctors seem to be 2 to 1 against it. It will take even longer to gain public acceptance of "persuaded" suicide but (as the gay marriage movement has taught us) radical changes in public moral norms can be achieved by patience and persistence.

I suspect that liberals have already taken some preliminary steps in that direction. In the state of Washington, where assisted suicide is legal, about 40% of the hospital beds are under Catholic supervision. Suddenly last summer, the ACLU became worried that this Catholic oligopoly would jeopardize "reproductive and end-of-life care" -- the code names for abortion and assisted suicide. This position seemed rather odd, since these services are, by an overwhelming margin, currently performed outside of hospitals.

Then, in November, the Department of Health decided to consider a new rule that would require hospitals to list, on their websites, the "reproductive and end of life" services that they do and do not provide. (This rule would not apply to any other services or procedures.) Surprisingly, the local MoveOn team urged its members to attend the meeting and support the rule. Simultaneously, the DOH comments website was flooded with comments advocating the rule and condemning Catholic hospitals for "imposing their morality" on hospital patients. A few later comments noted the apparent "scripting" of the earlier ones and suggested that the rule was the first step toward compelling all Washington hospitals to provide these services.

This would be the perfect one-stop solution to the problem of superfluous old people. Every hospital would be required to have a staff thanatician who would smoothly handle the transition from long-term care to assisted suicide. Recalcitrant patients could be persuaded by frequent "counseling" and reduction of palliatives such as opiates. Perhaps I'm being paranoid; I hope so.

In summary, to paraphrase Yeats, this is no country for old men or women. It used to be.

It's hard enough being old, with your faculties declining as you become a prime target for scammers and hucksters. But to make matters worse, you are also being cheated and persecuted by your own government.

I don't think "persecuted" is too strong a word. The present Democratic regime is throwing you under the bus, in favor of the young (and often unemployed) voting groups that they depend upon to keep them in power. And as to "cheating", bankers and financiers, whose ranks include greedy pillagers of retirement funds, are being joined by the government itself, which has developed its own methods of cheating.

To begin with, you are probably aware that the nest-egg you saved is being undermined by inflation and lowered interest rates. But let's consider how much and why this has happened, by doing some arithmetic.

Let S equal the best available FDIC-guaranteed interest in savings or CDs. Let F be the inflation rate. Therefore, in the course of a year, your savings account increases in dollar value by a factor of (1+S) but, because of inflation, the value of those dollars decreases by 1/(1+F). Therefore, the actual value of your account changes each year by

(1+S) / (1+F) = 1+R

where R* (the Retiree Equity Normalized Accrual, or RENA index) is the rate at which the actual value of your account is increasing or decreasing. Thus, if R is positive, say 5% or more, you may derive a decent income from your savings. But if R is negative, as it has been for several years, your retirement account is steadily losing value. Here are some sample figures:

 

 

YEAR

ST (%)

MONEY MARKET (TAXABLE)

SE (%)

MONEY MARKET

(TAX EXEMPT)

F (%)

INFLATION

RATE

RT

TAXABLE

RE

EXEMPT

1985

7.7

4.9

3.6

 4.0

 1.3

1990

7.8

5.5

5.4

 2.3

 0.0

1995

5.5

3.4

2.8

 2.6

 0.6

2000

5.9

3.5

3.4

 2.4

 0.1

2005

2.7

1.9

3.4

-0.7

-1.5

2010

1.0

0.4

1.6

-0.6

-1.2

2012

0.1

?

2.1

-2.0

?

 

I cannot explain the drastic drop in interest rates that started around 1995. I do not understand the "explanation" offered by the Federal Reserve Board Economic Letter, but until about 2001, it was exclusively an American phenomenon. Now, throughout the world, interest rates are low and R is negative. Your savings are leaking away, like sand through an hourglass.

To make matters worse, your Social Security inflation adjustment is falsely low. According to Wikipedia

In January of each year, Social Security recipients receive a cost of living adjustment (COLA) "to ensure that the purchasing power of Social Security and Supplemental Security Income (SSI) benefits is not eroded by inflation. It is based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)".[6] The use of CPI-W conflicts with this purpose, because the elderly consume substantially more health care goods and services than younger people.[7] In recent years, inflation in health care has substantially exceeded inflation in the rest of the economy. Since the weight on health care in CPI-W is much less than the consumption patterns of the elderly, this COLA does not adequately compensate them for the real increases in the costs of the items they buy.

The BLS does track a consumer price index for the elderly (CPI-E). It is not used, in part because the social security trust fund is forecasted to run out of money in roughly 40 years, and using the CPI-E instead of CPI-W would shorten that by roughly 5 years.

You can read more about this little scam here. Moreover, if you have an inflation-adjusted pension, they may be using an even lower index, such as the core price index that ignores "volatile" items such as food and oil, which have been the principal inflation leaders in recent years.

Inflation will probably get worse if Janet Yellen is appointed Federal Reserve Board chairman. She is reputed to be a devout believer in the Phillips curve -- the idea that inflation causes a lower unemployment rate. This concept was challenged by Milton Friedman and experimentally refuted by the stagflation of the 1970s but, despite widespread criticism and modification, it still has some devout liberal adherents. Therefore, Yellen would undoubtedly, for the sake of lowering unemployment, strive to increase inflation. To some extent, this could be hidden, since, as of January 2012, the Federal Reserve uses the core price index as their measure of inflation.
The Obama administration would encourage Yellen to do so, since inflation would have the advantages of blunting the national debt and easing public pressure about student loans, minimum wages, and underwater mortgages. But heaven help the poor retiree!

In desperation, you might try to get higher return rates by investing in securities or real estate. But practices such as arbitrage, day-trading, and exorbitant executive salaries cause the money invested in the stock market to be stealthily siphoned off in a manner similar to the sweating and clipping of coinage. Moreover, trust has vanished. Nowadays, investing in stocks is like being invited into a poker game with a group of friendly strangers. And I hope you didn't get caught in the housing bubble.

But you may even be denied those options. It has been plausibly argued that the government might raid your retirement account and replace your investments with Treasury bills or bonds, thereby compelling you to accept low interest rates and increased danger of inflation. This has already been done in several other countries.

All of this is discouraging enough but so far, we've considered only half the story. You may remember the old Jack Benny joke about "your money or your life." Well, the government seems to want both.

You and your life insurance company want you to enjoy a long life. But frankly, your government wishes otherwise. If you are a typical retiree, your income tax has probably shrunk to the point where it's scarcely worth collecting. On the other hand, you've become an expensive liability, eating up Social Security and Medicare funds at an alarming rate.

This problem -- and you are considered a "problem" -- has been exacerbated by ObamaCare, which requires that two healthy young people enroll to support three older sign-ups. The young are not cooperating; in fact, many of them will have to be subsidized. The Democrats won't dare antagonize them, since they are one of their most important supporting groups. So guess who's going to get thrown under the bus. You are living too long and spending too much healthcare money to do so. You must be persuaded to gracefully depart.

One way is healthcare rationing. You probably laughed when Sarah Palin began talking about ObamaCare death panels. But perhaps the numerous articles in this website have induced you to consider them seriously. I fear that the coming year will vindicate Nancy Pelosi's famous prediction; we shall find out more about healthcare rationing as the ramifications of ObamaCare unfold during the coming year. (A shocking example of Obamacare discrimination against the elderly was exposed here.)

But that may not be enough to balance the budget. Old people who should die and won't die may have to be persuaded to die.

It will take time for our nation to become accustomed to assisted suicide. So far, only three states have legalized it and only a few hundred people have availed themselves of the opportunity. At present, the public is about equally divided on the issue while doctors seem to be 2 to 1 against it. It will take even longer to gain public acceptance of "persuaded" suicide but (as the gay marriage movement has taught us) radical changes in public moral norms can be achieved by patience and persistence.

I suspect that liberals have already taken some preliminary steps in that direction. In the state of Washington, where assisted suicide is legal, about 40% of the hospital beds are under Catholic supervision. Suddenly last summer, the ACLU became worried that this Catholic oligopoly would jeopardize "reproductive and end-of-life care" -- the code names for abortion and assisted suicide. This position seemed rather odd, since these services are, by an overwhelming margin, currently performed outside of hospitals.

Then, in November, the Department of Health decided to consider a new rule that would require hospitals to list, on their websites, the "reproductive and end of life" services that they do and do not provide. (This rule would not apply to any other services or procedures.) Surprisingly, the local MoveOn team urged its members to attend the meeting and support the rule. Simultaneously, the DOH comments website was flooded with comments advocating the rule and condemning Catholic hospitals for "imposing their morality" on hospital patients. A few later comments noted the apparent "scripting" of the earlier ones and suggested that the rule was the first step toward compelling all Washington hospitals to provide these services.

This would be the perfect one-stop solution to the problem of superfluous old people. Every hospital would be required to have a staff thanatician who would smoothly handle the transition from long-term care to assisted suicide. Recalcitrant patients could be persuaded by frequent "counseling" and reduction of palliatives such as opiates. Perhaps I'm being paranoid; I hope so.

In summary, to paraphrase Yeats, this is no country for old men or women. It used to be.