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Aug. 24, 2010 - Rush Limbaugh Program
36:44
August 24, 2010, Tuesday, Hour #1
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Welcome to today's edition of the Rush 24 7 Podcast.
Ah, yes, yes, yes.
That is absolutely right.
Uh and I'm happy to be former chairman of a very distinguished economics department at George Mason University.
And you get good economics at George Mason University.
You don't get that kind of stuff that you hear from Paul Krugman in the New York Times.
Anyway, folks, we got a we have a busy day today.
And I'm very pleased to tell you that in the second hour, during the second hour, I'm going to have my good friend and colleague, Dr. Thomas Sowell.
He's going to be on with me to talk about his new book.
And I believe it is his 45th or 46th book.
And the title is Dismantling America.
I might ask Tom, because I'm kind of jealous, you know, I'm envious.
He has 46 books, and maybe I have 10.
And maybe the reason I only have 10 is because he's taking he's writing more books than he's supposed to.
You're getting his unfair share.
I'll ask him about that.
Anyway, he's a very distinguished scholar.
And those of you who don't know about Tom Sowell, he's a uh he's a Milton and Rose Friedman distinguished scholar at the Hoover Institution at Stanford uh University, very distinguished outfit out there.
But what I want to start today's program off with, you know, our president said, I believe it was last week or this week or over the weekend.
President Obama said, Social security is not in crisis.
And we only have to make modest changes.
And, you know, then we'll solve the problem.
And keep in mind that according to the National Center for Public for Policy Analysis and Outfit in Dallas, uh, Texas, they estimate that the unfunded liability of Social Security, Medicaid, and Medicare, and prescription drugs is around 105 trillion dollars.
So when Obama says, well, gee, we just have to make only modest changes, I'm wondering how modest those changes will.
And keep in mind, folks, that we can solve the Social Security problem, is just raise the retirement age.
Make it uh 85.
Then you're eligible for Social Security uh payments, and it's solved.
Or you have oppressive taxes, you solve it.
But Social Security is inherently unsound.
Now, I want to spend a little bit of time because many of you out there, you might share Obama's opinion.
Because I wrote a I wrote a column about two weeks ago.
And the title of the column was What Handouts to Cut.
And I started the column started out saying, well, because of failure to heed limitation of the United States Constitution, we've had we have massive spending.
And I was pointing out Obama's debt commission that was set up, and and and Senator Simpson of Wyoming and Erskine Bowles, a the former uh White House Chief of Staff under Bill Clinton, they co-chaired this uh commission,
this uh debt and deficit uh commission, and they concluded that the federal revenue is fully consumed by three programs Social Security, Medicare, and Medicaid.
And they were pointing out, I think they're slightly wrong.
They're pointing out that the rest of the federal government, including fighting two wars, homeland security, uh, art, education, you name it, the rest of the discretionary budget is being financed by China and other countries.
But I think that's a little bit of an exaggeration.
Anyway, if we're going to cut spending, where where should we cut?
I think that we need to cut some of these programs that are going to senior citizens.
Now here's why a lot of people really got angry with me about this.
You know, they got quite nasty for I got very nasty letters.
And matter of fact, the nastiest letters I've received, I've been writing a column for something close to almost 40 years.
The ugliest letters I receive is when I start criticizing farm subsidy programs and Social Security programs.
Anyway, before uh before the um uh email came about, I would get letters.
Now they type these letters out, but I get letters in shaky handwriting saying you're gonna die and go to hell, attacking Social Security.
Anyway, look, I said, according to the census, about 80% of Americans, 65 and older own their own homes, compared to 43% for those under 35.
23 million households, or 37% of all homeowners, own their houses free and clear.
And most of these are seniors, 65 and over.
And according to the Federal Reserve Board's survey of consumer finances, the median net worth, that is assets minus liabilities, of people 65 and over is 232,000.
Those under 35 years have a net worth much, much less of 12,000.
Anyway, I was pointing out when we give subsidies to senior citizens, very often we're not subsidizing the senior citizen.
We're subsidizing their heirs, their children.
For example, take take a senior citizen that has a $300 or $400,000 house.
That's free and clear.
That's paid for.
And say you give her property tax rebatement, forgivance.
Well, who are you really subsidizing?
Well, of course, one of that one one thing that that senior citizen can do, she can take out a loan.
Sometimes people call them reverse mortgages.
They could she could take out a loan on that house and pay the property taxes herself.
But if she had to pay her own way, consume her house paying her own way, then her heirs would have nothing to inherit.
And so very often when we call ourselves subsidizing senior citizens, we're really subsidizing uh their heirs.
Now, so I think one of the things we can do to get spending under control is to look at the subsidies that we're giving to senior citizens.
Now, what about Social Security?
Social Security is bankrupting our country.
Now, you find a lot of senior citizens, they are for Social Security.
They are for uh prescription drugs, and a lot of them will say in these letters they wrote to me, well, Walter, I paid into Social Security.
I paid into Medicare.
Well, let's look at a few numbers.
Let's see, according to a uh a report, again put out by the National Center for Policy Analysis, and the publication is titled, Is War Between Generations Inevitable.
Anyway, they point out that a male reaching 65 years of age today, and well, that's in 2000, that's when they did the study, reaching 65 years of age in 2000, can expect to receive 71,000 more in government transfer benefits than he's paid in taxes.
And if he's a female, if if she's a female, can expect a net gain of more than twice that amount, maybe six 163,000 dollars.
Now, a person entering the labor force in 2000, before I was talking about the Benny's going to the people leaving the labor force in 2000, let's look at the people coming into the labor force in 2000.
They will pay far more in taxes than they receive from transfer programs.
For example, a 20-year-old female can expect to pay $92,000 more in taxes than she'll receive in benefits from Social Security and other programs.
It looks even the future looks even more oblique for a male who will pay $312,000 more in taxes than he'll ever receive in benefits.
Now, you have to say, you have to ask the question, why is Social Security such a good deal, a better deal for today's seniors than for tomorrow's seniors?
Well, you just look at what they paid in.
Here's some statistics, and you can get them from the Social Security Administration.
From 1937 until 1949, the maximum Social Security tax was $60 a year.
It remained under $200 a year until 1956.
After 1956, old age survivors disability insurance was added, and 1966 Medicare was added.
And only after 1970 did Social Security taxes exceed $2,000.
Today, the maximum annual Social Security Tax is $13,000.
Now, so with any Ponzi scheme, people who come in early make out like a bandit.
And this was pointed out by a study by the Congressional Research Service.
And they said that they look at some statistics from 1980.
They say that a worker who earned average wages and retired in 1980, he got all that he ever put into Social Security in 2.8 years.
The person entering the labor force in 1980, they'll have to live until they're 92 years old to break even.
Now, how can anybody say anybody who draws out all that they ever put in Social Security in a few years, how can they say they're not living at somebody else's expense?
And we have to do something about these programs.
But but look, folks, all those people who wrote me letters, you know, express expressing outrage at my suggestion that we need to do something about these handouts going to senior citizens.
Well, it's no sweat.
What the heck?
As I said in that column about what handouts to cut, it's no sweat.
Both today's politicians and today's seniors, they'll be dead when the crunch comes in 2030 or 2040.
So why should they make sacrifices now to prevent a calamity that's decades off in the future?
Let the future generations worry about that.
That's at least the attitude.
We'll be back with your calls after this.
This is Walter Williams holding the fort for Rush Limbaugh, and he will return tomorrow.
And you can be on with us by calling 800-282-2882.
And uh keep in mind, folks, those of you tuning in late, uh, Thomas Sowell is going to be on with me in the second hour to talk about his new book, Dismantling America.
Anyway, we I was talking about uh Social Security and HANAT programs for uh for senior citizens.
And uh keep in mind, folks, you know, when when you when you hear people politicians running for office, even Republican politicians, they'll say, we want to reduce government spending by getting rid of waste and mismanagement.
Well, any politician, there's plenty of waste and mismanagement in government, but any politician talking about waste and mismanagement, that's a cop-out.
What he must talk about is cutting money to some people.
That is, he can't be talking about raising taxes.
He has to talk about cutting spending.
Now, that's a difficult issue, as as was shown to me, demonstrated to me uh by all these angry letters I got in response to my uh column saying that we ought to do something about these handout programs that senior citizens are getting.
So it's it's politically very difficult.
But Milton Friedman and I and a bunch of other uh very, very distinguished economists, we we huddled in 1978, and we uh got together uh what we called a spending limitation amendment that was introduced in the Senate in 1982 by uh by Luger,
Senator Loger, and actually it passed the Senate in 1982 and did not make it through the House in 1982, and then when when it was reintroduced in 1986, it didn't even make it in the Senate.
What we have to do somehow is to give Congress a bottom line.
That is, we need to be able to write an amendment to the Constitution that says that the Congress can only spend a particular percentage of the gross domestic product.
I think in our amendment, and you can look back uh in the back, it's in the appendix of Milton Friedman's free to choose.
I think we were calling for 18%.
That is Congress could spend no more than 18% of the GDP.
And while I was on the blue ribbon committee, I was advocating a a 10% limit on Congress, and some people said to me one time, a news person asked me being interviewed on it, well, why ten percent Williams?
I said, Well, if 10% is good enough for the Baptist Church, it ought to be good enough for the United States Congress.
They don't need more than that.
Matter of fact, from 1787 until 1920, federal spending was only three percent of the GDP, except during wartime.
And now federal spending as a percentage of GDP approaches 30 percent.
Now, so you have to say, how in the world did we go from a third world country in 1787 to a major power, the richest country, around 1920, without all these programs, without all this spending.
We did not need it.
For the most part, the Americans adhered to and had faith in the United States Constitution.
Anyway, folks, let's let's go to the phones because I know whole you whole lot of you guys have been waiting, and let's go to Terry in St. Louis.
Welcome to the show, Terry.
Hello?
Hello, Terry, you're on.
Hello.
Hello, we lost uh do we still have Terry?
I'm right here, Dr. Williams.
Well, call back, Terry if you get a chance.
Let's go to let's go to Mark in uh Fargo, North Dakota.
Mr. Dr. Williams to speak with you.
Hi.
Hi.
Well, uh my point is back when it all started, it was supposed to be a compassionate thing to develop some kind of retirement funds for the Americans.
Well, I think the idea that Congress brings up is a great idea.
We should have uh a national retirement fund.
But what would have happened had they taken the mandatory money out of your check and instead of going to the federal government, it went into the banks.
So the banks not only would have money to loan, they would also have built an individual IRA account for every single American.
So like what you're saying, everything you paid in over thirty years in the cases of people now would be probably a million-dollar retirement.
Instead of it going to the general flush fund where they use it to, like you say, all the different functions other than what it was intended for.
So the idea was good, but they ended up sidetracking the money and it never made it back to the people who paid it in.
Well, look, look, Mark, I I think you I think you make an error that many Americans make.
And when we talk about Social Security is the classic example of this error.
That is these various programs, it's not an issue of whether something is a good idea or a bad idea.
The issue is, is it authorized by the United States Constitution?
And there's no authority in the United States Constitution for a Social Security program.
Absolutely none.
And so for example, I I think it's a good idea that everybody get uh eight hours worth of sleep.
So so because that's a good idea should Congress make a law that everybody gets eight hours of sleep and those who don't who disobey uh uh get punished for it.
I think that we have to ask ourselves the question, or or or look, some people just might say, well, look, this guy Williams, he's beyond the pale.
Heck with the United States Constitution.
Let's just do things that we can get a majority vote on in Congress.
And I and I think that's the way we headed.
We're headed.
That is, Americans are saying, the heck with the United States Constitution.
All that we're concerned with is whether Congress can get a majority vote.
And I think that's a that's tragic.
The the founders of our n the founders of our nation did not have that vision of Washington, D.C. If you read Federalist Paper 45, when Madison was trying to explain to the nation what was in the Constitution, actually he's trying to explain to citizens of New York, but the nation as well.
He said that the powers that we gave the Federal Government are few and well defined and restricted mostly to external affairs.
Those left with the people and the states are indefinite and numerous.
We'll be back after this.
We're back.
Uh Walter Williams sitting in for uh for rush.
And before we get to the calls, uh there's there's another thing about Social Security that you people don't know.
And that is how Congress lies to us.
Now here's here's what here's here's in this is a Social Security pamphlet of nineteen thirty-six, and here's what it says.
It says, and I'm quoting here after the first three years, that's to say beginning in nineteen forty, you will pay and your employer will pay one and a half cents for each dollar you earn up to three thousand dollars a year.
Beginning in nineteen forty-three, you will pay two cents, and so will your employer for every dollar you earn for the next three years.
And finally, beginning in nineteen forty-nine, the you will pay three cents on each dollar you earn up to three thousand dollars a year.
That is the most you will ever pay.
Let me repeat that for you folks.
This is the Social Security Pamphlet, 1936.
That is the most you'll ever pay, namely three cents on each dollar you earn up to three thousand dollars a year.
What do you think of that?
I think that is a lie.
Now at least according to my pay stub.
But let's go back to the something I I I I didn't really fully elaborate when I talked about there's no constitutional authority for for Social Security, but even there's no moral authority for it.
That is, here's somebody telling you and me how much we should set aside out of each week's paycheck for our retirement.
We're we're we are adults, and they're telling us how much we should set aside for retirement.
What do you think if they told you how much you should set aside for housing, how much you should set aside for food, how much you should set aside for your children's education, you would surely see that as tyranny.
You'd say Congress has no damn business in doing that.
And they and they're trying to do it with health care.
Thanks, Kit, for bring that up.
Now, but see, once you let these people into our lives, they don't know when to stop.
They're gonna tell us, they're gonna tell us what to buy, what to sell.
And you say, Oh, no, Williams, they would never go that far.
Well, two years ago, three years ago, if someone had said the Obamacare that Congress is going to pass, it's gonna d dictate how much insurance, what kind of health insurance you're gonna buy, and and if you don't buy it, you're gonna get tax, and if you don't pay the tax, you're gonna go to jail, you would not have believed it.
So you people invite Congress into our lives, and then all of a sudden you're surprised at what they do.
Let's go to Terry in St. Louis.
I'm sorry I lost you before, Terry.
Hi, Dr. Williams, how are you?
Okay.
It's a top treat.
I love your columns every week, and uh I share them with my wife.
Uh my point is that Social Security is uh, in addition to being unconstitutional, is a total fraud, because if any insurance company tried to run a program like this, the government would run them out of business.
No, they would get shot.
Well, that's true.
I was trying to keep it on a high uh moral plane.
Uh but seriously, we are we have no choice unless I'm uh an ordained minister and I opt out of social security.
But basically the money is extracted from me.
Uh They are free to change the contract at any time they want.
And your your point that yeah I may get more money back than I paid in, but if they're calling this as some type of a retirement program, then I would expect to be investing my money.
Now they're taking that and say they're going to do that so that I would have a reasonable expectation of an increased sum at the uh at the point where I begin to withdraw my retirement savings.
However, that isn't necessarily so.
If I had the option to invest for myself in the way I deem appropriate, I would be financially better off.
Oh, you'd be much better off.
And the statistics are that an average person, a person making an average income – I'm sorry, a couple earning their average income over a lifetime, if they put their money in – the same amount of money that they put in Social Security in a retirement program, the –
couple would be able to retire off of forty eight thousand dollars a year and then when they died they would be able to bequeath two hundred and fifty thousand dollars to the heirs like you can be sixty five and die under Social Security and your heirs won't get anything and social security is not only unconstitutional it is a bad deal.
And let's go to Chris in Portland Oregon Dr. Williams it it has been a pleasure to trade emails with you and uh good to talk to you today.
I think we've got a public service sector bubble that is going to burst, and I think Congress is going to find that bottom line the hard way, along with the rest of us, that you speak of.
I look at the housing bubble.
We got a great lesson in fiscal conscientiousness.
I will accept the license of naivete, but I think that Americans learned a real lesson about how money works.
I'm hoping we can go another, oh, I don't know, what do you think, two weeks?
I'm not quite sure that we learn how money works.
Look at the American people, how they support the Obama administration bailouts and how they support a guy telling a president saying how much pay a CEO should receive.
Americans ought to be...
The numbers are coming down, my friend.
I don't know that that's, you know, this charade can only go on for so long.
He doesn't have the...
I mean, we're not stupid.
You know, I mean, we...
learned a hard lesson as I say I don't think Americans are going to be doing what they were doing with money three years ago anything that sounds too good to be true probably is I can tell you locally here in Portland we've got a mayor that just tacked on fees to our sewer bills so that he could build a bike pass.
He's going to spend six hundred million dollars uh on bike paths and he's gonna go ahead and tack money onto the sewer.
Now, you want to talk about a Ponzi scheme.
Do you think he's going to get reelected?
I don't think he's going to get reelected at all.
And if you look at Portland, Oregon, you see a real hollow city.
I mean, between the empty buildings all over the place, it's overvaluation.
Well, you have all those environmental wackos out there.
Their headquarters are in Portland.
And they've decided that if you're not one of those, if you're going to be one of these evil business people that give back to the community every payday well that they don't want you here but as I'm saying Doc it's not working and the cracks are showing.
Now what we've got to do is to illustrate that as you have been and so many others have been and I don't I mean we've we've got to keep the message out there.
Yeah you're you're absolutely right and let me just say this because I've got get ready to go in a in a second but let me say this if there's anything good that can be said about the Democratic control of the Congress of the House of Representatives of the Senate and the White House is that these people have been so brazen.
They've been so brazen that they've stimulated the American people into debating about the Constitution for the first time in my life.
I've heard I I have not heard so many Americans arguing about the Constitution, explaining what the Constitution is, telling uh you forming Tea Party groups, uh, Glenn Beck, uh, Rush Limbaugh, uh, Hannity, all these shows are focusing on the growth of government and its exceeding its constitutional authority.
And that's what we need, and I think that is a good thing.
We'll be back with your calls after this.
Rush shall return tomorrow, but today it is Walter E. Williams.
Let me read something else to you.
It's a matter of fact, these these uh all this information is available at my website, Walter E. Williams.com.
But let me read something else to you from the Social Security pamphlet, and think about it a little bit before you jump to conclusions as to whether this is another lie.
Quote, beginning November 24th, 1936, the United States government will set up a Social Security account for you.
The checks out of this account, the checks will come to you as a right.
Now, first of all, ladies and gentlemen, there is no social security account containing your money with your name on it and has your money in it.
But more importantly, remember the checks will come to you as a right.
More importantly, the United States Supreme Court has ruled on two occasions that Americans have no legal right to Social Security.
It's no contract.
That is, Congress can do anything it wants to.
It can get away politically.
That is, Congress can take my suggestion for saving Social Security that I gave towards the beginning of the hour.
They could just make the retirement age 85 or 90.
And they solve it.
Or they can say, well, gee, people making over a hundred thousand dollars a year, they're not eligible for Social Security payments.
They can they can do anything that uh upon which they can get a majority of vote.
So, again, for those of you who missed it, be beginning in November 24th, 1936, the United States government is gonna set up an account with your name in it for Social Security.
Ask your Congressman, Mr. Congressman, is that true?
Is there an account with my name on it?
See whether see what he says.
Let's go to Loretta.
Is that Weimer, California?
Well, the German pronunciation is Weimer, but not here to call Wimar.
Okay.
Uh-huh.
Welcome to show.
Thank you.
Good to talk to you, Dr. Williams.
I I call you my cousin because my maiden name was Williams.
Okay.
Um, I I get so upset when they talk about Social Security.
Um it was in its own uh fund to start with, and I don't remember who was president when all this was changed.
Oh, and when was that uh written that we have no right to it?
Uh 1962.
It's two Supreme Court cases.
Uh I think one was called Helvering and uh and I and Nelson, I believe.
I'm not absolutely sure.
But check on my website, just click on Social Security under the search term uh Walter E. Williams.com and click on so on the Social Security, and you'll come up with the uh information.
Okay.
Well, now if they think it was Nestor versus Fleming, the last the last case.
But go ahead.
Yeah.
Well, now it I I don't think they had any right to do that if they had left that in its own fund instead of putting it in the general fund and uh and using it for so many other things, all the pork they want and and the trillion they they quote borrowed unquote uh trillions of dollars from the Social Security Fund, and they've never been back.
Well, it but but then it's actually unsound.
That is it's it's built on unsound principles.
First, Social Security worked for a long time because at one time in our country there were 40, I believe it was 40, don't quote me on this, but I believe I'm pretty near right.
There were 40 workers per one retiree.
Now there's estimated three workers per one retiree.
That is there and there needs to be three people working in order to support one person receiving social security.
And and because of the demographics of our nation, that is more people are living uh longer, it's going to eventually get down to two.
Yeah.
And so it's actually unsound.
What we need to do, what we need to do, we need to find a compassionate way out of Social Security.
We need to find a compassionate way out of it.
And one that I might suggest that I suggested some years ago when I was doing a lot of stuff with Social Security, I suggested that the United States government or Congress live up to its promises for all Americans 45 years of age and over.
And then all Americans under 45 years of age, we tell them, kiss all the money you put into Social Security goodbye and get your own retirement program.
Now why 45?
Why age 45?
Well, it turns out that if you put the same amount of money that you would have put in Social Security between age 45 and 65, you'll break even with what you got what what you would get through Social Security.
But somehow, the only constructive thing we can do as Americans is to find our way out of this mess that we created for ourselves.
And I think if you ask the question, people say, oh, well, we just need Social Security.
Well, you ask you have to ask the question.
Well, again, we were a nation from 1787 until 1935 before there was Social Security.
And how in the world did we make it?
Were there old people just dying on the streets?
No, I'll tell you what, families were far more important uh during those days.
That is old people died in the homes of their children.
Today, many older people die lonely in little green rooms.
That is, people thought people obeyed the the uh biblical admonition to honor their mother and father.
Well, people don't honor their mother and father much anymore because they can get Walter Williams to honor their mother and father through the tax code.
And so they honor their mother and father less.
And so and and uh a basic premise of economics, when it's cheaper to do something, people do more of it.
So it's cheaper to not honor your mother and father for for the days of the life.
We'll be back with your calls after this.
We're back, uh Walter Williams filling in for Rush and who will be back tomorrow.
And stay tuned for the next hour.
We're gonna have Dr. Thomas Sowell talking about his new book, Dismantling America.
But let's take a quick call before the break.
Uh Barb welcome show.
Um hi, Dr. Williams.
Glad to speak to you.
I'm wondering if when you were speaking of the uh dollars that people are getting back, is that the actual dollars that the government collected off of our wages, or is that using current dollar value?
That's the actual dollars that they uh collected off the wages plus interest rates and then plus the amount the so-called employer share.
Actually, the the employee pays all of it, but they make the affection of the employer uh share.
Right.
And I I agree with you that that uh this plan is totally unconstitutional and should be done away with.
But I think for many of us that would like to opt out of it, perhaps the government could pay us out, and they could do that.
Government owns tons and tons of property, they could certainly sell off some property and and offer us a payout, and I would be one of the first ones to jump.
You're absolutely right.
That is if the government told me if President Obama said Williams, instead of Social Security, we'll give you ten acres of land in Nevada.
Yep.
And a mule.
I don't I don't want 40 acres.
I just want 10 acres and a mule.
And I'd be perfectly happy.
And I believe many of my fellow Mercs and the somebody should work this out, and the government would get away with it.
That is, how many people would settle for the idea that keep the Social Security money, but give me land in Utah, and you know the government owns ninety percent of the land in places like uh Nevada and Utah, and they can it's a wasting asset, and they can just get rid of it and get rid of some of these big problems.
That that is a brilliant idea that I came up with.
Didn't I come up with that?
But but but seriously, folks, you must stay tuned for the next hour.
Dr. Thomas Sowell, Rose and Milton Friedman, uh Senior Fellow at the Hoover Institution at Stanford University of California, he's going to be on with us the next hour to talk about his new book, Dismantling America.
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