Tuesday, July 26, 2011

New Mexico Should Brace Itself

I watched President Obama's economic address last evening.  I thought he did a good job of explaining the situation and made a good case for painful compromise on the deficit.

Certainly, government spending will take a huge hit.  Nationally, we will all see scary reductions in Social Security, Medicare, and other entitlement programs.  It is just bitter medicine.  But, what  happens in New Mexico where federal spending on military and defense, Sandia and Los Alamos National Labs, and thousands of other federal jobs from Forest Service employees to Department of Agriculture field representatives....etc. etc.

The Land of Enchantment is going to take a huge hit on employment.  There will be layoffs of federal employees as many agencies will look at 15-20% cuts in their budgets.  Since 80% of their budgets are devoted to paying employees you can see the devastation that will occur.  It will be the younger workers who will be hit worse since seniority will decide on who goes or stays.  And, worse yet New Mexicans will most likely lose some valuable services and economic development projects.

Additionally, since we are a state with many poor folks, the cuts in medicaid and medicare will be disproportionately harsh.  Not only on the poor but also the medical establishment, hospitals and clinics that get that money.

And what is the state doing to prepare?  Sorry the Governor is busy chasing immigrants and their drivers licenses.  She and her neo-con handlers haven't seen the future.  If they would bother to think a little outside the wedge issue box then they might realize as unemployment rises their reelection efforts turn to toast.

Someone better get to work and quick.  The hour glass is emptying.

In the meantime I will be off playing golf for a couple of days in Pendaires.


Bubba Muntzer said...

Just a reminder to everyone: Social Security has nothing to do with the budget deficit. It's paid for by the Social Security Trust Fund, which is funded by deductions from your paychecks and matching contributions from employers. The fund is solvent. It has a surplus.

Social Security is accounted for separately from the general fund, which is what this current political show is all about.

Since Social Security was begun under the Franklin Roosevelt Administration, the wealthy, and their handmaidens the Republicans have hated it and have tried to do away with it. They've got theirs, why should they care if the working class elderly can't live a dignified retirement.

With regularity, Republicans and their handmaidens in the news media will put forth some dire predictions of Social Security being bankrupt, and certain Democrats, including Barak Obama, have been complicit in this lie.

Most reliable predictions I've seen are that if no adjustments are made, the fund will break even in 10 to 20 years. At that point you would have to lower payouts, or put more money in somehow.

The best way to put money in would be to have the rich pay their fair share into this program. As it is, Social Security taxes only come out of your first $85,000 of income in any given year. Any income above that is tax free, as far as Social Security taxes go. Many people in this country now make way more than that. Millions more.

If that ceiling were raised just a little bit, the fund would have plenty of money in it. All the Baby Boomers could retire in dignity, live out their lives, die off, and the fund would be fine on the other side.

Medicare is something else. Rising medical costs are a danger to that system. When Obama was getting his Obamacare passed, there were plans around by which the government could have controlled those costs, but Obama caved in to a few blue dog Democrats who were holding Obamacare up by siding with the Republicans, who did not want costs controlled, and nothing was done to control those costs and so they are still going up.

Democrats controlled all three branches of government at the time.

Rodney said...

yet we here over and over and over again how the government doesn't create jobs. If the government doesn't create jobs, then there should be no problem at all with closing KAFB or Holloman or any of the labs etc....

Abq Dude said...

Nice write-up Bubba! This is an example of the clarity we need in the media.

Michelle Meaders said...

"As it is, Social Security taxes only come out of your first $85,000 of income in any given year. "

I think it's up to the first $106,800 of earnings now. It's indexed to inflation.

"The 2011 cap is the same as in 2010 at $106,800.00, at which point the Social Security amount withheld would be $6,621.60 (6.2%)."

Read more: http://wiki.answers.com/Q/What_is_the_2011_Social_Security_tax_cap#ixzz1THa2KRbL

Anonymous said...

Bubba, nice write up. Nice to see clear and organized thinking.